Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Do you have a fully funded retirement or not. That is the scorecard for telling us who is right and who is wrong.
Does the Greaney retirement study contain a valuation adjustment or not? That is the scorecard for telling us whether Get Rich Quick/Buy-and-Hold is on the up and up or not.
If the Buy-and-Hold Goon Squads were not supporting a cover-up, there never would have been a single abusive post and I would be flying high today, with hundreds of millions of dollars in my account. If we all were thinking clearly, there would be zero penalty for pointing out an error in a retirement study.
Those were real people who posted at the Motley Fool board and who thought that the Greaney study was legitimate. I was there.
Rob
I think the only person here who supports a cover up is Robert “Hocus” Bennett.
I’m so bad. It amazes me sometimes how bad I am. Something will come up and the thought will hit me — am I going to be bad again or will I make a special effort this time to not be quite so bad? And I will just be totally bad again! It’s pretty darn shocking when you think about it.
Some of us are just bad, Sensible. You just have to accept it. Springsteen had a song where he argued that: “Sir, there’s just a meanness in this world.” That one nails it, in my assessment.
Bad Rob
Yesterday you refused to accept posts that demonstrated that you violated the very standards of decency that you falsely accused others of violating. So your behavior definitely is “bad”.
VERY bad. It’s well established. I like to think that we all could at least agree re that much. Is there anyone who doesn’t see it yet at this point in the proceedings? Very, very bad.
Disco-level bad.
Not good.
https://www.google.com/search?q=thunder+in+my+heart&rlz=1CAKDZI_enUS1093&oq=thunder+in+my&gs_lcrp=EgZjaHJvbWUqCggAEAAY4wIYgAQyCggAEAAY4wIYgAQyBwgBEC4YgAQyBwgCEAAYgAQyBwgDEAAYgAQyBggEEEUYOTIHCAUQLhiABDIKCAYQLhjUAhiABDIHCAcQABiABDIHCAgQABiABDIHCAkQLhiABKgCALACAA&sourceid=chrome&ie=UTF-8#fpstate=ive&vld=cid:78879c79,vid:LBaUiXpZx2I,st:0
Rob
On the fateful morning of October 13th, 2005 Robert Michael “Hocus” Bennett advanced death threats against fellow forum members and even the grandchild of one of the forum members who he also threatened to kill.
Not too surprised. It sounds like the sort of thing that a very bad person would do.
When someone is bad, they’re just bad. Whachagonnado?
Rob
At least one of the people who you threatened on that fateful morning is easy to look up. I know because he’s a minor personal finance “celebrity” whose contributions to the field dwarf most others who tried including you. Most FI-minded people are aware of his calculator even if they don’t know his name. People who have never heard of you will know his name, and he’s easy to find. I think you should reach out to him and apologize for threatening to kill him and his grandchild.
You are referring to Bill Sholar. Bill and I are friends from our days together at the Motley Fool board. Bill based his calculator on the Greaney study and so he of course got the numbers wrong. He did not include a valuation adjustment any more than Greanry.
Bill was distressed that, when I pointed out the error at his site, the abusive behavior of you Goons was driving good people off the board, as it has at numerous other places. He set up a special section of the site where people could discuss the last 43 years of peer-reviewed research without bothering the people who want to continue to believe in Buy-and-Hold strategies. People loved it. The new section took off like a rocket. Then you Goons stepped in and threatened to burn the site to the ground unless Bill banned honest posting site-wide. Bill wrote me a note apologizing for what he felt he had to do and imposed a site-wide ban on honest posting re the research.
Bill had been Greaney;’s friend (and I had been). I don’t think that Greaney should have threatened either on of his friends. If he had corrected his study on the afternoon of May 13, 2002, he wouldn’t be in the spot he is in today, If you Goons had all insisted that he correct the study immediately, he would have done it and he would be better off, as would you Goons. The thing to do when you discovered that you have made an error in a retirement study is to correct the error and get on with your life, That is no other way.
But of course I am bad through and through. That’s the other side of the story.
Rob
One problem is that you still have not demonstrated that there was an error in Greaney’s study.
I’ll let another person who was actually there address the claims you made about BS and JG’s behavior (which, if true, does not in any way justify the death threats that you advanced).
Don’t you think that the complete and total badness thing would explain the threats directed at Bill’s granddaughter? That’s certainly what I attribute them to. I don’t see what else it could be.
Rob
I suspect that there’s a lot of jealousy and resentment coming from you. You are an egomaniac who wants to be some kind of hero and so many of the people you knew on the old boards didn’t only succeed at retiring several of them became somewhat famous. But as any good Christian would know jealousy is a sin and the key to happiness is gratitude.
Okay, Sensible.
My best wishes to you.
Rob
Rob,
You always ask us to what to see how things play out. Can you tell us as to how you see things playing out over the next 10 years so that we know what to expect.
Thanks in advance.
I believe that we will see another Buy-and-Hold Crisis within the next few years. It is not possible for anyone to say when it will come. When there is a Buy-and-Hold Crisis, the CAPE value will fall from 36, where it is today. to a 17 (the fair-value CAPE) level) or lower. The usual thing is that, when prices crash, irrational exuberance is transformed into irrational depression and the CAPE drops all the way to 8. That would be a loss of more than 75 percent for stock investor.
That’s trillions of wealth that would be destroyed in a short amount of time. We would see millions of failed retirements. People would not be able to spend as much. So hundreds of thousands of businesses would go under. Millions of people would lose their jobs. Political frictions would worsen.
I believe that at some point the owner of a large investing site would work up the courage to stand up to you Goons and permit honest posting re the last 43 years of peer-reviewed research at this site. Investors who want to hear the straight story and experts who want to tell the straight story would flock to that site. Other sites would follow that site’s lead and in time there would be nothing “controversial” about telling people what the peer-reviewed research tells us about how stock investing works. From that point forward, we would all live richer and fuller and freer and better lives.Both our economic system and our political system would be more stable.
Bull markets are optional today. We can prevent them by telling people that the research shows that valuations affect long-term returns and valuation-based market timing is 100 percent required for every investor. If investors lowered their stock allocation when prices got out of hand, the stock sales would pull prices back to reasonable levels. You can’t have a bull market if investors are acting rationally and investors are naturally going to act rationally once they have access to the research that permits them to earn higher returns at less risk. In a world without bull markets, there would be no bear markets. Bear markets occur when prices are st crazy levels and there is nothing real backing them up.
Rob
So if we don’t see a crash in the next few years, will you tell everyone here and on all the investment boards that you were wrong?
That’s a perfectly reasonable question. The only thing that has caused me to feel a little doubt about Valuation-Informed Indexing over the 22 years is the length of time over which stock prices have remained high, which has been longer than at any earlier time in U.S. history. If we were to see hundreds of years in which prices remained at levels at which they had never remained for long in the past. we would have to conclude that Shiller’s research findings no longer apply.
That’s not your hypothetical. You are asking how I would react if we did not see a crash “in the next few years.” We have good records of stock prices going back to 1870 and for those 150 years valuations have always affected long-term returns with the last few decades being a bit of an outlier. We would need to see more than a few more years of outlier behavior for me to conclude that Shiller’s research is not legitimate.
That said, it is something that I would not to people when describing the Valuation-Informed Indexing concept. I would leave it up to the individual to decide what to make of things, both of the way stocks have behaved for 150 years and of the outlier behavior that we have seen in recent years. I am a reporter. My job is to describe what has happened. Both the long history explored by Shiller and Wade Pfau and the outlier behavior of recent years are things that have happened and that should be described. They are both part of the story.
Shiller is not God. It is theoretically possible that he could make a mistake. if there are Buy-and-Holders who believe that he made a mistake, they should make that case, That would help us all. Not one Buy-and-Holder has presented a case that Shiller made a mistake. So I don’t think that that’s really what they believe.
The thing that I object to constantly is the suppression of discussion. It is though discussion that we learn of the sorts of mistakes that you are suggesting might have been made. A few more years of high prices would not persuade me that a mistake has been made. There’s too much evidence on the other side, But I would like to see a lot more discussion of all sorts of matters relating to Shiller’s research, including of any suggestions of possible mistakes. The fact that I would not personally be persuaded by a few more years of high returns doesn’t mean that there is no one else who would be. We need to be hearing both from people like me and from people who come to different conclusions. It’s all part of the wonderful game.
Rob
“ We would need to see more than a few more years of outlier behavior for me to conclude that Shiller’s research is not legitimate.”
It has been well more than a few years already. Just how many years to you need to have pass by before you finally say that you were wrong?
50 years would certainly be more than enough. 10 years would certainly not be enough. At 20 years out or thirty years out, I would listen to the views of different interested parties and try to form a personal assessment that made some sense given what was at that time known about the entire subject matter.
It’s possible, and I believe likely, that we will come to know more about all sorts of aspects of the question as time passes. As you know, I believe that Valuation-Informed Indexing is the future of investment analysis. I believe that we are today at an early part of the learning curve. So rapid increases in knowledge are still possible.
Rob
So you have another 30-50 years left to see if you are right?
If I had been wrong, Greaney would have posted a link to the page in his study containing a valuation adjustment on the afternoon of May 13, 2002.
Rob