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

Your opinion is not the same as the actual research. One study does not constitute the last 43 years of research. Outcomes are what matter. Outcomes tell us who is right and who is wrong.

Shiller’s Nobel-prize-winning research paper showing that valuations affect long-term returns is only one research paper. But it remains the controlling authority on the questions addressed by it until it is discredited. That has never happened in any way, shape or form in 43 years.

I’ve been doing this for 22 years now and there has never been a Buy-and-Holder who made a case that Shiller’s research doesn’t stand up to scrutiny. All of the efforts have been directed at getting people to stop talking about it The feeling among Buy-and-Holders is, if no one talks about Shiller’s amazing research findings, it’s just as if those research findings don’t exist. They exist. And smart people who would very, very much like to be able to discredit them have not been able to do it. The fact that the Buy-and-Holders are so impressed by Shiller’s research that they don’t even try to discredit it gives that research persuasive power.

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:

The stock market is crashing.  I am confused.  Why aren’t people blaming buy and hold?  Why am I and all the other buy and holders not broke?  Why isn’t everyone over here seeking out Rob Bennett’s help to save them from disaster?  Why aren’t people all begging for Rob’s new book?

Before the world was opened up to widespread discussion of the link between smoking and lung cancer, people who got lung cancer didn’t;t blame smoking. They didn’t;t know. We live in a better world today because people know about this link. And fewer people smoke!

We have the research showing that valuations affect long-term returns. Intellectually, we know how stock investing works, We have known for 43 years now. We need to give ourselves permission to talk about it. Then we won;t see these horrible Buy-and-Hold Crises anymore. Then we will be able to stabilize our stock market. And our economic system. And our political system.

The words “valuations affect long-term returns” signify something. We all need to be talking about what those words signify. They signify that the old way of thinking about stocks, that valuation-based market timing is not 100 percent required for every investor, no longer applies. That we all need to act in our own best interest and that doing so means tuning out the Buy-and-Hold garbage pushed so relentlessly by our Wall Street Con Man friends.

A CAPE value in the 30s doesn’t just happen. We all played a role in permitting that CAPE value to come into play. We all need to look inside to come to understand the Get Rich Quick/Buy-and-Hold impulse that has been making stock investing a thrill ride for as long as the stock market has been in existence (something it no longer needs to be in the post-Shiller era). It’s not all about turning a quick buck. What happens in the long run to the human lives affected matters too.

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:

What is more important: a) your opinion of the search, or b) outcomes?

Is it more important for you to try and get someone to believe all of your hocomania or is it more important for you to fix your current financial predicament?

Lifetime outcomes are what matter to me. I of course get it that irrational exuberance can temporarily cause investors to believe that their stock investments are performing better than they really are. But the deception hurts them in the end. We all would be better off if honest posting re the peer-reviewed research were permitted at every site,

Our only defense against irrational exuberance is valuation-based market timing, It is absolutely key. Valuation-based market timing is price discipline. No market can function without price discipline. Today’s market has become dysfunctional because of the widespread promotion of Buy-and-Hold strategies. Today’s CAPE level shows that as clearly as anything can be shown.

Do you consider today’s CAPE value an outcome? I do. It’s a horrible, horrible outcome made possible by the widespread promotion of the “idea” that valuation-based market timing is not always 100 percent required for every investor.

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:

— Greaney said that a 4 percent withdrawal IS “100 percent safe.”

Why did you put the word IS outside the quotation marks?

To emphasize the conflict between what Greaney said and what Bernstein said.

If Greaney said “there’s a chance that a 4 percent withdrawal will work out, even at these crazy prices –that has worked out for retirements beginning at crazy price levels in the past,” I would endorse the statement. When he instead says falsely that a 4 percent withdrawal is 100 percent safe at all times, he is taking the valuations question off the table. The Bennett/Pfau research shows that the valuation level that applies on the day the retirement begins is the most important factor affecting retirement safety. So we all should very, very much want to see that issue remaining on the table.

We should be discussing stock valuations everywhere and at all times. If we were always focused on the effect of high stock valuations, we never again would see a CAPE value of 35, the CAPE value that applies today. So we never again would experience the ocean of human misery that inevitably follows a time when we permit the CAPE value to rise to insane highs. The enemy of stock investors is irrational exuberance. And the greatest friend of irrational exuberance is investor complacency re stock valuations. Greaney’s false claim that a 4 percent withdrawal is always 100 percent safe encouraged complacency about valuations among investors who were using that withdrawal rate or thinking of using it. I was there. I saw this. So I eventually worked up the courage to point out the false claim.

I offer no apologies. I believe that, if we were all thinking clearly, there would be zero controversy over the question of whether the authors of retirement studies should make an effort to get the numbers right. The problem is that we are NOT today thinking clearly. The CAPE value that applies today shows that. Most of us are guilty of irrational exuberance. The only thing that could possibly change that would be to open every site to honest posting re the last 43 years of peer-reviewed research. So that’s what I have been proposing as a fix to this mess going back to the afternoon of May 13, 2002.

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 bet I sound at least somewhat like some people in your real life. Is there anyone online or, most especially, in your real life who still supports what you have been doing for the past 22+ years?

There are a number of people who are supportive. There is no one who is intensely supportive. I get asked about the investing stuff on a regular basis. Probably once a month someone will ask about it. The reactions are very similar. People are definitely interested. Nearly everyone seems to have some concerns re investing, they feel that they don’t know enough about it and are worried about what may happen to their money. So people want to know more. But people have a hard time grasping the story.

The issue is that it is just so darn big. It doesn’t sound plausible. You Goons have on occasion used the term “conspiracy theory.” I don’t claim a conspiracy. But I believe that people have a hard time accepting how 43 years of peer-reviewed research could be covered up without a conspiracy. It doesn’t sound possible. So people do not feel 100 percent comfortable with what they are hearing.

That’s my job with the book. I have to explain it in a way that makes sense to people. The core problem is that it’s just so big. Shiller took us to the undiscovered continent of stock investing — the psychological side of the story. People completely accept that there’s a psychological side to the story. But they have no idea how big it is. And they don’t understand how ignored it is in the advice that they hear. Shiller looked at the 70 percent of the story that has been hidden from all of us for a long time. It’s a very big advance and big advances are hard to grasp.

Big advances upset the apple card. This is a lucrative area for those who have acquired expertise. So there are lots of powerful people who would prefer that the apple cart not be upset.

People are definitely interested. And they don’t doubt that there are things being kept from them that it would be good for them to know. But they are generally not intense about this issue. They are 1/50th as intense as you Goons. They don’t feel confident re their ability to understand the issues. Most people are intimidated by the subject of stock investing. And it makes them uncomfortable to imagine that our system of government is not handling things. They feel that there should be people taking care of things.

And of course they don’t really want to think too much about their portfolios not being worth what they have been led to believe they are worth. That part of the story is of course highly distressing. They hear the words and they tune them out at the same time. Cognitive dissonance is very much a factor.

People have a complacency over it, a lack of urgency. Prices are of course high today. That makes people feel satisfied with their circumstances. People rarely get super worked up over something at a time when a situation seems positive. But there is definitely an undercurrent of concern.

Rarely do I have someone dismiss what I say out of hand. I have had that happen. When it happens, it’s because the person has a strong loyalty to the Buy-and-Hold Model. Then I get a “who do you think you are?” reaction. That’s not at all a common reaction.

That was a good 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:

Buy & Hold is “good stuff on top of good stuff”, as some might say. I can see some of my stocks are down today. BRB I’m gonna go buy more.

I certainly wish you the best of luck with it.

It defies common sense to believe that there is no price at which stocks are not worth buying. I view that claim as a marketing Gimmick. It can’t be true. So I personally very much doubt that it is true. And of course there’s the 43 years of peer-reviewed research showing us that what common sense tells us must be so really us so.

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:

Stocks are an amazing choice RIGHT NOW.

I’d say that they are worth owning today. But I would not say that they are an amazing choice.

We have as a nation of people permitted the Buy-and-Hold stuff to get out of hand and stocks are priced dangerously today. I would like to see us all pull together to get that horrible CAPE value down.

Do you consider today’s CAPE value of 35 acceptable? I do not.

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 can log into Empower and get most of my score from their scorecard, “Net Worth” section, any time of the day (some accounts do not sync up). My (incomplete) score is just under $1,086,000 as of right now. I’d have to log into a few other websites to get the full number. This number is much higher than $0 and I still plan to work for another 19 years.

I don’t think you understand how investing works.

I make an adjustment for irrational exuberance and you don’t. I would say that you are the one who doesn’t understand how stock investing works. You invest as if the last 43 years of peer-reviewed research in this field doesn’t exist.

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 use history to support YOUR opinion on the market crash.  For YOUR timing scheme to work, you need the big crash.  You say that history has always worked for your scheme (even though you say that the market is currently not following history).  So you want to pick and choose what fits history and when to ignore it so that it all fits your narrative.   Clear hypocrisy.

I spent some time last night transforming the most recent comments that merit it into future blog entries. I woke up this morning with a new chapter title for the section on “The Theory Behind Valuation-Informed Indexing” in my head. The chapter title is: “The Buy-and-Holders Find Shiller’s Research Findings So Compelling That They Cannot Ignore Them Unless Discussion of Them Is Banned.”

That’s a big part of the story here. You Goons used the word “annoying” in some recent comments. I am always talking about Shiller’s research findings and you find that annoying, so you must insist that I be banned. It would make sense that you would find research that cuts against your personal beliefs a little bit annoying. But the normal thing would be just to ignore the discussions you don’t enjoy. You do your thing and let others who want to participate in those sorts of discussions do theirs. You can’t do that. Never once have you tried. Those discussions drive you absolutely bonkers. They need to be banned for you to be able to face the new day.

Shiller’s reseatch findings are common sense. OF COURSE valuations affect long-term returns. How could it be any other way? Valuation-based market timing is price discipline. Price discipline is absolutely essential in every market that has ever existed. What possible reason could there be for thinking it might be different in the stock market?

It’s not different. And it drives you bonkers to be reminded of that. All of your energies are devoted to tuning out that simple and essential and obvious reality. So, if some fellow comes along and gives voice to it every day, he needs to be removed. That’s why these discussions have been so strange. I like research. I want to share with people what it says. And you can’t freakin’ stand it. Research is the enemy. Research undermines Get Rich Quick/Buy-and-Hold and the Get Rich Quick fantasies about the value of your stock portfolio that are encouraged by the numbers that appear on your portfolio statement and that make you feel happy and satisfied and safe in a deep way.

Reality is the enemy to a Get Rich Quicker/Buy-and-Holder and research helps us to see the realities. Shiller’s research is highly, highly, highly “annoying,” in your word. I am annoying because I talk about Shiller’s research. The normal thing would be to ignore me and to permit others to engage in whatever discussions with me that they want to engage in. But the entire thought that valuations might affect long-term returns is just too fraught for you to even consider such a thing. The idea that valuations might affect long-term returns is the scariest thought in the world to you. You want to ignore it and I want to bring it to everyone’s attention. We are working at cross purposes.

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 use history to support YOUR opinion on the market crash.  For YOUR timing scheme to work, you need the big crash.  You say that history has always worked for your scheme (even though you say that the market is currently not following history).  So you want to pick and choose what fits history and when to ignore it so that it all fits your narrative.   Clear hypocrisy.

No. We do not have enough history to say precisely what will happen. We have enough to say that risk is much greater at times of high valuations. But we cannot say precisely when prices will crash.

We know some things and we do not know some other things. We should say the things we know and avoid saying the things we do not know. We should tell people that stock investing risk is higher at times of high valuations and thus investors who want to keep their risk profile stable over time need to lower their stock allocations at such times. But we should not say “there will be a price crash on such and such a date.” Because we just don’t know that.

I believe that history is a great guide, the best guide that we have. One of the many things that I like about the Buy-and-Holders is that they were the one who urged using history as a guide. I do not believe that history tells us everything. That’s because there is not yet enough history. When we have 10,000 years of historical data, we may be able to make better predictions of when price crashes will arrive. It’s also possible that we will never be able to do that because it is shifts in investor emotion that cause price crashes and investor emotion is an irrational phenomenon so it may never be highly predictable. In any event, we cannot make such predictions effectively today. So we should not advance them.

But we can say that, once prices get high, their long-term direction is down. That’s been so for 150 years running. So that’s a safe prediction. High prices beget years of low returns and low prices beget years of high returns. I read that in Bogle’s book before I ever read Shiller’s book. It was Bogle that helped me to understand why Greaney’s study is in error, not Shiller. Shiller of course added to my understanding later on. But Bogle is the true cause of all this. I would guess that the reason why Bernstein stated that the Greaney number is in error is that he had read Bogle. Bogle is the real trouble-maker.

I believe that the market is today operating under the same principles that it has operated on throughout history. The results that we have seen in recent years have been outlier results. But that is going to happen from time to time. It doesn’t mean that the principles have changed. It just means that the details by which things play out are a little different. I think we are going to see the Same basic pattern this time as we have seen for the entire history of the market. a failure to pay sufficient attention to valuations will cause us all a great deal of misery.

I would like to see us learn from history instead of continuing to make the same horrible mistakes. The benefit of permitting discussion of the peer-reviewed research is that it permits us to learn from history. I view the ban on honest posting re the peer-reviewed research as irrational. I think that the irrationality that we have seen during the first 22 years of our discussions supports Shiller’s belief that stock investors are not always 100 percent rational but at times become highly emotional. I see the reining in of investor emotion as being 70 percent of what it takes to achieve successful long-term stock investing success. It’s the key to the entire project.

Rob