Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“What I say is that we should be permitting discussion of what Shiller says at every site on the internet.”
There is plenty of exposure to what Shiller says. You have also had more than sufficient exposure of your comments. We do not need constant repeating of the same material as it is already out there and easily accessible. The problem is that you cannot accept the answers you have been given, nor are you willing to take the blame for your own actions.
The Greaney retirement study has not been corrected to this day, Anonymous.
Also, we all have a Get Rich Quick/Buy-and-Hold impulse residing within us. We need to be reminded daily of the dangers of the Get Rich Quick/Buy-and-Hold approach if we are to overcome that impulse.
Rob
Why don’t you post anything new? Why does nothing change for you?
Even if there was a crash, nothing would change. The market would recover, with buy and holders continuing to be rewarded. Meanwhile, you may or may not finish a book, which would mean nothing. You would keep making the same posts. You would still avoid getting a job. You would still lack any followers or support. Things would look the same in the future for you as they do today.
I believe that the crash will change things. If we see a 70 percent drop in stock prices, hundreds of thousands of businesses will go under. Millions of people will lose their jobs. Millions of retirements will fail. Political frictions will worsen. I believe that there is a bog difference between knowing that there is 40 years of peer-reviewed research showing that the relentless promotion of a pure Get Rich Quick approach is dangerous and actually seeing an ocean of human misery appear before your eyes. I think people will see that ocean of human misery and will work up the courage to stand up to your Goons.
I can’t guaranty it. We have never before seen a situation where we had 40 years of peer-reviewed research showing us what works and also had seen with our own eyes how much we hurt ourselves when we tolerate the relentless promotion of a pure Get Rich Quick investing strategy. But it is not like I have any other options available to me in any event. I do not believe that the Greaney retirement study contains a valuation adjustment. And I had become friends with a good number of the people who posted at the Retire Early board. If I were to post at some new place starting today, I am confident that I would in time become friends with the people who posted at that place as well.
I wish you all the best that this life has to offer a person. Anonymous. I would like to think that perhaps that would help at least a tiny bit.
Rob
“hundreds of thousands of businesses will go under. Millions of people will lose their jobs. Millions of retiremens will fail. Political frictions will worsen. ”
We have already seen this with Covid. People that lack emergency savings will want to know how the government will bail them out (like they are doing right now) and those with resources will be picking up assets at bargain prices, making them even more rich. You already have 2008 as another example. We have already seen things play out, yet you still have nothing new and don’t see the obvious. Sitting around is not a game plan.
Covid has been rough. But that wasn’t something where we had 40 years of peer-reviewed research to help us avoid it. I see an important distinction there.
The 2008 crash would have been the same thing if it had remained in place longer. It scared people. But it did not scare them enough for us as a people to let go of the attachment to the Buy-and-Hold/Get Rich Quick stuff. For the current bull/bear cycle to come to an end, the CAPE would have to drop to somewhere near 8 and we would have to see that drop remain in place for five years or more. I am not saying that it is for certain that that would do the trick. I am saying that I personally believe that it would do the trick. And that I am not capable of playing it the other way in any event.
I would describe your position as a cynical one. I am not sitting around. I am responding to your comments here at the blog. I am writing a weekly column. I am finishing work on a book that I think it would be fair to describe as the most important book ever written in the history of personal finance. That ain’t nothing.
We all have questions in our mind when we are young as to what area of life endeavor we should direct our life energy. If it turns out that Shiller’s Nobel-prize-winning research is legitimate research (I believe it is), then the need to shift from Buy-and-Hold to Valuation-Informed Indexing is the most important public policy issue before our nation today. If I succeed in opening every discussion board and blog on the internet to honest posting re the last 40 years of peer-reviewed research in this field, I will have accomplished 50 times what I thought as a a young man was the most that I could accomplish in a single lifetime. I an live with that, you know?
It is a gratifying feeling to know that you can help millions of people and revolutionize the field in which you work with the work you do. It’s no fun standing up to you Goons, I will give you that one. But I have always believed that the good that there is to achieve here is 50 times more good than the bad that we have seen generated from the Goon side of the table, So I soldier on.
I hope that that is okay with you, my dear Goon friend.
I wish you all good things, in any event.
Rob
The “40 years of research” is nonsense. It is just Rob Bennett’s opinion of something that one guy wrote. The largest factor that will decide your retirement is your rate of savings. You don’t need a market timing scheme or some secret investing knowledge.
We disagree, Anonymous. I think that practicing price discipline (market timing!) is the single most important factor leading to long-term investing success.
It shouldn’t be “secret knowledge.” We should be talking about the importance of market timing at every discussion board and blog on the internet. Every day. If we did that, we wouldn’t be looking at a CAPE value in the low 30s (the CAPE value that brought on the Great Depression!) today.
Rob
What would ever make the investing community think that the buy and hold strategy ever caused a crash? Every drop has always been blamed on an economic factor.
You have described the history accurately. Shiller CHANGED our understanding of how stock investing works. That’s why the word “revolutionary” appears in the subtitle of his book. That’s why he was awarded a Nobel prize.
Shiller introduced the concept of “irrational exuberance.” If irrational exuberance exists, then an out-of-control bull market is ALWAYS going to cause an economic crisis. Trillions of dollars of consumer spending power disappear into nothingness when stock prices crash. Because those dollars were never rooted in anything real in the first place.
Buy-and-Hold causes bull markets to go out of control. There is only one way to combat irrational exuberance, through market timing. Taking market timing out of the process of buying stocks is like taking the brakes out of a car. The car may seem to be going down the highway very nicely. But what happens when it gets to a toll booth? Everybody dies. It would be better to put brakes in the car. And it would be better to let all investors hear about the 40 years of peer-reviewed research showing that market timing (price discipline!) is 100 percent essential.
We will see after the next crash whether the reaction to the next crash is different or not. I believe it will be. I could be wrong. I don’t know everything. I sure hope it will be. I would like to see us all live better and richer lives in the future. For that to happen, we all need to pull together and stop bull markets from getting out of control. The only means available to us to do that is market timing. So we need to stop discouraging people from practicing it. We need to permit honest posting about the dangers of Buy-and-Hold strategies.
Rob