“It Is High CAPE Values (Irrational Exuberance) That Cause Low CAPE Values (Irrational Depression). “

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

It is possible that it will fall to 8 again during the rest of my investing lifetime. However I am not going to rely it happening since it is now over 40 years since it did.

You have been waiting for stocks to drop to historical lows since the mid 90s. You have been at 0% stocks for over 25 years now. That explains your current financial predicament.

You are free to “rely” on it or not rely on it as you please. I of course have no problem with that. I have a big problem with you telling others that it is “100 percent safe” to believe that stocks in the future will begin performing in ways in which they have never performed in the past.

It’s not just that we have seen a CAPE value of 8 in the past. It’s that the historical record shows that it is high CAPE values (irrational exuberance) that cause low CAPE values (irrational depression). Given today’s CAPE value, the odds that we will see a CAPE value of 8 in the not-too-distant future are much higher than what they would be if stocks were priced reasonably. So a 4 percent withdrawal is not “100 percent safe” for a retirement beginning today. We should all be permitted to speak honestly about these matters when talking things over with our fellow community members.

In have been at 0 stocks but not solely because of what I have learned from Shiller’s research. My personal circumstances are not the typical circumstances. I have never heard a reasonable Buy-and-Holder say that an investor should not take his personal circumstances into consideration when setting his stock allocation. I have been saying all along that an investor in typical circumstances should be going with a stock allocation of 30 percent when prices are crazy high. That ain’t 89 percent, as Greaney says is always “optimal.” But it ain’t 0 percent either.

If there had never been any abusive posting or criminal behavior, I would obviously be a multi-millionaire today. Going by the large number of our fellow community members who expressed a desire to learn more about Valuation-Informed Indexing, we know that there are many millions of people in the general population who would like to hear about what the peer-reviewed research in this field says about how stock investing works in the real world. This is a highly lucrative field. Show people a better way and you are going to be compensated well for doing so, presuming that any who engage in abusive or criminal behavior are reined in. I have been urging responsible parties to rein in the behavior of you Goons going back to the afternoon of May 13, 2002.

I naturally wish you all the best that this life has to offer a person, Evidence.

Rob