Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Why do you post these if you don’t get a response?
Because I believe that we all should be doing everything in our power to open every discussion board and blog on the internet to honest posting re the last 39 years of peer-reviewed research in this field. Our retirement accounts matter. We all should be doing everything we can to protect them. Even if you are a Buy-and-Holder (most of us are), you should want to hear both sides of the story, just in case. We permit honest posting in every field of endeavor other than the investment advice field. I think we should do it in the investment advice field.
It would be hypocritical if I asked others to take action but I never took action myself, would it not?
The fact that I rarely get responses shows how important it is to send out these e-mails. If I got responses, I wouldn’t need to send out e-mails.If I was getting responses, there would be no problem. we could just follow the normal procedure of permitting all to post their honest views. The reason why I do not get responses is that we all feel so had about what we have done to ourselves, we don’t want to face it. Is it going to be any easier to face after the refusal to look at the last 39 years of peer-reviewed research extends another week or another month or another year? It sure does not seem so to me, Anonymous.
The way in which things are handled in the investment advice field runs counter to our most basic cultural norms. We all need to keep chipping away at that wall of fear of Shiller’s research findings. We are a good people. We will get to where we need to go sooner or later. We just need to keep at it. Those of us in the 10 percent who believe that Shiller’s Nobel-prize-winning research is legitimate research need to keep making the case, NOT to give in to the brutal abusiveness of you Goons. Each time one of us gives in, it makes you Goons stronger. We want the American people to win this one, not to lose it.
I keep sending the e-mails because I rarely get responses. If I got lots of responses, we would know that the problem is gone and we could all just post our honest views at every site with no fear of what the Buy-and-Holders would do to us in response. That’s the normal procedure. That’s what we would all be trying to achieve, if we all were thinking clearly.
I hope that that helps at least a tiny bit.
E-Mail Sending Rob
“Because I believe that we all should be doing everything in our power to open every discussion board and blog on the internet to honest posting re the last 39 years of peer-reviewed research in this field.”
Can you give us a summary of all peer-reviewed research over the last 39 years?
Shiller showed in 1981 that the market is not efficient. That’s another way of saying that investors are not rational, that investor emotions affect prices, that risk is not constant but variable (the more emotional investors get, the more risky it is to invest in stocks).
That changed everything. If valuations affect returns, then every single strategic question needs to be reexamined and the conclusions that were reached during the days when it was believed that the market is efficient need to be reconsidered. We live in a post-Buy-and-Hold Era today. Not in a practical sense. In the practical realm, Buy-and-Hold remains dominant. But intellectually, it is over. It is not possible both to believe that Shiller’s Nobel-prize-winning research is legitimate and that Buy-and-Hold is legitimate. The two things are rooted in opposite premises (one that investor emotions matter and one that investors are 100 percent rational).
Most research that has been done over the past 39 years doesn’t comment on this core question. But we need to know the answer to the core question to make use of that research. The Trinity study didn’t directly consider the question of whether the market is efficient or not. But it got all of the numbers wildly wrong because it failed to take valuations into consideration when calculating the safe withdrawal rate. The purpose of peer review is to stop that sort of thing from happening. The peer-review committee that looked at the Trinity study should have rejected it because there was peer-reviewed research on the books at that time showing that valuations must be considered. But obviously that did not happen.
Every study produced either reflects the old model for understanding how stock investing works or the new model for understanding how stock investing works. Every study that looks at the question of whether valuations matter has found that they do. Even Fama’s research from the 1960s on which Buy-and-Hold is based did not show otherwise. Fama did NOT find that market timing does not work or is not required. People say that he did but that is a false claim. Fama showed that short-term timing does not work. But that’s the only form of timing that he looked at. Fama did not look at long-term timing. It is obviously not possible to show that timing in general does not work by looking at only one form of timing.
100 percent of the peer-reviewed research supports Valuation-Informed Indexing and 0 percent of the peer-reviewed research supports Buy-and-Hold. People find that hard to believe. And of course it is indeed an amazing reality. But that is the reality. Researchers are not disinterested pursuers of truth. They are humans. Which means that they can be compromised. People who work in this field want to keep their high-paying jobs. The Buy-and-Holders have a long history of destroying the careers of those who speak honestly re the how-to implications of Shiller’s work because those how-to implications make the Buy-and-Holders look bad.
The entire field is corrupt today. That’s the blunt way of putting it. It’s a shocking reality, one that I learned when I pointed out the error in the retirement study posted at John Greaney’s web site and then saw the reaction to my post. Not one person (including Greaney himself!) has been able to identify a valuations adjustment in the Greaney study. Yet the study remains uncorrected to this day, 18 years later. If that sad reality doesn’t show that the entire field is corrupt, I don’t know what would.
All of the research that looks at the question shows the same thing. Long-term market timing always, always, always works and is always 100 percent required. Investors who fail to engage in long-term market timing are failing to exercise price discipline when they buy stocks. And of course the market always eventually collapses once large numbers of investors come to believe that it is not necessary to practice price discipline when buying stocks. And when the stock market collapses, trillions of dollars of consumer buying power disappear into thin air and we always suffer an economic crisis.
So that last 39 years of peer-reviewed research matters. We should all be discussing it honestly and civilly at every discussion board and blog on the internet.
Civil Posting Rob
What you have described is not 39 years of peer review research. It is the opinion of one guy, derived from another guy’s work product. Period.
If that guy states some opinion other than the one that he sincerely holds, he is posting dishonestly.
Thanks, but no thanks.
Opinionated Rob
What is dishonest is to call your opinion 39 years of peer reviewed research.
Is it John Greaney’s opinion that a 4 percent withdrawal is always “100 percent safe”?
Rob
I missed the point where John Greaney made the claim that his work constituted 39 years of peer reviewed research.
He says that his safe withdrawal rate claims is supported by research. He doesn’t say that it is just his personal opinion. If he said that it was his personal opinion, I would have no objection. Anyone can offer any personal opinion they please, so long as they tell people that that is what it is. Greaney does not do that, not with his safe withdrawal rate claim. He says that that claim is a research-based claim.
Rob
He is correct that it is supported by research as it is based on historical data, but that is not the point. YOU have made the claim of what constitutes 39 years of peer reviewed research. All you have presented is YOUR opinion of work done by someone else. The two obvious issues is that your statements are YOUR opinion and it clearly does not contain all the research of the last 39 years.
It’s my opinion that the earth is not the center of the universe. There is scientific research supporting that opinion. The fact that it is my opinion that that research is legitimate does not negate the fact that that research exists.
It is my opinion that valuations affect long-term returns. There is 39 years of peer-reviewed research supporting that opinion. The fact that it is my opinion that that research is legitimate does not negate the fact that that research exists.
I am going to continue to post honestly. I do not believe that Greaney’s study contains a valuation adjustment. So I am not going to say that I believe that it does.
Rob
Opinion is not research. Nor does it reflect the entire body of research. Thus, to make a statement as to what is 39 years of peer reviewed research is entirely incorrect.
The state of the world’s knowledge of how stock investing works changed in 1981. Prior to that, there were many people who believed that the market is efficient. From 1981 forward, those who follow the peer-reviewed research know that it is not. If Shiller had published his Nobel-prize-winning research in 2019, you could say: “Oh, its only been one year, someone may shoot down that research soon.” But the reality is that it’s been 39 years since the research was published showing that the market is not efficient and that timing is required and no one has shot down that amazing finding in all that time. So people need to know that.
I will continue posting honestly.
Goon Foe Rob
“But the reality is that it’s been 39 years since the research was published showing that the market is efficient and that timing is required and no one has shot down that amazing finding in all that time.”
Actually, timing has been shot down. We have never seen even one successful portfolio outcome with market timing. Feel free to post outcomes data if you have it.
There has never been one iota of evidence put forward that long-term timing might ever not work. Wade Pfau spent months going through the literature re that one. He was amazed that other researchers were not telling people what he found. He was so astounded by his finding that he told me that he could not sleep for excitement. If there were any evidence that long-term timing might not work, someone would have come forward with it a long, long time ago.
We will have outcomes data coming out of our ears once you Goons have been placed in prison cells, where you belong. There are millions of investors who would like to obtain better returns while taking on less risk. Once we open every site on the internet to honest posting, there won’t be any Buy-and-Hold anymore. There will be outcomes data showing that research-based strategies beat Get Rich Quick strategies everywhere you look. Are you joking?
My best wishes.
Outcome-Based Rob
“There has never been one iota of evidence put forward that long-term timing might ever not work.”
You have that backwards. There has never been one single case of a successful investing outcome from someone that practiced market timing.
The Buy-and-Holders have engaged in criminal acts to block discussion of the last 39 years of peer-reviewed research. The Valuation-Informed Indexers have never engaged in any criminal acts. Get, I wonder which strategy is supported by the peer-reviewed research? Some of this investing stuff is so darn hard to figure out!
Rob