I’ve posted Entry #534 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Was Buy-and-Hold Just a Money-Making Scheme Going Back to the First Day?
Juicy Excerpt: Another factor is that there are so many experts who endorse Buy-and-Hiold. As noted above, common sense says that market timing must work and all of the evidence available to us confirms that what common sense says must be so really is so. Still, experts rarely make that point. Actually, I cannot recall anyone other than me ever saying things quite that way. Buy-and-Hold appears to be supported by experts. That reality gives the strategy credibility in the minds of millions even though the case does not hang tougher at all well.
“Actually, I cannot recall anyone other than me ever saying things quite that way. ”
That should be a red flag for you. There are many well educated and well informed people out there that can all do critical analysis. Further, they are actual “numbers” people. When you find yourself standing alone for two decades, at some point you have to self reflect and stop drinking your own Kool-Aid.
I agree with the point that you are making. It is absurd that I am the one making many of the claims that I am making. The Trinity study had been around since the mid-1990s. So there should have been lots of people pointing out the error in that study and in all the studies that followed from it (including the Greaney study) long before I came on the scene. It doesn’t take an I.Q. of 140 to check whether a retirement study contains a valuation adjustment or not. So, yes, in ordinary circumstances, the fact that I am the one making many of these claims should be a huge red flag. And I am certain that many take it as that and that that is why I have not been able to get my message out to millions of people.
These are not ordinary circumstances. That’s the thing. The idea that market timing does not work is rooted in a belief in the Efficient Market Theory, which in turn is rooted in a belief that investors are 100 percent rational. Shiller showed in 1981 that they are not. So the Efficient Market Theory has been discredited and the Trinity study along with it. Take those things out of the picture and there never would have been any conflicts whatsoever. We all would have been enjoying a great learning experience going back to the morning of May 13, 2002.
Why are there people who still talk about the Efficient Market Theory as if it were a real thing? There is no intellectual reason for doing so. There is an INSTITUTIONAL reason for doing so. During the time when it appeared that the Efficient Market Theory was a real thing, thousands and thousands of people built careers promoting Buy-and-Hold as if it were a legitimate investment strategy. Those people don;t want to give up their high-paying careers and they don’t want to give up their reputation as “experts.” So there is huge institutional resistance to the idea of people being permitted to post honestly re these matters. Valuation-Informed Indexers must be destroyed. That’s why Wade Pfau was threatened when he published research showing that in fact market timing always works and indeed is the key to long-term investing success.
The Buy-and-Holders would all be better off making the shift to Valuation-Informed Indexing. All of the people who promoted Buy-and-Hold strategies would love to be able to get back to doing good and honest work that helps people, which is what they intended to do when they entered this field, But they cannot do that. Their careers will be destroyed if they do. They have families to feed. So they pretend that they don’t understand what is going on. They fail to speak up about the death threat and the acts of extortion. And millions of people are misled into believing that there is some sort of mystical, magical research somewhere showing that market timing is not always 100 percent required and that Buy-and-Hold is a sound strategy.
There is not one person in the world who benefits from this massive cover-up. Opening every site on the internet to honest posting re the last 40 years of peer-reviewed research would be a boon to us all. But who the heck is going to stick his neck out and get the ball rolling, given the penalties that apply today for those who do so? That’s the job for a journalist. Which is what I am. So I do what I can.
People should be skeptical. This is a crazy story. Skepticism is justified. But there is an easy way for anyone who wants to get to the bottom of things to find out for himself or herself whether there really is funny business going on in this field, as I maintain. Pull up the Greaney study and see if you can find a valuation adjustment in it. If it is lacking one, as I have maintained since the morning of May 13, 2002, then this 40-year cover-up has put millions of retirements at grave risk of failing. That’s a matter of huge public policy significance.
We all should be working to overcome you Goons and to open every site on the internet to honest posting. I believe that we will be in the days following the next price crash, when it will be crystal clear to everyone how dangerous it is to persuade millions of stock investors that market timing (price discipline!) is not 100 percent required for every stock investor on the planet. The idea that it might not be is the worst mistake ever made in the history of personal finance and we need to get it corrected. Opening every site on the internet to honest posting re the last 40 years of peer-reviewed research in this field is the first step.
My sincere take.
Rob
You either don’t understand the point made or you are intentionally ignoring it. The red flag should indicate to you that you are not really thinking about things correctly. What are the odds that only Rob Bennett is right. Answer: Slim to none and slim just walked out the door.
It is not honest posting when you are ignoring what people are telling you. Calling people goons means that you see these people as a threat to uncovering the real truth.
You lack total self awareness as well as situational awareness. There is no way for anyone to have a reasonable conversation with you.
The odds that only Rob Bennett is right are zero. But I am not the only person saying that valuations affect long-term returns. Shiller wrote an entire book on the subject and was awarded a Nobel prize for his research showing that it is so. Wade Pfau devoted 16 months of his life to investigating my claims and concluded that they all check out and that “Yes, Virginia, Valuation-Informed Indexing works!” John Walter Russell researched my stuff for eight years, receiving zero compensation, because he thought that the issues that I brought to the table were so important. Bill Bernstein said that the safe withdrawal rate was only 2 percent at the top of the bubble. The Wall Street Journal and the Economist both published articles saying that the Buy-and-Hold studies are out of date and in error. Thousands of my fellow community members have said that they would like to see honest posting permitted so that they could see my work and the work of other Valuation-Informed Indexers. Rob Arnott looked at my site and calculators and said that everything I have said sounds good to him. Several professors have told me that they have begun teaching Valuation-Informed Indexing in their classes after having being exposed to my work on the internet. And on and on and on and on.
It’s not just me, Anonymous. It is 10 percent of the population that today believes that Shiller’s Nobel-prize-winning research is legitimate research.
I want to make it 90 percent. That won’t happen until we open every site on the internet to honest posting. So I want to see that happen. The problem has never been that people do not see the merit of the case. The problem is that Buy-and-Holders see how positively people react to the message and feel that they need to shut the discussions down, even if it takes criminal acts to get the job done.
Not this boy, you know?
Mu best wishes.
Rob
You have just talked yourself into believing all of this stuff. As they say, if you repeat a lie often enough, eventually you will believe it to be true.
I have looked at the Greaney study many times, Anonymous. I have never been able to find a valuation adjustment in it. I don’t believe that Greaney himself truly believes that he put a valuations adjustment in the study. If he did, he wouldn’t behave the way he does, he would just forward an image of the section of the study containing the valuation adjustment. He doesn’t want to acknowledge that the study is in error but he cannot identify a valuation adjustment in it any more than any of the rest of us can. So he does this other stuff instead.
It would have been best if we had all moved on to Valuation-Informed Indexing back in 1981. I think we experienced cognitive dissonance. Shiller’s research findings were too much to take in. There is a big difference between a world where market timing doesn’t work and a world where market timing always works and is always 100 percent required. Now that there has been a 40-year cover-up, it is harder than ever for the Buy-and-Holders to acknowledge that the whole thing about market timing (price discipline!) not being required is just nuts. There’s never been any market on the face of the earth that could work without price discipline being a big part of the story. The rational human mind tells us that there can never be one.
Sooner or later, we need to move forward. I don’t think we have any choice. I think that there will come a time (after the crash) when the Buy-and-Holders will see this too and we will all be able to enjoy an amazing learning experience together.
My best and warmest wishes to you, in any event.
Rob
Wade Pfau has explained to you how you were wrong on Greaney. Many others have told you the same, yet you ignore it. This is just one of many examples why you have no supporters.
There were hundreds of occasions on which Wade said that I was right about everything I said. There was only one on which he said that I was wrong about anything and that was when you Goons told him that you would get him fired from his job if he didn’t say it. And the thing that he said I was wrong about was something that I never said. He said that Greaney has resolved the entire matter by saying on the first day that those who wanted to take a lower withdrawal rate were free to do so. I never disputed that. The conflict was over whether those of us who believe that the safe withdrawal rate is lower than 4 percent at times of insanely high valuations should be able to explain why they think that in board discussions. Greaney has never permitted that.
I was not wrong to point out the error in his study and to explain to my fellow community members why the study is in error. And Wade doesn’t believe that I was wrong. He never should have been pressured to say that I was. Threatening someone’s job so that he will pretend to agree with you is extortion. That’s a crime, a felony. The fact that there are a significant number of people who feel a need to engage in criminal behavior to “defend” Buy-and-Hold (and that there are a much larger number of people who do not engage in such behavior themselves but who tolerate it when they see others engaging in it) shows how dangerous the idea that market timing is not always encouraged really is, Not this boy, you know?
My best wishes to you.
Rob