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

“One, you have only said that within the last few months. You could have saved lots of people a lot of time by saying it in May 2002. Why didn’t you.”

Because it was obvious to everyone taking part in the conversation that there was no valuation adjustment.

If it’s so obvious, why hasn’t the study been corrected to this day?

Today’s CAPE is 35. That’s an obvious threat to the smooth functioning of our economic system. But how many of the experts in this field are actively involved today in getting that CAPE value down?

Sometimes it is the most obvious things that are most important. For an alcoholic, the most obvious thing that he needs to do to make his life better is to start attending A.A. meetings. The fact that this is obvious doesn’t mean that you shouldn’t say something if you think of this person as a 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:

Every buy and holder?  Can you give us @ link to just one failed portfolio?  At the same time, can you show even one successful person that has implemented VII?

Take a look at all of the stock portfolios that existed in 1929. They all fell by a huge amount. The collective losses were large enough to bring on a Great Depression, That should never happen.

Once we have a widespread understanding of the importance of market timing, it will never happen again. All investors went to act in their self-interest. Show them how much the value proposition of stocks drops when prices reach insanely dangerous levels and they will lower their stock allocation at such times. Which will bring prices back to reasonable levels.

There can never be an out-of-control bull market in a world in which honest posting re Shiller’s Nobel-price-winning research is permitted. Which means that there can never be a bear market. Which means that there would in all likelihood never be an economic crisis. I can live with that.

ALL Get Rich Quick/Buy-and-Hold portfolios are failures. Because failing to engage in market timing dramatically reduces long-term returns while dramatically increasing risk. Successful strategies do just the opposite. We should be permitting honest posting re the last 40 years of peer-reviewed research at every site.

My best 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:

“The last 150 years did not turn out as you said it would. Why would anyone listen to what you have to say?”

Actually, it has. Buy and hold has always rewarded the patient. The market has always recovered and gone on to new highs. Yet we have never seen any successful outcome with market timing.

The Great Depression was a great boon to mankind. The near depression of the early 1900s was a great boon to mankind. The stagflation of the 1970s was a great boon to mankind. The 2008 economic crisis was a great book to mankind,

What was I thinking?

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:

“Would it have been better if I had just kept my mouth shut about the error in the Greaney study?”

Every member of your family would answer that one with a big fat Yes.

How lucky for the world that their opinions don’t matter.

I don’t know, Anonymous. Every member of my family lives in the United States. My mother lived through the Great Depression. She told me stories. This way, I can go to sleep at night knowing that I did everything in my power to spare the members of my family what we are going to see if the continued promotion of the Buy-and-Hold “strategy” brings on the Second Great Depression.

The crazy stuff is out of my hands. I have spoken out in opposition to it on many occasions. No one person can bring it to an end on his or her own. We are all going to need to pull together as a society if we want to see that little dream come true. ALL of the families in the United States have a role to play here. No reasonable person can deny that I have done my part and then some more on top of that and then some more on top of that.

Don’t let the bad guys get you down, my good 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:

How have things worked out for you? Have you received backing by the financial experts? No. Do you have successful outcomes supporting VII? No. Has your retirement plan been successful? No. Did your crash predictions come true? No. Did you finish your book on time? No. Did you get a job at the beginning of the year as you previously said? No.

What have been your successes? Setting a record for board banning? Longest streak of repetitive posts? Avoiding real work?

It was a huge success to work up the courage to point out the error in the retirement study posted at John Greaney’s web site.

It was a huge success to have thousands of our fellow community members express gratitude to me for starting the most exciting investment debate in the history of the internet.

It was a huge success to have a Ph.D. in Economics ask me to co-author research with him showing the superiority of Valuation-Informed Indexing over Buy-and-Hold and for him to conclude after 16 months of in-depth explorations that “Yes, Virginia, Valuation-Informed Indexing works!”

The biggest success will come in the days following the next price crash. We are going to have to rebuild our broken economic system at that time, are we not? I think it would be fair to say that we are not going to rebuild it with even more promotion of the pure Get Rich Quick/Buy-and-Hold “strategy.” We are going to need to open every discussion board and blog to honest posting re the last 40 years of peer-reviewed research in this field. I think it would be fair to say that we will all enjoy the greatest surge of economic growth in our nation’s history and that there will not be one person looking back with longing to the Buy-and-Hold days. For someone who has a deep love for his country, that is going to feel like a big success.

Do I wish that Greaney had corrected his study within 24 hours of the moment he learned of the error he made in it? Obviously. Of course.

Do I believe that the good we have seen over the past 19 years has been 50 times more good than the bad that we have seen over the past 19 years has been bad? Obviously. Of course.

My best and warmest wishes to you and yours.

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’s only a horrible bull market if you are over the age of 60 and you missed out on the bull run.  At that point, it is too late for you.

If we see millions of failed retirements, it’s a horrible bull market. If we see hundreds of thousands of businesses go under, it’s a horrible bull market. If we see millions of workers lose their jobs, it’s a horrible bull market. If we see increased political frictions, it’s a horrible bull market.

And for what? We get the same 6.5 percent real return regardless of whether we play these games to push prices up temporarily or whether we permit honest posting and see prices remain at reasonable levels at all times. I don’t see the fantasy thrill ride as being worth the price attached to it.

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:

“Because it is just a distraction to act like the death threats themselves are a big deal.”

You have made a big deal about them, so people ask you for proof and then you don’t provide it.

“The big deal is that I pointed out an error in a retirement study 19 years ago and it has not been corrected to this day.”

Wade Pfau, and many others, have pointed out how you don’t understand John Greaney’s work and what he has said. People keep telling you all of this over and over and over again, and all you want is more access to other people’s websites to repeat the same thing over and over again. This is known as bad behavior.

I think that the last 40 years of peer-reviewed research in this field needs to be part of the discussion anytime stock investing is being discussed. There are today two academic models for understanding how stock investing works, Buy-and-Hold and Valuation-Informed Indexing. Everybody knows about Buy-and-Hold because it is discussed everywhere and has been for a long time. Few understand Valuation-Informed Indexing in any depth because only 10 percent of the population believes in it and that 10 percent holds back from talking about it in any depth for fear of alienating the Buy-and-Holders, who are in the majority. So millions of people who would be open to making the transition from Buy-and-Hold to Valuation-Informed Indexing if they heard all about it and had all their questions answered, are not even aware that there is an alternative to Buy-and-Hold that is supported by 40 years of peer-reviewed research (which is so respected that the author of it has been awarded a Nobel prize).

I believe that Valuation-Informed Indexing is the future and that Buy-and-Hold is the past. So I want to see the word spread as quickly as possible. That won’t happen if I and the others in the 10 percent don’t insist on our right to post our honest beliefs. Since I want others to do that, I think that I am absolutely required to do it myself. During the three years when I posted at Motley Fool and did not speak up about the error in the Greaney retirement study, there were a lot of people who were friends of mine who got the impression that I believed that the study was accurate because I never said otherwise. I am ashamed of myself for having been such a coward. The other side of the story is that I have seen how excited people get when Valuation-Informed Indexing clicks for them for the first time. I have had many people tell me that it is by listening to me that they came to understand how stock investing really works for the first time. I found it very gratifying to have that effect on people and I would like to see that happen in millions of additional cases.

The Ban on Honest Posting is killing us. The best thing to do when you discover that you have made a mistake is to acknowledge it and move on with your life. To be covering up a mistake for the rest of your life is a horrible place to be. The Buy-and-Holders would of course benefit themselves from developing a better understanding of how stock investing works, Today, it’s not even the idea that people will learn about their mistake that most bothers them. Today, they don’t want people to learn about the 40-year cover-up. And that feeling of course just gets worse as the cover-up extends longer into time.

I love my country, That’s the bottom line. The mistake that the Buy-and-Holders made (that market timing — price discipline! — is not required) is in the process of hurting millions of people in a very serious way. None of us should want to see a Second Great Depression. None of us should want to see hundreds of thousands of businesses go under. None of us should want to see millions of people thrown out of work. None of us should want to see political frictions worsen. The laws that we have against threats of physical violence and against extortion are there for a good reason. We should be 100 percent united in wanting to see those laws enforced in the investment advice field just as they are enforced in all other fields of human endeavor.

That’s where I am coming from, Anonymous. I naturally wish you all the best that this life has to offer a person.

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:

Not according to Shiller.  He often speaks of a housing bubble.  You better get that van ready.

Housing prices can go into a bubble. But usually it is going to be a stock bubble that is the driver of the housing bubble. There is no ban on honest posting re housing prices that I am aware of. So you have to ask yourself, what would cause a housing bubble? Why wouldn’t the tension between buyers and sellers just produce the proper price (which is the entire point of a market)?

So long as honest discussion of the stock market is prohibited, a stock bubble will be created that will bring into existence trillions of dollars of Pretend Money. People think of the Pretend Money as real. That’s why the exuberance is irrational. Don’t you think that that is going to affect their thinking process re housing? If a person has enough money to afford a $300,000 house counting his stock holdings, he may feel fine offering to pay $250,000 for a house that he likes. He can afford it! But if half of the $300,000 is Pretend Money manufactured through a belief in Buy-and-Hold, he really cannot afford that house at all and will not offer to buy it.

Bubbles cannot be contained in a single market. Once Pretend Money is created, the bubble in the market in which it is created spreads to other markets. In time, it destroys our entire economic system. We all need to know how much money we have. And that becomes impossible once Buy-and-Hold stock buying strategies become popular and honest posting re the peer-reviewed research is prohibited.

We should be practicing price discipline in ALL markets. I do not know of any market in which the exercise of price discipline is discouraged except for the stock market. So the stock market is the driver of bubbles. We have to gain the ability to talk honestly about how stock investing works if we want all of our markets and indeed our economic system as a whole to work effectively.

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:

I think the prices of  homes in Purceville are pretend values.  You are living in a cotton candy house.  As such, you will soon be living in a van down by the river.  Since I said it, it must be true.

In the housing market, sellers make the case for why the price should be high and buyers make the case for why the price should be low. For a transaction to be completed, there has to be a meeting of minds somewhere in the middle. So both the buyer and seller have an incentive to hear out the other guy. So the market is able to function.

It doesn’t work that way in the stock market. Not today. Many people put aside a portion of each paycheck for the purchase of stocks. Those people are buyers and will be for many years to come. They should be rooting for price drops. If prices dropped, they could buy more stocks for the same amount of money and retire much sooner. But when is the last time you heard someone rooting for stock prices to drop? It doesn’t happen. Sellers root for high prices and buyers root for high prices. There is no tension between the two sides. So there is no way for the market to arrive at the right price. The stock market is dysfunctional.

Now, the stock market gets the price right EVENTUALLY. It has to do that. That’s the core job of any market — to get the price right. But, once large numbers of investors come to follow a Buy-and-Hold strategy, it becomes impossible for the market to perform its core job. Prices go up and they do not come down for a long time. Until eventually the market just crashes them. That’s how the market overcomes the irrational unwillingness of investors to engage in market timing. It crashes prices. And we all suffer.

If we permitted honest posting, the stock market could function like other markets. Investors could become informed of the downside of buying stocks when they are insanely overpriced. So they would go to a lower stock allocation when prices got out of control. That would bring prices down to a reasonable level. You would still have steady gains of 6.5 percent real per year because those gains are supported by the economic realities. But you would not have crashes and the economic crises that follow from them. Because the market would be able to do its job of keeping prices where they should be. Permitting investors to know what the peer-reviewed research says is a critical part of having a functioning market. Investors cannot make rational choices unless they have access to good information.

That tension between people who believe that prices should be higher and people who believe that prices should be lower is what makes markets work. Take that tension away by directing threats of physical violence and acts of extortion at those who make the case for lower prices and you can no longer trust the market to get the price right. The market WANTS to get the price right. That’s why as a society we adopted laws against threats of physical violence and against acts of extortion. But the Buy-and-Holders do not follow those laws. And most of us do not insist on enforcement of them because we have a Get Rich Quick impulse within us that makes us sympathetic to the message advanced by the Buy-and-Holders (timing is not required!).

Timing is ALWAYS required. Timing is what makes the market work when it works. Taking away market timing from the stock market is like taking away brakes from a fast car. It guarantees a crash somewhere down the road a piece. Not good.

My sincere take.

Rob