Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Yes, this is the academic researcher that made a recent statement that market timing with CAPE failed based on the most recent data.
It is.
If the Buy-and-Holders were confident in their strategy, they would want to find out what he would say in an environment in which there were no intimidation tactics being practiced.
And they would want to find out the same re everyone else who works in this field.
Rob
If Rob Bennett was truthful, we would admit that Wade Pfau no longer agrees with him on VII. If Rob Bennett was confident in VII, he would not consistently block posts.
No one knows what Wade Pfau truly thinks. That includes Wade Pfau.
We know for certain that he has grave doubts re some aspects of Buy-and-Hold. He wouldn’t have devoted 16 months of his life to exploring his doubts if they were not serious. Once intimidation tactics enter the picture, it is not reasonable to take he says as being an accurate reflection of his genuine beliefs. And of course that is so of everyone else who works in this field. The intimidation tactics that the Buy-and-Holders employ cancel the effect of all productive intellectual work done in this field.
I believe that we will learn in the days following the onset of the next Buy-and-Hold Crisis that Wade agrees with me on most points (as he did publicly before his career was threatened for doing so.
Rob
“ No one knows what Wade Pfau truly thinks. That includes Wade Pfau.”
That is nonsense. Everyone knows what they as individuals think. It is called an opinion. There is also no evidence that he spent 16 months of his life devoted to one think. We merely make that up. You make it sound like it was somehow an obsession with him.
Your problem is that the internet never forgets. We can all go back and look at history and that history is not kind to you.
I don’t agree. Does an alcoholic “think” that he should drink again, An addiction cancels out rationality. There is no rational case that can be made for failing to exercise price discipline when buying stocks. Hence, the behavior we have seen from the Buy-and-Hold side of the table for the past 23 years.
Rob
“There is no rational case that can be made for failing to exercise price discipline when buying stocks.”
I exercise price discipline every time I buy stocks. I have never paid a cent over the market price.
“I exercise price discipline every time I buy stocks. I have never paid a cent over the market price.”
You are rejecting the concept of irrational exuberance. If irrational exuberance is a thing, then the market sometimes sets the price at an improper place and you need to make an adjustment to know the rel value of the thing you are buying.
Rob
If my Vanguard account says I have $6 million and I see a $6 million house I want to buy, do I have enough to buy it?
Not if the CAPE value is where it is today.
Irrational exuberance gains and economic-based gains are not the same thing. One has lasting value, one will lose its value when investor emotions shift. That ain’t the same thing.
If you don’t count the pretend gains as real, then you won’t be in trouble when the shift comes, you’ll be prepared for it.
Rob
“ Not if the CAPE value is where it is today”
Tell why I can’t take the $6 million right now and buy that house. How much is Vanguard taking out of that check? Does Vanguard look at CAPE before sending me the money?
You shouldn’t treat Pretend Money as real.
Vanguard won’t look at CAPE. That’s why we need to open every site to honest posting re the research. We need to bring everyone up to speed. Then the problem goes awsy.
Rob
“ Vanguard won’t look at CAPE”
Your answers are not consistent. Clearly, Vanguard will give me my $6 million today to buy that house if I want to buy it, right?
They’ll give you the $6 million.
The question is whether you are lucky enough to live in a nation of people in which the understanding of how stock investing works is sufficiently advanced so that you know to distinguish between real stock gains and pretend stock gains.
Rob
So you finally admit the truth in that the current balance is the current worth. As for your speculation on the future, you have been wrong with every prediction. Further, you have no idea as to what investments anyone has in their accounts, so no one, including you, can weigh in on the estimated future value of anyone’s portfolio.
The current balance is the current worth. But the stability of that value is determined by the valuation level. To act as if valuations do no matter is foolish and dangerous. Valuations affect long-term returns. There is 44 years of peer-reviewed research showing that.
There is no evidence that it is possible to make precise predictions of future returns. But there is a mountain of evidence that the riskiness (the potential for big price drops) is affected dramatically by changes in valuations. So it would be insane to put together a retirement plan without taking valuations into consideration. The valuation level that applies on the day a retirement begins is the most important factor that determines whether that retirement will survive or not.
The future value of a portfolio cannot be determined with precision by looking at valuations. But a range of possibilities can be determined and rough probabilities can be assigned to the points on the range of possibilities.
Rob
You failed predictions show that you have no clue about future value and that you shouldn’t be giving out any advice.
I trust what has always worked, which is buy and hold. The numbers speak for themselves.
I wish you the best of luck with it, Anonymous.
Rob