“I Am Like That Fellow in the Movie ‘Yesterday’ Who Was the Only One on the Planet Who Remembered All the Beatles Songs. For 18 Years I Have Been Able to Write About Hundreds of Different Aspects of the Stock Investing Project From an Entirely Fresh Perspective and From One That Is Rooted in Peer-Reviewed Research That Won the Fellow Who Did It a Nobel Prize. That’s a Pretty Darn Amazing Opportunity That I Had Fall Into My Lap.”

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:

The primary cause of the crash? Really? You continue to take your old tired themes and then spin it with the topic of the day. You never cease to amaze me as to how delusional you really are. I would think by now you would have learned your lesson. Back in 2002, you laid out for all to see a retirement/financial plan based on your VII strategy based on your perceptions of investing using CAPE. The financial community warned you back then that you would be headed for disaster, but you wouldn’t listen. In 2005, you posted an update and it was clear you were off track. People warned you yet again, but you said that by following VII, you would exceed the market averages of 7% and easily meet your objectives. As the years went by, the warnings continued, but you ignored people. Over the past year, you have given short updates on your website saying that you depleted your assets and needed to find a job, yet you wanted to finish your book first. You were warned to get a job asap, but with book delays you decided to put that off. Here we are now where you have painted yourself into a corner from a financial perspective and with the Covid-19 impact, jobs are likely to be much harder to get.

Despite warning after warning, you always tell people to wait and “ see how it all plays out”. It has all played out, Rob. Your assets are depleted. You are over 60 years old. If there was a worst case scenario for you, this is it. It all happened like others predicted. The unfortunate part is that your family will suffer because of your choices.

I like your opening statement that “you continue to take your old, tired theme and then spin it with the topic of the day,” Sammy. I don’t agree that my theme is tired. I find it exciting. I believe that Valuation-Informed Indexing is the future of investment analysis and that Buy-and-Hold is the past. However, outside of that adjective, the rest of your comment is a decent description of the work that I have been doing for 18 years now. Shiller showed something very simple, that the market is not efficient, as the Buy-and-Holders believed, that valuations affect long-term returns. That finding affects every aspect of the stock investing project in a profound way. But, amazingly, few have explored the far-reaching implications of Shiller’s Nobel-prize-winning work. So I do that. As you say, I just apply that breakthrough finding — that valuations affect long-term returns — to every topic that comes up.

And, no, the Valuation-Informed Indexing concept has not caught on in a big way just yet. Buy-and-Hold remains dominant today. And that reality has hurt my ability to make money doing this work. But do you really think that that is going to remain the case for much longer? I sure do not. If Shiller’s Nobel-prize-winning research is legitimate research, it changes our understanding of every aspect of the stock investing project. Getting everything wrong obviously is going to hurt us in serious ways. Making the shift that would permit us to get everything right would be a boon for millions. You do not think that that shift is going to take place? I do. I am highly confident that it will.

If Shiller’s Nobel-prize-winning research is not legitimate, I have wasted 18 years of my life. I’ll give you that one. But if Shiller’s research is legitimate, then I am like that fellow in the movie “Yesterday” who was the only one on the planet who remembered all the Beatles songs. He could go to a party, pull out a guitar and say “This next one is a little something that I call ‘Hey. Jude'”and blow everyone away. That’s me in the personal finance realm. For 18 years I have been able to write about hundreds and hundreds and hundreds of different aspects of the stock investing project from an entirely fresh perspective and from one that is rooted in peer-reviewed research that won the fellow who did it a Nobel prize. That’s a pretty darn amazing opportunity that I had fall into my lap.

I think that everyone should be doing this work. Now, if the market is efficient, that would be foolish. I see that. But if valuations truly affect long-term returns, as Shiller showed is the case many years ago — Holy moly! That changes everything! If part of the stock price is comprised of irrational exuberance, then we put ourselves at risk of suffering a devastating price crash when we permit the CAPE value to go too high. It’s an amazing thing that we now know how to prevent the sorts of price crashes that we are living through today. I think it’s great. It’s like living in the time when horrible diseases were cured. At one time, you just had to live in fear. Then you discover how to cure those diseases and everyone on the planet gets to live a better life. That’s where we are in the stock investing realm today, in my sincere assessment.

My best and warmest wishes to you regardless of what investment strategy you elect to follow.

Rob