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’m a research guy. Whachgonnado?”

You said you are a journalist. What specific training do you have regarding investment research and analysis? I thought you said that you are not a numbers guy.

I am journalist who has bought into the idea that investors should be using the peer-reviewed research as a guide re how to invest. It was John Bogle’s books and articles that persuaded me of that one.

The trouble with using research as a guide is that research findings CHANGE over time. The research does not say the same thing in 2022 as it said in 1965. We learned something very important in 1981 — the market is NOT efficient, not only does market timing always work, it is always REQUIRED for investors to maintain the same risk profile at all times (that is, to Stay the Course in a meaningful way).

There is a negative to this from a marketing perspective. From a marketing perspective, people who work in this field want to be perceived as experts. It cuts against the perception of them as experts for them to say “Oh, you know how I once said that market timing is not always 100 percent required, please forgot that I said that, there’s new research out showing that I was wrong.” Buy-and-Hold is what SELLS (for as long as prices remain high), Valuation-Informed Indexing is what WORKS.

I don’t think that we can let marketing considerations totally dominate what can be said on the internet. We have millions of middle-class investors who desperately need access to honest and accurate reports re how stock investing works. I believe that we need to provide them to them. Call me madcap.

Turning a quick buck is nice. But turning a quick buck can’t become the entire deal. At some point, you need to permit a little bit of honesty to slip into the discussions. I believe that a good place to start is in reports of the safe withdrawal rate.

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:

We know the size of our portfolio,  you are just jealous.

Do you believe that irrational exuberance is a real thing, Anonymous?

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 higher the balance, the better they should feel as they can offset a downturn better than someone with a small balance or no balance in their portfolio.  This is not rocket science. The person who built a high portfolio balance is smart enough to make adjustments to protect themselves during times of adversity.  This person likely has cash reserves, insurance, etc to handle what is thrown at them.  People with small portfolios can not do this.

Investors are better off knowing the true size of their stock portfolio. I am not able to imagine how there could ever be a single exception to that general rule.

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:

What information do people not have that isn’t already posted somewhere on the internet?  Why should you be able to post what you want wherever, yet you do not allow the same for others?

People should be hearing every day about the dangers of Get Rich Quick/Buy-and-Hold. Given that there’s 41 years of peer-reviewed research showing that market timing always works and is always required, people should be hearing the words “timing always works” AT LEAST as often as they hear the words “it’s possible that there might be circumstances in which timing might not work.” We all have a Get Rich Quick/Buy-and-Hold urge residing within us, If we are going to overcome that urge, we need to be reminded regularly how important it is to overcome it.

How well do you think people would do at losing weight if the Sugar Council banned all discussion of how gaining too much weight causes heart disease and diabetes? Humans have all sorts of weaknesses The only one that I know of where it is forbidden to try to help people cope with the weakness is the weakness we all have for Get Rich Quick/Buy-and-Hold investment strategies. People who hear about the dangers of going pure Get Rich Quick are often persuaded to follow more sensible strategies. Those who never even hear about the last 41 years of peer-reviewed research in this field are often not even aware of the risks they are taking on by failing to take price into consideration when buying stocks.

If we were permitting honest posting re the peer-reviewed research, we obviously wouldn’t have a CAPE value of 35.

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 value of something is based on what someone is willing to pay you right now.  Same goes for your house, car, business, etc. Further, unless you have specifics of my portfolio, how are you even able to comment on future potential or risk?

You can’t use the price that someone is willing to pay as a signal of real value if that person lacks the information he needs to form a reasonable assessment. If there were not a ban on honest posting re the last 40 years of peer-reviewed research in this field, I would agree with you — the values sets by the market would at least be close to the mark. But when people are denied the information they need to form proper assessments, it is just not possible for them to set the value properly. This is why I say that we should open every site to honest posting.

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:

You keep repeating the same old lines, but no one is buying it.

Few want to hear the truth about stock investing at a time when the CAPE value is 37. Surprise! Surprise!

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:

“their true value (x)”

there is no such thing as the “true value” of a stock

We disagree.

It’s hard to identify the true value of an individual stock. Warren Buffett does a good job of it. But I would not feel comfortable trying to do it.

It’s very different when you are talking about the value of the market as a whole. That can be identified with a high (but not perfect) level of accuracy. U.S. stocks have been generating a return of 6.5 percent real for as long as there has been a market. That’s a CAPE value of 17. We all should be working together to be sure that the CAPE value never rises too much above that.

Today’s CAPE value of 35 is a national scandal. In the event that stocks continue to perform in the future anything at all as they have always performed in the past, our collective decision to tolerate a CAPE value that high is going to destroy millions of lives. I stand by the statement that I have been making consistently since the afternoon of May 13, 2002 — we need to open every discussion board and blog on the internet to honest posting re the last 41 years of peer-reviewed research in this field, without a single exception.

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:

Buy and Hold = Investing

Investors (as a whole) practice buy and hold, there may be trading between investors but as a whole they own 100% of available stocks at all time.

If buy and whole doesn’t work then investing doesn’t work.
There is no way a market timing scheme can improve returns for all investors.

Investors as a whole determine the price for stocks. They can price stocks at their true value (x) or they can price stocks at 2x or they can price stocks at 1/2 x. When the price gets too high or too low, the only way to get it back to where it should be is through market timing. Market timing (price discipline!) is the magic by which the market goes about the business of getting prices right, which is its core function.

If large numbers of investors come to believe that it might be possible to pass up on the market timing thing just this once, prices eventually get so out of whack that the market collapses, causing a huge economic contraction, which hurts us all in a very serious way. I would rather just permit honest posting on the critical role served by market timing. Living through a Buy-and-Hold Crisis possesses just about zero appeal 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:

Market timing isn’t a strategy.  It is a scheme.

Market timing is price discipline. Price discipline is what makes markets work. There’s never yet been a time in U.S. history when large numbers of stock investors came to be persuaded that price discipline was not required and we did not eventually see a collapse of our economic system. It’s not possible for the rational human mind to imagine such a situation ending any other way. Investing in stocks without engaging in market timing is like driving a car without brakes.

All of the confusion that we are trying to overcome today comes from the idea that the market is efficient. If the market were efficient, there could never be any overvaluation. So there would be no need for market timing. The reality is that market efficiency is an aspiration that we should all be aiming to achieve, not something that is automatically handed to us without effort. Market efficiency is achieved through market timing. There is no other way that it could be achieved. Anytime someone suggests that market timing might not be 100 percent necessary for all investors, what they are really saying is that we should forget about market efficiency and let prices get so high that we bring on another economic collapse.

The mistake was made because there was research showing that short-term market timing doesn’t work and the Buy-and-Holders jumped to the hasty conclusion that no form of market timing was required. That’s like saying that, since drunk driving is dangerous, no form of driving should be permitted. Shiller was the first researcher to examine whether long-term timing is required (by showing that valuations affect long-term returns). Every researcher who has looked at the question since has affirmed Shiller’s finding. The most in-depth research on the importance of market timing was prepared by me and Wade Pfau. We showed that, in Wade’s words, “Yes, Virginia, Valuation-Informed Indexing works!”

Now we just need to reach a point as a nation of people in which we agree to stand up to you Goons to get the message as to how stock investing works out to every investor on the planet. I believe that it will happen in the days following the next price crash, when we will all be able to see up close and personal what the effect is on human beings when we permit the widespread and relentless promotion of a pure Get Rich Quick/Buy-and-Hold (price indifferent) approach to stock investing. We’ll see.

My best wishes, etc.

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:

When you told Wade this story about getting $500 million, he told you that it was crazy.  You ignored him as well.

I told Wade that thought that the research that we did together would win him a Nobel prize. There’s a sense in which he dismissed that idea too. He certainly acted like he didn’t think it would happen. But the idea that the work was of huge importance was stirring around in his head. He said that there were time when he couldn’t sleep because he would lie awake thinking of all sorts of amazing implications to our work. He mentioned that he thought that Shiller really would be awarded a Nobel prize (this was before that happened). He didn’t say it the way that I said it. But he saw something of great importance there too.

It takes time to let in that you are doing work that is going to change the world in a very positive way. I didn’t think on the morning of May 13, 2002, that Valuation-Informed Indexing was going to replace Buy-and-Hold. I didn’t say on the morning of May 13, 2002, that it was the relentless promotion of Buy-and-Hold that served as the primary cause of the 2008 economic crisis. I didn’t say on the morning of May 13, 2002, that bonds are more risky than stocks to the informed investor. These are things that come to you after you spend some time studying this stuff.

That’s why I say that we need to open every discussion board and blog to honest posting re the peer-reviewed research. Learning is done by building one block of knowledge on top of another. For 20 years, we have as a society held back from acknowledging that errors in retirement studies need to be corrected within 24 hours of when they are discovered. If Greaney had corrected his study on the afternoon of May 13, 2002, LOTS of people would be saying today that bonds are the more risky asset class and that we can bring economic crises to an end by opening the internet to honest posting re the peer-reviewed research. We sure wouldn’t have a CAPE value of 35 today if Greaney had promptly corrected his study, as we all should have insisted he do.

There were people who said that I was “crazy” to say that the Greaney study was in error when I first said it, You don’t hear too much of that today. Even Evidence, one of the lead Goons, now says that “nobody” truly believes that the Greaney study contains a valuation adjustment, including Greaney himself. People’s views change as they learn more about a subject. To get the learning process going the way we all need it to go, we need to open every site to honest posting.

That’s my sincere take, in any event.

Rob