A Rich Life

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

“Peer-Reviewed Research Gets You Outside of Your Own Emotions.”

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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:

You say you are concerned about people having a failed retirement.  Have you looked in the mirror lately?  YOU have a failed retirement.  It means you were WRONG about everything.  Why should anyone listen to you?

People should listen to me because I cite peer-reviewed research in support of what I say. Peer-reviewed research gets you outside of your own emotions. Within your own mind, you can rationalize anything, Your thinking goes around and around in circles. Peer-reviewed research is outside of you. It’s a check on your own emotionalism. Using peer-reviewed research as a guide permits rationality into the process.

This is a battle between emotionalism (we all have a desire to obtain something for nothing — counting irrational exuberance as real is obtaining something for nothing) and rationality (employing the discipline of checking what the peer-reviewed research says about your strategy). I believe that the arc of history in investment analysis bends toward rationality. We’ve been working toward Shiller’s research findings for a long time.We are not quite there yet. But we are very close today. All that we need to do is to open one large site to honest posting re the research and the rest wil be downhill sledding.

In any event, each investor should get to choose for himself or herself who to listen to. You Goons can decide for yourselves. You don’t get to decide for everyone else. When you cross the line and attempt to suppress discussion of the last 44 years of peer-reviewed research, you engage in fraud. That shows that you don’t really believe in Buy-and-Hold yourselves. I believe you follow it. Your belief goes that far. But you lack the confidence it would take to engage in civil and reasoned discussions of the merit of your strategy. Your behavior shows that you do not have confidence, only bravado. Not this boy, you know?

Rob

“Opening Every Site to Honest Posting re the Peer-Reviewed Research Will Solve the Problem. Investing Will Become a More Rational Endeavor. So Prices Will Correct Quickly.”

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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:

“I have put forward general time frames in which I said I believed the price crash would come. Those predictions did indeed fail. Those predictions were based on what has happened in the historical record. In recent history, prices have remained high longer than than they did at any earlier time in history. We are in uncharted waters. No one could have anticipated that.”

And did you learn anything from the failure of these predictions that weren’t really predictions?

I learned that we need to stress that the guessing game approach to market timing doesn’t work. I didn’t believe that it worked on the morning of May 13, 2002. I feel stronger re that point today.

We need to ask WHY short-term timing doesn’t work. It doesn’t work because stock investing is such an emotional endeavor. When prices are too high, they SHOULD be lower. But investors don’t care what they should be. Investors WANT prices ton be high. So they push them up even when there is no economic justification to do so.

Opening every site to honest posting re the peer-reviewed research will solve the problem. Investing will become a more rational endeavor. So prices will correct quickly. Investors will be encouraged to act in their self-interest. Prices will never again get so out of hand. So there will never again be such resistance to valuation-based market timing. All of these issues are connected.

Rob

“It Would Be One Thing if the Buy-and-Holders Just Got the Thing About Valuation-Based Market Timing Wrong. People Make Mistakes. It Happens. It Is Something Else Altogether to Insist That, Because You Got Something Important Wildly Wrong, No One Else Can Ever Get It Right. That’s Sick, Dangerous Stuff.”

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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:

Your wife divorcing you was cause by irrational exuberance?  How so?

Because it set off all this insane emotionalism that produced the CAPE value that applies today. In ordinary circumstances, people would view it as a good thing to point out an error in a retirement study. For about 10 percent of Buy-and-Holders, it is the end of the world. And most of the remaining 90 percent tolerate the abusiveness of the 10 percent.

It would be one thing of the Buy-and-Holders just got the thing about valuation-based market timing wrong. People make mistakes. It happens. It is something else altogether to insist that, because you got something important wildly wrong, no one else can ever get it right. That’s sick, dangerous stuff. If the Greaney study had truly contained a valuation adjustment, we never would have seen a single abusive post, much less any of the criminal stuff.

Where I’m coming from.

Rob

“Let’s Say That Shiller Changes His Mind and Tells People That We Should Time the Market with CAPE and Then He Gets Rich from People Buying His Books With This New Message………..but Then You Are Still Ignored and You Don’t Earn a Single Dime From All This. Are You Okay With That Outcome?”

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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:

Let’s say that Shiller changes his mind and tells people that we should time the market with CAPE and then he gets rich from people buying his books with this new message………..but then you are still ignored and you don’t earn a single dime from all this.  Are you okay with that outcome?

I wouldn’t be happy about it. But I could live with it. I see it as a better outcome than having to live with myself in the days and years following the onset of the next Buy-and-Hold Crisis knowing that I could have helped my friends by speaking out about the error in the Greaney retirement study but that I failed to do so because I was afraid of what you Goons would do in response.

None of us get everything we want in this life. We have to make choices. We have to try to choose the best option presented to us.

Rob

“Fair Value Is What the Market Determines.”

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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:

Fair value is what the market determines.  Stocks go up and down, but continue to rise over time.  We have learned that market timing doesn’t work and that people can and do go broke when following schemes like this.

Fair value is what the market determines when investors have access to discussions of the peer-reviewed research. The market obviously is not able to function properly when honest posting re the last 44 years of peer-reviewed research is prohibited at every site.

Today’s CAPE value is 33. Are we to believe that the relentless promotion of the Buy-and-Hold “strategy” had nothing to do with that?

Rob

 

“Announcement of the Tariffs Would Have Caused a Price Drop in Any Event. But When Stocks Are Priced at Two Times Their Real Value, the Price Drop Is Much Larger.”

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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:

Uh oh……….the market is dropping and no one is blaming buy and hold…….only tariffs. That means you won’t be getting your $500 million windfall. There goes your plan “B”.

I’m blaming Buy-and-Hold. Announcement of the tariffs would have caused a price drop in any event. But when stocks are priced at two times their real value, the price drop is much larger.When all investors are practicing valuation-based market timing, both phony price increases and phony price drops will be eliminated, Permitting honest posting re the peer-reviewed research at every site will take away the thrill-ride aspect of the stock investing experience. I think that would be a very good thing.

Rob

“All of the Numbers You Talk About Are Not Adjusted for Irrational Exuberance. If You Make the Adjustment, Valuation-Informed Indexing Has Been Doing Better Than Buy-and-Hold for 150 Years Now. If You Fail to Make the Adjustment, Buy-and-Hold Has Been Doing Better for the Length of the Current Bull Market.”

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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:

Let’s just look at long term results.  Look at anyone that is now in their 60’s and entering retirement.  Those that followed buy and hold for the last 40 years have done substantially better versus anyone following your VII strategy.  We can all look at the numbers.  You are broke.  Fix your own problems instead of trying to drag everyone else down with you.

All of the numbers you talk about are not adjusted for irrational exuberance. If you make the adjustment, Valuation-Informed Indexing has been doing better than Buy-and-Hold for 150 years now. If you fail to make the adjustment, Buy-and-Hold has been doing better for the length of the current bull market. It’s hardly a surprise that a Get Rich Quick approach would look good at a time when the CAPE is 35. The more irrational investors are, the better Buy-and-Hold looks to them.

It all comes down to whether Shiller’s Nobel-prize-winning research is legitimate research. I believe that it is legitimate research. So that’s what I say I believe when the topic of safe withdrawal rates turns up in discussions held on the internet. There’s never going to be research supporting Buy-and-Hold and taking the research into consideration is never going to be popular at a time when the CAPE is 35.

Rob

“Shiller Merely Reinforced What We Already Knew. He Told Us That We Should Not Try to Time the Market with CAPE. Too Bad You Didn’t Listen.”

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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:

Shiller merely reinforced what we already knew.  He told us that we should not try to time the market with CAPE.  Too bad you didn’t listen.

Shiller published a paper in 1996 saying that investors who stuck with their high stock allocations despite the sky-high valuations of the day would live to regret it within 10 years. That sounds like an endorsement of market timing to me.

Rob

“Do You Have a Different Opinion of How Shiller Changed Our Understanding of Stock Investing? He Was Awarded a Nobel Prize. He Must Have Showed Something of Significance.”

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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:

So your definition is only your opinion of what one guy said in a publication from 44 years ago and nothing else.  Got it.

Do you have a different opinion of how Shiller changed our understanding of stock investing? He was awarded a Nobel prize. He must have showed something of significance.