Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Market timing isn’t a strategy. It is a scheme.
Market timing is price discipline. Price discipline is what makes markets work. There’s never yet been a time in U.S. history when large numbers of stock investors came to be persuaded that price discipline was not required and we did not eventually see a collapse of our economic system. It’s not possible for the rational human mind to imagine such a situation ending any other way. Investing in stocks without engaging in market timing is like driving a car without brakes.
All of the confusion that we are trying to overcome today comes from the idea that the market is efficient. If the market were efficient, there could never be any overvaluation. So there would be no need for market timing. The reality is that market efficiency is an aspiration that we should all be aiming to achieve, not something that is automatically handed to us without effort. Market efficiency is achieved through market timing. There is no other way that it could be achieved. Anytime someone suggests that market timing might not be 100 percent necessary for all investors, what they are really saying is that we should forget about market efficiency and let prices get so high that we bring on another economic collapse.
The mistake was made because there was research showing that short-term market timing doesn’t work and the Buy-and-Holders jumped to the hasty conclusion that no form of market timing was required. That’s like saying that, since drunk driving is dangerous, no form of driving should be permitted. Shiller was the first researcher to examine whether long-term timing is required (by showing that valuations affect long-term returns). Every researcher who has looked at the question since has affirmed Shiller’s finding. The most in-depth research on the importance of market timing was prepared by me and Wade Pfau. We showed that, in Wade’s words, “Yes, Virginia, Valuation-Informed Indexing works!”
Now we just need to reach a point as a nation of people in which we agree to stand up to you Goons to get the message as to how stock investing works out to every investor on the planet. I believe that it will happen in the days following the next price crash, when we will all be able to see up close and personal what the effect is on human beings when we permit the widespread and relentless promotion of a pure Get Rich Quick/Buy-and-Hold (price indifferent) approach to stock investing. We’ll see.
My best wishes, etc.
Rob
Drops are never blamed on Buy and Hold:
https://www.cnbc.com/2022/05/17/stock-market-news-open-to-close.html
I am guessing you still don’t have a single dime of that $50 million.
That’s what needs to change. We now have 41 years of peer-reviewed research showing us all how stock investing works in the real world. Once we open every internet site to honest posting re that research, we will never again experience bull markets. Which means we will never again experience crazy price drops.
I can live with that.
Rob
Let us know when you finally decide to make honest posts.
Will do, Anonymous.
Take care, my friend.
Rob
The Greaney retirement study is perfect in every way.
Does that get the job done?
Rob
You can clear things up. Just post links of the actual death threats, job threats or other criminal acts. While you are at it, point out where Shiller said he agreed with your VII timing scheme. Point out where any expert has said Greaney’s work was in error.
I’ve posted links to the death threats. You Goons just say that they were discussions of gun safety. If Buy-and-Hold were a real thing, no advocate of the strategy would engage in discussions of gun safety at a retirement planning board. The purpose of the death threats was to intimidate people who wanted to hear honest discussions of the peer-reviewed research into silence.
The title of Shiller’s book is “Irrational Exuberance.” If irrational exuberance is a thing, it is obviously a bad thing. So we all should be doing all that we can to combat it. The only way to combat it is with market timing (lowering one’s stock allocation when prices rise to insane levels to pull them back down to reasonable levels). Shiller has on several occasions publicly recommended market timing. So he obviously believes in it. He once had a throwaway comment in an interview in which he suggested that his confidence in market timing is not today as strong as it once was. I have said that we should all want to know precisely what he meant by that comment and that the Buy-and-Holders should agree to rein in the criminal stuff long enough for Shiller to appear at the Bogleheads Forum and respond to questions re his views on safe withdrawal rates and on market timing. You Goons have not followed up on that suggestion.
Numerous experts have said that the 4 percent rule used in the Greaney study was in error. Wade Pfau, who was my co-author on peer-reviewed research showing that “Yes, Virginia, Valuation-Informed Indexing works!”, said that the Greaney study is “dangerous.” That’s a pretty darn clear assessment. I say that the dangerous study should be corrected and that Greaney should make moves to compensate the people who have been hurt by it or who are likely to be hurt by it in future days for the losses they have suffered or will suffer.
My best wishes.
Rob