“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.”

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

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