“Valuation-Informed Indexing Is Linked to Everything. Absolutely Everything. The Money That People Have in Their Retirement Accounts Is What They Have to Show for Decades of Work in Our Economic System. We Show Great Disrespect to Them If We Lie to Them About How Much Money They Have in That Account.”

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

PETA??? Really???

Maybe you can somehow link VII to 2-ply toilet paper.

You are obviously being sarcastic. But the point that you are making in your sarcastic tone is right on. Valuation-Informed Indexing is linked to everything.Absolutely everything.

The money that people have in their retirement accounts is what they have to show for decades of work in our economic system. People go to work each day knowing that there will come a time when they will not be able to do it anymore and so they put money aside into a retirement account to provide for that day. We show great disrespect to them if we lie to them about how much money they have in that account. Their futures depend on it. They cannot plan their futures effectively unless we talk straight with them.

The Buy-and-Holders have a theory as to how much money people have in their retirement accounts. The strategy was developed in the days before Shiller published his “revolutionary” (his word) peer-reviewed research. The popular idea at the time was that the market is efficient. If that were so, it would mean that the stock price is the product of millions of rational assessments of the value of the market. We would all be able to trust the numbers on our portfolio statements as reflecting something real and lasting. We would all be able to plan our futures effectively making use of the investment advice available today at hundreds of different discussion boards and blogs.

But what if Shiller’s research if legitimate research? What is Shiller merited that Nobel prize of his? What if the Yale Economics professor is on to something?

Shiller tells a very different story about the real value of portfolio statements. He says that the stock price is set by humans, who are emotional creatures. So, when prices are as insanely high as they are today, close to half of the amount purporting to be in a stock portfolio is really the product of irrational exuberance, nothing more. People who are misled into believing that those numbers reflect a real and lasting value are going to be hurt in very serious ways in days to come.

I believe that Shiller is on to something. And I care about the people who read my stuff. So I feel a need to post honestly re safe withdrawal rates and re lots of other critically important investment-related topics. The Buy-and-Holders don’t want to learn how to pronounce the words “I” and “Was’ and “Wrong.” So they don’t like the idea of permitting me or anyone else to post honestly re the last 38 years of peer-reviewed research at even a single board or blog. Yucko, you know? I call “foul!” But there’s not too much that I can do about for so long as prices remain at these insanely high levels. I think it would be fair to say that much at this point in the proceedings.

I love my country. That means that I believe in the goodness of my country. People support PETA out of the goodness inside them. So, yes, PETA supporters might well be drawn in time to support my cause of opening every discussion board and blog on the internet to honest posting re safe withdrawal rates and lots of other critically important investment-related topics. I certainly plan to give it a try, in any event. I can do no more and I can do no less.

It will be interesting to see how it all plays out.

I wish you the best of luck with it. I hope that that helps at least a tiny bit.

My best wishes to you, dear Goon friend.

2-Ply Rob