A Rich Life

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

“Shiller Provided Us All a Means to See Into the Future.”

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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 can’t provide links today for what they will be saying in the days following the next price crash.”

I don’t have a time machine. How can I, or anyone else, provide a link for something in the future. What I can do is post a link on what has happened and what people have said. The other websites do not paint a favorable picture of you and what you have said.

Shiller provided us all a means to see into the future. That’s why he was awarded a Nobel prize. That’s why I argue that we should be permitted to discuss his research findings at every web site.

You cannot tell whether a retirement plan is safe or not without taking a look into the future. You cannot know what stock allocation to go with without taking a look into the fuure.

The Buy-and-Holders are taking a look into the future when they say that this will be the first time in history that investors who failed to practice market timing/price discipline will end up okay. So we all make an effort to look into the future. The difference is that some of us use peer-reviewed research as a guide and some of us just take a purely emotional approach. The purely emotional approach has the edge at a time when irrational exuberance is at insane levels. But, if Shiller is right, those days will not last forever.

None of these websites of which you speak has offered a screenshot of the page of the Greaney study containing a valuation adjustment. I wonder why.

Rob

“The Reason Why Shiller Was Awarded a Nobel Prize Is That He Made Us Aware of the Scam at the Core of the Stock Investing Project That Since the First Stock Market Was Formed Has Made Stocks a Far More Risky Asset Class Than It Needs to Be. Now We Are Free of 70 Percent of the Risk of Stock Investing — Intellectually. The Next Step Is to Become Free of 70 Percent of the Risk of Stock Investing in a Practical Real-World Sense.”

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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:

Can you give us examples of what you consider abusive posting on this website and what was specifically said that compelled you to block posts.

That is not why you are banned. You are banned as you hijack threads, don’t provide supporting data behind claims, you refuse to answer questions and you do not comply with what board owners ask of you.

To the opposite, you ban posts that are not abusive and address the subjects in the thread.

There is no consistency to your positions.

There are thousands of threads at this blog in which I interact with you Goons. If, in the days following the next price crash, there are millions of people trying to understand why most of their life savings vanished into the air, they can read through those threads and see if they can pick up the idea. I am 100 percent confident that any halfway reasonable person who takes even a brief look at those threads at a time when he or she is not longer suffering from irrational exuberance, he or she will get it.

There’s also a way to avoid even looking at the threads. Look at the retirement study posted at John Greany’s web site. See if you can identify the valuation adjustment in it. If you cannot find one, think how much abusive posting it would take to keep the cover-up going for 18 years. Now you get it. Now you know.

It’s a scam, Anonymous. It’s not a hidden scam. It’s a scam taking place in full public view. I don’t think that it started out as a scam. And I don’t think that the people working the scam are aware that it is a scam. But it’s a scam all the same. The damage that it will do to millions of investors is just as serious whether the people working the scam are aware that that is what it is or not.

The reason why Shiller was awarded a Nobel prize is that he made us aware of the scam at the core of the stock investing project that since the first stock market was formed has made stocks a far more risky asset class than it needs to be. Now we are free of 70 percent of the risk of stock investing — intellectually. The next step is to become free of 70 percent of the risk of stock investing in a practical real-world sense To achieve that, we need to open every discussion board and blog to honest posting re the last 39 years of peer-reviewed research in this field. I strongly urge that we take that amazing step forward by the close of business today (although what I have seen over the first 18 years of our discussions tells me that we are probably not going to pull it off until we all come together in the days following the next price crash).

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

Rob

“When Research Was Published Showing That Smoking Causes Cancer, the Tobacco Companies Considered That Abusive and Did Everything in Their Power to Stop People From Learning About It. They in Essence Banned Discussion of the New Research. As a Nation We Overcame That b.s. in Time. I Believe That We Will See the Same Happen in the Investing Realm.”

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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:

Some consider your posting abusive, so they ban you.

You ban posts that are not abusive and I have never seen a single person that has posted a death threat.

It comes down to you wanting to post what you want, whenever and wherever you want, but you do not allow the same on your website.

When research was published showing that smoking causes cancer, the tobacco companies considered that abusive and did everything in their power to stop people from learning about it. They in essence banned discussion of the new research.

As a nation we overcame that b.s. in time. I believe that we will see the same happen in the investing realm. When that happens, I will be able to point to thousands and thousands and thousands of posts in my file showing that I had been advocating that honest posting be permitted going back to the morning of May 13, 2002. I have done everything that a person could possibly do.

Rob

“I Have Never Heard Shiller Say That People Need to Divide By Two Either. My Take Is That Everyone Alive Should Want to Know Whether He Believes That This Is Required or Not. So We Should All Be Doing Everything in Our Power to Find Out.”

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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 yet to Shiller say that people should divide by 2. Secondly, I haven’t seen one single criminal act. Feel free to post a link to Shiller saying to divide by 2 and feel free to post links to the specific criminal acts you speak of.

By the way, I think my work is worth $1 Trillion. When should I expect to get my check?

I have never heard Shiller say that people need to divide by two either.

My take is that everyone alive should want to know whether he believes that this is required or not. So we should all be doing everything in our power to find out. If we permitted honest posting at every site, he would tell us and we would all be better off. Even those who didn’t believe that what he said was right would be better off because they would be better informed.

This is the entire story. Shiller gave us all an amazing gift with his Nobel-prize-winning research. But to open that gift, we need to permit honest posting at every site. So I am 100 percent in favor of doing that.

Rob

“It Is Human Nature to Look at Recent History, to Go Five Years Back or Something Like That Rather Than 150 Years Back. But That’s Not Science. Science Goes 150 Years Back If There Is 150 Years of Data to Examine.”

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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:

f I am showing you a strategy and it has a poor track record over 24 years, you would still be open to this strategy? Just a simple yes or no answer.

Yes.

The point you are making is the biggest reason why Buy-and-Hold remains dominant today. It is human nature to look at recent history, to go five years back or something like that rather than 150 years back. But that’s not science. Science goes 150 years back if there is 150 years of data to examine. Then science tries to explain to people why it is a mistake only to go five years back.

Does your doctor only go five years back when telling you whether you are at risk for a heart attack? A person could be overweight for 24 years and not have suffered a heart attack in that time. Should the doctor just conclude, “oh, everything is fine then.” Or should he encourage you try to lose weight on grounds that you are at great risk for a heart attack even though you have not had one for the 24 years since you first became overweight.

I was drawn to Buy-and-Hold once upon a time because of claims that it was rooted in science. If Buy-and-Holders are not willing to look at data that is more than 24 years old, then Buy-and-Hold is not science and Buy-and-Hold is not for me.

Yes, I am open to a strategy that has scientific backing and that has a poor track record for 24 years. I understand that that puts me at a marketing disadvantage. But I am not the only one looking for a strategy backed by science. It’s about 10 percent of all investors who are seeking that. That’s millions of people. Those millions of people have every right in the world to engage in whatever discussions they want to have re Valuation-Informed Indexing at whatever sites they want to have them. The Buy-and-Holders have every right to take a pass. But they do not have the right to disrupt the discussions that non-Buy-and-Holders are seeking to participate in.

That’s where I’m coming from, Anonymous.

Rob

“Humans Are Subject to Addictions. Get Rich Quick/Buy-and-Hold Investing Is Addictive. If We Are Going to Get People to Overcome Their Buy-and-Hold Addiction, We Are Going to Have to Open Every Site on the Internet to Postings Pointing Out the Dangers of a Pure Get Rich Quick Approach.”

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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:

“Everybody in this field reads the Wall Street Journal. So everybody in this field is in on it. Everyone knows that Buy-and-Hold is “hooey” and that the idea that market timing is not required is a “myth.” People don’t want to see their high-paying careers come to an end. So they keep their mouths shut. I think that we all should be speaking up. I think that we should be pointing out that the emperor is wearing no clothes. That’s my contribution, to state that plainly.”

If Everybody knows about it, why aren’t they investing via VII? Why aren’t they paying you your $500 million settlement?

Why didn’t everybody stop smoking on the day that the first research was published showing that smoking causes cancer?

Humans are subject to addictions. Get Rich Quick/Buy-and-Hold investing is addictive.

If we are going to get people to overcome their Buy-and-Hold addiction, we are going to have to open every site on the internet to postings pointing out the dangers of a pure Get Rich Quick approach. Humans are CAPABLE of rationality. But sometimes they need a helping hand to achieve it. That’s the case in the stock investing realm.

Rob

“The ‘Idea’ That It Might Not Be 100 Percent Required for All Investors to Practice Market Timing/Price Discipline When Buying Stocks Is the Marketing Gimmick That Ate the U.S. Economic System. We Need to Move on to Something Real, to Something Truly Research-Based.”

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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 John Bogle was in on the mass conspiracy against Rob Bennett.

Bogle was in on the mass conspiracy against anyone who believes that Shiller’s Nobel-prize-winning research is legitimate research. His own words show this. Bogle advanced a post to the Bogleheads Forum saying that he could see how Valuation-Informed Indexing could work. He didn’t endorse it. But he said that he could see how it would make sense for an investor to increase his stock allocation three times in the course of an investing lifetime when prices got insanely low and it lower his stock allocation three times in the course of an investing lifetime when prices got insanely high. That’s Valuation-Informed Indexing! That’s what works!

Given that Bogle believed that Valuation-Informed Indexing makes sense, he should have asked Mel Lindauer to knock off the funny business, especially the criminal stuff. He didn’t do that because he was afraid of what Lindauer and his Goon Squad would do to him if he posted with complete honesty. That’s sad. Bogle created a monster when he suggested (as he did on many occasions) that there might be some mystical alternative universe in which it is not 100 percent required to practice market timing (price discipline!) when buying stocks.

The “idea” that it might not be 100 percent required for all investors to practice market timing/price discipline when buying stocks is the marketing gimmick that ate the U.S. economic system. We need to move on to something real, to something truly research-based.

Rob

Valuation-Informed Indexing #508: Investor Psychology and Economic Realities Are Very Different Things

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I’ve posted Entry #   to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Investor Psychology and Economic Realities Are Very Different Things.

Juicy Excerpt: Say that an investor is spooked by a price drop and is trying to determine whether to stick with his stock allocation or not. The one who believes that stock prices are determined by economic realities worries that the economic factors that have pulled stock prices down are likely to remain in place and continue to pull prices down some more. The one who believes that stock prices are determined by shifts in investor psychology is encouraged by the fact that the price drop has diminished the effect that irrational exuberance has been having on stock prices. The lower stock prices go, the better the long-term value proposition offered by stocks. That investor sees falling stock prices as a signal to increase her stock allocation.

 

“Everybody in This Field Reads the Wall Street Journal. So Everybody in This Field Is In On It. Everyone Knows that Buy-and-Hold is “Hooey” and that the Idea that Market Timing Is Not Required is a “Myth.” People Don’t Want to See Their High-Paying Careers Come to an End. So They Keep Their Mouths Shut.”

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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, Pfau, Bernstein, Ferri, Swedroe, Burns………they all would have to be in on this conspiracy. When Jack Bogle was alive, he would have to have been playing a big role in this conspiracy as well……………or Rob Bennett is making all this up. What is more believable?

Brett Arends wrote an article titled “The Market Timing Myth” in the Wall Street Journal on October 14, 2010. It stated that: “For years the investment industry has tried to scare clients into staying fully invested in the stock market at all times, no matter how high stocks go. It’s hooey. They’re leaving out more than half the story. Anyone who followed the numbers would have avoided the disaster of the 1929 crash, the 1970s or the past lost decade on Wall Street…. I wonder how many stayed fully invested because their brokers warned them ‘you can’t time the market’.”

Everybody in this field reads the Wall Street Journal. So everybody in this field is in on it. Everyone knows that Buy-and-Hold is “hooey” and that the idea that market timing is not required is a “myth.” People don’t want to see their high-paying careers come to an end. So they keep their mouths shut. I think that we all should be speaking up. I think that we should be pointing out that the emperor is wearing no clothes. That’s my contribution, to state that plainly.

Please understand that all of the people who are in on it rationalize their behavior. They tell themselves “oh, it will be okay.” I think it is going to be harder to say that in the days following the next price crash. We’ll see.

Everyone is in on it to one degree or another. Everyone over the age of seven understands that it is a logical impossibility that there could ever be an asset that is worth buying at any possible price. That is a perfectly ABSURD claim.

Rob

“Humans Have Weaknesses. There Are Some Circumstances in Which Money Can Be Made Exploiting Human Weaknesses. When There Is a Lot of Money to Be Made Going in That Direction, There Is Always Going to Be a Widespread Temptation to Do That.”

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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:

How odd that you can’t find anyone that can provide proof or verify your claims about death threats, job threats and felonies. Also add that people would avoid your timing scheme even though it would make them money. Also odd that Wade wouldn’t list you as an author. Very odd that every investment expert is too scared to say what you say. It is just one big vast conspiracy.

Was the Madoff fund a conspiracy?

Is alcoholism a conspiracy?

Is smoking a conspiracy?

Was racism a conspiracy?

Humans have weaknesses. There are some circumstances in which money can be made exploiting human weaknesses. When there is a lot of money to be made going in that direction, there is always going to be a widespread temptation to do that.

The Buy-and-Holders made a lot of valuable contributions. I respect them for that and I feel gratitude to them for that. But I do not believe that humankind knew everything that there ever would be to know about the subject of stock investing in the year 1980. Shiller added something of great value and we should be exploring his contributions at every discussion board and blog on the internet.

Shiller’s advance was so great that it threatens people who developed their reputations promoting the model that he discredited, So, yes, there is a lot of resistance to exploration of the new model. If we all were thinking clearly, there would not be one objection to the idea of permitting honest posting everywhere. But this is a subject that pushes people’s buttons. Partly because their common sense tells them that there must be some price at which stocks are not worth buying. It works that way with everything else that can be bought or sold in this world.

I don’t think that the answer is to keep quiet about what Shiller did. I think the answer is for those of us who believe that Shiller’s Nobel-prize-winning research is legitimate research to speak up. In a respectful and charitable way. But also in a firm and non-apologetic way.

I naturally wish you all good things.

Rob