“When You’re Telling People Why They Need to Engage in Market Timing, You’re Telling Them Why the Strategy That Posits That Market Timing Is Not 100 Percent Required Is So Dangerous. Buy-and-Holders Don’t Want People Hearing That Message.”

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

When did a 4% withdrawal rate run out of money?

When was a 4 percent withdrawal rate safe and when was it an extreme high-risk withdrawal rate because valuations had risen to bonkersville levels? That’s what people need to know. And, if you tell them that at a time when valuations are at bonkrsville levels, the Buy-and-Holders will insist that you be banned. That’s the thing that the Buy-and-Holders want to keep covered up. They don’t want people to see the practical effect of irrational exuberance getting out of control. So long as people do not see the practical effect, they are okay with not engaging in market timing, which means that they are okay with Buy-and-Hold.

There are things that you can say and there are things that you cannot say. Yes, there are occaional comments where people make reference to the CAPE value. But you won’t see threads where there is detailed discussion of what to do about an insanely dangerous CAPE value. The only thing to do about an insanely dangerous CAPE value is to engage in whatever amount of market timing it takes to get the CAPE value back to where it should be. When you’re telling people why they need to engage in market timing, you’re telling them why the strategy that posits that market timing is not 100 percent required is so dangerous. Buy-and-Holders don’t want people hearing that message. Saying that will get you banned at places where Buy-and-Hold is dominant (which by definition is everywhwre at times when the CAPE value is as bonkersville as it is today).

If Shiller appeared at the Bogleheads Forum and said “the Greaney retirement study is in error and should be corrected immediately before it does more harm,” either he would be banned or Greaney would correct the study. One or the other. You can’t have people openly talking about an error in a retirement study and not have the study corrected. It’s not a viable situation. Hence, the bans. The bans let people PRETEND that the error has gone away. The error is still there. But, if no one is permitted to speak about it, this feeling develops that maybe there is not really any error to be concerned about.

There is theoretically a middle ground. Everyone could acknowledge that there are today two schools of academic thought as to how stock investing works, Buy-and-Hold and Valuation-Informed Indexing. People on both sides could present their views while showing respect and affection for people who are part of the other school of thought. For a long time, I thought that that was the answer. I don’t really believe that today. The Buy-and-Holders find it unacceptable for people to be able to learn that their school is not the only school. There are some Buy-and-Holders who are fine with that. It’s actually a majority that is fine with it. But you Goons sure are not fine with it. And the Normals (who are the majoriry) do not possess the courage to stand up to you Goons. So you Goons for the time-being hold a veto power over what can be said on the internet about the peer-reviwed research in this field.

And you Goons are clear in your position that no one can be permitted to point out the error in the Greaney retirement study (and in all Buy-and-Hold retirement studies). And you are clear in not permitting discussion of the abusive and in some cases criminal behavior that has been employed to block discussions of the error in the Greaney study. So we (the millions of Americans who would like to be able to engage in honest discussions of what the research says about how stock investing works) can’t discuss the error and we can’t discuss the criminal behavior used to keep it covered up. That’s where things stand.

I think we should be discussing the last 42 years of peer-reviewed research in this field. I am banned at every large site. I have made it clear that I will discuss the error and the criminal behavior at any place at which I am permitted to post. I believe that the 42-year cover-up has done us great harm as a nation of people. I believe that the CAPE value would not be anywhere near the level at which it resides today if it had not been for the 42-year cover-up. The CAPE value reveals the health of the investment advice field as it exists at the moment in time when it is checked. Today’s CAPE is 32.

Rob