“It Is Hard for the Scientific Community to Accept a Paradigm Change When One Is Thrust Upon It Because Powerful People Have to Acknowledge That Decades of Work That They Have Done Is Pointless or Wrong.”

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

2) I would not agree with him if all that he did was to make that statement. I would ask him why he had come to that conclusion and try to find common ground with him by either coming to a better understanding of where he was coming from or by persuading him of the merit of my different take.”

So, you wouldn’t even think that you are wrong? What would make you think that you know more than Shiller?

The fact that he would be engaging in a logical contradiction in the hypothetical that you are putting forward.

The difficulty that we are having as a society making the transition from Buy-and-Hold to Valuation-Informed Indexing stems from the fact that the change is so enormous. The change is a change from a belief that investors are 100 percent rational to a belief that investors (and thus market prices) are heavily influenced by emotion. Both Buy-and-Hold and Valuation-Informed Indexing are numbers-based models. The difference is that one model excludes the most important number while the other excludes it. There is nothing worse than a numbers-based model that excludes the most important number. That model gets every single question that it examines wrong.

If Shiller did not know that he would have to pay a horrible price for speaking openly about his beliefs re how stock investing works, he would do it. Drop the death threats and all the other garbage and ask him to talk things over in an environment in which the laws of the United States govern how the discussions are conducted and he will be happy to tell you all sorts of things that he has not been willing to say until now. I would love to see that happen. You wouldn’t. You are not willing to go there. So we are stuck for the time-being.

You’re going to be willing to go there after the next crash, Anonymous. You are going to be as upset as everyone else in the days following the next crash. So we will be working together. We will be friends. That’s how I’ve always wanted it to be and that’s how it will be. It breaks my heart to acknowledge that it is probably going to take a deepening of the economic crisis to get us there. But things are what they are. I didn’t create this crazy situation and I cannot change it by myself. All that I can do is to play the cards that I have been dealt to the best of my ability.

Even your question evidences the core mistake about human nature that you made when you became a Buy-and-Holder. You say: “What would make you think that you know more than Shiller?” The suggestion is that I think that I possess more I.Q. points than Shiller possesses. But of course I think no such thing. You Goons have set things up so that there is a terrible price to be paid for posting honestly re stock investing topics in the Year 2018. I have elected to pay that price. Shiller has elected to pay it in part and not to pay it in part. The only reason why he doesn’t say the same things that I say is because of the death threats and all the other garbage. It has nothing to do with I.Q. points. I have been paying the price that you Goons dish out for 16 years running now. I may not know as much as Shiller. But I sure as shooting say many, many things that Shiller doesn’t say. Because I have elected to pay that price. It’s not even a tiny bit hard to figure out what is going on if you have been paying even a tiny bit of attention for 16 years now.

Shiller will be working with me in the days following the crash. So will Pfau. So will Bogle. So will Bernstein. So will Swedroe. So will you Goons. We will all be working together and we will all make amazing amounts of progress in amazingly short amounts of time when we are working together at last. And I will do everything in my power to help you Goons out, just as I do today. I cannot promise that all of my efforts will succeed. It is my belief that they may succeed in small part but that to a large extent they will not. But we will just have to wait and see to find out for sure, you know? I will make the efforts. That’s all that I can do and so that’s all that I can promise to do.

It’s not that I know more than Shiller. It’s that I say things that Shiller is not willing to say. And it’s you Goons that have created the situation in which Shiller does not feel comfortable speaking freely. Put away all your Goons garbage and you will hear lots of amazing things from him and from thousands of others. It’s your Goon garbage that is the strange thing here, not the fact that Shiller is not today willing to say that he agrees with me on every point. It’s perfectly natural that he would not be willing to say that he agrees with me on every point given the circumstances that prevail today.

We need to do something about the Goon stuff. That’s the block. It’s hard because the cover-up has been going on for 37 years. That reality makes the Buy-and-Holders look very, very, very, very bad. There are things that can be said to sugar-coat the reality. I say those things all the time. But there are limits to how far the sugar-coating process can go. Even after all the sugar-coating that is possible, the Buy-and-Holders still end up looking very, very, very bad. So they fight very, very, very hard. And so people like Shiller elect not to be 100 percent forthright in their public statements.

If you want to read a book about it, read The Structure of Scientific Revolutions. It is about how it is hard for the scientific community to accept a paradigm change when one is thrust upon it because powerful people have to acknowledge that decades of work that they have done is pointless or wrong because they have been working from the wrong starting point. Academics have told me that it will take a crisis to turn things around. It breaks my heart to acknowledge it but there’s a lot of evidence that they are right. I think it would be fair to say that a price crash of 50 percent or more would constitute a crisis. So we will begin moving forward in a big way following the next price crash, you know? If that’s what it takes, that’s what it takes.

I am your friend today. You will be able to acknowledge being my friend then. I think it would be fair to say that that’s the best we can do with the cards that have been dealt us.

I hope that helps a small bit.

Rob