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

VII gets the numbers wildly wrong.  How do we know this?  Let’s use you and me as an example.  We are both in our 60’s.  If one of us was a market timer over the last 30 years, that person would have substantially less money in their retirement account vs the other that was a buy and holder.  There is no argument on this.  It is simple math.  The market timer would not be able to retire right now.   That is a very big problem for someone in their 60’s because most people have little time to continue working and many are forced out of working by health issues, ability to work a job or job availability.

You’re not adjusting for irrational exuberance. If you adjust for irrational exuberance, you get very different numbers. That’s the entire dispute. The last 43 years of peer-reviewed research shows that you need to adjust for irrational exuberance and the Buy-and-Holders ignore it because they don’t want to acknowledge that they made a mistake in failing to distinguish the guessing-game approach to market timing (which really doesn’t work) and valuation-based market timing (which is just price discipline and which the entire 150 years of historical return data available to us shows is always 100 percent required for every investor. There’s no other way to combat irrational exuberance.

We should be Permitting honest posting re the peer-reviewed research so that each investor can hear both sides and decide for himself or herself. That’s my sincere take re this terribly important matter.

If we permitted honest posting re the peer-reviewed research, everyone would just retire when he had enough saved to support a retirement. There wouldn’t be any of this phony baloney irrational exuberance floating around in our portfolios. So it would not be difficult to know when we had enough wealth accumulated to finance a retirement. Irrational exuberance hurts us all. It is the cancer of the personal finance world. We should all be working together to eliminate it. That means encouraging each other to practice price discipline (valuation-based market timing!) as needed.

Where I’m coming from.

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:

Here is a very simple explanation of why market timing is a bad thing:

https://awealthofcommonsense.com/2024/08/timing-the-stock-market-using-valuations/

I don’t agree even a tiny bit that, if you lower your stock allocation a bit and then prices go even higher, you have somehow “missed out” on something. You “missed out” on having more irrational exuberance in your portfolio That’s a good thing! You don’t want that garbage in your portfolio! Irrational exuberance is what makes stock investing risky! We all should want to see as little of that as possible. We all should be working together as a nation of people to get the CAPE value down when it gets to the sorts of levels where it resides today. We should all want to “miss out” on bull markets and bear markets and economic collapses. We sbould all be satisfied with the 6.5 percent real gains that are provided by economi growth. Thinking that something more than that can be a good thing just gets us into a Buy-anfd-Hold mode of thinking and hurts us.

This is the issue that the Bennett/Pfau research looks at. We found that, as Wade put it, “Yes, Virginia, Valuation-Informed Indexing works!” Practicing price discipline when buying stocks lowers risk dramatically while also increasing long-term returns dramatically. That’s investor heaven.

This is not that hard to understand. What we are dealing with today is a marketing gimmick gone haywire. The Buy-and-Holders did a wonderful thing in suggesting that investing strategies be rooted in the peer-reviewed research. That’s their greatest contribution. They had the bad fortune to be developing their strategy when all of the research was not yet available; Shiller didn’t publish his amazing research until 1981. The obvious thing to do was to incorporate his amazing research findings into their strategy as soon as they were published. Somehow that wasn’t done and we have seen a 43-year cover-up. And so now it looks really, really, really bad for people to find out about this massive act of financial fraud.

It’s not going to look any better a year from now or two years from now or three years from now. So I vote for opening every site to honest posting re the research by the close of business today, without a single exception. No one should ever feel intimidating into keeping quiet about an error in a retirement study, which is the situation that I found myself in fron May 1999 through May 2002. I mean, holy moly!

Where I’m coming from.

My best wishes.

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:

It is funny to watch a broke guy with a failed retirement who has admitted to “not being a numbers guy” telling a bunch of millionaires as to how they all got it wrong.

Even so, I sincerely believe that the Greaney retirement study lacks a a valuation adjustment. Had he included a valuation adjustment, the study would have reported very different withdrawal rates as safe. Stock investing risk is not stable but variable, depending on how much irrational exuberance there is in the stock price at a given time.

And I think we should be talking about how much of a difference valuations make on a daily basis at every site. If we talked about it daily at every site, we could never again get the sort of CAPE value that applies today. I believe that that would be a good thing. I believe that the Ban on Honest Posting re how stock investing works hurts us all in very serious ways.

Where I’m coming from.

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:

“ There’s a lot of value in putting the material from the 700 columns into one continuous narrative of a manageable length. That’s why books exist. Having the entire story in one place helps people appreciate how different aspects of the question relate to each other.”

So it is just a repeating the same information that you have already posted thousands of time and the production of a book is merely an organizational exercise. This is simple work and should be MUCH faster versus writing a book from scratch. Either you don’t intend to finish the book or your are just stretching it out as long as possible to avoid having to get an actual job.

There’s not a lot of intellectual content to this on either side, Anonymous. There are thousands of markets out there and in every single one price discipline is absolutely essential, the thing that makes the market work. It’s hardly a big surprise that Shiller showed that that’s how it works in the stock market as well. But he was awarded a Nobel prize for his work. There must be something about his research that impressed people. What impressed people is that what he said (timing is required) is the OPPOSITE of what most of today’s “experts” say. To acknowledge the obvious reality would save us all from future bull markets and bear markets and economic collapses. So it’s not a small deal, it’s a huge deal.

The challenge is not an intellectual one, it is an emotional one. Say that I went over to Reddit today and posted there. There would be a few people there who would be intrigued by what I said. I know that from experience. I also know that there would be some who would be very upset. There would be some guy who over the course of a lifetime has accumulated savings of $1 million and who ids proud of the work that it took to pull that off. And I come along and tell him that his portfolio has a lasting value of only half that, that the rest is just irrational exuberance. I would be taking $500,000 out of that guy’s pocket. He’s not going to like me for saying that and I am not going to like not being liked. That’s the dynamics we have seen at play here since the first day. Do we as a nation of people want to know the truth about stock investing or do we prefer to continue to cover up the truth and suffer the consequences associated with that.

When a person writes a book, he has a reader in his mind’s eye. He thinks about the effect on that reader as he puts his sentences together. I know from a lot of experience that a lot of my readers are not going to enjoy the experience of reading my words. I assume today that they are not going to read my words until after the onset of the next Buy-and-Hold Crisis. So I think that people may be more open to the message of the book when they read it than they would be today. But I don’t believe that everybody is going to be entirely happy to read my words. That affects the writing process.

The usual goal of a writer is to make things as clear as possible. In this case, making things more clear makes things more painful. You don’t want to call your readers stupid. That’s a very bad persuasion strategy. But it’s a pretty darn stupid phenomenon we’re talking about here. Today’s CAPE value is 36. We know from history how much human misery follows from that. And every reader of the book has contributed to that in some way. If a person jumped up and down when the CAPE went from 35 to 36, he played a role in causing all that misery. It was not done by one person. Yes the Wall Street Con Men lie to us all about how stock investing works on a daily basis. But they do it because we love them so much for doing it. So all of the people that they are lying to are liars too, no? Calling your readers stupid liars is not the conventional path to journalism success. But to tell this story clearly and fully and accurately its something that must be said.

How about the fraud? I love John Bogle. It was byb reading Bogle’s book that I learned that Greaney’s study is in error. But Bogle saw what was going on at the Bogleheads Forms and he kept it zipped re Lindauaer’s behavior. Had Bogle reassured Wade Pfau that he would protect him from Lindauer and his goon squad, Wade never would have flipped. So Bogle’s role in all this is a topic that must be addressed. But it is not easy to write the sections dealing with that sort of thing.

Intellectually, it’s a piece of cake. Paying attention to price is just as important when buying stocks as it is when buying anything else. One sentence does the job. It’s not hard to understand why it’s so. But if everyone took that comment-sense insight into consideration, we wouldn’t have a CAPE value of 36 today. If we want to bring an end to the pain that Buy-and-Hold causes, we are going to need to talk about these matters. So it is both a very easy book to write and a very hard book to write.

Valuations matter. So easy. Self-evident. Millions of people ignore this obvious truth and destroy their own lives and the lives of others by doing so. Writing that up is a very hard thing to do. That’s why no one had done it in the 43 years since Shiller published his amazing research, including Shiller himself. So I am not going to get too down on myself for taking some time getting there. I want to get there as soon as possible. But the bottom line is that it doesn’t matter how long it takes so long as I do a good job. I just need to hang in there and get a little closer day by day.

My sincere take.

Think about how slow Greaney has been about correcting his study! That’s the truly amazing one!

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:

So what you are saying is that you don’t have any new material and that your book is just a repeat of what you have already said.  If that is the case, why wasn’t the book done many years ago?  Afterall, the ValueWalk articles are all repeats of things you have said many times before.

If it were an easy thing to write this book, thousands of people would have written it many years ago. Nobody has pulled it off. It’s Shiller’s research and he hasn’t written this book.

There’s nothing complicated about it. Shiller’s research is common sense. The price you pays for stocks affects the amount of risk you take on! Who would have thunk it? That’s the story.

It’s like telling your kid that he can’t have a second bowl of ice cream. People can retire years earlier by keeping the realities in mind. The Bennett/Pfau research shows that as clearly as anything can be seen. But people like thinking that the phony irrational exuberance gains they create are real. Woe to the guy who dares to tell them otherwise, you know.

It’s a simple and yet difficult message to convey. I think people need to hear this message. So I stick at it.

Today’s CAPE value is 36. That should tell you what you need to know.

Rob