I’ve posted Entry #544 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called I Like Case Because I Like Stocks.
Juicy Excerpt: Investing in cash when stocks are insanely overpriced permits me to own more stocks over the course of an investing lifetime. And stocks purchased at reasonable or super-reasonable prices are the best investment class out there. I don’t invest in cash because I like the direct return provided. I invest in cash because doing so permits me to buy more stocks when they are priced to offer a solid return. I love cash because I love stocks.
You have (if I recall correctly) been in cash since the mid to late 90s. Over your investing lifetime have you ever been able to buy stocks when they were priced to offer a solid return? When was that?
Yes. I got out of stocks in the Summer of 1996. Because I am trying to build an internet writing business, my overall situation contained more risk than that of a person holding a conventional corporate job. So my belief is that I should be going with a stock allocation that is 30 percent less than what would apply for the typical investor. So I have always said that the typical investor should be going with a 30 percent stock allocation even though I was going with a zero percent stock allocation.
There was one time in the past 25 years when I believe that the typical investor should have increased his stock allocation to 60 percent. That was in the months following the 2008 crash when the CAPE value dropped at one point to 13. I believe that at that CAPE value a stock allocation of 30 percent made sense for me. I said that on all of the RobCasts that I recorded at the time. I started off each one saying that stocks offered a very strong long-term value proposition at the prices at which they were selling at the time.
Those prices did not apply for very long at all. I had a conversation with my wife in which I said that I thought it made sense for us to increase our stock allocation. She said that she wanted to think it over a bit. Prices then started heading upwards pretty quickly. So I never actually increased my allocation The value was there for a brief time. But I don’t think that it ever makes sense to rush one’s decisions. I don’t believe that I “missed out” on anything by not acting quick;y. The value was there for a brief moment and then it was gone. It will be back. I will take advantage of that opportunity when it comes. It’s the long term that matters. If you always keeps the long-term value proposition in mind when setting your stock allocation, you will do well in the end . That’s how it has been for 150 years now and that’s how it will continue to be for many years into the future, in my sincere belief.
Rob
“The value was there for a brief moment and then it was gone. It will be back. I will take advantage of that opportunity when it comes.”
How? You have admitted that you have little (if any) money left.
I’m obviously going to have mountains of money in the days following the next price crash, when every person on the planet is looking for an explanation of what happened. I have expressed a willingness to settle my legal claims against those who have committed criminal acts for $500 million. If the CAPE is 8 at that time, I can realistically expect a 10-year return of 15 percent real on any money that I invest in stocks at that time. 80 percent of $500 million is $400 million. If I earn 15 percent real on $400 million for ten years running, that’s a good bit of change. I mean, come on.
Every penny that I earn will be the result of following the peer-reviewed research where it took me. Moving from making purely emotional choices to using the peer-reviewed research for guidance is a big positive change.
My sincere take.
Rob
“I’m obviously going to have mountains of money”
“Obviously” is not the word for a scenario requiring a combination of miracles far beyond the world has ever seen.
Your retirement plan rests entirely on getting a settlement payment? What happened to your plan of getting a job? I thought you said about a year ago that you would go out and get a job. Did you change your mind?
“I’m obviously going to have mountains of money”
“Obviously” is not the word for a scenario requiring a combination of miracles far beyond the world has ever seen.
Shiller’s “revolutionary” (his word) research findings are a miracle, I think that much is fair to say. They permit us all to retire many years sooner and to invest at far less risk than anyone dreamed would ever be possible in the Buy-and-Hold days.
Thank God for miracle. I am proud to have devoted 19 years of my life to making that miracle come true for millions of people.
My best wishes to you.
Rob
“Your retirement plan rests entirely on getting a settlement payment? What happened to your plan of getting a job? I thought you said about a year ago that you would go out and get a job. Did you change your mind?”
I haven’t changed my mind. I will get a job after I finish the book. My target date for completion is August 1. The book comes first by a factor of 50. After that is out of the way, sure, I think getting a job would make perfect sense.
Rob
If you are getting a job, I guess you lack confidence in getting any settlement payment. What kind of job do you think you might get?
I don’t lack confidence. It’s not possible to have complete confidence because there has never before in U.S. history been a situation like this. But I have confidence that we are a basically good people and that things will eventually play out in a basically good way. I don’t think it is a bad idea to get a job while waiting for things to play out. I sure don’t think that it would be a good idea to go to Vegas with the thought that I essentially have $500 million in my pocket, you know?
I am not looking for any one particular type of job. I am open to lots of possibilities. I am confident that I will be able to find something suitable. I’m not worried about that aspect of things.
The thing that I am worried about is the effect that the crash will have on our nation. That one terrifies me.
Rob
“ I don’t lack confidence. It’s not possible to have complete confidence because there has never before in U.S. history been a situation like this. But I have confidence that we are a basically good people and that things will eventually play out in a basically good way. I don’t think it is a bad idea to get a job while waiting for things to play out. I sure don’t think that it would be a good idea to go to Vegas with the thought that I essentially have $500 million in my pocket, you know?”
Shouldn’t you look at this from a risk/probability standpoint? If you have less than a 50/50 shot, shouldn’t you focus on the job above everything else? Depleted savings is a critical issue as food/shelter/clothing are essential. Being out of the job world for so long also impacts the length of time it will take in finding a job; not to mention that your age will be a factor.
Why doesn’t the job take priority over the book?
“Shouldn’t you look at this from a risk/probability standpoint? If you have less than a 50/50 shot, shouldn’t you focus on the job above everything else? Depleted savings is a critical issue as food/shelter/clothing are essential. Being out of the job world for so long also impacts the length of time it will take in finding a job; not to mention that your age will be a factor.”
The biggest issue BY FAR is the 40-year cover-up of Shiller’s Nobel prize-winning research findings. We are now at a CAPE level higher than the one that brought on the Great Depression and higher than the one that brought on the 2008 economic crisis. Opening the every site on the internet to honest posting re the last 40 years of peer-reviewed research is my top priority and it is not even a remotely close call.
I mean. come on.
Rob
Why doesn’t the job take priority over the book?
Because it affects so many more people. The job affects me and my family. The book affects millions and millions of people.
If you found out about the 911 terrorist attacks before they happened, would you elect not to inform the authorities on grounds that there was some risk that reporting the matter would put you in personal danger? Could you sleep at night from that point forward if you elected to keep your mouth shut? I think that I would have to say something. I don’t want to have millions of destroyed lives on my conscience. I want to do what I can to help my country out when it is in grave danger.
My sincere take.
Rob
You might as well say you’re going to finance your retirement by winning the lottery. That’s more realistic than any part of your plan.
No one believes you ever had any intention of seriously looking for a job. You’ve been much too inert for much too long.
“Because it affects so many more people. The job affects me and my family. The book affects millions and millions of people.”
If you really feel as if your book changes anything, why have you delayed the completion of your book? I think you are more than 2 years late already.
You might as well say you’re going to finance your retirement by winning the lottery. That’s more realistic than any part of your plan.
No one believes you ever had any intention of seriously looking for a job. You’ve been much too inert for much too long.
We couldn’t possibly disagree more, Anonymous. The shift from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance ever achieved in the history of personal finance. I am honored to be able to say that I have been making the case for opening every site on the internet to honest posting re the peer-reviewed research for 19 years now.
I naturally wish you the best that this life has to offer a person regardless of what investment strategy you elect to follow.
Rob
“I sure don’t think that it would be a good idea to go to Vegas with the thought that I essentially have $500 million in my pocket, you know?””
It looks like you are finally admitting that your plan to get a settlement payment is a long-shot given you compare it to going to Vegas. Why would you gamble with your retirement?
“If you really feel as if your book changes anything, why have you delayed the completion of your book? I think you are more than 2 years late already.”
That’s a perfectly fair question. I ask myself that question all the time.
This entire business is a highly emotional business. We all want the same things. Intuitively, you would think that every site on the internet would already be open to honest posting. People need the information. Why not provide it?
The answer is that people are counting on the money in their stock portfolios to finance their retirements. Show them that 60 percent of that money is just irrational exuberance of no lasting value and it’s as if you are taking hundreds of thousands of dollars out of their pockets. It makes them feel bad. Most of us humans don’t like to make other humans feel bad. So we keep it zipped re this sort of thing. The entire purpose of the book is to NOT keep it zipped. My writing of this book is a deeply anti-social act.
So it is hard to write it. It makes me anxious to work on it. I put it off. I make excuses. Yadda, yadda, yadda.
I hate myself for taking so long to complete it. It’s a horrible thing. But you know what? Shiller’s research has been available to the world for 40 years now and no one else has written the book that I am writing. That includes Shiller. He wrote an amazing book. But he discussed only theory on that book, not the how-to stuff that people need to hear for Valuation-Informed Indexing to become the dominant model. So I am going somewhere where no one has ever gone before me. I guess it is understandable that it would take some extra time to work up the courage to go there.
I am close today. I believe that I will be finished by August 1. I will dance a jig on the day when I finish the last proofing read. It’s been a heck of an experience. Holy moly!
My best and warmest wishes to you, my dear Goon friend.
Rob
“It looks like you are finally admitting that your plan to get a settlement payment is a long-shot given you compare it to going to Vegas. Why would you gamble with your retirement?”
I don’t think that believing that Shiller’s Nobel-prize-winning research is legitimate research is a long shot at all. I think that ignoring the last 40 years of research and promoting a pure Get Rich Quick approach instead is the long shot.
I just don’t think it makes sense to spend the $500 million until I have collected it. I have earned it but I do not yet have it in hand. That’s the weird thing. It is the world around me that is behaving oddly, not me. If we do not want to know the truth about stock investing, why do we have peer-reviewed journals. If we think that it is so important just to go where our emotions lead us, why bother to have anyone study this stuff.
I think that there is a part of us that really does want to know the truth and that that part will become more dominant in the days following the next price crash, when we can see with out own eyes how much pain always follows from going with a pure Get Rich Quick strategy. We’ll see, you now. I believe that the current situation is untenable as a long-term proposition. I believe that it became untenable as soon as Shiller published his Nobel-prize-winning research findings.
My best wishes.
Rob
“I don’t think that believing that Shiller’s Nobel-prize-winning research is legitimate research is a long shot at all. I think that ignoring the last 40 years of research and promoting a pure Get Rich Quick approach instead is the long shot.”
We disagree about what the last 40 years of research say and what is part of that data set. Set that aside for now. What is a long shot is you getting any kind of settlement payment.
Are you okay with waiting to see how things play out?
I didn’t put my famous post of the morning of May 13, 2002, forward with the idea of collecting a $500 million settlement payment. I just thought that I should post honestly because the retirements of my friends were at stake. So I did that. I thought that you Goons would do your dirty stuff for a few days and then the site owner would shut you down. That obviously didn’t happen. You are still at it 19 years later.
What does that tell us? It doesn’t tell us that honest posting on what the peer-reviewed research says is non-important. It tells us that it is very, very. very important, hundreds of times more important than I realized on the morning of May 13, 2002. If there had never been any cover-up, there never would have been any objection to me posting honestly. What we see is intense opposition. That’s because the cover-up has gone on for so long. The Buy-and-Holders very, very, very much for not want the truth getting out.
I am helping to change that. After the crash, everything will come out in the open. You don’t think that there will be lots of people insisting that I be compensated for the work I have done, work that is likely going to benefit millions and millions of people. I think there will be people doing that. I think that there will be a feeling that we all need to come together at that time and that part of that process will be compensating those who dared to post honestly when it took a lot of courage to do so.
If you don’t think that, you don’t think that. You get to live your life and I get to live mine. I think it. I couldn’t post dishonestly even if I didn’t think that there was going to be compensation for posting honestly. So there’s an important respect in which it doesn’t matter. I don’t want to be associated with the millions of fails retirements or with the hundreds of thousands of failed businesses or with the millions of lost jobs. I’m not doing this just for the compensation that I expect to receive. I am doing it because it is the right thing to do, because it is important work that needs to be done and because no one else has stepped forward to do it. I am doing it because I love my country. I am doing it because I couldn’t sleep at night if I didn’t do it.
I do expect to receive compensation. I am not able to imagine any scenario in which I would not. But I think we are going to just wait and see to know for sure. There has never before been a situation like this. So no one can know for certain. We will just have to let things play out.
I naturally wish you all good things, in any event.
Rob
If you need a job, how can you wait any longer to “see how it plays out”? It’s been 2 decades now. Do we need another 2 decades? You will be in your 80’s by then, provided you live a longer than average lifespan.
The retirement study posted at John Greaney’s web site doesn’t contain a valuation adjustment any more today than it did 19 years ago. If you are saying that you find it amazing that it would take 19 years to get an error in a retirement study corrected, I am with you. But the fact that it has taken 19 years shows just how important a matter this is. We cannot just let that continue, can we?
Where are we going to be as a people if we just let that continue? I think it would be fair to say that getting the Buy-and-Hold retirement studies corrected is a pretty darn urgent piece of business. Should I go back to pretending that I don’t know about the error, just keeping my mouth shut about it like lots of others do? Do you think that would help?
Rob
If you don’t get a settlement payment and you can’t find a job, do you have another alternative?
Love life, Be grateful for all of the blessings that I have been given in this life.
Isn’t that the only reasonable alternative that any of us have when life deals out hurts to us? One plays the cards that one is given to the best of one’s ability and one makes the best of the circumstances that follow from that.
Rob
“Love life, Be grateful for all of the blessings that I have been given in this life.”
You still need to figure out the way to pay the bills.
Valuation-Informed Indexing is the future of investing analysis, Anonymous. There’s 40 years of peer-reviewed research supporting it compared to zero for Buy-and-Hold. The market for honest, accurate, research-based investment advice is immense, millions and millions of people. I am today the world’s foremost expert on Valuation-Informed Indexing. I have been working these fields for 19 years while many of the big-name experts haven;t yet quite worked up the courage to say that the Buy-and-Hold retirement studies should be corrected by the close of business today.
I think it would be fair to say that my prospects for being able to pay any bills that come my way are better than those of 99.999 percent of the population. There is no such thing as an absolutely sure thing in this life. But I think that it would be fair to say that this is as good as it gets in this life. I can live with that.
My best and warmest wishes to you and yours.
Rob
For more than a decade you have been confident that your VII will finally work and you have also been confident that you will get a settlement payment. Unfortunately, none of that ever materialized. It is obvious that you need another plan.
That’s like saying that the people who didn’t invest in the Madoff fund in the years before it was exposed as a fraud needed another plan because the Madoff fund made tons of money for a long time. No. Either Shiller’s Nobel-prize-winning research is legitimate research or it is not. I believe that it is legitimate research. So my plan is to tell people about it and to make money as a journalist doing that.
If Shiller’s research is legitimate, then any strategy not emphasizing the importance of market timing is a scam. Most people may not appreciate how much falling for the scam can hurt them until the scam is exposed in a price crash. But just about everybody will get it once the mountain of irrational exuberance disappears into thin air. You are the one who needs a new plan. Get Rich Quick strategies remain popular only for so long as prices remain sky high. And they never remain sky high indefinitely. Shiller’s research shows that.
I think my plan is a winner. Get Rich Quick/Buy-and-Hold remains popular today. I see that. But I do not believe that it is going to remain popular after it has destroyed millions and millions of lives. My plan for 19 years now has been to go with the research. That remains my plan. The pure emotion stuff just doesn’t appeal to me.
We’ll see.
Rob
“That’s like saying that the people who didn’t invest in the Madoff fund in the years before it was exposed as a fraud needed another plan because the Madoff fund made tons of money for a long time. ”
Wrong. Madoff was running a Ponzi scheme. He was not buying stock.
Madoff committed fraud. He misled people into believing that his fund had made trades that in fact it had not made.
Greaney committed fraud. He misled people into believing that a 4 percent withdrawal rate is always “100 percent safe” (his words) when there is 40 years of peer-reviewed research showing that it is not possible to identify the safe withdrawal rate without taking valuations into consideration (which Greaney did not do).
The difference is that the Greaney fraud affects 500 times the number of people. If stocks continue to perform in the future anything at all as they always have in the past, the Greaney fraud will end up destroying millions of lives. I want no part of it. I am proud that I was the person who exposed the Greaney fraud and that I have worked for 19 years now to bring it to the attention of every person on the planet.
That’s where I am coming from, Anonymous. When I post about retirement studies, I post honestly or I post not at all. Not negotiable.
And I naturally wish you all the best in your future life endeavors.
Rob