Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
It is funny to watch a broke guy with a failed retirement who has admitted to “not being a numbers guy” telling a bunch of millionaires as to how they all got it wrong.
Even so, I sincerely believe that the Greaney retirement study lacks a a valuation adjustment. Had he included a valuation adjustment, the study would have reported very different withdrawal rates as safe. Stock investing risk is not stable but variable, depending on how much irrational exuberance there is in the stock price at a given time.
And I think we should be talking about how much of a difference valuations make on a daily basis at every site. If we talked about it daily at every site, we could never again get the sort of CAPE value that applies today. I believe that that would be a good thing. I believe that the Ban on Honest Posting re how stock investing works hurts us all in very serious ways.
Where I’m coming from.
Rob
We don’t need to entertain your silly hocomania on other people’s websites. You have your own site to say whatever you want.
I believe that we need to open every discussion board and blog on the internet to honest posting re the peer-reviewed research. I don’t see that as being even a tiny bit optional, I see it as being 100 percent imperative.
People are not naturally inclined to practicing valuation-based market timing (price discipline!). We all want something for nothing. We all love the Get Rich Quick/Buy-and-Hold stuff. The entire history of the market shows that. We suffer a horrible Buy-and-Hold Crisis and we sweat off of irrational exuberance. But time passes and we start thinking that maybe we should give the Get Rich Quick/Buy-and-Hold garbage (no market timing now!) another try. To stop bull markets from developing, we all need to work together to remind ourselves daily of the human suffering that always follows in the wake of a time when the Buy-and-Hold “strategy” is heavily promoted.
I think we can do it. I think that the fact that Shiller’s research showing that valuations affect long-term returns was awarded a Nobel prize was a very good sign. And I liked seeing thousands of our fellow community members express a desire that honest posting re the peer-reviewed research be permitted. I’m not encouraged by today’s CAPE value. That scares me. But I see more good signs than bad. I like to say that the arc of history in the personal finance field bends toward increased rationality. I think that we are in a fundamental sense a good people and that the next Buy-and-Hold Crisis may cause us to open at least one large site to honest posting. We’ll see.
My best and warmest wishes to you and yours.
Rob
And we don’t think your posts are honest. Like I said, you can post what you want on your website and other board owners do not have to allow you to spread your lies on their websites.
It’s fraud. There were people at the Motley Fool board who were using the Greaney retirement study to plan their retirement. Do you think it would have been better if I had kept it zipped re the error in it (it lacks a valuation adjustment)?
If Greaney were honest, he would want people to know about the dangers of his study. If he cared about the people who make use of his study, he would want to correct the error before it hurts more people.
If we all were capable of thinking clearly about these matters, there wouldn’t be one dissenting voice to what I am saying here. The core issue in dispute in our discussions is whether investors are 100 percent rational (they would need to be for the market to be efficient, which was the assumption of the people who developed Buy-and-Hold) or highly emotional (they would need to be for irrational exuberance to be a real thing). The fact that there is even one person who believes that it is okay that Greaney failed to correct his study within 24 hours of the moment he learned of the error he made in it shows beyond any reasonable doubt that Shiller was right to posit that investors are at times highly emotional. We wouldn’t have seen any of the abusive or criminal behavior that we have seen from you Goons if investors were 100 percent rational.
I would permit honest posting re the peer-reviewed research. At every site. We’re obviously not there yet. But I think we are close.
Rob
There is no error. You have been told that thousands of times. It doesn’t need an adjustment. You know that as well. You just need to keep a story going to cover up your complete failure. Instead of playing silly games, you should be focused on generating an income since you are broke.
Okay, Anonymous.
I wish you all good things.
Rob
Seriously. Why should one single person believe one word? You have been wrong about everything. You have been caught in so many lies. Your retirement failed.
Woe is me, Anonymous.
I’m cereal.
Rob
Motley Fool seems to have gotten rid of (or vastly changed) their original discussion boards. Do you have a copy of your post on the REHP board that talked about Greaney’s study?
I have copies.
But that’s not really the issue. Today’s CAPE value is the issue. There could never be a CAPE value like that if everyone who worked in the field stressed at all times how important it is to keep irrational exuberance under control. It’s something that we all need to work at every day at every site.
I didn’t know that on the morning of May 13, 2002. I thought that Greaney had just overlooked the need to include a valuation adjustment in his study. But the error in the safe withdrawal rate studies is just a symptom of the real problem — the human weakness that causes us all to be drawn to Get Rich Quick/Buy-and-Hold strategies. That affects everything. That’s the story of stock investing. When stock investors fight that urge, they do well. When they fail to fight that urge, they get hurt.
There are no two sides on any of this stuff, Evidence. We all want the same things. We are all on the same side.
Rob
“ There are no two sides on any of this stuff, Evidence. We all want the same things. We are all on the same side.”
No one wants what you want. Haven’t you forgot? You are banned at most boards.
I’m banned. I’m not banned because no one wants to hear what I have to say. I’m banned because lots of people want to hear what I have to say. That’s the threat.
Rob
If people wanted to hear what you say, they would be here on this board.
Their desire to hear it is not strong enough for them to subject themselves to what you Goons dish out to those who post honestly re the last 43 years of peer-reviewed research, that much would be fair to say. Will that change in the days and years following the onset of the next Buy-and-Hold Crisis? I think it might. We’ll see, you know?
I could just keep it zipped re the error in the Greaney retirement study (it lacks a valuation adjustment). Does that sound like a good idea? Do you think that would solve the problem? My take is that people agreeing to keep it zipped in the face of the abusiveness of you Goons is the CAUSE of the problem. That’s what got us to where we are today. So I don’t see that as the solution.
I think that those who believe that Shiller’s Nobel-prize-winning research showing that valuations affect long-term returns is legitimate research should adopt a practice of speaking up, abusive posting be darned. We’re not a majority. We’re greatly outnumbered. We’re about 10 percent of the population of investors. That’s still millions of people. I think it would make a difference if we all made it a practice not to permit ourselves to be intimidated. Whether it did or not, it has certainly made me feel better about myself since I began speaking up. At least I no longer feel that I am personally contributing to the giant act of fraud that has produced today’s CAPE value.
That’s pretty much it. I think we all should be saying what we believe. I don’t think that there should be any controversy about it, I think it’s the most obvious thing in the world. I don’t control any others, only me. So I make an effort to do what I have been urging others to do for 22 years now. I say that I sincerely believe that the Greaney study lacks a valuation adjustment. That’s what I sincerely believe.
Rob
Given that people are posting anonymously, your conclusions lack any merit. People just don’t believe your garbage.
Okay, Anonymous.
I completely agree that most do not agree with what I am saying. The only way that I can imagine that that is ever going to change is if people are exposed to research-based strategies and get to ask questions about them and decide for themselves. So I don’t think it would help if I agreed to post dishonestly. So I’m not willing to go there.
Rob
People don’t believe you are honest and they have rejected your timing scheme. They don’t want to be broke like you.
Okay.
I wish you all the best that this life has to offer a person, in any event.
Rob
“Today’s CAPE value is the issue.”
It is the issue for you. Stock prices have been too high for you since the mid 90s.
And that is OK. No one should be forced to pay more for stocks than they are willing to pay. As long as you are willing to accept the lower returns from which ever investment classes you are currently invested in.
I, on the other hand, realize that I will need to pay the market price for goods and services that I wish to purchase. If I want to buy a new BMW or a 15 year old Ford Focus I will need to pay the market price. I may wish that market price to be half what it currently is, but that wish won’t get me a car at a 50% discount from the market price.
The issue is whether people should be permitted to discuss the last 43 years of peer-reviewed research at every investing site. That research shows that the CAPE value that applies on the day one purchases stocks affects the long-term value proposition obtained from the purchase. If everyone adjusted his or her stock allocation in response to price changes for the purpose of keeping his or her risk profile constant over time, we could never see the sort of CAPE value that applies today and we could all live richer and fuller and happier and less stressful lives.
You are of course correct that we all need to pay the market price for stocks. The market price is affected by the information to which stock investors have access. Permit honest posting re the peer-reviewed research and investors are going to become better informed than what it was possible to be back in the days when the Buy-and-Hold strategy was being developed. Better informed investors would set stock prices are more reasonable levels and we would all benefit. It’s not even possible to imagine any downside.
Rob
If low volatility stocks were available at a CAPE value of 17 then the demand for such wonderful valuable assets would drive the price up greatly.
You don’t seem to understand how supply and demand works.
The only way your dream scenario could happen is if no one noticed that those incredible investments were available.
You’re the one who doesn’t understand, Evidence. You are assuming rationality on the part of investors. That’s the mistake that the people who developed the Buy-and-Hold strategy made. The reason why Shiller was awarded a Nobel prize for his work is that his research shows that the market is NOT efficient, that investors are NOT rational. That’s why his book is titled “IRRATIONAL Exuberance.”
Permitting honest posting re the peer-reviewed research at every site would permit investors to become more rational than they are today. That would be a benefit to everyone.
It is not rational to be price indifferent re stocks in a world in which valuations affect long-term returns. The value proposition of stocks changes with changes in valuation levels. Investors who want to keep their risk profile constant over time MUST engage in valuation-based market timing (price discipline).
Price discipline is what makes markets work. Markets in which participants do not practice price discipline become dysfunctional. Hence, today’s CAPE value. Dysfunctional markets eventually collapse and the participants in those markets suffer horrible life setbacks. Those setbacks became OPTIONAL for stock investors in 1981, when Shiller published the amazing research that we all needed to click into place the up-to-then missing piece to the stock investing puzzle.
My sincere take.
Rob
“You’re the one who doesn’t understand, Evidence. You are assuming rationality on the part of investors.”
I am simply following the logic of what you are advocating. You stated “Permitting honest posting re the peer-reviewed research at every site would permit investors to become more rational than they are today.”
If that happened, and investors became “more rational than they are today” then they would look at the low volatility, high return stocks that would be available in your theoretical world and attempt to buy as much as they could (which would be the rational thing to do)
Of course the very act of doing that would drive up the price and lower the return.
The market would find the proper equilibrium. That’s what we should all want to see happen. Let the market work.
Banning honest posting re the peer-reviewed research is a bad idea. A profoundly bad idea. That’s my sincere take.
We know what we know. We obviously know more after the publication of Shiller’s Nobel-prize-winning research than we knew before publication of that research. We should all feel 100 percent free to talk about the amazing and far-reaching how-to implications of that research.
Rob
“The market would find the proper equilibrium. That’s what we should all want to see happen. Let the market work.”
Markets do work, you just don’t like the results. The price rises and falls so that the buyers and sellers find a price they agree on.
There are some sellers who would like the price to be higher and some buyers who would like the price to be lower. But if you don’t want to buy or sell at the market price you don’t have to.
Death threats and demands for unjustified board bannings and acts of defamation and acts of extortion obviously affect what people talk about on all the boards and blogs. And what people talk about obviously affects the stock price. Your abusiveness makes a difference, Evidence.
I would like to see the same laws that apply in every field other than the investment advice field applied in the investment advice field as well. It’s not just about turning a quick buck.
My sincere take.
Rob
We haven’t seen any of these death threats or acts of defamation, except from you. If you feel laws were broken, then file charges.
How about if I just refuse to say that I believe that the Greaney retirement study contains a valuation adjustment? That’s the part that I control. That’s the part that is up to me.
And I write a weekly column exploring the Valuation-Informed Indexing concept. That helps me to learn new things about the subject regularly.
And I respond to questions and comments here at the blog,. That insures that, if I have missed something over the years, there is a way for it to be brought to my attention.
And I work on a book. That helps me to tie everything together in an organized way. So that it is clear in my head and so that I can present that clarity of thought to others when the time comes when as a nation of people we are ready to begin living richer and fuller and more meaningful and happier lives.
If it were my call, there never would have been a single abusive post. We all would have just gone straight to the good stuff and never looked back. It’s not only my call. I get one vote, like everybody else. I’ve been clear about what my vote is for. That’s as far as I can take it today.
If someone is unsure about some aspect of this matter, I try to help. But there are limits to my powers, you know? That’s the reality, you know? The bad stuff is discouraging. The good stuff is very encouraging. It’s a mixed bag. Life is often like that.
Rob