Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“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.”
What is it that you believe that people don’t already know? What information is not out there?
People need to understand that the value proposition of stocks is not constant but variable. Investing rationally means looking at the pros and cons of various stock allocations at a particular point in time and choosing the one that makes the most sense for someone in your particular circumstances. That process of thinking things through is cut off when investors come to believe that market timing is not required. Market timing is the act that permits reason to enter the stock investing project. That’s why the payoff for engaging in it has always been so huge.
There was a poster at the Bogleheads Forum who said: “No one would ever go into a bank and announce that ‘I will take three certificates of deposit please’ without first checking on the rate being offered. But that’s how all Buy-and-Holders make stock purchases. They don’t even check how the current CAPE level affects the value proposition of the thing they are buying before making a decision. I would like to see people making use of their reasoning abilities when buying stocks. To do that, they have to give up any aversion they feel to market timing.
Once every investor appreciates how important it is to engage in market timing, there will be mountains of material generated to help them do it effectively. There will be all sorts of good stuff available to us, things that we cannot even imagine today. We don’t today even appreciate what we are missing because so many of us have fallen for the line about market timing not always being 100 percent required and 100 percent beneficial.
Rob
If market timing works, why don’t you post success stories. Perhaps you can start with your portfolio including your return rates.
The entire history of the stock market is one big success story for market timing, Anonymous. The peer-reviewed research that I co-authored with Wade Pfau shows that beyond any doubt whatsoever. Market timing is price discipline, Price discipline is always a good thing. It always reduces risk while increasing return. How could it possibly ever play out differently?
The reason why we have such a strong desire to believe that market timing might not always work is that believing that takes us to a magical land where irrational exuberance doesn’t hurt. We want to believe that we can get something for nothing by creating lots of irrational exuberance. Our common sense tells us that it is not so. The peer-reviewed research tells us that it is not so. But we really, really, really want to believe, so we come up with this thing where maybe everything is the opposite of what the research and common sense shows it to be and market timing isn’t really required. Um — yeah, sure, it’s not! Stocks for the long run! Stay the course! Tune out the noise!
Believing that market timing is not required is like believing that brakes are not required on an automobile. It’s a belief that always ends in tears. But I suppose that, if you were making mountains of money selling cars without brakes, you might be inclined to block people pointing out the realities of what cars without brakes do to people from being heard on the internet.
It’s a scam, Anonymous. I mean, come on.
Rob
“ Once Every Investor Appreciates How Important It Is To Engage in Market Timing, There Will Be Mountains of Material Generated to Help Them Do It Effectively. ”
Once we have rainbows installed in every town in America, we can have endless pots of gold to buy everything we want.
Okay. Well, please mark me down as saying that market timing (price discipline!) is absolutely essential and that we need to open every discussion board and blog on the internet to honest posting re the last 40 years of peer-reviewed research in this field so that we can all learn for the first time in history how stock investing works in the real world.
I naturally wish you all the best that this life has to offer a person, regardless of what investment strategy you elect to follow.
Rob
Because it has all worked out like you said it would, right? How will you ever spend all those millions you have in that brokerage account?
On the substance side, it has worked out 50 times better than I could have possibly imagined. How many people can say that they are the co-author of the most important peer-reviewed research published in their field in 30 years?
On the process side, it has been a nightmare. But that’s hardly my doing. I am been speaking out in favor of the idea of opening every discussion board and blog on the internet to honest posting re the past 40 years of peer-reviewed research for 19 years now. We are going to need to find some more people willing to stand up to you Goons to see that happen. I believe that we will when we will all be able to see up close and personal just how much misery follows from the relentless promotion of the pure Get Rich Quick/Buy-and-Hold approach to stock investing.
I believe that I will end up with many, many millions in my account. But, even in the unlikely event that I end up with zero, I will be able to say that I did everything in my power to prevent us all from having to live through the Second Great Depression. There’s no amount of money that could make up for finding one’s self on the wrong side of that one. Fair enough?
Rob
What matters is if you have fully funded your retirement.
That’s not all that matters.
There are millions of people who have money invested in stocks. If I say that I believe that the Greaney study contains a valuation adjustment, I am selling those people out. just like I sold out my friends at the Motley Fool board in the days before I worked up the courage to post honestly. I know how that feels and I am not keen on experiencing those feelings again. I prefer posting honestly and I would like to see lots of others experience that feeling as well.
My best and warmest wishes to you and yours.
Rob
“ That’s not all that matters.”
Wrong. This is why we are investing. You have either funded your retirement or you haven’t. It comes down to simple math, not talking points. You pay the bills with $$$$, not words.
I am a journalist. I earn the money to pay the bills with words. And this is the biggest story in the United States today. It is one of the biggest stories in the history of the United States, period. We are living in the best time to be stock investors in the history of our nation. And today’s CAPE value is worse than the one that applied in the days prior to the Great Depression. We need to get honest and accurate information about how stock investing works in the real world out to mullions of people before the close of business tomorrow.
That is my sincere take re this terribly important matter, in any event.
I naturally wish you all good things.
Rob
“ I am a journalist. I earn the money to pay the bills with words.”
It doesn’t matter how you earn dollars. The common denominator for all of us is our retirement savings, or lack thereof. We all measure our success by comparing outcomes, not our career path. Simply, do you have a fully funded retirement or not? It is a simple yes or no answer based on $$$$ in your account.
In a world in which U.S. law is followed, I have a fully funded retirement times 500. In the crazy, upside-down world in which you Goons are permitted to engage in criminal behavior to block millions of people from learning what they need to learn about the last 40 years of peer-reviewed research in this field, I temporarily do not have a fully funded retirement but I have even more than $500 million if I just hang in there and complete the work that I need to do to keep us all from landing in the soup. Gee, I winder how I should play this one?
Someone needs to help us make the transition from Buy-and-Hold to Valuation-Informed Indexing, no? I didn’t ask that it be done this crazy way. But I think it would be fair to say that, each time someone permits himself to be intimidated by you Goons, it makes it that much harder for all the others who have a desire to post honestly. I can’t say that I feel a great longing to make the problem worse. So I find myself drawn to the path that makes it better. Call me madcap, you know?
Rob
“ I temporarily do not have a fully funded retirement but I have even more than $500 million if I just hang in there and complete the work that I need to do to keep us all from landing in the soup. Gee, I winder how I should play this one?”
You are no different than the guy waiting for his lottery tickets to pay off. It’s not going to happen. Are you just trying to make yourself feel better by making up these stories?
You don’t need to worry about those of us with fully funded retirement portfolios. Our only remaining challenges are related to growing inflation due to the fed and the typical healthcare issues. Both of those, we can manage.
Your retirement is not “fully funded” if more than half of the money in your account consists of irrational exuberance, Anonymous,
Rob
“ Your retirement is not “fully funded” if more than half of the money in your account consists of irrational exuberance, Anonymous,”
That’s what you said 10 years ago and look at how that worked out for you. Meanwhile, you are banking on a windfall with odds that are worse than playing the lottery.
I say the same thing today that I said 10 years ago, Anonymous. I think it has worked out very well. I abandoned Buy-and-Hold and started working on Valuation-Informed Indexing on the evening of August 27, 2002, when Greaney advanced his first death threat and over 200 of my Buy-and-Hold friends at the old Motley Fool board endorsed it. I write a weekly column on Valuation-Informed Indexing at the Value Walk site. In 10 years, that’s over 500 columns. I have learned at lot over the past 10 years. I would be 10 years behind where I am today if I spent those 10 years pretending to believe that there might be some mystical, magical alternate universe where a pure Get Rich Quick/Buy-and-Hold “strategy” might work f0r one or two long-term investors.
Somehow, I think that the odds of me collecting a $500 million settlement payment are a lot better than your odds of avoiding a long-term prison term. I’ll take those odds!
Rob