Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“At every site that I have ever posted at, there has been a significant minority (about 10 percent) that very much wants to hear what I say.”
If that is true, why is the comment section on Valuewalk empty of comments from these people that want to hear what you say?
You’re asking a good question, Anonymous. I ask myself that question all the time.
I had a guy call me from California about three weeks ago. He loves my stuff. He has seen my column at ValueWalk and he put in a Google notification thing so that he would be informed whenever there was an article with my name on it and the term “CAPE” in it. We talked for several hours and we have exchanged a good number of e-mails since. The guy did not understand that I had an article at ValueWalk every week. He was just seeing some of them, those that Google brought to his attention. So he had questions about issues that were not addressed in those particular articles and he wanted to talk through some things with me.
Now, he saw an article by me that appeared at Seeking Alpha not long ago. The people at ValueWalk often send my articles to other sites. So Seeking Alpha runs my stuff sometimes. For this particular article, there were a number of comments at Seeking Alpha and most of them were positive. This guy was impressed. He told me that it is a smart group that shows up at Seeking Alpha and that I should be happy that they thought highly of my article.
So smart people thought that that particular article had merit. Yet no one at Value Walk commented on it. I think that that’s weird, It would be a big help to me if people at Value Walk would comment. Those people have a chance to really get to understand my stuff because I appear there every week. So it would make all the sense in the world that they would comment. But the reality is that they do not. That’s a fact.
And I have had that same general experience over and over and over again. If you go back to May 13, 2002, at the Motley Fool board, there were scores of people on the first day saying that I had launched the most exciting debate ever held in the history of the forum. So people absolutely loved my stuff. But there was also a larger group that was hostile from the first day. That’s also always a part of the dynamic. The hostile group is more intense and has more staying power. The group that is interested in exploring the issues always gets tired and eventually walks away. So the hostile group prevails. That same pattern applies over and over and over again.
Most people are complacent re this stuff. That’s how I would sum it up. There is a small group of Buy-and-Holders (the Goons) who very, very, very much do not want people to discuss the far-reaching implications of Shiller’s research. There is a much larger group that is fine with it. But the Goons are 50 times more intense than the Normals. The Normals are complacent. They figure that, if things were really as bad as I say they are, someone would have done something about it. Their common sense tells them that things simply CANNOT be as bad as I am saying, so they drop out of the conversations when they get too contentious And you Goons always make sure that any conversations about the far-reaching implications of Shiller’s research quickly become very, very contentious indeed.
That’s the best explanation that I can give you. It’s a fact that people don’t comment on my stuff at Value Walk. I wish they did. It makes me sad that they do not. But I have had thousands of people comment on my stuff, some in the most laudatory way possible, And that includes numerous big-name experts. So I know that there is extraordinary value there. We just need as a society to figure out a way to overcome you Goons. If we put you in prison cells for your criminal acts, that would obviously do it. But the same people who are too complacent to post in the face of your brutal abusiveness are also too complacent to contact prosecutors and to demand that criminal actions be taken against you. So we are where we are.
The only thing that I can imagine that might change it is a price crash. I think that people might become less complacent after they see most of their life savings vanish into space. So I believe that that might be the turning point. So I see it as my job today to prepare myself for that day, to get the book finished and to continue writing the column so that I am learning new things every week and to do my best to respond to your Goon comments and all that sort of thing. So that’s what I do.
This is a big deal. Shiller’s Nobel-prize-winning research revolutionizes our understanding of how stock investing works. So we are having a hard time as a society letting it in. We are not ignoring Shiller’s research because it is unimportant. We are ignoring it because it is so super important that we cannot bear the thought of going through all the changes that we are going to have to go through once we let it in. If we had launched a national debate on Shiller’s breakthrough research findings back in 1981, this wouldn’t have been so hard. Now that there has been a 39-year cover-up, it has become a very, very, very hard transition to make. But a very very, very important one to make as well.
That’s my explanation.
Paradigm Changer Rob
There are no goons. Just people that don’t agree with you. If and when there is a drop in the market, it will not be blamed on buy and hold. Every day, there are predictions of drops that are tied to some particular reason. Here is another example:
https://www.marketwatch.com/story/the-stock-markets-comeuppance-is-coming-heres-how-to-prepare-your-portfolio-now-2020-08-18
You are wasting your time.
Buy-and-Holders are going to offer rational explanations of any price changes. That is what they do. The premise of the strategy is that investors are rational. If investors are rational, then it is not possible that prices could fall for any but a good reason.
But that’s not what Shiller’s research shows. Shiller showed that gains that push prices above the prices we would have if the CAPE were 16 are the product of irrational exuberance. I believe that Shiller’s Nobel-prize-winning research is legitimate research. So I don’t have any option but to say that the Buy-and-Holders are wrong. Shiller’s research cannot be reconciled with the research that was once thought to support Buy-and-Hold (and that still is in the minds of millions of Buy-and-Holders).
I don’t think that I am wasting my time. But, given that it is a physical impossibility for me to post dishonestly re these matters, we will just have to wait to see how it all plays out. We do not need to have every Buy-and-Holder change his mind on the day of the price crash. We already have 10 percent who believe that Shiller’s research is legitimate. If that number goes above 20 percent, I believe that we will be on our way. Once we get to 20 percent, people will be speaking up when they see criminal behavior and more and more of us will feel free to post honestly and knowledge of how stock investing really works will just spread and spread. Once we are all living better lives in about 20 ways, there is not going to be anyone who is ever going to want to go back to the Buy-and-Hold garbage. We will work together as a society to bury that smelly garbage 30 feet in the ground, where it can do no further harm to humans and other living things.
Or maybe not. I thought that Motley Fool would give Greaney the boot when he advanced his first death threat. That was on the evening of August 27, 2002. So I obviously was proven to be wrong re that one. It is at least within the realm of the possible that it is happening again and that I just cannot see it. But given that I am physically incapable of saying that I believe that Greaney’s retirement study contains an adjustment for the valuation level that applies on the day the retirement begins. we will just have to wait to see how it all plays out. Maybe I am wasting my time and maybe I am leading the people of the United States to the biggest advance in our understanding of how stock investing works ever achieved in our history.
I naturally wish you all the best that this life have to offer a person, on any event, my dear Goon friend.
Rob
Shiller doesn’t say what you say what you say. The SWR issue has been explained thousands of times. There were never any death threats. Yes, you are wasting your time.
Shiller says that there is irrational exuberance. He chose that term as the title of his book. If there is irrational exuberance, investing risk is not stable but variable. That means that investors who want to keep their risk profile constant over time MUST engage in market timing, investing more heavily in stocks when irrational exuberance is low and less heavily in stocks when it is high. Shiller was awarded a Nobel prize because his research overturns the fundamentals of our old understanding of how stock investing works, the understanding that led to development of the Buy-and-Hold strategy.
If we all were thinking clearly, we would be discussing these issues openly at every investing site on the internet. We would be asking Shiller and lots of others about the how-to implications of his amazing research findings. We would all be living better lives as a result.
I do not believe that I am wasting my time. I believe that we will be opening the entire internet to honest posting in the days following the next price crash. I believe that my work will be helping millions of people to come to a better understanding of how stock investing works at that time. We’ll see.
My best wishes to you.
Rob
Timing has never worked. You can’t show even one successful outcome. Shiller knows this and specifically said not to use CAPE for timing the market.
None of that is so.
Every case of intelligent market timing that has ever been attempted has produced good results. The peer-reviewed research that I co-authored with Wade Pfau shows that beyond any doubt whatsoever. There were a small number of cases in which timing produced slightly worse numbers. But in those cases the investor was obtaining the benefit of taking on less risk (since the odds were that timing would produce much better numbers).
Your own behavior shows that you know this on at least one level of consciousness. If you thought that there might be circumstances in which intelligent market timing would not produce good results, you would have told people what you thought those circumstances were instead of engaging in criminal behavior (extortion) to silence Wade. I believe that you follow a Buy-and-Hold strategy. But you lack confidence in it. That’s the worst of all worlds. That means that you will follow Buy-and-Hold up until the point where you will feel pressure to sell stocks at the worst possible time for doing so and will give in to that pressure and lock in your losses.
Shiller published a paper in July 1996 advocating market timing. He wouldn’t have done such a thing if he didn’t believe in it. And he titled his book “Irrational Exuberance.” He obviously would not have chosen such a title if he believed that the market was efficient. The idea is absurd.
These are my sincere thoughts re these terribly important matters, in any event.
I naturally wish you all good things, regardless of what investment strategy you elect to follow.
Rob
None of that is correct. You can’t point to one single portfolio with market timing. Shiller has said that you shouldn’t use CAPE to time the market. Do you need the link again? I have read Wade’s books and his website. He has never recommended market timing.
Before you threatened him, Wade said (after studying the matter in great depth for 16 months) that: “Yes, Virginia, Valuation-Informed Indexing works!” That’s an endorsement of market timing, Anonymous. Valuation-Informed Indexing is Buy-and-Hold with market timing added. That’s the only difference.
John Bogle endorsed market timing without quite having the courage to use the word “endorse.” He said that he could see how Valuation-Informed Indexing could work. He didn’t outright recommend it, which is what I would have liked to have seen. But he said that, based on his knowledge of what the data says, he could see how it could work. If Bogle could see how it could work, we should be permitting honest posting at every site and letting people make up their own minds.
Here’s an article from Morningstar by a guy who is a CAPE skeptic:
https://www.morningstar.com/articles/993648/maybe-theres-something-to-the-shiller-cape-ratio-after-all
The article states: “I have long dismissed attempts to employ the CAPE ratio. The exercise is fun, but attempting to garner insight from the evidence is futile. However, a recent article, “The Remarkable Accuracy of CAPE as a Predictor of Future Returns,” by Michael Finke of The American College of Financial Services, may have changed my mind…. Perhaps we skeptics should pay renewed attention to the CAPE ratio. ” That’s not quite an endorsement of market timing but it is an endorsement of giving the idea some serious consideration.
I wish you all good things. But I believe that market timing (price discipline!) is 100 percent required and that it would be financial fraud for me to pretend to believe otherwise.
All good wishes.
Rob
Wade said he wasn’t threatened. Robert Shiller said to not time the market with CAPE and Michael Kitces agrees with Shiller on that point.
The internet is open to honest discussions. Some sites decide to ban those people that are not honest and have behavior issues.
I am going to continue to say that I do not believe that the retirement study posted at John Greaney’s web site contains an adjustment for the valuation level that applies on the day the retirement begins.
It will be interesting to see how things play out.
Rob
And the rest of the world will continue to say that you don’t know what you are talking about and are wasting your time. Thus, the silence on this board.
By the way, we have already seen things play out. It did not end well for you.
Okay, Anonymous.
I do wish you all good things, in any event.
Rob