“In All Markets, Market Participants Need Accurate Information to Make Good Choices. The Ban on Discussion of the Past 43 Years of Peer-Reviewed Research Makes It Impossible for Investors to Make Sound Choices and We All Pay a Price.”

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

You have said that you know how the stock market works and that VII would beat buy and hold.  Instead, you are now saying that the market isn’t working like you think it should and that you have to convince everyone else to buy stock when you think they should for your system to work.

First of all, it’s not my system. It’s reality. The value of peer-reviewed research is that it helps us all to see realities to which we were previously blind. Shiller’s Nobel-prize-winning research was a huge advance. If Shiller’s Nobel-prize-winning research is legitimate (I believe it is), then what we believed in the days when Buy-and-Hold was developed needs to be updated to reflect the new findings. If Shiller’s research is not legitimate, then nothing that I say has merit. But of course I believe that Shiller’s research is legitimate. If Shiller’s research is legitimate, then everything that the Buy-and-Holders say is wrong because Shiller’s research changed our understanding of how stock investing works in a fundamental way.

Valuation-Informed Indexing has always beaten Buy-and-Hold. That has been so for as far back as we have good records of stock prices. The Bennett/Pfau research shows that beyond any reasonable doubt. If there were any reason to believe that there might be circumstances in which it is not 100 percent necessary for investors to practice price discipline/valuation-based market timing, the Buy-and-Holders would have presented that evidence many years ago. They have of course never presented anything, That’s why the Buy-and-Holders put so much energy into suppressing discussion of Shiller’s research findings. They have no answer to it. Valuations affect long-term returns. Irrational exuberance is real. Valuation-based market timing is required to fight it. The safe withdrawal rate changes with changes in valuation levels.

The market is certainly not today working as well as it would if every site was open to honest posting re the peer-reviewed research. In all markets, market participants need accurate information to make good choices. The ban on discussion of the past 43 years of peer-reviewed research makes it impossible for investors to make sound choices and we all pay a price.

The good news is that, if we permitted honest posting re the research at every site, we could all invest more effectively than we could in the days before Shiller’s Nobel-prize-winning research was available to us. We all have the option of living better and fuller and richer and freer lives than we were able to live before Shiller’s Nobel-prize-winning research was published.

The tricky part is that, to get to where we all want to go, we need to work up the courage to stand up to the tactics employed by the Buy-and-Hold Goon Squads. That ain’t no walk in the part. I think it would be fair to say that the members of the Buy-and-Hold Goon Squads feel very, very, very threatened by Shiller’s Nobel-prize-winning research findings.

My best wishes.

Rob