Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
The financial community is focused on having a financially secure retirement. Your focus is trying to set yourself up as one of the premier thought leaders because you seek the fame and accolades. You figured you would do this by trying to come up with a timing scheme that you could leverage to promote yourself. Unfortunately for you, it has failed miserably.
The only “human misery” is being experience by you and those that were either dependent on you or happened to take your horrible advice. No one has to take your word or my word for anything. Instead, they can just look at the results. You went broke and your predicted crashes never happened when you said they would. Those of us that kept working our jobs, kept saving our money and followed buy and hold, have ended up with very successful retirements that are financially sound. Just look at the numbers.
I didn’t even want to write about investing. From May 1999 to May 2002, I hardly advanced a word on the subject. It just wasn’t my thing. But I was eventually left with no choice because Greaney repeatedly pushed his study purporting to show that a 4 percent withdrawal rate is always safe. I had read John Bogle’s book where he says that reversion to the mean of stock prices is an “iron law” of stock investing. So I knew that there was zero chance that the safe withdrawal rates is always the same number. I could see that lots of people at the Motley Fool board believed that the Greaney study was legitimate. At some point, you just have to speak up.
What it all really comes down to is emotion vs. reason. Valuations OBVIOUSLY affect long-term returns. All that Shiller did was to confirm that what common sense tells us must be so really is so. Buy-and-Hold is an effort to deny common sense. Get Rich Quick strategies are huge money-makers because deep down we all like the idea of getting something for nothing and, if irrational exuberance gains are as good as real economic-based gains, we can create as much phony wealth as we want and never pay a price. To persuade people that valuation-based market timing is not always 100 percent required for every investor, you have to persuade people to give up on logic and reason and research and go with a purely emotion-based approach. That’s just not me. In the days when I was a Buy-and-Holder, it was because I liked it that they often referred to what the research says.
I’m a research guy. That’s the issue. The Buy-and-Holders can’t stand that because their “strategy” is pure emotion and they cant’t stand for people to learn that. They cant even stand to acknowledge it to themselves. I believe that in time they will need to. We permit people to make use of their reason in every other field. I don’t believe that we can have just one field in which reference to the peer-reviewed research is absolutely forbidden, no matter how much money it makes in the short term to tell people that irrational exuberance gains are real. I believe that the arc of history in the investment advice field bends toward rationality.
We’ll see.
Rob
My emotions help me get a nest egg of over $7.5 million and your emotions ended up causing you to go broke. Last I checked, you are the one in therapy to deal with emotions.
I believe that you have a lot more money than me. It’s true that I am seeing a therapist to cope with the stress that this matter has brought into my life
I wish you well.
Rob
I guess we have different goals. My goal was to have as much money as possible in my accounts by the time I reached 60, so that I could have a comfortable retirement.
One thing to ponder: The vast majority of stress we have in our life is actually self-imposed since it reflects the choices that we have made. If you want to deal with stresses, then you need to change what you are doing.
You don’t understand risk. You increase the risk of stock investing dramatically if you fail to practice valuation-based market timing. You could get good results for a time regardless. But you won’t get good results indefinitely. If you consistently choose a high-risk approach, you are eventually going to pay a price.
The benefit of research is that you can learn from what happened to others throughout history. Ignoring the research is learning the hard way.
Rob
I totally understand risk and you don’t. I did not quit working until my retirement funding was fully in place. You thought you could make money from an internet business that was not established before you stopped working. I used a strategy that has always worked. You used a strategy that you thought could work, but never had even one successful outcome. I made choices and you made choices. The stresses we have or don’t have are a direct result of the decisions we all made up to this point.
Yikes!
Woe is me, Anonymous.
Rob
You are the one that is complaining. You are the one wanting things to be different. You are the one that made all these decisions, so why shouldn’t you be responsible for correcting your mistakes? Why should other people have to fix what you caused to be broke?
I would like to see every discussion board and blog on the internet to be opened to honest posting re the peer-reviewed research, that much is certainly fair to say.
I’m not the only one thinking that things should be different as new things are learned. Why do we have peer-reviewed journals if we don’t believe that the research published in peer-reviewed journals should be discussed on the internet? In the days when I was a Buy-and-Holder, it’s because I heard Buy-and-Holders cite peer-reviewed research and that seemed to me to be a good way to proceed. Even today, it is my sense that most Buy-and-Holders are fine with people citing peer-reviewed research so long as it is not Shiller’s Nobel-prize-winning research showing that valuations affect long-term returns.
Even there, I don’t think the opposition to discussion of the research would be so intense if there had not been a 44-year cover-up. At this point, it’s not the idea of people learning about the mistake that most distresses the Buy-and-Holders. It’s the idea of people learning about the 44-year cover-up. If we could go back and do it over, I think that most Buy-and-Holders would be in favor of permitting honest posting re the research going back to the day when Shiller’s research was published.
Rob
Why would anyone want to learn “new things” if they ended up broke and divorced. The old ways have worked just fine and it is simple: Bring in an income. Save consistently. Invest consistently (buy and hold).
Relying on windfalls and silly market timing schemes are destined to failure.
I don’t agree that the old ways have worked “just fine.” The old ways brought us the Great Depression and the stagflation of the 1970s and the Great Recession of 2008. I think we are blessed that we learned what we learned with the publication of Shiller’s Nobel-prize-winning research. I would like to see every site on the internet opened to honest posting re the last 44 years of peer-reviewed research.
Where I’m coming from.
Rob
That is a bunch of made up garbage.
Okay, Anonymous.
My best wishes to you.
Rob