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

There has never been a buy and hold crisis.  In fact, buy and hold has always worked.  We have a market timing crisis where people get in and out of the market and cause chaos.  Further, we have never seen a successful outcome from any market timer and you, yourself, have had a complete retirement failure while pushing a timing scheme.

I have had a few days to think about this one and I have a second reaction.

You say: “There Has never been a Buy-and-Hold Crisis.” If Shiller is right that there is a thing called “irrational exuberance,” then a Buy-and-Hold Crisis is inevitable. All that a Buy-and-Hold Crisis is is a moment in time when irrational exuberance gets so out of control that investors panic and sell their stocks and that causes prices to collapse.

Is there any way that a moment like that would not eventually not arrive? The only thing that I am able to imagine is that we could remind investors daily to always, always, always practice valuation-based market timing. If they did that, irrational exuberance could never get too out of control and thus prices would never collapse. But of course the relentless promotion of Buy-and-Hold (no market timing now!) rules that out.

Shiller could be wrong. That’s a possibility. I don’t think it’s so. But it is certainly a theoretical possibility. But the killer there is that the Buy-and-Holders don’t argue that he is wrong. I’ve been doing this for 22 years and I have never heard a Buy-and-Holder make the case that Shiller is wrong. They ignore him. They have not changed their investing practices in any way as a result of the publication of his amazing research. So they act as if they believe he is wrong. But they have never made that case. Not once. In some section of their brain, they are convinced he is wrong. But they are not able to articulate why that is, even to themselves.

If he is not wrong, if irrational exuberance is a real thing, then Buy-and-Hold Crises are inevitable. There is no other way to get irrational exuberance under control than to practice valuation-based market timing and Buy-and-Hold rules that out. If I were a Buy-and-Holder, I would be arguing that Shiller is wrong. The problem there is — the research shows what the research shows. So the Buy-and-Holders are stuck in this crazy place where they implicitly acknowledge that Shiller’s research is legitimate (by not finding fault with it) but still investing as if it did not exist (by failing to practice valuation-based market timing).

That seems like an unstable reality to me. It’s been going on that way for a long, long time. But my brain tells me that things cannot go on that way indefinitely. If irrational exuberance is real, then our collective failure to practice valuation-based market timing is sooner or later (there is no way to know when because psychology plays such a big role in all of this) going to cause a Buy-and-Hold Crisis. Then it seems to me that the pain we all suffer will cause us to reflect on whether we should have been taking what this Shiller fellow taught us with his research into consideration all along.

That’s where I’m coming from re this one, 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:

Shiller is talked about all over the internet. Just Google it.  What you don’t like is that people got tired of you lying about Shiller (and other people/things) as well as your poor behavior issues.   YOU are banned.  Shiller is not.

We disagree.

Shiller was awarded a Nobel prize for his research. So his research must have showed us something about stock investing that we did not know before Shiller published it. What is that something? I have been asking that question of Buy-and-Holders for 22 years and never once have I received a response. Buy-and-Holders don;t respond because they understand that it will be the beginning of the end for Buy-and-Hold if they do.

Shiller discredited Buy-and-Hold. Technically, he discredited the Efficient Market Theory. But it’s the same thing because the Efficient Market Theory is the only justification that the Buy-and-Holders ever offered for their loony-tunes “idea” that there might be an alternative universe 50 billions light years away in which everything works the opposite of how it had always worked on good old Planet Earth and valuation-based market timing (price discipline!) is not 100 percent required for every stock investor.

It’s no accident that the peer-reviewed research that I co-authored with Wade Pfau showed that Valuation-Informed Indexing has been soundly beating Buy-and-Hold for as far back as we have good records of stock prices. How else could it have possibly turned out? Could the exercise of price discipline ever produce poor results? I mean, come on.

Mention of Shiller’s name is not banned. But discussion of the far-reaching how-to implications of his amazing research is. The people who developed the Buy-and-Hold strategy didn’t’t have Shiller’s research available to them because it had not yet been published at the time. So they made a mistake. The best thing to do when you make a mistake is to correct it IMMEDIATELY. It’s been 43 years. We need to open every site to honest posting re the peer-reviewed research.

That’s where I’m coming from re this one, in any event.

My best wishes to you and yours, Anonymous.

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 believe that our stock market will be less volatile”

Markets have been volatile since their creation. Nothing you can do will change that; it is the nature of the beast. If you can’t handle that volatility you should stay out of the stock market, understanding of course that the decision to do so will mean you miss out on the higher expected returns that go along with the volatility.

I am now close to half way through Four Pillars of Investing, 2nd edition. It really is a fantastic comprehensive book.

I agree that stock markets have been volatile since their creation. The publication of Shiller’s research changed all that. That’s why he was awarded a Nobel prize. His research represents a revolutionary change in our understanding of how the stock market works and of course there are amazing benefits that all stock investors will realize once we have opened every site to civil and reasoned discussion of all of the far-reaching implications of Shiller’s research.

This is why I am constantly repeating my recommendation that we all work together to see that every site is opened to honest posting re the research. A world in which valuations affect long-term returns (the world we live in, according to Shiller’s research) is a very different world from a world in which the market is efficient and there is no need for market timing, the world that the people who developed Buy-and-Hold believed existed in the 1960s, prior to the publication of Shiller’s research.

I only half agree with you re Bernstein’s book. I believe that the chapter on valuations is top-notch. I used to recommend that people read it as a primer on why the shift to Valuation-Informed Indexing is so critical. It does a great job of laying out all the reasons in a concise way. The flaw in the book is that the material in the valuations chapter cannot be reconciled with the material in the other chapters.

Again, opening every site to honest posting is the answer. Just as we all would benefit from hearing Shiller discuss his views on market timing without any of the abusive stuff going on, we would benefit from hearing Bernstein do the same. We are all on the same side. We all want the same things. We should all want to find out what we will all find out once every site has been opened to honest posting and there is no more abusive stuff going on.

That’s where I am coming from re this one, Evidence. My best wishes to you.

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 outcomes show that buy and hold has always worked and market timing has never worked.  You should know better than others as you went broke from timing.

Are you able to identify any strategic change that follows from Shiller’s Nobel-prize-winning finding that valuations affect long-term returns?

The Nobel prize makes sense if he showed that market timing is always 100 percent required for all investors. That’s a big change from the belief that was widely held in the days when the Buy-and-Hold strategy was being developed. But, if there is no strategic change that follows from Shiller’s research, I have a hard time understanding why he was awarded a Nobel prize.

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 priced today for an ocean of human misery to be delivered in the next year or two or three in the event that stocks continue to perform in the future somewhat as they have always performed in the past. ”

You have made predictions like that many times in the past and you were always wrong. Instead, you went broke and provided even more proof that your timing scheme doesn’t work.

Are you able to identify any strategic change that was necessitated by the publication of Shiller’s Nobel-prize-winning research showing that valuations affect long-term returns? I say that it requires market timing/price discipline for every investor. You obviously do not share that belief. Can you say what strategic change IS required by Shiller’s research finding? Does it have any practical significance whatsoever?

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 have a series of important questions to ask you Rob.  Hopefully, you won’t delete them like you usually do.  First question, does Robert Shiller and Wade Pfau recommend timing the market with CAPE?  Yes or no?

For the 16 months in which we worked together on our research, Wade certainly believed that CAPE can be used for long-term market timing. That was the entire point of the research, that is the question that we were looking at. He was a little unsure in the beginning. He was intrigued by the idea. But it was a big change from what he had been taught, So he proceeded carefully. When our research continued to show that timing ALWAYS works and that the difference it makes is very big, he could no longer resist acknowleding what the historical return data so clearly shows. That’s why he declared: “Yes, Virginia, Valuation-Informed Indexing works!”

All of this was before he was threatened, of course. Threats affect human behavior. They cause people to say things that they don’t really believe. That’s why we have laws against making threats to get people to say things they don’t believe. I would like to see those laws enforced in the investment advice field in the same way that they are enforced in every other field of human endeavor.

I am highly confident that Shiller believes that CAPE can be used to engage in long-term market timing. First of, his entire life’s work shows that that is the case. Shiller showed that valuations affect long-term returns. If that’s so, then stock investing risk is a variable and not a constant. If risk changes with changes in valuation levels, then investors who want to keep their risk profile constant over time (we all should want to do this) MUST engage in long-term timing. There is no other way to pull it off. Second, we have the paper that Shiller published in 1996 urging market timing because of the dangerous CAPE value that applied at the time. So, yes, I very much believe that Shiller believes in market timing.

The odd thing, of course, is that Shiller never states in his book in a clear and direct way that all stock investors should be engaging in market timing at all times. Why wouldn’t he say that? People buy books on investing for the how-to insights. They want to know what to DO. The most important how-to insight that follows from Shiller’s research is that long-term market timing is always 100 percent required. In ordinary circumstances, an editor would read that book and send back a note to the author that: “You MUST address the market timing question, that’s the most important advance achieved by your research and that is the advance that we need to publicize to market this book.”

Shiller feels intiminated in much the way that Phau and many, many others feel intimidated. The proble is that the discover that market timing is always required is the biggest advance in the history of personal finance. Yes, it would make all of our lives much better than we ever imagined they could be back in the dark ages of our belief that Buy-and-Hold might be an acceptable strategy. But to let people know how stock investing works in the real world would upset ten-thousands applecarts. Every text book ever written on the subject of stock investing would need to be rewritten. Every calculator would need to be rejiggered. The Buy-and-Holders would need to accept the blame for being the primary cause of the economic crisis. Buy-and-Hold was not around as an official strategy in 1929 but the Buy-and-Holders would have to acknowledge that the same “idea” that they push today (that market timing/price discipline is not always 100 percent required) was the primary cause of the Great Depression.

So, while permitting honest posting re the peer-reviewed research would make everyone’s life better, there are a lot of wealthy and powerful and well-connected people who would like to see discussions of this amazing advance in understanding suppressed. So lots of good people self-censor. Their consciences require them to tell people as much of the real story as they can get away with telling without losing their positions. But they say things in fuzzy ways that they hope will not get them in too much trouble. Every investor has a Get Rich Quick/Buy-and-Hold impulse residing within him; we all want something for nothing, as irrational as it is to think that that is possible. So, without clear and direct statements that market timing/price discipline is absolutely required, lots of us are just going to ignore the research. That’s how we end up with the sort of CAPE value that applies today.

Does that help, 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:

Name on other person that has written a book on the far reaching implications of why Teslas don’t have microwave ovens.

The suggestion here is that it is not important to explore the how-to implications of Shiller’s amazing research. I think it is very, very, very important. That’s why I have devoted 21 years of my life to the project.

If we had all been thinking clearly, a national debate on the how-to implicatons of Shiller’s research would have been launched on the day in 1981 when the research was published. We are today 42 years behind in our understanding of how stock investing works as a result of our delay in launching that debate. If we fail to launch it by the close of business today, we will be yet another 24 hours behind where we could have been.

Shiller was awarded a Nobel prize for his work. He must have showed SOMETHING beyond what was known in the 1960s, when the Buy-and-Hold strsategy was being developed. Do you have any thought about what that something might be, Anonymous? I am not looking for theoretical generalities like the claim that “valuations affect long-term returns.” I certainly believe that that is so. But what I want to know is how does knowing that valuations affect long-term returns affect one’s strategic choices in investing? I say that it shows that market timing/price discipline is always 100 percent required. What do you say it shows?

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:

Most authors deal with emotions and passion.  You just can’t function.  You can’t deal outside your protected website and ValueWalk.

Please identify one other person who was written a book on the many far-reaching how-to implications of Shiller’s amazing Nobel-prize-winning research findings. There isn’t one. Shiller himself hasn’t done it. He wrote a book on the theory but refrained from exploring the how-to implictions.

That’s why the project is so important and so necessary. The less people talk about this stuff, the harder it is for everyone else who wants to talk about it to do so. The more people talk aboit it, the easier it becomes for everyone else to do so. My aim is to open EVERY site to honest posting re the research. I want every single person on the planet to feel 100 percent free to share his or her sincere thoughts. That certainly includes Buy-and-Holders but it includes Valuation-Informed Indexers as well.

I wish that it wasn’t such a difficult journey. But it is what it is, you know. I doubt that there will be too many saying that they wish that we could go back to the day when we rarely talked about this stuff once we have opened every site to honest posting. If we were all thinking clearly, we would have launched the national debate in 1981!

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 2023 Bogleheads conference is coming up.  Will you be attending?  This would give you the chance to ask questions directly to Wade Pfau and William Bernstein.  You can ask them about Greaney, Jack Bogle, Shiller, etc.  This is your big chance to be on the big stage and let the world know about YOUR research.  This is your shot to become the leading expert.  You want to save the world, right?

If we open every site on the internet to honest posting, then we are obviously going to open the Bogleheads conference to honest questioning. I urge that every day. Every investor on the planet should want to see that. Every particiant in that conference, and everyone listening to those making presentations, should want that. We all do better work when we all learn together.

It shouldn’t take 21 years to determine whether a retirement study contains a valuation adjustment or not. The fact that the Greaney study has not been corrected in the 21 years since I pointed out the error in it should concern us all. It points to something very concerning. And of course the other side of the story is that the development that caused the “controversy” (Shiller’s research) points to something very liberating — a critical advance in our understanding of how stock investing works (the market is not efficient, market timing/price discipline is always 100 percent required for every investor).

Shiller obviously showed us something we did not know before. Otherwise, he would not have been awarded a Nobel prize. What is that something? The Buy-and-Holders cannot bear to talk about it. Because the thing that he showed (that valuations affect long-term returns) is a huge advance. My take is that we should celebrate that liberating advance, not fret about the fact that learning something important and new means that there was a time when we did not know it all.

I believe that we will get to where we need to be. Probably not at this year’s conference. But in time. Given that we are going to get there sooner or later (presuming that Shiller’s Nobel-prize-winning research is legitimate research), I think we should just go ahead and celebrate the advance starting at the close of business today. But I am just one person, some guy who figured out how to post stuff to the internet. As you know. So, like you, I will just have to wait to see how things play out.

I hope that works for you.

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 only learn by reading your own words?  So you really aren’t interested in posting anywhere else on the internet, right?

No. That’s not even close to being true. I learn by thinking. It’s when my own thoughts come into contact with different thoughts offered by others that I learn. That’s why I say that I would be an amazing learning experience if you Goons had any interest in engaging in civil discussion, But I gave up thining that that was a possibility a long time ago. Every now and again, however, you just can’t help yourselves. Those moments are gold. I put up with all of the garbage to be able to enjoy those rare moments when you permit something real to show through the Goon persona.

If I learned about some place on the internet where people were having a discussion about how Shiller’s Nobel-prize-winning research overturns our old understanding of how stock investing works in a fundamental way, then, sure, I would want to be a part of that. The comment that Sensible put up re the Reddit discussion does not suggest even a tiny bit that that is what is going on over there. So, no thanks, you know? Shiller revolutionized the field or he did nothing. He didn’t show that the old safe withdrawal rare calculations are a little off. He showed that they are wildly wrong. A showing that valuations affect long-term returns is not a small advance over a belief that the market is efficient (that market timing is not required). It is the biggest advance in the history of personal finance. To benefit from the advance (to make the changes that we need to make so that we can all live fuller and better and richer lives from this point forward), we need to talk about the how-to implications of Shiller’s amazing research findings in realisitc ways.

I am happy to talk to anybody. But I am not going to pretend that I believe that Shiller’s Nobel-prize-winning research is only a small advance. That would be dishonest. I have had many of those sorts of discussions in the past and they ultimately lead nowhere. To obtain the benefits that Shiller’s amazing research promises, we need to be able to let in that we did not always know everything there is to know about this subject and that the last 41 years of peer-reviewed research is the most important 41 years of peer-reviewed research in the history of investment analysis. Those are the discussions that matter. We have already squandered 41 years. Engaging in silly discussions of whether Shiller achieved some small advance just causes us to squander more time that we should be devoting to learning how we all can live fuller and better and richer lives by making the shift to the first true research-based investment strategy.

Rob