Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“ He should address questions relating to the implications of his ideas.”
Why does he need to answer YOUR questions? If he, or anyone else, is asked a question, why is there an obligation to answer? You could have hundreds of thousands of people asking different questions. Why does he owe Rob Bennett an answer? Why does Shiller have to comment on your make believe assumption that he is threatened by buy and hold goons?
Shiller predicted the 2008 economic crisis in his book, which was published in 2000. Had the entire internet been open to honest posting at that time, we could have avoided that economic crisis. Investors obviously want to do what is in their best interest. Shiller’s research shows that it is in their best interest always to engage in long-term market timing (price discipline). When we all gain the freedom to talk about that, stock prices become self-regulating. From that point forward, we could never again see the insane price levels that caused that economic crisis.
So hundreds of thousands of businesses would not have gone under. And millions of workers would not have been thrown out of their jobs. And we would not have seen the political frictions that remain a problem to this day. It is Shiller’s Nobel-prize-winning research that showed us the path to avoiding all that. And you are asking why he would want to help out? Are you joking? The reason why he did the research was to help out. Of course he wants to see millions of people benefit from it. The question is absurd.
Why did Martin Luther King do what he did? Why did millions of people do what they could to follow in his footsteps? Why do people revere the man to this day? Caring for others is part of human nature, Anonymous. We are not all Goons.
The full truth is that even you Goons have a tiny part of that within you. Had Shiller gone public with his sincere views on safe withdrawal rates back when he published his book, you Goons would not have been able to spend the last 18 years of your lives engaging in criminal acts aimed at destroying millions of lives. Can you honestly say that you wouldn’t feel a lot better about yourselves today had Shiller played it that way? I sure think you would.
The desire to help other humans is part of what makes us human ourselves. That will never change. I don’t care how much money the promotion of Buy-and-Hold strategies puts in the pockets of our Wall Street Con Men friends. Our Wall Street Con Men would deep down inside like to gain the freedom to do honest work in their chosen profession. I am sure. That is why you see people like William Bernstein sneaking honest statements about safe withdrawal rates in their books. Most of the people who work in this field are engaging in as much honest work as they think they can get away with. They would love to feel that they could get away with more. And having Shiller speaking out clearly on all sorts of issues would help them do that.
Shiller is one of the humans. He has a natural desire to help the other humans. That’s why he did the research that led to him being awarded a Nobel prize. And that is why he would like to feel free to talk clearly about the far-reaching implications of that research at every place at which he speaks on investment-related topics.
That was an easy one. I mean — Holy moly!
Please take good care, my dear Goon friend.
People Person (Even When The People in Question Are Goons!) Rob
“ So hundreds of thousands of businesses would not have gone under. And millions of workers would not have been thrown out of their jobs. ”
Wrong. Businesses do not fold because of stock price. They fold due to lack of profit and/or capital. That is how it should work. Why should any business have endless access to debt?
Irrational exuberance is something that disappears into thin are. It is a psychological phenomenon, it does not have economic validity. But businesses count it as real. So they make plans based on a belief that that money will be around. When it disappears, those plans are put at risk of failing. If irrational exuberance is a real thing (Shiller was awarded a Nobel prize for his discovery of it), then it certainly can cause businesses to fail
We all should be doing everything in our power to keep irrational exuberance as limited as possible, To do that, we need to open every site to honest posting re the last 39 years of peer-reviewed research in this field.
Rob
You totally ignored the point. Businesses only fail when they don’t make more money and can no longer survive just on debt. It has nothing to do with their stock price. That is exactly how things should run. Why should a business have an endless supply of debt. It will eventually fail.
It’s not just the stock price of the individual company that matters. Companies sell products or services to consumers. When consumers see their life savings cut in half, they cut back on spending, That means fewer sales. A company might have a level of debt that it could get by with perfectly fine and then a price crash causes sales to drop dramatically and it can no longer make payments on that debt. The disappearance of irrational exuberance is a huge factor, That’s one of the reasons why Shiller was awarded a Nobel prize for his “revolutionary” (his word)n research findings.
Please identify one time when the pure Get Rich Quick/Buy-and-Hold “strategy” became popular and we did not see an economic crisis in the following years. It has never happened. It is not possible for the rational human mind to imagine how it ever could happen. Get Rich Quick/Buy-and-Hold is not the answer. Get Rich Quick/Buy-and-Hold is the entire freakin’ problem.
Rob
Companies that are viable, can survive recessions. The businesses that folded during the great recession were in trouble before he down turn. Look at the businesses in trouble now. All of them were on the brink of closing even with the economy going through a boom. The stock market has had nothing to do with any of them going out of business.
Call me madcap but I believe that the loss of many trillions of dollars of consumer buying power in a short amount of time can make a difference. I believe that we should be permitting honest posting re the last 39 years of peer-reviewed research at every discussion board and blog in the internet.
Rob
Give us just a few examples of business that closed due to a drop in stock price. You said that stock price drops caused thousands of businesses to close, so it should be easy for you to show just a few. After all, we just want honest posting.
There were thousands of businesses that went under in the wake of the 2008 crash, Anonymous. It was in all the newspapers.
Things were even worse in 1929. And, sure enough, the CAPE level that brought on that crash was a bit worse.
Going pure Get Rich Quick/Buy-and-Hold is not the answer. Going pure Get Rich Quick/Buy-and-Hold is the entire freakin’ problem.
I am sure.
Rob