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 look at people like Bernstein, Pfau and Shiller, very little of their income comes from their publications.

I am not an investment expert. I never had any interest in being one and I never made any effort to become one. I am a journalist. Every dime that I earn will come from journalist-type endeavors.

This is the biggest journalism story of my lifetime. We have millions of people with a great desire to know how stock investing works and and an investment advice field that made a mistake in the 1960s that has caused so much human misery that everyone who works in the field is afraid to talk about it because they feel that it would make the Buy-and-Holders — who are wealthy and powerful and well-connected people — feel bad. The only reason why we are not today talking about Valuation-Informed Indexing at every site is that it is such a huge advance over Buy-and-Hold that it makes the Buy-and-Holders feel bad for people to learn about it. Had Shiller published his amazing research in 1961 rather than in 1981, there never would have been a Buy-and-Hold.

We all want the same thing. we all want to know how to invest effectively for the long-term. But the Buy-and-Holders came up with this “idea” in the 1960s that market timing/price discipline might not always be 100 percent required and now they feel that they are stuck defending it. What kind of “experts” would they be if they had been telling people the opposite of what works for 42 years now. That’s the entire deal. It’s about a mistake that was made by a group of good and smart people who made many important contributions to the field but got one item horribly wrong — instead of saying that price discipline is 100 percent required as it is in every market that has ever existed, they came up with this loony tunes thought (I don’t say that they knew it was loony tunes, just that they did not have the research avaialble to them at the time showing that it was looney tunes) that maybe the stock market was the only market that ever existed in which price discipline was not 100 percent required for every participant for the market to function properly.

Telling the story of how that all happened is a JOURNALISM function. That’s what I am. That’s what I do. This story shows the importance of journalism, why it is such a noble profession. We need journalists to discover this sort of thing and help the entire nation by doing so. You hear about the Washington Post all the time nowadays, The Post is considered the second most influential newspaper, next to the New York Times. That wasn’t always the case. That happened because the Washington Post broke the Watergate story. That story made a difference in millions of lives. The Valuation-Informed Indexing story is bigger than Watergate. This allows millions of people to retire many years earlier while taking on only a fraction of the risk that they thought they needed to take on during the Buy-and-Hold Era. And it stabilzes our entire economic system, as well as our political system to a considerable extent.

There is no way that this story could be broken without a journalist getting involved. There are many people who work in the field who very much want to tell it. But they live in fear that their careers will be destroyed if they “cross” the Buy-and-Holders by talking about the far-reaching how-to implications of Shiller’s Nobel-prize-winning resarch. A journalist is needed to clear the field and then all of the good people who work in this field will be able to do the good work that they got in this field to do. All of those people will be freed to HELP investors once this story is written up on the front page of the New York Times. That’s where all this is leading. It changes the investment advice field in a profound way. But the journalism has to come first, it is the journalism work that I am doing and that I will be compensated for that is the driver here.

No one would have voluntarily signed up for what I have been put through. You would have to be a crazy person to do that. But someone had to do it. The future of our nation depends on someone working up the courage to stand up to you Goons and tell the world why price discipline is every bit as important in the stock market as it is in every other market that has ever existed. I was the one that the universe chose to do this work. So I have given it my best shot. That’s pretty much it.

My best and warmest 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:

The Larry Swedroe looks at the research and says that Rob Bennett is wrong about timing the market with CAPE:

The Shiller CAPE 10: how to use it, not abuse it

Note the following: “ While valuations do provide information on future returns, the research has found that they do not provide information that allows investors to profitably time the market.”

And the summary says as follows:

“ The bottom line is that the CAPE 10 does provide us with valuable information (as do other current valuation metrics). However, it’s important that the information be used in the right way, as misusing it can lead to bad outcomes and the failure of plans. You should not use a valuation metric in a deterministic way (i.e., “I’m going to earn x percent”). Instead, the forecast should only be used in a probabilistic manner. And you should not use valuations to time the market, shifting allocations toward higher expected returning assets. “

Did you read that last line? It says “YOU SHOULD NOT USE VALUATIONS TO TIME THE MARKET”

I like the article. It provides value. So thanks for the link.

I don’t agree that CAPE cannot be used to profitably time the market. The Bennett/Pfau research shows that timing can be used to reduce risk by nearly 70 percent or to permit the investor to achieve his retirement goals much earlier in life. That’s investor heaven!

The article doesn’t even discuss the Bennett/Pfau research. Why? It’s either because Swedroe hasn’t heard of it (which shows how much damage the ban on honest posting is doing to all of us) or because he realized how much trouble he will be in with the Buy-and-Holders if he points to the peer-reviewed resesrch showing that timing always works and is always required for every investor seeking to keep his risk profile constant over time.

As always, the answer is to open every site to honest posting re the last 41 years of peer-reviewed research. Wade Pfau and I (and lots and lots of others) can make the case for market timing and Larry Swedroe and lots and lots of others can make the case against it. That’s how we all learn, by talking thijgs over amongst ourselves. That debate should have been launched on the afternoon of May 13, 2002. Or, better yet, on the day following the publication of Shiller’s Nobel-prize-winning research in 1981.

Please note that early in the article he explains why it is a logical impossibility that the safe withdrawal rate is the same number at all valuation levels. He explains that valuations affect long-term returns. If that’s so (all evidence available to us today shows that it is), it is a logical impossibility that the safe withdrawal rate is the same number at all valuation levels.

He doesn’t discuss how much encouraging market timing would help us to avoid economic crises. We could never get to the sort of CAPE level we have today if market timing were being encouraged at every site on a daily basis. It’s the failure of most investors to engage in market timing when needed that brought us this CAPE level (and that will have brought us the economic crisis that will follow from it, presuming that stocks continue to perform in the future somewhat as they always have performed in the past).

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:

“ But you can’t say that that’s so for the millions of good people who have been denied access to the discussions they need to engsge in to be able to make informed decisions.”

Everyone has had full access to all the information. Given that the majority of stock is held by the top 10%, your premise is also false. Stock price does not cause business failure. Lack of capital is the cause. Business failure statistics have been available for decades.

You don’t have to dig very deep into our twenty years of discussions to come across numerous accounts of people who clearly did not have access to all the information. Wade Pfau held a Ph.D. in Economics from Princeton. He spent 16 months of his life researching my investing ideas and concluded that they all checked out. At the end of the 16 months, he said: “Yes, Virginia, Valuation-Informed Indexing works!” In numerous emails to me he described his wonder at discovering what the research showed. He told himself for a time that he must be making some sort of mistake because he had heard so often that timing doesn;t work and yet the research showed clearly that long-term timing always works and is always required.

If a guy with a Ph.D. in Economics was being taken in by the Buy-and-Hold stuff, anyone could be taken in by it, We don’t all hold a Ph.D. in Economics. We don’t all have 16 months of our lives to direct to studying this stuff in great depth.. We should be permitting honest posting re the last 41 years of peer-reviewed research at every site, without a single exception. I think that’s the answer, Anonymous.

I know it is!

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:

So you are now saying that these guys are right?  They each disagree with you on very major issues.  Wade even sent you a scathing email not only explaining how you are wrong, but he also spoke about the harm you caused him.

I believe that people in the investment advice field are like people in every other field — they would like to be free to do honest work, they would like to be able to go to bed at night feeling that they had helped people.

Shiller has described the intellectual leap from the finding that short-term price changes are unpredictable (University of Chicago Economics Professor Eugene Fama showed this in research published in the 1960s) to the Buy-and-Hold belief that the market sets prices properly as “one of the most remarkable errors in the history of economics.” Humans did not come to Planet Earth with perfect knowledge of how stock investing works. The way it is done in every other field of human endeavor is that people take educated guesses and then learn over time where they have gotten something wrong and then fix it.

The “fix it” part is broken in the investment advice field. The feeling is that making a mistake in this field would be such s terrible thing that the “experts” must keep it zipped when new research shows that they have made a mistake. So the mistake just keeps compounding and compounding. Precisely 100 percent of the evidence available to us today shows that long-term market timing (price discipline!) is always 100 percent required and presisely 0 percent of the evidence supports the “idea” that they might be some mystical, magical alternate universe where market timing (price discipline!) is not 100 percent required. Gee, I wonder why so many Buy-and-Holders feel the need to resort to abusive posting to “defend” the idea that long-term market timing is not always required.

Everyone in the field would like to see every site opened to honest posting re the peer-reviewed research. But who is going to be the one to pin the bell to the tail of the cat? Who is going to be the site owner brave enough to permit honest posting and take on the wrath of the Buy-and-Hold Goon Squads? I believe that someone will appear in the days following the next Buy-and-Hold Crisis. I believe that that fellow or gal will live to see his or her head carved on Mount Rushmore in recognition of the great good that he or she will have done for millions and millions of people who need access to honest and accurate and research-based advice on how to plan their retirement. 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:

Well, it is the truth.  They did the work, right?  Their name is on it, right?  You admitted that Wade wrote the paper.  You admitted that JWR made the calculators (as you are not a numbers guy).  Shiller must have done the work as he got the Nobel prize.  Greaney did his work as well.  All you have really done is given us your “commentary”.

All of the people you mentioned did amazing work. Greaney got an important number wrong in his study. But there are a lot of people at the Motley Fool board who would have taken even higher withdrawal rates if not for his study. So even Greaney did some good (along with a lot of bad). The others (Shiller, Pfau, Russell) are flat-out heroes. So no argument with any of that.

But take a look at today’s CAPE value. It’s 28. Shiller’s amazing research has not gotten the job done. We all have a Get Rich Quick/Buy-and-Hold urge residing within us. Our addiction to Get Rich Quick/Buy-and-Hold investing strategies is every bit as strong as the addictions that some have to alcohol or drugs or sex or gambling. To overcome that addiction, we are going to need to open every site to honest posting re the peer-reviewed research. The Bennett/Pfau research shows that market timing is 70 percent of what it takes to achieve long-term stock investing success. So 70 percent of what we hear from investment experts should be telling us ways to avoid getting sucked in by the Get Rich Quick/Buy-and-Hold garbage. We’re not even close to that today. Shiller’s research, as amazing as it is, cannot bear good fruit until we decide as a society to begin applying the same laws in the investment advice field that we apply in every other field of life endeavor.

My job is to open every site on the internet to honest posting re the peer-reviewed research. All of my “commentary’ is aimed at achieving that goal. People have a hard time accepting that there could be 41 years of oeer-reviewed researcb that cannot be discussed. The purpose of my commentary is to explain how it happened. People need to hear that explanation to make sense of things and to help us all make it to the other side, where we all deep in our hearts want to be. That’s journalism. Good journalism has great value. My journalism work will make the valuable work done by the three people you mention (and the good portion of the work done by Greaney) bear good fruit not just in a theoretical sense but in a practical real-world sense. After we have opened every site to honest posting, we will have THOUSANDS of people doing good work in this field. As people become less and less afraid of what you Goons will do to them if they post honestly, people will develop and share more and more powerful insights. There’s huge leverage in the work that I am doing. I am proud to have been able to have played the role that I have played.

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:

You’ll delete this of course, but one has to wonder why you are pretending to still be married.  What possible purpose does that serve?  For someone who brags about his honesty, you have some glaring exceptions.

I do not pretend. This is an investing site. The investing question is — Should we or should we not open every internet site to honest posting re the last 41 years of peer-reviewed research in this field. I have answered that one on thousands of occasions. in very clear and forceful terms.

I discuss the divorce in the opening pages of my book. Most people would not think of an author’s divorce as an investing topic. But in this particular case, it is one. That hardest thing to understand about this story is, why are there still people saying 41 years after the peer-reviewed research was published showing that market timing (price discipline!) is always 100 percent required for every investor that there might be some alternate universe where stock investing works just the opposite to how it has always worked here on good old Planet Earth. The story of my divorce offers the explanation. Until every site is opened to honest posting, there will be a heavy price to be paid for telling the truth about stock investing. That scares people. So lots of smart people who could be helping us all pull their punches.

You Goons occasionally ask questions about my wife’s views. I respond to them to the extent they are relevant. As I said in a recent comment here, my ex is like millions of other Americans re this matter. She and they have never seen a cover-up of this magnitude. So it is more than a little hard to take in. People just cannot believe that something like this could happen. It’s one of my primary jobs in the book to explain how it did happen.

Other than that, my divorce is none of your business. To the extent that it is relevant to the investing issues that the site was formed to address, I discuss it. Outside of that, I do not.

Fair enough?

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:

First you say you need to be an expert, then you say it is better not to be one.

The idea that market timing is not required was the dominant expert view in the 1960s, when Buy-and-Hold was being developed. Then in 1981 an expert (Shiller holds a Ph.D.) published peer-reviewed research showing that the market is not efficient and that timing is required for investors seekling to maintain a constant risk profile over time. People who had developed reputations as “experts” in earlier times have suppressed discussion of the far-reaching implications of Shiller’s Nobel-prize-winning research for 41 years now. Who are the true experts? The people still following a model discredited by 41 years of peer-reviewed research? Or the 10 percent of the population that believes that Shiller’s Nobel-prize-winning research is legitimate research?

I read Shiller’s book. I understand that there is precisely zero chance that the safe withdrawal rate could be the same number at all valuation levels. Does that make me an ‘expert”? Reading a book does not make me an expert in the way that that word is ordinarily used. But it puts me far ahead of the many people who to this day believe in Buy-and-Hold strategies.

Expertise will not mean what it means in other fields in this field until we open every internet site to honest posting re the last 41 years of peer-reviewed research. If the Buy-and-Holders cannot bear to be questioned, their “expertise” is a pretty darn flimsy thing. True experts don’t advance death threats or engage in acts of extortion. Nor do they keep quiet when they see others around them doing so. True experts encourage challenged to their thinking, especially when the challenges are rooted in 41 years of peer-reviewed research.

I am the strongest critic of the “idea” that market timing is not required alive on Planet Earth. If that makes me an expert, then I’m an expert. And proud of it. I sure ain’t a Buy-and-Holder (although I of course have great respect for the Buy-and-Holders for the many important contribtuons that they made that have stood the test of time).

I hope that helps at least a tiny bit.

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 is the last time you had an actual discussion with anyone from the investment community?

People in the investment community are having conversations with themselves every day, We have seen over and over again that the experts in the field would love to be able to do honest, research-based work. It all comes down to whether a few of them work up the courage to stand up to you Goons in the days following the nedt Buy-and-Hold Crisis.

Rob

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

How many studies have you included in your study of the last 41 years of research?

Shiller published his Nobel-prize-winning research showing that valuations affect long-term returns in 1981. It has not been discredited in the 41 years since. Every year that passes in which it remains not discredited, our confidence in Shiller’s finding should increase.

In contrast, there has never been a single study showing that market timing doesn’t work. Academics put that forward as an hypothesis (“The Efficient Market Theory”). But no one ever tested the hypothesis to determine whether or not it is so until Shiller came along to discredit it. Some people say that Fama’s research supports the hypothesis. But Fama only tested short-term timing. There is indeed good reason to believe that short-term timing doesn’t work. But to say that no form of timing works just because one form of timing has been shown not to work is like saying that no form of driving works because one form (drunk driving) has been shown to be a bad idea.

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 when you’re not, you’re not.

Research-based investment strategies are not super hot at a time when the CAPE value is 28. Who would have thunk it?

Rob