Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“ That part is hard to write. It involves being somewhat critical of my readers. Generally not a great promotional strategy.”
Because only Rob Bennett is right. Only Rob Bennett is honest. Only Rob Bennett is normal.
Sorry, Rob, but the results say just the opposite.
It’s not only Rob Bennett. Thousands of our fellow community members expressed a desire that honest posting re the peer-reviewed research be permitted. Shiller’s book was a best-seller. The 16 months in which Wade was doing honest research were the happiest days of his life.
It’s never been a majority, that’s for sure. But it’s not reasonable to think that new research would have majority support starting from the day it is published. People have to hear about it and then get to ask questions about it and then over time to be persuaded by it. That’s the part of the process that’s been missing for 22 years now.
I predict that, once we get every site opened to honest posting re the research, we will go from 10 percent Valuation-Informed Indexers to 20 percent Valuation-Informed Indexers in six months.
Rob
Your predictions have not really worked out all that well for you, Rob. In fact, people have done much better doing just the opposite of what you say.
I agree that in recent years stocks have not performed at all as I was expecting them to perform. That’s an objective fact.
I don’t agree that those who have ignored valuations have done well. You say that because you don’t account for the effect of irrational exuberance. Account for irrational exuberance and you come to different conclusions.
I account for irrational exuberance. That’s the only difference between me and the Buy-and-Holders. I believe that everything else that the Buy-and-Holders say checks out. I am in strong agreement with them re how great an asset class stocks are and re how the guessing-game approach to market timing doesn’t work.
My best wishes.
Rob
“ I agree that in recent years stocks have not performed at all as I was expecting them to perform. That’s an objective fact.
In short, you were wrong. Just say the words, Rob.
The Yankees were ahead by five runs at one time in yesterday’s World Series game. If someone said “I believe that there’s an 80 percent chance that the Yankees will win this game,” would you say that they were proven wrong? I would not. The historical record supported the statement. But 80 percent is not 100 percent. We saw an outlier outcome. It happens. In baseball and in stock investing as well.
You’re saying that, because we have seen this outlier outcome in recent years, we should throw away all of the peer-reviewed research and go with the strategy that the peer-reviewed research shows never works in the long-term (failing to practice valuation-based market timing). I don’t buy it. The value of the peer-reviewed research is that it steers us away from our worst emotional impulses.
Permitting the CAPE value to get to where it is today shows a dangerous emotionalism on the part of stock investors. I don’t believe that that dangerous emotionalism just fell out of sky. It is the result of the relentless promotion of Buy-and-Hold strategies by our Wall Street Con Men friends. We are perfectly capable of investing in rational, effective ways. But there’s a lot of money to be made pushing the Buy-and-Hold stuff. So we at times engage in this unfortunate behavior. I think we can do better. The key is opening every site to honest posting re the peer-reviewed research.
Where I’m coming from.
Rob
“We saw an outlier outcome.”
But you made an investing bet (going with 0% stocks) that assumed we would not see an outlier outcome. You assumed that stock prices would fall to a point where you would be comfortable buying at some point in the short to medium future.
It is now closing in on 30 years where you have been at 0%. The most likely outcome is that you will remain at 0% stocks for the rest of your investing career.
At around the same point (mid 90s) I was maxing out my 401k in a diverse mixture of stocks and bonds in index funds and have continued to work and invest heavily (though family obligations have meant that from time to time I have not maxed out the 401k).
The Boglehead way works.
You were caught up in the Motley Fool irrational exuberance where the allure of retiring early over rode the necessity of being financially independent before undertaking such a move.
I didn’t make a bet. I went with what the research said. You didn’t.
I believe that stocks will continue to perform in the future somewhat as they have always performed in the past. We’ll see, you know. But that’s what I believe. So that’s what I say when I participate at investing forums.
That upsets you. It upsets you because your common sense tells you that stocks cannot possibly offer the same long-term value proposition at all price levels and that therefore investors who want to Stay the Course in a meaningful way absolutely must practice valuation-based market timing. If you don’t do that, your risk profile is jumping all over the place as valuation levels change.
My sincere take.
Rob
And now you don’t have any money to invest in stocks or anything else for that matter. The game is over for you. Meanwhile, those of us that you have bashed for the last 20 years have done just fine. This upsets YOU. You want to see everyone else fail because of what happened to you. Instead, you should be focused on fixing your problems. Your goal of revenge is just sick.
You’re not doing just fine, Anonymous. You live in a country with a stock market with a CAPE value of 36. Are you joking?
That’s like refusing to move out of the path of a hurricane because in the days before the hurricane hits your feeling is that you are doing “just fine.” The peer-reviewed research is there to educate us as to the realities and thereby to help us all live better lives. I would permit honest discussion of it at every site.
Rob