I’ve posted Entry #672 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Buy-and-Hold Is a Price-Indifferent Strategy — That’s Not Good!
Juicy Excerpt: Shiller’s book is titled “Irrational Exuberance.” The first word of the term gives the game away. Irrational exuberance is not a good thing. As bad as it is, we all should be united in trying to put an end to it whenever it appears. You put an end to irrational exuberance by noticing when prices get too high and by uniting as a nation of people to pull them back down to reasonable levels. Um – hello, advocates of price-indifferent strategies!
No one forces anyone else to buy anything, including stocks. If you think they are too high, don’t buy (look at how bad that turned out to be). Meanwhile, everyone else is free to buy and sell as they see fit. Just because you don’t like the way the stock market works, the world does not have to bend to your will. Some thing home prices are too high. Should we dictate what people spend on homes? There are plenty of arguments on stock investing and at the end of the day, and all they are doing is giving their best guess. Look how many times Shiller has been wrong. Look at how many times you have been wrong.
I am not trying to dictate a thing. And I acknowledge that I am capable of being wrong.
What I am saying is that, if I sincerely believe that the Greaney retirement study lacks a valuation adjustment and I see that study being used for retirement planning purposes at a discussion board at which I participate, I need to speak up and point that out. If some say “I don’t care, I am going to use it any way,” that’s their business, it is none of my concern. If some others say “thanks, man, I was going to use that study but now I have changed my mind,” that’s fine too so far as I’m concerned. It’s up to them.
That’s where I’m coming from re this one. I have an obligation to say what I sincerely believe. And every community member has a right to hear both sides and to decide for himself or herself what to do with his or her retirement money.
Rob
“ I am not trying to dictate a thing. And I acknowledge that I am capable of being wrong.”
I strongly disagree with not of those statements. You are clearly dictating things and you refuse to acknowledge when you are wrong, even when caught in direct lies.
Okay, Anonymous.
I do wish you all good things, in any event.
Rob
This whole site is silly. You are broke and shouldn’t be giving advice to anyone. It is like malpractice. It is like your house is on fire and you want to talk about how you need to urgently paint the siding.
I would be king of the world today if there weren”t a signficant percentage (about 10 percent) of the Buy-and-Hold community that is INSANELY defensive about their strategy, so defensive that they oppose the corrections of errors in retirement studies if those errors were made by Buy-and-Holders. Even on of the generals in Greaney’s Goon Army has acknowledged that “nodody” truly believes that Greaney included a valuation adjustment in his study, “including Greaney himself.” That was one Goon post that I could hearily endorse!
My best wishes.
Rob
You can be INSANELY defensive about your position, but think no one else can. You don’t think you should be banned, yet you block people here every day. The Greaney crap is stupid. Of course it doesn’t have an adjustment because it doesn’t need it. A submarine lacks a screen door. Does it need it? No. You try and argue one point, by throwing out another argument on a non-related issue. All of these have been explained thousands of times.
Okay, Anonymous.
Please mark me down as saying that I sincerely believe that the Greaney study lacks a valuation adjustment.
I naturally wish you all the best that this life has to offer a person.
Rob
I will mark you down as someone that can’t deal with reality.
Today’s stock price really is a current-day reality. It is the product of the votes of millions of investors. It’s what we collectively believe today the stock price should be. We could set the stock price wherever we wanted it to be and we set it where it is. So one could say that it reflects reality.
But Shiller’s research is a reality as well. His book is a reality. Today’s CAPE value is a reality. My claim that the Greaney retirement study lacks a valuation adjustment is a reality. The Bennett/Pfau research is a reality. The laws against death threats and extortion are realities.
Those latter realities are being suppressed at this time so that the former realities can remain realities a bit longer. If as a nation of people we were to give full recognition to the latter realities, the former realities would change. We would collectively set the stock price at a very different place. I would like to see that happen. I would like to see all of the realities given recognition.
I believe that we all will begin living fuller and better and richer and freer lives once all of the realities are given recognition. I believe that our stock market will be less volatile and that are economic and political systems will be more stable once that change takes place. Recognizing more of the realities means developing a deeper understanding of how stock investing works in the real world. It’s a move away from the dark ages belief that wherever investors happen to set the price at a certain time is the most important thing and there is no need to take into consideration how emotion went into the decision to set prices at that place.
We’ll see , you know? I naturally wish you all the best that this life has to offer a person, in any event.
Rob