Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“Irrational exuberance is not fluffy words. Robert Shiller was awarded a Nobel prize for his research.”
Your words are fluffy words. Shiller does not say what you say and that bothers you. In fact, no one says what you say. You then use more fluffy words, by making up a story about how they are scared to say what you want them to say.
“ The market comes back after a drop for both the Buy-and-Holder and the Valuation-Informed Indexer. The difference is that the Valuation-Informed Indexer has been engaging in market timing to Stay the Course in a meaningful way.”
But your timing didn’t work and the market didn’t do what you said it would do and that is why the 60 year old VII guy is so far behind the buy and hold guy and time ran out.
No one has taken Shiller’s ideas as far as I have. That much is so. I have spent 18 years exploring their implications. Thinking about them, writing up my thoughts, incorporating reactions into my take, thinking some more, all that. I have taken Shiller’s ideas far beyond where Shiller has taken them. My guess is that there are lots of things that Shiller thinks that he has not shared with us. But I doubt that even privately Shiller has explored all the issues that I have explored. I certainly don’t say that Shiller has endorsed my every word. I say that every word of mine is rooted in Shiller’s “revolutionary” (his word) research findings but not that Shiller has endorsed all of my takes.
You say that “no one says what you say.” That’s what makes what I say so valuable. Not because I am necessarily right. Because Shiller’s core insight (that the market is not efficient and that therefore Buy-and-Hold cannot possibly work for even a single long-term investor) is so profound that we all need to be taking it into consideration. I don’t have to get them right for my stuff to be of great value. There are numerous people saying today that the 4 percent rule is garbage. There was no one saying that on the morning of May 13, 2002. I believe that everything that I have said about safe withdrawal rates is correct. But if that’s not so, so what? We still have people saying things about safe withdrawal rates today that they were not saying on May 13, 2002. Good for me for getting that conversation started. Getting the conversation started is huge. That’s a very big contribution that I made and I am very proud of it.’
There is zero chance that Shiller’s research can be reconciled with Buy-and-Hold. The two things are opposites in every way. If the market is efficient, risk is constant, If valuations affect long-term returns, risk is variable. That’s what matters. The rest is details. My core message is that we all should be exploring this all the time and at every place where people get together to talk about investing. The Shiller Revolution is so important that it is silly for anyone in this field to be directing his or her energies on things over than coming to terms with it. I am not the first human being not capable of making a mistake. But there is no one alive who has put more energy into the project of coming to terms with the Shiller Revolution in thinking about how stock investing works. Good for me. I offer zero apologies re that one.
I 100 percent say that the reason why others don’d do it is that they are scared. I say that partly because I experienced those feelings of fear myself. I am ashamed that I did not speak up sooner. But at least that experience helps me to understand why others do not speak up. And I have seen the fear in the conversations that I have had with others. It comes up over and over and over again. People tell me that my stuff is amazing, top-grade stuff. Then they say “now you are not going to tell anyone that I said that, are you?” Huh? What the f? Are we going to keep the top-grade stuff a secret? People are afraid because Shiller revolutionized the field and revolutions always leave some people behind. People who are big shots to day will not be big shots after we have opened every discussion board and blog to honest posting re the last 39 years of peer-reviewed research. So those of us seeking to post honestly have encountered a good bit of resistance.
Your behavior tells the tale. You Goons come here day after day after day, year after year after year. If you truly believed that Shiller thinks the safe withdrawal rate is always 4 percent, you would ask him. There’s a reason why you have never done that. You know as well as I do what he would say.
The Buy-and-Holders are living on borrowed time. When prices crash, the entire thing disappears from the world.It’s sad. I prefer to live in the future than in the past. I believe that, once the peer-reviewed research was published showing that there is precisely zero chance that a Buy-and-Hold strategy could ever work for a single investor, we all should have just moved on. I think you cause yourself more pain with each day that the Ban on Honest Posting remains in place. I think it is garbage. But the criminal acts scare people. So that stuff has been enough to keep Buy-and-Hold hanging on a little bit longer.
If you want to call that a victory, I can’t stop you, But it ain’t a victory in my eyes. If my stuff didn’t stand up to scrutiny, I would make changes in my stuff, I wouldn’t try to intimidate people into silence. That’s sure how I hope I would react if the tables were turned, in any event.
My best wishes.
Rob
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