Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

Marketing timing hasn’t worked for you and I haven’t seen any other documented case in seeing it work for anyone else. Over the last 10 years, we have seen one of the all time biggest bull markets in history and during that time, you stayed out of the market and told everyone that the market was going to crash. I can’t think of any other better word than “scheme” when referring to VII.

Market timing has worked very well for me IF Shiller’s Nobel-prize-winning research is legitimate. Stocks are today priced at two times fair value. If half of the value of all stock portfolios is comprised of nothing more than irrational exuberance, then millions of Buy-and-Holders are going to be experiencing very severe life setbacks in days to come. I will not be.

And it was my belief in market timing that caused me to lock in a real return of 3.5 percent real when that was available through IBonds and TIPS. How many Buy-and-Holders did that? And of course I will be able to buy stocks at good prices after the crash and will see huge rewards for many years to come as a result.

It all comes down to whether investors are 100 percent rational, as the Buy-and-Holders believe, or highly emotional, as Shiller believes. If investors are highly emotional, you need to take that into account when setting your stock allocation. The CAPE value tells us how emotional investors are at a given point in time and thus how dangerous it is to invest in stocks at that time. If investors really are 100 percent rational, then Buy-and-Hold is the ideal strategy. I give you that one.

The majority of today’s investors would say that it is Valuation-Informed Indexing that is the scheme because a majority of today’s investors believe in Buy-and-Hold. If they didn’t, we never could have reached the price levels that apply today. But will that still be the case after we see a 60 percent price drop? I believe that many will be referring to Buy-and-Hold as the scheme in those days.

Buy-and-Hold says that price doesn’t matter when buying stocks. That sounds pretty darn far-fetched to me. I think of the far-fetched approach as being the more scheme-like approach. Taking price into consideration when buying something is just common sense. Nothing scheme-like about it whatsoever, in my view.

It strikes me as so odd that you make the case for Buy-and-Hold by noting that we are living through a huge bull market. It is when there is a bull market that stocks are at their most dangerous. It is when there is a bull market that I want to run from stocks. It is my view that the last 23 years were the worst time to own stocks in the history of the United States.

And look at what strategy achieved its highest level of popularity during that time. It wasn’t Valuation-Informed Indexing!

My best wishes to you, Sammy.

Satisfied Market Timer Rob

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

Once again, you step right into it and make the case for Buy and Hold without evening knowing it. Buy and hold people ignore the short term ups and downs because they know that they market has always gone higher in the long run. Market timing schemes, like VII, require people to figure out when to get in out of the market. We have yet to see anyone, including Rob Bennett, show us their own successful personal track record (because it doesn’t exist).

I certainly agree that the market always goes up in the long run, Sammy.

But I also believe that market timing is absolutely required.

Shiller showed that valuations affect long-term returns. If that’s so, stock investing risk is not stable but variable; the higher prices are, the more risk there is attached to owning stocks. So investors who want to keep their risk profile constant over time are 100 percent required to practice market timing.

I would never call a strategy calling for market timing a “scheme.” I would play it just the other way. I would call a strategy that does not call for market timing a “scheme.” Market timing is price discipline. It seems to me that any strategy that suggests that market timing might not be required should properly be called a “scheme.”

That’s my sincere take, in any event. I naturally wish you the best of luck with whatever strategies you elect to follow.

Scheming (But Not Really!) Rob

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

The May 2002 post you speak of was not the cause of you leaving your job. You told all of us you quit. You know you were wrong about your May 2002 post and you apologized. Wade Pfau even confirmed you were wrong. None of this has anything to do with why you quit your job and why you haven’t gone back to work yet. Why do you continue to look to blame others for your refusal to work?

You’re right that I thought that I was wrong at one point and that I apologized for raising the issue. I wasn’t wrong. It was intense social pressure that caused me to think that I was. That’s what we are facing as a society. Lots of people have doubts about Buy-and-Hold but are afraid to give them public voice because they know that millions of people have their retirements riding on the validity of the strategy. We are social creatures. We will get beyond Buy-and-Hold once we give ourselves permission to talk openly about what the last 38 years of peer-reviewed research says about it. But we have to hear lots of people talk about those flaws in an open way to gain confidence that we really need to move on.

Wade also was subject to intense social pressures. Wade loves Valuation-Informed Indexing. Loves it, loves it, loves it. He sent me scores of e-mails telling me so. He researched the issue for 16 months. He told me that he couldn’t sleep at night because he was so excited about what he was learning. He told me that he was thinking of submitting our research to the most prestigious journal in the field. He wrote at the conclusion of his research that: “Yes, Virginia, Valuation-Informed Indexing works!” That’s what he really believes.

But, yes, when you Goons threatened to get him fired from his job, he wrote to me to tell me that he was scared about what would happen if he continued saying what he really believes re these matters. He had seen what you Goons had done to me and he was worried that he would be in for the same treatment. Would anyone stand up for him if you sent defamatory e-mails to his employer or would he too end up being an unemployable whistle-blower?

I say that we should permit Wade and every other researcher in this field to say what he or she truly believes. An amazing learning experience will follow. People need to feel safe to speak up. We need to enforce our laws in a reasonable manner. We all benefit from advancing in our understanding of how stock investing works. So we all need to be united in speaking up on behalf of those who work up the courage to blow the whistle on the Buy-and-Hold stuff.

That’s my sincere take, in any event, Sammy.

Rob

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

In short, your predictions have been wrong and your marketing timing strategy (scheme) did not work. Shiller warned you not to use CAPE for timing the market, but you didn’t listen.

I have definitely gotten some predictions wrong (as has Shiller). That’s a fact.

I don’t agree that that means that market timing does not work or is not a good idea. I think that market timing is absolutely essential. We are going to have to wait to see if prices drop over the next few years. If they do, then I will be ahead of where I would have been had I not engaged in market timing. I’m not there today. But it’s what happens in the long run that matters most, in my assessment.

I am not sure precisely what Shiller believes about market timing. He offered a clear endorsement of it in 1996. And in 2009 he endorsed it again. All of his work makes the case for market timing. If valuations affect long-term returns, then stock investing risk is not stable but variable and the investor who wants to maintain the same risk profile over time MUST engage in market timing.

However, there was one offhand statement that Shiller made in an interview a few years back in which he suggested that he no longer believes in market timing. I would very much like to hear him expand on that statement. People should be asking him to write a full article explaining his position. I would find it hard to accept an argument that market timing is not required. But I would certainly read anything that Shiller said on the subject with great care.

This is an issue that affects each and every one of us. We should all be encouraging more debate on the matter. The Buy-and-Holders treat market timing as a bad thing. I think it would be fair to say that “time” is a four-letter word in the Buy-and-Hold lexicon. But, if Shiller is right that valuations affect long-term returns, timing is the key to long-term success. That’s a pretty big difference. I think that we all should be doing all that we can to get to the bottom of this one.

I obviously do not recommend short-term timing and neither does Shiller. The issue is — Does the research showing that short-term timing does not work give us any reason to believe that timing in general is not required? I believe that the idea that timing in general is not required was just a mistake. Timing is paying attention to price when buying stocks. To fail to practice market timing is to fail to engage in price discipline when buying stocks. Huh? How could that possibly be a good idea?

Price discipline is what makes markets work. If it is true that valuations affect long-term returns, then the market is going to collapse whenever large numbers of investors come to believe that a Buy-and-Hold strategy might work. A market in which large numbers of investors fail to practice price discipline is a dysfunctional market.

Those are my sincere thoughts, in any event, Sammy. I naturally wish you all the best that this life has to offer a person.

Rob

 

 

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

No, your work is not amazing. That is why you haven’t earned anything. You seem to recognize this as you have said you need to go back to work. You just can’t admit to it.

Just stop a minute and look at this. You have spent two decades trying to convince people you are some expert or thought leader on investing, yet you have not owned stocks during that time and your retirement plan failed.

Maybe you should shift gears. Why not show people your mistakes and how they can learn from them.

My very first post on investing, which I put forward over 17 years ago, noted that the retirement study posted at John Greaney’s web site lacks an adjustment for the valuation level that applies on the day the retirement begins. The study has not been corrected to this day. But the reality is that thousands of people have looked at that study over the past 17 years and NOT ONE has been able to identify a valuation adjustment in it. What does that tell us, Sammy?

That’s amazing. There is no other word for it. Getting the numbers right in retirement studies is an amazing advance. People use retirement studies to plan their retirements. A failed retirement is a serious life setback. So getting the numbers right in retirement studies is a big deal.

And please understand that it is not only people who used the Greaney study to plan their retirement who were misled by the methodology used in that study. Greaney used the same methodology as was used in the Trinity study, a peer-reviewed study that was used as the basis for THOUSANDS of newspaper articles that people used to plan their retirements. There are MILLIONS of people who used the discredited Buy-and-Hold retirement studies to plan retirements.

Pointing out that error was a very, very big deal. Pointing out that error was nothing short of amazing. And that was just the first day. My post pointing out that error was advanced on the morning of May 13,2002! I have had thousands and thousands and thousands of follow-ups in the years since.

We need to get this stuff right, Sammy. There’s no getting around it. And it is not possible that both Fama and Shiller are right. They are saying opposite things! We need to as a people figure out which of the two of them is right and which of the two of them is wrong. The only way to do that is to launch a national debate re these matters. Suppressing discussion gets us nowhere. We need to permit discussion. And then we need to go a step further and actually ENCOURAGE discussion.

That’s my sincere take, in any event.

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:

Going the purely emotional route (Buy-and-Hold) permits you to feel better for a time (when prices are at unjustifiably high levels) and then worse for a time (when prices crash to fair-value levels and then even lower). I think it is better for every single investor and for the economic system as a whole for us always to remain as close to fair-value price levels as possible. There’s less jumping around that way. And that way you always know where you stand. You can plan your future effectively because you are living in reality, not in an emotional fantasy world.

Buy-and-Hold is the emotional approach. It has the emotional highs and it has the emotional lows. I don’t like emotional lows. Which means that I don’t like emotional highs either because it is emotional highs that bring on emotional lows.

The difference is price discipline. Price discipline COUNTERS the emotional highs brought on by price indifference (Buy-and-Hold). Buy-and-Hold is rooted in price indifference. Valuation-Informed Indexing is rooted in price discipline. Price indifference possesses great emotional appeal because it permits investors to set prices wherever they please. Price discipline has great long-term appeal because it permits greater returns at lower risk.

The purpose of investment research is to reveal to us what works, not what sells. Shiller is right, Fama is wrong. Fama made great contributions. He deserves his Nobel prize. But he dropped the ball re the importance of all investors practicing price discipline when buying stocks.

Price-Discipline Advocate 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 live in communities, Anonymous. ”

Yes, we live in communities. These communities don’t allow made up death threats. They don’t allow made up job threats. They don’t tolerate bad behavior. That is why the communities banned you.

It’s all going to come down to what happens in the days following the next price crash, Anonymous.

I am not able to lie to my friends about the numbers that they are using to plan their retirements. You Goons do not feel able to come clean re the 17-year cover-up of the error that Greaney made in the retirement study posted at his web site. We are at a standoff.

I believe that we will see a change in the circumstances that apply in the days following the next price crash. A 60 percent drop in stock prices is doing to hurt us all in very serious ways. There is all the difference in the world between knowing as a matter of theory that there is zero chance that a strategy could ever work for even a single long-term investor and seeing with your own eyes the real-world consequences that following that strategy had on your friends and your neighbors and your co-workers.

I think that we are a good people. The fact that Shiller’s book found a publisher shows that. The fact that it became a best-seller shows that. The fact that he was awarded a Nobel prize shows that. The fact that we have had thousands of our fellow community members express a desire that honest posting on the last 38 years of peer-reviewed research in this field be permitted at every discussion board and blog on the internet shows that. The fact that an academic researcher holding a Ph.D. in Economics contacted me to ask if I would work with him to co-author research showing the superiority of Valuation-Informed Indexing over Buy-and-Hold shows that. The fact that that this researcher was so excited over our findings that he was thinking of having the research published in the most prestigious journal in the field shows that. A good people is going to fix this problem after it has seen with its own eyes the pain that will be suffered by millions of middle-class people from the continued promotion of the pure Get Rich Quick/Buy-and-Hold approach. I am sure.

I will do whatever I can to help you out at that time. I will not say that I believe that the study posted at Greaney’s site contains a valuation adjustment. But I will do whatever I can that does not take me to the wrong side of the felony line. I wish you all the best of luck with it.

Bad Behaving 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:

Typical Rob tactic of changing the subject so that he draws attention away from those times that he gets caught in a lie.

The error in the Greaney retirement study is always the topic, Anonymous.

A failed retirement is a serious life setback. The reason why we as a people study investing is to get the retirement numbers right, not to get them wrong.

The problem for the Buy-and-Holders with permitting honest posting re the Greaney study is that, if they get the retirement numbers wrong, they get everything wrong. So even discussion of the error made in the study cannot be permitted. Even the possibility that the Buy-and-Holders could have gotten something so important so wrong cannot be entertained.

So we now have a situation on the internet in which the only thing that cannot be discussed is the last 38 years of peer-reviewed research in the investment advice field. I don’t think that that’s a viable long-term reality. The thing that Buy-and-Hold has going for it at the moment is that the numbers on all the stock portfolio statements are inflated. People have enjoyed the good part of a Get Rich Quick approach (easy money) but not the bad part (crushing losses). If Shiller is right (I believe that he is), we will all be experiencing the crushing losses within the next year or two or three. And then we will see enough people work up the courage to stand up to you Goons to open every site on the internet to honest posting on the peer-reviewed research.

Or so Rob Bennett sincerely believes.

I do not believe that John Greaney included a valuation adjustment in the retirement study posted at his web site. I think it is important to get the numbers in retirement studies right. I don’t think that Buy-and-Hold can survive once we begin permitting widespread discussion of the errors in the Buy-and-Hold retirement studies. And I believe that we will work up the courage to do that in the days following the next price crash. Because at that point we will see that we don’t have any other choice.

But we’ll see, you know?

Subject-Changing Rob

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

Shiller is not a failure, Rob. He told people to not use CAPE to time the market. No, Rob, don’t tell us he just didn’t talk about long term versus short term timing. He said don’t do it at all. End of story. The real truth is that if people followed your advice on VII, the would have had a miserable outcome versus buy and hold. Stop lying about it. You think if you just repeat the lie long enough, people will believe it. Stop misquoting Wade Pfau as well. Wade also grew tired of your lies and won’t speak to you either.

It would be nice if you allowed people to post honestly like this at your website, but of course you don’t.

The only change we have seen is that you have finally admitted your retirement plan failed and that you will have to go back to work. Maybe you could write an article about that as I am sure your readers could learn from you if you actually wrote about honest things in your life instead of the fairytales.

Shiller has said both things. In 1996, he said that investors who failed to lower their stock allocations given the high valuation level that applied then would live to regret it within 10 years. He was advocating long-term market timing, as I do. And, following the 2008 crash, he said that investors should not get back into stocks until the CAPE level dropped below 10, Again, that’s market timing.

You are correct, though, that he made a statement more recently suggesting that he does not think that it is a good idea to use CAPE values to time the market. I don’t agree even a tiny bit re that one. I think he said it because he is embarrassed that his earlier predictions about where stock prices were headed did not play out well.

But I think it is absolutely essential that investors engage in long-term market timing. Long-term market timing is price discipline. If large numbers of investors fail to practice price discipline when buying stocks, the market eventually crashes because there is no other way to get prices down (it is the market’s core function to get prices right) than to crash them. Crashes cause trillions of dollars of spending power to leave the economic and bring on recessions or in rare cases even depressions. We all suffer in that event.

It would be better for us all to just practice price discipline all along. We would not see the bull markets that we see when Buy-and-Hold is widely promoted. But we would still get that steady 6.5 percent real return each year that is the product of economic gains and not just irrational exuberance. I think that annual gains of 6.5 percent real are just fine. And I would love to live in a world in which we did not see these horrible price crashes and the horrible economic crises that follow from them. Call me madcap,

I naturally wish you all good things, Sammy.

Rob

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

Imagine being a market timer. That is really taxing. Look at Rob Bennett, the author of this article. He has been peddling his VII concept for years. You can search out his failed retirement plan by doing a quick internet search. When it fell apart, he came up with a crazy story about these mysterious goons and how Jack Bogle was the biggest con-man to come along. He then said that John Bogle would help him collect $500 million in settlement payments (based on some delusions). Of course, Jack passed away not to long ago. Rob won’t admit the failure yet, but has now mentioned on his website that he will return to work at the end of this year or beginning of next year. Given that Rob has not worked for a regular paycheck since sometime in 2000 (about 19 years ago) and is now over the age of 60, it will not be an easy task.

I love Bogle. I rank him as the second most important investment analyst in history (second only to Robert Shiller).

However, it is true that I believe that Bogle made a terrible mistake. Short-term timing really doesn’t work. The research backs Bogle up on that one. But long-term timing is price discipline. Price discipline is the key to making markets work. When Bogle discouraged investors from practicing long-term timing (price discipline), he hurt them in very serous ways. The error that Bogle made does not take away from his many hugely important contributions. But it is an error that needs to be acknowledged and corrected.

I believe that we need to work together as a society to launch a national debate on the question of whether investors should be practicing price discipline (long-term market timing!) when buying stocks. It is my belief that this is 100 percent essential. If Shiller is right that valuations affect long-term returns, investors who fail to engage in long-term timing see their risk profile change dramatically when stock prices rise to the levels where they reside today.

I naturally wish you all the best that this life has to offer a person, Sammy.

Rob