A Rich Life

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

Valuation-Informed Indexing #602: The First Step to Getting Better at Stock Investing Is Wanting to Get Better

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I’ve posted Entry #602 to the weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The First Step to Getting Better at Stock Investing Is Wanting to Get Better.

Juicy Excerpt: The primary emotion that most people have about stock investing is a defensive one. They don’t want to mess up. That makes people want to follow the crowd. One investor said it to me quite bluntly. I argued that, if Shiller is right that irrational exuberance always disappears into the wind in time, things look bad for stock investors when stock prices are as high as they are today. He didn’t argue with me that prices are not high or that the irrational exuberance will not disappear into the wind in time. But he showed no willingness to lower his high stock allocation. He said that, if stock prices crashed, he would be in the same boat as millions of others and he could live with that.

“Downdt Sell Yerself Shooort, Rob. Only You Figgured Out Dadt There Is Only 1 Studdy That Makes Up the Last 41 Yeers of Reesearch and Only You Figgured Our What Sheeler Really Meant But Not What He Said Because He Was Skeeered of Them Goonies. Us Moooorooons Never Thinked of All That.”

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

Downdt sell yerself shooort, Rob.  Only you figgured out dadt there is only 1 studdy that makes up the last 41 yeers of reesearch and only you figgured our what Sheeler really meant but not what he said because he was skeeered of them goonies.  Us moooorooons never thinked of all that.

Okay, Anonymous.

I do wish you all good things, in any event.

Rob

“I Think That It’s the Last 41 Years of Peer-Reviewed Research in This Field That Has All the Answers.”

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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:

Yes, weez all justa buncha moooroooons and only Rob Bennett has all the right answers.

I think that it’s the last 41 years of peer-reviewed research in this field that has all the answers. Once we decide as a nation of people to permit honest discussion of that research at every discussion board and blog on the internet (I believe that that day will come after the next price crash shows us in an up-close and personal way what going pure Get Rich Quick/Buy-and-Hold always translates into in the long run), I believe that the first true research-based strategy will start spreading like wildfire.

We’ll see.

Rob

“We Should All Have Wanted to Know What a Giant Like Bogle Truly Believed About Market Timing. But of Course to Find Out We Would Have Had to Have Opened Every Site on the Internet to Honest Posting. The Reason Why Bogle Hesitated to Frequently Offer His Pro-Market-Timing Views Is That He Was Afraid of What Mel Lindauer and His Goon Squad Would Do to Him If He Spoke With Complete Honesty About What the Last 41 Years of Peer-Reviewed Research Teaches Us About This Important Subject.”

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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:

Jack Bogle explains why Rob Bennett is wrong:

https://www.kiplinger.com/article/investing/t052-c016-s001-resist-the-folly-of-market-timing.html

John Bogle, founder of the Vanguard Group of mutual funds, wrote of market timing: “After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don’t even know of anybody who knows anybody who has done it successfully and consistently.”

John Bogle has been consistent and Rob Bennett has been wrong about market timing.

Bogle said what you quoted him as saying.

He also said this:

“Big moves out of stocks should not be done at all. But “tactical asset allocation — I should say strategic asset allocation rather than tactical — can be done at very rare times, so rare and so difficult to observe, maybe six times in an investor’s lifetime, three times when the market is stupidly high and three times when stupidly low.”

And Bogle endorsed Bill Bernstein’s book, in which Bernstein said that the 4 percent rule was a full two percentage points off the mark at the top of the bubble. To say that valuations affect the value proposition of stocks that much is to implicitly say that market timing (going with a lower stock allocations when the value proposition of stocks is low than what you go with when the value proposition of stocks is high) always works and is always required,

Bogle was all over the map when it came to market timing. He even engaged in it himself! There was an interview in which he said that he lowered his stock allocation in 1999, in part because of the insane valuations that applied at the time, And of course he benefited from doing so. If Bogle truly believes that he has never known anyone who engaged in market timing successfully, he should have introduced himself to himself. He was a nice guy. And smart as the dickens too. I think he would have come to like himself if he has given himself half a chance.

We should all have wanted to know what a giant like Bogle truly believed about market timing. But of course to find out we would have had to have opened every site on the internet to honest posting The reason why Bogle hesitated to frequently offer his pro-market-timing views is that he was afraid of what Mel Lindauer and his Goon Squad would do to him if he spoke with complete honesty about what the last 41 years of peer-reviewed research teaches us about this important subject.

I wanted to know what Bogle thought! And I want to know what people in this field think today! So I favor opening every site to honest posting. I think that the Goon stuff is garbage. It hurts us all. It is holding us all back.

My best wishes to you.

Rob

 

“Bogle Endorsed Bernstein’s Book. Bernstein Said in His Book That the 4 Percent Rule Was Off by a Full Two Percentage Points at the Top of the Bubble. There Were Millions of Retirees Who Took That Rule Into Consideration When Planning Their Retirements. So They Needed to Know That It Was in Error. Bogle Knew This By Reading Bernstein’s Book. Did He Do Anything to Get the 4 Percent Rule Corrected? There Was a Raging Controversy at the Bogleheads Forum About It After I Pointed Out the Error in the Greaney Study. It Would Have Been a HUGE Help to Me if Bogle Had Come Out Clearly and Firmly in Favor of a Correction.”

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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:

Bogle was consistent in what he said.  You, on the other hand, spin a story to fit your agenda.

Bogle wasn’t a tiny bit consistent. Bogle endorsed Bernstein’s book. Bernstein said in his book that the 4 percent rule was off by a full two percentage points at the top of the bubble. There were millions of retirees who took that rule into consideration when planning their retirements. So they needed to know that it was in error. Bogle knew this by reading Bernstein’s book, Did he do anything to get the 4 percent rule corrected? There was a raging controversy at the Bogleheads Forum about it after I pointed out the error in the Greaney study. It would have been a HUGE help to me if Bogle had come out clearly and firmly in favor of a correction. He did not do that. Huh?

Please explain.

Rob

“Goons, Goons, Goons………….Greaney, Greaney, Greaney, Honest Posting, Honest Posting, Honest Posting………………..repeat for Another 20 Years.”

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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:

Goons goons, goons………….Greaney, Greaney, Greaney, honest posting, honest posting, honest posting………………..repeat for another 20 years.

Okay, Anonymous.

I do wish you all the best that this life has to offer a person regardless of what investment strategy you elect to follow, in any event.

Rob

“Everyone Alive Will Offer Better Investment Advice Once We Have Opened Every Discussion Board and Blog to Honest Posting re the Last 41 Years of Peer-Reviewed Research in This Field. My Contribution Is to Get Every Site Opened to Honest Posting. Then All of the Others Will Be Able to Do Much. Much Better 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:

Do you feel that you can offer the same or superior investing advice versus  people like Wade Pfau, Michael Kitces and/ or Bill Bernstein?

I think that everyone alive will offer better investment advice once we have opened every discussion board and blog to honest posting re the last 41 years of peer-reviewed research in this field. My contribution is to get every site opened to honest posting. Then all of the others will be able to do much. much better work. The combined effect will be amazing.

The entire purpose of doing peer-reviewed research is to learn things and then to tell people about what you have learned. For so long as we ban the discussion of anything that we did not know in 1980, we are all worse off than we would be if we had just permitted honest posting re the new stuff we learn, as we do in every other field.

Say that people in the typewriter industry felt bad when people started using word processors and that they were powerful enough to get personal computers banned. We would all be worse off today. When all new knowledge is banned, you don’t even know what you are missing out on because all you have available to you is the old stuff. When you permit knowledge to advance, one thing leads to another and in not too much time you are in a place that you never could have imagined in the days when all you had was the old, now discredited, knowledge.

I believe that the last 41 years of peer-reviewed research is the most important 41 years of peer-reviewed research in the history of investing analysis. We all should be making use of what we have learned from it on a daily basis.

Rob

Valuation-Informed Indexing #601: Logic Produces Gradual Change, Emotion Produces Rapid Change

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I’ve posted Entry #601 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Logic Produces Gradual Change, Emotion Produces Rapid Change.

Juicy Excerpt: I believe that the reason why we ignore the obvious (to me, at least) realities of stock investing is that they scare us. Stock investing is a serious subject. Knowing the true size of our stock portfolio is important. Accepting that it is investor emotions that are the primary determinant of stock prices is deeply unsettling. So we pretend that this is not so. We pretend that the numbers on our stock portfolio statement are real and reflect something of lasting significance.

Buy-and-Hold Goon to Rob: “If You Look at Any of the Major Financial Boards, This Is Just Common Practice. You Don’t See Other People Making Wild Claims of Goons, Prison and $500 Million Windfalls. Instead, It Is Routine Questions, Answers and General Comments/Observations. There Aren’t Mass Conspiracies.”

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

“ I have convinced lots of people. Thousands of people.”

I think you have convinced yourself, but that is about it. If you tell yourself a lie long enough, eventually, you will believe it. None of us have anything to gain or lose regarding what you do or not do to secure your financial future. That gives us the luxury of not having a bias and give you honest feedback. If you look at any of the major financial boards, this is just common practice. You don’t see other people making wild claims of goons, prison and $500 million windfalls. Instead, it is routine questions, answers and general comments/observations. There aren’t mass conspiracies.

The fact that lots of people don’t talk about the criminal stuff illustrates the problem. The core idea on which Buy-and-Hold is built is that investors are 100 percent rational. If that were so, prices would be set properly and market timing really would not be required. Death threats are emotional. So are acts of extortion. When we don’t talk about that stuff, we make Buy-and-Hold look plausible. If we all talked about that stuff whenever we saw it, we could as a society get our emotions under control and we would’t have a CAPE value of 33 hanging over our heads.

It’s never the Valuation-Informed Indexers behaving this way, only the Buy-and-Holders. I wonder why.

Rob

“I Can Point You to Cases Where It Came Very, Very Close to Failing. And, If You Look at the Return Sequences That Turned Up in Those Cases, You Will See That They Were on the Lucky Side. If You Obtained a Slightly Less Lucky Returns Sequence, You Would Have Had a Retirement Failure.”

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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>“In many of the return sequences that we have seen in the past, it fails.”

Can you point me to an instance in the past where 4% failed?</i>

No. But I can point you to cases where it came very, very close to failing. And, if you look at the return sequences that turned up in those cases, you will see that they were on the lucky side. If you obtained a slightly less lucky returns sequence, you would have had a retirement failure. People trying to put together retirement plans need to know that. We should not be telling people that an extreme high-risk withdrawal rate is “100 percent safe.”

My sincere take.

Rob