A Rich Life

The Old Ideas on Saving & Investing Don't Work -- Here's What Does

“There Have Been Bubbles Since Long Before Anyone Thought of Buy and Hold.”

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

There have been bubbles since long before anyone thought of buy and hold.

The issue is that your fantasy world of steady high returns from stocks is not compatible with human nature or reality.

It’s true that there have always been bubbles. The difference today is that we now have 43 years of peer-reviewed research showing us how to stop them from forming. We have learned things that we did not know in earlier times and thereby gains the ability to live better lives.

All that we are talking about is investing rationally. Humans employ reason in many fields. I see no reason why they would not be able apply it in the stock investing field. No it perfectly, probably. But I believe that we could do a lot better than we are doing today.

Rob

Comments

  1. How do you expect to convince people to consider your points on investing when you have a failed retirement plan?

  2. The idea of taking what the peer-reviewed research says into consideration makes all the sense in the world. The Buy-and-Holders themselves often express the view that the peer-reviewed research should be considered. That’s the reason why I became a Buy-and-Holder for a time. So in ordinary circumstances there would be no difficulty in persuading people of the merits of Valuation-Informed Indexing.

    The problem is that CAPE of 38. People obviously aren’t thinking clearly when we have a CAPE of 38. If we were thinking clearly, we would set the CAPE at a reasonable place. When the CAPE drops, we will have more people open to taking the last 43 years of peer-reviewed research into consideration. The next step will be to open one large site to honest posting re the research. Then an understanding of the research will just grow and grow and grow.

    Asking how I will be able to persuade people to follow research-based strategies is like asking how I would be able to persuade people of the merits of a cure for cancer that didn’t require chemo. Everyone wants a cure for cancer. And everyone wants to know how stock investing works in the real world. There might be some people who work at chemo treatment centers who would prefer that word about the cure for cancer not get out. And there are obviously some Buy-and-Holders who want to suppress discussions of the last 43 years of peer-reviewed research. But I don’t think that something this positive can be suppressed indefinitely. Trying to block advances that help millions of people in very big ways is a losing proposition,

    Hence, the crazy, abusive tactics we have seen coming from the Buy-and-Hold side of the table. I mean, please give me a freakin’ break. If Buy-and-Hold were a real thing, we never would have seen a single abusive post, much less any of the criminal stuff. That’s not normal behavior, it’s desperate behavior. The normal thing to do when exciting new research is published is to explore the far-reaching how-to implications of that research at every place at which it is possible to do so. It’s not even possible to imagine any downside that would follow from doing so.

    Where I’m coming from.

    Rob

    Rob

  3. The idea that a person with a failed retirement plan thinks that he is in a position to tell others how investing works is just silly. The only abusive tactics we see are from you. Just ask your ex-wife.

  4. Anyone can read Shiller’s book, Anonymous. It is a national scandal that there are still people saying that the safe withdrawal rate is always the same number at a time when Shiller’s book is available in libraries all across the nation.

    The only we are ever going to address that national scandal is through strong journalistic efforts to explain. Journalism is what I do. So this is my project.

    I don’t claim to be an investing expert. It probably helps me that I am not one. If I were an investment expert. I would have friends who don’t want people to learn what the research says and that would cause me to pull my punches.

    I am a journalist and opening every internet site to honest posting re Shiller’s research is the more important journalism project of my lifetime. So I soldier on.

    I naturally wish you all the best that this life has to offer a person.

    Rob

  5. I read the book. It never says to time the market with CAPE. It never mentions you. Shiller, Pfau and Greaney disagree with you. You are broke, they are not.