A Rich Life

The Old Ideas on Saving & Investing Don't Work -- Here's What Does

“If Irrational Exuberance Is a Real Thing (I Believe It Is), We All Should Be Doing Everything We Can to Combat It. How Would You Propose Combating It Without Engaging in Market Timing? There Is No Other Way.”

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Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

Let’s go back the original point you have avoided.  No one has banned Shiller and/or what he has to say.  Thus, your headline is faulty to begin with.

If you don’t permit discussion of the merits of market timing, you are not permitting discussion of Shiller’s amazing research findings. The title of Shiller’s book is “Irrational Exuberance.” If irrational exuberance is a real thing (I believe it is), we all should be doing everything we can to combat it. How would you propose combating it without engaging in market timing? There is no other way.

Shiller was awarded a Nobel prize. So his research must have changed how we all think about stock investing in many ways. Please tell me five ways in which Shiller’s research findings caused you to alter your stock investing strategies.

Rob

Comments

  1. Your entire approach for the last 20+ years is that you feel you are 100% right and that everyone else is not only wrong, but must be compelled to listen to you. Any opposing view is labeled as hostile by you.

    The fact is that people will always gravitate towards what works based on observing outcomes. If you had a successful track record, with superior outcomes, you wouldn’t have resistance. You don’t have that, so there is no reason for anyone to support your position.

  2. My view is that there are two academic models for understanding how stock investing works and every investor should be regularly exposed to both and permitted to make up their own mind as to which one to follow. I believe that the same laws that apply in every field of human endeavor other than the investment advice field (no death threats, no extortion, etc.) should apply in the investment advice field as well.

    In terms of outcomes, you will get very different impressions if you look only at recent history vs. looking at the peer-reviewed research, which looks at the entire history of stock investing. Valuation-Informed Indexing has of course been far superior to Buy-and-Hold over the entire history of the market. Buy-and-Hold looks better if you look only at outcomes from the recent past, in which we have experienced the most out-of-control bull market in U.S. history. I don’t believe that you can assess the out-of-control bull market accurately until you see the millions of lives that will be destroyed in the Buy-and-Hold Crisis that will inevitably follow from it. The reason why I like peer-reviewed research so much is that it takes you out of the current moment and permits you to see how things play out over the long term.

    I believe that I am right in the things that I say or else I wouldn’t say them. One of the things that I love about internet discussion boards in which honest posting is permitted is that they provide a means to become aware of the areas in which you are off base on something. I don’t believe that I am off base re my famous claim that the retirement study posted at John Greaney’s web site lacks an adjustment for the valuation level that applies on the day the retirement begins. The death threats, etc, have not persuaded me that I am wrong re that one. To the contrary, I view them as further evidence that I am right. If Greaney truly believed that he had included a valuation adjustment in the study, he would never have engaged in criminal behavior and risked going to prison. He went down that road out of desperation. There really is no valuation adjustment in the “study.”

    Rob

  3. “ The death threats, etc, have not persuaded me that I am wrong re that one. To the contrary, I view them as further evidence that I am right. ”

    So, by your logic, if there are no death threats, then you are wrong on everything else, right?

  4. No. I believed that the Greaney retirement study lacked a valuation adjustment before there were any death threats. But, if there were no death threats or other criminal behavior and we had gone 20 years and the new ideas had not spread very much, I think it would b e fair to conclude that that was a sign that there is something lacking in the new ideas. The fact that we have seen death threats and other criminal behavior tells a very different story. That shows that those who want to continue to push the old ideas feel extremely threatened by the power of the new ideas and feel that they need to take desperate steps to have any hope that they could survive.

    Rob

  5. Look at what you said. You described it as “evidence”. So if the death threats never existed, then you lack evidence. You say this evidence proves your point. As such, without evidence, it must be the opposite. I think you get the logic and so you then claim that any scenario favors your opinion. It is like when you flip a coin and say: “ Heads I win, tails you lose”.

  6. I definitely believe that the death threats support Shiller’s view that investors are not 100 percent rational, as was presumed by the people who developed the Buy-and-Hold concept. The things that we have seen from the Buy-and-Holders over the past 20 years show that at time of high stock prices stock investors are HIGHLY emotional.

    Rob

  7. Yet you have no evidence of any death threat, which means you whole argument is false.

    If someone made a post saying you were right, you would be posting a link to that every day. Yet after claims more than a decade old, you have yet to provide a link to a death threat. There were even posts where we saw that people were discussing personal protection and gun safety and you claimed that those comments were a death threat. As such, we can only conclude that it was all made up and your entire credibility is blown up.