A Rich Life

The Old Ideas on Saving & Investing Don't Work -- Here's What Does

“The Price That Is Set at a Time When Honest Posting re the Research Is Banned Is Obviously Not the Price That Would Apply If Honest Posting re the Research Were Permitted.”

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

We don’t have to sell you cheap shares just because you don’t want to pay the price.  If you don’t want to buy a stock at its current price, you don’t have to.  Just don’t expect anyone to sell to you at a lower price just because you say so.

The market sets the price, not me. I am saying that we should permit each investor to become informed as to what the research shows. Informed investors are going to practice price discipline because the benefits of doing so are so great. That would solve the problem.

The price that is set at a time when honest posting re the research is banned is obviously not the price that would apply if honest posting re the research were permitted. We should all want to see the market become empowered to perform its core purpose of getting prices right.

Rob

Comments

  1. Your timing scheme doesn’t work because people won’t buy and sell at prices that you deem as right. People are too stupid to figure things out and they can only be educated by you. That means the whole world needs to reach out to you and let you have a guest column to educate the masses. Only then will all be right in the world. Got it.

  2. There’s great interest in research-based strategies. It is certainly not a majority interest or anything close to it. The Get Rich Quick/Buy-and-Hold urge is a strong thing and has been a strong thing since the first stock market was opened for business. But human progress is possible and we have over the years advanced in our understanding of how stock investing works.

    Interest in research-based is now sufficiently strong that Buy-and-Holders have demanded a ban on discussion of the last 42 years of peer-reviewed research at every large site on the internet. That’s amazing! Buy-and-Holders see research-based as a major threat. They are not dumb. Research-based IS a huge threat. Once we give outselves permission to talk about the research at every site, the CAPE value will go down, economic productivity will go up and we will all live richer and fuller and freer and bigger and happier lives. I am good with that, you know?

    I don’t think that people are stupid. But I certainly think that people are flawed. It takes a lot of intelligence to come up with something as convoluted as Buy-and-Hold. We have thousands of markets in which price discipline is imperative. And we are going to tell people that we hav a funny feeling that market timing might not always be 100 percent required for every investor in the stock market? Um…. That makes sense!

    We are emotional cretures. Buy-and-Hold appeals to the emotions. So it is popular. Emotion-based strategies hurt us in the long run. We also are capable of engaging our reason to make decisions. So the Buy-and-Holders often feel threatened that investors are going to look at the last 42 years of peer-reviewed research, notice that it conforms to what common sense tells us must be so, and become increasinbgly skeptical of Buy-and-Hold.

    The movement away from Buy-and-Hold began before I ever came on the scene, Anonymous. Shiller got a publisher for his book. He got a peer-reviewed journal to accept his research. He was awarded a Nobel prize. You Goons have slowed down progree, that’s for sure. But I don’t believe that you will be able to stop it entirely. I think that we are fundamentally a good people and that in time we are going to permit people to hear both sides before putting their retirement money at risk. I sure hope so!

    Buy-and-Hold is the past. Valuation-Informed Indexing is the future. If we were all thinkinjg clearly, we would see that the movement to Valuation-Informed Indexing is the best thing that could ever happen to Buy-and-Hold, The Buy-and-Holders got a lot of things right. All of the things that they got right have been incorporated into Valuation-Informed Indexing. By fixing the one thing that they got terribly wrong (the looney tunes “idea” that market timing/price discipline is not always 100 percent required), the Buy-and-Holders get to see all of the things they got right work out in the real world. That sounds like a big plus to me.

    My best wishes.

    Rob

  3. “ There’s great interest in research-based strategies.”

    But there is no interest in what you have to say as we can see that reflected in the lack of interest here on your own website where you control all the narrative. Further, you can put labels on it all day long (like research based stratagies), but that doesn’t make it so. People want to see actual results that show success and that is what you lack. No rational person is going to risk their money on just taking one guy’s advice versus looking at specific track records.

  5. The bottom line is that you could have retired comfortably if you had simply left your $400K in the S&P 500 back in 2002 and then continued working at E&Y. You could have just added a minimal amount, like the company match, and enjoyed tremendous returns. Between a multi-million dollar 401K/IRA, a pension, Social Security, and a paid-off house you’d be sitting pretty. I noticed that your old house is in the market. Boo did a nice job fixing it up for sale. I can even see the “famous” rocking chairs from the front porch were given a fresh coat of paint.

  6. I wouldn’t be “sitting pretty” when millions of my fellow citizens were put through another Buy-and-Hold Crisis, Anonymous. Bull markets and bear markets and economic crises and the political frictions that follow from them all became optional in 1981, when Shiller published his Nobel-prize-winning research showing that valuations affect long-term returns, I believe that we should be exploring the far-reaching how-to implications of that amazing research at every site, without a single exception.

    That’s where I’m coming from re this one, in any event.

    Rob

  7. “ I wouldn’t be “sitting pretty” when millions of my fellow citizens were put through another Buy-and-Hold Crisis, Anonymous.”

    You fellow citizens would have a very good retirement if they followed buy and hold. Meanwhile, those that followed VII would be very upset with you right now. Good think people figured out you are a crackpot.