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 is a second brain involved.”

Your classic crank mistake is assuming that second brain (yours) is in any way remotely equal to Shiller’s. He’s a Nobel winner, you barely understand basic arithmetic. Your supposed insights about “what follows logically from what Shiller said” are utterly worthless.

Does anyone care what some high school kid thinks of Einstein’s work? Even if he writes lots of papers about Einstein? Of course not. And so it is with you and Shiller. He’s the real deal, you’re the wannabe. This fact is completely obvious to everyone. No crash will ever change that reality.

I don’t buy it, Anonymous.

I worked with Wade Pfau for 16 months. We exchanged scores and scores of e-mails. He praised my work to the skies. This is a fellow with a Ph.D. in Economics. And he told me that he learned things from me that he had never learned in all those years of schooling. He checked Valuation-Informed Indexing out every which way to Sunday and concluded that: “Yes, Virginia — Valuation-Informed Indexing Works!”

And of course Wade is not the only one. Rob Arnott said that all my stuff checks out. Carl Richards said that my work has huge value. Bill Shultheis was excited beyond belief when he discovered all the amazing stuff at my web site. Michael Kitces engaged in long e-mail correspondence with me, saying that he learned a great deal from our interactions. And thousands of my fellow community members put their lives on the line by standing up to you Goons by asking that honest posting be permitted at our boards. My insights are not “utterly worthless.”

What is “utterly worthless” are your death threats and your demands for unjustified board bannings and your thousands of acts of defamation and your threats to get academic researchers fired from their jobs. Wade spent years learning what he has learned. He shouldn’t have to live in fear of what a gang of internet Goons will do to him if he posts honestly re his views on investing at internet discussion boards. Financial fraud is a felony. You Goons should be placed in prison cells so that people like Wade can feel free to express their true beliefs. Then we all move forward together. That’s the answer.

And you don’t for two seconds believe that Shiller is “the real deal.” If you did, you would be encouraging discussion at every site as to the implications of Shiller’s “revolutionary” (his word) research findings. I have asked you scores of times to identify even one big change that Bogle made to the Buy-and-Hold strategy in response to what he learned from Shiller’s Nobel-prize-winning research. You have not been able to do so. That’s because there isn’t one. The core principle behind the Buy-and-Hold strategy (that the market is efficient) was discredited by Shiller’s 1981 research findings and Bogle has failed to address that reality publicly for 37 years now.

I think the next crash will change how we all deal with these matters. But I could be wrong. We are just going to have to show a little patience to find out for sure.

I naturally wish you the best of luck in all your future life endeavors, old friend.

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:

“Every word that I have written over the past 16 years is rooted in Shiller’s “revolutionary” (his word) finding that valuations affect long-term returns.”

No, it is what you think Shiller should be saying.

What I say is what follows logically from what Shiller said.

I am not saying that Shiller has said precisely the same things that I have said. In some cases that is so. But in most cases it is not. I say what seems to me to logically follow from what Shiller said. There is a second brain involved. People need to know that. For me to say it is not the same as for Shiller to say it. So you have a point here. If Shiller thought about every word that I have ever put forward and commented on it himself, there would probably be a good number of cases where Shiller’s take would be at least a little different from my take. And people need to make that distinction. They need to be able to identify Shiller’s takes on all of the various topics and then identify Bennett’s takes on all of the various topics and then of course they should make an effort to resolve the differences, to figure out for themselves which takes on which topics make the most sense and which can be improved and which can be discarded.

My point when I say that every word that I have written is rooted in Shiller’s “revolutionary” (his word) research findings is that I am not just some guy on the internet who woke up one morning and revealed that I had had a dream that valuations affect long-term returns and then addressed every question of investment strategy as if that were so. No. The finding that valuations affect long-term returns is rooted in peer-reviewed research that was published in 1981 and led to the awarding of a Nobel prize in Economics in subsequent years. So the foundation of everything that I have ever said on stock investing is very, very, very strong. People need to know that. That reality is an important part of this story.

I can get things wrong. People need to know that too, of course. But what has happened for 16 years running is that the Buy-and-Holders have not been able to find problems in what I say. If they could, they would. They naturally want to defend the strategy they believe in when I challenge it and the natural way to do that is to point out errors in my thinking. But in every case they have given up on that effort. In every case they either just stop participating in the discussion with me (this is what usually happens) or they resort to threats of violence and board bannings and all of the other Goon garbage that we have seen (this is what happens when I refuse to take hints that I should silence myself). When the Buy-and-Holders either resort to abusiveness or tolerate seeing others resort to abusiveness, they are making an implicit statement that they cannot imagine any other way of challenging my claims. That’s a big deal. The fact that that has been our universal experience for 16 years running now is a very big deal.

The ordinary experience would not be for me to play the role that I have played. I’ve written close to 400 columns at the Value Walk site. Let’s take just one of them to make the point. I wrote a column a number of years back in which I argued that, if it is true that valuations affect long-term returns, then it is not true, as has long been believed to be the case, that stocks are more risky than bonds. If it is true that valuations affect long-term returns, then most of the risk of stocks is optional. All that investors need to do to avoid that risk is to take valuations into consideration when setting their stock allocations. I was particularly proud of that column. I have been hearing that stocks are more risky than bonds for many years now. It is obviously a very big deal if it turns out that that is not so and if the community of investors learns that. And I have never seen anyone else say that. So that one has my name on it. I have a column posted on the internet with my name on it and with a date stamped on it showing when I came to this conclusion that makes a very important statement about how stock investing works in the real world. That’s just one column out of 400. But, if just that one column turns out to be correct, then I have changed the world of stock investing in a huge and very positive way. That’s as cool as it gets.

But is it true? That’s what we need to know. No one should go just by what I say. Anyone who would go solely by what I say about such a matter is an idiot. We agree re that much. What we don’t agree on is what we should do in response to that reality. Your response is to say that I should shut up, I should stop expressing my views on the implications of Shiller’s “revolutionary” (his word) finding of 1981 that valuations affect long-term returns. I think that’s a horrible, horrible, horrible response. I think that the proper response is to show the proper amount of skepticism re what Rob Bennett says but to have thousands of other smart people comment on Shiller’s Nobel-prize-winning research findings and find out what they mean that way.

Bogle should be writing about this stuff every single day. Shiller should be writing about this stuff every single day. Pfau should be writing about this stuff every single day. Bernstein should be writing about this stuff every single day. That’s the answer. The answer is not to shut Rob Bennett up, the answer is to get everyone else talking. That’s my sincere take, Anonymous.

The obvious question is: Why isn’t everyone already talking about this “revolutionary” (Shiller’s word) stuff? There are mountains of money to be made providing millions of middle-class people with honest, accurate, research-based investment advice. We know that there is a huge market for what I do because we saw the reaction at the Motley Fool board when I first raised the suggestion that Shiller’s findings should have changed what we think about how safe withdrawal rates are calculated. So why is it Rob Bennett who writes the column arguing that stocks are actually not more risky than bonds? Why aren’t there thousands of smart people out to help people and make a buck doing it who got to that one long before this Rob Bennett fellow ever came on the scene?

This is where death threats enter the picture. You Goons have your lives riding on the validity of the Buy-and-Hold Model for understanding how stock investing works. It drives you freaking nuts to think that you might have gotten it all wrong. You cannot bear to hear someone on the internet challenge your beliefs. And there are lots of non-Goons who don’t approve of the tactics you employ to crush discussion of the implications of Shiller’s findings but who are not too upset to see those discussions crushed and who thus go along with your use of those tactics anyway. And we end up as a society that has missed out once again on learning whether it is true that stocks are more risky than bonds or whether that is in fact not true.

Days pass. Weeks pass. Months pass. Years pass. We remain trapped in our ignorance despite 37 years of peer-reviewed research pointing us all to a better way.

The American way is not to remain trapped in our ignorance. The American way is to talk things over in civil and reasoned discussions. That’s why every board on the internet has rules prohibiting the tactics employed by you Goons. That’s why we have laws against financial fraud. The American way is to move forward even though it hurts sometimes to move forward because moving forward sometimes means learning how to pronounce those words “I” and “Was” and “Wrong.” I love my country. I favor the American way. That’s the bottom line here.

Shiller has not said every word that I have said. I am not claiming that he has. I am saying that every word that I have spoken is rooted in a “revolutionary” (that’s Shiller’s word) finding of Shiller’s from 1981 that we all should have been exploring for 37 years now. I have been exploring it for 16 years now. I offer no apologies. I think that every single person in the field should be doing what I am doing. We are not all going to agree. That’s of course fine. That’s part of what the American way is all about. So long as we remain civil and reasoned in our discussions, we will learn. And learning is the one true free lunch out there. So that is the road we need to take, the American road, the road approved by the laws of the United States and by the posting rules of every site on the internet.

That’s the deal, Anonymous. Every word that I say is rooted in Shiller’s 1981 findings, the findings that caused him to be awarded a Nobel prize. We need to know not just what Rob Bennett thinks are the implications of those findings, we need to know what Shiller thinks are the implications of those findings. We need to freakin’ ask him. If we drop all the Goon garbage, I am 100 percent certain that he will be happy to share with us. But we most certainly will have to drop the Goon garbage. He has shown that he is not going to be forthcoming until we do that. And of course we need to hear from thousands of others too. And all of those others will be forthcoming as well once we drop the Goon garbage. Dropping the Goon garbage opens the floodgates on the greatest advance ever achieved in the history of personal finance.

I am doing my part. I can do no more and I can do no less. If I want thousands of others to start sharing their sincere takes re the far-reaching implications of the last 36 years of peer-reviewed research in this field, then I had better be willing to take on all the heat that for the moment goes with doing that. So that’s what I do. I offer my take on hundreds of different topics that we all should be examining on a daily basis. And I take the heat that for the time being is associated with doing that. There will come a day when there will not be so much heat. I am 100 percent certain of that. Then there will be thousands offering their takes on all these questions, not just me. That will be a very, very, very good thing.

But it has to start with one, you know?

I wish that someone else had taken on you Goons. It would have made my life a lot easier if it had all gone down that way. I wouldn’t be in line for a $500 million settlement payment if someone else had been the trailblazer before I ever showed up on the scene. But I still would have preferred that it had been done that way. This job is fun intellectually and it is fun because it involves helping millions of people in a very big way. But the nasty stuff is not fun. I do it because it has to be done. I noticed back in the Summer of 2002 that no one else had done it and so I pulled up my big boy pants and got about the business of doing it. And here we are, you know?

I am not Shiller. What I say is not necessarily what Shiller would say. But every word that I say is rooted in what Shiller showed in 1981. It’s not my fault that we don’t today have thousands of people addressing all of the topics that need to be addressed. That’s the fault of you Goons. I don’t have the power to make you knock off the funny business. All that I can do is to call you out on your b.s. I have done that. And yet you continue! All that we can do at this point is to wait patiently for the price crash and see whether living through what that is going to mean for millions of people causes the emotional background in which these discussions take place to change enough for us to get lots of other people involved in the discussions in a constructive way.

I am highly confident that we will all pull together in the days following the crash to take this thing to a very, very, very positive place. But we are going to have to wait and see to find out for sure. I could be wrong. If I were, I would probably be the last to know. So we are just going to have to wait and see.

I naturally wish you all the best that this life has to offer a person regardless of how things play out, my good friend.

Rob

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

What is PE/10? Per you, it’s the “price of stocks”. What is the calculation based on? The S&P 500 index. VII’s timing mechanism is based on PE/10. It’s your justification for saying that stocks have been insanely overpriced since 1996. And who created PE/10? Shiller. All of this is undeniable fact. There is no VII without the S&P 500.

So why would Shiller go to all the work to create this vitally important metric based on an index that he says you shouldn’t invest in? Does he have a screw loose?

I wouldn’t go so far as to say that he has a screw loose. I obviously cannot speak for Shiller. My guess is that he might say that there is value in STUDYING the S&P500 to learn how stock investing works but that he sees a danger in having too big a percentage of the population investing in it.

I agree with you that “there is no VII without the S&P 500.” I see indexing as a great risk-reduction advance. You get the great returns associated with stocks but you avoid the risk of picking the wrong stocks. I see that as being a very big deal.

So I do see a bit of a contradiction in what Shiller is saying here. He did indeed create the VII concept. But he is suggesting here that people not reap the benefits of his advance. That’s one way of looking at it. I don’t see that as an unreasonable thing to say.

Could it be that Shiller just doesn’t himself see the benefit that comes from being able to predict long-term returns?

I am thinking that that might be the case. There certainly is other evidence that that is so. Perhaps he is just not yet aware of all of the implications of his amazing research findings. I am inclined to believe that that is the best explanation of the contradiction to which you are pointing.

There was something that John Walter Russell once said about me that always stuck with me. He said that I was good at asking questions. He said that there were numerous occasions where I would say something on the boards that would get people mad at me and he would think to himself: “Why is Rob making a big deal of this when it really doesn’t matter much?” Then, six months later, he would be researching some other point and something would turn up that would cause him to see the importance of the point that I was making. He would say to himself: “Oh! Now I see why he kept pushing on that point!”

It seems possible to me that something like that is going on with Shiller. You are right that he created P/E10 and that he essentially created Valuation-Informed Indexing. But I don’t think that he fully appreciated what he was creating. He was looking to solve particular puzzles that intrigued him at the time he did his research. But there were implications of his findings that did not occur to him at the time and that have not clicked for him in the years since. Those implications clicked for me because I was forced as the result of circumstances to think through some of this stuff in an in-depth way (because of all of the, um, good questions that you Goons so helpfully directed my way). So I took Shiller’s creation to places that he never intended to take it himself.

You won’t like that answer because it suggests that I did something positive. I obviously do believe that I did something positive. And I think that my explanation of Shiller’s comment makes some sense of the puzzle to which you are pointing. I don’t think he has a screw loose. Or, if he does, he just has a screw loose in the same way that all of us humans have a screw loose. We all see parts of the story and we all miss out on other parts. So Shiller is way ahead of us on some things and perhaps behind a lot of us re other things. And it’s the same with Bogle. And with me. And with you And with all of us. We all have something to offer but none of us can put the entire story together solely via our own brain power.

Remember when President Obama said: “You didn’t build that”? He got a lot of grief for that statement. And I think he may have merited a portion of that grief. But I also think that he was making a legitimate point that is often overlooked. There really are great people in this world who discover things or build things or create things that make life better for all of us and we should all appreciate their contributions. But it is also true that even these great figures had to rely on the help of lots of “little people” to do what they did. The greatest scientist in the world had a second-grade teacher who developed in him a love of learning that led to his breakthrough findings many years later. Individuals matter. But communities matter too.

Those are my thoughts, in any event. You certainly have pointed to an interesting puzzle.

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 I am reading this right, we have an anonymous poster that quotes what Shiller says and describes his Shiller invests, but you call that abusive posting, because you think Shiller is either lying or not telling the truth because he is afraid. So the only way you would see that person as not being abusive is if he agrees with your position on what you think Shiller “Should” say. Have I got that right?

The way you say it isn’t exactly right. You’re twisting things to serve your purposes, as you always do. You take statements out of context, that sort of thing.

All that said, there is a point mixed in with all your deceptive garbage that is real and important.

Why is it that the entire world does not know with something close to a perfect understanding what Shiller thinks on all these questions? I say what I believe on all sorts of issues all the time and I say that every point I make is rooted in Shiller’s 1981 finding that valuations affect long-term returns. You are not being unreasonable to ask: “What does Shiller think of what Rob says?” It’s a perfectly logical question. Shiller published his research 36 years ago. We should know by now what he thinks on just about every question that follows from the publication of that research.

But we don’t.

The reality is that we just don’t.

The first question that came up in our discussions is the question of whether one needs to include a valuations adjustment in a safe withdrawal rate study to get the numbers right. Pretty darn basic, right? The primary purpose of investing is to finance one’s retirement So we all should be pretty darn concerned that we get that one right. Okay. John Greaney says that you don’t have to include a valuations adjustment. Mel Linduaer obviously thinks the same. Jack Bogle too. Rob Bennett obviously thinks otherwise. How about Shiller? Does Shiller agree with Rob Bennett? Or with Jack Bogle?

It would help to know, would it not? It would be a lot harder for you Goons to terrorize our board and blog communities if Shiller came out with a clear statement that he endorses Rob Bennett’s views on this matter. I think that would be great. I think he should do it. I think that, when Shiller does that, we will be able to put the nasty side of this matter behind us and have a healthy and productive and fun debate from that point forward. Shiller hasn’t done it. Why? It would take all of ten minutes of his time to write a brief statement saying “Rob Bennett is right re safe withdrawal rates, in my view” and get it posted at some big investing site. The question of whether the retirement studies used by millions of middle-class Americans to plan their retirements got the numbers wrong or not is obviously an important one. So why haven’t we seen that statement (or a statement saying the opposite if Shiller agrees with you Goons — a statement saying that this Rob Bennett fellow is off his nut re the safe withdrawal rate matter)?

And why haven’t you Goons DEMANDED such a statement from Shiller? You have gone to enormous trouble to keep people from being able to discuss the errors in the Buy-and-Hold retirement studies. If you truly believed that there were no errors, you would just go to Shiller and ask kindly for a statement to settle the matter. If for some reason he did not respond, you would ask Bogle to serve as a go-between and get the statement you need to settle this matter that way. This is an obvious solution to the problem that has been available to you going back to Day One and you have never sought it. Huh?

You don’t want a statement. You know what the statement would say. You don’t want a statement.

We have known intellectually how stock investing works for 36 years now. Most of us emotionally cannot accept what we know intellectually. So we keep out mouths shut and we encourage all others to keep their mouths shut too and we punish the Rob Bennetts of the world who just can’t catch a clue as to what behavior is tolerated on investing boards and what behavior is not tolerated.

Shiller tells the truth. He was awarded a Nobel prize for doing so. But he would prefer not to get banned from every site on the internet. So he pulls his punches. He is not going to give you a dishonest statement if you ask for it. But he is not going to offer a completely honest statement either until he feels that the time is right, until he feels that the price that he will be made to pay for his honesty will not be too great. I think it would be fair to say that that time will come sometime following the next price crash.

I don’t want to wait until then to start posting honestly re matters that every investor alive on the planet needs to know about TODAY. That’s the difference between me and Shiller. I am an inpatient sort of fellow.

Shiller honors the Social Taboo against speaking honestly about how stock investing works while bubble prices remain in effect. I violate that Taboo every day. I believe that that Taboo is killing us as a society and so I violate it daily in hopes that others will come to see the need to violate it as well and we will all move together to a far better place in our understanding of how stock investing works than we inhabit today.

I hope that helps a small bit, my long-time Taboo-following friend.

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 on the subject of CAPE/PE10,

Rob says “It’s the price of stocks. And it’s insanely high.”

Shiller says “Well, I wouldn’t discard it.”

So Rob says “See? We totally agree.”

Obviously Shiller can’t say he would discard it. To do so would be to say he didn’t deserve his Nobel Prize. The test is where Shiller is putting his own money, and he just said he is heavily in stocks. A point you avoided in that huge comment.

I think your comment is a fair one, Anonymous.

I 100 percent say that P/E10 is the price of stocks and that it is insanely high.

And Shiller said that he wouldn’t discard it. That statement is not inconsistent with what I say. I wouldn’t discard it either. But the tone used by Shiller and the tone used by me are very different. I am saying that we should be permitting honest posting re the effect of an insanely high P/E10 value at every discussion board and blog on the internet because, in the event that Shiller’s Nobel-prize-winning research is legitimate, the continuation of the Ban on Honest Posting may cause the Second Great Depression. That’s not good for anybody.

What I most like about your comment is where you say: “Obviously Shiller can’t say he would discard it. To do so would be to say he didn’t deserve his Nobel prize.” Yes! That’s exactly right. Shiller is biased. I am biased. You are biased. Bogle is biased. We all are biased. That’s why we should permit honest posting. When we permit honest posting, the people reading the boards to learn about the subject of investing get to hear both sides and then to form their own opinions. They can’t do that when only the advocates of one side are permitted to post their honest views. When you prohibit honest posting for those advocating the minority position, you turn the entire board into a corrupt endeavor. No one can trust a thing that is said at a board where one point of view cannot be expressed. How do you know whether the stuff being said by people holding the other point of view is legitimate? There is no one to challenge them when they say dubious things.

I don’t think that the test is where Shiller is putting his money. Shiller has indicated in many comments that he believes that he is able to engage in short-term timing successfully. He has said that he believes that a crash is coming but that he also believes that there are economic indicators that he can look at that will tell him when to get out. I am with the Buy-and-Holders re that one. I think Shiller is fooling himself re that one. It sounds like he might be one of those darn humans! The fact that Shiller gets that one wrong (in my view!) does not discredit his research findings. The research findings have been checked many times and they have passed every test. I believe that Shiller’s Nobel-prize-winning research is legitimate research.

By the way, I did NOT say that Shiller and I totally agree. I don’t see how any fair-minded person could get that from my comment. I couldn’t have done any of my work if Shiller has not published his “revolutionary” (his word) research findings of 1981. Everything that I have done is rooted in a belief that valuations affect long-term returns. But I don’t believe that Shiller and I agree on every point and I certainly have never said that we do.

I don’t agree with my wife on every point. I don’t think that I agree with my dog on every freakin’ point. Sometimes it is raining and he doesn’t want to go for a walk and I have to persuade him. He usually goes along with some reluctance but I don’t get the sense that he entirely agrees with me. He doesn’t like the rain, you know? He really doesn’t. But my view is that he needs to take a pee sooner or later, rain or no rain. Whachagonnado?

I think it might be that the difference between Shiller and me is that he is an academic and I am a journalist. Academics are very cautious. I think he feels that, if he makes his point and doesn’t argue it very forcefully, events will over time prove him right or wrong. I think he believes that there is going to be a crash and that that will vindicate him and that he doesn’t need to convince anyone today.

Up to a point, I agree with that. I do think that there will be a crash and that it will vindicate both me and Shiller. But I feel more of a sense of urgency re bringing the intimidation tactics that the Buy-and-Holders have employed to keep discussions of this stuff bottled up to a full and complete stop. If we permitted honest posting at every board, there would still be lots of people who would follow Buy-and-Hold strategies. There are many people who would not be persuaded of what I say even if I and all others were permitted to post with full honesty. I see that as being all part of the wonderful game. That doesn’t concern me.

But it concerns me greatly that we don’t permit honest posting today. When we ban honest posting, we violate the core social norms of this country. When we ban honest posting, we open lots of people to civil lawsuits and even to criminal prosecutions after the crash arrives. Huh? How is that a good thing? That sort of thing is very much NOT all part of the wonderful game. I don’t favor that sort of thing.

As an academic, Shiller adopts an ivory tower perspective. The idea is :”The truth will reveal itself over time, regardless of anything that I say. So there is no need for me to speak up with any great force.”

As a journalist, I believe that telling people the true story regardless of how they elect to react to it is a matter of great importance. The idea is: “Get the word out and let people decide for themselves how to react once they are fully informed. But always get the word out. Do not let intimidation tactics dissuade you from playing this important role, the role you have been given in this society. Speak truth to power. Do not falter.”

We believe in essentially the same things. But of course we don’t agree on every tiny detail because no two people on this planet do. But we come at things from different perspectives. Shiller is an academic and so he tends to come at things from the perspective of an academic. I am a journalist and so I tend to come at things from the perspective of a journalist.

As a journalist, I see this as the biggest personal-finance-story in the history of the United States. I think we’ve got a tiger by the tale re this one. That’s my sincere take.

My best wishes to you and yours.

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:

How do you know Shiller is not saying what he wants to say? Are you a mind reader?

Shiller wrote a book on how stock investing works called “Irrational Exuberance.” The subtitle promises a “revolutionary” new approach. And the book lives up to its billing. Shiller has been awarded a Nobel prize for the research described in the book. This book is the most important book ever published on stock investing, in my view.

Why do people buy investing books? They want to know what to do with their money. What does Shiller say about that subject in the book? Nothing. Not one word. Zilch.

Huh?

You don’t need to possess an I.Q. of 140 to know that there’s some funny business going on, Anonymous.

Shiller wants to help people. But he of course does not want to be exposed to the sort of abusiveness that you Goons have been dishing out for 15 years now to every poster who has dared to “cross” you by posting honestly re their views on stock investing. So he talks about the things that he believes he can get away with talking about. And he keeps it zipped re the rest.

A good solution?

I am glad that Shiller had told us what he has told us, that’s for sure.

But I want to take things to the next step. I want to hear what he believes we should do with our money given his “revolutionary” (his word) research findings. I want Buy-and-Holders to challenge him. And I want to hear his responses to their challenges. And I want Valuation-Informed Indexers to ask him for more detail. And I want him to provide as much detail as he is able to provide in response. In short, I want things in the investing advice field to proceed just as they do in every other field of human endeavor.

I know that Shiller is not telling us everything that he believes because he doesn’t even address the how-to aspects of stock investing in his book. That’s what sells, Anonymous. That’s the first thing that an editor would look for in assessing the first draft that Shiller turned in. Yet it’s not there in the finished product. Odd, no?

It’s not there because Shiller and his editors have seen the same sorts of things that all of us in the Retire Early and Indexing communities have seen over the past 15 years. We have all seen insane levels of emotion on the part of Buy-and-Holders when they hear the practical implications of Shiller’s research findings discussed.

We are going to have to deal with this matter as a society. Millions of middle-class people need and desire access to honest and accurate information on how to invest for their retirements. We are going to have to find a way to work around you Goons and get it to them.

These are my sincere thoughts re these terribly important matters, in any event.

My best wishes to you, 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:

“We don’t feel a need to beat the market, just to match it.”

You could have done that 20 years ago by buying an index fund, and saved yourself several million words of typing.

If PE10 is everything, why didn’t its father mention it in that article? Why is he now giving the exact same advice as Buffett, Bogle, and all the Bogleheads? It’s almost as if he was embarrassed by PE1o.

Face it Rob. Shiller is a buy-and-holder. The war is over.

I couldn’t do that 20 years ago because stocks were not available for sale at a reasonable price. I would prefer that stocks ALWAYS be available at reasonable prices. If we opened up the internet to honest posting on the last 36 years of peer-reviewed research, we would be there. But we do not today live in a world where honest posting on the last 36 years of peer-reviewed research is widely tolerated. The reality is what it is whether I approve of it or not.

Shiller should have mentioned P/E10 in the article. I am 100 percent with you re that one, Anonymous. All of the points he makes are legitimate. There is nothing wrong with the words that he put forward. But it is weird for him to put those accurate words forward without also including a discussion of the valuation-related aspects of the question. I think you are right on re that observation.

I cannot see into his mind. I can speculate as to what is going on. But I cannot say with certainty.

I don’t know if I would go quite so far as to say that Shiller is giving the exact same advice as Bogle. But I agree with you that what he is saying sounds close to what Bogle is saying. He is certainly not doing much to highlight his differences with Bogle. I can see how someone who read only that article could think he has no major differences with Bogle. I have lots in common with Bogle but I don’t think that anyone would say that about me. I highlight the differences, Shiller does not. That’s a perfectly fair assessment, in my view.

I don’t think that Shiller is embarrassed by P/E10. I think that he doesn’t want to be slammed and he has learned from bitter experience over the years that being too clear in one’s statements re what the last 36 years of peer-reviewed research shows leads to one being slammed pretty darn hard. I think your statement that “it’s almost as if he was embarrassed by P/E10” is a fair one. The behavior is exceedingly odd. I don’t think that deep down he really is embarrassed of his life’s work. But I think it is fair to say that at times he gives that impression. It’s a strange way for someone who truly is the creator of the Valuation-Informed Indexing concept to spread the word re his “revolutionary” (his word) research findings. If it is all so revolutionary, why doesn’t he tell us more about the revolutionary how-to aspects of the question from his perspective?

I don’t think that Shiller is a Buy-and-Holder and I don’t think that the war is over. I obviously believe something quite to the contrary. But I cannot say that I fault you too much for saying this. I have won every battle we have fought on the content side and you have won every battle that we have fought on the process side. It’s a pretty darn big victory for you to be able to point to Shiller statements of this sort while also pointing out the absence of Shiller statements saying that what Bogle is saying is wrong and dangerous. If I were you, I would be pointing this out. I don’t quite agree with you. But I don’t think you are engaging in much distortion re this particular point.

If you really cared about your own long-term investing success, you would want to pin both Shiller and Bogle down to a far greater extent than they have allowed themselves to be pinned down thus far. That’s my comeback. Shiller is offering you a certain measure of happy talk. Are you going to let him get away with it? If you were thinking clearly, you would be holding his feet to the fire. You don’t do that. That tells me that you are worried that, if you tried to hold his feet to the fire, you would hear things that you very much do not want to hear.

So your position is ultimately a weak one. You have a temporary strength that you can use to get people like Shiller and Bogle to issue public statements that keep the fantasy going. Okay. But what do you do for an encore, you know? If the last 36 years of peer-reviewed research points to something real, prices are going to collapse and a lot of people are going to be angry about what happened to their retirement portfolios. People are going to be asking hard questions in those days and looking for real answers to them. Happy talk is not going to close the sale in those days. I have a mountain of real answers to offer them. I got off the happy talk road a long time ago.

It all comes down to whether people develop a desire to know the realities or not. If they do, I win. If they don’t, you win. That’s the bottom line, The desire is not intense enough today to overcome your abusiveness. But what about tomorrow? Will a price crash bring about a change? I believe that it will. I cannot see into the future. But I don’t feel comfortable being one more person generating a lot of happy talk. So I guess that I will just continue to walk this path that I have been on for the past 15 years.

I believe that Shiller will be singing a clearer and bolder tune in the days following the next price crash. But I cannot prove it. We will have to wait to see how things play out.

A few years back I talked these matters over with my priest. I supplied him with a summation of events and he asked me: “Have you considered contacting Shiller and asking for his help?” It’s a fair question, no? That’s pretty much the same point that you are getting at here, no? Shiller is the guy with the Nobel prize. One would think that he would be doing everything in his power to spread the word re the last 36 years of peer-reviewed research. But the reality is that he has never said “The Buy-and-Hold retirement studies get the numbers wildly wrong” or “Bogle’s investing advice is dangerous” or “It was the promotion of Buy-and-Hold strategies for decades after the peer-reviewed research showed that there is precisely zero chance that they could ever work in the real world that served as the primary cause of the economic crisis.” It hurts the cause that that is so.

I obviously would like to hear Shiller say all those things. What do you want me to do about it? I cannot force the man to say those things any more than I can force Bogle to say the things that I would like to hear Bogle say. There would be no Valuation-Informed Indexing without the contributions of Shiller and Bogle. So I obviously need to be supremely grateful to both of them. And I just have to accept that neither of them sees fit today to offer all the help that I would like to see them both offer. It’s not like I can do anything about it anyway, you know?

It wouldn’t surprise me to see Shiller publish a sequel to his Irrational Exuberance book in the days following the next price crash in which he reports on all the how-to implications of his research that he has held back commenting on through this day. I have no inside knowledge. But it would not surprise me to learn that he has already written the sequel and is just waiting for a time to publish it when he believes that the follow-up work will generate a good reception.

I want to read the sequel now, you know? I don’t want to wait. When it comes to learning what I need to do to invest my retirement money effectively, I am an impatient sort of fellow!

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 sounds like Shiller is guilty of playing a large part of the cover up since he would know the truth. Will he be going to prison as well?

We’ll work out together as a society who goes to prison and who doesn’t following the next price crash, Anonymous. I would be shocked and stunned and amazed if we decided as a society that Shiller should go to prison. I get the feeling that you Goons would like everyone who did even the smallest thing wrong to be treated the same as you Goons. You see that as your protection. Shiller has not behaved perfectly. Therefore, if we Goons go to prison, Shiller must go to prison as well. It doesn’t work like that.

I have drawn the parallel to the race relations issue. If someone makes a racist comment today in a public place, there is a heavy price to be paid. The person might lose his job. There was a time when racist comments were relatively common. Do you think that, as we changed as a society to become less tolerant of racism, we went around and rounded up every person who had committed even tiny racist crimes and sent them to prison? We didn’t. We employed common sense in making distinctions between different levels of bad behavior.

Just about all of us are guilty of some bad behavior during the Buy-and-Hold Crisis. I have often noted that I failed to speak up about the errors that I knew about in the Greaney retirement study because I was afraid of what his Goon squad would do to me. I rationalized my behavior. I said that Greaney’s study was a big improvement over the safe-withdrawal-rate analysis that was being advanced by Peter Lynch not too many years before the Greaney study was posted (this is so). But I held back from expressing my concerns that Greaney’s study, while an improvement from what had come before, still got the numbers wildly wrong. I was a coward.

Shiller has behaved in cowardly manner re a number of matters. We all have. There are very few exceptions. We are not going to elect as a society to put every person who on occasion acted in a cowardly manner in prison. I believe that all of the cowardly behavior will be brought to light and that most of the people who engaged in cowardly behavior will apologize for the harm they have done to others. I believe that Shiller will be making some apologies. But I don’t believe that he will be going to prison. I believe that he is going to be playing a huge role in helping us all move from the awful place where we find ourselves today to the wonderful place where we all deep in our hearts aspire to be tomorrow.

I think that you are wrong when you suggest that Shiller “knows the truth” in an all-encompassing way. We all learn by talking things over with others. Shiller is not able to talk things over with others to the extent he could if there were no social taboo against speaking openly and honestly re these matters. So there are lots of things that Shiller has not yet learned that he would have learned a long time ago had circumstances been different.

I have no doubt but that Shiller knows much more than he has thus far been willing to say in his public comments. But I do not believe that he today knows everything. I believe that he will be enjoying an amazing learning experience along with all the rest of us in days to come. He will be teaching us all by giving voice to things that he already knows but has thus far been afraid to speak about and he will be learning by hearing what lots and lots of others think about aspects of the question that he has not yet been able to explore in great depth himself.

That’s why I describe the opening of the internet to honest posting on investment-related topics as a win/win/win/win/win. Learning is the one true free lunch. When we learn together, we all end up better off than we were before we did so. It’s good stuff piled on top of good stuff piled on top of good stuff piled on top of good stuff with no possible downside for even a single one of us. This ain’t no zero sum game we’re playing!

I hope that helps a tiny bit.

My best and warmest wishes to you.

Rob

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:

Despite the fact that you have repeating the same stuff in this article thousands of times over and over, Shiller has repeated said not to u his work for timing……PERIOD. Saying that he implied it for long no term timing would be lying as his words were clear.

Besides, it has nothing to do with your financial failure. You should have continued to work past the age of 43 instead of wasting your time as an internet troll.

You’re wrong about this, Sammy. At least that’s my sincere take.

You are correct that Shiller has said that P/E10 cannot be used for market timing. That much really is so and it is important too. So I certainly do not object to you letting people know that that’s so. People need to know that.

You are 100 percent wrong re the “Period” part. Shiller’s statements re timing are HIGHLY ambiguous and HIGHLY unclear and HIGHLY uncertain. If there is one thing that should never be said about them, it is that he placed some sort of “Period” at the end of his claim that P/E10 should not be used for timing. That is a false claim and a dangerous claim and an irresponsible claim. I would not feel comfortable putting my name to that one.

Shiller has devoted his entire life’s work to showing why one form of timing, long-term timing, ALWAYS works and is ALWAYS 100 percent required. He has been awarded a Nobel prize for research that he published in 1981 showing that valuations affect long-term returns. If that’s so, then risk is not static but variable and it is not possible for investors not willing to exercise price discipline (that is, to practice long-term TIMING) to maintain a stable risk profile.

Shiller believes that his life’s work has value. If he didn’t, he would not be continuing with that work today. Shiller does not believe what you say he believes.

Why, then, did he say that investors should not use P/E10 to engage in timing? My guess is that he was using the word “timing” to refer to “short-term timing.” Short-term timing really doesn’t work. There is a mountain of research showing that. And it is common practice in this field to use the word “timing” to refer to “short-term timing.” Bogle does it all the time. So do hundreds of others. Given that so many in this field employ this shorthand and given that assuming that Shiller is using this shorthand permits us to make sense of his statement, I think it would be fair to assume that Shiller was indeed using this unfortunate shorthand.

In fact, Shiller has OPENLY ADVOCATED long-term timing on more than one occasion. I recorded a podcast back in 2009 when he did so. And he was advocating long-term timing when he gave testimony to the Federal Reserve saying that investors who retained their high stock allocations in 1996 would live to regret it within 10 years. I am certain that he gave a great deal of thought to that statement advocating long-term timing, a lot more than he gave to the single off-hand ambiguous statement that you refer to when he said that “timing” does not work.

You are engaging in deception here. It is shameful behavior given the importance of the question being addressed. And you of course are well aware of Shiller’s LONG advocacy of long-term timing. We have met up at scores of discussion boards and blogs at which you have engaged in insanely abusive posting practices aimed at shutting me down and shutting down other posters who see the value of long-term timing and the dangers of Buy-and-Hold investing strategies. Yucko, Sammy. This is low stuff. You need to get over whatever pain you experience when your investing beliefs are challenged by the peer-reviewed research in this field and rise above this sort of behavior.

All that said, you are raising a very important question. Those of us who have looked at these matters with reasonably open minds know that Shiller believes in long-term timing. WHY DOESN”T HE SAY SO IN CLEAR AND FIRM AND BOLD AND CERTAIN LANGUAGE THAT WOULD BRING THIS “CONTROVERSY’ TO A FULL AND COMPLETE STOP? He makes his living helping people to understand how stock investing works. All of the confusion of recent years, confusion that caused an economic crisis, came about because the “experts” in this field have failed to make this distinction between long-term timing — which always works and is always 100 percent required — and short-term timing — which really does not work — clear to millions of middle-class investors. Why doesn’t Shiller just step to the plate and say what needs to be said?

He doesn’t do it because he knows from experience that the advocacy of Buy-and-Hold has caused millions of investors to become as hyper-sensitive to hearing about the implications of his “revolutionary” (Shiller’s word) as you are, Sammy. We all kept our mouths shut until valuations reached a point where telling the truth about these matters would have caused the destruction of millions of middle-class lives and so today we hold back from saying what needs to be said because we cannot bear to face the abuse that we know will be visited on us for doing so when we finally work up the courage to do the right thing.

Doing the right thing doesn’t get easier by putting it off. It gets harder. Shiller will be speaking more clearly about these matters following the next price crash, just as he hesitantly started down that road in the early days of the last one. It will be harder for him then. His friends should be encouraging him to step forward today and thereby to put that hard piece of important business behind him. Once we have a major figure speaking out clearly re this mater, it frees all the rest of us to speak out honestly about what the last 35 years of peer-reviewed research teaches us about how stock investing works in the real world.

We are all sooner or later going to get to the point where we feel a need to speak up. It gets harder the longer we put it off. So why not just work up the courage to do it today and thereby put the nasty stuff behind us and bring on all the wonderful stuff that follows once we all feel free to speak honestly and accurately and clearly? That’s certainly my take re this terribly important matter.

I wish you all the best that this life has to offer a person in any event, my old friend.

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 showed that long-term timing ALWAYS works and is ALWAYS 100 percent required.”

Direct quote from Shiller: “It’s not a timing mechanism.”

Oh right, he was lying. Or intimidated. Or he doesn’t mean “long term” timing. Or he doesn’t understand his own research.

What do you think Shiller would say about someone who sold out twenty years ago, and has been waiting for a suitable re-entry point ever since?

a) “Gee, that’s swell! He really gets me!”
b) Some variant of “That’s not so swell.”

You are asking an intelligent question, Anonymous.

The obvious answer is — We should all want to ask him! We should all want to hear how Shiller responds to these questions.

I want to launch a national debate. When we have a national debate, people like Shiller will be answering all kinds of questions that they have not answered to date. That’s a 100 percent good thing. It’s by struggling with the sorts of questions that you have raised that societies advance in their knowledge of a subject matter.

Shiller has indeed said that P/E10 is not a timing mechanism. You are right about that. And I am right that Shiller has recommended various forms of timing on numerous occasions. He recommended long-term timing (the kind that I recommend) in the wake of the 2008 crash. He has recommended short-term timing ( which I do not believe works) in more recent comments. Shiller is all over the place re the timing question. Every investor alive should want to pin him down. We all need to know what he thinks.

Shiller is of course in good company re his mountain of self-contradictions. Bogle too talks out of both sides of his mouth re all sorts of investing questions. ALL THE TIME. We all should want to know what Bogle really thinks. We all should be trying to pin him down. We all should favor the launching of the national debate that will supply clear answers to all these legitimate and thus far unanswered questions. We all should be looking forward t enjoying the great learning experience that will follow the announcement of your prison sentence.

That’s my sincere take re these terribly important matters, in any event.

Rob