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 you are now saying that these guys are right? They each disagree with you on very major issues. Wade even sent you a scathing email not only explaining how you are wrong, but he also spoke about the harm you caused him.
I believe that people in the investment advice field are like people in every other field — they would like to be free to do honest work, they would like to be able to go to bed at night feeling that they had helped people.
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.” Humans did not come to Planet Earth with perfect knowledge of how stock investing works. The way it is done in every other field of human endeavor is that people take educated guesses and then learn over time where they have gotten something wrong and then fix it.
The “fix it” part is broken in the investment advice field. The feeling is that making a mistake in this field would be such s terrible thing that the “experts” must keep it zipped when new research shows that they have made a mistake. So the mistake just keeps compounding and compounding. Precisely 100 percent of the evidence available to us today shows that long-term market timing (price discipline!) is always 100 percent required and presisely 0 percent of the evidence supports the “idea” that they might be some mystical, magical alternate universe where market timing (price discipline!) is not 100 percent required. Gee, I wonder why so many Buy-and-Holders feel the need to resort to abusive posting to “defend” the idea that long-term market timing is not always required.
Everyone in the field would like to see every site opened to honest posting re the peer-reviewed research. But who is going to be the one to pin the bell to the tail of the cat? Who is going to be the site owner brave enough to permit honest posting and take on the wrath of the Buy-and-Hold Goon Squads? I believe that someone will appear in the days following the next Buy-and-Hold Crisis. I believe that that fellow or gal will live to see his or her head carved on Mount Rushmore in recognition of the great good that he or she will have done for millions and millions of people who need access to honest and accurate and research-based advice on how to plan their retirement. We’ll see.
Rob
Who, in the investment community, has said that they can’t post honestly (truthful), other than those of us that keep getting blocked here.
Lots of people have said it. Pretty much everyone has said it to at least a small degree.
Rob Arnott was blunt and direct about it. He said that he thought that everything that I say about stock investing checks out but that he was not willing to help me because he had already suffered enough abuse for expressing his sincere views. He said that he knew academic researchers who were doing work on the effect of valuations who were taken aside and warned that it would be a career-limiting move to do that research.
Bill Shultheis discovered my site and told me that he thought that it was amazing. Then somebody got to him and he stopped communicating with me.
Bill Bernstein wrote in his book that the 4 percent rule was off by two full percentage points at the top of the bubble. But, then, when the debate over the Greaney study was raging at the Bogleheads Forum, he was afraid to say that he agreed with me.
John Bogle at one time said that he never knew anyone who knew anyone who timed the market successfully. But, then, after he had listened in on our discussions, he said that he could see how timing could work in certain circumstances. That was a big deal. He should have said that at lots of places. His statement should have been more widely publicized. Why didn’t he make more of a big deal of it? And why didn’t the entire community engage in an extended debate of that major breakthrough?
Wade Pfau was scared to death to report on his discovery that market timing always works. He knew it was a big deal. He loved the learning experience. But he was afraid to speak out loud about what he had discovered.
Very few people in this field speak about these matters with complete honesty. There are some Buy-and-Holders who just accept the idea that market timing is not required as a matter of faith and have never questioned it. But those people just haven’t been exposed to the other side of the story. That fact just highlights the problem. To continue to believe that market timing is not required 42 years after the peer-reviewed research showed that valuations affect long-term returns, one has to live in a cave. It’s not possible to make a coherent case that market timing is not required in a world in which valuations affect long-term returns, which is the world we live in.
If everyone thought that they could post honestly, the error in the Greaney retirement study would have been corrected within 24 hours of the moment that it was brought to his attention. The aim should be to get the numbers in retirement studies correct.
My sincere take.
Rob
None of these people speak to you. In fact, no one speaks to you. You have been totally cut off and for good reasons.
Not really.
In a surface sense that’s so. But I have had thousands of people express a desire that honest posting re the peer-reviewed research be permitted at every internet site, without a single exception. That’s a gratifying, off-the-charts level of support.
And you face prosecution for violations of the laws of the United States in the days following the next Buy-and-Hold Crisis. THAT’S being totally cut off, in my sincere assessment.
Irrational exuberance is a tempory thing. You can’t focus on the temporary to learn what a nation of people truly believe. We are not a perfect people. If we were a perfect people, we all would have insisted that the error in Greaney’s retirement study be corrected within 24 hours of the moment it was brought to his attention. So we are not perfect. But we are not 100 percent corrupt either. If we were 100 percent corrupt, Shiller would not have been able to get his book published or to have it carried in libraries all across the nation. If we were 100 percent corrupt, he would not have been able to get his research published in a peer-reviewed journal. If we were 100 percent corrupt, he would not have been awarded a Nobel prize for having published that amazing, life-affirming research.
My sincere take.
Rob
Just look at all these thousands of fans you have posting here every day.
Just look at the fact that the Greaney retirement study has not been corrected in 21 years.
Rob