Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Thanks again for your daily reminder that you alone are right and everyone else is wrong. It must be difficult to find time to educate us morons when you have all those speaking engagements, book tours, etc, not to mention, the burden of managing your upcoming $500 million windfall.
Shiller wouldn’t have been awarded a Nobel prize if I were the only one who believed that his research showing that valuations affect long-term returns (and that thus there is precisely a zero percent chance that a pure Get Rich Quick/Buy-and-Hold strategy could ever work for a single long-term investor) is legitimate research. It’s about 10 percent of the population that believes that. We are going to have to get that number up if we are going to avoid future Buy-and-Hold Crises (it’s probably too late for the next one but we can avoid further crises after that one by getting the word out). I believe we will do it.
We all have a little bit of moron in us or else today’s CAPE value would not be 29. Shiller is trying to help us become more aware of what makes stock investing risky (price-indifferent investment strategies!). But the message doesn’t stick when we only hear it once in a great while. Are we all “morons” because we all want to eat too much chocolate cake and not stick to a balanced diet? We are flawed. Regular remineders help us avoid going too heavy on the chocolate cake. It works the same way with stock investing and with our human weakness for price indifferent/Buy-and-Hold investment strategies. Irrational exuberance tastes sweet in the moment. It’s only when we see how much harm it has done to millions of humans that we can reflect on how much better off we all would be if honest posting re the last 41 years of peer-reviewed research were permitted (and encouraged!) at every discussion board and blog.
My sincere take.
Rob
Nobel prize winner, Robert Shiller, warned people not to time the market with CAPE.
If you truly believed that, you would invite him to appear at the Bogleheads Forum with both Buy-and-Holders and Valuation-Informed Indexers present and ask him to spell out his views on market timing with some clearity and detail. You know that he would not describe his views in the way that you describe him. So you don’t ask him to spell things out.
I would love to hear Shiller spell out his views in market timing. I believe that every investor on the planet needs to hear about Shiller’s views on market timing. Shiller’s precise views on market timing are one of hundreds of important things that we will learn once we decide as a nation of people to open every discussion board and blog to honest posting re the last 41 years of peer-reviewed research in this field, without a single exception. The Ban on Honest Posting is killing us. It’s bad news.
My best and warmest wishes to you and yours, in any event, Anonymous.
Rob
Shiller is not worried about the current level of CAPE.
https://www.tker.co/p/robert-shiller-cape-ratio
Shiller says in the interview quoted in this article that “I am not highly alarmed” and “When it’s highly priced, it doesn’t necessarily make it a horrible investment.” I am highly alarmed. I agree that stocks are not a horrible investment even when selling at the prices that apply today. But I think that all investors should be going with lower stock allocations than what they were going with when stocks were reasonably priced. That’s the only way that they can keep their risk profile constant over time. That’s market timing.
Of course, if most investors sold shares to bring their stock allocation down at times of insane prices, that would bring prices down to reasonable levels again. So the problem would be solved. It is the relenetless promotion of price-indifferent strategies (Buy-and-Hold) that cause bull markets. And it is bull markets that cause bear markets. And it is bear markets that cause economic crisies.
Thanks for supplying the link, Anonymous.
Rob
In other words, Shiller Is not market timing, which is consistent with his earlier comment about not timing the market with CAPE.
Say goodbye to that $500 million you have been expecting.
He didn’t say anything even remotely close to what you are saying he said.
Stocks are a super amazing asset class when the CAPE is 8 (the most likely 10-year annualized return is 15 percent real at that price level). He said that he does not necessarily think stocks are a horrible choice today. It would be crazy for investors to go with the same stock allocation when stocks are almost but not quite a horrible choice as they do when stocks are a super amazing asset class. Shiller appears to be as much in favor of market timing today as he has always been in the past.
We should open every site to honest posting and find out all the details of his position and of the position of every other investment expert. That would be the best thing for every investor on the planet. My personal thought is that it would even be best for you Goons.
If Get Rich Quick/Buy-and-Hold were a real thing, we never would have seen a single abusive post. It’s all emotion.
Rob