“A Bull Market Cannot Sustain Widespread Telling.”

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

“ I was not banned at just one or two places. I was banned at lots of places. There were a few places where I backed off when it became clear that I was going to be banned if I continued posting about what the last 42 years of peer-reviewed research teaches us all about how stock investint works in the real world. If I continued pushing at those places, I would have been banned at those places as well.”

People disagree with each other every day on almost every board. People are not banned because of their opinions (except on this board). You lack the self awareness to understand why you are really banned. No one can reason with you. Even your wife gave up.

I like your observation that people disagree all the time and it’s not usually such a big deal. That gets to the heart of things. The purpose of my book is to explain that. I can try to explain it briefly here. But the ultimate purpose is to explain it in detail and in depth. To understand why people are so sensitive to hearing what the research says in this area is to understand what stock investing is all about. Your question gets to the core of the stock investing project.

It’s about self-denial. Self-denial is the key to everything. That’s what people need to understand to know what is going on in the stock market. What’s a bull market? It’s a grand exercise in self-denial. Millions of people agree collectively to push stock prices up to unsustainable levels and not to tell anyone that that’s what they are doing. If you tell, the illusion is broken and people realize that it is in their best interest to lower their stock allocation once prices reach such crazy levels and, when they do that, the bull market goes “Poof!” A bull market cannot sustain widespread telling.

That’s why I am hated by some for telling. I am loved by some too because some get it. And the vast majroity don’t understant what all the commotion is about, they would be happy for me to be able to post honestly but they are not too terribly distressed if I go away. But some flat out hate me for taling about the research. Those are the ones that I call “Goons.” They hate me because they see that permitting discussion of rhe last 42 years of research would be the end of bull markets. They like bull marklets and they realize on some level of consciousness how vulnerable they are. Permit people to talk about the research openly and bull markets are a thing of the past. I of course think that sounds great. You Goons think it sounds horrible. Your entire identity is tied up in the bull market. You count irrational exubeeance gains as real and you congratulate yourself for being smart enough to tap into them. I threaten that pleasant illusion. You are not wrong to be threatened. Shiller’s research findings revolutionize our understanding of how stock investing works in a fundamental way.

I mean to threaten today’s CAPE level, Anonymous. I mean to bring it down. It’s nothing personal against you or any of the other Goons. It’s just that I believe that irrational exuberance hurts humans and other living things. So I aim to say the words that need to be said to bring that CAPE level diown, to get the numbers on your portfolio statement to better reflect that economic realities. So you perceive me as the enemy. I think of myself as your friend. We have different persepctives. I see it as a good thing for you to know the true and lasting value of your stock portfolio.

The stock market is a battle of human emotions. There is econmic stuff underlying it. That stuff is real. But that stuff is so simple. The economic stuff provides gains of 6.5 percent real per year. If we all could be satisfied with that, we would all be in grreat shape and there would never be bull markets and there would be no conflict on our boards. But there is something in human natiure that wants something for nothing, that wants to go beyond what the economic realities provide and create trillions of dollars of phony baloney irrational exuberance. That’s where you get bull markets and down the road economic crises. That’s where Buy-and-Hold comes in. Buy-and-Hold PROTECTS irrational exuberance. So those seeking the phony baloney stuff love Buy-and-Hold. It suggests to them that the irrational exuberance is real. Which is something that they desperately want to hear.

Shiller’s research is inflammatory. It’s a huge advance. It is all good, no bad. But it represents a threat to those who are trying to believe that the irrational exuberance gains are real and are having a hard time doing it (we all continue to possess common sense, even in the midst of a raging bull market, we can never entirely kill it, common sense is part of our human nature as well).

Say that I were welecomed with open arms at every site tomorrow morning. I would get a chance to have my say without disruptions by yout Goons, People would learn the realities of stock investing. Nice, right?

Well, people would suffer huge losses. Millions of retirements would fail. Hundreds of thousands of businesses would go under. If investors were able to talk over what is in their best interest, today’s CAPE value could not be sustained. The value of the stock market would drop by nearly 50 percent. I tbink that would be a very good thing. Because the research shows us that prices are going to drop eventually in any event and it would be better if we had knowledge of why they were dropping when it happened so that we could avoid panic. And of couese once we all understood what was happening, we could work tofether to stop it from ever happening again. But the reality is that a lot of human misery would follow from me being permitted to post at every site, as I would like. You Goons are “protecting” us from all that. All of your nastiness helps to protect people’s phony baloney irrational exuberance wealth from destruction at my hands. That’s why some of the Normals feel some synpathy for your cause.

Research helps us to understand reality. Once we understand reality, there can be no more bull markets. The very term “bull market’ suggewts that reality has been abandoned. Do we want stock investing to be a rational enterpeise? I do. You very much do not. You like your irrational exuberance and I am out to destroy it. Irrational exxuberancw is rooted in emotion. So this is a battle over emotions. It gets to people on a deep level. There’s an intesnity.

I don’t believe that it always needs to be so intense. Once we get the CAPE value down (it’s going to happen whether I am permitted to post or not — Shiller’s research shows that it always happens sooner or later — otherwise, the stock market couldn’t contunue to function), the intense feelings of vulnerability that Buy-and-Holders feel when the contemplate the thought that much of the accumulate wealth of their lifetime is rooted in cotton candy emotionalism will no longer be as strong. I believe that we will then be able to work together to use Shiller’s research to learn how to live better and fuller and richer and freer lives from that point forward. We’ll see, you know?

My best wishes, etc.

Rob