A Rich Life

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

“Remember When Wade Pfau Said re Long-Term Market Timing That “It Hardly Matters How We Do It” Because the Evidence That It Works in Every Possible Circumstance Is So Strong? That’s What He Was Getting At. Long-Term Timing Is Price Discipline. How Could There Ever Be a Circumstance in Which Exercising Price Discipline Would Not Work?”

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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:

“Wade said the same thing over and over and over and over again. Then he was threatened and he took it all back. Gee, I wonder what was going on there.”

No need to wonder. It’s obvious. Just one small but typical example is in this same comment:

“the 1996 prediction did not pan out”

“long-term timing always works”

You fail to the contradiction there, which proves that you are irrational and impossible to reason with.

Wade disowned you in 2012, and your reaction was an epic psychotic break from which you have never recovered. I could post the link but it’s ancient history. It’s sad that you won’t ever get past it.

I agree that Shiller’s 1996 prediction did not pan out. I do not agree that that shows that long-term timing does not always work.

If prices fall over the next year or two or three by 75 percent (that would take us to a P/E10 of 8 — there has never once in U.S. history been a bull/bear cycle that did not get us to a P/E10 of 8 or lower before it fully resolved and a new cycle was able to begin), those who followed Shiller’s 1996 advice to lower their stock allocations will be FAR ahead of those who followed Buy-and-Hold strategies instead. Presuming that stocks continue to perform in the future at least somewhat as they always have in the past. this will be one more case in which exercising price discipline when buying stocks (by engaging in long-term timing) will have paid off big time, even though the precise prediction advanced by Shiller (that prices would drop hard within 10 years) did not in fact pan out.

Remember when Wade said re long-term market timing that “It hardly matters how we do it” because the evidence that it works in every possible circumstance is so strong? That’s what he was getting at. Long-term timing is price discipline. How could there ever be a circumstance in which exercising price discipline would not work? Shiller once said that the conclusion that the Buy-and-Holders jumped to, that because short-term timing does not work, the market price is the product of rational choices and reflects reality, is one of the most remarkable mistakes in the history of economics. I would add that it is in the process of causing more human misery than any earlier mistake ever made in the history of personal finance.

It doesn’t matter too much WHEN the pretend gains caused by irrational exuberance disappear into the wind. What matters is that they always do. If you know that those gains are going to be disappearing in coming days, you should not be counting them as part of your retirement portfolio. That’s what the Buy-and-Holders do. The Buy-and-Holders count those pretend gains as real (because they believe that those gains are the product of economic developments, not irrational exuberance).

That’s the core difference between Buy-and-Holders and Valuation-Informed Indexers. We have different views as to where excess price gains come from. If you believe that big price gains are the product of economic developments, then they signal something very positive — a growing economy. But if you believe that big price gains are the product of irrational exuberance, then they signal something very negative — a market that has become insanely emotional. How you feel about that core question is going to determine how you feel about every other question that comes up in stock investing. If you think that the market has gone insanely emotional, you are not going to feel comfortable putting too much of your money in it. If you think that high prices just signal a super strong economy, you are going to celebrate the big gains because you will want to participate in the benefits of the super strong economy to the greatest extent possible.

Wade didn’t disown me. The 16 months in which we were working together were the happiest and most exciting months of his life and he properly remains immensely proud of the research paper that we co-authored. He stopped promoting the paper and stopped working with me to get the word out about the realities of stock investing to millions of middle-class investors because he saw what you Goons do to people who post honestly re these matters and he saw how Bogle failed to act when he saw what was going on and he concluded that he needed to pull back to keep his career from being destroyed. Those who want to know Wade’s sincere views re what works in stock investing can read the items under the “Wade Pfau” category at this blog and learn some amazing stuff. Wade will be flipping back to work with the good guys in the days following the next price crash and I believe that he will be awarded a Nobel prize for his amazing work at that time. We’ll see.

Buy-and-Hold was a mistake. Now that the mistake has been covered up for 37 years through insanely abusive behavior, I think it would be fair to characterize it as a scam. It’s a scam that is killing us as a nation. I OPPOSE the scam. I am proud to be able to say that I have been publicly OPPOSING it for 16 years now. Who else can say that?

It will be interesting to see how things play out.

I naturally wish you all the best that this life has to offer a person, scam promotion or no scam promotion. My personal belief is that, in the days following the crash, when you have seen the effects of Buy-and-Hold on your own retirement hopes, you will flip too and we will be working together as friends to get the word out about the exciting last 37 years of peer-reviewed research in this field to every investor alive on the planet. I sure hope it turns out that way, in any event.

My best and warmest wishes to you, Goon pal.

Psychotically Broken Rob

Valuation-Informed Indexing #416: It’s a Mistake to Try to Identify Stock Bubbles

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I’ve posted Entry #416 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called It’s a Mistake to Try to Identify Stock Bubbles.

Juicy Excerpt: There are cases in which drinking three beers will get you in an accident and there are cases in which it will not. What conclusions can we draw from that? I worry that, in the stock investing realm, the conclusion that is drawn when high prices do not produce a crash is that high prices are not so terribly dangerous. I see that as an unfortunate conclusion. The results that follow from being involved in either a car crash or a stock crash can be devastating. The aim should be to avoid these experiences. The fact that we cannot say with precision what sorts of inputs (cans of beer or levels of P/E10) will bring them on does not justify daredevil behavior (driving after consuming several cans of beer or investing heavily in stocks when prices are very high). Unfortunately, it seems to be human nature to conclude that, if doing dangerous things does not produce a wipeout on one or two occasions, it thereby becomes safe to take the chance a second or third time.

“If Buy-and-Hold Had Never Existed, Everyone Would Get Valuation-Informed Indexing in 10 Minutes. It Is Simple, Clear, Common-Sense Stuff. But Most People Have Heard of Buy-and-Hold. Once You Become Committed to Lots of Wrong Stuff, It Becomes Hard to Accept the Right 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:

Wrong. They all say the same thing in the sense that they all say the same thing. Just one example, the phrase:

Shiller’s “revolutionary” (his word) finding

Appears in the 3/6, 9/11, 8/21, 9/18, 7/11, and in many earlier columns. That’s just from the first page of the Google results.

I make that point over and over and over again because it is a critically important point. Shiller changed the world in 1981. We should have launched a national debate at that time re the hundreds of ways in which he changed our understanding of how stock investing works. I wish it had happened. It didn’t. That’s just the reality.

If you say in the year 2018 that the safe withdrawal rate is a number that changes with changes in the valuation level, you are saying something that is obviously true but also something that CANNOT be true. If that’s really true, wouldn’t the studies have been corrected a long time ago? It is very hard to understand how people could make an error that would cause millions to suffer failed retirements and it wouldn’t be corrected for years.

The explanation of how that happened is that Shiller’s research was revolutionary in nature. He showed the need for a paradigm change. People don’t just give up on paradigms overnight. They have to look at things from lots of different angles before they are ready to do so. They need to ask lots of questions and be persuaded by the answers given. They need to become comfortable with the new paradigm before they are willing to give up on the old one.

Every column that I write is looking at some aspect of the new paradigm. So it makes sense to remind people in each column that this stuff is revolutionary. If you come to my stuff wearing your Buy-and-Hold hat, you are not going to get it. You need to come to it with an understanding that, given the revolutionary nature of Shiller’s work, everything that we once believed — and that most of us still believe — is now under question.

If Buy-and-Hold had never existed, everyone would get Valuation-Informed Indexing in 10 minutes. It is simple, clear, common-sense stuff. But most people have heard of Buy-and-Hold. Most people have heard the Buy-and-Hold dogmas repeated thousands of times. So they think there must be something to them. You’ve got to persuade them to question those dogmas before you can have any hope of helping them to understand what the new research is showing us. Once you become committed to lots of wrong stuff, it becomes hard to accept the right stuff.

Shiller and Bogle cannot possibly both be right. They are saying opposite things. The first order of business at every discussion board and blog should be to help people figure out which of the two is right. You have to get that one right for anything else you do to work.

Revolutionary advances are good news. But they are not easy to accept. There is a lot of emotional resistance to revolutionary advances. People do not like change. Change can be a plus and in this case it is. But you cannot make an effective case for Valuation-Informed Indexing without pointing out regularly how revolutionary Shiller’s work is. People need to keep that thought in mind to have any hope of making sense of it. It is unusual for a piece of research to change everything that we once thought we knew about a subject. But that’s what happened in this case.

Good question.

Revolutionary Rob

Valuation-Informed Indexing #415: Buy-and-Hold Is Dangerous

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I’ve posted Entry #415 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Buy-and-Hold Is Dangerous.

Juicy Excerpt: Only in subsequent years did I discover the downside of rooting an investment strategy in objective, research-proven realities. The downside is that science does not stand still. We thought we knew how stock investing worked in the 1960s and 1970s, when Buy-and-Hold was being developed and popularized. Then we learned in 1981 that our fundamental beliefs were not nearly so solid as we had once imagined, The trouble with a numbers-based model is that, if mistakes are made, the model produces numbers that are wrong. The certainty that goes with an objective approach becomes illusory. A model that produces false numbers retains the appearance of objectivity but no longer is animated by the spirit of a scientific endeavor. Science that is not corrected for a long period of time becomes anti-science.

“I Have an Article at My Site Titled Something Like ’12 Reasons Why Valuation-Informed Indexing Might Not Work.’ Bogle Should Write an Article Like That re Buy-and-Hold. I Shouldn’t Have to Be the One Pointing Out the Flaws in Bogle’s Strategy. He Should Do It. That Way He Gains the High Ground.”

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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:

Check this out: https://www.marketwatch.com/story/5-things-we-can-still-learn-from-vanguards-jack-bogle-2018-10-08

Of course you don’t like being reminded of the Bogleheads conference, for obvious reasons, but Bogle does throw you a bone: “It would probably take a 25% drop [for the stock market] to get to its normalized value.”

Not bad, right? He’s meeting you halfway. How about lopping a couple years off the old man’s prison sentence?

I believe that Bogle is saying what he truly believes. And I think that’s healthy. It could be that he’s right and that I’m wrong. If there’s even a 1 percent chance that he’s right, I want people to hear that point of view. So I am glad that we have him around to express it.

You don’t see any death threats in that paragraph that I just wrote. You don’t see any demands for unjustified board bannings. You don’t see any acts of defamation. You don’t see any threats to get academic researchers fired from their jobs. That’s the difference. It’s when that sort of thing is added to the mix that financial fraud comes into the picture. That’s where prison sentences come into the picture.

Jack Bogle should say what he believes. So should Bill Bernstein. So should Larry Swedroe. So should Robert Shiller. So should Rob Bennett. So should Microlepsis. So should John D. Craig. And on and on and on and on and on. We all have a different perspective. We all have to post our honest views for a board community as a while to achieve its potential.

It is only the Buy-and-Holders that engage in criminal acts to intimidate the “other side” from expressing its sincere views. I’ve never seen a Valuation-Informed Indexer do that.

So who do you think people are going to be angry at in the event that we see another crash, as Shiller’s research indicates is likely? They are going to be angry at the Buy-and-Holders. And they are going to learn about the criminal acts. And they are going to demand prison sentences. That’s what I truly believe is going to happen.

Do I want it to happen? I do not. But you know what? I am not Superman. I have not been able to stop this stuff from happening. If the tables were turned and there was 37 years of peer-reviewed research showing that I got an important number wrong in a retirement study posted at my web site, I would be praising the guy who brought it to my attention morning noon and night. I would be thanking him for saving me from a lot of embarrassment and for keeping me from taking on huge financial liabilities and even a possible prison sentence.

That’s not what happened with John Greaney. And that’s not what happened with Mel Lindauer. And that’s not what happened with Jack Bogle.

I love Bogle. There is no one alive on Planet Earth who holds him in higher esteem. All you have to do to see that is to look at all of the Bogle ideas that I incorporated into the Valuation-Informed Indexing model. Or consider whose book it was that persuaded me that Greaney got the numbers wrong in his study — it was Bogle’s. I hadn’t read Shiller’s book at the time. Bogle was the bigger influence at the time.

I love Bogle. I do not love financial fraud. That’s the story here.

I don’t have the ability to lop any time off of anyone’s prison sentence. I am not going to be serving on any of the juries that will be formed in the days following the next price crash. So I will have zero say. The only possible influence that I might have is that I think I might be able to say some things that would put Bogle’s behavior and Lindauer’s behavior and Greaney’s behavior in a somewhat more positive light than some of the millions who have seen their retirement accounts wiped out will be inclined to put it. And it is my intent to do everything in my power to put their behavior in the best light possible. That’s as far as I can go and that far I will indeed go.

I am not going to say that I believe that Greaney’s study contains a valuation adjustment. If I did that, I would be at risk of going to prison myself. So no freakin’ thanks, you know?

I love Bogle. I hate financial fraud. I wish that I could say that Bogle has never done anything to suggest that he either supports Lindauer or at the very least tolerates him. I cannot say that. All that is said on our boards goes into Post Archives. There is a lot of material in which Bogle has given the very strong impression that he either supports or at the very bare minimum tolerates Lindauer. So I am bound to acknowledge that reality. And then others decide who goes to prison and for how long.

If there is every anything that I can do to help Bogle or Lindauer or Greaney or anyone else, I am going to do it. In three seconds and you wont have to ask me a second time. But I am never going to say that I believe that Greaney’s study contains a valuation adjustment. Thousands of people have looked at the study over the course of the past 16 years and not one has been able to identify a valuation adjustment.

Bogle f’d up when he failed to speak up about the Lindauer matter. Guess who wrote to him on several occasions imploring him to take action? And it wasn’t just me. There were a number of us who wrote to him. And no action was taken. I can love the man to death and praise him to the skies and it won’t change that simple reality. Bogle f’d up and only a small number of his friends possessed the courage and love for the man to implore him to fix the f-up. I wish that you had stepped forward at the time, Anonynmous. You might have made the difference, man. You never know unless you try.

I hope that all that helps at least a tiny bit.

Love the man, hate financial fraud, hate the idea of seeing any of my many Buy-and-Hold friends go to prison. For obvious reasons.

I have an article at my site titled something like “12 Reasons Why Valuation-Informed Indexing Might Not Work.” Bogle should write an article like that re Buy-and-Hold. I shouldn’t have to be the one pointing out the flaws in Bogle’s strategy. He should do it. That way he gains the high ground. That would be awesome. He should stop behaving defensively and make an effort to get ahead of the curve. There would still be lots of people who stuck with Buy-and-Hold. But the poisonous atmosphere that influences every discussion held at the Bogleheads Forum today would dissipate it he did that. I encourage my good friend to get that article written and posted by the close of business today. For EVERYONE’s benefit.

My best and warmest wishes to you and yours.

Prison-Sentence-Lopping (If Only He Could!) Rob

“If You Believe That the Buy-and-Holders Got Into This With Good Intentions, As I Do, Then It Follows That the Most Diehard Buy-and-Holders Are Going to Become the Most Diehard Valuation-Informed Indexers After the Crash.”

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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 you think that after the next economic disaster hits, the internet will become a kinder, gentler place. Wow.

In the investing realm, yes.

There’s a saying that “pride comes before a fall.” The discussion board community that now goes by the name “Bogleheads Forum” used to go by the name “Vanguard Diehards.” There was a lot that I related to in that name. I like fighters. That name suggests that the community was a group of people who were willing to fight for what they believed. You Goons fight. I like that about you. I have often wished that some of my Valuation-Informed Indexing friends had a bit more fight in them. There are positive things to be said for being a fighter.

But there are also negative things to be said about being a “diehard.” Diehards are arrogant. Diehards are not willing to admit mistakes. Diehards are not willing to listen carefully to others even when they are making good point and diehards thereby often miss out on wonderful learning experiences.

The Buy-and-Holders have engaged in corrupt acts. It doesn’t follow that they are corrupt through and through. I think that the Buy-and-Holders are good and smart people. They made a mistake. They got caught up in something bigger than them. They got caught in a trap. So what happens when they see the ocean of human misery that we all are going to see appear before us in the event that Shiller is right and we all experience a 50 percent price crash?

They are going to feel anguish when they see that. They are going to wonder if they got something wrong. Their hearts will soften a bit, Their minds will open a bit. They are going to be willing to entertain questions that today they are not willing to entertain. And we only need a little bit of an opening at this point to bring on a flood of powerful insights about how stock investing works in the real world. We are all going to enjoy 37 years of powerful advances in the space of a few months. There is a mountain of pent-up energy that will be put to work helping us all figure out this stuff. We will all be working together. There will be no more nastiness or friction.

You seem to think that because the Buy-and-Holders have closed minds today that they will always have closed minds. I just don’t see it. Their minds are closed today because they cannot bear the thought of looking at all the pain they have caused in the event that Shiller really is right. It’s an unbearable thought and so they shut it down. But there’s not going to be much point in shutting it down once we experience the crash. Then the ocean of human misery will be standing there before us. You can’t deny it when it is being written up in the newspaper each morning. At that point the defenses just get broken down and you are willing to look at what you need to look at to make the pain stop.

I have many times made the comparison between Buy-and-Hold and alcoholism. An alcoholic knows that he is ruining his life. It is foolishness to point out to him how self-destructive his behavior is because he knows that 50 times better than you do. He doesn’t want to face the problems. He doesn’t want to learn how to live without alcohol. That is his driver. There’s no logic to it. The behavior is 100 percent irrational. Alcoholics are diehards.

Now —

There’s a thing called “hitting bottom.” When an alcoholic hits bottom, he often changes. He gives up the rationalizations. He attend AA meetings. An alcoholic who hits bottom and develops a desire to change can become an amazingly productive person, a more productive person than he would have been had he never been an alcoholic in the first place.

If you believe that the Buy-and-Holders got into this with good intentions, as I do, then it follows that the most diehard Buy-and-Holders are going to become the most diehard Valuation-Informed Indexers after the crash. They truly believe in research, The last 37 years of research supports Valuation-Informed Indexing. The Buy-and-Holders are going to reconnect with their research-believing inclinations in the days following the next price crash, when the human misery that appears before their eyes forces them to reevaluate their belief that there is no need to practice price discipline when buying stocks.

I believe that investing boards and blogs will become kinder, gentler places in the days following the next price crash. I have some fears that there will be people attacking the Buy-and-Holders in those days. I am going to do everything in my power to stop that sort of thing. I think that would be a tragic mistake. My job is to pull us all together, to help us all see that we all benefit when we learn new things about how stock investing works. I believe that it can be done. And I believe that in many cases it will be my Buy-and-Hold friends helping me make it happen.

I believe that a good number of you Goons will flip eventually. You might be the last group to flip. I could see that being the case. But I could see you flipping eventually. I could see us working together in the days following the crash. Please consider the hill-and-valley pattern that stock prices have been following since the day the market was formed. Prices don’t start heading upward again until every last Buy-and-Holder gives up on Buy-and-Hold. You could never get to a P/E10 of 8 unless every last Buy-and-Holder gave up the fight. Have you considered how crazy it is for an entire nation to value its portfolios at half of their real value? It’s insane. More insane than the prices we see today. If that is going to happen again, as it has happened in the wake of every bull market that we have ever seen in history, it’s going to be because every last Buy-and-Holder has given up the fight. That includes you Goons.

So, yes, I think that our boards will be kinder, gentler places in the days following the crash. They will be sadder places too. People will look at the ruin we have caused and feel terrible about it. But you know what? We will get past that. We will eventually stop focusing on the ruin that we have caused and begin looking forward to all the good we can do by opening every board and blog to honest posting. And then we will return to the original Buy-and-Hold idea of using research to make ourselves better long-term investors. And then we will all be energized for the future.

It all comes down to what you think of the Buy-and-Holders. Do you think that they are good but mistaken re one key part of the investing story? Or do you think that they are corrupt and evil and stupid through and through? I believe that my Buy-and-Hold friends are good but mistaken on one key point. So I think that we can turn it all around in the days following the crash. I obviously wish that it were not necessary for us to live though a crash to get there. I now believe that that is the case. But, yes, I do believe that our boards and blogs will be kinder and gentler and more intelligent and more life-affirming places in those days.

Goon stuff is always going to be popular when prices are where they are today. I don’t believe that it will be so popular after a crash wipes out the retirement hopes of millions of middle-class people.

You may say that I’m a dreamer….

Dream-Believing Rob

“I Have Seen Some Very Smart People Enjoy the Click Moment re this Stuff and it is Very Gratifying to See That. I Want to See That with Millions.”

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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 USED to try. Now you’re hiding under the bed, looking for your Big Boy pants. Because you can’t handle rejection. But you’ll be back, as soon as you find a site with nice people who always agree with you.

Good luck with the internet, Rob.

The internet has the potential for great good, Anonymous. Please remember that I was a Buy-and-Holder on the morning of May 13, 2002. I obviously am not that today. A lot of the things that I learned that caused me to lose confidence in Buy-and-Hold and to gain confidence in Valuation-Informed Indexing I could not have learned but for the internet. You don’t learn new things by sitting in a room thinking up great thoughts. You need to interact with others. I have interacted with thousands of people that I could not have interacted with but for the internet. I am grateful for those learning experiences. I am grateful for the internet.

You are right, though, that the internet has a dark side. The mob rule stuff is not appealing and that sort of thing takes place more on the internet than it does in other communication mediums. I have seen a lot of the mob rule stuff. I have seen the dark side of the internet up close and personal.

What happens after the crash? It would not surprise me if the mob rule stuff turns in the opposite direction, if people become so angry over the losses that they have suffered that they go after the Buy-and-Holders in a mindless way. I obviously want no part of that. I want people to learn why Buy-and-Hold is flawed. I don’t want people to go from one emotional extreme to another. Maybe I will always be the man on the outside, you know? Maybe if you don’t go emotional, you cannot develop a following on the internet. I hope that’s not so. It’s possible that it is. If it is, there’s nothing that I can do about it. I have to be what I am.

I think that what may happen is that I will team up with Buy-and-Holders after the crash. I obviously don’t agree with Buy-and-Holders on valuations. But I very much relate to their basic approach to investing questions. The Buy-and-Holders were trying to develop a rational, research-based strategy. I think they were sincere about that. I cannot prove it, I cannot see into their minds. But everything that I can see points in that direction. So I think there is a natural kinship between the Buy-and-Holders and me. I think they made a mistake, I think they got caught up in something bigger than them. But I also believe that deep down inside they want to get it right. I believe that, following the crash, they are going to reevaluate their positions and I will probably be someone taking the side of the more open-minded Buy-and-Holders over the side of any mobs attacking them because of losses they have suffered.

If everything was mob rule left, right and center, we wouldn’t have Buy-and-Hold. You say “good luck with the internet.” Someone could have said to Bogle when he was starting out “good luck with a research-based investing approach” or “good luck with a focus on the long-term” or “good luck with persuading people that they don’t need to pick stocks” or “good luck with low fees.” I think that Bogle has been proven right about a lot more things than the number of things that he has been proven wrong about. And yet Bogle has been extremely successful in persuading people of the merit of his investment strategy. So it is not always mob rule that prevails.

Mob rule is about emotion. That is part of what humans are. We are emotional creatures. And that does us in sometimes. Mob rule hurts us in the investing realm and in lots of other realms too. But it is a mistake to conclude when mob rule hurts us in some way that all we are is mob rule. Mob rule holds us back from achieving the potential of the internet. But there’s a lot of good on the internet. So mob rule is not the entire story. I believe that it is possible to use the internet to do good. I believe that it is cynical to believe that mob rule is the entire story of the internet.

That’s my take, Anonymous. We are just going to have to wait to see how it plays out to know for sure. I am not capable of playing it any other way, in any event. So all that I can do is to give it my best shot. You are right that I have been hurt by rejection. You are not right to say that I cannot handle rejection. I have handled more of it than anyone else alive. I have done amazing things in the face of a mountain of rejection and still kept getting up and rushing in for more. So I offer no apologies. But, yes, there comes a point where the relentless rejection hurts. That is so. I wish that I were Superman. But I am not.

But I think that there are a lot of good people in this world who will be happy to help out when conditions change. And I think that conditions will change after we all experience a 50 percent price crash. I think that experience is going to change the thinking of millions of people and that people are going to want to find out where their hopes for a decent retirement went. And I believe that the materials at this site will help to provide them some answers. I believe that I will be able to tell them both where the Buy-and-Holders got it wrong and where the Buy-and-Holders got it right. It is my intent to tell a balanced story and I believe that there is going to be a great need for that in the days following the crash.

I see a happy ending to the story. Now the full reality is that I would almost have to see a happy ending or else I couldn’t get up in the morning, you know? I think we humans build narratives that help us cope with the circumstances in which we find ourselves and sometimes those narrative are right on and sometimes not so much. That’s my narrative. I believe that as a society we are very close to making some amazing advances in our understanding of how stock investing works. I have seen some very smart people enjoy the click moment re this stuff and it is very gratifying to see that. I want to see that with millions. And I think we are close to making that happen. So it is my intent to soldier on and wait for that change in attitudes that we need to see to travel together to the other side.

We’ll see, you know? That’s the best that I can offer you. Either it will happen or it will not. I am not a mob rule kind of guy. So I cannot be part of a mob cursing Buy-and-Hold any more than I can be part of a mob praising Buy-and-Hold. That’s just not in me. I am a guy who wants to take the good out of it and make sure that that lives forever while wanting to leave the bad — which can end up ruining the good if not addressed — behind. Time will tell the tale. Mob rule is a real thing on the internet. But it is not the only thing. It is certainly not my thing. I think that I can overcome it. I certainly hope so. But we are just going to have to wait a bit to find out whether I am right re that one or not.

I hope that helps at least a tiny bit, my mob-rule-embracing friend.

Rejection-Damaged Rob

“Human Beings Are Social Animals. We Want To Be Liked. It Hurts To Be Rejected By Others. And Shiller’s Message Is a Message that Most People Very Much Want to Reject. I Am Telling People Who Have a $100,000 Stock Portfolio That They Really Have $50,000 of Lasting Value. How Do You Think That Makes Them Feel? And How Do You Think It Makes Me Feel When They Reject Me Out of Fear That What I Am Saying Might Really Be So?”

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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:

“That’s my sincere take re these terribly important matters”

You’re not sincere, and these matters are not important. If “opening every board and blog to honest posting” is so goll-durn important, why aren’t you doing anything about it? You haven’t even tried to post anywhere else in years. You’re still talking about 1999 as if it’s a current event. “All talk, no action” is the story of Rob Bennett.

(No, waiting for a crash is not doing something. It’s literally doing nothing.)

I’ve done more than anyone else alive, Anonymous. And it’s not a close call.

Doing this work is hard. Human beings are social animals. We want to be liked. It hurts to be rejected by others. And Shiller’s message is a message that most people very, very, very much want to reject. I am telling people who have a $100,000 stock portfolio that they really have $50,000 of lasting value. I am telling people who have a $500,000 stock portfolio that they really have $250,000 of lasting value. I am telling people who have a $1 million portfolio that they really have $500,000 of lasting value. How do you think that makes them feel? And how do you think it makes me feel when they reject me out of fear that what I am saying might really be so?

Knowing the realities of stock investing benefits each and every one of us in the long run. Once we open every site to honest posting on the last 37 years of peer-reviewed research, we will in all likelihood never again experience an economic crisis. It is the huge loss of consumer buying power that we experience with stock crashes that cause economic crises. And it is the ban on honest posting that causes the bull markets that bring on stock crashes. Stock prices are self-regulating so long as all investors have access to honest, research-based reports on how stock investing works. And of course we will dramatically reduce the number of failed retirements once we permit honest posting on safe withdrawal rates. And people will be able to retire many years earlier. And on and on and on.

The advance from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance that we have ever seen in the history of personal finance. So this work is of huge importance. And there is no one alive who has worked it as hard as I have. Have I taken some hard emotional hits that have slowed me down? I have indeed. But I am still kicking. And I will be coming back strong in the days following the next price crash, when I will be working with my Buy-and-Hold friends to get the word out to millions of middle-class investors as to how this stuff really works and to get all the calculators fixed and to get hundreds of exciting new books published and to get hundreds of new blogs and discussion boards formed and on and on and on.

I offer no apologies. I wish that all of the emotional hits just bounced off me. I wish that I were Superman. But i’m not. So all that I can do is all that I can do. I can assure you that I have never done one smidgen less than all that I can do. And I am 100 percent confident that not one reasonable person will in the days following the next price crash look at the materials offered at this site and conclude differently.

It will be interesting to see how it all plays out.

My best and warmest wishes to you, dear Goon friend.

All-Talk, No-Action Rob

“I Don’t Think That Investment Advice Should Be Decided by Taking an Opinion Survey.”

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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 know why I am banned.”

You just don’t tell people the truth as to why you are banned. It is well documented. It is your behavior.

Specifically the behavior in which I say that the Buy-and-Hold retirement studies are in error and should be quickly corrected and in which I say that in general the Buy-and-Hold strategy has been discredited by 37 years of peer-reviewed research.

Buy-and-Holders don’t like to be told that they are wrong. The experts don’t like it because they see it as a threat to their livelihood and ordinary investors don’t like it because their hopes for retirement are riding on the accuracy of the numbers on their portfolio statement.

I don’t think that investment advice should be decided by taking an opinion survey. I believe that we should go by what the peer-reviewed research says. If Shiller is right that valuations affect long-term returns, then we are hurting ourselves more with every hour that we delay opening every discussion board and blog on the internet to honest posting. This stuff matters. When we get it wrong, we hurt people in very serious ways.

My sincere take.

Bad Behavin’ Rob

Valuation-Informed Indexing #414: Buy-and-Holders Are Satisfied With Their Strategy Because They Don’t Adjust Their Portfolio Statement Numbers for the Effect of Valuations

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I’ve posted Entry #414 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Buy-and-Holders Are Satisfied With Their Strategy Because They Don’t Adjust Their Portfolio Statement Numbers for the Effect of Valuations.

Juicy Excerpt: Stock prices have increased by 309 percent from July 1996 (when Shiller issued his warning) through today. So an investment of $100,000 would have grown to over $400,000. But stocks are today priced at over two times fair value. If overvaluation is the product of irrational exuberance not possessing lasting economic significance, that $400,000 could be reduced to $200,000 in the next year or two or three. IBonds and Treasury Inflation-Protected Securities (TIPS) were available in the years following Shiller’s warning that paid long-term returns of 4 percent real that could be locked in for up to 30 years. Investors who were prompted by Shiller’s warning to lock in those juicy returns will end up ahead of their Buy-and-Hold friends in the event that stock prices fall by 50 percent and they would have gotten ahead by investing in far less risky asset classes. They would have obtained higher returns while taking on reduced risk, a good deal all around.