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

Most people just go to the grocery and buy whatever is there. So it sounds like you fully support buy and hold.

When the price of milk increases, people complain.

When the price of stocks increases, people cheer.

That’s the problem, Laugh. It’s an emotional thing.

People can be educated to complain about increases in stock prices just as they complain about increase in milk prices. But those of us who want to help out are prohibited from doing so because it makes the Buy-and-Holders feel bad for people to learn the realities.

That has to change. If our economic system is going to survive, we need to find a way to provide access to honest and accurate posting about scores of critically important investment-related topics. We are on our way. We are as a society working our way through a process that gets us there and that liberates us all from the Get Rich Quick thinking that is at the core of the Buy-and-Hold project.

I am doing my part. I love my country. So I am doing my part.

You Goons desperately want to stop me. So you are doing all you can to hold me back.

The people of the United States will decide the matter. As one of you Goons put it not too long ago, the community will have its say. But you Goons make it sound as if the community decisions that resulted in bans on honest posting are final decisions. They are not. Communities are permitted to rethink matters after the members of the community lose most of their retirement savings. That’s certainly what happened with the community that celebrated the owner of the Madoff Fund as “Saint Bernie.” You don’t hear anyone referring to him as “Saint Bernie” today while he watches television in his prison cell.

The community of people who comprise the United States of America is working its way toward achieving the biggest advance in its understanding of how stock investing works ever experienced in history. We are in the process of coming to see that buying stocks is just like buying milk, there are some prices at which the value proposition is amazing, there are some at which it is good and there are some at which it is poor. Once we all start buying stocks the way we all already buy milk, we will never again see another bull market. Which means we will never again see the bear markets that inevitably follow from bull markets. Which means that we will never again see the economic crisis that inevitably follow from bear markers.

I don’t like economic crises. They hurt millions of good people. So I oppose the Buy-and-Hold “strategies” that create them. I follow and recommend the first true research-based investing strategy, Valuation-Informed Indexing. I am 100 percent confident that everyone in this field will be working with me to help spread the word re Valuation-Informed Indexing once we all see the damage done by the promotion of Buy-and-Hold with the arrival of the next price crash. But we are going to have to wait to see how things play out in the real world to get you Goons on board. I have a funny feeling that you are not going to be willing to come clean just because I put forward some words about things I am 100 percent sure we are going to see happen in coming days.

Can you just calm down a bit until the next crash arrives and and then resume these discussions at that time? I sincerely believe that that’s the best way to proceed given the circumstances that apply today.

I wish you all the best that this life has to offer a person in any event, my long-time Goon friend.

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 amnesty will let a lot of people off the criminal hook while containing funding to aid the transition to Valuation-Informed Indexing.”

So, you believe there will be Federal money spent to promote VII?

The economic crisis that was caused by the promotion of Buy-and-Hold “strategies” is the #1 public policy issue of our time. It is scaring millions of people that their economic circumstances are getting worse and worse at a time when they should be getting better and better. Our economic system is working. It is producing huge advances in productivity. But the money is not finding its way into the pockets of the millions of hard-working middle-class people who produced it. It is all being funneled through the miracle of Buy-and-Hold into the pockets of a small number of Wall Street Con Men. And we are seeing political frictions on both the left and the right as a result. These frictions will worsen with another huge price crash.

We are going to have to do everything we can as a society to open up some space for accurate and honest presentations of what the last 36 years of peer-reviewed research tells us about how stock investing works. There was a time when we did not spend Federal money on environmentalism. We do today. There was a time when we did not spend Federal money on education. We do today.. There was a time when we did not spend Federal money on anti-discrimination efforts. We do today. So, yes, I think it is entirely possible that we will elect as a society to spend Federal money to assure that nothing like this current bull market (and the massive act of financial fraud that keeps it going) ever happens again. I could see that happening.

I am someone who believes that Federal programs that are well-intentioned can get out of hand because, once they are put in place, they are not monitored carefully and there is a gradual drifting away from the original purpose. So, personally, I would prefer seeing this done though the private sector. There are huge amounts of money to be made giving accurate and honest and research-based investing advice. Once we begin enforcing the laws against financial fraud, everybody in this field is going to be presenting himself as a Valuation-Informed Indexer and the word re what works will spread quickly. We have seen on the various boards that the hunger for honest investing advice is HUGE. So we can easily get the job done without the adoption of any Federal programs.

However, the full reality is that Shiller’s research shows that how people go about investing in stocks is a public policy question. The stock market is where most of us put our life savings. It matters what happens to our life savings. We all have a Get Rich Quick urge within us. So we are always as humans inclined to fall for Get Rich Quick strategies. Once those strategies become popular, they are VERY hard to defeat. Get Rich Quick strategies provide HUGE short-term payoffs. And so bull markets always get out of control. Once a bull market gets out of control, it becomes impossible for the “experts” who promoted them to acknowledge their errors, even in the face of mountains of peer-reviewed research revealing them, because they have caused so much human misery at that point that they just cannot bear to own up (even in their own minds!) to what they have done. So this is a serious business.

I don’t personally think that we need a Federal program. I think this can be done through educational efforts, which can be done through the private sector. I personally think that is the way to go. But I also think that it makes sense to adopt some sort of amnesty. Lots of people are potentially on the hook both criminally and civilly who really just got caught up in something a lot bigger than them. Wade Pfau obviously had every intention of using his talents to help people. He 100 percent wanted to do honest work. The evidence re that point is simply overwhelming. So I believe that he should be left off the hook for things he did because he was worried that he would not be able to feed his children if he continued to do honest work in the face of the threats delivered to him by the Bogle Goon squads. There are thousands of Wade Pfau’s out there. An amnesty is appropriate.

But how do you sell the amnesty? Wade’s story evokes sympathy. To someone who has not lost most of his life savings as a result of Wade’s criminal actions. Someone who has lost most of his life’s savings as a result of Wade’s criminal actions is going to have a hard time going along with an amnesty. Millions of people are going to be very, very, very angry following the next price crash, and understandably so. We are going to need to do something to address that anger. Adopting a Federal program that insures that nothing like this can ever, ever, ever happen again might be the way to go.

It might be that we provide an agency where people can go to obtain educational materials when they hear some investing “expert” pushing some strategy that sounds plausible on the surface but that causes warning bells to go off suggesting that the story doesn’t quite add up. That’s how I felt about Buy-and-Hold in the days before Greaney’s first death threats, when it became clear to me that the entire thing was a huge con. I would have liked to have been able to call a number and have someone point me to materials showing that the idea that there is some mystical, magical research somewhere showing that the claim that there is no need to practice long-term timing (price discipline) when buying stocks is a lie. It was Wade Pfau who told me that when we were doing research together. It would have been a lot easier just to be able to call a Federal agency and have someone not getting rich pushing the purest Get Rich Quick garbage ever concocted by the human mind tell me the straight story.

My personal vote would be not to have Federal money spent cleaning up this mess. But I can easily see it happening. And it could be that I am wrong in my inclinations. A lot of people didn’t think Social Security was a good idea. My inclinations would probably have been to oppose Social Security. I have come to believe that it was a good idea. I am beginning to feel that way about Obamacare. I certainly did not support it when it was being considered. But I think it would be fair to say that efforts to repeal it have not played out well. Perhaps we need some kind of Federal program ensuring that everyone has access to basic health care. Perhaps some of us get stuck in old ways of thinking and become too reactionary in our thinking. Perhaps I am just letting the liberal side of me come out and play a little bit today.

I am not able to give you a definitive answer to your question, Anonymous. How we proceed is something that we are going to decide as a society. Each and every one of us is affected by this massive act of financial fraud. We are all going to get to have a say on how to turn things around. We have a great economic system. But I think that it would be fair to say that capitalism runs on the pursuit of self-interest; that is the driver of our system. In most areas, that works okay. But in the investing realm, there is a huge payoff for telling horrible lies to people about what the last 36 years of peer-reviewed research show us about how stock investing works in the real world. That needs to change. Of that I am 100 percent certain. There are lots of good people trying to do good work in this field. But they hold back from doing that work in an effective manner because they live in fear of what the Wall Street Con Men will do to them if they put forward a fully honest statement or two. That simply must stop.

Our system is based on incentives. The incentives get too out of whack in the investing realm because Buy-and-Hold can be such an amazing winner in the short term and such a horrible loser in the long run. I still believe that we can address the problem in the private sector. But I certainly don’t object to turning to the government sector for help if that is what is needed. I want to see my Wall Street Con Men friends doing the sort of work they intended to do when they first entered this field, in the days when Buy-and-Hold was just a gleam in Jack Bogle’s eye.

The bottom line is that we will do what we need to do to open up access to honest discussion of safe withdrawal rates and scores of other critically important investment-related topics to every investor on the planet. We must do that and so we will do that. If we can do it without adoption of Federal programs, I would vote for doing it without the adoption of Federaal programs. If it takes Federal programs to keep in check the greed of the Wall Street Con Men, then so bet it, you know? My priority is the preservation of our economic system and of our political system. I have a funny feeling that, deep down in his heart of hearts somewhere, that is my good friend Jack Bogle’s priority too.

We will see how it all plays out in days to come.

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 is no data that challenges my beliefs, Anonymous. 100 percent of the data supports Valuation-Informed Indexing, 0 percent of the data supports Buy-and-Hold.

I wish it weren’t so. If 10 percent of the data supported Buy-and-Hold, we could have fun arguing our different positions and you could learn from me and I could learn from you. But when 0 percent of the data supports your position, you are in a tough spot. That’s why we see death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs. You ain’t got nothing else.

I didn’t do that to you, Anonymous. It was Jack Bogle who did that to you. He should have come clean when Shiller published his “revolutionary” (Shiller’s word) research. And, if Bogle was suffering too much from cognitive dissonance to do so, those who love him should have helped him out by asking him to address Shiller’s research and explain what changes he believed needed to be made to the Buy-and-Hold strategy to bring it up to date with the new research. You have a beef with everyone who failed to do that. You have no beef with me. I have done that.

Buy-and-Hold was a mistake. It was based on research that was published in 1965 and then discredited in 1981. When your strategy is discredited, you need to update it. Or else you need to stop claiming that the now-discredited strategy is supported by the peer-reviewed research. Once peer-reviewed research is published showing that there is precisely zero chance that a strategy could ever work for even a single long-term investor, claims that that strategy is supported by the peer-reviewed research become a lie.

That’s my sincere take re these terribly important matters, in any event.

I naturally wish you all the best that this life has to offer a person, my long-time Goon friend.

Rob

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

I don’t know of a single person that agrees with you Rob, yet each of the points I mentioned are well documented and discoverable with a simple Google search. I would be happy to provide examples again if needed.

Shiller obviously agrees. And the people who awarded Shiller the Nobel prize agree.

And the thousands of our fellow community members who asked that honest posting be permitted on our boards and blogs agree at least in part.

Wade Pfau obviously agrees. He spent months researching Valuation-Informed Indexing and declared at the end of his work that: “Yes, Virginia, Valuation-Informed Indexing works”

I could go on and on. I’ve spoken to economists who agree and bloggers who agree and investment advisors who agree. I’ve had site owners who banned me from their sites tell me in the e-mail informing me of the ban that their personal view is that my site is the best investing site on the internet. I would say that that’s a pretty darn strong statement of agreement.

What I don’t have is people who will say out in public that they agree after they see what you Goons will dish out to them when they do. People don’t like to be threatened. People don’t like to see their reputation smeared. There is a widely shared dislike for these sorts of practices. To get people to say what they believe in clear and firm and bold ways, we are going to have to lessen the penalties imposed for doing so.

The core issue here is that stocks are today priced at two times fair value and so to tell people what the last 36 years of peer-reviewed research tells us re how stock investing works is to tell people that they need to divide the number on their stock portfolio by two to know the true and lasting value of their life savings. For many of us, hearing that we need to divide the number on our portfolio statement by two is like hearing that we have cancer. How popular do you think the guy is who tells millions of people that they have cancer, Sammy? That’s me.

In the long term, people who have cancer are better off knowing that they have cancer. Once you know, you can take steps to deal with the problem. Those who don’t know the true value of their stock portfolio cannot plan effectively for the future. They may not like hearing the realities. But they NEED to know the realities.

Doctors can get away with telling their patients that they have cancer because it has become standard industry practice in the medical field to tell patients where they stand. It has not become standard industry practice to shoot straight with stock investors about the last 36 years of peer-reviewed research. Shiller published his “revolutionary” (his word) research findings in 1981 and the longest and biggest bull market in history began in 1982. No one wants to know the realities in the middle of a bull market. Prices moved downward sharply in 2008 and we saw some slippage in support for Buy-and-Hold in early 2009. But then prices shot back up quickly and we have been stuck in fantasyland in the years since.

I think things are going to change in the days following the next price crash, Sammy. There’s no benefit to living in fantasyland after you have lost most of your retirement savings. At that point, I don’t see what opposition there would be to coming clean. So this is all going to come out. Lots and lots and lots of people will be saying in those days that they supported me all along but that they just were afraid to come forward. And they will be telling the truth.

I wish it weren’t so. But that’s where we stand, my good friend. Lots of people agree with me either in whole or in part. But you would need to cut back on the abusiveness a notch for them to gather the courage to speak up. And I have a funny feeling that you have no intention of taking things in that direction at this point in the proceedings.

My best and warmest wishes to you and yours, old friend.

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 market is valued today according to what all the people holding stocks think it’s worth. What the market is valued tomorrow, the next day or any day in the future depends on the collective individual decisions of those who participate in the market by owning stocks. CAPE or PE10 is not some magical metric which tells you exactly what the market value should be or when market valuations will shift. Only in the Bat$hit Crazy Wide World of Hocomania has PE10 been elevated to the status or a religious belief.

The people who comprise the market cannot price stocks properly without access to the information needed to do so. As of today, honest discussion of the implications of the last 36 years of peer-reviewed research is banned at every major investing site. So it is not even possible for today’s investors to price stocks properly. They would need to gain the ability to post honestly to do that.

P/E10 tells you the proper price of stocks presuming that the market continues to behave in the future at least somewhat as it always has in the past. It is possible that the market will behave differently in the future. If that’s what you believe, you can make whatever adjustment you feel you need to make to reflect your personal belief.

There is no question but that emotion plays a huge role in the setting of the daily price and that that price does not last into the long-term to the extent that it reflects only emotions and not economic realities. This is why knowing today’s P/E10 level permits you to have a much better idea of what the price will be in 10 years or 15 years or 20 years than you would have if you did not look at today’s P/E10 level. The P/E10 level tells you how much of today’s price reflects emotional cotton-candy nothingness and how much of it reflects economic realities. You can count on the portion of the price that reflects the economic realities. You cannot count on the portion of the price that reflects only emotional cotton-candy nothingness. It is the market’s job to price stocks properly. So the cotton-candy nothingness just gets blown away in the wind in time.

Do you think that stocks offered the same value in 1982, when they were priced at one-half of fair value, as they did in 2000, when they were priced at three times fair value? I sure don’t. The research shows that the safe withdrawal rate was 9.0 in 1982 and 1.6 in 2000. For a retiree with a portfolio of $1 million, that’s the difference between living on $90,000 per year and living on $16,000 per year. That is too big a difference to overlook in any study purporting to identify the safe withdrawal rate. Aspiring retirees need accurate numbers. If you give them inaccurate numbers, you are going to hurt them in very serious ways.

We agree that P/E10 does not tell you WHEN prices will return to fair-value levels. That is determined by investor emotion. No metric that I know of can tell you that. P/E10 tells you HOW MUCH prices need to correct. But the correction takes place only in the long-term and there is no way to know in advance when it will take place. That is why short-term timing does not work. If you could know in advance WHEN the price correction would take place, you could engage in short-term timing successfully. It just doesn’t work that way.

But, if you are a long-term investor, you certainly need to know the real long-term value of your portfolio. It is not possible to engage in effective financial planning without getting the basic numbers at least roughly right. When stocks are priced at three times fair value, as they were in 2000, using unadjusted portfolio statement numbers won’t get you anywhere even remotely in the neighborhood of having accurate numbers. People were using the incorrect numbers in the Greaney study to determine when to turn in resignations from high-paying corporate jobs. Those people’s lives were destroyed by the errors in that study. I believe strongly that Greaney should have corrected the study within 24 hours of the moment when he became aware of the errors in it.

There is no excuse for the death threats. And the death threats show that Greaney did not believe that it would be possible for him to justify the methodology used in his study in civil and reasoned debate. People who are making an honest effort to help investors do not advance death threats when their statements are questioned. People who advance death threats when questioned are working some sort of con. I mean, come on. I can accept that Greaney worked a con on himself before he worked it on others. But the con that he worked still did a great deal of harm to those others.

You say that today’s market price is determined by the assessment of today’s investors as to what the market is worth. If that were so, how would it be possible for P/E10 to effectively predict the market price that will apply 10 years into the future for 145 years running now, the entire history of the U.S. stock market for which we have records? You are wrong. The market price is set partly by the factors that you refer to. But there is another factor that you and all Buy-and-Holders ignore that was revealed by Shiller’s “revolutionary” research findings of 1981. The factor that we did not know about until 1981 is that the market always eventually closes the gap between the emotionally determined price and the real, economic price. When you know the extent to which today’s price differs from the real, economic price, you know in which direction prices are headed in the long term. That’s very important information for investors planning retirements which will extend for more than 10 years into the future, which is the vast majority of them.

These are my sincere thoughts re these terribly important matters in any event, my good friend. I naturally wish you all the best that this life has to offer a person.

Rob