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 can use all the help that I can get.”

Yes, you do. We have suggested many times that you need to seek the help of a qualified mental health expert.

That suggestion is one of the things showing me that Buy-and-Hold is rooted in emotion, Anonymous. If Buy-and-Hold were real, it would be possible to engage in civil and reasoned discussions re its merit. But Buy-and-Holders go nuts when someone challenges their belief in their strategy because there is nothing behind it but a shaky emotional desire that gains produced by irrational exuberance count for as much as gains produced by economic realities.

I think about how I would react if someone on the Valuation-Informed Indexing side behaved the way you Goons behave. If someone on the VII side said that Bogle needs to consult a mental health professional, I would be horrified. I would distance myself from the comment in every way possible because I would feel that all reasonable people would conclude that reliance on that tactic showed that the research-based case for Valuation-Informed Indexing must be weak. Most Buy-and-Holders don’t personally employ such tactics. Only a small percentage are outright Goons. But the vast majority of Buy-and-Holders TOLERATE the employment of such tactics by you Goons. That’s why we are where we are today.

When I point out that there is no valuation adjustment in the Buy-and-Hold retirement studies even though we have 37 years of peer-reviewed research showing that valuations affect long-term returns, there should be a universal acknowledgment that that point is of huge importance. If the Buy-and-Holders got the numbers that people use to plan their retirements wrong, what else did they get wrong? Probably everything. The entire point of investment analysis is to help people finance their retirements. If you are that careless about retirement planning, you just shouldn’t be working in this field. You may be as smart as the dickens (most Buy-and-Holders are indeed very smart). But you haven’t achieved the level of control over your emotions that you need to possess to offer helpful investment advice if you don’t appreciate the need to get the numbers right in retirement studies.

The Great Safe Withdrawal Rate Debate has never been an intellectual debate. There have been good intellectual points made on both sides. But the core dispute has never been one that could be resolved by making reference to data or research or logic or common sense. The core dispute is emotional in nature. The Valuation-Informed Indexers say that we should consult the peer-reviewed research in this field to determine the true and lasting value of our stock portfolios. The Buy-and-Holders say that we should go by the numbers printed on our portfolio statements, that the validity of those numbers may not be questioned in public discussions. 90 percent of the population wants those numbers to be real, 90 percent of the population desperately needs those numbers to be real.That’s the story and that has always been the story.

Will the story change when prices fall by 50 percent or more? I think it will change. I don’t think there is going to be much interest then in maintaining a belief that the earlier numbers were real. When the numbers no longer appear on portfolio statements, most reasonable people are going to come to accept that those numbers were fantasy numbers all along. If they were real, they wouldn’t change so dramatically in such a small amount of time. And then the learning process will go into hyper-drive. We will have 37 years worth of powerful stock investing insights opened to us all at once. My guess is that we will as a nation of people learn more about how stock investing works in the year following the next price crash than we learned in the preceding 37 years (or whatever it turns out to be) in which Shiller’s “revolutionary” (his word) research findings were available to us for our review and consideration.

But I could be wrong. That’s always the curve ball. I thought that Greaney’s smear campaign would be shut down after two days, three at the most. The joke was obviously on me re that one. If I could be wrong about that one, I obviously could be wrong re this one too. But I just am not able to play it any other way. In a debate between reason and emotion, I am going to take the side of reason. It’s what I am, right down to the core. I was a Buy-and-Holder myself for several years and the thing that drew me to the strategy was its claim that it was a strategy rooted in research (I believe that the Buy-and-Holders were being sincere in making that claim even though I also of course believe that they have been proven wrong).

I think that stock investing strategies should be rooted in peer-reviewed research and I think that in future days they will be. I believe that there will come a day when every investing discussion board and blog on the internet will permit honest posting on the last 37 years of peer-reviewed research in this field. I believe that it is going to take a price crash that is going to cause an ocean of human misery to get us there and that reality of course breaks my heart in a thousand pieces. But I do think we will get there all the same. And, as John Walter Russell suggested many years ago, I believe that in the end The Great Safe Withdrawal Rate Debate will end up helping us all in many ways that today we cannot even imagine.

I vote for reason over emotion in stock investing. Every time. I offer no apologies whatsoever.

I naturally wish you all the best that this life has to offer a person, my dear friend.

Reasonable Rob

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 81 paper did not address using PE10 to predict future stock returns. That was the 88 Shiller Campbell paper.

The 81 Shiller just addressed stock price volatility. “Do Stock Prices Move Too Much to Be Justified by Subsequent Changes in Dividends”.

Sean:

You are making a helpful point. I am grateful.

I think it is important to understand, though, that it was the 1981 research that was “revolutionary” (Shiller’s word) in its implications. The Wikipedia article notes that it was the 1981 article that challenged the Efficient Market Hypothesis. That’s what changed the world. It is universally accepted that price discipline is needed in every market other than the stock market. The thing that threw everybody off re stocks was the Efficient Market Hypothesis. If the market truly were efficient, Buy-and-Hold would be the ideal strategy. But Shiller showed in 1981 that that is not so. He removed the foundation stone of the Buy-and-Hold concept.

Once you know that Buy-and-Hold does not work, the next step in the logic chain is to determine what DOES work. That’s where using P/E10 to predict future stock returns comes in. The 1988 research builds upon the 1981 research. Shiller would not have even thought to look at that question had he not first discredited the Efficient Market Hypothesis/Buy-and-Hold. Wade Pfau and I went another step down the logic chain when we showed with our research that a 30 percent/60 percent/90 percent Valuation-Informed Indexing strategy has performed better than Buy-and-Hold on a risk-adjusted basis for all 30-year time-periods in the historical record (there were a small number of 30-year time-periods in which Buy-and-Hold did better on a nominal basis). And other researchers will of course explore other aspects of the question in days to come and we will all live better lives from that point forward as a result.

The most important research was the 1981 research. That’s what changed the world. Buy-and-Hold cannot work if what Shiller showed in 1981 is real. If the market is not efficient, common sense tells you that you need to exercise price discipline when buying stocks. Why wouldn’t you? The only reason anyone ever gave not to do so was the Efficient Market Hypothesis, which was just a mistake.

The bottom line on all this is that we all need to be talking about this stuff at every discussion board and blog on the internet. We made a great leap forward intellectually in 1981 and we made additional big leaps forward in 1988 and in 2011, when Wade and I published our paper. We all should be doing everything in our power to keep the ball rolling. We all should want to see as much research on these questions as possible and we all should want to see as much discussion of the implications of the research published as possible. Learning experiences are the one true free lunch in this world.

Do you agree?

Does it concern you that Shiller challenged/discredited the Efficient Market Hypothesis in 1981 and yet there are still people promoting the investment strategy that follows from that hypothesis today, in the year 2018? It scares the beejeebers out of me. If the market is efficient, the safe withdrawal rate is always 4 percent. If valuations affect long-term returns, as Shiller’s work (BOTH the 1981 and 1988 papers) showed, the safe withdrawal rate for those who retired in January 2000 was only 1.6 percent and those who retired at that time and were persuaded by the Buy-and-Holders to take a 4 percent withdrawal have only a 30 percent chance of seeing their retirements survive 30 years. That scares me to death. That means that we will likely be seeing millions of failed retirements in days to come. This will be one of the greatest public policy crises in the history of our nation. How do you think people are going to feel when they learn that those millions of failed retirements could have been avoided just by us electing as a nation of people to open every discussion board and blog on the internet to honest posting re the last 37 years of peer-reviewed research in this field?

I can use all the help that I can get. If you are prepared to sign up for The Cause, we have plenty of room for you, my new friend!

Recruiter Rob

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 showed that long-term timing always works and is always required in 1981. ”

Do you have a link to the 1981 paper?

I read it once years ago, Sean. You can find it on the internet if you are interested. He wrote the paper with Campbell.

And he talks about it in his book Irrational Exuberance. And of course there are mentions of it in articles and in the newspaper reports on why he was awarded the Nobel prize and so forth.

I find your question interesting in way because it mirrors a question that I often want to ask the Buy-and-Holders. They say that there is research showing the market timing doesn’t work and I always want to ask them to provide a link to the paper showing that. The closest thing that we have is a paper published by Eugene Fama showing that SHORT-TERM timing doesn’t work. There has never been a paper showing that long-term timing (price discipline) doesn’t work. Wade Pfau spent months searching the literature to see if he could find such a paper and he came up empty-handed. There is zero evidence in the literature showing or even suggesting that long-term timing either might not work or might not be required. And of course, if valuations affect long-term returns, as Shiller showed, long-term timing MUST work and is ALWAYS required by every investor seeking to keep his risk profile roughly constant over time.

There can of course be legitimate differences of opinion as to how to practice long-term timing. We don’t know everything there is to know about the subject of stock investing. So we are not able to give perfect guidance today. My guess is that we will never be able to give perfect guidance. But we are able to say that those who absolutely refuse to practice long-term timing even at times of extreme overvaluation are dramatically reducing their lifetime return by doing so while also dramatically increasing the risk they take on with their investment decisions.

Just because we do not know everything does not mean that we do not know anything. We know that valuations affect long-term returns. So we know that dogmatic Buy-and-Hold strategies are dangerous strategies. Those who used a 4 percent withdrawal rate for retirements that began at the top of the bubble have only a 30 percent chance of seeing those retirements survive 30 years. I think we should be telling those people the realities at every investing discussion board and blog on the internet.

My best and warmest wishes to you.

Rob

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

“After the crash, I’ll have Jack Bogle.

Is that a big enough name for you?

Boglehead Rob”

Uhm….Jack did not make any death threats of job threats. Come on now, Rob. If those threats really happened, you should have a link, right??? You would have the ability right here and now to set the record straight and show everyone after all these years that there was an actual death threat. Why would this situation be any different than any other situation? We always require proof of an allegation in every other situation. Why would this particular situation be any different. Go ahead, Rob. Show us the links.

Greaney’s study is posted at his web site, Anonymous. Anyone who cares to can take 10 minutes and see if he can find a valuations adjustment in the study.

Greaney himself hasn’t been able to find one. If there truly were a valuations adjustment in that study, we never would have seen a single death threat or a single demand for a single unjustified board banning or a single act of defamation or a single threat to get a single academic researcher fired from a single job.

Those who follow the peer-reviewed research have known for 37 years that Buy-and-Hold is a scam. Permit honest posting on safe withdrawal rates and the entire house of cards comes tumbling down. So you Goons fight like crazy to block honest posting on safe withdrawal rates at every site on the internet.

Will you still be able to pull it off following the next crash? I don’t think so. But you are not going to go by what I say. We will have to wait a bit to see how it all plays out.

I will do anything that I can to help you out. But I cannot say that I see a valuations adjustment in the Greaney study. I have zero desire to join you in prison. So we will see what we will see.

This entire site is your link. Start anywhere and then just go where your fancy takes you. If your mind is 1 percent open, you will get the general idea in time. And then as you go deeper, the story will become clearer and clearer until you will never again be able to think about how stock investing works in the old way again.

There’s a reason why I am banned at every major investing site on the internet. That sort of thing doesn’t happen by accident.

Hang in there, man.

Link-Crazy Rob