Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:
In short, your predictions have been wrong and your marketing timing strategy (scheme) did not work. Shiller warned you not to use CAPE for timing the market, but you didn’t listen.
I have definitely gotten some predictions wrong (as has Shiller). That’s a fact.
I don’t agree that that means that market timing does not work or is not a good idea. I think that market timing is absolutely essential. We are going to have to wait to see if prices drop over the next few years. If they do, then I will be ahead of where I would have been had I not engaged in market timing. I’m not there today. But it’s what happens in the long run that matters most, in my assessment.
I am not sure precisely what Shiller believes about market timing. He offered a clear endorsement of it in 1996. And in 2009 he endorsed it again. All of his work makes the case for market timing. If valuations affect long-term returns, then stock investing risk is not stable but variable and the investor who wants to maintain the same risk profile over time MUST engage in market timing.
However, there was one offhand statement that Shiller made in an interview a few years back in which he suggested that he no longer believes in market timing. I would very much like to hear him expand on that statement. People should be asking him to write a full article explaining his position. I would find it hard to accept an argument that market timing is not required. But I would certainly read anything that Shiller said on the subject with great care.
This is an issue that affects each and every one of us. We should all be encouraging more debate on the matter. The Buy-and-Holders treat market timing as a bad thing. I think it would be fair to say that “time” is a four-letter word in the Buy-and-Hold lexicon. But, if Shiller is right that valuations affect long-term returns, timing is the key to long-term success. That’s a pretty big difference. I think that we all should be doing all that we can to get to the bottom of this one.
I obviously do not recommend short-term timing and neither does Shiller. The issue is — Does the research showing that short-term timing does not work give us any reason to believe that timing in general is not required? I believe that the idea that timing in general is not required was just a mistake. Timing is paying attention to price when buying stocks. To fail to practice market timing is to fail to engage in price discipline when buying stocks. Huh? How could that possibly be a good idea?
Price discipline is what makes markets work. If it is true that valuations affect long-term returns, then the market is going to collapse whenever large numbers of investors come to believe that a Buy-and-Hold strategy might work. A market in which large numbers of investors fail to practice price discipline is a dysfunctional market.
Those are my sincere thoughts, in any event, Sammy. I naturally wish you all the best that this life has to offer a person.
Rob
Have you found a job yet? Aren’t you worried? If the collapse you speak of is coming, those open jobs all go away, right?
I haven’t started looking. I have made clear in my earlier comments re this matter that I do not intend to start looking until I finish the book, which I expect will be at the turn of the year.
I am more worried about the economic collapse than I am about not finding a job. It is certainly true that it will be harder to find a job if there is an economic collapse. So I suppose that I am worried about that a little bit. But I am far more worried about the many ways in which an economic collapse will affect the lives of all of us for many years to come.
I wish that there was more that I could do to help us all avoid the collapse. I have been working that one hard for 17 years now. Shiller’s biggest breakthrough is that he showed us how to avoid economic collapses. That’s a huge advance. And I have written about it and tried to get the word out about it. You Goons have obviously done a lot to keep the word from getting out. I would rather be doing what I am doing than what you are doing. By a factor of 500.
The collapse is going to be horrible. I cannot bear to think about it. But I strongly believe that the positive here is 20 times more positive than the negative here is negative. I believe that the collapse will cause a greater number of people to question Buy-and-Hold and to stand up to you Goons. Once we open the entire internet up to honest posting re the past 38 years of peer-reviewed research, we won’t have to worry about these economic collapses anymore. So we will all be living better lives than we ever imagined possible in the Buy-and-Hold Era.
Do I like it that we will need to endure a great deal of pain to get to a better place? I do not. I hate it, hate it, hate it, hate it, hate it. But I am not running things. My job is to play the cards that I am dealt to the best of my ability. I happened to be born into a time when the peer-reviewed research showing us all how stock investing works in the real world would be published and when a group of internet Goons would work very, very, very hard to suppress discussion of it long enough to bring on an economic collapse. Whachagonna do?
I am happy that we have Shiller’s Nobel-prize-winning research available to us today. I am proud to have been leading the effort to get word of it out to every investor on the planet for 17 years now. I am sad that I have run into so much resistance. But I am just going to continue giving it my best shot.
There are always things to be worried about. And there are always things to be excited about. I think that we are a good people and I think that we will turn this into something very good in the final chapter of the saga.
We’ll see.
Worried and Excited Rob
A job search takes time. We are almost at the end of this year, so I assumed your book was in the final stages. Wouldn’t you want to start the search now so that you can begin after the book is complete? You are confirming your thoughts of a crash, so one would think that you would be highly motivated to begin the job search.
You are right that a job search takes time. There is no way of knowing how long it will take.
However, I don’t want to begin the job search until I am ready to accept employment. It is possible that I could find something quickly. The book is coming along but it is not far enough along that I would be willing to accept full-time employment today. I am going to continue with the plan of beginning to look when the book is finished, probably at the close of the year.
If the book is not finished at the turn of the year, it is possible that I would delay the search by a few weeks. But I doubt that I would need to delay it by more than that.
Wish me luck!
Highly Motivated (to Finish My Book on Valuation-Informed Indexing!) Rob
It sounds more like you don’t want to go back to work.
I want to have that book in hand. That’s my contribution to the world. That’s my life’s work product. That’s the thing that will finance my retirement. There’s huge leverage in it. Once we get a higher percentage of the population speaking up in favor of us permitting honest posting, Valuation-Informed Indexing will just grow and grow and grow. We will have thousands of people doing productive work in this field. I will not be directly responsible for their work product. But I will be indirectly responsible for it by having been the one that got the ball rolling. That will be a highly gratifying experience.
And once the entire internet is opened to honest posting, I will of course be returning to the work that I have done for the past 17 years, building and promoting the Valuation-Informed Indexing concept. That’s the work that I was put on earth to do. That’s the work that is the best use of my talents. That’s the work that helps the most people. So that’s obviously my focus.
I don’t have any objection to doing a different kind of work for a time as part of a process that leads in the end to the achievement of the ultimate goal. I am sure that there are things that I will like about the work that I take on for a time. I will meet interesting people. I will put my efforts into solving a new set of puzzles. That sort of thing. All that is fine. It’s all part of the wonderful game.
But the work that I take on to pay the bills is never going to be my primary focus. The work that I do today will be my primary focus until the day that I die. Once the entire internet is opened to honest posting, I could see moving back to the saving side of the story. I would also like to write a book on career growth. I could see moving in that direction. But I would be doing work in the personal finance realm. That’s the direction that I chose when I left Ernst & Young and I think it would be fair to say that that proved to be a very good path for me to follow. Nothing that I do to pay the bills is going to change that.
Say that you are majoring in engineering and the college tells you that you need to take a course in literature to get your degree. You do it and you work your hardest to get a good grade because you love your major. But you might not enjoy the time spent on literature as much as do the time spent on your engineering courses. It’s a box that you have to check off to achieve the ultimate goal. I won’t be jumping up and down about whatever work I take on. But I certainly intend to give it my best efforts. And I expect that I will have some good times and grow in some ways as a person.
I hope that helps a tiny bit.
Enthusiastic Worker Rob
“ That’s the thing that will finance my retirement. ”
Why wouldn’t your retirement be carried with your investment returns with your VII portfolio versus needing a book to pay for retirement?
The normal way to finance a retirement is to earn an income over many years with work you do and then add on top of that investment returns. That’s what I did. Over the past 17 years I have earned huge amounts of money by making “revolutionary” (Shiller’s word) contributions to this field. I didn’t collect those earnings because of the criminal acts of you Goons. I will collect big time in the days following the next price crash, when you Goons will be placed in prison cells, where you belong. Then I will earn big investment returns (because stocks will be priced well at that time) on those earnings for many years to follow.
I did things the normal way. The criminal behavior of you Goons wasn’t normal. But I of course have objected to that from the beginning. The criminal behavior of you Goons, and our society’s tolerance of it, has been tragic. It has hurt you Goons. It has hurt me. It has hurt everyone who works in this field and who would like to be spending their human energies doing honest and productive work. And it has hurt millions of investors. All bad stuff. I believe that we will see a change in the days following the next price crash. But we will just have to wait a bit to see how things play out to know for sure.
Fair enough?
Retirement Planning Rob
How have goons kept you from being successful with your VII implementation? Don’t you control your own investments?
I’ve answered this question hundreds of times. The investments have done fine. The problem has been the criminal acts blocking me from bringing in an income. The only question on the table is whether those criminal acts will be prosecuted in the days following the next price crash. I believe that they will be. Madoff was prosecuted after his fund collapsed. Why would it be different with those who have engaged in criminal acts to suppress discussion of the 38 years of peer-reviewed research showing that there is precisely zero chance than an investor who refuses to engage in market timing (price discipline!) could achieve good long-term results?
I don’t believe that it is going to turn out different this time. But we’ll see, you know? I sure don’t intend to walk away from the amazing opportunity that has fallen into my lap both to profit personally and to help millions of people learn about a far better and safer way to invest in stocks.
You Goons are the problem. Everything else is wonderful. There are good reasons why we elected as a people to make extortion a felony and to make financial fraud a felony and to make threats of physical violence felonies. I love my country. I think our laws are good laws. Sue me.
Goon Critic Rob