“No One Even Claims That Greaney Included a Valuation Adjustment in His Study.”

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

No one even claims that Greaney included a valuation adjustment in his study.

I agree with you that no one has ever claimed that. Thank God for small favors.

But Greaney has not corrected the error in 22 years. That’s the source of conflict.

The Bennett/Pfau study shows that practicing price discipline (valuation-based market timing) when buying stocks is 70 percent of what it takes to achieve long-term investing success. Given the valuation-based market timing is 70 percent of the story, 70 percent of the efforts of those in the investment advice field should be directed at insuring that investors practice price discipline. It’s hard work. The entire history of the market shows that investors love the Get Rich Quick/Buy-and-Hold garbage. We are naturally inclined to turn stock investing into a roller-coaster ride, bull markets followed by bear market. The last 43 years of peer-reviewed research points us to a better way. But we can’t get there if we cant even talk about the problem, the Get Rich Quick urge that causes us to believe that there might be an alternate universe where everything works the opposite of how it works here on Planet Earth and valuation-based market timing is not always 100 percent required for every investor.

People at the old Motley Fool board were talking about the Greaney study daily. Some of them became friends of mine. What kind of friend was I being when I failed to point out the error in the study? What kind of person does that?

I did it for three years. I sure cannot imagine circumstances in which I would ever again be able to rationalize that sort of behavior. You do you. I am going to do me. I sincerely believe that the Greaney study lacks a valuation adjustment. Just like Evidence.

Rob