I’ve posted Entry #630 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Market Timing Makes Stock Investing Rational
Juicy Excerpt: I look forward to living in a world in which rational stock investing is encouraged rather than discouraged. I believe that that world is coming in the days following the next economic crisis brought on by the relentless promotion of Buy-and-Hold strategies. There are all sorts of interesting questions that experts in this field will feel free to examine in those days.
Was your wife irrational when she asked for a divorce?
From her perspective, she was rational.
From my perspective, she was not.
Shiller published his Nobel-prize-winning research in 1981. If we were all thinking clearly, that’s when we would have launched a national debate to talk throughb all of its amazing, far-reaching implications. That didn’t happen. I presume just because it was such a huge advance that people had a hard time letting it in. So we put it off. And, the longer we put it off, the more embarrassing it became to come clean about having put it off. So now we have gone 41 years not talking about what the peer-reviewed research teaches us all about how stock investing works in the real world.
It’s the situation that’s crazy, not my ex and not me. I don’t see how we are ever going to get out of this crazy situation if someone doesn’t just make the case for opening every discussion board and blog to honest posting re the peer-reviewed research, without a single exception. I’m trying to do my part to fix this crazy situation. My ex wanted things to proceed as they would in any other field of human endeavor, where the guy who discovered the error in the Buy-and-Hold retirement studies would be properly compensated for the good work he did and all that sort of thing.
She’s right to think that this situation is not a tiny bit normal or a tiny bit healthy. I don’t blame her for thinking the situation is messed up. But I cannot imagine how it is going to get any less messed-up by one more person who knows what the research says concluding “oh, the Buy-and-Hold Goons really, really. really don’t want to correct the error they made, I had better just get with the program and pretend that the Greaney study contains a valuation adjustment after all.” The study does not contain a valuation adjustment, Anonymous, I am sure. We all would be better off if everyone just acknowledged that it is not even a logical possibility that the safe withdrawal rate could be the same number at all valuation levels in a world in which valuations affect long-term returns.
I have all the empathy in the world for my ex’s situation. I get it loud and clear. It causes me great anguish. But you know wha? I also feel great empathy for the millions of middle-class investors who are not aware of the real and lasting value of their stock portfolios because we do not permit honest posting re the last 41 years of peer-reviewed research on any internet sites. I believe that we need to open them all to honest posting re the research, without a single exception. I am just trying to do the best that I can, given the crazy circumstances that apply for all of us and that applied on the morning of May 13, 2002, when I advanced my famous post pointing out the error in the Greanery study.
Do you think it would have been better if I had just kept it zipped?
Rob
And there is your problem. You don’t think your wife is rational. You don’t see anyone that disagrees with you as being rational.
You fail to understand the world does not need to change for you.
It’s not disgreeing with me that makes someone irrational. It’s disagreeing with 41 years of peer-reviewed research. I’m just some guy who says that we should permit discussion of the last 41 years of peer-reviewed research at every discussion board and blog, without a single exception.
And, no, the world does not need to change for me. But, if as a nation of people we continue to fail to take action re the internet goons who have for 20 years blocked discussion of the peer-reviewed research, we will suffer consequences for failing to do so. I am assuming here that the stock market may continue ijn the future to perform somewhat as it always has in the past. As scary as the thought is, I see that as a live possibility.
My best wishes to you.
Rob
“ It’s disagreeing with 41 years of peer-reviewed research.”
No, because it is only your opinion of what 1 guy said. It is not 41 years of peer-reviewed research.
Right. It’s only my opinion that Robert Shiller’s Nobel-prize-winning research from 1991 showed that valuations affect long-term returns.
https://en.wikipedia.org/wiki/Robert_J._Shiller
Rob
When did Shiller say to get out of stocks? When did Shiller say to use CAPE for market timing? When did Shiller say that his work is the only thing that constitutes the last 41 years of research?
Shiller published a paper in 1996 saying that those who failed to lower their stock allocation in response to the high CAPE value that applied at the time would live to regret it within 10 years. If that’s not market timing, what the heck is market timing?
Shiller’s Nobel-prize-winning reseearch is not the only research that has been published over the past 41 years. But his finding that irrational exuberance is a real thing affects every strategic decision made in the stock inveting realm. The most basic and important thing that an investor must do is to determine the size of his portfolio. If irratonal exuberance is a real thing, then he needs to distinguish real economic-based gains from the phony, temporry irrational exuberance gains. Otherwise, he will end up putting together a retirement plan based largely on irrational exuberance and wil pay the price for doing so when the next Buy-and-Hold Crisis hits.
The last 41 years of peer-reviewed research is important. We should be permitted to discuss it at every discussion board and blog on the internet, The Lindauerheads and the Greaney Goons be darned.
My sincere take.
Rob
You just made my points, which means you are not rational. Most knew that already.
Okay, Anonymous. My best wishes to you.
Rob
Is there anyone that knows you on a personal level that would also agree with you being rational and your wife being irrational?
I didn’t say that she was irrational. I said that from her perspective what she did was rational. If we were all thinking clearly, we all would want any errors made in retirement studies to be corrected as soon as possible. If we all were thinking clearly, there never would have been a single abusive post, much less any of the criminal stuff. There is no way without her following this stuff closely that she could have imagined that 90 percent of the stuff that went down went down. We have seen some crazy, crazy, crazy stuff.
I said that she was irrational only from my perspective. I had had a front-row seat to everything that has gone down. Please remember that in the days before Greaney launched his Campaingn of Terror aganst the Motley Fool board community, I was a Buy-and-Holder myself. Was I irrational? I don’t think so. I liked it that the strategy was promoted as research-based. I gave up on Buy-and-Hold on the evening ogf August 27, 2002, when Greaney advanced his first dreath threat and it was endrosed by over 200 Buy-and-Holders. That’s enotion, Anonymous. That’s pure emotion. It’s the farthest thing from research that you can get. This entire debate is a debate between rresearch/reason and intimidation/emotion. I today criticized Buy-and-Hold for the same reason that I once endorced it. I endorsed it because I believed that it was supported by reason. When I discovered that it is not, I moved on to something that really is supported by reserarch (Valuation-Informed Indexing).
My ex did not live through what I lived through. If she had, I am confident that she would be 100 percent supportive of evetything thst I have done. I think that the same is true of every site owner who has banned me. I think the same is true of all of the researchers. I even think that that is probably true of you Goons. If we could go back to the afternoon of May 13, 2002, and play it over, I am confident that you Goons would play it differently the second time through. The unfortunate thing is that of course we cannot do that. As the pile of evidence showing that the Greaney study lacks a valuation adjustment gets higher and higher, you Goons become more and more entrenched in hyour position. Now it’s not just an error in a retirement study that embarrasses you, it’s a 20-year cover-up of that mistake.
The only way that we can keep things from continuing to get worse is to open every site to honest posting so that things start getting better. You are not going to hear anyone saying that it is rational to fail to correct errors in retirement studies after that happens. The key is opening every site to honest posting so that we can talk through what is best for every single person involved. That’s the rational thing to do.
I hope that that helps a tiny bit.
Rob
You are either rational or irrational. One of you is rational, the other one is not. There is no third option. So, with that as the context, is there anyone close to you that would agree with you on being rational and your wife being irrational?
Do you think that the doctors who bled their patients were irrational human beings?
I do not. They were wrong. But their thoughts proceeded in a rational way. The world of the time just did not possess the knowledge that it needed for those doctors to see why bleeding patients was ineffective. I would say that a doctor of today who bled his patients was irrational. More knowledge is available today.
There will come a day when everyone will agree with me that we should have opened every site to honest posting re the peer-reviewed research on the afternoon of
Your ex-wife had all the information. You said before that she was not rational. By default, you are saying she is irrational. So answer the question. Is there anyone close to you that agrees with your opinion that you are rational and she is not?
The entire world agrees with both me and my ex.
The entire world agrees that honest posting re the peer-reviewed research should be permitted at every site. If it didn’t, every site wouldn’t have publushed rules that prohibit the behavior that you Goons engsge in to block honest posting.
And the entire world agrees that it’s not worth standing up to you Goons, that it will have to be someone else who does it. Otherwise, Greaney would have had to correct his study 20 years ago.
The entire world is torn, Anonymous. The question on the table is whether the next Buy-and-Hold Crisis will cause the entire world to tilt in the right direction. I believe it will. But I am not God. I could be wrong. It’s been known to happen. We will just have to wait and see how it all plays out.
My best and warmest wishes to you and yours.
Rob
“ The entire world agrees with both me and my ex.”
If that were the case, you wouldn’t be broke, banned and divorced.
We’re in a twilight zone in which the world believes two opposite things. Trying to make logical sense of it is like trying to make logical sense of an alcoholic’s choice to continue drinking when all his friends see that it is destroying his life. Addictions do not make sense.
I believe that we will hit bottom in the days following the next Buy-and-Hold Crisis. Some alcoholics revover and go on to live the best days of their lives.
Rob
The whole world is wrong, but Rob is right. Got it.
The majority is wrong in its understanding of how stock investing works. But only because it has never been exposed to discussions of what the last 41 years of research says. And 10 percent already understands what it says. Once that group feels safe in tellung the others what it believes, the word will spread fast. Everyone wants to know. Once we get to 20 percent, you Goons will not be able to hold us back.
How do you think new ideas spread? Can you think of any field in which someone published exciting new research and then in one second everyone in the world understood it without the need for there ever to be a single discussion about it? We have to have discussions of the research for knowledge to spread. You Goons caught us at a vulnerable time. But I don’t believe that you will be able to hold us back indefinitely.
The Goon tactics are desperation tactics. If you had any confidence in Get Rich Quick/Buy-and-Hold, you would permit discussion of the research. If you are so convinced that Get Rich Quick/Buy-and-Hold cannot prevail in civil and reasoned debate, why should anyone else believe in it? Your own behavior over the past 20 years tells the tale that needs to be told.
My sincere take.
Rob