“We Wouldn’t Have a Stock Market That Produces 6.5 Percent Real Gains If We Didn’t Encourage Learning Experiences. If We Ever Get to a Day Where We Are So Reluctant to Acknowledge That There Might Have Been a Time That We Made a Mistake re Something, Then All Our Learning Experiences Are Over and We Are Going Down.”

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

“Some will decide not to follow Shiller’s advice as a result.”

Shiller doesn’t give advice. Except to not to use PE/10 for market timing. That advice he has given multiple times. You seem to think that if people keep asking him that same question, eventually he’ll give a different answer.

Do you ever stop to ponder why you think the way you do?

He’s already given a different answer! He said in 1996 that smart investors should lower their stock allocations because prices were too high. He was right! No, we didn’t see a crash within 10 years. He was wrong about that detail. But the thrust of what he said — that high prices make stocks more risky — was very, very, very right. There’s 150 years of historical return data showing that.

I think the way I do because I have been trained all my life to determine what logically follows from a set of principles. Shiller was awarded a Nobel prize because he showed us that valuations affect long-term returns. If that’s so, it is a logical impossibility that the safe withdrawal rate is the same number at all valuation levels. If every person on the planet believed that the safe withdrawal rate is always the same number, it would still not be so. And it’s not every person on the planet that believes that. It’s about 90 percent of the population. 10 percent of the population agrees with me.

Most are afraid to speak up about what they believe too clearly because they know that it makes Buy-and-Holders angry to hear about the far-reaching implications of Shiller’s Nobel-prize-winning research. I don’t enjoy making the Buy-and-Holders angry any more than anyone else does. But I believe that my Buy-and-Hold friends possess a sincere desire to know how stock investing works as well as a sincere belief that looking at peer-reviewed research can help us learn what we need to learn. So I share with them what I have come to believe. If I were to fail to do that, I would feel that I was disrespecting them and letting them down. I don’t want to go there. I fully accept it when they elect to ignore what I say — whether to buy into what I say or not is their choice. But I try to always say what I truly believe because I see that as my obligation to my friends and all Buy-and-Holders are my friends.

I think the way I do because I think learning experiences are a positive, Anonymous. You have heard me say that “I love my country.” That’s the bottom line for me. Well, our country is all about learning experiences. We wouldn’t have a stock market that produces 6.5 percent real gains if we didn’t encourage learning experiences. It’s all the learning experiences that we have enjoyed over the years that produced the profits that are behind that wonderful 6.5 percent number.

I love this country. I believe in learning experiences. If we ever get to a day where we are so reluctant to acknowledge that there might have been a time that we made a mistake re something, then all our learning experiences are over and we are going down. We are temporarily in a place where as a society we have not been able to work up the courage to acknowledge that we didn’t always know everything there is to know about how stock investing works. But I sure don’t see any reason to believe that that is a permanent reality. We are in the process of working up the courage to move to a far better place, a place that deep in our hearts all of us want to live in.

Does that help at little bit?

Let’s all work together to persuade Shiller to offer more advice, you know? Let’s all help ourselves and millions of others in very, very big ways.

Any downside? I sure am not able to imagine any.

Question-Asking Rob