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

Uh oh……….the market is dropping and no one is blaming buy and hold…….only tariffs. That means you won’t be getting your $500 million windfall. There goes your plan “B”.

I’m blaming Buy-and-Hold. Announcement of the tariffs would have caused a price drop in any event. But when stocks are priced at two times their real value, the price drop is much larger.When all investors are practicing valuation-based market timing, both phony price increases and phony price drops will be eliminated, Permitting honest posting re the peer-reviewed research at every site will take away the thrill-ride aspect of the stock investing experience. I think that would be a very good thing.

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 agree that in recent years stocks have not performed at all as I was expecting them to perform. That’s an objective fact.
In short, you were wrong. Just say the words, Rob.

The Yankees were ahead by five runs at one time in yesterday’s World Series game. If someone said “I believe that there’s an 80 percent chance that the Yankees will win this game,” would you say that they were proven wrong? I would not. The historical record supported the statement. But 80 percent is not 100 percent. We saw an outlier outcome. It happens. In baseball and in stock investing as well.

You’re saying that, because we have seen this outlier outcome in recent years, we should throw away all of the peer-reviewed research and go with the strategy that the peer-reviewed research shows never works in the long-term (failing to practice valuation-based market timing). I don’t buy it. The value of the peer-reviewed research is that it steers us away from our worst emotional impulses.

Permitting the CAPE value to get to where it is today shows a dangerous emotionalism on the part of stock investors. I don’t believe that that dangerous emotionalism just fell out of sky. It is the result of the relentless promotion of Buy-and-Hold strategies by our Wall Street Con Men friends. We are perfectly capable of investing in rational, effective ways. But there’s a lot of money to be made pushing the Buy-and-Hold stuff. So we at times engage in this unfortunate behavior. I think we can do better. The key is opening every site to honest posting re the peer-reviewed research.

Where I’m coming from.

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 and Hold investors are satisfied getting the market return.

Market timing junkies think they have some magic way of exceeding the market return even though years of experience shows that holding such a belief is not supported by the evidence.

What if the market becomes emotional and produces irrational exuberance? Are the irrational exuberance “gains” part of the “market return” that you expect to get?

We all need to work to keep the market return honest and real. We do that by permitting honest posting re the peer-reviewed research at every site. If all that investors can hear is what our Wall Street Con Men friends want them to hear, they are not going to obtain the market return on stocks they purchase at times of insane levels of irrational exuberance. The Bennett/Pfau research shows that as clearly as anything could be shown. As Wade put it after 16 months of research into the question: “Yes, Virginia, Valuation-Informed Indexing works!”:

Irrational exuberance gains are not the same as genuine economic gains. I mean, come on. Investors can only get the market return for as long as the market remains rational. And that doesn’t happen by magic. We all need to work together to keep our Get Rich Quick/Buy-and-Hold impulses under control to keep the market rational.

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:

Everyone already makes that decision, Rob.  They just don’t have to agree with you as to what YOU think. Is overpriced.  They don’t have to be forced by you to go broke, just like what happened to you.

Today’s CAPE value is 37, Anonymous. Do you think that that CAPE value came to apply as the result of millions of investors making informed choices as to their stock allocation?

I see that CAPE value as being the consequence of the widespread promotion of Buy-and-Hold strategies.

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:

Shiller has warned you about timing the market with CAPE. You act like that comment never existed.

Many have told you how you are wrong on Greaney. You act like those comments never existed.

Wade Pfau was on a podcast earlier this year talking about the data since Shiller’s study was published and he explained how market timing did not work. You act like his comments never existed.

All the board owners told you that you were banned because of your behavior. You act like these comments from the board owners never existed.

You act like the 43 years of peer-reviewed research showing that valuations affect long-term returns don’t exist. We need to figure this stuff out. That’s why I say that we need to open every site to honest posting. No intimidation tactics whatsoever. Let people say what they truly believe and then ask lots of questions so that over time we all gain a sense of clarity re what is going on.

Bernstein said that the safe withdrawal rates at the top of the bubble was 2. You can’t get more clear than that. Yes, there’s lots of stuff in his book indicating a belief in Buy-and-Hold. If he felt comfortable posting honestly, he could try to explain the contradictions and we could all learn from what he said. I believe that over time he would become a Valuation-Informed Indexer. There’s only one way to find out.

I believe that over time we would ALL become Valuation-Informed Indexers if honest posting re the peer-reviewed research was permitted at every site. The problem we are facing today is that the Buy-and-Holders got there first. Shiller’s research had not yet been published at the time when Buy-and-Hold was being developed. The Buy-and-Holders took a shot in the dark re valuation-based market timing (there was research showing that the guessing-game approach to market timing doesn’t work) and they made a mistake. Since then, it’s just been a matter of wealthy and powerful and well-connected people not wanting to acknowledge having made a mistake in a field in which possessing a reputation as an expert pays off big time.

Part of the scientific process is admitting mistakes as they are discovered. It is a logical impossibility that valuation-based market timing doesn’t work in a world in which valuations affect long-term returns. Once the Buy-and-Holders acknowledge the mistake, we can all begin putting our energies into developing the first true research-based stock investing strategy (Valuation-Informed Indexing),

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 just checked my accounts. My net worth hit another all time high. It’s only August but it’s gone up by significantly more than our annual household income. Most of these gains are contributions and gains to the stock market. After this crazy runup in real estate our house is still only worth $300K which in coastal Connecticut means it’s a modest house (we got a modest house for a reason…)

You cannot buy groceries with your theories, but I could buy groceries with my market gains.

Okay, Sensible.

I still believe that we should be Permitting honest posting re the peer-reviewed research at every site.

Research papers do not advance theories. Research papers TEST theories. They determine which theories reveal realities and which theories fail to do so. The theory behind Buy-and-Hold, that the market is efficient and that valuation-based market timing (price discipline!) is not needed, has been discredited. We need to move on to development of the theory that has passed the test, the theory behind Valuation-Informed Indexing, that the stock market is like every other market that has ever existed and that price discipline (valuation-based market timing) is always 100 percent required for every investor.

If the theory is valid, then Valuation-Informed Indexing will permit you to buy more groceries over the course of an investing lifetime. It’s important to know which theory is valid. If we are not going to permit ourselves to use research to test theories, why have peer-reviewed research? If we are going to contunue the ban on honest posting, we should just shut down all the peer-reviewed journals. I vote for permitting honest posting re the research.

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 and Holders collectively will achieve the market return (minus very small transaction costs)

Market timers collectively will achieve the market return (minus much larger transaction costs)

I appreciate you making an effort in this comment to present a rational case for the Buy-and-Hold position rather than just engaging in name-calling, Evidence.

The transaction costs for Valuation-Informed Indexers do not need to be large at all. They need to check the CAPE value once a year to see if their stock allocation percentage still makes sense given the risk profile that they believe is appropriate for someone in their circumstances and for someone with their financial goals. But dramatic swings in CAPE values do not take place frequently. A person can obtain most of the benefits of valuation-based market timing by making only one allocation change every ten years on average.Making only a small number of allocation changes permits the investor to retire years sooner while dramatically reducing the risk he takes on by investing in stocks. The transaction costs incurred are trivial relative to the benefits obtained by following a research-based strategy,

Please remember that Shiller’s Nobel-prize-winning research bad not yet been published at the time the Buy-and-Hold strategy was being developed. At the time, the Efficient Market Theory was popular among academic economists. If the market were efficient, there would be no need for valuation-based market timing. The reason why Shiller was awarded a Nobel prize is that he DISCREDITED the Efficient Market Theory. He showed that irrational exuberance is a real thing. If irrational exuberance is a real thing, an investor who wants to keep his risk profile stable over time (that is, to Stay the Course in a meaningful way) is REQUIRED to engage in valuation-based market timing. In a world in which valuations affect long-term returns, there is no other way to get the job done.

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

If everyone has emotions, than that is not the issue. The difference comes down to decisions. Market timers think they can beat the market. Buy and holders know that the market is unpredictable in the short term, but grows in the long term. Buy and holders know that market timing has never had a successful outcome. Buy and holders know that the market has always gone up the the long run and if they don’t do anything based on emotions, they will have a successful retirement. I have $6 million+ as my proof. Your outcome is a depleted savings account. Results matter.

Yes, market timers believe that they can beat the market. They beat it by maintaining their rationality in the face of insane emotionaliism in the market, which is always temporary. If you were looking to buy a car that had a market value of $20,000 and you happened to stop in to a particular dealer who said that he would sell you the car for $60,000, you would be wise to engage in timing of your purchase. The smart thing would be to wait for the dealer to realize that he is not going to be able to sell the car for that price and to go with a more reasonable price. When he agrees to sell for a sensible price, your smart move would be to buy. By timing your purchase, you get a far better deal for your money.

Market timing has of course had ONLY successful outcomes. The entire point of the Bennett/Pfau research was to show that. For the entire history of the market, market timing (price discipline!) has dramatically diminished risk while also dramatically increasing return. Investor heaven! Common sense tells us that market timing/price discipline must always work. And the past 41 years of peer-reviewed research CONFIRMS that what common sense tells us must be so in fact really always has been so. Refusing to practice price discipline (that is, following a Buy-and-Hold “strategy”) always subtracts, it can never add.

We agree that the market is unpredictable in the short term and we agreed that it always goes up in the long term. Where we don’t agree is that I say that an investor should aim to keep his risk profile stable over time. In a world in which valuations affect long-term returns (the world we live in!, it is not possible to do that without being willing to engage in market timing. Keeping one’s risk profile constant over time always produced better long-term results. It is not even possible for the rational human mind to imagine how it could be different.

Markets set prices properly. That’s their core purpose. When millions of investors become unwilling to practice market timing/price discipline, it becomes impossible for the market to set prices properly. It becomes dysfunctional and we see price crashes and economic crises and an increase in political frictions. Not good. We should permit honest posting re the last 41 years of peer-reviewed research at every site on the internet, without a single exception.

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:

It is not true that we would ‘see the same 6.5%’. If stocks were not volatile and were risk free they would have the same returns as treasuries.

I don’t agree.Edge.

The return that you obtain on stocks is the result of the increase in the value of the companies. The increase in value is the same regardless of how much risk we add by failing to practice price discipline. Making stocks riskier is a negative, not a positive.

At least that is my sincere take re this 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:

“I don’t do criminal.”

You don’t do sane either. In fact you don’t do much of anything.

Except waiting. Credit where it’s due. You are great at waiting.

Thanks for that much, Anonymous.

I don’t see that I have much choice. I felt like a creep for those three years when I didn’t speak up about the error in the Greaney retirement study. I have a tendency to over time become friends with the people that I post with on discussion boards. I sure don’t want to go back to feeling like a creep by selling those people out. But the shift from Buy-and-Hold to Valuation-Informed Indexing is a huge advance. It means rewriting all the textbooks, rejiggering all the calculators, explaining to millions of people an entirely new way of understanding how stock investing works. That’s not a one-person job. I am going to need some help from site administrators and academic researchers and investment advisers and policymakers concerned about the future of our economic system and so on. So, yes, I wait.

I believe that we will see a change in the days following the next price crash. It’s like what you see in an area where there is a high risk of flooding. You can tell people “don’t build your house here, the science says that someday in the not too distant future it will be washed away in a flood.” Lots of people who like living where they are are going to look at the sky and say “it seems like a sunny and pleasant enough day, I think I will just remain where I am, now go away, I don’t want to hear anymore about what the science says.” But, after the flood hits and many lives are destroyed, it’s a different story. Then people say: “Why didn’t you tell us about the flood back when there was still time to do something about it?”

I believe that there will be people who will work up the courage to stand up to Lindauer and Greaney (and their respective Goon squads) in the days after the flood hits. If Fama is right, it’s not even an issue. If Fama is right, the risk of a crash is not greater today than at any randomly chosen time. But, if Shiller is right, which I believe is the case, the risk is much, much greater today. The risk is probably greater today than it has been at any earlier time in U.S. history. A case could be made that the risk is greater today than it was in January 2000. That’s not so going by the CAPE value alone. But the amount of time that a bull market has been in place is another risk factor and we have had many more years of irrational exuberance today than we had had in 2000.

So, yes, I wait. I also pray that the crash will not be as bad as the past 40 years of peer-reviewed research in this field indicates it might be. And I pray that, in the days following the crash, we all find a way to put our differences behind us and to get together for a few frosty cold ones and have a laugh about the craziness we lived through in earlier times.

My best and warmest wishes to you and yours, old (Goon) friend.

Sentimental Rob