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 didn’t work for you in the long term.  In fact, you can’t even name one person in which market timing has worked out.

Price discipline works for every investor who employs it, Anonymous. Ir’s impossible for the rational human mind to imagine any exceptions to that rule.

You don’t subtract for the effect of irrational exuberance when determining the size of your portfolio. That’s what confuses you. Irrational exuberance gains are imaginary gains. They are not real. They disappear into the mist in time.

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 are so lucky that you can tell us what research counts and how to interpret it since we are a bunch of stupid morons.  It has all worked out so well for you, that I am sure everyone wishes they were in your spot right now.

When an idea is discredited by new research, that doesn’t mean that the people who came up with the discredited idea were dumb. It means that the humans did not come to Planet Earth with a manual telling them how everything works. We learn more over time.

That’s the purpose of research, to learn new things. That’s what makes it do great.

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 financial community is focused on having a financially secure retirement. Your focus is trying to set yourself up as one of the premier thought leaders because you seek the fame and accolades. You figured you would do this by trying to come up with a timing scheme that you could leverage to promote yourself. Unfortunately for you, it has failed miserably.

The only “human misery” is being experience by you and those that were either dependent on you or happened to take your horrible advice. No one has to take your word or my word for anything. Instead, they can just look at the results. You went broke and your predicted crashes never happened when you said they would. Those of us that kept working our jobs, kept saving our money and followed buy and hold, have ended up with very successful retirements that are financially sound. Just look at the numbers.

I didn’t even want to write about investing. From May 1999 to May 2002, I hardly advanced a word on the subject. It just wasn’t my thing. But I was eventually left with no choice because Greaney repeatedly pushed his study purporting to show that a 4 percent withdrawal rate is always safe. I had read John Bogle’s book where he says that reversion to the mean of stock prices is an “iron law” of stock investing. So I knew that there was zero chance that the safe withdrawal rates is always the same number. I could see that lots of people at the Motley Fool board believed that the Greaney study was legitimate. At some point, you just have to speak up.

What it all really comes down to is emotion vs. reason. Valuations OBVIOUSLY affect long-term returns. All that Shiller did was to confirm that what common sense tells us must be so really is so. Buy-and-Hold is an effort to deny common sense. Get Rich Quick strategies are huge money-makers because deep down we all like the idea of getting something for nothing and, if irrational exuberance gains are as good as real economic-based gains, we can create as much phony wealth as we want and never pay a price. To persuade people that valuation-based market timing is not always 100 percent required for every investor, you have to persuade people to give up on logic and reason and research and go with a purely emotion-based approach. That’s just not me. In the days when I was a Buy-and-Holder, it was because I liked it that they often referred to what the research says.

I’m a research guy. That’s the issue. The Buy-and-Holders can’t stand that because their “strategy” is pure emotion and they cant’t stand for people to learn that. They cant even stand to acknowledge it to themselves. I believe that in time they will need to. We permit people to make use of their reason in every other field. I don’t believe that we can have just one field in which reference to the peer-reviewed research is absolutely forbidden, no matter how much money it makes in the short term to tell people that irrational exuberance gains are real. I believe that the arc of history in the investment advice field bends toward rationality.

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:

How can any of us be suppressing information.  We don’t run any of these boards.  Instead, it seems YOU are suppressing information.  Look at how many posts you have blocked.  You are clearly afraid of having facts on your board because it doesn’t not support your narrative.

You don’t run the boards. But you disrupt the conversations held at them with abusive posting. We all have a Get Rich Quick/Buy-and-Hold urge residing within us. It’s been causing bull markets and economic collapses so long as there has been a stock market. So people start out with sympathy for the Buy-and-Hold case. And you make it unpleasant for them to ask the questions that they need to ask. And the Normals don’t possess one-tenth of the determination to participate in the discussions as you possess to stomp them out. So we are where we are.

As a nation of people, we are making progress. We are close. We have 44 years of peer-reviewed research showing that valuations affect long-term returns. I think we will eventually make it to the other side and no one is going to want to return to the Buy-and-Hold says once we do. We’ll see.

My best wishes.

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 guess I need to read more.  Honest posting?  I am not sure what you mean by that, but people are able to post what they want, right?  Also, we do seem to already know about failed retirements and it seems to me that it is common knowledge that our collective savings rate is pathetic.  It just comes down to spending less than you make, consistent investing and avoiding debt.  The concept is not hard, but most people lack the discipline to do that.

Most people need the discipline to practice valuation-based market timing, Mike. That IS hard. It goes against human nature. The history of the stock market shows what happens when people fail to practice price discipline when buying stocks. It’s a tragic story.\

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 we are, 29 years later (19 years past that 10 year mark)and  those that stuck with what YOU think is a high allocation have done very well, while you went broke.

My financial troubles were 100 percent caused by the abusive and in some cases criminal behavior of you Goons.

Those 29 years were not good years for stock owners. There has never been a time when the CAPE value remained so high for so long. If you subtract for the effect of irrational Exuberance, you would see that you would have been better off just getting a steady 6.5 percent real return each year (the return supported by economic growth). That’s a fantastic return. If the Buy-and-Holders were satisfied with that, we would all be better off. Turning stock investing into a roller coaster ride with the crazy unwillingness to engage in valuation-based market timing always leads to the sort of CAPE value we are suffering through today and to all of the human misery that follows from it.

Not this boy, you know? Economic-based gains,yes! Irrational exuberance gains? I pass. They’re bad stuff piled on bad stuff piled on bad stuff piled on bad stuff. Yucko?

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 say you are concerned about people having a failed retirement.  Have you looked in the mirror lately?  YOU have a failed retirement.  It means you were WRONG about everything.  Why should anyone listen to you?

People should listen to me because I cite peer-reviewed research in support of what I say. Peer-reviewed research gets you outside of your own emotions. Within your own mind, you can rationalize anything, Your thinking goes around and around in circles. Peer-reviewed research is outside of you. It’s a check on your own emotionalism. Using peer-reviewed research as a guide permits rationality into the process.

This is a battle between emotionalism (we all have a desire to obtain something for nothing — counting irrational exuberance as real is obtaining something for nothing) and rationality (employing the discipline of checking what the peer-reviewed research says about your strategy). I believe that the arc of history in investment analysis bends toward rationality. We’ve been working toward Shiller’s research findings for a long time.We are not quite there yet. But we are very close today. All that we need to do is to open one large site to honest posting re the research and the rest wil be downhill sledding.

In any event, each investor should get to choose for himself or herself who to listen to. You Goons can decide for yourselves. You don’t get to decide for everyone else. When you cross the line and attempt to suppress discussion of the last 44 years of peer-reviewed research, you engage in fraud. That shows that you don’t really believe in Buy-and-Hold yourselves. I believe you follow it. Your belief goes that far. But you lack the confidence it would take to engage in civil and reasoned discussions of the merit of your strategy. Your behavior shows that you do not have confidence, only bravado. Not this boy, you know?

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:

Fair value is what the market determines.  Stocks go up and down, but continue to rise over time.  We have learned that market timing doesn’t work and that people can and do go broke when following schemes like this.

Fair value is what the market determines when investors have access to discussions of the peer-reviewed research. The market obviously is not able to function properly when honest posting re the last 44 years of peer-reviewed research is prohibited at every site.

Today’s CAPE value is 33. Are we to believe that the relentless promotion of the Buy-and-Hold “strategy” had nothing to do with that?

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:

Let’s just look at long term results.  Look at anyone that is now in their 60’s and entering retirement.  Those that followed buy and hold for the last 40 years have done substantially better versus anyone following your VII strategy.  We can all look at the numbers.  You are broke.  Fix your own problems instead of trying to drag everyone else down with you.

All of the numbers you talk about are not adjusted for irrational exuberance. If you make the adjustment, Valuation-Informed Indexing has been doing better than Buy-and-Hold for 150 years now. If you fail to make the adjustment, Buy-and-Hold has been doing better for the length of the current bull market. It’s hardly a surprise that a Get Rich Quick approach would look good at a time when the CAPE is 35. The more irrational investors are, the better Buy-and-Hold looks to them.

It all comes down to whether Shiller’s Nobel-prize-winning research is legitimate research. I believe that it is legitimate research. So that’s what I say I believe when the topic of safe withdrawal rates turns up in discussions held on the internet. There’s never going to be research supporting Buy-and-Hold and taking the research into consideration is never going to be popular at a time when the CAPE is 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 problem in the stock market is that honest posting re the last 44 years of peer-reviewed research is banned at every internet site.”

Every internet site? What is YOUR definition of the last 44 years of peer-reviewed research (what studies have you included in that definition). Please elaborate more on your claim.

Robert Shiller publiushed peer-reviewed research in 1981 showing that valuations affect long-term returns. That research revolutionized (that word appears in the subtitle of his book) our understanding of how stock investing works.

Learning that revealed to us what makes stocks risky (irrational exuberance) and how to combat it (valuation-based market timing). It’s the biggest advance in the history of personal finance. We should be talking about the how-to implications of Shiller’s research at every site. We will all be able to retire years earlier once we give ourselves permission to talk about what the peer-reviewed research shows.

It’s a logical impossibility that the safe withdrawal rate is always the same number in a world in which valuations affect long-term returns.. If we were all thinking clearly. there would not be even one person who favored a ban on honest posting at even a single site. We should all want to see the authors of retirement studies get the numbers right. People use retirement studies to plan retirements. I know this from personal experience. I saw people doing it at the old Motley Fool board.

Rob