I’ve posted Entry #708 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Only a Combination of Fundamental and Technical Analysis Makes Complete Sense.
Juicy Excerpt: I completely agree with them that the guessing-game approach to market timing is a foolish endeavor. However, I am a strong proponent of valuation-based market timing. It drives me nuts that Buy-and-Holders act as if the two approaches to market timing are the same thing. They are not even a tiny bit the same thing. They are very, very different things.
Help us understand something.
1. You are broke
2. You have been banned at 15+ websites
3. No one comes here or in any other public forum in support of you
4. No one in the financial/investment community will talk to you
5. Your wife divorced you
Despite these 5 facts (which you have acknowledged), you still don’t see how you are the problem and blame everyone else for your situation. Explain how you think this is the case.
The Greaney retirement study lacks a valuation adjustment. Nothing could be more clear. Greaney hasn’t corrected the study in the 22 years since I brought the error to his attention,. That’s a problem, you know? That’s a big problem.
It’s not just Greaney. Obviously, he has played a role in creating the problem. But there’s no way that one person could cause such a big problem for so many millions of people. The only explanation of this super weird situation is that the problem resides within each and every one of us. We LIKE irrational exuberance. We LIKE Get Rich Quick. We LIKE Buy-and-Hold. We LIKE pretending that the safe withdrawal rate is the same number at all times.
We’re not going to solve the problem by just going along with all the nonsense. We’ve been doing that for 150 years and today’s CAPE value is 35. What we’ve been doing for 150 years hasn’t been getting the job done. Until 1981, we didn’t;t know. So it was just one of those things. But now we do. Shiller’s research was published in a peer-reviewed journal. He was awarded a Nobel prize for it. His book became a best-seller. Intellectually, we now know what we’ve been doing wrong since the formation of the first stock market. But emotionally we very, very, very much don’t want to let that knowledge in.
I am a journalist. That’s how I have made my living since I was in my 20s. My journalism is what I give to the world. There’s never been as big a story as this one. We all need to know how stock investing works. Our retirements depend on it. And for 43 years now, we DO know. Except we don’t. We love bull markets so much that we have blocked that knowledge out. My journalism project is to change that, to get every internet site opened to honest discussion of the last 43 years of peer-reviewed research in this field.
The more you Goons evidence hate for the idea of permitting honest posting re the research, the more I realize how important it is that every site be opened to it. You Goons and I are working at cross purposes. What you want is what I do not want. What I want is what you do not want.
I hope that that helps, at least a tiny bit.
Rob