“We Once Believed That Buy-and-Hold Was the Answer. Now We Have 37 Years of Peer-Reviewed Research Showing That That Is Not the Case. In Ordinary Circumstances, We Would Have Had a National Debate on the Question Starting in 1981 and the Question Would Have Been Resolved By Now. But the Shift From What We Believed in 1980 to What Shiller Showed in 1981 Was So Huge That Lots of Us Fell Under the Spell of Cognitive Dissonance. We Just Couldn’t Accept That We Had Gotten So Important a Question So Terribly Wrong. It Became Even Harder to Accept As the Years Went On and We Continued to Promote the Buy-and-Hold Stuff. So Now It Is Really, Really, Really Hard.”

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

Do you have any new material? You keep repeating the same themes on this site about Shiller (which you misrepresent his views) and you keep repeating your themes of goons, prison sentences, fraud, etc over at your own website. Even if you had an audience, don’t you think that readers would expect something new versus reading the same thing, day after day, week after week, month after month and year after year? I think everyone has addressed your issues a long time ago. Do you keep repeating it hoping that someone will finally agree with you?

Lots of people agree with me, Sammy. They have told me so. Some privately. Some publicly. But lots of people agree. Shiller would not have been awarded a Nobel prize if lots of smart people did not agree that valuations affect long-term returns or at the very least that there is strong reason to believe that that’s the case.

As a society we find ourselves in a tough spot. We once believed that Buy-and-Hold was the answer. Now we have 37 years of peer-reviewed research showing that that is not the case. In ordinary circumstances, we would have had a national debate on the question starting in 1981 and the question would have been resolved by now. But the shift from what we believed in 1980 to what Shiller showed in 1981 was so huge that lots of us fell under the spell of cognitive dissonance. We just couldn’t accept that we had gotten so important a question so terribly wrong. It became even harder to accept as the years went on and we continued to promote the Buy-and-Hold stuff. So now it is really, really, really hard.

I think that this is all going to change in the days following the next crash. I think that we are going to see then that we made a mistake by putting off the national debate and that we are all going to pull together and try to figure out together what the research really says about how stock investing works in the real world. I can’t snap my fingers and make the national debate begin today. If I could, I would. But I can put forward my best efforts to get it started as soon as possible or, if that fails, to put forward some thoughts that can be put to use by all of us in the days following the crash, when we are able to move forward with this stuff.

I am not responsible for the delay in the debate. I have been saying for 16 years now that we should all be participating in the debate. We have one Nobel prize winner saying one thing (that the market is efficient) and another Nobel prize winner saying something very, very different (that valuations affect long-term returns). We need to figure out which it is. This question affects the lives of millions of people. Every one of us really. We all need to be putting forward our best efforts to figure it out, in my assessment.

Anyway, that’s where I am coming from. I hope that helps a small bit, my dear friend.

Rob