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

Once again, it is all your own self promotion. Notice that not one supporter will post at your website.

That’s what needs to change, Anonymous.

There should be no punishment for posting honestly. We all benefit from honest posting. So we should enforce the laws against financial fraud and the published rules of all the sites.

Why don’t we?

It’s that darned Get Rich Quick urge messing us up again. We rationalize. We say to ourselves “well, those laws are good laws but I sure don’t like hearing about that research that shows that I need to divide the number on my portfolio statement by two to know the true and lasting value of my holdings, so I am okay with there being an exception in this case.”

The battle between Buy-and-Hold and Valuation-Informed Indexing is a battle between emotion and reason. Shiller brought our understanding of how stock investing works up to a higher level by showing how going the purely emotional route hurts us in the end.

Will we realize the benefits of Shiller’s amazing work in the days following the next price crash? I sure hope so. I sure think so.

We’ll see, you know? I think that’s going to make all the difference. People won’t be able to rationalize anymore once they have experienced the losses. At that point, rationalizations no longer will serve a purpose. When all else fails, I think we will turn to the peer-reviewed research.

The entire reason why I once was a Buy-and-Holder is that I believe in science and Buy-and-Hold is promoted as a research-based approach. It was on the night of August 27, 2002, when Greaney put forward his first death threat and 200 of my Buy-and-Hold friends endorsed it that I knew that Buy-and-Hold was pure emotion and I left it behind. I think that lots of people are going to be interested in a true research-based approach in the days following the next crash. Then I will have no problem with site visitors. I will have thousands of them.

Think about it this way. What do you think the P/E10 value would be if we permitted honest posting on the peer-reviewed research at every site? It would be at fair-value levels, no? People would invest rationally if they could learn what the research says. We couldn’t keep the P/E10 level where it is today if we told people what they need to know to invest rationally.

Today’s P/E10 level tells us that we are suffering from temporary insanity as investors, does it not? Well, how popular do you think that a site that talks about the first true research-based approach is going to be at a time when most of us are suffering from temporary insanity? Not too popular, right? Now, how much do you think that will change when we see with our own eyes how much it hurts us to go with a purely emotional approach? I think it will change a lot. But we are going to have to wait a bit to find out for sure.

Does all of that not follow?

Self-Promoting 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:

Why do you say your post in 2002 is famous, when it really isn’t? Does it have to do with your comment about wanting to be popular?

There’s never in the history of the internet been another post that generated so many responses, Anonymous. Reaction to that post dominated discussion at the Retire Early board for over a year and then dominated discussion at several other board communities for several years later. That post ultimately caused the death of the Retire Early board. It was a thriving community before the Greaney freak-out. Now there is no longer any discussion of early retirement there. The Bennett/Pfau research paper, which I think can fairly be described as the most important research published in this field in the past 30 years, would not exist if I had not first worked up the courage to advance that post. That post started it all. You Goons wouldn’t be going to prison if I hadn’t put forward that post. It was the message in that post that you felt you had to block that caused you to engage in all the intimidation tactics.

It was a simple post. It just asked a question: Should we be counting valuations when we calculate the safe withdrawal rate? The problem is that the obvious answer to the question is “yes” (why the heck wouldn’t we?) and yet the Buy-and-Hold answer is “no” (none of the Buy-and-Hold retirement studies contain valuation adjustments). So, if the question is permitted, Buy-and-Hold goes down. And bringing Buy-and-Hold down would be the biggest advance in the history of personal finance. It is because we cannot question Buy-and-Hold that we have not been able to advance in our understanding of how stock investing works for 37 years now. Bring Buy-and-Hold down and you open up an enormous learning experience for millions. That post and the reaction it provoked is eventually going to be the cause of every discussion board and blog on the internet being opened to honest posting on safe withdrawal rates and scores of other critically important investment-related topics. It would be pretty darn hard to top that.

You would never have written a single post here if you didn’t see the importance of that May 13, 2002, post, Anonymous. You’ve never gotten over it. It drives you to this day. You believe in Buy-and-Hold and it is an important part of your life. But that post implicitly questions Buy-and-Hold and there is no intelligent answer to the question that it poses but to abandon Buy-and-Hold (at least the dogmatic version of it that was responsible for the error in the Buy-and-Hold retirement studies).

So, yes, the post was a super, super big deal. It took me three years to work up the courage to write it. That’s why. I held back because I sensed the power that I was unleashing. Advancing that post was my finest moment. It is my job to create learning experiences like that and I went far beyond anything that I thought I was capable of achieving with that one. It was such a big wave that I created that instead of just enjoying a fun ride, I was knocked to the ocean floor and spun around head to toe about 500 times. So there’s been a scary side to the aftermath of that post, I am not saying different. I of course have not collected the $500 million yet. And we haven’t opened the internet to honest posting yet. And we haven’t gotten the textbooks rewritten and all that sort of thing. So we have not yet seen with our eyes the full impact of that amazing post.

But we have seen the beginnings. We have seen hundreds and hundreds of thousands of reaction posts. Those of us who are capable of thinking clearly about these matters can see where things are headed.

The answer to the post is that, yes, we should have been taking valuations into consideration all along. We destroyed millions of lives by failing to do so. And human psychology is such that we have been able to rationalize doing that for so long as prices remain high. That’s the story. Humans are capable of rationality. But we are also the rationalIZING animal. For so long as prices remain high, we will continue to rationalize and hurt ourselves and others. But we will accept what our rational minds tell us re these matters when prices drop and we are in a corner with no choice but to move forward in our thinking. And the reactions that we have seen from that post will tell us what we need to know. We have the negative reactions that reveal our human weaknesses. And we have the thousands of positive responses to the post that show us what we can do when we permit rationality to exist in our discussions of how stock investing works.

If it is true that the Buy-and-Hold retirement studies lack valuation adjustments, then Buy-and-old is dangerous. Every person alive in the United States today is affected deeply by that reality.

If there really are valuation adjustment in those studies, then I was wrong in what I said in that post. But that of course is not the case. You Goons would not have responded in the way you did if you truly believed that the Greaney study contained a valuation adjustment.

The story is still being told. That’s why we are still here. In the end we are going to determine as a society whether the study contained a valuation adjustment or not and move on with a much stronger understanding of how stock investing works than we ever possessed before. We are not there yet. But we are close. We are getting closer every day. And the post of May 13, 2002, generated a mountain of material that we can use to understand how we got off the right track and caused all this human misery.

I don’t say that I knew when I hit the “Submit” button. I didn’t. I knew that the post was important. I knew that it was going to create a stir. But I didn’t anticipate 1/500th of what we have seen. I was only slightly less in the dark than everyone else. I was still a Buy-and-Holder myself on the morning of May 13, 2002. I kick myself for it today. I don’t see why I hadn’t put the pieces together. If the retirement studies were so off, the entire model was suspect. But I didn’t see that then. It takes time for the human mind to let all these things in.

As a society we are still working through the process of letting it all in. But the post pointed us to the future. Not one Buy-and-Holder has been able to answer the question posed in that post honestly and effectively in 16 years. Should we be taking valuations into consideration when calculating the safe withdrawal rate? OF COURSE we should. And yet we still do not. Every abusive post that you Goons have advanced has been an effort to see that that remains the reality. And that’s a doomed effort. All of the board bannings in the world cannot change the reality bought to light by that post. If the Buy-and-Hold retirement studies do not contain valuation adjustments, they are in error and they have hurt millions of people in very, very serious ways. There is no more important public policy issue before us today than the need for us all to pull together and fix that.

I’m working on it! I’m working on it!

Whew!

No apologies for the post. That’s what I aim to do with all of them. It was not my intent to hurt anyone’s feelings. My intent was to help. If I had gotten a number wrong in a study, I would want one of my friends to point it out. So I did for my friends what I would have wanted them to have done for me. I think you Goons will see that one day. Not today, I know. But I believe that there will come a time when you will be able to get your heads around it. And we will all go out for a nice cold one and laugh about the crazy things that went down in the old days.

The post sure has not made me popular. I don’t think there has ever in the history of the internet been a post that caused a person to lose so many popularity points. In the long run, I believe that that will change. But I guess we are just going to have to wait to see. I could be wrong. It’s been known to happen.

My best wishes.

Unpopular (For Now!) 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:

Who says there are two schools. Are you the finance dictator of investing?

That’s a good question. It is unfortunate that it is phrased in a hostile way; I obviously am not the dictator of anything, nor do I care to be. But the question being asked is an intelligent one and an important one. It would be helpful for people concerned about these matters to think this one through.

I cannot link you to the New York Times article reporting on the awarding of Nobel prizes to both Eugene Fama and Robert Shiller on the same day; the Times keeps their articles behind a paywall. But I read the article in paper form and in real time. It remarked on how odd it was that the highest award in the field was being given to two men who had opposite ideas of how stock investing works. That’s the story.

Fama and Shiller cannot possibly both be right. Fama says that the market is efficient and Shiller says that valuations affect long-term returns. If valuations affect long-term returns, the market is not efficient. If the market is efficient, valuations cannot affect long-term returns. Fama and Shiller are saying opposite things. The name for the school of thought that believes that Fama is right is “Buy-and-Hold.” The name for the school of thought that believes that Shiller is right is “Valuation-Informed Indexing.” There are two schools. That’s just the way it is.

All of the friction that we have seen results from the unfortunate reality that we have as a people tried to paper over the differences between what Fama is saying and what follows from it and what Shiller is saying and what follows from it. Most Buy-and-Holders acknowledge that Shiller has done important work. But I have never seen a Buy-and-Holder integrate Shiller’s findings into his or her understanding of how stock investing works. Buy-and-Holders ignore Shiller. They credit him with having done important work. But then they go about their lives as if Shiller did not exist.

That’s why my famous post of the morning of May 13, 2002, caused so much controversy. What I said should not have been even a tiny bit shocking. If valuations affect long-term returns, then you OBVIOUSLY need to take valuations into consideration when calculating the safe withdrawal rate. But most Buy-and-Holders had never stopped to realize that. Most Buy-and-Holders don’t believe that the market is purely efficient. But they believe that it is LARGELY efficient. So they think that the numbers you get from a study that does not consider valuations are at least in the right ballpark. But they have never checked the numbers. They don’t in fact know how much of a difference it would make to count valuations. They react with shock when someone says that they should count valuations because doing that would put them in a different world than the one that they have always lived in and they don’t like the idea of going to that different world.

Shiller created that different world, I didn’t. I have done nothing but advance views that follow from a belief that Shiller’s research is legitimate, which is a perfectly reasonable belief given that he was awarded a Nobel prize for his work. But when I say the things that I say, Buy-and-Holders are shocked because they have not heard these things before. The things that I say sound outlandish to them because they have never heard them before. And they are not too cool with thinking them through for the first time because their entire lives are riding on their belief that Buy-and-Hold is solid.

I am not the dictator of anything and I do not want to be the dictator of anything. But it is a simple fact that you don’t get the same numbers when you include a valuation adjustment in your calculation of the safe withdrawal rate. If Fama were right, there would be no need to include such an adjustment. But, if Shiller is right, an adjustment is required. So there are two schools of thought, no? One school says that you need to include the adjustment (because it affects the result), the other says that you do not need to include the adjustment (because it does not).

People who belong to the different schools should not be enemies. We should be working together to try to arrive at the truth of things. It is the shock that causes the friction. And the shock is the result of the unfortunate reality that as a society we have developed the habit of sweeping these differences under the rug rather than speaking about them openly and frankly. I think that Fama was wrong. I think he merited his Nobel prize because I think he made huge contributions. But I do not believe that he was right because I do not believe that the market is efficient. But I sure am not angry about the fact that his beliefs about how stock investing works are different than my own. And I am not angry that anyone else’s views are different than my own.

Should I lie when I post at boards, Anonymous?

I obviously believe that valuations affect long-term returns. So I obviously don’t believe that the safe withdrawal rate is the same number at all times. Should I lie about that to make you Goons happy? You cannot possibly believe that I should do that. It would be an absurd thing to believe. But I have never been able to figure out anything else that would satisfy you. You want me to lie. And that just can’t be right. The better way to go would be to acknowledge that there are two schools of thought and be friends despite our differences.

It is the 37 years of peer-reviewed research showing that valuations affect long-term returns that says that there are two schools of thought. Buy-and-Hold was developed at an earlier time, a time in which is was believed that the market was efficient. If the market were efficient, Buy-and-Hold would be the ideal strategy. But those of us who believe that Shiller’s research is legitimate do not believe that the market is efficient. So we of course have different ideas.

I hope that helps a small bit, Anonymous.

My best wishes to you.

Finance Dictator (According to My Goon Friends But Not According to Me) 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:

Do you see?

How often does a person who smokes three packs of cigarettes a day need to hear the message that smoking causes cancer? Until he freakin’ gets it. ”

This is advice you need to take. Every one of your points have been addressed hundreds of times and you choose to twist it around, lie about it or ignore it. Repeating your lines has not helped and continuing to do so, will similarly fail. HOW OFTEN DO YOU NEED TO HEAR THIS UNTIL YOU FINALLY GET IT.

I put up a post pointing out the error in Greanry’s retirement study on the morning of May 13, 2002. The study has not been corrected as of today. Today’s date is November 1, 2018.

You say that my points have been addressed. But the study has not been corrected. Does that reality not tell a tale? People used that study to plan retirements.

I think it would be fair to say that we all are living under a sort of spell. The name given to this sort of spell in the psychology literature is “cognitive dissonance.” If Greaney were thinking clearly, he would have corrected the study a long time ago. If Bogle were thinking clearly, he would have insisted that Greaney correct the study a long time ago. Getting the numbers wrong in a study that people use to plan their retirements is a big deal

I love Jack Bogle, I would like to be working with him. It pains me that some see us as being on “different sides.” I think it would be fair to say that Bogle himself feels this way given that he did not respond to my three e-mails to him. That shouldn’t be. And of course I love John Greaney too. I would like to be working with him too. It pains me that he sees us as being on “different sides.” And the same is true re hundreds of others.

You say that my points have been addressed. But the study has not been corrected. The last time I checked, people were still recommending use of it to plan retirements. The points have not been addressed. The actions that need to be taken have not been taken.

I suppose that you could say that a majority at the various boards has made a decision that there is no need to do anything about the studies. I think that would be fair to say. But those of us (and it is not just me, it is a minority but it is not just me) who believe that the study is in error have both a right and responsibility to point out the problems in it to people who will be inclined to make use of it to plan a retirement if we fail to do so. If those people elect to make use of the study despite what we say, that’s on them. But if we don’t at least make an effort to inform them so that they can make an intelligent choice, that’s on us.

How will this situation ever change if none of us insist on our right to post honestly? It’s been 37 years since Shiller published his “revolutionary” (his word) research. Are we going to wait to see how it feels to live through a Second Great Depression before we speak up? I can’t go for that. It’s too much human suffering. I couldn’t live with myself if I saw millions of retirement failures coming into play and did nothing to help. If you knew about the 911 attacks before they happened, would you feel comfortable saying “oh, it’s not my problem, too bad for all those people who will get killed.” I would like to think that, if I knew about the 911 attacks before they happened, I would have tried to do something to prevent the huge amount of human suffering before it took place. That’s how I feel about this other matter.

I know that you don’t want me to say anything. I get that much. I know that you have powerful people on your side. I get that too. And I know that the majority sides with you. But I feel that as a nation we have to come to terms with this problem. We have created a mess and we need to fix it. And there is no way to fix it other than for more of us to work up the courage to speak up.

You don’t get to decide for everyone. You get to decide for you, that’s all. If 10 percent of a community wants to hear about Shiller’s findings, that’s good enough for me. In time, I am confident that the 10 percent will become 20 percent and then in some more time 40 percent. That’s how our country works. Someone comes up with a new idea and then over time it grows and grows and grows. You are going against the fundamental beliefs of our country when you try to kill this idea in the crib. And I just don’t feel even a tiny bit comfortable going along with that given how much human suffering we are talking about here.

The advances have been amazing. Yes, you have had the power to stop them from helping as many people as they should be helping. But the advances have been flat-out amazing. I want to share those advances with millions of people. Each person gets to decide for himself or herself whether he will tap into the benefits of the new ideas. But if there are millions who decide that they want to do so, I want to be there for them. We have already seen thousands express an interest and that was under very difficult conditions. So I think it is entirely possible that we could bring it up to millions in time. We will have to see how it all plays out.

I believe that, when we get to the other side, you will thank me, Anonymous. Did you ever have that happen? You don’t want to see a particular movie and someone else does and you end up being dragged into it and then you love the darn thing. I think that is what will eventually happen here. You will come around in time. You’ll need to stop fighting it so hard for that to happen. But I believe it will happen eventually, If not prior to the crash, then afterwards.

Can you please say what you see as the downside to opening every site on the internet to honest posting re the last 37 years of peer-reviewed research? I don’t see any. I cannot even imagine any possibilities. How many times do you need to hear that to get that, you know?

I believe in letting all sides talk. I don’t believe in abusive stuff. But I believe in letting all sides who come to the table with non-abusive stuff to talk. You can say that people have rejected that idea in this particular case. But we still have published rules at all the sites that show respect for that idea. And we still have laws that respect that idea. That idea is who we are as a people. This other thing is a mistake that we have made in this particular field of human endeavor. And we need to be working together to overcome that mistake before it does us more harm.

That’s my sincere take, Anonymous. I have heard all of your responses and I have also heard the responses of the thousands who have said they love the idea of learning more about Valuation-Informed Indexing if only it could be done in a peaceful environment. I care about those people. I want to give those people what they want and I don’t think that you have a right under the published rules of the sites or under the laws of the United States to stand in the way, You can decide for you and then you need to let others decide for others.

That’s where I am coming from. I hope that helps a tiny bit.

Slow on the Uptake(When His Country’s Values Are in Question) 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 am not sure how you think you are providing new aspects. Everything you write, you have already repeated hundreds or thousands of times. People have already responded to your points long ago and over time have just grown tired of what you have to say. Look at how you continue to even repeat your nonsense of a post from 2002. That is SIXTEEN YEARS AGO.

Shiller published his research showing that valuations affect long-term returns in 2002. Every word that I have written over the past 16 years is just an expansion on those words. So are more words from me needed?

They are needed.

Take a look at Greaney’s site, Anonymous. He has not yet corrected the error in his retirement study that I pointed out on the morning of May 13, 2002. His death threats were not really a “response” to my post. They were an attempt at intimidation. The proper response would be to correct the darn study.

So, no, the message has not gotten through. So, yes, the point must be made again. And I of course am not just talking about Greaney. There are people who have authored similar studies. And there are people who have recommended Greaney’s study and similar studies. All of those people need to hear the message again and again. Until they get it. And respond appropriately.

Do you see?

How often does a person who smokes three packs of cigarettes a day need to hear the message that smoking causes cancer? Until he freakin’ gets it. It’s an important issue. It’s life or death. As is the matter of whether the market is efficient or valuations affect long-term returns. There will never come a day when we will have heard that message as often as we need to hear it. Say that a day came when there is 100 percent agreement that valuations affect long-term returns and that we must all practice long-term timing when buying stocks. Would the message no longer be needed? By no means! If we stopped repeating the message, we would just eventually fall back into our habit of following Get Rich Quick/Buy-and-Hold strategies. We all have that Get Rich Quick urge within us that has been making stock investing risky since the first market opened for business. We need to be ever vigilant lest it rise up again within us and destroy our retirement hopes once again as it has done so many times before. This powerful new understanding of how stock investing really works will never be old news.

Now —

If someone has been told that smoking causes cancer and has chosen to ignore the message, do I think that it would be a good idea to keep insisting that he listen to it? No. That’s obviously crazy. Similarly, I don’t see it as my job (or anyone else’s job) to convert all the Buy-and-Holders to Valuation-Informed Indexing. I see it as my job to invite them to follow a strategy that I view as far superior. But each person gets to decide which strategy he is going to follow. I am not going to pester someone who has rejected Valuation-Informed Indexing with repeated appeals that he reconsider. That would obviously be annoying and non-productive and inappropriate.

But we have to open every board and blog on the internet so that those who ARE interested in hearing the new message have a place to access it and ask questions about it and so on. That’s the key. Once all sites are open to honest posting re the last 37 years of peer-reviewed research, there’s no problem. Those who prefer Buy-and-Hold do their thing and those who prefer Valuation-Informed Indexing do their thing. That’s how we do it in this country re every subject other than stock investing and that’s how we need to do it re stock investing as well.

I think we do it different with stock investing because the new message comes as such a shock to our Buy-and-Hold friends. Most of us care a great deal about our life savings. The Buy-and-Holders are telling us that the full amount listed on our portfolio statement is real. The Valuation-Informed Indexers are saying that we need to divide that amount by two to know the true and lasting value of our portfolio when stocks are priced as they are today. That’s a darn alarming message to those who truly came to believe that Buy-and-Hold is the answer. It’s scary stuff. So a good number of our Buy-and-Hold friends have come to react in crazy ways.

We need to normalize our discussions. Had we all started talking about what Shiller showed back in 1981, when he showed it, my famous post from the morning of May 13, 2002, would not have come as a shock to anybody. What I was saying was so obvious. We know that valuations affect long-term returns. So we need to consider valuations when calculating the safe withdrawal rate. What a shocker!

But it was a shocker, wasn’t it? Why? Because we had not been talking about Shiller’s breakthrough research findings from 1981 through 2002. When I brought them up, the Buy-and-Holders among us went nuts. Shiller’s work was too strong for them to reject it. But they couldn’t imagine accepting that the safe withdrawal rate is not a constant but a variable. So we got this nutso stuff.

We need to move beyond the nutso stuff. When we move beyond it, I don’t think that everyone is going to become a Valuation-Informed Indexer. I think that lots of people will. But lots will remain Buy-and-Holders because that is what they will prefer, for whatever reason. And lots of others (probably the largest number) will choose some path between those two (that’s what lots of investors do today — after we open the internet to honest posting, they will still do that but in a better-informed way).

The idea that giving in to the Get Rich Quick impulse is a bad idea is going to be with us until the end of time. That’s the Valuation-Informed Indexing message. That’s Shiller’s breakthrough. That’s the whole story in a nutshell. We will never say it enough times because the Get Rich Quick urge is never going to go away and we are always going to need to be combating it. Thinking that it will go away is like thinking that reminders of the dangers of smoking are going to go away or that admonitions against cheating on your spouse are going to go away or that recommendations not to drink and drive are going to go away. These are basics of the human condition, as is the inclination that all investors feel toward Buy-and-Hold/Get Rich Quick investing strategies.

The difference is that every reasonable person acknowledges today that it is bad to drink and drive while millions of good and smart people still view Buy-and-Hold as the perfect strategy. So we experience clashes when some fellow comes along and points out that the Buy-and-Hold retirement studies lack adjustments for the valuation level that applies on the day the retirement begins. We need to figure out as a society how to live together in peace in a way that permits us all to have access to the important realities discovered by Shiller’s research while not upsetting our Buy-and-Hold friends unduly. That’s the project facing us today. That’s the thing we need to work through together to get this process moving forward and to a better place.

The basic message will be repeated until the end of time. Why? because those darn humans have a tendency to forget the basics. If you want them to learn how to invest effectively, you need to remind them of the basics over and over and over again. Shiller’s finding that valuations affect long-term returns is the most important basic of all. We obviously have as a society lost site of it in recent years. If we hadn’t, we never could have gone to the valuation levels that apply today. But even after valuations drop to fair-value levels, we are going to need to be reminded of that important reality regularly or we will just forget it and start going through that darn boom/bust cycle all over again.

Make sense?

Repetitive (and Proud of 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:

“I haven’t made any decision to join that board”

You’ve said many times that spreading the word about VII is your job. Was that a joke? Not a very funny one.

Ask Bogle why he has not made a public statement asking that the errors in the Buy-and-Hold retirement studies be promptly corrected.

That would be discussed at that board and everyone would from that day forward feel more comfortable talking about the realities.

Had Bogle made a statement in 1981 acknowledging that there were now two schools of academic thought re how stock investing works, we never would have seen any of these problems. If he made a statement today, that would help. That’s the sort of thing we need. When there’s 37 years of peer-reviewed research showing that the Buy-and-Hold retirement studies are in error, it shouldn’t be left to me to point that out at some discussion board. The big-name Buy-and-Holders should be letting everyone know about their mistake and about what they are going to do to provide damages to those who have been hurt by it.

Sincere 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:

Okay, so you will be covering the death threats and job threats. How about the prison sentences, jury trials and settlement payments. Will we see that as well over at the new board?

I’ve never said anything about participating at any new boards. All of that is in your head.

The story will be told on the front page of the New York Times. Once it is told there, it will be common knowledge at all boards, old and new.

None of the things that you ask about are problems once they have been exposed. The problem is that people are embarrassed about them. And so people are reluctant to bring them up and people are reluctant to discuss them when they are brought up. They are now part of our history. Once death threats and job threats were used to stop us from learning about what the last 37 years of peer-reviewed research teaches us about how stock investing works, they became a part of our history as a nation. I did not do that and I cannot change that. My hope is that I can keep the prison sentences to a length shorter than they would otherwise be by exposing all the criminal stuff sooner than it might be exposed. That’s how I can play a positive role and so I hope that I can do that.

You’ll know everything that you need to know about the prison sentences at an appropriate time. For obvious reasons. If you want to help get things exposed, then help. If not, then watch to see how things play out. I will do everything in my power to help you out. But I will never cross the felony line myself.

But you of course knew all that.

Hang in there.

Prison-Sentence-Shortener Rob (and He Could Use Some Help With This Project!)

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

Can we count on you for discussing the death threats and job threats over on this new board as well?

I never lead with the death threats and the job threats. The substantive stuff is what matters most and people hate to hear about the death threats and the job threats.

But as a society we have to deal with the death threats and job threats before the substantive stuff can get widely known. Shiller published his “revolutionary” (his word) research 37 years ago. The obvious question that anyone asks when someone tells them about the realities of stock investing is: “Why haven’t I heard about this before?” It’s not possible to explain the 37-year cover-up without making reference to the death threats and job threats. It’s not possible to pull something like this off without death threats and job threats.

There are other things that help to explain the 37-year cover-up. Cognitive dissonance is a big one. The counter-intuitive nature of some of the realities. Just the fact that we don’t know it all. Ignorance. That’s a factor that should not be overlooked. I talk about that stuff. I don’t talk only about death threats and job threats. I never have and I never will.

My job is to tell the story. Death threats and job threats are part of the story. So I will tell about them when necessary and to the extent necessary. I try not to put too much emphasis on them. Because they are not the entire story. I try to give them the right amount of attention, not too much and not too little.

I wish that there had never been any death threats or job threats. But that’s not the world we live in. That’s not the reality.

We don’t get fewer death threats and fewer job threats by ignoring them, by never talking about them. Ignoring them causes us to see more death threats and more job threats. I am 100 percent sure. Our problem has not been that we have talked too little about death threats and job threats. By not talking about those that have taken place, we have caused more of them to take place. Which is of course not the way that any of us want to take this. Which of course does not help any of us and which hurts every last one of us.

You can count on me to tell the story. It is always my aim to be as honest as possible without ever crossing the line and becoming uncharitable while also being as charitable as possible without ever crossing the line and becoming dishonest.

I hope that helps a small bit, dear Goon friend.

My best wishes to you.

Death Threat and Job Threat Discusser (But Only to the Extent Necessary to Tell a Story Important to All of Us) Rob

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

And you want us to wait, even if it takes 73 to 86 years more for it to play out, right?

I’ve asked myself that question, how long would I wait? Shiller predicted in 1996 that those going with high stock allocations would regret it within 10 years. That would have been 2006. We are now 12 years past that. This is the longest that we have ever gone with stocks at crazy high prices and not seen them crash (they crashed in 2008 but prices went back up after the passage of only a few months, so that crash didn’t turn out to be terribly consequential). Does there come a point when you just say “this has continued for so long that it just doesn’t make sense to continue to expect a crash?”

The long wait is a point against Valuation-Informed Indexing, in my assessment. I can see someone saying “if stock prices had just recently risen to crazy high prices, I would listen to Shiller and Bennett and lower my stock allocation but this has gone on so long that I feel that they are like the boys who cried wolf, I just do not have confidence that what they are saying will happen will actually take place.”I don’t agree with that view. But I don’t see that view as being entirely unreasonable. So I don’t say that someone who concludes that “it has taken too long for prices to crash” and therefore rejects Valuation-Informed Indexing is crazy.

The problem that I have with that view is that we all need to invest our money. If you are considering making a bet on the World Series but you can’t figure out whether the Red Sox or the Dodgers are the better baseball team, you can just elect not to place a bet either way. You can opt out of the choice. You can’t do that as an investor. You can’t say “Valuation-Informed Indexing beats Buy-and-Hold for about 10 different reasons but I am concerned about how long it has taken for the crash to arrive so I am just going to opt out of making a decision re how to invest my money because I don’t want to get it wrong.” You’ve got the money, so you have got to make a choice. There is no opt out.

I think the case is so strong for Valuation-Informed Indexing and so weak for Buy-and-Hold that I could not bear to elect to go with Buy-and-Hold. So I still go with Valuation-Informed Indexing even though it has taken a long time for the crash to come. What if it took another 100 years for the crash to come? Would I still opt for Valuation-Informed Indexing in those circumstances?

I don’t see how I could opt for Valuation-Informed Indexing in those circumstances. That would just be too crazy.

But where do you draw the line? At what point do you say “it has taken too long for the crash to come” and abandon the concept? I cannot answer that question. If there were a great alternative, if would make sense to move to it. But there’s not. If some brilliant researcher came up with a third model that seemed to make sense, I would be inclined to investigate that third model and see if it might be a better answer than the two existing models. But there are no signs of that happening. I could see eventually moving in the direction of a middle ground, changing my stock allocation in response to what the last 37 years of peer-reviewed research shows but not changing it as much as that research suggests because of a concern that the crash hasn’t arrived in the time that you would expect it to arrive based on what has happened through history. That will probably be my path if the crash does not come for a long time.

But I cannot see going with Buy-and-Hold. It just doesn’t stand up to scrutiny. Price discipline is key in every market that exists and the Buy-and-Holders have never given any reason for their belief that it isn’t needed in the stock market. Wade Pfau spent months searching the literature for studies showing that it is not necessary to practice long-term timing when buying stocks and he came up empty-handed. So I just do not feel comfortable going there. It seems at least possible to me that there might be some way to practice price discipline (long-term timing) other than what the peer-reviewed research available to us today teaches us. I don’t think that we know all the answers. But I cannot see going backwards. Buy-and-Hold has failed. Shiller checked whether its premise (that the market is efficient, that prices fall in the pattern of a random walk both in the short term and in the long term) held up to scientific scrutiny and Buy-and-Hold failed the test. I cannot see going back to it unless the Buy-and-Holders offer some explanation for why their model failed the test that it must pass for the model to be valid.

I believe that the case for Valuation-Informed Indexing is 100 percent rock-solid GOING BY THE EVIDENCE AVAILABLE TO US TODAY. Not all of the evidence is available to us today. You are raising a hypothetical where we see another 73 years pass without a price crash. I agree that that would change things. But I cannot say precisely how many years it would take for me to change my views. 73 years would certainly bring a change (but probably not to Buy-and-Hold, I would need to look for some third option), five years would certainly not bring a change, given how strong the case is for Valuation-Informed Indexing today. Somewhere in the middle of those two scenarios, I would experience enough doubts that I would begin to shift away from Valuation-Informed Indexing and perhaps somewhat in the direction of Buy-and-Hold.

The question you are asking is a good one. Skepticism is part of the scientific process. If people are not skeptical toward Valuation-Informed Indexing, we will not learn of its flaws and that would be a negative for all of us. So the skepticism is good. I wish that you would direct some of that skepticism toward Buy-and-Hold. In addition to asking how many more years Valuation-Informed Indexing advocates can go without seeing a crash, you should be asking how many more years of price-return data Buy-and-Holders need to see in which valuations affect long-term returns before they are willing to acknowledge that the market is not efficient and that price increases that take stock prices beyond fair-value levels do not represent economic realities but only the effect of an irrational exuberance on the part of stock investors.

You are with this question pointing to the weak spot in the case for Valuation-Informed Indexing. I think that the overall case is very, very strong. But, when I am going over the case in my head to determine whether I might have gotten something wrong, this is the question that my mind turns to. I have explanations for why it has taken so long for prices to crash. Valuation-Informed Indexers need to try to answer that question if they are to retain their intellectual integrity. It is not a question that can be ducked. So I have explanations that are partly satisfying in my mind. However, I am not sure that I can say that all of them added together are completely satisfying. This aspect of the question troubles me a bit. If there were completely satisfying models available, I would be at least checking them out at this point in the proceedings.

So thanks for asking the question.

Somewhat Questioning But Generally Steadfast 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:

Wrong. They all say the same thing in the sense that they all say the same thing. Just one example, the phrase:

Shiller’s “revolutionary” (his word) finding

Appears in the 3/6, 9/11, 8/21, 9/18, 7/11, and in many earlier columns. That’s just from the first page of the Google results.

I make that point over and over and over again because it is a critically important point. Shiller changed the world in 1981. We should have launched a national debate at that time re the hundreds of ways in which he changed our understanding of how stock investing works. I wish it had happened. It didn’t. That’s just the reality.

If you say in the year 2018 that the safe withdrawal rate is a number that changes with changes in the valuation level, you are saying something that is obviously true but also something that CANNOT be true. If that’s really true, wouldn’t the studies have been corrected a long time ago? It is very hard to understand how people could make an error that would cause millions to suffer failed retirements and it wouldn’t be corrected for years.

The explanation of how that happened is that Shiller’s research was revolutionary in nature. He showed the need for a paradigm change. People don’t just give up on paradigms overnight. They have to look at things from lots of different angles before they are ready to do so. They need to ask lots of questions and be persuaded by the answers given. They need to become comfortable with the new paradigm before they are willing to give up on the old one.

Every column that I write is looking at some aspect of the new paradigm. So it makes sense to remind people in each column that this stuff is revolutionary. If you come to my stuff wearing your Buy-and-Hold hat, you are not going to get it. You need to come to it with an understanding that, given the revolutionary nature of Shiller’s work, everything that we once believed — and that most of us still believe — is now under question.

If Buy-and-Hold had never existed, everyone would get Valuation-Informed Indexing in 10 minutes. It is simple, clear, common-sense stuff. But most people have heard of Buy-and-Hold. Most people have heard the Buy-and-Hold dogmas repeated thousands of times. So they think there must be something to them. You’ve got to persuade them to question those dogmas before you can have any hope of helping them to understand what the new research is showing us. Once you become committed to lots of wrong stuff, it becomes hard to accept the right stuff.

Shiller and Bogle cannot possibly both be right. They are saying opposite things. The first order of business at every discussion board and blog should be to help people figure out which of the two is right. You have to get that one right for anything else you do to work.

Revolutionary advances are good news. But they are not easy to accept. There is a lot of emotional resistance to revolutionary advances. People do not like change. Change can be a plus and in this case it is. But you cannot make an effective case for Valuation-Informed Indexing without pointing out regularly how revolutionary Shiller’s work is. People need to keep that thought in mind to have any hope of making sense of it. It is unusual for a piece of research to change everything that we once thought we knew about a subject. But that’s what happened in this case.

Good question.

Revolutionary Rob