“There Is Not One School of Academic Thought re How Stock Investing Works Today, There Are Two”

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

In short, you want everyone to think about how they are wrong, yet you don’t even consider that you are wrong. As such, your definition of “working together” is for you to be the teacher and everyone else are pupils.

Something that I have suggested in the past is that a disclaimer could be added to the bottom of my posts saying: “Rob has acknowledged that his views are minority views and that it is possible that he is wrong in everything that he says about stock investing. He has also noted that his only claim to expertise in this field is that he has figured out how to get his posts to appear on the internet. It is his view that anyone who invests in the way that Rob recommends solely because he recommends it is a darn fool.”

I don’t have a problem with a statement like that because every word of it is true. I don’t think that I am wrong, I think that I am right. But one of the problems with being wrong is that the person who is wrong doesn’t recognize that this is the case (if he did, he would change his views). So I don’t have any problem with letting people know that, despite my confidence in my ideas, there is always the possibility that those ideas are in error.

I would like to see the same attitude from the Buy-and-Holders. I acknowledge that they believe that they are right. I think that it would be a huge help if they would at least acknowledge the POSSIBILITY that they are not. I wouldn’t say that I want them to “think about how they are wrong,” I would say that I would like them to reflect on that POSSIBILITY. For so long as my Buy-and-Hold friends believe in Buy-and-Hold, they have both a right and a responsibility to let that belief govern their postings. But it wouldn’t hurt for them to now and again acknowledge that Fama and Shiller hold very different views on stock investing and yet both have been awarded Nobel prizes. There is not one school of academic thought re how stock investing works today, there are two.

If someone asks me a question and I respond, I suppose that it would be possible for someone reading the words to conclude that I sound like I am “teaching.” What I am trying to do is to respond to the question effectively. I obviously have spent years thinking about Valuation-Informed Indexing in great depth and from thousands of possible angles. So it would be fair to say that I know things about Valuation-Informed Indexing that most others do not. My aim in responding to questions is to help people out, not to make them feel inferior.

The ultimate question here is the question as to whether it is Shiller or Fama who is right. If Shiller is right, then my investigations have great value (that’s so even if they are wrong — investigations often lead us down life-affirming paths even when they do not begin with perfect knowledge). If Shiller is wrong, then all the stuff that I say is wrong too. I can acknowledge that if it makes people hearing the words feel less insulted. But I cannot say that I believe either that Shiller is wrong or that I am wrong even if that means that someone might get their feelings hurt that I am implicitly suggesting that I know something that not everyone else knows. Any time someone in the world puts up a post to a discussion board, he is suggesting that he knows something that not every other person in the world knows; otherwise, he wouldn’t go to the trouble.

As a society, we do not today know whether it is Shiller or Fama who is wrong. We know that one of them is wrong — they are saying opposite things. It seems to me that it is in everyone’s interest that we figure out which one of the two is right and which one of the two is wrong. The only way that we can do that is to engage in a national debate in which people from both sides of the controversy feel free to state their sincere beliefs as plainly and clearly and fully as possible.

The Buy-and-Holders are in the majority today. If they want people from the other side of the table to challenge their views (they should — it is by being challenged that we learn the weaknesses of our beliefs and thereby sharpen our thinking on a subject), they need to warmly invite challenges from all who feel inclined to advance them. The key to getting the process to work smoothly is for people from both sides of the table to evidence respect and affection for people on the other side of the table. It is possible for humans to disagree without being disagreeable.

Do you think that you are assuming the role of teacher and putting me in the role of pupil when you explain why you believe that Buy-and-Hold is a good strategy, Anonymous? I don’t think that’s your intent. I think your intent is to share something of value that you have learned over the years with others with an interest in the subject matter. That’s my intent when I tell you why I am so excited about Valuation-Informed Indexing. Yes, I think I have something of great value to share with you. But, no, there is no desire on my part to make you feel small.

I would like to be one of many teachers of Valuation-Informed Indexing participating in a spirit of friendship in communities also populated with many teachers of Buy-and-Hold. If that’s the spirit in which discussions are held, the truth will reveal itself over time. There is no need for any of us to force things to a quick conclusion. We all need to accept that for the time being there are two schools of academic thought re these matters and that it is natural that both schools of academic thought would be represented on all of our board and blog communities.

Rob