Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Still waiting for even one of the “thousands” to come post over here in support of you…….hmmmmmmm……wonder why they won’t post here, even though it is anonymous?
There’s a social taboo against telling the truth about stock investing, Anonymous. You Goons are enforcers of the social taboo. But it exists without you. It exists within people’s minds. Whether other people know that they violated the taboo or not, THEY know it. They don’t feel comfortable going outside where the hive mind permits them to go.
A bull market is a highly delicate thing. The entire thing is just an emotional fantasy. One person could talk about the realities and it could all collapse. This is why the television interviewer warned Shiller before their interview to be careful what he said, he could cause prices to drop. She was right. But what she was missing was that it would be a good thing if prices dropped because that would bring them closer to reflecting the realities. In her mind, the idea was not to do that, the idea was to keep the blinders on.
To live better lives, we all need to come to understand that it is better to take the blinders off. It’s scary to be one of the first to speak up. I want things to get to a point where no one is afraid anymore, where people just say what they truly believe, just as they do in all fields of human endeavor other than the investment advice field. I want us all to feel free to learn again, to go beyond what we knew in the 1q60s, when Buy-and-Hold was developed and Shiller’s research had not yet been published.
The question is whether the onset of the next Buy-and-Hold Crisis will shake people up enough that some brave souls will start posting honestly re the research and encouraging others to do the same. I have hopes that it will. It would make sense to me that a huge price crash would break the spell. People would no longer fret about causing a recession because we will already be in a recession, so the thought would be “what the heck.” We’ll see, you know?
You always try to apply logic to this, The Ban on Honest Posting is fundamentally not a logical phenomenon. If logic controlled, there would be no overvaluation or undervaluation. All you need to know to see that logic does not control here is today’s CAPE value. If investors were logical, there never could be a CAPE value of 34. But here we are. We have a CAPE value of 34 and we have Buy-and-Hold Goon Squads patrolling the internet to be sure that no one is posting honestly re the last 43 years of peer-reviewed research. Those aren’t unrelated realities. You couldn’t have either of those two strange realities without the other.
My best wishes to you and yours, in any event.
Rob
There are people who are buying the same stock (GME or AMC), pouring their life savings into a dogsh-t company because they’re caught up in some irrational cult. There are people who buy Tesla because everyone they know likes Tesla. There are infinite ways to buy stocks, and an enormous number of stocks that one could buy. What the GME people prove is that when it comes to stocks there is no taboo. When it comes to irrational investing many people will, like you, “let their freak flag fly”.
I say that there’s a taboo against speaking about the dangers of irrational exuberance. Irrational exuberance is the cancer of personal finance. It helps no one and does great harm to everyone. We should be 100 percent United in support of the goal of keeping irrational exuberance under control at all times. We obviously are not. If we were, the CAPE value could never get to where it is today.
When the CAPE value is as insanely dangerous as the one that applies today, stock prices are highly vulnerable. The can collapse at any moment that a whiff of truth about how stock investing works is spoken. So there has to be a taboo to keep the insane bull market going. Real economic gains are not vulnerable. Irrational exuberance gains are.
Or so this Rob Bennett fellow sincerely believes, you know?
My best wishes to you and yours.
Rob
Speaking out against irrational exuberance is very popular. Big people do it.
What do these big people propose that we do to address the problem?
I say that we should encourage investors to practice valuation-based market timing. That would do it. Each time prices got too high, there would be people selling shares. That would pull prices back to where they should be. In a world where most investors practiced valuation-based market timing, stock prices would be self-regulating.
Do these big people have any other ideas?
I think it would be fair to say that whatever they are proposing is not working at all well. Today’s CAPE value is 35. I propose that we all work together to get every discussion board and blog opened to honest posting re the last 43 years of peer-reviewed research. Working together, I believe that we could bury the Get Rich Quick/Buy-and-Hold stuff 3o feet in the ground, where it could do no further harm to humans and other living things.
I’d like to see these big people take more practical steps to address the very real probkem.
Rob
“ I say that we should encourage investors to practice valuation-based market timing.”
And many of us don’t agree because there has never been a single successful outcome with VII. You can use your platform to give out your opinions and you cannot off people on your forum pushing other strategies. Same goes for other board owners. Where you cross the line is demanding that other people have to either agree with you or let you have full reign to push your opinions on their website.
Why have published rules saying that posting about the peer-reviewed research is just fine if you don’t mean it?
There were people at the Moltey Fool board who used the Greaney retirement study for help in planning their retirement. I know, I was there.
Rob