Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
It is just simple math. Do you want $6 million or do you want $1 million. We are measuring outcomes.
The criminal behavior comments are just silly and farcical.
It’s simple math in which the most important part of the equation is being ignored by Buy-and-Holders.
Does 2 plus 3 plus 8 equal 5? It does if you ignore the most important factor in the calculation, as the Buy-and-Holders do.
If irrational exuberance exists, you need to consider it in all calculations. If you consider it, you get a different answer than the Buy-and-Holders every time.
Simple math should be done honestly and accurately. Do it that way and the math helps you instead of hurting you. Get the calculations wrong and you turn math into a negative.
Rob
We measure everything by outcomes. If someone has a brokerage statement that says he has $6 million, that is the point of measure. He is able to access $6 million and buy whatever he wants, up to $6 million.
To the opposite, the person that says he will get a $500 million settlement payment has $0 today. He is not able to buy a thing with is hope and dream of getting $500 million.
If someone has a brokerage statement that says he has $6 million at a time when the CAPE value is 37, he needs to reduce that amount by nearly 60 percent to identify the true and lasting value of his portfolio. When the CAPE value is that high, most of the nominal value of his portfolio is comprised of irrational exuberance, nothing of any real and lasting value.
That’s the entire point of Shiller’s Nobel-prize-winning research. That’s what makes it so “revolutionary” (Shiller’s word). Shiller’s research findings permit us all to know the true value of our stock portfolio for the first time in history. That’s a huge advance.
Rob
Wrong. First, you have no clue as to what is in my portfolio. Secondly, if we look at the past 2 decades of, we see that your analysis failed. Third, Shiller never makes the claims you are making.
Shiller’s entire life’s work is a claim that the market is not efficient and that instead valuations affect long-term returns. Shiller and Fama were awarded Nobel prizes on the same day. The New York Times placed an article on the awards on their front page. That article commented on how odd it was that two people with opposite views on how stock investing works would both be given the award on the same day. What possible motive could the New York Times have for saying that Fama and Shiller have opposite views if in fact they have the same view? Shiller is saying something very, very different from what people believed in the days when the Buy-and-Hold strategy was developed.
If you wanted to know what Shiller believes, you would permit honest posting at every site on the internet and over time you would learn. Your behavior shows that you want to continue believing in Buy-and-Hold regardless of what Shiller’s research (and the Bennett/Phau research as well) shows. That’s an emotional position to take. If Shiller’s research is legitimate, we should expect to be seeing an insane amount of emotion from Buy-and-Holders when the CAPE value is where it is today. That is indeed what we have been seeing for 19 years now.
My best and warmest wishes to you and yours.
Rob
By the way, how much of that $500 million have you received?
I am inches from receiving all of it. Committing criminal acts if a desperation strategy. If you thought that there was even a tiny chance that Buy-and-Hold would prevail over Valuation-Informed Indexing in civil and reasoned debate, you would have chosen that path 19 years ago. I mean, come on.
Your behavior shows how threatened you are by Shiller’s research findings. They blow up everything that you once thought was true about stock investing. I think that Shiller’s Nobel-prize-winning research is legitimate research. So I see that as a good thing. If Buy-and-Hold is as dangerous as Shiller’s research shows it to be, we all need to know that.
My sincere take.
Rob