I’ve posted entry #537 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Believing in Shiller’s Research Is a Money Loser.
Juicy Excerpt: What would happen if Shiller were to give a speech so powerful as to persuade all of the investors of the world of his case. U.S. stock prices would fall overnight by 50 percent. That would certainly be a show of the power of his ideas. But would it be a good thing? The millions of people who saw their retirement plans fail probably would not think so. The owners of the hundreds of thousands of businesses that went under probably wouldn’t think so. The millions of workers who would be thrown out of their jobs probably wouldn’t think so. The policymakers who would be left with the task of picking up the pieces of a broken country probably wouldn’t think so.
This Shiller fellow did something very important. But did he do something good?
How much money have you made as a result of your interpretation of Shiller’s work?
Not one penny.
I’ve lost money. There were many people who loved the work that I did in the saving area. I drove lots of those people away from my site when I started writing about Valuation-Informed Indexing all the time,
People who once loved me now hate me. I don’t mean just you Goons either. There are a good number of people in that camp. There are people who love the investing stuff too, to be sure. But that group is outnumbered by the people who hate the investing stuff. The biggest group is the group in the middle, people who neither love nor hate my investing stuff. But neutral attitudes don’t bring in any money. People need to love your stuff to spend money to gain access to it.
Sad but true.
Rob
Rob,
Love and hate are emotions. Take emotions out of it. Just go with facts. If you are not making money, then is says you are doing something wrong. Learn from mistakes and make corrections. If you don’t expect the same results.
I don’t agree that not making money is a sign that I am doing something wrong. As a general rule, that’s a good signal. But there are cases where unpopular ideas have great power and will pay off big in the long term even though they do not pay off in the short term. I believe that that is the case here.
The reason why I say that is because the discussion of Shiller’s research causes such extreme reactions. There are many people (a small minority overall but still a good number of people) who are insanely effusive about my investing work. That tells me that at the very least I am on the right track. And then there is a group that is so hostile that they are willing to engage in criminal acts to block discussion of the far-reaching how-to implications of Shiller’s research. There is a sense in which that group is sending the same message as the effusive group, Both groups are saying that this stuff is IMPORTANT. So the takeaway is the same in both cases — I need to keep digging so that over time I come to understand this stuff better and better and better.
My sincere take, Anonymous.
My best wishes to you and yours.
Rob
“As a general rule, that’s a good signal.”
How is that a general rule? In what world? You have lost any sense of objectivity.
I was agreeing with you. I was saying that, as a general rule, not making money is a signal that you are doing something wrong, I went on to say that this case is an exception to the general rule.
Rob