Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
I am a bit lost here. Can someone tell me what the primary mission is of this website?
It’s to get every discussion board and blog on the internet opened to honest posting re the last 44 years of peer-reviewed research. Shiller published research in 1981 showing that valuations affect long-term returns. So investors who want to keep their risk profile constant over time (to Stay the Course in a meaningful way) are 100 percent required to practice valuation-based market timing.
Today’s CAPE value is 34. That’s scary. That’s slightly higher than the CAPE value that caused the Great Depression. We should all be working together to get that CAPE value down (of course, we never should have let it get that high in the first place. But the Buy-and-Holders get hostile when people point out the need for valuation-based market timing.
In the event that the stock market continues to perform in the future somewhat as it always has in the past, we will be seeing another Buy-and-Hold Crisis in the not-too-distant future. That will likely translate into millions of failed retirements, hundreds of thousands of business failures and millions of workers getting thrown out of their jobs. All of that awful stuff is optional today. If we permitted honest posting at every site, investors would know to lower their stock allocation at bit when prices got crazy high. The stock sales would pull prices back to reasonable levels. Stock prices are self-regulating when investors are aware of what the research shows.
But it doesn’t happen by magic. We all carry a Get Rich Quick urge within us. We all want bull markets to come consequence-free. We all want to believe in Buy-and-Hold. We all want to believe that our stock portfolio is really worth the number reported on our portfolio statement. If we were thinking clearly, we would adjust for the effect of irrational exuberance. At today’s CAPE, that would mean reducing the value of the portfolio by 50 percent.
Rob
The primary mission of this website is to convince everyone that Rob Bennett is one of the leading experts on investing, regardless of results. As part of this mission, everyone must keep it zipped unless they agree with Rob Bennett.
All that I have argued for 23 years is that we should permit discussion of the peer-reviewed research at every site. So to say that I am an expert is to say that the peer-reviewed research is an expert. I think that’s so. The great thing about research is that it reveals things that you didn’t know without having done research. I see that as a huge benefit.
If we are not going to permit discussion of the peer-reviewed research, why have peer-reviewed journals? It seems like a waste. It’s only when you apply what you learned from the research that research comes to have value. If the peer-reviewed journals just collect dust, what good are they? I believe in making use of new knowledge. That’s progress.
You Goons act like Shiller’s Nobel-prize-winning research is a curse. I see it as a blessing.
Rob
But you only want to talk about your opinion of what you think one guy said and that is it. You want to ignore everything else. A discussion means that everyone can give their opinions, yet you don’t allow that.
Okay, Anonymous.
Rob
We are so lucky that you can tell us what research counts and how to interpret it since we are a bunch of stupid morons. It has all worked out so well for you, that I am sure everyone wishes they were in your spot right now.
When an idea is discredited by new research, that doesn’t mean that the people who came up with the discredited idea were dumb. It means that the humans did not come to Planet Earth with a manual telling them how everything works. We learn more over time.
That’s the purpose of research, to learn new things. That’s what makes it do great.
Rob