Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Yes, I still expect those things.
Shiller revolutionized our understanding of how stock investing works with the Nobel-prize-winning research that he published in 1981. In every other market that has ever existed, price discipline is 100 percent required. If anyone questioned whether price discipline is required in any other market, everyone would laugh at him. The stock market is the one big exception. In the stock market, investors exercise price discipline by engaging in market timing (changing their stock allocation in response to changes in valuations). But the idea that market timing might not work became popular because before Shiller there was a belief among academics that the market is “efficient.” If that were so, Buy-and-Hold (failing to engage in market timing) would be the ideal strategy. Shiller blew that one of of the water in 1981. Since then, it has been a cover-up. Our Wall Street Con Men friends don’t want to admit that they made a mistake. So they are in the process of destroying millions of lives with the relentless promotion of the Buy-and-Hold strategy 39 years after it was discredited by the peer-reviewed research.
Do I think that is going to change? Absolutely. It has to. Our economy cannot continue to function if we do not find some means to get honest and accurate investment advice out to millions of investors. This is not optional, it is 100 percent imperative. I believe that the only reason why it did not happen long ago is that we all have a Get Rich Quick urge residing within us and so we find a lot of appeal in the Buy-and-Hold lies. That appeal is going to diminish dramatically when prices fall to a CAPE of 8, which is nearly 70 percent down from where we were before the Coronavirus came on the scene. People are going to be angry at seeing their retirement hopes destroyed. They will all be a lot more willing to stand up to you Goons at that point and we all will be able to make enormous strides in our understanding of how stock investing works once we have placed you in prison cells, where you belong.
Once I learned that Buy-and-Hold is garbage (this happened for me on the evening of August 27, 2002, when John Greaney advanced his first death threat), I refused to write another word supporting that strategy. All of the work that I have done since is rooted in the Valuation-Informed Indexing strategy, which is identical to Buy-and-Hold in all respects except that it corrects the one error that the Buy-and-Holders made — it says that market timing always works and is always 100 percent required.
I have an encyclopedia’s worth of material on Valuation-Informed Indexing, which is the first true research-based strategy. Millions of middle-class people need access to this material. Nobody else has ever supplied it because everyone else is afraid of the criminal acts that you Goons employ to keep people in this field from offering research-based (that is, non-Buy-and-Hold) investment advice. I have a monopoly on the good stuff today. Not because I want to have a monopoly. Because everyone else is intimidated by the threats of physical violence and of career destruction that have keep Buy-and-Hold handing on for years after it was discredited by the peer-reviewed research.
My site goes 500 miles deep on how stock investing works. It is an amazing asset.
But it only goes about three inches wide because the penalty is so great for any other site that wants to link to my material. So the insights set forth here have not reached many people.
That is going to have to change if our economic system is going to survive. So I think it is going to change. Lots of people love this country. As prices continue to drop, people are going to work up the courage to stand up to you Goons and things will begin getting better and better and better for all of us. The site will no longer be only three inches wide — it will reach all over the internet. But it will still go 500 miles deep. Everyone in the country will enjoy an amazing leaning experience because of the thousands of powerful investment insights that I have developed over the past 18 years by working with the thousands of our fellow community members who have a genuine interest in learning how stock investing works and in passing along what they learn to others.
After your prison sentence is announced, the long national nightmare is over, Anonymous. It will be all downhill sledding from that point forward.
My sincere take.
Downhill Sledder (Not Quite Yet, But Soon!) Rob
You still think that buying stock is the same as buying a car or a banana, right?
In the sense that you need to take price into consideration when making a purchase, 100 percent. That’s the entire deal. Buy-and-Holders say that you don’t need to take price into consideration, that it is okay to stick with the same stock allocation at all times (that is, to fail to engage in market timing). Valuation-Informed Indexers say that that is crazy, that price discipline is what makes markets work, that there is zero chance that the stock market can function properly once large numbers of investors comes to believe that it is not necessary to engage in market timing.
All of the craziness is rooted in Modern Portfolio Theory. Just do a Google search for “Is Modern Portfolio Theory Outdated?” and the following words will appear on your computer screen: “For one, MPT assumes that investors are always rational.” Investors are humans. Do you know any humans who are rational? There have been hundreds of thousands of novels written showing that humans are not rational. Is this really an idea that needs to be debated at this point? All of the evidence is on one side. There is no evidence supporting the core idea of Modern Portfolio Theory.
The only reason why we haven’t dumped the theory in the year 2020 is that Fama published his research (which showed that short-term timing doesn’t work) before Shiller published his research (showing that long-term timing always works and is always required) and an entire industry was built around the project of telling investors that timing doesn’t work and isn’t required (Buy-and-Hold). That industry is populated with lots of wealthy and powerful and well-connected people and those people are willing to engage in a lot of unscrupulous behavior to keep millions of investors from learning what the last 39 years of peer-reviewed research teaches us all about how stock investing works. So here we are.
But the idea that U.S. laws will not apply in this field just doesn’t seem even remotely possible to me. For a time, yes. For a time, that has been so. But a 70 percent price crash is going to cause a lot of human misery. I think that when we all see that human misery taking place before our eyes a larger number of us are going to work up the courage to speak up against you Goons. And then we are off to the races. From that day forward, we will all be able to live far richer and fuller lives. It’s not even possible to imagine any reason why we would ever go back to believing what we believed in the days before Shiller published his Nobel-prize-winning research.
That’s my sincere take, in any event. Market timing is always 100 percent required. It always works. Price discipline is every bit as much required in the stock market as it is in the car market or in the banana market. Or so the last 39 years of peer-reviewed research in this field teaches us. Buy-and-Hold is a Get Rich Quick scheme. A dangerous Get Rich Quick scheme. That’s why we see criminal behavior used to “defend” it. It is a huge money-maker. But it was discredited by the peer-reviewed research a long, long time ago.
My best wishes to you.
Stock Market Reformer Rob