Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Buy and hold is a strategy. Market timing is a strategy. Neither are human. We are comparing strategies. Look at what you are describing. You are actually making the case for buy and hold.
One of the two strategies is suited for use by humans. The other is not. That’s the difference.
There was a widespread academic belief at the time that the Buy-and-Hold strategy developed that the market is efficient. For the market to be efficient, investors would need to be engaged in a rational pursuit of their self-interest. If the market were efficient, Buy-and-Hold would be the ideal strategy.
Shiller discredited the Efficient Market Theory with his Nobel-prize-winning research. He showed that investors are NOT rational. They are self-destructive. They bid prices up to insane, unsustainable levels. They fool themselves into believing that the crazy nominal prices that apply during bull markets are real, that they can use that money to finance their retirements. Then they suffer the horrible consequences that follow from the inevitable price crash and economic crisis.
If irrational exuberance is a real thing, it is the #1 enemy of stock investors. We all should be doing everything in our power to rein it in. That means telling investors about the amazing wealth-protecting and wealth-enhancing power of market timing at every site on the internet. Once every site on the internet is opened to honest posting re the last 40 years of peer-reviewed research, there can never be another out-of-control bull market. Stock prices are self-regulating in a world in which Shiller’s research is available to investors and in which honest posting re the far-reaching implications of that research is permitted.
Humans are flawed creatures, not perfectly rational creature. We all have a Get Rich Quick impulse residing within us. The “idea” that market timing might not be 100 percent required at all times pushes that Get Rich Quick impulse to places it has never been pushed before. We should all back off the dangerous Buy-and-Hold stuff and get about the business of making the case for market timing/Valuation-Informed Indexing.
That’s where I am coming from, Anonymous.
Rob
“One of the two strategies is suited for use by humans. The other is not. That’s the difference.”
Are you now marketing your timing scheme to aliens? I guess that is your only option since there is no one here on earth supports you.
You don’t support yourself, Anonymous. You had to click an “I Agree” button before you were permitted to post at any of the boards you post at. So your yourself gave your agreement to the laws by which we govern ourselves in this country. That’s a problem for you and the other Buy-and-Holders.
I acknowledge that honest posting re the last 40 years of peer-reviewed research in this field is banned at every large site on the internet. But I don’t think that the Ban on Honest Posting is a viable long-term proposition. If Shiller’s Nobel-prize-winning research is legitimate research (I believe that it is), we are going to see an ocean of human misery during the next Buy-and-Hold Crisis. That is going to melt people’s hearts. People are going to work up the courage to stand up the you Goons at that time. And we will all live richer and more fulfilling lives from that point forward. Once we make the transition to Valuation-Informed Indexing, there will not be one person who will ever want to go back to Buy-and-Hold.
We are living through a huge leap forward in our understanding of how stock investing works. Huge advances can be messy. I wish it wasn’t so. But it is obviously so. And you are right about the bans. But I am right about the laws of the United States. The laws of the United States say as much about what we are as a people as does the Ban on Honest Posting re Shiller’s amazing research findings.
We’ll see.
I wish you all good things, in any event.
Rob
The problem is that us normal people believe that the word “honest” also means “truthful”. You obviously have a different definition and that is why you are banned.
I don’t believe that any of us has sole possession of the truth. I believe that, if we all post honestly, the truth will reveal itself over time.
There is a process to learning the truth over time. Part of the process is permitting challenges to things that were once widely believed to be the truth.
Rob
Truth is clear when you base it on facts. Things are either true or not true. There is no middle ground.
So, when the vast majority of people thought that the earth was the center of the universe, that made it true? Those people thought that that was a fact. It is only when they opened their minds to the possibility that there had been a time when they did not yet possess the truth, that they came to recognize what we today believe are the facts..
I say that Shiller added something, that we did not know it all before he came along. I say that that’s why he was awarded s Nobel prize in Economics.
Rob
“ I say that Shiller added something, that we did not know it all before he came along. I say that that’s why he was awarded s Nobel prize in Economics.”
Shiller? You mean that guy that made a truthful post about not using CAPE to time the market?
You don’t know what Shiller really believes about market timing and you do not want to know. If you wanted to know, you would want to see the entire internet opened to honest posting and you would ask him and every person who believes that his research has merit.
Shiller made one off-hand comment suggesting that he was not sure about market timing, He also made clear on a number of other occasions that he thought that market timing had great value, So, going solely by what is in the public record, no one can say with certainty precisely what he believes. That is a terrible shame. We all should want to know as much as possible about what he and thousands of others believe.
I want to know what Shiller and thousands of others believe. That’s why I say that we should open the entire internet to honest posting.
Shiller must believe SOMETHING different from what most others believe. Otherwise, why would he have been awarded a Nobel prize?
Do you believe that Shiller thinks the safe withdrawal rate is always 4 percent? I do not. Have you asked him? If not, why not? Is there some reason why you don’t want to know?
Rob