“I am Not Able to Think of Another Case Where Things Are Sufficiently Open That We Have a Mountain of Evidence That an Existing Model Is False While Not Permitting the New Model to Be Openly Discussed and Thereby Developed to the Point That It Can Effectively Replace the Now-Discredited Model.”

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

From today’s New York Times

“This reminds Professor Shiller of the rallies of the 1920s and the dot-com boom, which both ended badly. When prices get too far ahead of earnings, there will eventually be a reckoning — and, he says, there’s a good chance that U.S. stock market returns will be lower over the next decade than the last one.”

Doesn’t look like there is any ban on discussing Professor Shiller’s ideas.

There’s certainly a ban. I pointed out the error in the Greaney retirement study (it lacks a valuation adjustment) on the morning of May , 13, 2002. It has not been corrected to this day. Please explain.

It’s not a TOTAL ban. That much is so. If it was a total ban. Shiller wouldn’t have gotten his research published in a peer-reviewed journal and his book wouldn’t have been a best-sellter and he wouldn’t have been awarded a Nobel prize. If it had been a total ban, we wouldn’t have seen thousands of our fellow community members put up posts expressing a desire that honest posting be permitted and I wouldn’t have a research work with me for 16 months to develop research showing that my ideas check out and all that sort of thing.

I am not able to think of another case where things are sufficiently open that we have a mountain of evidence that an existing model is false while not permitting the new model to be openly discussed and thereby developed to the point that it can effectively replace the now-discredited model. That is exceedingly strange stuff. But that’s where we stand in the investing advice field. There has never been an iota of evidence that valuation-based market timing might not work or might not be required. But woe to the individual who dares to say that openly on any discussion board or blog on the internet. Holy moly!

I said it. I love what the Buy-and-Holders were trying to do. That’s why I was a Buy-and-Holder myself for a time. And I view the mistake they made as trivial in the grand scheme of things. They didn’t have Shiller’s research available to them. So they took a wild shot in the dark and made a mistake. So what. you know? The only people who never make mistakes are people who never try to accomplish anything of consequence. So the mistake was nothing.

But the 43-year cover-up of the mistake has hurt millions of people in very serious way. The cover-up is responsible for today’s loony-tune CAPE value. The cover-up was responsible for the Great Recession of 2008. The cover-up has made effective financial planning impossible for 43 years now. Not good. Our discussions show that 10 percent of the population of stock investors believes that Shiller’s Nobel-prize-winning research is legitimate research. If we all had been speaking up in clear and firm terms for 43 years now, we could as a nation of people have buried the smelly Buy-and-Hold garbage 30 feet in the ground, where it could no longer hurt humans and other living things, a long, long time ago.

I have a funny feeling that continuing to keep it zipped, as I did from May 1999 through May 2002, is not going to get the job done. That’s why I play it the way that I do. I show respect and love for my Buy-and-Hold friends and for all of the great contributions that they really did make. But I am pretty darn insistent in saying that I sincerely believe that the Greaney retirement study (and ALL Buy-and-Hold retirement studies) lacks a valuation adjustment. Call me madcap, you know?

My best wishes,.

Rob