Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Instead, you have adopted the “Get Broke Quick” method.
30 years of consistent saving via buy and hold is hardly “quick”. Instead, it is a slow, methodical and proven way of retiring successfully.
Did the Great Depression “prove” that pushing stock prices up to unsustainable levels is a good idea?
I see it just the other way around. We can all enjoy annual returns of 6.5 percent real without permitting any irrational exuberance whatsoever. I vote for that. A 6.5 percent real return should be plenty. Relentless promotion of the Get Rich Quick/Buy-and-Hold stuff is killing us.
My sincere take.
Rob
One of the hallmarks of 1929 was margin buying on a large scale including by retail. What’s going on today is more big money (including CCP money “boomeranging” back to the western financial system) and small money. The small money is disproportionately clustered in 401Ks and IRAs, and in those accounts disproportionately into index funds. If someone loses 50% of value on their S&P 500 index fund overnight they very well may panic sell and this will be a disaster to their long-term financial health, but it’s not and never will be the same as a 1929 margin call.
The fact that there’s a good chance that millions of people will be suffering a disaster to their long-term financial health is a strong reason for opening every site to honest posting re the last 43 years of peer-reviewed research.
My sincere take.
Rob
The entire internet is open to “honest posting”. Your entire schtick is a lie. Worst of all, you seem to believe in your own lies.
Today’s CAPE value of 36 tells the story, Sensible. That’s not possible in a world in which all posters feel free to talk openly about the horrors of high stock valuations.
We could get that CAPE value down. But we would need to work together to do it. And it sure doesn’t help when there are people (some who claim to be “experts”) who tell us that there might be some mystical, magical world 50 billion light years away in which valuation-based market timing is not 100 percent required for every investor.
Fair enough?
Rob
The other day I linked a the story about a former janitor and gas station attendant, both near-minimum wage jobs, who started saving at 39 and died in his early 90s with a fortune worth $8 million. He didn’t sell a damn thing. He lived below his means and bought stocks with his excess cash, and he reinvested dividend checks back into more stocks. Market timing certainly wasn’t necessary for him!
https://www.joshuakennon.com/janitor-ronald-read-leaves-behind-8000000-secret-fortune/
What that shows is that stocks are an amazing asset class. It’s true that they are an amazing asset class.
If you discovered an amazing asset class, you should want to invest in it as much as possible. Engaging in valuation-based market timing permits you to do that. The thing that stops people from putting all of their money into the amazing stocks asset class is the risk attached to this asset class. The Bennett/Pfau research shows that practicing valuation-informed market timing reduces the risk of owning stocks by nearly 70 percent. So the investor who chooses this path can own more stocks than the Buy-and-Holders over the course of an investing lifetime while not taking on more risk.
Following research-based strategies is good stuff piled on top of good stuff piled on top of good stuff. That’s why the members of the Buy-and-Hold goon squads engaged in abusive and in some cases criminal behavior. They despair of having their preferred strategy prevail in a civil and reasoned debate.
People like the idea of basing their investment strategies on what the peer-reviewed research shows. Full truth be told, there was a time when one of the core principles of Buy-and-Hold was to make use of peer-reviewed research. If only the Buy-and-Holders had listened to their own advice! The trouble (it’s really a benefit!) with research is that it teaches you new things about the subject you are examining. When you learn important new things (Shiller’s research taught is an important new thing — that’s why he was awarded a Nobel prize), you need to learn how to pronounce the words “I” and “Was’ and “Wrong” to benefit from the new research findings.
Valuations affect long-term returns. The safe withdrawal rates is a number that changes with changes in the valuation level. Valuation-based market timing is 100 percent required for every investor at all times. It’s would all be so easy if the Buy-and-Holders has not been pressed into taking a wild shot in the dark (Shiller’s research had not yet been published when Buy-and-Hold was being developed) and getting the valuation-based market timing thing so horribly wrong. Once you have gotten something horribly wrong, you either need to learn how to say the words “I” and “Was” and “Wrong” or be stuck getting things horribly wrong for the remainder of your years.
Stocks are an amazing asset class. Owning more stocks over the course of an investing lifetime is better than owning fewer stocks over the course of an investing lifetime. Keeping your risk profile stable permits you to own more stocks over the course of an investing lifetime. Learning is the one true free lunch in this world. We should open up the possibility of learning more about this important subject by permitting honest posting re the peer-reviewed research at every site, without a single exception.
Rob
“Once you have gotten something horribly wrong, you either need to learn how to say the words “I” and “Was” and “Wrong” or be stuck getting things horribly wrong for the remainder of your years.”
Some people find it easier to dish out advice than to follow the same advice they dish out.
Fair enough, Sensible.
My best wishes to you.
Rob
“ The fact that there’s a good chance that millions of people will be suffering a disaster to their long-term financial health is a strong reason for opening every site to honest posting re the last 43 years of peer-reviewed research.”
No, Rob, we are not doing a thing for you. We are not going to let you spin your version of what YOU think is honest or what YOU think the research says because it is just a bunch of lies. Further, we have no interest in being broke and divorced like you. You should focus on fixing your own problems instead of demanding people do things for you.
I understand.
My best wishes to you, Anonymous.
Rob
Just say the magic words, Rob. You were wrong. You’ll never begin to pick up the pieces of your life and family, which you and you alone destroyed, unless you admit that you were and are wrong about investing and withdrawal rates.
Um….
Rob
If I went broke are you okay with me blaming you instead of taking responsibility?
So long as all laws of the United States and site posting rules are followed, each investor is responsible for himself. In a case where laws and posting rules are violated, it would be perfectly understandable for investors who were harmed by the cover-up to bring civil cases to be compensated for their losses and for others (investors or non-investors since a Buy-and-Hold Crisis will usually cause an economic crisis and cause increased political frictions) to demand criminal prosecutions.
I don’t intend to lead the effort to see that such cases are brought. But I am not going to say that I believe that the Greaney study contained a valuation adjustment all along. That would put me at risk of prosecution. Thanks but no thanks, you know? I will stick with my policy of being as honest as possible without ever crossing the line to becoming uncharitable while also being as charitable as possible without ever crossing the line to becoming dishonest.
I think it would be a good idea if Congress passed some sort of amnesty legislation that would permit us to settle all these cases quickly and included in that legislation funds to educate all investors re what the last 43 years of peer-reviewed research teaches us about this important subject. I would like to see us keep the nastiness to a minimum. But of course that is ultimately not possible until we normalize discussions held re stock investing. The same laws that apply in every field of human endeavor other than the investing advice field should apply in the investing advice field as well.
Getting the word out far and wide about the last four decades of peer-reviewed research is key. From that point forward, it should be all downhill sledding. If I had been king of the world, we would have opened every site to honest posting re the peer-reviewed research on the afternoon of May 13, 2002. But you of course knew that.
My best and warmest wishes to you and yours.
Rob
“ I think it would be a good idea if Congress passed some sort of amnesty legislation that would permit us to settle all these cases quickly and included in that legislation funds to educate all investors re what the last 43 years of peer-reviewed research teaches us about this important subject. ”
What cases? There aren’t any. What specific research? Is is just YOUR opinion to what one guy said? Here you sit trying to dictate to the world as to what everyone else should do. How arrogant. It is also laughable given your complete disaster of a retirement.
It is definitely my opinion that we should all be working together as a naton of people to get the CAPE value down from the horrible place where it resides today to a more reasonable level.
Rob