Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
If you were right, you wouldn’t be broke and divorced.
We disagree, Anonymous. It’s BECAUSE I am right that I am broke and divorced.
If Greaney had included a valuation adjustment in his retirement study, he would have pointed to it when I called him out on the error. I think that Evidence nailed it when he said that nobody truly believes that Greaney included a valuation adjustment in his study. Greaney knew from, the first moment that there was zero chance that he could show that I was wrong. So he played it this other way, which led to me being broke and divorced.
There is no valuation adjustment in the study. I am sure.
Rob
“ We disagree, Anonymous. It’s BECAUSE I am right that I am broke and divorced.”
That is like saying that the flight went as planned when the pilot crashed the airplane.
It’s more comparable to a situation where the pilot of a plane is drunk and the plane is making errative movements and the co-pilot attempts to take over the controls and the pilot pulls out a gun and shoors him. You are saying that that proves that the pilot is the one who should be handling the controls. It does no such thing It shows that the pilot is nutso. It’s his being nutso that caused him to become drunk while driving a plane and it’s his being nutso that caused him to shoot the co-pilot. The other passangers need to unite and take power away from the pilot, take care of the co-pilot and get him behind the controls of the plane. The current pilot has demonstrated himself unable to take care of the job in an effective manner.
Today’s CAPE value is 30. That’s Buy-and-Hold, That’s what telling people that market timing is not always 100 percent required brings us. Rationality should be permitted in stock investing. Discussion of the last 41 years of peer-revieed research should be both tolerated and encouraged.
That’s my sincere take re these terribly important matters, Anonymous.
Rob
Is there anything you’re willing to blame yourself for?
Is there anything you’re willing to blame yourself for?
I blame myself for not pointing out the error in the Greaney retirement study from May 1999 through May 2002. I was afraid of what you Goons would do to me if I posted honestly. I was also concerned about the damage that would be done to the board community as a whole when all of the abusive posting drove our best posters off of the board.
Rob
“I think that Evidence nailed it when he said that nobody truly believes that Greaney included a valuation adjustment in his study.”
But you still keep talking about it because you have demonstrated no ability to convince people that the study should include a valuation adjustment.
Do you believe that Robert Shiller’s Nobel-prize-winning research showing that valuations affect long-term returns is legitimate research, Evidence?
Rob
I believe Robert Shiller when he said that you should not time the market using CAPE. I believe Robert Shiller when he said that we cannot predict the ups and downs of the market, so we should stay in stocks.
Shiller published a paper in 1996 in which he explained in some detail why he believed that any investor going with a high stock allocation who did not lower it in response to the high CAPE value that applied at the time would regret failing to do so within 10 years. That’s market timing, Anonymous. If that’s not market timing, I don’t know what market timing is.
We should be discussing how best to engage in market timing (price discipline!) at every site. The more we talk about it, the better we will all get at it. The Bennett/Pfau research shows that an investor who tunes out the Buy-and-Hold noise and accepts the need to engage in market timing thereby reduces the risk of stock investing by nearly 70 percent. That’s why Wafe Pfau concluded after researching my investing ideas for 16 months that: “Yes, Virginia, Valuation-Informed Indexing works!”
Rob
So, you are calling Shiller a liar, just like you called Pfau a liar?
I say that the research that Wade co-authored showing the great value of market timing is the most important research published in this field in 30 years. And I say that Shiller’s Nobel-prize-winning research showing that valuations affect long-term returns and that market timing is therefore 100 percent required for any investor seeking to keep his risk profile constant over time is legitimate research.
I believe that the same laws that apply in every field other than the investing advice field should apply in the investing advice field. If we were all thinking clearly, we would all want Wade Pfau and Robert Shiller and thousands of others to feel 100 percent safe in posting their honest views on how stock investing worls in the real worlds. Death threats hurt us all. Acts of extortion hurt us all. Thousands of acts of defamation hurt us all. Unjusitified board banning hurt us all. Acts of financial fraud hurt us all.
That’s my sincere take re these terribly important matters, Anonymous.
Rob
So you are saying that Shiller and Pfau do not post honestly…..which means they are lying. We only have Rob Bennett to save the world.
Once we have opened every site to honest posting re the last 41 years of peer-reviewed research, we will all be saving the world together. We all want the same thing. We all want to become more effective investors. Shiller has described the intellectual leap from the finding that short-term price changes are unpredictable (University of Chicago Economics Professor Eugene Fama showed this in research published in the 1960s) to the Buy-and-Hold belief that the market sets prices properly as “one of the most remarkable errors in the history of economics.” We should all want that error corrected so that we can all begin living better, fuller, richer lives than anyone imagined possible back in the Buy-and-Hold days (which I think can farily be described as the dark ages of stock investing now that we have 41 years of peer-reviewed research showing us how stock investing works in the real world).
Rob
“ We all want the same thing.”
No, we do not want the same thing. Again, you act like a dictator. We do not want to be broke and divorced like you.
I believe that deep down we all want the same thing, Anonymous. If we opened every site to honest posting re the last 41 years of peer-reviewed research, you could still follow a Buy-and-Hold strategy with my blessing and with the blessing of every other Valuation-Informed Indexer. So it wouldn’t make you any more broke and divorced than you ago today. And of course I wouldn’t be broke and divorced today if we had been permitting honest posting all along, as the published rules of the Motley Fool site and every other site permitted all along. And you of course clicked “I Accept” re those rules. So there is some part of you that sees the merit of permitting honest posting re the last 41 years of peer-reviewed research.
Deep down we all want the same thing. What we are stuggling though today as a nation of people is a process of getting from Point A, the place we were on the day before Shiller published is amazing, liberating, Nobel-prize-winning research and the place where deep in our heart we all want to be tomorrow, a place that we cannot get to without first working up the courage to say those magical but frightening words “I” and “Was” and “Wrong.” Will the next Buy-and-Hold Crisis finanlly bring about our liberation from Get Rich Quick/Buy-and-Hold strategies? I believe that they just might. We’ll see, you know?
Rob
“ a place that we cannot get to without first working up the courage to say those magical but frightening words “I” and “Was” and “Wrong.””
You are broke, divorced, without friends and without a home. Despite of this total catastrophe, you still haven’t learned how to say those words. The world doesn’t need to change just to make you happy. We all are responsible for our own outcomes. We all own our own outcomes. If I screw up, I am to blame. If you screw up, you are to blame. Take responsibility and fix your own self made problems.
Okay, Anonymous.
My best wishes to you.
Rob
I don’t believe in the efficient market (and neither do Buffett, Munger, etc) but I also don’t believe in market timing. Buy and hold is the best way for most investors. If a smart trader like Jim Cramer can make so many bad calls what more an ordinary person working at Walmart? You can avoid entire sectors during times of irrational exuberance but even Buffett and Munger have made mistakes. If the brightest investing minds in the planet screw up what makes you thi k the Walmart employees who get their news from memes on Facebook will do better?
That’s my sincere and honest take re: these matters.
Sensible
“Do you believe that Robert Shiller’s Nobel-prize-winning research showing that valuations affect long-term returns is legitimate research, Evidence?”
Of course.
I don’t believe in the efficient market (and neither do Buffett, Munger, etc) but I also don’t believe in market timing. Buy and hold is the best way for most investors. If a smart trader like Jim Cramer can make so many bad calls what more an ordinary person working at Walmart? You can avoid entire sectors during times of irrational exuberance but even Buffett and Munger have made mistakes. If the brightest investing minds in the planet screw up what makes you thi k the Walmart employees who get their news from memes on Facebook will do better?
That’s my sincere and honest take re: these matters.
Thanks for offering your sincere and honest take, Anonymous. That’s always a plus.
I believe that market timing is absolutely essential. I believe that Buy-and-Hold is a catastrophe.
I love what Buy-and-Hold was INTENDED to be. I designed Valuation-Informed Indexing to be what Buy-and-Hold was intended to be. Everything in Buy-and-Hold except for the thing about market timing not always being required has checked out. So I just incorporated everything in Buy-and-Hold into Valuation-Informed Indexing with the exception of the one big thing that has been discredited by 41 years of peer-reviewed research that was not available to the people who put together the Buy-and-Hold strategy at the time they were putting it together.
If Buy-and-Hold is so great, why do we today have a CAPE value of 30? I think that CAPE value tells the story of what the relentless promotion of a pure Get Rich Quick strategy (no market timing now!) does to all of us. Many of the people working at Walmart are not engaging in market timing today. I cannot guranty that they will if we open every site to honest posting. But I sincerely believe that we can get the percentage who do up a bit. It’s 10 percent now. I believe that we can get that up to 20 percent within six months with every site opened to honest posting re the last 21 years of peer-reviewed research. It will take much longer to get it up to 40 percent and then 80 percent. But all we can do is all we can do, you know? It certainly seems more likely that we will be able to persaude more people to practice market timing (price discipline!) by permitting honest posting than we will be keeping the ban on honest posting (which has yielded a CAPE value of 30!) in place. Call me madcap.
The brightest minds in investing can certainly screw up, That’s why so many of them have endorsed Buy-and-Hold! The Bennett/Pfau research shows that the biggest difficulty in stock investing is not lacking a sufficient amount of intellect, the biggest problem is becoming so emotional that you come to believe that market timing/price discipline might not be 100 percent required at all times. People who work at Walmart are just as much capable of falling into the Buy-and-Hold traps as the experts. This is why I say that we should open every site to honest posting. We can all works together to help each other to tune out the Buy-and-Hold noise and come over time to live richer and fuller and better lives than we ever imagined possible in the Buy-and-Hold Era. The 41 years of peer-reviewed research is there for us. All that we need to do as a nation of people is to give ourselves permission to talk about it so that we can obtain the benefits it promises.
My best wishes.
Rob
“Do you believe that Robert Shiller’s Nobel-prize-winning research showing that valuations affect long-term returns is legitimate research, Evidence?”
Of course.
That’s good to hear.
That’s why I say that we all should be practicing market timing on a daily basis. I certainly don’t believe that we should be changing our stock allocations on a daily basis. The historical data shows that we can do just fine making allocation changes only once every ten years on average. But we should always be aware of where the CAPE value stands and of what it would mean for our stock portfolio if our stock allocation came to no longer make sense for us given shifts in valuation levels. That’s something that we should be thinking about in the back of our mind on a daily basis.
I don’t say that I wouldn’t believe in market timing had Shiller not piblished his amazing research findings. I like to think that common sense alone would have brought me around to that view (there has never in the history of humankind been a market that could remain functional without the participants in that market practicing price discipline). But I think it was a breakthrough when Shiller publushed research showing that what common sense tells us must be so re stock investing really is so in the real world.
My best and warmest wishes to you and yours.
Rob
There is still the real world problem that the only known Valuation Informed Indexer ruined his life. This was his own doing, others did not do this to him. Sensible people in the real world will look to the one Valuation Informed Indexer and see that he’s broke and that his life is in shambles, and will run the other way. How do we as a nation get past this seemingly insurmountable hurdle?
Sensible
The world needs to change for Rob the dictator.
The world needs to change for Rob the dictator.
The world needs to change for the Nobel-prize-winning research dictator.
Or you could say that the world needs to change for the reality dictator. All that the peer-reviewed research in this field really does is reveal the realities of how stock invesitng works. Get Rich Quick strategies have a short-term emotional appeal. But sooner or later they always come into conflict with the realities. The realities always prevail in the end, The realities are the dictator of stock investing, you could say.
I am not the dictator. I just report on what the research shows to be the realties.
Rob
There is still the real world problem that the only known Valuation Informed Indexer ruined his life. This was his own doing, others did not do this to him. Sensible people in the real world will look to the one Valuation Informed Indexer and see that he’s broke and that his life is in shambles, and will run the other way. How do we as a nation get past this seemingly insurmountable hurdle?
It’s a real predicklement, Sensible.
Rob
“That’s why I say that we all should be practicing market timing on a daily basis.”
Shillers research has never addressed using CAPE as a market timing tool.
It absolutely does. If valuations affect long-term returns, the value proposition of stocks changes as valuations change. Stock are more risky when prices are high (because, as John Bogle explained in his book, Reversion to the Mean is an “Iron Law” of stock investing). So the investor seeking to keep his risk profile contant over time MUST engage in market timing, There is no other way to pull it off.
When too many of us fail to engage in market timing, the market becomes dysfunctional because it cannot get prices right (the core purpose of any market) when millions of investors become unwilling to act in their own best interest, Without market timing, there is nothing to pull prices back down when they out of hand. Eventually the market crashes them because that’s the only means remaining to get them back down. The crash causes a huge loss in consumer buying power, which brings on an economic crisis.
It happens every time, Evidence. When you see something happening over and over again for 150 years, it’s not an accident. We always experience an economic crisis once Buy-and-Hold strategies become popular because there is no other way things could go once that happens. The market needs rationality to get prices right. To disdain market timing (price discipline!) is to disdain rationality.
Shiller didn’t publush a paper in 1996 warning investors with high stock allocations that if they didn’t practice market timing in response to the high stock prices of the time, they would live to regret it within 10 years because he thought it would make him popular with millions to say that. He did it because his Nobel-prize-winning research shows that market timing is 100 percent essential and he has a conscience.
It was the same with Bernstein and his famous statement in his book that the Buy-and-Hold retirement studies were off by a full two percentage points at the top of the bubble. That was Bernstein’s conscience speaking, Bernstein’s conscience wasn’t strong enough to cause him to say that Greaney’s study should be corrected while Lindauer was in then room. But everyone at the board was free to read Bernstein’s book and get the straight story if he chose to do so. Bogle read Bernstein’s book. I presume that he read it. I think that may have influenced Bogle’s decision to move from saying that he never knew anybody who knew anybody who practiced market timing succesdfully to saying that he could see how there were circumstances in which market timing would work.
Make everyone feel comfortable saying that market timintg always works and we will have thousands of people saying it every day. It’s common snese, There has never in history been a market that could function without price discipline. The stock market is not the first exception to the universal rule, according to the last 41 years of peer-reviewed research in this field.
Rob
“ It absolutely does. ”
Nope. Want proof? Looks at what happened to you.
What you are really saying is that you want everyone else to change they way they buy and sell stocks. Instead, you have to deal with how it functions in reality.
There was a time when the tobacco companies ran commercials saying that smoking is good for your health because it reduces stress. Today, the percentage of people who smoke is down because word has gotten out that smoking causes lung cancer. I think that the same thing will happen with Buy-and-Hold/Get Rich Quick investing strategies. We are not perfect people. We all have a Get Rich Quick urge residing within us. But we have seen thousands of people express a desire that honest posting re the peer-reviewed research be permitted. I believe that that number will increase in the days following the next Buy-and-Hold Crisis. I see the good news here being 20 times more good than the bad news here is bad.
My best and warmest wishes to you and yours.
Rob
“ There was a time when the tobacco companies ran commercials saying that smoking is good for your health because it reduces stress. ”
There was a time in your life where you didn’t worry about being broke and divorced. Most of us understand that risk. You haven’t treated it seriously.
Okay, Anonymous.
I think that we are fundamentally a good people. i think we will turn it around in the days following the next Buy-and-Hold Crisis.
We’ll see.
Rob
Do you think you were a good person with your wife when you refused to financially support her?
The experience with my wife caused me enormous mental anguish. I 100 percent believed that we could have worked through things together if we just maintained our trust in each other. People who live in the United States have never seen the kind of corruption it takes to continue a cover-up of an error in a retirement study for 20 years, So she just could not appreicate what was going on.
I did appreciate what was going on. I was there for every abusive post. There are millions of middle-class investors affected by this massive act of financial fraud. That’s all on my shoulders, given that I am aware or what’s going on. A man has responsibilities to his country as well as to his family. Everything that I have been taught since I was a boy about decent behavior tells me that.
Should a soldier desert his troop if he believes that his death could cause some distress for his family?
I say “no.” Sometimes you have to do what is right for your country. Yes, love your family by all means. But the trick is to figure out a way to love your country as well. My job is to do both.
It starts with honest posting re safe withdrawal rates. That one is non-negotiable. I believe that it will be possible to work the rest out in the days following the next Buy-and-Hold Crisis. If we are basically a good people, there will come a day when we work together to open every site to honest posting. I believe that we are basically a good people. I have seen too many people work up the courage to stand up to you Goons to believe otherwise.
Rob
All you had to do is get a job, but you have run your silly games for over 20 years to avoid working.
Okay, Anonymous.
Please take good care.
Rob
You think someone else should have supported your wife and not you?
I think every site owner should have protected me when you Goons engaged in criminal behavior in response to my decision to post honestly re the error in the Greaney retirement study. Had the site owners applied their own published posting rules, my wife and I would have had millions and millions and millions. There is a huge appetite out there for honest, research-based investment advice. We obviously would not have had any money problems ever again. I don’t believe that I will ever again have any money problems once every site is opened to honest posting re the peer-reviewed research in the days following the next Buy-and-Hold Crisis.
Rob