Set forth below is the text of an e-mail that I sent on September 1, 2019, to Ken Bensinger, author of an article on The Cost of Next-Day Delivery at Amazon, at BuzzFeedNews.com:
Ken:
My name is Rob Bennett.
Your article on Amazon’s next day delivery service is terrific. Thanks for doing the work that you do.
I have done some investigative journalism of my own that I am pretty darn proud of. I would be grateful if you would invest the time to read the first few paragraphs of the attached article and see if it pulls you in.
[Link supplied here.]
I wish you the best of luck in all your future life endeavors.
Rob
“I would be grateful if you would invest the time to read the first few paragraphs of the attached article and see if it pulls you in.”
If I had to hazard a guess I would say he didn’t get pulled in.
Any estimate on when the new book gets published?
Not that any of your prior estimates have even got the decade correct.
I want to have the book complete before I accept corporate employment. If there were still some proofing needed at that time, I would be okay with that. I just don’t want to have anything remain that requires a good bit of mental energy because I worry that it would be hard to find time for that while working a full-time job. I can do proofing or a little bit of fine-tuning on weekends.
My goal is to finish by the end of this year. I think I will make it. There are some weeks in which things go very smoothly and other weeks in which I run into obstacles. So I cannot say with certainty. But overall I would say that things are on schedule.
I don’t plan to do anything with the book until we see another price crash. I don’t think it is possible to promote it in today’s environment. I believe that there will be much more interest after the crash. I want it done so that it is ready to go when the crash comes. And of course if someone whom I contact expresses great interest in the Valuation-Informed Indexing concept, I will be able to turn over the book to them to tell them the 17-year story in one document. But in general I do not expect anything meaningful to happen until we see another price crash. I see that as the game-changer.
Rob
” But in general I do not expect anything meaningful to happen until we see another price crash. I see that as the game-changer.”
http://www.nbcnews.com/id/37740147/ns/business-stocks_and_economy/t/historic-bear-markets/
From March 2000 to October 2002
S&P500 Loss: 49.1 percent
October 2007 to March 2009
S&P 500 loss: 56.4 percent
If a 49% drop and a 56% drop didn’t get you any traction what makes you think the next price crash will be different?
Those are both significant price drops. But they were both short-lived. Investor psychology does not change dramatically as the result of a short-lived price crash. It is the combination of experiencing a big loss and seeing that loss remain in place for a long time that causes investors to experience an irrational hatred of stocks as intense as the irrational love of stocks that caused the high prices.
Please note that neither of those price drops took the CAPE level down to anything close to the “8” that we saw at the end of the three earlier bull/bear cycles. A CAPE level of 8 cannot be reached until investors experience the irrational depression that always follows a period of irrational exuberance. We did not see that in either of those two cases. I believe that we would have seen it had the price drop that we saw in late 2008 and early 2009 remained in place for another year or two. But that’s not how things played out. The bull psychology still has not been broken.
We DID see changes in early 2009. There were several posters at the Bogleheads Forum who called Taylor Larimore a liar in those days (and none of them were me!). It was only a few people. But something like that would have been unimaginable in the days before the price crash. Had prices dropped even lower and then remained at those lower levels, the number of people calling Buy-and-Hold advocates liars would have increased dramatically. In that new psychological environment, there would have been an enhanced interest in learning what the last 38 years of peer-reviewed research teaches us all about how stock investing works in the real world.
Once the ball starts rolling, I believe that it will pick up momentum rapidly. And then we will all be free of the Buy-and-Hold mindset (in which market timing is not required for all investors seeking to keep their risk profile roughly constant over time) for all time.
Or so Rob Bennett sincerely believes, in any event.
Rob
So, what you are saying is that buy and holders did well after those drops, but VII investors missed out yet again.
Obviously I am not saying anything even remotely like that.
I am saying that stock price increases of 6.5 percent real per year are rooted in economic realities and that investors may count on them to finance their retirements but that price increases of more than that are rooted in irrational exuberance and investors should NOT count on those amounts to finance their retirements. I am also saying that everyone who works in this field should be telling investors that every day.
Investors have not been told that. Investors have been terribly misled. This is a national tragedy.
The biggest reason why The Great Buy-and-Hold Con has continued for so long is that all investors possess a Get Rich Quick urge and Buy-and-Hold appeals to it. The vast majority of investors like thinking that the amounts on their portfolio statements are real and that they do not need to divide those amounts by two at times when stocks are priced at two times their fair value. Most investors are fine with being misled. That doesn’t make it okay. But it does make it a viable marketing strategy to mislead investors about the true and lasting value of their portfolios.
When nominal portfolio values are lower than their real values, the psychology changes. When stocks are priced at one-half of their true value, I will be telling investors that they need to multiply the nominal value by two rather than divide it by two. That’s a much more appealing message. I believe that enough investors will listen to that message for us to open every site on the internet to honest posting re the last 38 years of peer-reviewed research. Then we are home free.
There’s no reason for anyone to go back to Buy-and-Hold once they have discovered Valuation-Informed Indexing. One is research-based, one is not. One is real, one is not. One works, one does not, We are all going to be Valuation-Informed Indexers in the future. But for now, these high prices are an obstacle to progress. They appeal to our Get Rich Quick impulse, which is our weakness.
No one ever “misses out” by knowing what the peer-reviewed research says, Anonymous. That’s like saying that people who didn’t invest in the Madoff fund “missed out” on a great opportunity to get rich quick. Huh? The peer-reviewed research is our friend. It is the marketing slogans of the Buy-and-Holders that hurt us and cause us to miss out on better investment strategies and the many benefits that flow from them. It is absurd to think that someone could miss out by giving up a Get Rich Quick strategy for a research-based strategy. Perhaps in the short-term, when irrationality can prevail, but never in the long-term, when rationality always reasserts itself.
My sincere take.
Rob
But you never got in, so you are not seeing 6.5 real returns.
The companies are generating enough productivity to support a 6.5 percent annual return. But I obviously do not get that return if I have to pay two dollars for each one dollar’s worth of stock that I obtain.
A new Suburu Forrester might cost you $25,000. It’s a good car. You might be very happy paying $25,000 for it. You might like the car so much that you would even be happy paying $30,000 for it. But would you be happy paying $50,000? $75,000? $100,000. There’s some price level at which a car is not worth buying, no matter how great the car.
So it is with stocks. I think it makes sense for the typical investor to go with a 30 percent stock allocation today. Even at today’s price level, the value proposition for stocks is strong enough to support that asset allocation. But some Buy-and-Holder advocate a 60 percent stock allocation even at today’s prices. Some support higher allocations than that. Greaney used to support a much higher stock allocation even for retirees. What was it that he said was “ideal,” 89 percent or something like that? I think that’s flat-out crazy and dangerous as all get-out.
If stocks were priced today where they were priced in 1982, I would advocate a 90 percent stock allocation. But I can’t get behind that allocation at today’s stock prices.
I would love to see prices fall so that I could justify buying stocks. That would be wonderful. But of course for that to happen, we would need to open every site to honest posting so that investors could see how dangerous it is to go with a high stock allocation at today’s prices. When those people sold stocks, that would bring prices down and benefit everyone. We should all want every investor alive to have access to the information they need to invest rationally. It’s a win/win/win/win/win.
The Ban on Honest Posting is a stone cold drag. My sincere take.
Value Conscious Rob
Yet buy and holders have been getting that return and more. It is way beyond the point of you ever catching up.
If you thought that you could defend Buy-and-Hold with research and logic and numbers, we never would have seen a single death threat or a single demand for a single unjustified board banning or a single act of defamation or a single threat to get a single academic researcher fired from a single job, Anonymous. I mean, please give me a freakin’ break.
It’s emotion. Nothing more and nothing less.
I’l go with the research-based stuff every time. Show me some peer-reviewed research indicating that it is not necessary for investors to practice market timing when buying stocks and I’ll be impressed. The empty, arrogant tough talk does nothing for me.
I hope I’m not missing out! Oh noes!
Get-Rich-Quick Skeptic Rob