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 guess it is all one big mass conspiracy targeting Rob Bennett.
I certainly wouldn’t put it that way.
Humankind did not come to Planet Earth with a book of instructions telling us how stock investing works. We have had to learn on the fly. Fortunately for those of us alive today, the biggest advance in our understanding was achieved 42 years ago, when Shiller published his Nobel-prize-winning research showing that valuations affect long-term returns. If only he had published that research in 1961 instead of in 1981, there never would have been a Buy-and-Hold and no one would have ever even considered the possibility that long-term timing might not always be 100 percent required for every investor. But there was a gap there when the Buy-and-Holders has to take a wild guess as to how things worked and they happened to guess wrong. Now there’s embarrassment over the mistake that they made and a widespread feeling that, since the cover-up has been going on for 42 years, it’s best just to let it continue indefinitely.
Is that a conspiracy?
The vast majority of Buy-and-Holders don’t even know about the error they made. The vast majority of Buy-and-Holders follow Buy-and-Hold strategies themselves. Are they engaging in a conspiracy against themselves? Does that not seem a little far-fetched?
I think that the best way to describe the situation we face is that it is a conspiracy of ignorance. We have achieved this huge advance which will begin enhance the life of every person on the planet as soon as we give outselves permission to talk about it. It takes some courage to do that because there is a group that is intensely hostile to the idea of people learning about the advance. They have seen how excited people get about it when they hear about it and so they cannot stand for people to hear about it. If you want to say that that group (you Goons) are participating in a conspiracy, fine. It would be fair to say that. But you Goons make up about 10 percent of the population of Buy-and-Holders. The vast majority have a desire to learn about the research-based realtiies. They are just afraid of what they have seen coming from the Goon side of the table.
I believe that we will work it out as a nation of people in the days and years following the onset of the next Buy-and-Hold Crisis. I sure hope so!
We’ll see, you know? I hate it that we have delayed our ability to enjoy all the benefits of the advance for 21 years now. That’s an awful reality. But the good we have seen over the first 21 years of our discussions has been 20 times more good than the bad that we have seen has been bad. I remain confident that we will as a nation of people work it all out in an amazingly positive way down the road a bit.
My best wishes to you.
Rob
You have been all telling us the story for 20+ years about how you are going to be rich from market timing and all the buy and holders would be broke. You admitted that anything beyond 10 years is long term. More than double that time has expired and during this very long period of time, you went broke and the buy and holders have been incredibly rewarded. Meanwhile, you keep up with the same stories of disaster like Chicken Little while doing nothing to address your complete financial failure.
You’re right about the 20 years, Anonymous.
Do you think irrational exuberance is a good thing or a bad thing? I think it is a very bad thing. I think of irrational exuberance as the cancer of the personal finance world. So somehow it doesn’t impress me too much when you say: “Hey! We managed to let the cancer get more out of control this time than it ever did at any earlier time in U.S. history.” You talk about that as if it is a good thing. I think of all the human lives destroyed because people did not know the true value of their portfolio for so many years.
I would like to see honest posting at every site so that never again we do we have to go through something like this. 10 years of irrational exuberance is bad stuff. 20 years of it is twice as bad. We are coming at this from different starting points. That’s why we always end up at different end points.
If I were king of the universe, we would permit honest posting re the last 42 years of peer-reviewed research at every site. If we did that, I believe that we would never see another bull market. Which means that we would never see another bear market. Which means that we would never see another Buy-and-Hold Crisis. I could live with that, you know?
Do you see any downside?
Rob
Your irrational exuberance for market timing ended up with a complete failure, yet you ignore that and you keep talking as if it is a good thing. The peer reviewed research does not say what you say. You shouldn’t have ignored it. You also don’t really believe in honest posting based on what is on this board. No one has interest in perpetuating your lies and bad behavior on your website. You have learned absolutely nothing by the events of the past 2 decades. None of us are hurt by it. We just feel bad for your family having to live what you put them through.
Okay, Anonymous.
I do wish you all good things, in any event.
Hang in there, old friend.
Rob
What is there to disagree with there, Rob?
You know from the first 5,000 times I went through it, Anonymous.
I wish you the best as one human being to another. But I sincerely believe that the Greaney retirement study lacks a valuation adjustment and I am not willing to say othwewise when I post on discussion boards. I came to think of a number of people that I got to know at the Motley Fool board as friends.
Rob
Greaney has nothing to do with what I said. Why change the conversation. It just shows you are trying to distract people.
Wade Pfau admits now that market timing failed, so you can’t even spin that anymore.
Wade never should have been threatened. If Buy-and-Hold were a real thing, every Buy-and-Holder would speak up in opposition to the intimidation tactics that you Goons have employed to suppress discussion of the last 42 years of peer-reviewed research.
But say that Wade had flipped of his own volition. If that were so, the fact that there was a time when he believed that “Yes, Virginia, Valuation-Informed Indexing works!” would mean that honest posting re the research should be permitted. Wade holds a Ph.D. in Economics from Princeton. If some with that background find merit in market timing even for a brief time-period, it is something that we should be permitted to discuss at every site. People should be able to hear both sides and make up their own minds.
Greaney’s failure to correct his retirement study for 21 years is very relevant. It’s been 21 years. There are people who used that study to plan their retirement. What does it say about Buy-and-Hold that the study has not been corrected to this day?
Rob
He wasn’t threatened, but that is also another diversion. He pointed at the data to show that timing hasn’t worked since Shiller’s work. It is not in dispute as you can look at the numbers. People can spin a story. Numbers don’t lie.
Okay, Anonymous.
Please make me down sa saying that long-term market timing is price discipline and is always 100 percent required for every investor.
That’s where I’m coming from re this one.
Rob
Required for what? Any 60 year person today that followed it for the last 42 years would be worse off. How is a requirement, unless your goal was to be worse off?
So what you are saying is that Wade is lying and made up the numbers. Maybe you can put out the numbers and show us how he is lying.
Required for what? Any 60 year person today that followed it for the last 42 years would be worse off. How is a requirement, unless your goal was to be worse off?
The Bennett/Pfau research shows that, for as far back as we have records of stock prices, the Valuation-Informed Indexers ended up far ahead of the Buy-and-Holder on a risk-adjusted basis over the course of an investment lifetime. You are right that the past 42 years has been the best time in the history of the market for an investor to follow a Buy-and-Hold/no market timing strategy. We will have to see how things go in the next Buy-and-Hold Crisis to know whether this will be the first exception to the otherwise universal rule or whether things will ultimarely turn out much as they always have in the past.
I believe that things will likely turn out more or less as they always have in the past. But we’ll see, you know? The historical data shows that market timiing has always worked and has always been required. I don’t have a crystal ball. When I cite the research, I am just reporting how things have always gone in the past. I believe in using peer-reviewed research for guidance. I picked that one up from the Buy-and-Holders, sttangely enough.
My best wishes.
Rob
So what you are saying is that Wade is lying and made up the numbers. Maybe you can put out the numbers and show us how he is lying.
Wade would love to feel free to do 100 percent honest work in this field. Love it, love it, live. The 16 months be devoted to the research we did showing that “Yes, Virginia, Valuations-Informed Indexing works!” were the happiest days of his life.
I am not aware that he ever disowned our research. To get you Goons off his back, he agree not to do more research along those lines and he agreed to remove a number of important articles from his web site. But I do not believe that he ever disowned our research, which I think can fairly be described as the most important research done in this field in the past 30 years.
I believe that Wade will flip back to the side of the good guys in the days and years following the onset of the next Buy-and-Hold Crisis.
Rob
You ignore the numbers, Rob. Your opinion of the research is not based on the actual numbers that occurred. The math now shows how wrong you are.
Are you okay with waiting to see how things play out in the days and years following the onset of the next Buy-and-Hold Crisis?
Rob
42 years is not long enough? If you are over 60, it is over. We don’t live to the age of 150 to see how “things work out”
If we permitted honest posting re the last 42 years of peer-reviewed research, we wouldn’t have the problem with the 42 years. So long as you permit honest posting, prices are going to adjust quickly. Prices are self-regulating in a world in which honest posting re the peer-reviewed research is permitted. We all get those 6.5 percent real returns that are based on economic realities, not emotional mumbo jumbo, no more and no less. That works for me.
The Valuation-Informed Indexer would have been going with 90 percent stocks (compared to 60 percent for the Buy-and-Holder) in the early 1980s. Prices were at rock-bottom lows at that time. It is only in 1996 that the Valuation-Informed Indexer would have dropped to a stock allocation lower than the Buy-and-Holder. So it’s 27 years, not 42 years. And the Valuation-Informed Indexer starred out ahead because of the larger gains in the early 1980s. And he would have suffered less of a hit in 2008. And he would of course suffer much less of a hit in the next Buy-and-Hold Crisis. And thus would have more to invest in stocks for the rest of his life, including years in which they would be selling at super great prices and he would be obtaining super great returns.
I don’t buy your idea that at age 60 it’s over. Most people retire at 65. But they don’t sell all their stocks then. Most continue to hold stocks until they die, which could be in their 80s. The typical investing lifetime is probably for 60 years. So, yes, 27 years is enough for a research-based approach to pay off. It’s true, though, that this is the longest and strongest bull market we have ever seen. I think it is the relentless promotion of the Buy-and-Hold “strategy” that we have to thank for that. I am not a fan of bull markets. I like that average 6.5 percent real return, no more and no less. Call me madcap.
Rob
Yes, it is over at 60. You need to have your retirement secure by that time as that is the point your funds have to be in place. You cannot be certain that you will have good enough health to go much further and there are also job losses by that time when the older workers get phased out. Instead, you want people to keep going into their 80”s? Are you nuts? Your whole plan has been a disaster. Look at the smelly garbage you are trying to sell.
It’s not over at 60.
If two investors each have $1 million at 60 and one follows a research-based strategt and drops down to a 30 percent stock allocation because the CAPE is at the sort of level that brings on Great Depressions (like the CAPE that applies today) and the other goes pure Get Rich Quick/Buy-and-Hold, the one who goes research-based is going to suffer much smaller losses. He then can invest those additional funds in stocks at a time when they are paying amazing returns. The CAPE usually drops to 8 during a Buy-and-Hold Crisis and the most likely 10-year annualized return for stocks purchased at 8 is 15 percent real. That guy is going to go farther and farther and farher ahead as time goes on.
Research-based strategies are a lifetime thing. Get Rich Quickers focus on the moment, they ignore the long-term. That’s the attitude that I oppose. That’s the thing that never works. The long-term matters.
My sincere take.
Rob
The market timer just sat through 42 years of lower performance and now you want him to hold on even longer to see “how it all plays out” and that he should just keep doing the same thing. Yet the buy and holder has done much better over the last 42 years and you tell him that he is wrong and should switch to the strategy that performed worse.
Yes, I agree with your statement that long-term matters. 42 years is more than the simple definition of long term. VII didn’t work.
You are starting with the premise that two people have $1 million each, but they don’t given what they went through over the last 42 years and now you want to ignore that. You think they can all just hit the reset button and start at the same point. That is not how it works.
It’s not 42 years. I explained that below.
The Buy-and-Holder was going with an improperly low stock allocation in the early 1980s because Buy-and-Hold is a price-indifferent strategy.
As Wade Pfau put it after studying the matter for 16 months: “Yes, Virginia, Valuation-Informed Indexing works!”
How could price discipline (market timing!) ever not work? It’s a logical impossibility.
My best wishes.
Rob
Rob,
Let’s use me and you as examples. First, you want to start us both at $1 million and ignore that you are now at $0 and I am at $7 million+. That would mean we would then have to ignore everything over the last 42 years, or 27 years or 20 years (whatever you want to pick). You then want to say that I should take my winning strategy and completely switch over to your timing scheme because you think it is better and not consider the track record I put together. You then bring up Wade Pfau with a spin from what you think he said many, many, many years ago, but then ignore his recent update where he now says the data shows that timing didn’t work after the Shiller publication.
How does this make any sense? It doesn’t.
It all makes perfect since, Anonymouds.
The research that Wade and I completed together is the most impotant research published in this field in 30 years. We should be talking about that research at every site on the internet. It would be to everyone’s benefit, including yours, for us to do that. Learning is one of the few free lunches available in this world.
Is it possible that Wade has modified his views a bit because this bull market has lasted so long? That’s possible. But for so long as the intimidation tactics employed by you Goons continue, there’s no way for us to know. It could be that he has modified his views. It also could be that he doesn’t want to antagonize your Goons by stating his sincere views because he is afraid that you will damge his carreer prospects. I want to know what he really things. So I would like to see the intimidation stuff come to a full and complete stop by the close of business today.
I don’t just want to know Wade’s sincere views. I want to know William Bernstein’s sincere views. And Michael Kitces sincere views. And Todd Tressider’s sincere views. And on and on and on and on. I see it as all upside and zero possible downside to go that route.
I’ll bet you five dollars that six months of being exposed to honest posting will cause you to change your own views at least a tiny bit. It might cause me to change my views a bit. If so, then good, that’s what should happen. Until every site is opened to honest posting with zero intimidation tactics. I really cannot trust anything that anyone says in this field. The intimidation stuff causes people to pull punches or in some cases to just fail to say things that need to be said.
While waiting for every site to be opened to honest posting re the research, I try to figure things out to the best of my ability on my own. I think I do okay with that, I believe that I know a whole big bunch more about how stock investing today than I did on the morning of May 13, 2002. I am certain that i don’t understand things as well as I would if I were getting feedback every day from hundreds of good and smart people. Which makes me sad.
That’s where I’m coming from re this one, in any event.
Rob
Rob,
We have plenty of honest (truthful) posting elsewhere on the website. It clearly isn’t taking place here. We already see views from Bernstein, Pfau, Kitces, etc. You already burned your bridges a long time ago and you have to live with your bad behavior of making up stories, calling people names, ignoring questions, etc.
No Rob. It has nothing to do with your silly Greaney stories or goons or other board owners. The problem is YOU.
Okay, Anonymous.
I do wish you all the best that this life has to offer a person, in any event.
Hang in there. old friend.
Rob