Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
<I>You’re not appreciating the nature of free markets. A sale requires a willing buyer and a willing seller. You may be willing to pay $17 for a dollar of earnings but if I am not willing to sell to you at that price the sale will not happen.
There is not a single thing in Shiller’s research that would suggest that I should make that sale.</I>
Today’s stock market is not a free market. Part of what makes a market free is that investors have easy access to the information they need to make intelligent choices. For so long as honest posting re the last 43 years of peer-reviewed research is banned at every site, investors do not have access to the information they need to invest pursuant to their self-interest. We have seen during the first 22 years of our discussions that many investors would like to see honest posting re the research permitted at every site.
You don’t need to have shares of stock sold to bring their price down. All that you need is for investors to place less value on them. Once investors understand that irrational exuberance gains are not real or lasting, they will place less value on all their shares. That will bring the price of all their shares down.
Prices are always going to return to fair-value levels if the information needed to set prices properly is available. We should all want our stocks to be priced properly. So we should all want to see honest posting re the research permitted at every site.
If the market were efficient. stocks would always be priced properly. Today’s CAPE value is 34. Please explain.
Rob
Companies issue quarterly and annual reports, and they are audited. Falsifying the information on these reports leads to prison sentences. See Ken Lay. What SPECIFIC remedies do you suggest?
I believe that we need to open every discussion board and blog on the internet to honest posting ee the last 43 years of peer-reviewed research in this field. All laws that apply in every field other than the investment advice field should apply in the investment advice field as well. So no death threats, no extortion to stop researchers from publishing honest research, no defamation to suppress discussions of the research, etc.
That would do it. We have seen strong interest among experts in the field to report on what the recent research says and strong interest among ordinary investors to learn as much as they can about the subject. Everyone is not going to switch to Valuation-Informed Indexing immediately. It wouldn’t be realistic to expect such a thing. But I am highly confident that we could get the percentage of Valuation-Informed Indexers up from 10 percent to 20 percent in six months if honest posting were permitted. And it would grow from there.
Doing something about the intimidation tactics would take the fraud element out of it. That’s the big thing. There are still smokers today even though it has been years since researchers were afraid to let people know about the research showing that smoking causes cancer. But the number of smokers has been reduced significantly. And those who smoke at least know what they are getting into. That’s how it should be with Buy-and-Hold. People should be able to learn how dangerous and be able to make up their own minds after hearing both sides of the story.
I would recommend down the line that mutual fund companies provide both the official numbers for stock portfolio value and the number after it has been adjusted for the effect of irrational exuberance. I would encourage all investors to work together to pull the CAPE value down once it rises significantly above fair-value levels. And of course I believe that all retirement studies not including valuation adjustments should contain language explaining why many people believe that such adjustments are needed to get the numbers right. If people elect to ignore such warnings, so be it. But all should be properly informed of what the research shows.
It’s too important a matter to just let the industry turn a quick buck exploiting people’s weakness for Get Rich Quick approaches. In the long run, there would be more money for everyone as a result of us having a more stable stable economic and political system.
Rob
If ten percent of current investors are Valuation Informed Indexers then where are they? I only ever see you posting about it.
You never would have insisted on a ban on honest posting re the research if you had not seen the thousands of posts and recommendations expressing a desire that honest posting re the research be permitted. It’s those thousands of people who represent the threat that drives your behavior.
I’m more persistent than the others. That’s the big difference from me and the others in the 10 percent of the population who make use of Shiller’s Nobel-prize-winning research to guide their stock allocation decisions. I like to think that I’ve learned a few things here and there as a result of sticking with it for 22 years. But the core idea that valuations affect long-term returns is shared by about 10 percent of the population of stock investors. If we want to get the CAPE value down go reasonable levels, it’s going to take more than that.
Rob
Just because you are banned doesn’t mean there is a ban on honest posting
The Greaney retirement study hasn’t been corrected to this day, It’s been 22 years. That tells the story to any reasonable person.
Rob
By your definition, you believe everyone has to agree with you about Greaney. Nope. We are not lying just to make you happy.
I don’t object at all if some people choose to use 4 percent as their withdrawal rate. And I definitely believe that many would do that even if honest posting re the research were permitted at every site. It’s their business what withdrawal rate to use.
But I strongly believe that every investor should be able to hear both sides of the story and make up his or her own mind re the matter. I believe that all of the laws that apply in every field of human endeavor outside of the investment advice field should apply in the investment advice field as well. So no death threats, no extortion, no defamation, no demands for unjustified board bannings for the purpose of protecting a huge case of financial fraud from being exposed to the general public.
Rob
“ But I strongly believe that every investor should be able to hear both sides of the story and make up his or her own mind re the matter. ”
People have heard all the stories. They are grown adults and can make all of their own decisions. No one needs you to tell them what to do. You do not decide what is “honest”. You control content on your website and everyone else can control content on their website. Every website does not have to have Rob Bennett’s opinion. You are not special. You are not a dictator.
The only website or “board” of consequence that you are banned from is Bogleheads. You’re free to post anywhere else. You chose to force your (now ex) wife to work 5 jobs, and even for your then-teenaged sons to work fast food to support the family while you did nothing but post to your personal website. You chose to ruin your life over not being allowed to post at Bogleheads. The Bogleheads have the same rights that everyone else has. If they want the discussion to be about their strategies and their beliefs then that’s their right. You have no right to impose yourself on them.
Okay, Anonymous.
My best wishes to you and yours.
Rob
The only website or “board” of consequence that you are banned from is Bogleheads. You’re free to post anywhere else. You chose to force your (now ex) wife to work 5 jobs, and even for your then-teenaged sons to work fast food to support the family while you did nothing but post to your personal website. You chose to ruin your life over not being allowed to post at Bogleheads. The Bogleheads have the same rights that everyone else has. If they want the discussion to be about their strategies and their beliefs then that’s their right. You have no right to impose yourself on them.
It’s my strongly held view that honest posting re the last 43 years of peer-reviewed research in this field should be permitted at every investing discussion board and blog on the internet, without a single exception.
That’s where I am coming from re this matter.
Rob
Property rights matter, Rob.
You don’t want to discuss REAL research or allow honest posting and that is why you block posts on this website.
Um….
Rob