Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“So you say, Anonymous.
But I am not convinced.”
That’s the issue. Other people have to see value in what you say or do. Otherwise, it is a waste of time. You don’t have that support, but delusionally think you do.
I don’t think that I suffer from a delusion. I think that I suffer from holding a minority view on an issue that is a highly sensitive one for the people holding the other point of view. Shiller and Fama were both awarded Nobel prizes for their work. It’s not possible that both are right — they say opposite things about what causes stock price changes. I think that we should all be engaging in a national debate over those differences until we have resolved once and for all who is right and who is wrong. But it is a very scary debate for Buy-and-Holders to engage in. They feel that they have their life savings riding on their belief in Buy-and-Hold and they cannot bear to engage in sustained questioning of beliefs that are so core to their existence.
Lots of smart people see great value in what I say. There are over 200 statements that I run on a slider at the top of every page of this site that show that to be so. But those people don’t represent the majority, And most of those people don’t say all that they believe; they hold back so that the brutal abusiveness that has been directed at me will not be directed at them.
If you think about what a CAPE level of 28 means, you can understand why that is so. A CAPE level of 28 means that our entire society is today suffering from delusions about the value of their stock portfolios. The title of Shiller’s book is “Irrational Exuberance.” A CAPE level of 28 suggests not some small level of irrationality, it suggests that investors today are suffering from so much irrationality that they are delusional, to use your word. So it is hard at this moment in time for us as a society to have the discussion we need to have to advance in our understanding of how stock investing works.
Will the level of abusiveness and irrationality subside as the CAPE value falls? I believe it will. But we of course will just have to wait and see. Humans are capable of becoming delusional about stock prices. The fact that we are able to reach a CAPE level of 28 shows that beyond any reasonable doubt. But we are also capable of making use of human reason to come over time to a better understanding of how stock investing works. The fact that Shiller’s book was published by a major publisher and became a best-seller shows that. The fact that Shiller was awarded a Nobel prize shows that. The fact that the Bennett/Pfau research paper was published in a peer-reviewed journal shows that. The fact that I have over 200 statements of support that I was able to put in that slider at the top of every page of this site shows that.
So, yes, most of us are suffering from delusions about the value of our stock portfolios today. Today’s CAPE value shows that. But we are capable as a people of overcoming those delusions and adopting a more reasoned understanding of how stock investing works than the one we adopted in the days before Shiller published his Nobel-prize-winning research. Lots of things show that too. I don’t think that helping us as a society move from a delusional understanding of how stock investing works to a more reasoned one is a “waste of time.”
But we will just have to wait to see how it all plays out to know for absolutely sure.
My best wishes.
Non-Delusional Minority Opinion Holder Rob
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