Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Does Scott Burns talk to you now? Nope. Does Wade Pfau talk to you now? Nope. Does anyone else from the investment community talk to you now? Nope.
No, we are not in this together. No, there is no one that supports you.
What will happen once we have opened every discussion board and blog on the internet to honest posting re the last 42 years of peer-reviewed research, without a single exception? Will there be even one person in this field NOT talking to me then?
Rob
“ What will happen once we have opened every discussion board and blog on the internet to honest posting re the last 42 years of peer-reviewed research, without a single exception? Will there be even one person in this field NOT talking to me then?”
If it is honest (truthful) posting, they will all be laughing at you.
Okay, Anonymous.
My best wishes to you and yours, in any event.
Rob
I cannot control whether people laugh or not. What I can control is whether I say what I believe or not. My sincere belief is that the Greaney reetirement study lacks a valuatiion adjustment.
Rob
“ I cannot control whether people laugh or not. ”
Sure you can. Just look at what happened in the past and don’t repeat it. It isn’t that hard to understand, Rob.
Ummmm….
Rob
I have an update for you, Rob. My company, like many others is looking to offer early retirement packages to those of a certain age. I just turned 60, so I qualify. Even with some people taking the package, it is expected that they company will still want to consider further headcount reductions and jobs will be at risk. A number of my colleagues that really want to take the package are unable to do so, because they are at or above the age of 60 and have inadequate retirement savings and know that if they give up their job, it will be next to impossible to reach their target as the severance will fall short of needs. For a few people like me, we are very well funded at the age of 60. As you know, I have $7+ million. The severance check will be a nice little cherry on top at this point. Imagine if I followed your advice with your VII scheme. I would be in a heap of trouble, just like you. My funds would be much smaller and I would be worried that the instability puts everything at risk given the fact that people of our age have few options and few remaining years of physical ability to work a job.
This is an example of why you just can’t “wait to see how things play out”. At our age, it has played out. You are either ready by this age or you are not.
The Bennett/Pfau research shows that, had you followed a research-based approach, you would over the course of an investing lifetime end up far, far ahead. Research-based provided much higher returns with greatly reduced risk. But only over the course of an investing lifetime. It’s not a short-term thing.
If you truly believed in Buy-and-Hold, you would have no problem discussing it in civil and reasoned conversations. The crazy, defensive reaction shows that you desperately want Buy-and-Hold to be the best strategy but you have not been able to persuade yourself on a deep level that that is so. So you need to silence any voices that bring up the last 42 years of peer-reviewed research.
I think we need to move on. I am grateful for the many important contributions made by the Buy-and-Holders. But we now have something a lot better and we need to move on. I believe that Shiller’s Nobel-prize-wiuning research is legitimate research and I think we should be exposing every investor on the planet to exploration of its far-reaching how-to implications.
That’s where I’m coming from re this one, old friend.
Rob
Rob,
It is simple math. I am 60. I have been working for the last 42 years. During that time, marketing timing did much worse. Wade pointed that out on a recent pod cast. 42 years in long term. 42 years is a lifetime of work. You are not much older than me. You are broke. You tell me that I just need to see how it all plays out. It has played out. My working years are near an end. I won’t live another 42 years. Average lifespan is 77. At my current age, I can expect to live to about 82. Now is the time that I live off of my retirement savings.
Today’s CAPE value is 30. Let’s use 32 to make the math easier. The CAPE value usually drops to 8 in the Buy-and-Hold Crisis that always follows years in which irrational exuberance reaches insanely dangerous levels. That’s a 75 percent decline in the value of your stock portfolo. That could last 10 years. We don’t know how long it would last. But if stocks continue to perform in the future somewhat as they have always performed in the past, 10 years is certainly not out of the question. Being down 75 percent for 10 years is going to hurt.
Contrast that ot where we would be if we opened every site to honest posting re the peer-reviewed research. In a world in which honest posting re the research is permitted, stock prices are self-regulating. There’s always going to be some Get Rich Quickers pushing prices up a bit too high. But in a world where honest posting re the research is permitted, investors would appreciate that it is in their self-interest to practice market timing for the purpose of keeping their risk profile constant over time, to Stay the Course in a meaningful way. So the CAPE would always remain somewhat close to 17.
Does that mean that stocks would not provide amazing returns in such a world? Not at all! In a world in which investors are supplied the information they need to invest in their self-interest, there would be an annual gain of 6.5 percent real. Those are real economic gains, not the smelly irrational exuberance gains that the Buy-and-Holders promote so heavily.
I see that as a better world. Every stock investor gets great returns. But we no longer have to endure the bull markets and bear markets and economic crises that are characteristc of times when Buy-and-Hold “strategies” become popular. I like the real economic gains provided by stocks, not the irrational exuberance garbage, which has done so much to hurt stock investors in all the years prior to the publication of Shiller’s amazing Nobel-prize-winning research. Please mark me down as saying that we should permit honest posting re the research at every site.
That’s where I’m coming from re this one.
Rob
That is what you said 1 year ago. That is what you said 5 years ago. That is what you said 10 years ago. That is what you said 15 years ago. That is what you said 20 years ago. Along that way, you made multiple predictions of a stock market disaster and those never turned out. In fact, you said, at one point, if your prediction for the drop didn’t come true by 2015, we should doubt your strategy and what you said.
You said that I and others should have been following VII a long time ago and the fact remains that if we did, we would have substantially less that what we have right now as we enter retirement. You don’t get to push the restart button with each year, Rob. You can’t undue the past. If VII had worked out as you said it would, do you think you would say the buy and hold crowd could just hit the restart button like you are trying to do?
Valuation-Informed Indexing has been far superior to Buy-and-Hold for the entire history of the stock market. The Bennett/Pfau research shows that beyond any doubt whatsoever. That’s why Wade Pfau announced after 16 months of studying the matter that: “Yes, Virginia, Valuatuon-Informed Indexing works!”
Are we today living in the last days of the longest and strongest bull market in U.S. history? We are indeed. That’s not a good thing. That’s a very, very, very bad thing. Bull markets are times when prices are wildly wrong. Bull markets are liar’s markets. It’s not good for anyone for the stock market to get the price of stocks wrong. Investors are not able to engage in effective financial planning when there’s a bull market. Businesses aren’t able to know the level of genuine interest in their product or service when there’s a bull market. Policymakers don’t know the true strength of the economy when there’s a bull market. Buy-and-Hold encourages bull markets because it does not encourage market timing/price discipline. And bull markets are bad, bad. bad. bad. bad.
All you are saying is that the relentless promotion of Buy-and-Hold and the prohibition on honest posting re the research has caused the worst bull market in U.S. history. Um…. Okay, I guess that’s so. That’s why I oppose Buy-and-Hold and argue that we need to open every site to honest posting re the research. That’s the conflict. You LOVE irrational exuberance and I want to protect people from it.
My best wishes, etc.
Rob
“ Valuation-Informed Indexing has been far superior to Biuy-and-Hold for the entire history of the stock market”
No it hasn’t and Wade just pointed it out on a Podcast. You can’t rewrite history. The numbers are there. In fact, you know it by saying we are in the strongest bull market in history. It shows that buy and hold had done better and also points out how your timing scheme won’t work because you cannot predict the market.
Here I am at retirement. I have $7+ million. It throws off over $250k a year in dividends and interest alone. I can move from my current home to my retirement property. I can go on a nice retirement vacation. I don’t have to work. This what all this is about, Rob. It is having a successful retirement after 40 years worth of work. If I look at the historical returns that happened during the past 40 years and I tried your market timing scheme, I would not be in the great position I am today. Meanwhile, look at where you are at. You had a high paying job back in the 90’s, but then made all the opposite decisions that I made. It is not meant to be a brag or shame you. Merely, we are comparing two different strategies.
I agree that we are living in the end days of the longest and strongest bull market in U.S. history. I blame Buy-and-Hold for that.
Wade told a very different story in the days before you Goons threatened to get him fired from his job if he continued to do honest work in this field. Wade once told me that he views the Greaney retirement study as “dangerous.” I oppose the extortion stuff. I would like to see everyone who works in this field feel 100 percent free to post his or her honest thoughts re that last 42 years of peer-reviewed research at every site.
I valuations affect long-term returns, as Shiller’s Nobel-prize-winning research shows, then to believe that that market cannot be predicted is to believe in a logical impossibility. If valuations affect long-term returns, then stocks become more risky as prices increase. It’s not possible to predict short-term price shits and it is not possible to predict long-term returns with precision. But we can predict enough for investors who practice market timing to always come out ahead (on a risk-adjusted basis) of Buy-and-Holders over the course of an investing lifetime. That Bennett’Pfau research shows that. Thats what Wade concluded that: “Yes, Virginia, Valuation-Informed Indexing works!”
My sincere take.
Rob
Your opinion of the research did not change what happened over the last 42 years. Your market timing strategy did not turn out like you said it would and you admit that by saying that this was the longest and strongest bull market in history. You did not predict that this would happen, yet it did. You can’t erase the past. Now you know why Shiller told you not to time the market with CAPE. The only true scientific way to validate something is to take any theory and then back test what has happened during the applicable time. So we take the last 42 years and see if the timing strategy worked and we see it didn’t. You blame in on the longest and strongest bull market, but it doesn’t matter. A strategy has to work, regardless of the circumstances. To the opposite, when we back test buy and hold, it has never failed over ANY 30 year timeframe.
How much did you adjust for the mountain of irrational exuberance that is present in the market price today? The answer is that you didn’t adjust at all. If you do, you get very different numbers. If you ignore irrational exuberance, Buy-and-Hold is going to look good. The fatal flaw of Buy-and-Hold is that it ignores irrational exuberance. But-and-Hold assumes rationality on the part of investors. So it always gets the numbers wrong.
The Bennett/Pfau research looks at the entire history of the market and finds that Valuation-Informed Indexing has always been proven far superior to Buy-and-Hold over the course of an investing lifetime. Surprise! Surprise!
Please show me some research showing that market timing either doesnt work or isn’t required. Wade spent 16 months searching the literature for such research and came up empty-handed. I wonder why.
Market timing is price discipline. If I am going to fail to exercise price discipline when buying stocks, I am going to have to see some research showing that it doesn’t work or that it is not required. You got anything?
Rob
Your adjustments are the same faulty adjustments you made in previous predictions. You are sticking with a methodology that failed during your entire work life history and you want to act like it never happened. You also contradict yourself by saying your market timing scheme has always worked, but then you say it didn’t work for the last 42 years because we had the longest and strongest bull market in history. Just looking at the ACTUAL numbers show that your market timing scheme just didn’t work. It really isn’t subjective. It is merely looking at the numbers. If it worked, you wouldn’t be broke right now. We would have had this huge market crash and then you would have been bragging to everyone how you got it right. Instead, you say that the goons have kept the bull market intact making it the “longest and strongest” bull market.
It has certainly been the longest and strongest bull market in history. We have no disagreement there.
The difference is that I see bull markets as being a horrible thing and you are acting as if you think they are a good thing.
I don’t believe that you made any adjustment for the irrational exuberance present in today’s market price. Everything you say makes me more confident that you are just using the numbers reported in the papers as if they were real. That’s a problem.
If someone showed you their portfolio statement, how much would you tell them to reduce the number reported there as being the value of their stock portfolio to reflect the effect of the irrational exuberance present in that number?
Do you even believe that irratonal exuberance is a real thing? I sure do.
Do you believe that the safe withdrawal rate is the same number at all valuation levels, that there is no need to adjust for irrational exuberance? Do you believe that stocks are equally risky at all times?
Rob
Adjust what? Retirement is now. The expenses are now. I have the money now. You don’t.
You want to know what I tell people? I tell people what has worked and what hasn’t. Buy and Hold has worked in EVERY 30 year period. You are making the same prediction you made before, despite the fact that your prediction failed. What about all those people that are at the stage of life like you and me? What would you tell any 60 year old that followed your advice? How would this person fix his/her situation given their age? How do you think they still have time to “see how it all plays out” when money is needed NOW to cover retirement expenses?
I would tell people to adjust for irrational exuberance, I think it would be a terrible mistake to fail to do that. Irrational exuberance gains are not real.They are not based on economic developments but only investor emotion. Phony gains don’t last. They eventually disappear into the mist. You can’t count the phony irrational exuberance stuff as real or you will get all your calculations wrong.
Rob
You don’t think it is a terrible mistake to push a timing scheme that failed? You think it is okay to be broke in your 60’s like you?
I don’t like the abusive stuff that has been directed at me, Anonymous. I have spoken out in opposition to it 10,000 times.
We need to as a nation of people work up the courage to take whatever steps it takes to bring the abusiveness to a full and complete stop. We are all in the same boar, we all need to know how stock investing works. Shiller’s Nobel-prize-winning research is a very important piece of the puzzle. We need to be discussing the far-reaching how-to implications of Shiller’s Nobel-prize-winning research at every discussion board and blog on the internet, without a single exception.
Do you think that the abusiveness is just going to come to an end by itself if none of us who believe that Shiller’s Nobel-prize-winning research is legitimate research ever work up the courage to say in public that all of the Buy-and-Hold stuff proceeds from a faulty premise (that investors are rational and therefore would never set the stock price improperly)? I don’t think that that is going to happen. I believe that we all have an obligation to our dellow community members and to our fellow citizens to post honestly re the research. So I soldier on.
I believe that our nation of people has made a terrible mistake by failing to explore the far-reaching how-to implications of Shiller’s amazing research for 42 years now. I believe we need to move forward and that we will all be rewarded with being able to live richer and fuller and freer and better lives on the other side of The Big Black Wall of complacency and indifference and ignorance that I am trying to break through. I think that the last 42 years of peer-reviewed research matters. So I do what I can do.
My best wishes to you.
Rob
“ We need to as a nation of people work up the courage to take whatever steps it takes to bring the abusiveness to a full and complete stop.”
We need to, as a nation, stop humoring deadbeats that refuse to support their families, while trolling the internet will silly stories and lies.
Yeah, yeah.
Rob
This article could have easily been written about you:
https://awealthofcommonsense.com/2023/10/the-crash-callers-wont-save-you/
Your track record is even worse.
There’s a phrase in that article that makes my blood run cold. It refers to “the glorious bull market.” To me that’s like referring to “my glorius brain cancer.” They don’t call it a bull market when stocks go up up the 6.5 percent real justified by the economic realities. For it to be called a bull market. the price gains have to be out of control. Those are the sorts of price increases that cause bear markets and economic crisis. You can keep them, so far as I’m concerned. Those are the sorts of price increases caused by the promotion of Buy-and-Hold “strategies.” Not this boy, you know?
I think Hussman has the right idea. He is at least trying to assess risk. That’s what all stock investors should be doing, in my opinion. I don’t say that everyone should agree with Hussman or with me or with Shiller or with anyone else. But I think that everyone should be thinking about these matters, everyone should be assessing risk at all times. The Buy-and-Holders don’t do that. Buy-and-Hold is a price-indifferent strategy. It is a put-your-head-in-the-sand strategy. I am not a put-your-head-in-the sand type of guy.
No, Hussman doesn’t nail it every single time. Nor do I. Nor does Shiller. At least we are in the game. At least we are trying. The Bennett/Pfau research shows that investors who put in a little effort have been beating the pants off of Buy-and-Holders for as far back as we have records of stock prices. I believe that there’s a realistic chance that stocks will continue to perform in the future somewhat as they always have in the past.
We’ll see, you know?
Rob