A Rich Life

The Old Ideas on Saving & Investing Don't Work -- Here's What Does

“Pros and Cons Have to Be Weighed in Any Purchase Decision and That’s How We Do It for All the Things That We Buy Other Than Stocks.”

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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>More money is lost or given up in preparing or waiting for the proverbial crash then actually has been lost in them – Peter lynch</i>

This is the sort of statement that causes all the trouble. Pros and cons have to be weighed in any purchase decision and that’s how we do it for all the things that we buy other than stocks. When the idea that it is not necessary to weight pros and cons (to engage in market timing!) when purchasing stocks becomes popular, the brakes are ripped out of the car and that generally amazing asset class become extremely dangerous indeed. I believe that we should be permitting honest posting re the last 40 years of peer-reviewed research in this field.

My best and warmest wishes to you and yours.

Rob

“I Believe That All Humans Have Goonishness Within Them. We All Also Possess the Ability to Employ Reason to Enrich Our Lives. Shiller’s Amazing Advance Points Us to the Way to Make Stock Investing a Less Goonish Experience and a More Reason-Filled One. Which Means That We All Will Get to Live Better Lives Once We Make the Transition from Buy-and-Hold to Valuation-Informed Indexing. We Are Today in the Process of Working Up the Courage to Achieve That Transition.”

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

Those are the same comments you make, so you must be the goon.

I believe that all humans have goonishness within them, Anonymous. We all also possess the ability to employ reason to enrich our lives. Shiller’s amazing advance points us to the way to make stock investing a less goonish experience and a more reason-filled one. Which means that we all will get to live better lives once we make the transition from Buy-and-Hold to Valuation-Informed Indexing. We are today in the process of working up the courage to achieve that transition.

Wish us luck!

Rob

“I Don’t Believe That There Can Ever Be a Last Word. There’s Always Going to Be New Research. So People Are Always Going to Be Learning New Things. If Everyone Converted to Valuation-Informed Indexing Today, Tomorrow Someone Would Come Up With Some New Wrinkle That Hadn’t Been Considered Prior to Today. So There Would Be a Valuation-Informed Indexing Plus. And the Discovery of That Wrinkle Would Lead to the Discovery of Even More New Wrinkles. Learning How Things Work Is a Never-Ending Process.”

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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 know that you are wrong, so you try and compensate with long winded posts, delete most posts and never let anyone else have the last word.

I don’t believe that there can ever be a last word. There’s always going to be new research. So people are always going to be learning new things. If everyone converted to Valuation-Informed Indexing today, tomorrow someone would come up with some new wrinkle that hadn’t been considered prior to today. So there would be a Valuation-Informed Indexing Plus. And the discovery of that wrinkle would lead to the discovery of even more new wrinkles. Learning how things work is a never-ending process.

People believe different things. And that’s healthy. There might be some threads in which a Valuation-Informed Indexer wrote the last post in the thread. That’s fine so long as there are other threads in which a Buy-and-Holder wrote the last post. That’s not the way it was at the Retire Early board in the days prior to May 13, 2002. There were hundreds and hundreds of threads discussing Greaney’s retirement study and none of them pointed out that it lacked a valuation adjustment. That led people to believe that the study was legitimate. The Valuation-Informed Indexers were afraid to point out the error in the study because you Goons had made clear that there would be consequences if anyone did that.

I am proud that I eventually worked up the courage to post my sincere view that that study lacks a valuation adjustment. I think that people using the study to plan a retirement need to know that. If there are people who want to use the study regardless, that’s their business. But, if I truly believe that the study lacks a valuation adjustment and I fail to say anything, that’s on me. I should post honestly, whether my post happens to be the first in the thread or the last or somewhere in the middle. The big thing for me is that we all feel free to post our honest views.

Rob

Valuation-Informed Indexing #564: We Are All Responsible for the Popularity of Buy-and-Hold

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I’ve posted Entry #564 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called We Are All Responsible for the Popularity of Buy-and-Hold.

Juicy Excerpt: I recall one year looking at the numbers for our stock portfolio in preparation for the budget-crafting task and being delighted at how much the stock gains for the year had made it so much easier to achieve my goals. Spending cuts? Who needs spending cuts when you can create imaginary money with bull market gains and thereby get to the same place? I obviously didn’t see it that way at the time. But I try to bring that moment to mind when I am struggling to understand how Buy-and-Hold became so popular despite the obvious danger of going with an approach that disdains market timing/price discipline. I made Buy-and-Hold popular! At least at that moment in time I did! Because I experienced the same Get Rich Quick impulse that everyone else experiences. And so I felt that same warm feeling when hearing about bull market gains that everyone else feels.

Valuation-Informed Indexing #563: How Much Better Would Life Be If Today’s CAPE Value Was 17?

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I’ve posted Entry #563 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called How Much Better Would Life Be If Today’s CAPE Value Was 17?

Juicy Excerpt: It is not just the dark cloud of a possible price crash that makes today’s CAPE value unappealing to me. Stock overpricing messes up just about everything in the society that tolerates it.

“If Valuation-Informed Indexing Did Not Have Huge Perceived Value, Discussion of It Would Not Be Banned at a Single Site. You Do Not Ban Things That Are Not a Threat.”

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

Here are your problems:

The majority of your content is 15 years old.

The majority of your content is repetitive. In fact, it doesn’t look like you have had anything new to say for over a decade.

Your predictions have failed.

There have been no successful outcomes with your strategy and you have even failed.
Why would you continue to waste time on something that has no perceived value?

If Valuation-Informed Indexing did not have huge perceived value, discussion of it would not be banned at a single site, Anonymous. You do not ban things that are not a threat. I mean, come on.

We know how stock investing works today. That’s wonderful. We can all live better lives from this point forward as a result.

But there is a price to be paid for incorporating what the last 40 years of peer-reviewed research teaches us into our knowledge base. The price is that the Buy-and-Holders will have to learn how to say the words “I” and “Was” and “Wrong.” Some are fine with that. But there are enough who do not want to go there and who have enough power to get their way to hold the rest of us back. For now, the rest of us have been willing to tolerate being held back.

The next Buy-and-Hold Crisis will bring on an ocean of human misery. I believe that that will cause some more people to work up the courage to stand up to you Goons. We don’t need that many to make it happen. We already have 10 percent of the population that believes that Shiller’s Nobel-prize-winning research is legitimate research. If another crisis brings that up to 20 percent, I believe that will turn the key.

It’s all downhill sledding from there. For each and every one of us. We all want the same things. We all want to know how stock investing works in the real world.

My sincere take.

And my best wishes to you and yours.

Rob

 

Valuation-Informed Indexing #562: An Important Purpose of Investment Research Is To Reveal Unpopular Truths

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I have posted Entry #562  to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called An Important Purpose of Investment Research Is to Reveal unpopular Truths.

Juicy Excerpt: The biggest problem, though, is that the Buy-and-Holders are not entirely sincere in their belief in the power of research. They do believe in research. It is clear to me that that is so. But one element of the scientific mindset is always to question, never to fall into the trap of believing that you have it all figured out. The Buy-and-Holders have fallen into the trap of believing that they have it all figured out. They no longer are open to questioning of their claim that market timing doesn’t work. The Buy-and-Holders of today disdain the recent research.

Buy-and-Hold Goon to Rob: “You Have Burned Every Bridge”

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

Do you really think anyone is stupid enough to believe even one thing you say anymore.  You have burned very bridge and have destroyed any credibility you thought you might have one had.

If there hadn’t been lots of people (about 10 percent of the population of community members) who said that I was the first person who they ever heard who described how stock investing works in a way that made complete sense, you never would have insisted that I be banned from every board. If large numbers of posters did not find Valuation-Informed Indexing as very exciting, you would not have seen me as a threat.

I will continue posting honestly. Re safe withdrawal rates and re scores of other critically important investment-related topics.

My best wishes.

Rob

“What Matters Here Is Getting Every Discussion Board and Blog on the Internet Opened to Honest Posting re the Past 40 years of Peer-Reviewed Research in This Field, Without a Single Exception. I Do That and I Am One of the Richest People on Planet Earth. I Fail to Do That and I Am Pretty Much Screwed. Everything Else Is of Tiny Significance Compared to That.”

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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 enough put aside to pay the bills for some time.”

So now you say that you don’t really need to work? What changed?

I have always said that I would get a job after the book is finished.

It would be insane to throw away a $500 million payday to get s small amount of money coming in a few months sooner.

What matters here is getting every discussion board and blog on the internet opened to honest posting re the past 40 years of peer-reviewed research in this field, without a single exception. I do that and I am one of the richest people on planet Earth. I fail to do that and I am pretty much screwed. Everything else is of tiny significance compared to that.

And that’s always been the case. This is not a news flash. I never would have let things get to a place where I was banned from the Motley Fool board if I didn’t think that it was a matter of critical importance that millions of middle-class investors be provided access to accurate and honest information re the last 40 years of peer-reviewed research in this field.

Rob

“I Should Want the Sentences To Be Hard-Hitting. But, If They Do Their Job of Persuading Millions of Middle-Class Investors of the Merit of Following a Research-Based Investment Strategy, They Are Almost Certainly Going to Cause an Economic Crisis. There Is a Part of Me That Holds Back, That Doesn’t Want to Go There. That’s True of Everyone. We Want to Tell the Truth. But, Given the Spot That the Relentless Promotion of Buy-and-Hold Has Put Us In, We Also Do NOT Want to Tell the Truth.”

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

“My new deadline is the end of the year.”

As with so many things, you have a weak grasp on the concept of “deadline”. Deadlines have consequences for being missed. The book is more along the lines of a new years resolution. Something you briefly pay lip service to, and then fail to deliver, as everyone expects.

I have a poor record re the self-imposed deadlines for completion of the book. The other side of the story is that no one else has written a book telling this story. So I am ahead of every other soul residing on Planet Earth today. When you look at it that way, it doesn’t sound so bad.

It’s not an intellectually difficult project. It is an EMOTIONALLY difficult project. Say that I were to get everything that I want by the close of business tomorrow. A reporter from the New York Times says that he wants to publish a ten-part series on the front page detailing the 40-year cover-up and describing all of the criminal stuff that we have seen and telling people about the amazing how-to implications of Shiller’s Nobel prize-winning research. Sounds pretty good for me. right? What would happen? We would see an economic crises, perhaps a Second Great Depression.

That’s what makes this so hard. My job as the person writing this up is to make the best possible case for Valuation-Informed Indexing. I should want the sentences to be hard-hitting. But, if they do their job of persuading millions of middle-class investors of the merit of following a research-based investment strategy, there are almost certainly going to cause an economic crisis. I don’t want to cause an economic crises! So there is a part of me that holds back, that doesn’t want to go there. I think that that’s true of everyone. We want to tell the truth. But, given the spot that the relentless promotion of Buy-and-Hold has put us in, we also do NOT want to tell the truth.

So it has been a hard journey. I think it will end up being worth it 50 times over, though. I doubt that there will be one person who will be wishing that we could go back to the Buy-and-Hold days once we have opened every site on the internet to honest posting re the peer-reviewed research. The transition is very, very, very difficult. But the end point will be well worth all the trouble.

Or so this fellow who often forgets to take his meds sincerely believes, in any event.

My best and warmest wishes to you and yours.

Rob