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 is a strategy.  Market timing is a strategy.  Neither are human.  We are comparing strategies. Look at what you are describing.  You are actually making the case for buy and hold.

One of the two strategies is suited for use by humans. The other is not. That’s the difference.

There was a widespread academic belief at the time that the Buy-and-Hold strategy developed that the market is efficient. For the market to be efficient, investors would need to be engaged in a rational pursuit of their self-interest. If the market were efficient, Buy-and-Hold would be the ideal strategy.

Shiller discredited the Efficient Market Theory with his Nobel-prize-winning research. He showed that investors are NOT rational. They are self-destructive. They bid prices up to insane, unsustainable levels. They fool themselves into believing that the crazy nominal prices that apply during bull markets are real, that they can use that money to finance their retirements. Then they suffer the horrible consequences that follow from the inevitable price crash and economic crisis.

If irrational exuberance is a real thing, it is the #1 enemy of stock investors. We all should be doing everything in our power to rein it in. That means telling investors about the amazing wealth-protecting and wealth-enhancing power of market timing at every site on the internet. Once every site on the internet is opened to honest posting re the last 40 years of peer-reviewed research, there can never be another out-of-control bull market. Stock prices are self-regulating in a world in which Shiller’s research is available to investors and in which honest posting re the far-reaching implications of that research is permitted.

Humans are flawed creatures, not perfectly rational creature. We all have a Get Rich Quick impulse residing within us. The “idea” that market timing might not be 100 percent required at all times pushes that Get Rich Quick impulse to places it has never been pushed before. We should all back off the dangerous Buy-and-Hold stuff and get about the business of making the case for market timing/Valuation-Informed Indexing.

That’s where I am coming from, 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:

Again, you make more silly allegations, yet fail to provide any proof.  You are a complete joke.

The proof is easily available to anyone who knows how to perform a Google search. Pull up the retirement study at John Greaney’s web site and see if it contains an adjustment for the valuation level that applies on the day the retirement begins. The answer to that inquiry tells you what you need to know about the Buy-and-Hold “strategy.”

My sincere take.

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 is a goon and who is not a goon?  Will you be finally revealing the names of all the goons in your book?

We all have goonishness within us. We all want something for nothing. We all are drawn to Get Rich Quick/Buy-and-Hold strategies to get it. A society does not get to a CAPE value of 36 because of a few individuals on the internet with outlier personalities. We all to some degree want to abandon our irrationality so we can “enjoy” irrational exuberance” as if it were something real. It is human nature that is responsible for most stock investing risk. We all do our part to push stock prices up to unsustainable levels and we all suffer the consequences of doing so.

But there are degrees. Most of us have that goonishness within us and thus feel some sympathy for the Buy-and-Hold case. But 90 percent of us would never in a million years advance a death threat or engage in an act of extortion. It is the true Goons who do that sort of thing, the people who feel that life would not be worth living if honest posting re the last 40 years of peer-reviewed research were permitted and if people were thus able to hear about the downside of going with a pure Get Rich Quick/Buy-and-Hold strategy.

Since the vast majority of us are not pure Goons, the normal state of affairs would be that the Normals would rein in the Goons when they got totally out of hand. We have seen hundreds of efforts to do that. But those efforts tend not to be sustained because the 90 percent who are not true Goons themselves do have sympathies for the Get Rich Quick/Buy-and-Hold position. The 90 percent rationalizes. They say: “Oh, it’s not so bad.” They tell themselves: “It is not my job to put my neck on the line to fix this, let someone else do it.”

The question is — Will that change after the next price crash, when millions of Normals see most of their life savings disappear into thin air? If the Normals elect to speak up, you Goons are finished and we will all live far richer and better lives from that point forward. From that point forward, everyone in this field will be doing all that he or she can to SUPPRESS the Get Rich Quick/Buy-and-Hold urge, not to do everything imaginable to take the Get Rich Quick “idea” to places to which it has never been taken before.

Goonishness is irrationality. The purpose of research is to put reason to use to help us all live better lives. Thus, you Goons HATE the last 40 years of peer-reviewed research with a burning hate. The Normals do not hate the research. They are not happy with the thought that their retirement portfolios are worth only 40 percent of what they have been led to believe that they are worth. But they support the laws against death threats and against extortion. In theory, they support the idea of permitting rational discussion. They are torn today between their respect for rationality and their love for temporary fruits of Get Rich Quick “strategies.”

I think rationality will prevail over goonishness in the end. I don’t believe that our economic and political systems can survive if they do not, But we are today at the second highest CAPE value ever seen in U.S. history. It would be fair to say that rationality is not even a tiny bit popular in Investoworld today, Goonishness is king at this moment in time.

I believe that the history of the human race is the story of an effort of the humans to overcome their gooonishness, to become more rational and to become able to live better lives. So I believe that Valuation-Informed Indexing is going to prevail. But I would, wouldn’t I?

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:

For more than a decade you have been confident that your VII will finally work and you have also been confident that you will get a settlement payment.  Unfortunately, none of that ever materialized.  It is obvious that you need another plan.

That’s like saying that the people who didn’t invest in the Madoff fund in the years before it was exposed as a fraud needed another plan because the Madoff fund made tons of money for a long time. No. Either Shiller’s Nobel-prize-winning research is legitimate research or it is not. I believe that it is legitimate research. So my plan is to tell people about it and to make money as a journalist doing that.

If Shiller’s research is legitimate, then any strategy not emphasizing the importance of market timing is a scam. Most people may not appreciate how much falling for the scam can hurt them until the scam is exposed in a price crash. But just about everybody will get it once the mountain of irrational exuberance disappears into thin air. You are the one who needs a new plan. Get Rich Quick strategies remain popular only for so long as prices remain sky high. And they never remain sky high indefinitely. Shiller’s research shows that.

I think my plan is a winner. Get Rich Quick/Buy-and-Hold remains popular today. I see that. But I do not believe that it is going to remain popular after it has destroyed millions and millions of lives. My plan for 19 years now has been to go with the research. That remains my plan. The pure emotion stuff just doesn’t appeal to me.

We’ll see.

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:

“Shouldn’t we quantify the problem by pointing out that a 75 percent price drop is not out of the question?”

To the opposite, a 75% increase can also happen. No one can predict the market. Further, hills and valleys are just normal patterns, yet the market has always continued to grow in the long term. The buy and holder has always been rewarded, while the market timers have yet to see any success.

We disagree.

It is true that market returns cannot be predicted with precision or in the short-term. But there is a strong correlation between today’s valuation level and the market price that will apply in 10 or 15 or 20 years. Robert Shiller was awarded a Nobel prize for his “revolutionary” (his word) research showing this. In the days when Buy-and-Hold was developed, this was not known. It was thought that the market was efficient (that is, that future stock prices could not be predicted and that long-term timing was not required for investors seeking to keep their risk profile stable). We all need to move on from Buy-and-Hold to Valuation-Informed Indexing. For that to happen, we need to open every discussion board and blog on the internet to honest posting re the last 40 years of peer-reviewed research in this field, That’s the first step in the huge learning experience that we all have in front of us.

A 75 percent price increase could happen. But if such a price increase took place starting from today’s price, it would all be irrational exuberance. So it would offer no lasting benefit to stock investors. In fact, it would hurt them. It would cause them to become confused about their financial status and thus make it hard for them to manage their financial affairs. And it would destabilize the economy because the inevitable price crash would cause hundreds of thousands of businesses to fail and millions of workers to be thrown out of their jobs.

Hills and valleys that cause the CAPE level to rise to 35 are NOT normal. Such extremes could never take place in an economy in which stock investors had access to honest and accurate reports of what the last 40 years of peer-reviewed research teaches us about how stock investing works. In such a world, stock prices would be self-regulating. Extreme high prices would cause investors to sell stocks and that would bring prices back to reasonable levels. In a world in which honest posting was permitted and the market was permitted to function normally, the CAPE value would probably never go below 12 or above 20.

Market timing has been working for 150 years. That’s as far back as we have good records of stock prices. The peer-reviewed research that I co-authored with Wade Pfau shows that beyond any doubt whatsoever. That’s why Wade declared after 16 months of researching the matter from every angle possible that: “Yes, Virginia,Valuation-Informed Indexing works!”

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:

Why is it that everyone else has a different interpretation of Greaney’s work versus you?  Why is it that only you see the death threats?  Why is it that only you see the job threats?  Why is it that you are the one that has the most bans from all the leading investing blogs?  Are we to believe that all of these other people out there are all wrong about everything and that only you are right?

It’s not only me who says that valuations affect long-term returns. There are thousands of people who posted in support of me at the various boards and blogs. Robert Shiller was awarded a Nobel prize for his amazing research showing that valuations affect long-term returns.

All of that does not get the Greaney study corrected. For the study to be corrected, Greaney would have to make a change to it. I cannot compel that and neither can any of those other thousands. If we had the support of the site owners, we could have those who promote discredited studies removed. But the site owners make a lot of money promoting a pure Get Rich Quick approach to stock investing. I asked the site administrator at Motley Fool to remove Greaney. He thanked me for my “thoughtful” e-mail. He told me that he thought it would be ideal if Greaney permitted honest posting. But he didn’t remove him. Eventually, he removed me. And he nominated Greaney for Poster of the Year at the site.

Why do tobacco companies sell a product that kills people?

Why do companies pollute the environment?

Why was the Catholic Church’s sexual abuse scandal kept quiet for so long?

There’s money in it. Mountains of money. That’s the answer.

Laws don’t enforce themselves. People have to enforce them. And, for the length of a bull market, lots and lots and lots of people appear to be ahead of the game in dollar terms if the irrational exuberance remains on the books. The irrational exuberance cannot remain on the books if we permit honest posting. People want their retirement plans to work out, and, if we permit them to obtain the information they need for that to happen, they are going to do what they need to do. Which will bring stock prices down.

Do you want that? I do.

I don’t want all the pain that goes with it. But I want prices to reflect the economic realities. We can’t get there without going though a lot of pain. Sooner or later, we are going to have to do it, whether we like the idea or not, I hope we learn our lesson. I hope that, when we see all the pain that follows from the relentless promotion of all the Get Rich Quick/Buy-and-Hold garbage, we make a vow as a society to never, ever, ever let it happen again. I think we will do that. We’ll see, you know?

Human beings get themselves into trouble by turning off their brains and giving in to emotional impulses. It’s been happening since the beginning of time. Shiller told us what we need to know to insure that it never happens again in the stock investing realm. I say that we should take advantage of what he showed us. And I believe that we will begin doing that when we see how much pain following the pure Get Rich Quick approach caused us.

Does that help?

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:

Will your book tell us about the death threats?  Will your book tell us about how you will get the $500 million?  Will your book name all the goons so we know who you are talking about?

The book will discuss the death threats. There is no way that something like this could have happened without death threats. The normal thing is for people to feel free to discuss the findings of peer-reviewed research wherever they please. The death threats and similar behavior are what messed everything up. People do not say the same things when there are death threats hanging over them as they do when they feel free to express themselves honestly.

The book will discuss the $500 million payment that I expect to receive on the other side of the next price crash. Just as we want to do away with penalties for posting honestly, we want to encourage rewards for posting honestly. The fewer penalties and the more rewards we see for honest posting, the more honest posting we will see. And the stronger our understanding of how stock investing works will grow over time.

The book will discuss the Goon phenomenon. A key theme of the book is that we all have goonishness residing within us. If we didn’t love Get Rich Quick stuff so much, the Trinity study would never have passed peer review and Greaney would never have made the error that he made in his study. We have met the enemy and he is us! Stock investing does not need to be risky. It has always been risky in the past because, prior to 1981, we did not have Shiller’s Nobel-prize-winning research findings available to us and, from 1981 forward, we have not given ourselves permission to discuss the far-reaching strategic implications of that research. The thing that holds us back is the goonishness within us all that so much desires something for nothing that it rejects the idea of applying human reason to the stock investing project.

The book is an extended argument for moving beyond goonishness and thereby opening up the possibility for us all to retire many years sooner while taking on much less risk with our retirement accounts. The key is saying those three magic words “I” and “Was” and “Wrong.” Saying those three words permits us to learn new things. And I think it would be fair to say that the last 40 years of peer-reviewed research will permit us all to enjoy the greatest learning experience in the history of personal finance once we give ourselves permission to discuss 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:

It is just simple math. Do you want $6 million or do you want $1 million. We are measuring outcomes.

The criminal behavior comments are just silly and farcical.

It’s simple math in which the most important part of the equation is being ignored by Buy-and-Holders.

Does 2 plus 3 plus 8 equal 5? It does if you ignore the most important factor in the calculation, as the Buy-and-Holders do.

If irrational exuberance exists, you need to consider it in all calculations. If you consider it, you get a different answer than the Buy-and-Holders every time.

Simple math should be done honestly and accurately. Do it that way and the math helps you instead of hurting you. Get the calculations wrong and you turn math into a negative.

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:

And here you are making a case for buy and hold yet again.  Why do I say that?  Because buy and hold people held their stock and kept buying.  Take a look where the buy and holders are today.  They have been richly rewarded, while market timers have suffered significant financial harm.

You count the accumulation of more irrational exuberance in one’s portfolio as a “reward,” Anonymous. I do not. The more irrational exuberance there is in a person;s portfolio, the less able he is to engage in effective financial planning. You need to know how much you really have before you can determine how much you should spend or how much you need to save.

I believe that we should be permitting honest posting re the last 40 years of peer-reviewed research at every discussion board and blog on the internet, without a single exception.

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:

“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.”

That sounds just like the stock market. People make a case for when they want to sell and people make a case for when they want to buy. Why should someone with a failed retirement be telling a successful person what to do?

It’s not even a tiny bit like the stock market. If someone engages in fraud in the real estate market, they are exposed and people do not buy houses from that person. I pointed out the error in the retirement study posted at John Greaney’s web site 19 years ago (it lacks an adjustment for the valuation level that applies on the day the retirement begins) but it has not been corrected to this day, Huh? what the f?

A market in which errors in retirement studies are not corrected is not a functioning market. Such a market is not capable of getting prices right, which is the core job of any market.

My sincere take.

Rob