Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Uh oh, Rob. Shiller just said you are wrong yet again. We aren’t gone to see that 50-60% drop that you say we are going to see.
Notice he says the following:
“The drop in home prices in the financial crisis was the most severe drop in the U.S. market since my data begin in 1890,” Shiller said. “It could be that we’re primed to repeat it because it’s in our memory and we’re thinking about it but still I wouldn’t expect something as severe as the Great Financial Crisis coming on right now. ”
So it oops likeyou don’t really know what Shiller’s data really says. Further, it means your dreams of a big crash leading towards your $500 million windfall will not materialize since your logic is all based on what Shiller says.
Of course, you will say that the goons got to Shiller and he is being controlled.
I’m grateful for the link, Anonymous.
Shiller is expressing an opinion when he says that he does not think we will see a repeat of the Great Financial Crisis anytime soon. He could be right. He’s certainly an informed person and I certainly think that people trying to figure out what is going on should be taking his opinion into consideration. I obviously hold a different opinion. And my opinion is every bit as much rooted in Shiller’s research as Shiller’s is. Stock prices are today at two times fair value. If we see a drop to fair-value price levels, that’s going to wipe out the retirement hopes of millions. I sincerely believe that the consequences could be devastating.
Is Shiller being controlled by you Goons? He is. I say that we should open every discussion board and blog on the internet to honest posting on safe withdrawal rates and scores of other critically important investment-related topics. Are you able to say what Shiller’s views re his own research would be today had the entire internet been open to honest posting for the past 16 years? You cannot. It’s a hypothetical. We had a chance to find out and we blew it by failing to work up the courage to stand up to you Goons. We don’t get the benefits of open debate for so long as we do not permit open debate.
On the morning of May 13, 2002, I was a Buy-and-Holder. I am obviously not that today. What changed? What changed is that I saw John Greaney advance his first death threat on the evening of 17, 2002 and then I saw 200 of people who long had been friends of mine endorse that death threat. Huh? What the f? When you see something like that, your mind forces you to try to come up with an explanation. My explanation is that Buy-and-Hold is not science at all, that it is a purely emotion-based strategy. It parades as science because the Buy-and-Holders want to persuade both themselves and others that it is real. But the science stuff is a cover. The reason why the Buy-and-Holders ignore the 37 years of peer-reviewed research showing that valuations matter is that they possess an emotional desire to believe that the numbers on their portfolio statement are real and lasting. It is the Get Rich Quick component of the strategy that is the driver of the strategy, the primary source of its widespread appeal.
Shiller wasn’t there at the Motley Fool’s Retire Early board on the evening of August 27, 2002. So he didn’t see what I saw. My personal circumstances caused me to be exposed to a type of “research” to which Shiller has probably never been exposed, The thing that is “revolutionary” (Shiller’s word) about Shiller’s research is that he showed that it is investor emotion that drives stock prices, not economic realities. What better way to test whether that premise is valid than to talk about Shiller’s research at a discussion board at which people are hoping to begin early retirements because of the numbers they see on their portfolio statements? If you get an insanely emotional reaction, that shows that Shiller is right. If the aspiring early retirees respond with a calm confidence that their strategy is rooted in research, that would support the Buy-and-Hold claims.
What happened at the Retire Early board should have been written up at every investment discussion board and blog on the internet. The violent reaction of the Buy-and-Holders to my showing that Greaney’s study got the safe withdrawal rate numbers wrong is EVIDENCE as to whether it is Shiller or Bogle who is right about how stock investing works. That evidence should have been considered at every site at which stock investors congregate. It was not. 90 percent of today’s investors are Buy-and-Holders and they become embarrassed for people to learn about the death threats and the career threats and all the other garbage that their fellow Buy-and-Holders have dumped on us all in their effort to keep us all from learning how stock investing really works.
So Shiller is probably not aware of a lot of things that have influenced my thinking. I am certain that he has seen his own share of abusiveness. I believe that he could probably write a book on what he has seen. But I doubt that he has seen Buy-and-Hold abusiveness as up front and in-person and for as long a time as I have seen it. He doesn’t interact with you Goons on a daily basis, as I do! I have seen evidence that Shiller has never seen. And that evidence has influenced my thinking on how all this stuff works.
Could I be wrong? Sure. If Bogle could be wrong, I could be wrong. And I certainly believe that Bogle is wrong about some important things. So I have to acknowledge that it is possible that I am wrong about some important things. That’s the fate of us poor humans. We can believe something with all of our hearts and minds and still end up being wrong about that something. It’s a humbling reality.
I think that’s why we have laws protecting us from the sorts of tactics that you Goons employ to keep us all from learning things we very much need to learn. Since any of us can be wrong about anything, we permit honest discussion on all subjects other than stock investing. That way, we learn about those subjects over time as different people coming at things from different perspectives offer their sincere thoughts and we come to discover our mistakes and fix them. Shiller has not learned all that he would have over the past 16 years because that learning experience got cut off on the day when I pointed out the error in Greaney’s study and he went into freak-out mode and lots of good and smart people failed to work up the courage to stand up to him and demand that he take a chill pill. Nor has Bogle learned all that he should have learned. Not have I. Not have you Goons. The Ban on Honest Posting has hurt each and every one of us in very, very serious ways.
I hope we don’t see anything as severe as the Great Financial Crisis. I hope that Shiller is right. I am not personally convinced. I think it is entirely possible that we will see something WORSE than the Great Financial Crisis (I presume that he is referring to the 2008 crash with these words). There was talk at the time that the 2008 crash might bring on the Second Great Depression. When stock prices headed back upward in not too long a time, the panic subsided. I am worried that it will be harder to address the panic the next time stock prices crash. But I certainly hope that Shiller and all others taking a more optimistic view turn out to be right and that I turn out to be wrong. My biggest fear is that we will all need to live through a Second Great Depression before we are able to open up every site on the internet to honest posting and reap all the benefits of the last 37 years of wonderful peer-reviewed research in this field.
As I have noted on many earlier occasions, it will be interesting to see how things play out.
And, as I have also noted on many earlier occasions, I naturally wish you all the best that this life has to offer a person, my dear Goon friend.
Non-Dogmatic Shillerite Rob
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