“If Shiller Had Said Things As Clearly As I Say Them, It May Be That He Never Would Have Been Able to Get His Book Published and That He Never Would Have Been Awarded That Nobel Prize. So I Wouldn’t Have Known About Him and I Never Would Have Come to Learn All the Things That I Believe That I Have Come to Learn.”

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

So, who do we agree with.  You or Shiller?  You are broke and unemployed.  Shiller is not. Not a hard choice as to which one of you to believe.

You are allowed to believe in whoever you want to believe in, Anonymous. Me or Shiller or anyone else. It’s a personal chouce.

I think I did a very good thing by pointing out the error in Greaney’s retirement study. I’m proud that I eventually worked up the courage to do that. Some would say that was a mistake. There were people who I met at the personal finance bloggers conventions who made tons of money saying the sorts of things that I was saying in the days before I advanced that famous May 13, 2002, post. I could have been one of them. No board bannings! No death threats! No divorce! That was open to me. And I was warned. It wasn’t like you Goons threatened to murder my loved ones on the afternoon of May 13, 2002. That only happened after I made it pretty darn clear that I intended to continue to say that the Greaney study lacked a valuation adjustment no matter what. So that was a choice.

I think it was a wonderful choice. I see is as my finest moment. I suppose that Wade Pfau would say that that was the wrong choice. The heat got too hot for him and he moved out of the kitchen. I said: “give me all you got!”, you know? I didn’t enjoy the heat. Not one little bit. But I preferred taking the heat to going back to being a little mouse in the corner, knowing that the Greaney study lacked a valuation adjustment and not saying anything about it. Yoy may recall that I said in an email to Wade that he was “insane” to flip to the Goon side. From my perspective, that’s the reality. His perspective is different. Different people do different things. Different people lead different sorts of lives.

It could be argued that Shiller has made things worse. I think his research is amazing. Obviously. But the other side of the story is that we have had higher CAPE values remain in place for longer lengths of time than was ever the case prior to the publication of Shiller’s research. It’s as if Shiller discovered the cure for cancer and then the number of people dying from cancern increased. That’s pretty messed up. That obviously wouldn’t have been the case if he has included a chapter in his book in which he pointed out that, gven his research findings, there is preciselty zero chance that the safe withdrawal rate could be the same number at all CAPE levels so we need to pull together as a nation of people and get all the Buy-and-Hold retirement studies corrected immediately. That certainly would have made a difference. Shiller messed up.

Or did he?

If Shiller had said things as clearly as I say them, it may be that he never would have been able to get his book published and that he never would have been awarded that Nobel prize. So I wouldn’t have known about him and I never would have come to learn all the things that I believe that I have come to learn. The CAPE value would be every bit as high as it is today. The difference is that I wouldn’t be 80 percent finished a book on how all this stuff came to be. So, when the next Buy-and-Hold Crisis hit and we were at risk of the CAPE falling to 8, I wouldn’t be around to reassure people that a CAPE of 8 is every bit as crazy as a CAPE of 29 and thereby prevent us from falling into the Second Great Depression. So maybe Shiller is a hero for playing it the way he did. There are different ways of looking at things.

Bob Dylan has a song called “Born in Time.” The world exists before we come along and then we enter it and do our best to make our way through it in some sort of sensible way. That’s life, that’s how it goes. I like you Goons. I liked you before I put up the May 13, 2002, post and I like you today. But I also like learning stuff about how the world works and then passing along what I have learned to people interested in knowing about it. That’s why I became a journalist. It’s not just what I do. It’s what I AM. That runs deep.

There’s never been a bigger journalistic opportunity than the one I stumbled onto on the morning of May 13, 2002. The shift from Buy-and-Hold to Valuation-Informed Indexing changes the world in a very big and very positive way. And it’s all backed by 41 years of Nobel-prize-winning research. It affects not just millions of people but hundreds of millions of people. And it’s me leading the parade. I am near completion of the book that no one else (including our friend Robert Shiller!) has had the courage to write. This is bigger than the Watergate story. It’s bigger than when Rachel Carson worked up the courage to write “Silent Spring.” My life producced this book. All of the crazy experiences that I have been through over the years somehow produced a person who would see this matter through to completion even when people who he loved and respected told him “hey, you might want to let someone else lead the charge, cowboy.” This story is me. It just is. I’m proud of it.

Yes, the divorce hurts like the blazes. That level of pain causes me to ask questions. If there’s a God (I believe there is), then my first question to him is going to be “Was that really necessary, couldn’t you have found some other way to make whatever point it is that you were trying to make?” But I can’t say that I would have played it differently even if I had known that it was going to lead to this awful, awful divorce. I had trained all my life to get the big story and the big story fell into my hands and so I did what I was trained to do. The last line of my first book was about how a dog feels when he chases a frisbee and how gaining financial independence early in life lets you gain access to that feeling. That’s how it played out for me. The saving stuff permitted me to pursue the investing stuff. And the investing stuff turned out to be the biggest story of my lifetime. It’s amazing and humbling to be at the center of it.

I am not going to say that Shiller did wrong. I can see the case for saying so. I can also see the case for saying he did not do wrong. I think that only God can render final judgments re some of these questions. I think that I probably behaved in the only manner in which I was capable of behaving, given the importance of the story and given what I am deep inside. I try to look at everyone involved (including you Goons!) in a spirit of love and just accept that crazy things happen in this mixed-up world of ours from time to time and that the past 20 years just happened to be one of those times. And I of course hope (and believe) that all will be set right on the final page of our little saga. I was born in time and I did the best that I could do with the little stretch of life handed out to me. That darn Greaney study really does lack a valuation adjustment! I am sure!

My best wishes to you, Anonymous.

Rob