I’ve posted Entry #502 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Thing That We Call a Price Crash Is Really an Emotions Crash.
Juicy Excerpt: The Buy-and-Holders believe that the stock prices that applied prior to the onset of the coronavirus matter were justified. If that were so, then it would follow that the coronavirus was the entire cause of the crash. I believe that the stock prices that applied prior to the arrival of the coronavirus problem were nutso. The CAPE value at the time was 32, which is double the fair-price CAPE value of 16. So we were set for a price crash even before the coronavirus arrived on the scene. All that the coronavirus can do is to serve as the precipitating event setting a crash into motion and to cause the crash to be more devastating than it would have been had it only been the overpricing feeding it.
Will you have any emotions crash when you realize that you won’t get your fantasy of a $500 million windfall and that there won’t be any jury trials or goons going to your make believe prisons?
No.
I don’t need $500 million and I don’t need anyone to be in prison. So, if those things did not happen, that reality would not cause an emotional crash for me.
What I need is to post honestly. I didn’t feel totally good about myself in the days before I worked up the courage to post honestly re these matters. Now that I have done so, it would feel even worse to go back to not doing so. So, if I were ever to agree to hold back from posting honestly again, that would cause an emotional crash for me. That’s the one that I fear enough that I would never give even two seconds of consideration to going there.
The $500 million and the prison sentences are not in a direct sense a biggie for me. But they follow from the thing that is a biggie — me posting honestly re safe withdrawal rates and re scores of other critically important investment-related topics. For me to post honestly re these mattes, the internet needs to be opened to honest posting. If the internet is opened to honest posting, it follows logically that we are going to see prison sentences and $500 million payments. So I expect to see those things happen. But that’s different. That’s not the same thing as saying that I need to see those things happen or even that I want to see those things happen. I don’t like thinking about the prison sentences. If it takes prison sentences to get the internet opened to honest posting, I am certainly okay with prison sentences. But in other circumstances thinking of my old friends going to prison would make me very sad.
The way that this should have worked is that there should have been a national debate launched on the implications of Shiller’s research immediately after he published it in 1981. I of course wish that it had happened that way. But of course that has not been the reality. Now that there has been a 39-year cover-up, there are a lot of obstacles to getting things to a good place. It’s not just you Goons. There are thousands of smart and good people who are going to feel embarrassed to have millions of investors learn about the 39-year cover-up. If there were a way to teach millions of people what they need to know about stock investing without embarrassing those thousands of good and smart people, I would of course pursue that way. But it is just not possible. We need to go through the rough stuff to get to the good, life-affirming stuff.
And the rough stuff gets rougher the longer we avoid going through it. So I have always been in favor of making the transition as soon as possible. There is not one academic model for understanding how stock investing works. There are two. That has been true for 39 years now. Everyone needs to know that. We need to get past this thing where people act all surprised that market timing might be required. People can of course think what they like. But there shouldn’t be one person today saying that it is a sure thing that market timing doesn’t work. That claim has at least been under question for those who are familiar with the peer-reviewed research for 39 years now.
So — no emotions crash re the money or the prison sentences. But posting dishonestly (pretending that the safe withdrawal rate might always be the same number) is out of the question. I will never go back to that way of handling things. I cannot control what the rest of the world does. But I control what I do, And I can never go back to that cowardly and lazy and selfish way of handling things. I do not believe that the Greaney retirement study contains a valuation adjustment and I am going to continue to point that out to people at any site at which the study is promoted as a tool for planning retirements and at which I am permitted to post.
My best wishes.
Rob
You have had plenty of time to post and you did so profusely. It is your behavior the led to your banning.
The behavior that you are talking about is that I said that the Greaney study lacks a valuation adjustment. That caused people to lose confidence in the Greaney study and Greaney does not want that. Greaney wants people to maintain confidence in the study and, to achieve that goal, he needs to have me banned everywhere. I want people to appreciate how dangerous the study is. So we are working at cross purposes.
The bottom line is that Buy-and-Hold cannot work if Shiller’s research is legitimate. The Buy-and-Holders act as if Shiller does not exist. I do not, I say that he exists and I say that it is perfectly appropriate for me and everyone else who cares to to discuss the implications of his research.
Shiller’s reseach and Buy-and-Hold cannot co-exist. If valuations affect long-term returns, then the idea that market timing is not required is crazy talk. The Buy-and-Holders recognize the threat and so they insist that discussion of the implications of Shiller’s research be banned. I think that a ban on honest posting is the wrong way to go, I advocate open discussion of the peer-reviewed research so that we can all over time come to a better understanding of the realities.
Any minority opinion can get banned if site administrators decide on who gets banned by taking a vote. Valuation-Informed Indexers are outnumbered by Buy-and-Holders by 10 to 1. But I say that the published rules of the sites and the statutes of the United States should determine who gets banned, not a popularity poll. It is Greaney and the others who have participated in criminal acts who should be banned, not those of us who have properly pointed out that his retirement study lacks a valuation adjustment.
An invalid retirement study that tells people what they want to hear is still an invalid retirement study. Buy-and-Hold is popular because it tells people what they want to hear (that the numbers on their portfolio statement are legitimate), not because there is any good reason today to believe that the market is efficient (as many believed was the case in the days before Shiller published his Nobel-prize-winning research).
Rob
“The behavior that you are talking about is that I said that the Greaney study lacks a valuation adjustment.”
Wrong. The bad behavior includes, but is not limited to, the following:
1. Hijacking threads in which you want to talk about your subject vs that of the original poster
2. Not answering questions
3. Not supporting claims/allegations (such as the death threats, job threats)
4. Posting long winded comments that ignore the position of others
5. Misrepresenting what other people have said
6. Outright lies
It’s the same thing. I said 18 years ago that the Greaney study lacks a valuation adjustment.
1) You have said that asking that question highjacked the disscussion.
2) You asked thousands of unrelated questions.
3) You advanced death threats and job threats aimed at me and thousands of others who had similar questions
4) You made some points that could only be answered effectively by providing background information
5) You made defamatory claims
6) You made false claims
The one thing that you never did was to supply a screen shot of the page in the Greaney study containing the valuation adjustment.
There is no reason to believe that that will change until after the next price crash, when a larger percentage of the population will be asking hard questions of the Buy-and-Holders.
The obvious problem is that I was right, the Greaney study really does lack a valuation adjustment. If honest posting is permitted, all will see the error in the study and it will be corrected and Buy-and-Hold will be replaced with Valuation-Informed Indexing. Ge Rich Quick schemes remain popular for so long as prices remain high because there is no penalty for going with a purely emotional approach at such times. That changes when the price for failing to take the research into consideration reveals itself.
Rob
To your point above:
1. The questions did not hijack the threads. Those questions have always been in response to things you bring up when you hijack the thread.
2. Those questions, as in point number one, are a result of you bringing up new and unrelated points.
3. You bring up death threats and job threats, yet fail to even back it up with proof, expecting readers to just take you word for these allegations.
4. You background information is always based on your own comments and interpretations vs those from other sources or 3rd party links. Again, you ask want us to just take your word for it.
5. What defamatory claims? You are the one making defamatory claims, such as calling Jack Bogle the biggest con-man ever.
6. What false claims? You make false claims, such as the death threats, job threats, etc. You also claim to be an author of Wade’s paper, when your name is not listed as an author.
Lastly, the Greaney thing has been addressed thousands of times, yet your pretend otherwise. That alone should get you banned. You apologized over the Greaney thing, yet you want to ignore that. Wade Pfau had to write an article about this, yet you now spin that. This goes back 18 YEARS and you are still trying to re-write history.
You have not learned one thing.
And we still haven’t seen the screen shot.
If enough people demand to see it after their retirement accounts are wiped out, we will all achieve the biggest advance in our understanding of how stock investing works ever achieved in our history. We already have achieved it intellectually. The next step is to gain the right to talk about it, which will give that huge advance practical, real-world value.
I vote “Yes.” But we’ll see how it goes.
Rob
You are not banned from honest posting. We do have to clarify as to what honest posting REALLY is because I would never let you post made up stuff like pretend death threats or pretend job threats if you were on my website. But setting that aside, you have the largest venues available to you, such as Twitter, YouTube and Facebook. That gives you access to everyone.if you can’t make it on any of those platforms, then no one sees value in your message.
Thousands have found value and thousands have said so. Not at one time. There was no single day on which thousands said they saw value. But over the course of the 18 years it has been thousands. There have been scores who have indicated that they have found value in a single day On the sixth day of the discussions, John Walter Russell put up a post saying that he had investigated my safe withdrawal rate claims and that he saw great value in them and that post obtained more than 50 recommendations.
So I have never had any problem whatsoever generating support for my work, But most of those people left the Motley Fool board after Greaney threatened to have his Goon Squad murder the loved ones of any poster who posted honestly re those matters. Once the people interested in the topic of early retirement left the Retire Early board, the board was no longer able to fulfill the purpose for which I had built it up in the first place.
Motley Fool of course had published rules prohibiting death threats. Had those rules been enforced in a reasonable manner, there never would have been a problem. But of course there is a lot of money to be made promoting a pure Get Rich Quick/Buy-and-Hold strategy. Greaney was telling people that they could retire many years earlier than what the peer-reviewed research showed was prudent. So he was popular. And his popularity brought in money for the Motley Fool site.
All Get Rich Quick approaches are going to be popular. For obvious reasons. The beauty of the peer-reviewed research is that it shows the dangers of going with a pure Get Rich Quick approach. This is why the Buy-and-Holders are so hostile to the idea of permitting honest discussion of the last 39 years of peer-reviewed research in this field. There is no research supporting the idea that market timing (price discipline) is not required. There never has been and there never will be. Buy-and-Hold cannot survive in a world in which discussion of the peer-reviewed research is permitted. For so long as discussion of the research is prohibited, emotion can rule the day and it is emotion (the Get Rich Quick emotion that all humans possess) that makes Buy-and-Hold look promising.
I believe that Buy-and-Hold will fall following the next price crash. At that time millions of people will be able to see in a concrete way what a terrible mistake it was to fall for a pure Get Rich Quick approach and to tolerate a general ban on discussion of the last 39 years of peer-reviewed research in the field. We’ll see.
Shiller has “made it” on every platform possible. His book was a best-seller. He was awarded a Nobel prize. What good has it done us? We all still have that Get Rich Quick/Buy-and-Hold urge residing within us. If we are to overcome that emotional urge, we need to be able to DISCUSS the practical how-to implications of Shiller’s findings. That’s what the Buy-and-Holders do not want to see happen. As people learn about the research, the entire Buy-and-Hold house of cards tumbles to the ground. Market timing is price discipline. No market can survive without price discipline. Persuade millions of stock investors not to practice market timing and the stock market is sooner or later going to collapse. There is no getting around it.
I tried for many years to prevent that collapse. I did everything that a person can do. If the collapse cannot be prevented, then the next best thing is to supply people the information after the crash that they need to understand it and to avoid future crashes. We may see a Second Great Depression with the next price crash. It horrifies me that I have not been able to stop it. But at least I can do what is possible to see that we never see a Third Great Depression. That ain’t nothing.
Rob
I am losing track. How many death threats have been made?
Enough to keep the Greaney retirement study from being corrected for 18 years from the date that he was made aware of the error in it.
Rob