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 can spend what you have on your statement.  You can’t spend what you don’t have (like a $500 million fantasy scenario).

I wouldn’t feel comfortable counting on money that is only irrational exuberance when doing my retirement planning. To me, that’s like counting on a feeling that you have when you are drunk that you can run red lights and not get hurt. The red lights are there for a reason. Shiller’s Nobel-prize-winning research is there for a reason.

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:

Why haven’t things worked out the way you said they would? Why didn’t we see the big crash?

This is a big question. If Shiller’s Nobel-prize-winning research is legitimate research (I believe that it is), then this is a question that we should be examining at every investing site on the internet on a daily basis. If Shiller is right, then when stocks are priced as they are today, half of our portfolio value has no economic substance to it and is comprised of nothing more than irrational exuberance. The question of when prices will return to reasonable levels is huge. Knowing that tells us when hundreds of thousands of businesses will fail and when millions of retirements will fail and when we will see a spike in political frictions and on and on. So we all need to come to a better understanding of why the crash has been delayed (this is the longest time-period in U.S. history in which prices have remained at super high levels).

The key to understanding this is to avoid falling into the trap of seeking economic explanations of what has happened. That’s pre-Shiller thinking. What Shiller showed is that much of what happens in the stock market has no economic foundation — it is rooted in investor mood swings. So we need to focus on investor psychology. What is different about investor psychology today that we have been able to keep stock prices up at super high levels for longer than ever before? That is what you are asking.

A book could be written on this question. But I think that the basic thing that is going on is that people are scared. An irony of economic progress is that, the richer people are, the more vulnerable they are to setbacks. Lots of people are okay with how they are living today. But they feel that they are on the edge. They do not feel secure. So they cannot even imagine how it would feel to experience a loss of 50 percent of their life savings, which is what we would see if today’s irrational exuberance were to disappear, as it must if the market is to continue to function.

So they block the thought of those losses out of their mind. So long as people do not think about the losses, they cannot take steps to avoid them. So people are not lowering their stock allocations. Which is what we would need to see for prices to come down. We are scared and paralyzed. If we were to act in our own best interests, we would lower our stock allocations. Doing that would bring on the price crash that we fear. So we don’t act. We cross our fingers and hope for the best.

I don’t favor this approach. I believe that it would be better to face our problems frankly. Then we could manage a price drop and keep it from getting out of control. But I am not seeing any signs that we are going to manage things. We are going to put off the day of reckoning just as long as we can. Then when it comes, we will panic. Not ideal. But panic is a natural result when we set things up so that the huge price crash comes as a surprise.

Think about an alcoholic, Anonymous. Say that at age 30 all bis friends predict that his life will crash by ago 40. But it doesn’t happen. The guy is very talented and has a will of steel. He makes it to 54. He still is in great danger of seeing his life fall apart but it hasn’t happened yet. To what would you attribute the long delay in his coming to terms with his alcoholism? I would say it is fear. The longer his addiction remains in place, the harder it is for him to fix his marriage and his career and his friendships and his health and his financial affairs. It doesn’t get easier over time, it gets harder.

But of course sooner or later he has to set things right. While it become harder to fact the addiction as time passes, it also become more imperative that the job be completed. We are deep into a price addiction today. It has gone on so long that it has become very, very hard even to think about what it would mean to permit prices to return to reasonable levels. But we know somewhere inside that we have no choice but to let this happen. But as of today, the thought is — put it off, put it off, put it off. It’s been like that for a long time now.

I hope that 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:

Your problem is with Shiller. He won’t say what you want him to say, which makes him a goon.

My problem is with human nature, as is yours.

There is something in human nature that makes us want to lie to ourselves, to tell ourselves that things are better than they really are and to thereby put ourselves in danger. There are people who are 100 pounds overweight and who are thus at risk for a heart attack but who tell themselves “I haven’t had a heart attack yet, so I will probably never have one.” There are people who tell themselves “I can still drive home even though I had four beers, I don’t need to call a cab” and there are people who fail to confront them about those sorts of decisions. We humans hurt ourselves by lying to ourselves. All the time. It’s not just in the stock investing realm that this happens.

That’s my problem. People want to lie to themselves. The last 39 years of peer-reviewed research in the investing realm makes it hard for us to do that. The message of that 39 years of peer-reviewed research couldn’t be more clear — always, always, always, always practice market timing; whenever a large number of investors fails to do so, we see a crash big enough to bring on an economic crisis, please don’t ever fall for the Buy-and-Hold garbage. The irony is that, the stronger the case is that drunk driving is dangerous, the more angry the drunk guy is when you try to take away his car keys. We really, really, really want to engage in the dangerous activity that our reasoning mind tells us we should not engage in and so we lash out at those who try to use reason to persuade us. When we possess a strong desire to do something unreasonable, reason becomes our enemy. We hate it, hate it, hate it, hate it, hate it. We ban it. We follow it all over the internet and call it names, that sort of thing.

That’s my problem. That is what is working against me.

But you have a problem too. We humans are not only the unreasoning animal that shuts out knowledge so that we can continue to do stuff that seems appealing in the short term but that has been shown to be dangerous. We also are on occasion the rational animal. That’s the hat we are wearing when we do research. That’s the hat we are wearing when we adopt rules at discussion boards that say that death threats are out of line. That’s the hat we are wearing when thousands of us put up posts asking the Goons among us to knock off the funny business and to permit honest posting. That part of us is just as real as the part that wants to do crazy dangerous stuff and to lie to ourselves about the risks.

So we both have a problem. We are fighting a battle of reason versus emotion. You think that emotion is going to win forever because it has won a number of short-term victories. I think that reason is going to win in the end because it must, our economic system will not remain viable for long into the future if we do not come up with some way to provide access to honest and accurate and research-based investment advice to the millions of people who want and need access to it.

The big question is — Will things change when people can see with their own eyes how dangerous the pure Get Rich Quick approach is? Does the fat guy wish that he had made more of an effort to watch his diet after he has had his heart attack and has had a bypass and is spending months taking cautious walks trying to recover from it? Does the heavy drinking guy wish that he had let his friends take his keys after he has been in an accident and has been told that he may never walk again?

I think that seeing things with our own eyes is going to make an impression on us. The next price crash will not be just theory, as people tend to think of the last 39 years of peer-reviewed research. The next price crash will bring on thousands and thousands and thousands of painful realities. And we will as a nation have to reconsider our behavior during the 30-year cover-up and decide whether the ban on honest posting is really such a hot idea. I think we will make better choices at that time. We’ll see. It is beyond my abilities to lie about what the research says in any event. So I would say that, wouldn’t I?

Shiller has a little bit of the Goon in him. He could have included a clear statement in his book saying that: “Given my finding that valuations affect long-term returns, there is zero chance that the safe withdrawal rate is the same number at all times and the Buy-and-Hold retirement studies should be corrected immediately, before they cause even more harm to even more people.” That would have been a great statement. That would have helped us all. I wish that he had included that statement in his book.

But, yes, you are right, Shiller is a human, which means that Shiller has a bit of Goon in him. Shiller wants the other humans to like him so he tells lies when he is placed in circumstances in which he believes that his career will be in danger if he says things in a blunt and plain and clear way. As did that Rob Bennett fellow for a good number of years. As I probably do to a small extent even today. We all want to be liked. So we all hold back on telling the full truth when we see that our fellow humans very much do not want to hear it.

I think that evolution put that part of us in us for a good reason. We need to stick with the herd. We don’t have time to think every issue through for ourselves. So we need to rely on what the other humans around us are saying. If we were all independent thinkers all the time, we would in general die sooner than we do. Evolution doesn’t like to see us dying sooner. So it edited out extreme free thinking. It put in us a gene that causes us to want to follow the herd and to dedicate lots of brain power not to discovering truth but to rationalizing dangerous stuff that the herd wants to see rationalized.

But evolution also sees benefit in a measure of free thinking. So we also have an ability to see through the b.s. of the herd and to move forward as a people. The laws against drunk driving have been tightened. There are now cancer warnings on cigarette packages. There was a time when people laughed at the idea that there would ever be cancer warnings on cigarette packages. But we overcame the herd instinct to laugh in that case. The warnings are there. Those who thought that the research showing that smoking causes cancer was important prevailed in the end. Good for them. Good for all the humans.

We are as a nation working through a process, Anonymous. Yes, we love our Get Rich Quick investing strategies. Yes, we have been investing in ways that cause price crashes and economic crises for a long, long time now. But, no, we are not hopeless cases. We as a society permitted Shillar’s book to be published, We as a society awarded Shiller a Nobel prize. We as a society adopted rules at every discussion board and blog prohibiting the tactics that you Goons have employed to block honest discussion of the last 39 years of peer-reviewed research for nearly 18 years now. We are not an all bad people. We are not an all good people, that much is evident at this point in the proceedings. But we are not an all bad people either. We are in the process of working our way to a better place.

Shiller will make that statement about safe withdrawal rates when he sees that it is safe for him to make it. I look forward to that day. I like the humans. I would like to see them stop beating up on themselves. I would like to see fewer of them drive drunk. And I would like to see fewer of them eat themselves into an early grave. And I would like to see fewer of them believe the words of internet con men who tell them that a 4 percent withdrawal rate is “100 percent safe” even when stocks are priced at three times fair value and the true safe withdrawal rate is 1.6 percent.

It all depends on whether you think that the humans are capable of engaging in reasoned discussion or not. I believe that they are. I never would have become a journalist in the first place if I didn’t think that we were capable of reasoned discussion. Reasoned discussion doesn’t always prevail in the short term. I don’t say that. But, when the issue is important enough, I think that the better bet is that reasoned discussion will prevail in the long run.

We will see.

Rob the Goon (At Least Once Upon a Time and Probably to Some Extent Even to This Day)

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:

We have already looked at the numbers. It has been a disaster for you. Further, your retirement plan failed and you have admitted that you have to go back to work.

You’re not exactly an unbiased observer, Sammy.

I never retired in a complete sense. I saved enough money so that I would only need to earn a small amount doing work that was highly fulfilling and I would be fine. I have done that for 20 years now. The only part that didn’t work was that I was not able to earn money writing about the far-reaching implications of Shiller’s research findings. My work received a great reception from about 10 percent of the population. That’s been super. But there have been Buy-and-Holders like yourself who get so upset to see their strategy challenged that they become abusive and that has caused me to be banned at just about every investing site. So I have not been able to bring in an income. But that’s because of the emotional nature of the Buy-and-Hold strategy not because of any weaknesses in Shiller’s work. The problem is that Shiller’s work is so strong that it is perceived as a threat by many Buy-and-Holders.

You say that you have looked at the numbers. You have done so on numerous occasions. But every time you do it, you fail to account for valuations. Which is the entire point under discussion. If you account for valuations, you obviously come to very different conclusions. Stocks are currently priced at two times fair value. So, for the person who holds stocks today, you need to divide the number on their portfolio statement by two to know the true, lasting value of their holdings. You never do that. Buy-and-Holders don’t do that. Buy-and-Holders act as if the numbers on their portfolio statement were the word of God as to the value of their holdings. That’s the dispute. Is that number real or is it just the product of irrational exuberance?

Say that stock prices go up by 10 percent over the next three months. Would you count those gains as real? If you read the newspaper reports, they will say something like “stock prices have been going up because investors are more confident that the economy will be doing well.” That’s a rational explanation of the price change. You never read that “stock prices went up because investors are concerned that they have not saved enough and thus do not have enough to retire on.” That’s irrational exuberance at work. That’s what is really going on when prices are where they are today, according to Shiller’s research.

You say that the numbers don’t work for me because you calculate them according to the dictates of the Buy-and-Hold strategy, which has been discredited by the last 38 years of peer-reviewed research in this field. If you perform the calculations with an understanding that the numbers change when you account for the irrationality of many investor decisions, you obviously get different results.

This is what we need to be discussing at every investing site on the internet. If it is really true (I believe that it is) that every stock portfolio in the nation is worth only 50 percent of its stated value today, that’s a big deal. It’s a big deal for millions of investors and it’s a big deal for our entire economic system and for our entire political system. If trillions of dollars of spending power are going to disappear into thin air, that is going to put thousands of businesses into bankruptcy and millions of workers out of work. We need a national debate as to whether what Shiller said is right or not.

The only way to keep prices from getting out of hand is to explain to investors how they hurt themselves when they permit prices to get too high. And the only way to do that is to show them what the research says about what happens in time-periods following those in which we see high CAPE values. But that of course upsets Buy-and-Holders, who ASSUME that the numbers on their portfolio statement are real and that no adjustments for irrational exuberance are required.

You are criticizing me because I do not follow the Buy-and-Hold way of doing things. But of course the entire point that I am trying to bring to the table is that the Buy-and-Hold way of doing things is outdated. We now have a better way available to us. And I think that we all should be learning everything we can about it. I think that Buy-and-Hold is the past and that Valuation-Informed Indexing is the future.

Do you see why it makes it hard for us to have a productive conversation when you judge me by the dictates of an investment strategy that I do not believe in, that I believe has been discredited by 38 years of peer-reviewed research? Would you want to be judged by the dictates of some strategy that you do not follow, that you believe has been discredited by decades of peer-reviewed 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:

Uh oh. Another article in which Robert Shiller says that Rob Bennett and his VII timing scheme are wrong.

https://www.fa-mag.com/news/was-the-stock-market-boom-predictable-44086.html?print

If investors would have follow Rob’s advice with VII, they would have missed on on the big market boom. Articles like this won’t look good in front of your jury.

I’m grateful for the link, Anonymous. It is of course always helpful to see what Shiller is saying re these matters. He’s obviously not saying anything even remotely close to what you are suggesting that he is saying.

Shiller is saying that the increase in stock prices from March 2009 was not caused by economic realities. The idea that stock price changes are caused by economic developments is the premise of the Buy-and-Hold Model. So he is here rejecting out of hand the entire Buy-and-Hold Model.

He is saying that predicting future prices is hard and I of course agree with that. Shiller has always said that and I have always said that.

I don’t see him saying in these words that knowing the extent of investor emotionalism that is present in today’s price does not permit one to gain a strong sense of where prices are likely to go over the long-term from that point forward. It was Shiller’s showing that that has been so for as long as the market has been in existence that caused him to be awarded a Nobel prize.

Shiller did not predict the price boom that we saw from 2009 forward and neither did I. That price boom was not entirely inconsistent with what we have seen over the history of the market but it was certainly very much an outlier result. He puts forward some explanations for that price boom that are EMOTIONAL rather than economic in nature. He is suggesting that, when the emotions shift, as they always do, prices will shift too.

That’s what makes high prices so scary. The long-term movement of the market is always in the direction of fair prices (it is the core job of all markets to get prices right). So, when prices are as insanely high as they are today, there is a much greater risk that they will be dropping hard in coming days than there would be if prices were at moderate or low levels. We cannot predict future prices precisely. But we can do a very good job of assessing risk. Risk is off the charts today. Given the increased risk in the market, investors who want to keep their risk profile constant over time need to lower their stock allocations from where they would want them to be if prices were moderate.

I don’t entirely agree with Shiller’s explanations of why prices might have gone so high. I don’t reject them out of hand. But I would put more emphasis on two factors: (1) efforts of the Federal Reserve to stabilize both the economy in general and the stock market in particular in the wake of the 2008 economic crisis and price crash; and (2) the enhanced feeling of security that investors felt when the huge price drop that we saw in late 2008 and early 2009 did not remain in place long. Shiller did refer to the second of those two factors. I think that was a big deal. It’s the stuff about Trump and Steve Jobs re which I am more skeptical. Shiller’s thought re those matters are speculative, in my assessment.

Say that the big factor is that investors felt reassured when the 2008 price drop did not remain in place for long. If that is the true reason for the price rise, we should all be scared re what may happen next. The higher confidence that investors feel today that high prices will remain in place can keep prices from falling for a time. But not forever. And, when they do fall, all of that excess confidence is likely to be shattered. So the price drop will likely be bigger than it would have been has we never experienced the excess confidence in the first place.

The difference between Buy-and-Hold and Valuation-Informed Indexing is that Buy-and-Hold says that price changes are rooted in economic developments while Valuation-Informed Indexing says that price changes are rooted in shifts in investor emotion. It is certainly true that shifts in investor emotion cannot be predicted precisely. So prices cannot be predicted precisely. But price changes do not follow a random-walk pattern if they are caused by shifts in investor emotion. Emotional highs bring on emotional lows. So the risk of big price drops is much higher when prices are high than it is when prices are low.

Shiller is saying here that today’s high prices are emotion-based, not reality-based or economics-based. That’s a very scary message for those who are going with high stock allocations today. An economics-based price would be one that you could count on. You cannot count on an emotions-based price. The same emotion that is causing investors to dramatically overstate stock prices today could cause them to dramatically understate stock prices next month or next year or two years from today. It’s not even just that we should expect stock prices to revert to fair-value levels. Irrational exuberance usually causes irrational depression. It is entirely possible that we will soon be seeing stock prices well BELOW fair-value levels. Yikes!

I am going to put this one on my list as fodder for a possible future column. Thanks again for bringing it to our attention.

And, yes, investors who followed my advice would have “missed out” on the big price boom from 2009 forward. Except, if Shiller is right in what he is saying, they would not have missed out on anything real. They would have missed out on a fleeting, emotional fantasy. If you want to have your retirement money tied up in a fleeting, emotional fantasy, I guess that’s your call. It’s not something that I want to do with my money and it’s not something that I feel even a tiny bit comfortable recommending for my friends. I say that investors should pull back from full participation in the stock market when it goes stark, raving bonkers, as Shiller is saying it did in the post-2009 period.

No, we cannot predict precisely when the return to rationality in prices will take place. But we can protect ourselves from experiencing its full negative effect on our financial future by pulling back a bit in response to the insane increase in stock market risk that applies when prices are where they are today.

Those are my sincere thoughts re this terribly important matter, in any event. I naturally wish you the best of luck in all your future life endeavors. my dear Goon friend.

Risk-Aware 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:

“They don’t want to be social outcasts.”

Not believable.

They can post anonymously.

It’s true that they could post anonymously.

I don’t think that people like even flirting with the idea of becoming social outcasts. The protection that comes from posting anonymously doesn’t assure them. It’s not just that they don’t want other people to know that they are social outcasts. They don’t want to know it themselves. If they post anonymously, they would still know themselves that they had done so, right? They don’t want that. People are afraid of being social outcasts and they just don’t want to even play at it (which is what they would be doing if they posted anonymously).

Acknowledging that we caused the economic crisis is a scary thing, Anonymous. It means saying that the experts made a mistake about a very important matter. That’s scary. And we are all in on it. The experts couldn’t have continued making the mistake if we had called them out. So we are all in on it. That makes it double scary. Acknowledging that it was the heavy promotion of Buy-and-Hold that caused the economic crisis is like accusing ourselves of a crime. The first instinct is to go into denial.

Also, please remember that even those who have doubts about Buy-and-Hold are not sure. We learned by talking things over with others. We can’t do that re Buy-and-Hold because of the ban. So we can’t really learn about the topic. When I say that lots of my friends expressed excitement over having the debate that we need to have, I am not saying that they signed on to everything that I said. They didn’t. They saw the merit of talking things over, that’s all. Some would in time have come to agree with me if we had let the debate go forward. But they are not going to go out on a limb today and express agreement with me, even anonymously. Make it clear to them that that is a safe thing to do, and they may do it, or they may at least pick up the debate and see where things go. But they haven’t yet talked things through enough to go out on a limb. We learn through talking things over and these people have not been permitted to talk things over in a safe way.

I’ve made the comparison to civil rights from time to time. Do you remember the movie “Guess Who’s Coming to Dinner?” It’s about a white girl who wants to bring the black man she is going to marry home to meet her parents. The parents are liberal. So they should be fine with this. But the entire tension of the movie is that they are uneasy about it. Fast forward to today and they would not have a problem. But it was hard in the early days of the civil rights struggles even for liberals to be quite that “progressive.” People need to be permitted to change slowly.

If you asked people of that day to say “Blacks are equal to whites,” they would have said it. If you asked them to say “blacks and whites should intermarry,” they would have hesitated, even if they were speaking under the cloak of anonymity. They wouldn’t be able to come up with any logical reason why blacks should not marry whites. They wouldn’t exactly oppose it. But they wouldn’t be quite capable of expressing enthusiasm for the idea.

That’s what you are asking people to do when you ask them to post anonymously in support of Valuation-Informed Indexing. There are people who would do that if there were no social stigma attached to it. But so long as that social stigma persists, they are going to hold back. It’s not just that they want to avoid direct punishment (which they could avoid by posting anonymously). They want to avoid the yucky feelings that come from violating a social taboo.

Show people that honest posting is both tolerated and encouraged and you will see more of it. Honor your word not to punish it and more people will venture forward. The anonymity thing is not enough to get the job done. Not today. Perhaps after the crash. But not today.

I hope that helps a small bit.

Social Outcast (With an Exclamation Point!) 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:

Why hasn’t Shiller partnered up with you to take down this mass conspiracy and expose all of these liars?

No matter who you ask about, the answer is going to be the same, Anonymous. Shiller is much like Bernstein. And Bernstein is much like Bogle. And Bogle is much like Bennett (remember that I didn’t speak up about the errors that I knew about in Greaney’s study for three years).

And on and on and on. We are all human. And so we all seek social approval. We all want to be liked. Tell people that they need to divide the amount on their portfolio statement by two to know the true and lasting value of their holdings and you are not going to be liked. So we all engage in this lying thing. It’s what we humans do when it comes to stock investing.

You use the phrase “expose all these liars” as if the liars were the exception, as if lying about stock investing were not the norm. Have you checked the P/E10 value lately? To price stocks improperly is to lie about their value, is it not? For stocks to be as overpriced as they are today, we pretty much all have to be big-time liars, no? Does that not follow?

Shiller was awarded a Nobel prize because he pointed out the path to being more honest about stock investing. Being more honest would help us all. Humans are liars. We all feel an inclination to lie about these sorts of things. But humans also love truth. Both things are so. We invest more effectively when we tell the truth. So Shiller did a wonderful thing by showing us how we lie and by providing us the tool we need (P/E10) to become more truthful about stock investing.

Why does Shiller not play it the way I do? Why is he not more blunt?

I think that he feels that he can be more effective by telling people what they need to know to figure out the truth while not saying things so clearly as to stir up their rage. I say things clearly. But very, very few people hear my words. Because you Goons have seen to it that I am banned at every major investing site on the internet. So Shiller’s soft approach to telling the truth has had 100,000 times the impact of my more direct and clear approach.

I didn’t wake up one day and declare “Oh, I know what I will do, I will take Shiller’s soft pronouncements and state them more directly and more clearly.” I ended up doing that because of the circumstances in which I was placed. If Shiller is right that valuations affect long-term returns (he is), then Greaney’s claim that the safe withdrawal rate is always 4 percent has put many people on a path to suffering failed retirements — thousands of people who were friends of mine at the Retire Early board and who thought that his retirement study was legitimate and millions who I have never met but who followed similar studies and retirement articles based on those studies that would have been corrected had Greaney not engaged in the abusive behavior that he engaged in to stop people from learning about the errors in those studies.

I was not going to get Grreaney’s study corrected by following Shiller’s soft approach. I tried. My May 13, 2002, post didn’t even say that Greaey got the numbers wrong. That first post just asked a question — Should we take valuations into consideration? That’s pretty darn soft. Greaney’s reaction was not so soft. So I was forced to respond with something a bit more clear and direct. And here we are.

The soft approach is more popular. People LIKE Get Rich Quick. People LIKE Buy-and-Hold. Lots of people don’t want to be told about the 37 years of peer-reviewed research showing that it is a logical impossibility that Buy-and-Hold could ever work for a single long-term investor. Shiller doesn’t endorse Buy-and-Hold. So the Buy-and-Holders do not consider him a friend. But he avoids stating things in the direct and clear way that I often state them and thus he is perceived as less of a threat by our Buy-and-Hold friends than I am. Shiller is disliked but tolerated. I am outright hated.

Not by everyone. I am loved by the 10 percent who already have serious doubts about Buy-and-Hold and who would like to explore those doubts. And I am tolerated by most Buy-and-Holders. But I am hated by the Goons, the most intense Buy-and-Holders, a group that comprises about 10 percent of the population of Buy-and-Holders. And the much larger number of Buy-and-Holders who do not love me or hate me but only tolerate me hate the ugliness that appears before them when the Goons go after me and end up voting in favor of bans when they see no other way to bring the ugliness to an end.

The proper way to bring the ugliness to an end is to ban the Goons when they violate the rules of the boards and indeed the laws of the United States. That’s the answer. But most humans are afraid to speak up in opposition to anyone who is on the side of the majority. It’s a scary thing to do. So the Goons for the time being hold a veto power over what can be said on the internet about how stock investing works.

That needs to change.

Shiller’s soft approach hasn’t gotten the job done. The Buy-and-Hold retirement studies have not been corrected to this day. So soft isn’t doing the job. Those of us who understand what the last 37 years of peer-reviewed research is telling us need to try some new things. We need to be respectful. We need to be warm and friendly. We need to be grateful for the many powerful insights that were supplied by our Buy-and-Hold friends. But we do need to get the job done. We do need to provide access to honest and accurate reports re what the peer-reviewed research really says about safe withdrawal rates and about scores of other critically important investment-related topics.

That’s my job. That’s what I do.

I want Shiller to partner with me. 100 percent. In ordinary circumstances, he would be happy to do it. These are not ordinary circumstances. He will do it if you Goons calm down. But I have a funny feeling that he is not going to do it until he sees some evidence of calming. You could provide him the reassurances he needs to hear and we could all get about the business of doing some wonderful things. Or we could wait until after the next crash, when Jack Bogle himself will see the need to move forward so clearly that he will step forward and give the speech that we all need to hear to break this spell that we are under.

I will play it however you want to play it. I won’t travel to the wrong side of the felony line, obviously. But I am up for anything that is even remotely reasonable. Just tell me what it is that you want and I will be there for you.

My very strong hunch is that we are going to have to wait for Bogle’s speech in the days following the next price crash. It’s s shame that we have to wait. I hate that reality. But it appears to me that it is a reality all the same. I am pretty much resigned to it at this point in the proceedings.

Once Bogle gives his speech and it is written up on the front page of the New York Times, we will all be working together. Shiller will be part of the effort then. Obviously.

We will all be exposing those darn human liars who in the past have made stock investing 10 times more risky than it needs to be by telling all those awful Buy-and-Hold lies. And we will all live better and richer (in every sense of the word) lives from that point forward.

Given that humans lie about everything they do and that it is only humans who buy stocks, humans obviously lie about stocks. Do you think it is a better approach to pretend that humans become 100 percent rational creatures when buying stocks and thus get all the numbers we use to inform our investing strategies wildly wrong or do you think it would be better to acknowledge that we are inclined to tell a lot of lies and to develop tools that we can all use to rein in the lying a bit? You can probably guess at this point in the proceedings which approach I favor.

Sound good?

Does that help at all?

Human Liar (and Human Liar Exposer) 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:

Hi Rob ,
After learning about Value Investing on your site , before I had been brain washed by my Buy and Hold Broker. I finally learned on my own about Value Investing I will never go back. In fact using your calculator with these insane values I allocated 20% to stocks. Am I glad I did I have still had a decent gain with no worry! If my portfolio looses 80% I am still only down 16%, I can live with that. I feel no emotional worry this way.With Buy and Hold I lived with emotional fear of loosing 50% of my retirement portfolio.The rest of my portfolio went into Tips ETF, not bonds. I am just an average guy not a pro. I thank you again for doing the research because it saves us emotional hard ship and family problems as well.
Max

There are millions of middle-class people who are seeking a investment strategy that takes the worry out of providing for an old-age retirement, Max. The Wall Street Con Men fight me like the dickens but the full reality is that they could make a lot of money with this if they would just chill out a bit. People would buy more stocks if most of the risk of stock-buying were removed from the experience. In the long run, Valuation-Informed Indexing will bring in more profits than Buy-and-Hold.

This is a win/win/win/win/win. The only hard part is navigating the transition. People who built their careers around Buy-and-Hold see it as a turf battle and don’t take the time to think through the long-term marketing implications. Taking most of the risk out of stock investing makes stocks a more appealing asset class. I am the most pro-stock guy out there! Lots of people who think of themselves as being pro-stock just don’t see it yet.

And of course my work builds on the foundation built by the Buy-and-Holders. So in no way, shape or form should anything I have done be seen as a dig at them. They make themselves look bad by fighting an advance that they made possible in the first place. I praise the Buy-and-Holders all the time for all the good that I have done. But they cannot bear to hear praise coming from me. They attack me because I point out the one mistake they made. They don’t get it that none of the good they have done ends up counting for anything in the long run if they don’t fix the mistake.

Yowsa!

Rob

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

If you really had a strong case, someone would take it on contingency.

I called about six places and I did not find anyone willing to take it on contingency. There was one fellow who came close. He was a sole practitioner. He loves the case. He wanted to take it. But when he looked closely, he saw how big it was and felt that he would need to put all his waking hours into the case. So his entire career would be riding on this one case. He ended up taking a pass.

It’s possible that, if I just made calls 10 hours a day, that I would eventually find someone. I tend to think that I would. But then, is that the way I want to go about finding a lawyer? I would prefer to be in circumstances in which the lawyers are coming to me and begging me to take them. I have a funny feeling that that will be the circumstance that I will be in in the days following the next price crash. So my inclination is to be a bit patient.

I’ve tried lots of things. I tried bringing legal cases. I tried getting Guest Blog Entries posted. I tried going to FinCon meetings. I tried contacting political blogs. And on and on and on. It seems to me that it always comes down to the same thing. People like to see the validation that comes from having lots of others join in a cause. Think of the sorts of things that they say in advertisements and in television commercials, when they are trying to persuade you of something. They say: “As seen on TV!” Or “four out of five doctors recommend!” Or “50 millions Elvis fans can’t be wrong!” We humans don’t like to trust our own judgment. We like to hear that other humans have come to similar conclusions. When we have the reassurance of knowing that lots of other humans are having the same thoughts, THEN we feel confident enough in what our reasoning capabilities tell us to make decisions based on logic.

That’s the story of bull markets, Anonymous. If you look at the historical record, you see that there has never been a bull market that did a lick of good for a single investor. We have had numerous bull markets in the history of our stock market. But there has never yet been one that produced lasting gains. We ALWAYS give the money back in the bear market that follows. Every single dollar that has ever been earned from overvaluation has been lost through the sub-par returns experienced in the years that followed. So bull markets are just a big waste of time and energy. They hurt us because they make effective financial planning impossible; how can anyone plan his or her financial future when he doesn’t even know how much wealth he possesses? Bull markets are a curse.

Given what a curse they are and given how easy it is to determine that they are a curse, it ought to be pretty darn easy to do away with bull markets, right? Just tell people. People want to act in their self-interests. So, when you show them how much they are hurting themselves, they are going to do what it takes to bring the bull market to an end. That all follows.

But it obviously hasn’t played out that way for the past 15 years, right? Learning what the last 36 years of peer-reviewed research tells us about how stock investing works in the real world cannot possibly hurt a soul. But we sure do see lots of opposition to the idea, do we not? What’s that about?

The opposition is rooted in the conflict that we all face between accepting reality and living in fantasy worlds. It is not true that we humans always act in our self-interest. It makes logical sense to believe that we would. But it is just not true that we actually do that. Alcoholics do not act in their self-interest. Gambling addicts do not act in their self-interest. Smokers do not act in their self-interest. The same humans that smoke and drink and gamble are the ones who buy stocks. It is not reasonable to believe that these creatures are going to amazingly become capable of acting rationally when they buy stocks. It takes great effort for humans to act in their self-interest. They are capable of it when given lots of help. But it does not at all come naturally to them. It is very much against the nature of humans to invest rationally.

Lawyers are humans too. To win their cases, to build strong careers, to make lots of money, they need to please their fellow humans. They all know this on some level of consciousness. They might not ever give voice to the reality. They don’t articulate it in speeches or write it down in books. But they know that part of the job is making their fellow humans happy and they are able to pick up if they possess even a tiny bit of intelligence — and most lawyers possess at least a tiny bit of intelligence — that most of the humans very, very, very much do not want to be told that they need to divide their portfolio balances by two to know how much money they have saved for retirement.

That’s the story here. When I tell people that they need to divide their portfolio balances in two, I am telling them something that they very, very, very much do not want to hear. People want to be able to retire sooner, not later. They want to hear that their portfolio balances are higher than what they appear to be, not smaller than they appear to be. The Buy-and-Holders don’t tell them that the balances are higher; perhaps we should thank God for small favors! But at least they tell them that they are not smaller. I tell them that they are smaller, a lot smaller. So I am not the most popular guy in town at this particular point in time.

Lawyers want to be popular. For the same reason that investment advisers want to be popular. And for the same reason that bloggers want to be popular. And for the same reason that academic researchers want to be popular. And for the same reason that book authors want to be popular. And so on and so on.

I basically have a sign hanging on me that says “I do not want to be popular, I am the fellow telling you that you need to divide your portfolio balance number by two to know the amount of true, lasting wealth that you have working for you.” So I am not popular at the moment. But I think that there’s great potential in the idea of telling people the truth about how stock investing works given the 36 years of peer-reviewed research we have available to us today that teaches us the realities. So I am going to continue going with that.

I might be able to find a lawyer who would take the case today. It would be a lot of work to find him or her. It would have to be someone who is an independent thinker, someone who is willing to take his or her chances with a jury that is probably going to come to the case with a bias against the fellow who is saying that you need to divide your portfolio balance number by two to know the true, lasting value of your accumulated wealth.

Is that going to change following the crash? I think it is going to change. I think that I will have a much better chance of signing up with a top-flight lawyer following the crash than I have today. So my inclination is to wait a bit on the legal side just as I am waiting a bit on publishing the book and on getting written up on the front page of the New York Times and on being the keynote speaker at FinCon and on all the rest. Everything depends on gaining some popularity and the popularity issues changes dramatically when stock prices drop by 50 percent or more.

Does all of that not make at least a little bit of sense? It seems to me to be the best way to proceed, given the realities that apply today.

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 will have to wipe away my tears with $100 bills.

$100 bills that have a real, lasting value of $50, according to the last 36 years of peer-reviewed research in this field.

Rob