Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
You use history to support YOUR opinion on the market crash. For YOUR timing scheme to work, you need the big crash. You say that history has always worked for your scheme (even though you say that the market is currently not following history). So you want to pick and choose what fits history and when to ignore it so that it all fits your narrative. Clear hypocrisy.
No. We do not have enough history to say precisely what will happen. We have enough to say that risk is much greater at times of high valuations. But we cannot say precisely when prices will crash.
We know some things and we do not know some other things. We should say the things we know and avoid saying the things we do not know. We should tell people that stock investing risk is higher at times of high valuations and thus investors who want to keep their risk profile stable over time need to lower their stock allocations at such times. But we should not say “there will be a price crash on such and such a date.” Because we just don’t know that.
I believe that history is a great guide, the best guide that we have. One of the many things that I like about the Buy-and-Holders is that they were the one who urged using history as a guide. I do not believe that history tells us everything. That’s because there is not yet enough history. When we have 10,000 years of historical data, we may be able to make better predictions of when price crashes will arrive. It’s also possible that we will never be able to do that because it is shifts in investor emotion that cause price crashes and investor emotion is an irrational phenomenon so it may never be highly predictable. In any event, we cannot make such predictions effectively today. So we should not advance them.
But we can say that, once prices get high, their long-term direction is down. That’s been so for 150 years running. So that’s a safe prediction. High prices beget years of low returns and low prices beget years of high returns. I read that in Bogle’s book before I ever read Shiller’s book. It was Bogle that helped me to understand why Greaney’s study is in error, not Shiller. Shiller of course added to my understanding later on. But Bogle is the true cause of all this. I would guess that the reason why Bernstein stated that the Greaney number is in error is that he had read Bogle. Bogle is the real trouble-maker.
I believe that the market is today operating under the same principles that it has operated on throughout history. The results that we have seen in recent years have been outlier results. But that is going to happen from time to time. It doesn’t mean that the principles have changed. It just means that the details by which things play out are a little different. I think we are going to see the Same basic pattern this time as we have seen for the entire history of the market. a failure to pay sufficient attention to valuations will cause us all a great deal of misery.
I would like to see us learn from history instead of continuing to make the same horrible mistakes. The benefit of permitting discussion of the peer-reviewed research is that it permits us to learn from history. I view the ban on honest posting re the peer-reviewed research as irrational. I think that the irrationality that we have seen during the first 22 years of our discussions supports Shiller’s belief that stock investors are not always 100 percent rational but at times become highly emotional. I see the reining in of investor emotion as being 70 percent of what it takes to achieve successful long-term stock investing success. It’s the key to the entire project.
Rob
“ We know some things and we do not know some other things. ”
We know that buy and hold has always worked. We know that VII has never worked. You are broke. We are not. It is simple to understand.
So simple That’s why the Buy-and-Hold Goons cannot bear the thought of people who believe that Shiller’s Nobel-prize-winning research is legitimate research being permitted to post their honest thoughts at all of the boards. It’s all so clear and simple.
I believe that the “idea” that valuation-based market timing is not always 100 percent required for every investor is the most damaging mistake ever made in the history of personal finance. I put the word “idea” in quote market because this belief is not the product of rational thought but just an emotional Get-Rich-Quick impulse that cannot be effectively defended in civil discussions.
That’s where I’m coming from, Anonymous. My best wishes to you.
Rob
You’re not banned from Twitter/X, reddit, Facebook, or Youtube. All the places that matter the most for reaching the masses are open to you. You choose to not post to these places.
There shouldn’t be a ban at a single site. Once peer-reviewed research was published showing that valuations affect long-term returns, everyone who cares about other investors should have felt free to point out the dangers of the Buy-and-Hold (no market timing now!) strategy. It’s because every site is not open that we have the CAPE value that applies today.
It’s not my job alone to open every site to honest posting re the peer-reviewed research. That’s something we should all be working on together. I’ve done my part and then some more on top of that and then some more on top of that.
My sincere take.
Rob
Bogleheads is private property. They have a right to ban you for any reason.
That question will be settled in the courts, Sensible.
The tobacco companies are private property. There was a time when the heads of the tobacco companies were doing everything in their power to suppress discussion of the research showing that smoking causes cancer. Their view was that it would be easier to turn a quick buck if people didn’t know how dangerous their product was.
That’s where we are with Buy-and-Hold today. Shiller’s Nobel-prize-winning research was not available in the days when Buy-and-Hold was being developed. So the people developing it took a wild shot in the dark on the question of price discipline and came up with this loony-tunes idea that valuation-based market timing might not be 100 percent required for every investor. Huh? What the f?
Lots of people have been hurt by that mistakes and lots more will be hurt in the next Buy-and-Hold Crisis. Each time once of you Goons engaged in abusive or criminal behavior, it makes it harder for those who want to keep our nation from being torn apart by this massive cover-up, the biggest case of financial fraud in our nation;s history. If Greaney truly believed that he had included a valuation adjustment in his study, we never would have seen a single abusive post or a single criminal act. i mean, come on.
We all have to follow the laws of the nation we live in, Those laws are there for everyone’s protection. When you learn that you got an important number wrong in a retirement study, you need to get that study corrected promptly. No death threats, no demands for unjustified board bannings, no acts of extortion, no acts of defamation. We all have responsibilities to others. There were people at the Motley Fool board who used the Greaney study to plan their retirement.
That’s where I’m coming from re this terribly important matter, in any event.
Rob
The people who used Greaney’s study to plan their retirement would have done well. Those who followed your advice would have done poorly. There will be no court cases. Bogleheads has a right to ban you and you don’t even need to violate any rules. There’s no “compelling public interest” in a mid-tier discussion forum. Heck, YouTube (the #1 site which you, of course, refuse to use) could ban you for being a Phillies fan or even for your VII theories and there’d be nothing you could do about it. I thought you went to law school?
I went to law school and i don’t agree with what you’re saying, Sensible. I absolutely believe that there’s a compelling public interest in whether or not millions of middle-class investors have some means to gain access to honest and accurate and research-based reports on what the peer-reviewed research teaches us all about how stock investing works in the real world.
It’s the most important public policy issue of our day. On pure substance terms, there are more important matters: the polarization of political views; the war in Ukraine; climate change; the unrest in the Middle East. But all of those are highly complicated matters. In this case, the solution is easy-peasy. If Shiller only published his Nobel-prize-winning research today, there would not be one dissenting voice questioning the need for it to be discussed at every discussion board and blog, without a single exception. The only thing holding us back is the 43-year cover-up. That makes the Buy-and-Holders look really, really, really bad. But it’s not as if it will look better for the Buy-and-Holders when it’s a 44-year cover-up.
I think that we all need to act together to get every site opened to honest posting re the research. Buy-and-Holders and Valuation-Informed Indexers should be united re the process question and they would be if it were not for you Goons. The same laws that apply in every field of human endeavor outside of the investing advice field need to be made applicable in the investing advice field as well. It”s silly that I should even feel a need to say that. It’s not all just about turning a quick buck any way you can.
My best wishes to you.
Rob
You have YouTube, reddit, Facebook, Instagram, Tiktok and many other social media sites that have far more reach than Bogleheads. Stop whining and post content. I know you have a Twitter account. Go ahead and use it.
My priority today is finishing the book that I am writing re this matter. When that’s done, I can imagine visiting all of the sites to which you are referring.
That won’t end the need to get Bogleheads opened to honest posting re the research as well. We need every investing site to be opened to honest posting re the research, There’s huge leverage in that. There are lots of smart people at Bogleheads. Many of them have expressed a desire that every site be opened to honest posting. I would like to be learning from those people on a daily basis and to have them learning from me.
Learning is this world’s one true free lunch. I would like to see as much of that going on as possible.
That’s where I’m coming from.
Rob
The Bogleheads don’t matter. They’re a small slice of the internet investing community. If you’re right then go out and prove it while somehow explaining how an investing genius like you are broke and pushing 70.
I think Bogleheads matters a great deal. A significant percentage of the material in my book is rooted in things I learned by interacting with lots of smart people at Bogleheads.
I view the Bennett/Pfau research as the most important research published in this field since Shiller’s Nobel-prize-winning 1981 research. I met Wade on Bogleheads. So that research wouldn’t exist without Bogleheads. That’s just one example.
Bogle put up his post saying that he could see how there might be circumstances in which market timing could work at Bogleheads. He had never said that before. That was a significant advance.
Bogleheads is potentially a great place. But obviously it needs to be opened to honest posting re the peer-reviewed research. It’s unfortunate that I even need to say that.
Rob
Bogleheads is not even in the top 20,000 websites. YouTube is the #2 site, Facebook is #3, Instagram is 4th, Twitter/X is 5th. Reddit is #12. You’re worried about a niche website that most people have never heard of. Go on and post to the top websites. If you’re the expert with the insights that people need to hear then go to where the people are and tell them.
There’s no need to pick and choose. Every site on the internet should be open to honest posting re the peer-reviewed research. It’s a win, win. win, win, win. It’s not possible for the rational human mind to imagine any downside.
Rob
No Rob, what you want is authoritarianism.
I’m so bad. Isn’t it obvious?
Hasn’t it been obvious since the morning of May 13, 2002?
Rob