A Rich Life

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

Buy-and-Hold Goon to Rob: “Here You Are, Over the Age of 60, Living in the Land of Make Believe With the Silly Stories on Death Threat, etc. Meanwhile, You Are Run Through Savings and Have Destroyed Your Social Security Benefits By Avoiding Work. You Have No Relevant Work Experience As You Haven’t Had a Job in About 2 Decades, So Any Job Your Could Possibly Land Would Pay a Very Minimum Income. To Provide for Retirement, Your Plan Revolves Around Some Fantasy of a $500 Million Windfall. Yet Here You Are Preaching to Everyone About Investing for Retirement. Really????”

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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 you are, over the age of 60, living in the land of make believe with the silly stories on death threat, etc. Meanwhile, you are run through savings and have destroyed your social security benefits by avoiding work. You have no relevant work experience as you haven’t had a job in about 2 decades, so any job your could possibly land would pay a very minimum income. To provide for retirement, your plan revolves around some fantasy of a $500 million windfall.

Yet here you are preaching to everyone about investing for retirement. Really????

I believe that we need to open every discussion board and blog on the internet to honest posting re the last 40 years of peer-reviewed research in this field. The fact that I have been denied an income for 19 years because I “crossed” the Buy-and-Holders by posting honestly re the error in the Greaney retirement study shows how important it is that we all insist on our right to post honestly. If Buy-and-Hold were a real thing, the Buy-and-Holders would WELCOME challenges to their ideas.

The fact that someone could be denied an income for 19 years solely for posting honestly re an error in a Buy-and-Hold retirement study is very scary stuff. If Buy-and-Hold were a real thing, there never would have been any “controversy” re any of this. The Greaney study would have been corrected IMMEDIATELY.

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

My best wishes to you.

Rob

Valuation-Informed Indexing #561: It’s Not Possible for One Asset Class to Always Be the Best Asset Class

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I’ve posted Entry #561 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called It’s Not Possible for One Asset Class to Always Be the Best Asset Class.

Juicy Excerpt: All of the asset classes that investors invest in are part of one large market of investment choices. If one asset class is always best, word would get out that that was so and investors would drive up the price of that asset class until it no longer was best. The appeal of all of the asset classes waxes and wanes. No one asset class is best at all times.

“The Great Depression Was a Great Boon to Mankind. The Near Depression of the Early 1900s Was a Great Boon to Mankind. The Stagflation of the 1970s Was a Great Boon to Mankind. The 2008 Economic Crisis Was a Great Boon to Mankind, What Was I Thinking?”

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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:

“The last 150 years did not turn out as you said it would. Why would anyone listen to what you have to say?”

Actually, it has. Buy and hold has always rewarded the patient. The market has always recovered and gone on to new highs. Yet we have never seen any successful outcome with market timing.

The Great Depression was a great boon to mankind. The near depression of the early 1900s was a great boon to mankind. The stagflation of the 1970s was a great boon to mankind. The 2008 economic crisis was a great book to mankind,

What was I thinking?

Rob

Buy-and-Hold Goon to Rob: “The Last 20 Years Did Not Turn Out as You Said It Would. Why Should Anyone Listen to What You Have to Say?”

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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:

The last 20 years did not turn out as you said it would.  Why should anyone listen to what you have to say?

The last 150 years did not turn out as you said it would. Why would anyone listen to what you have to say?

To be wrong for 150 years is worse than to be wrong for 20 years. And the 20-year thing (it’s really only 15 years) can be explained. We are going through a weird period. I have written several articles explaining why that is so. So has Jeremy Grantham. No Buy-and-Holder has ever offered an explanation for why there has been a correlation between valuation levels and long-term returns for 150 years now (if the market were efficient, there would be no correlation).

If someone wants to say that they are not going to follow my advice because the price crash has been long deferred, I have no problem with that. But you have to do something, you have to follow some investment strategy. And the pure Get Rich Quick/Buy-and-Hold approach has been doing great harm to stock investors ever since the first market opened for business. That’s hardly an improvement. If someone comes up with a third way that checks out, I will certainly take a look at it. As of today, there are only two models that are promoted as research-based. And 100 percent of the data available to us supports one of those models while 0 percent supports the other. I go with the model with 100 percent support. Call me madcap.

Rob

“Even If It Turns Out That I Am Wrong and That the Greaney Study Really Does Contain a Valuation Adjustment After All, the Questioning Generated Lots of Discussion and Thus Applied Us All With an Amazing Learning Experience.”

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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 objection to your behavior comes when you try to limit what others can hear about these matters. You get to decide for you. I get to decide for me. Others get to decide for others.”

What behavior? You are the one blocking posts on your website. If you can do so, why can’t others block you? Why a double-standard?

“There is not one academic model for understanding how stock investing works. There are two.”

No, there are not just two. There are so many different models out there, but you only focus on two.

The only two models for understanding how stock investing works that are rooted in peer-reviewed research that I know of are Buy-and-Hold and Valuation-Informed Indexing.

There are opinions that are put forward that are not rooted in either of the two academic models. But I left the idea of going with opinion-based strategies behind me a long time ago. I was frustrated with the multiplicity of opinions on this subject and then I heard about Buy-and-Hold and how it is rooted in peer-reviewed research and I knew that this was for me. It was The Great Safe Withdrawal Rate Debate that caused me to switch from Buy-and-Hold to Valuation-Informed Indexing.

Most Buy-and-Holders are proud of the fact that their model is rooted in peer-reviewed research (at least according to their belief). That’s the reason why The Great Safe Withdrawal Rate Debate has been so contentious. When I questioned whether the Greaney retirement study contained a valuation adjustment, I was really questioning the entire Buy-and-Hold Model. I did not intend to do that at the time. I did not even realize that that is what I was doing. But you Goons got it from the first moment. Over time, I came to see that you were right. I was questioning the entire model.

I of course see that as a good thing. Even if it turns out that I am wrong and that the Greaney study really does contain a valuation adjustment after all, the questioning generated lots of discussion and thus supplied us all with an amazing learning experience. I view my famous post from the morning of May 13, 2002, as my finest moment. What I said should not have been so controversial. The obvious thing to do was just to check the study and to see if a valuation adjustment could be found in it. I think it would be fair to say that the Buy-and-Holders don’t want to do that. For obvious reasons.

We would not have seen one-hundredth of the reaction that we have seen had I questioned one of the opinion-based strategies. The people who follow those strategies wouldn’t have cared that there was someone in the world who followed a different one. The Buy-and-Holders believe in research and they very much want to believe that theirs is the only true research-based strategy. So my question posed a major threat to them. Again, that was not my intent. I just didn’t want my friends to suffer failed retirements. But that’s what happened. If Shiller is right, Buy-and-Hold tumbles to the ground. His research findings challenge the premise of the Buy-and-Hold Model — that market timing is not required because stock investing risk is stable, not variable.

Rob

Valuation-Informed Indexing #560: High Stock Prices Are Sticky

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I’ve posted Entry #560 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called High Stock Prices Are Sticky.

Juicy Excerpt: This resistance to stock price drops is a fundamental force in the market. Without it, the market could test various price points and settle on the one that makes the most sense given the economic realities. But investors always favor high prices. It takes more in the way of bad economic news to pull prices down than it takes in the way of good economic news to pull prices up.

“Taking Valuations Into Consideration Permits You to Make Rational Asset Allocation Choices. Adding Rationality to the Decision-Making Process Is Always a Plus.”

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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:

What matters is results.  Your market timing strategy didn’t work out like you said it would.  Meanwhile, the buy and holders have been richly rewarded.  If you based your retirement on VII, you can no longer make up for the past 19 years.  It is too late because you would have spent down way too much of your portfolio.

Valuation-Informed Indexing has provided better risk-adjusted results for 150 years now. That’s as far back as we have records.

It’s not even logically possible that things could turn out any other way. Taking valuations into consideration permits you to make rational asset allocation choices. Adding rationality to the decision-making process is always a plus.

That’s my sincere take in any event.

Rob

“So Long As Those of Us Who Believe That the Study Lacks a Valuation Adjustment Are Free to Say That, People Are on Notice As To the Problems with the Study.”

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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:

Forums are made for having a discussion.  You never have a discussion.  With you, it is only one way.   You never listen.

I never say that I believe that the retirement study posted at John Greaney’s web site contains a valuation adjustment. I say what I believe, which is that the study LACKS a valuation adjustment.

I don’t have a problem with others saying that they believe that the study contains a valuation adjustment. My position is that all posters should post honestly.

So long as those of us who believe that the study lacks a valuation adjustment are free to say that, people are on notice as to the problems with the study. If some elect to use the study to plan a retirement regardless, I am fine with that. That one is on them so long as those on both sides were permitted to post honestly. If only Buy-and-Holders are permitted to post honestly, then the discussions are fraudulent.

I do not care to lend my name to a fraudulent enterprise. I have been saying since the morning of May 13, 2002, that I post honestly or I post not.

Whachagonnado?

Rob

“Saying That There Is No Need for People to See Honest Posting re the Last 40 Years of Peer-Reviewed Research in This Field Is Like Saying That There Is No Need for People to Hear That Eating an Unhealthy Diet Can Lead Over Time to Heart disease or That Smoking Can Cause Cancer or That Driving Drunk Is Dangerous. People Very Much Need to Have Access to Truthful Reports re These Sorts of Matters.”

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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:

So you don’t have any new information or facts that you haven’t voiced already.  There really isn’t any need to have you post the same thing you already posted thousands of times.  Further, people have you ample opportunity to answer questions and have a discussion, yet you refused to do that.  Instead, you are only looking for people to agree with you, with the hope that you will be looked upon as some leading expert.

Saying that there is no need for people to see honest posting re the last 40 years of peer-reviewed research in this field is like saying that there is no need for people to hear that eating an unhealthy diet can lead over time to heart disease or that smoking can cause cancer or that driving drunk is dangerous. People very much need to have access to truthful reports re these sorts of matters.

There have been four times in U.S. history when the pure Get Rich Quick/Buy-and-Hold approach to stock investing has become popular. On each of those occasions we have as a nation suffered a devastating economic crisis bringing on an ocean of human misery. Please mark me down as saying that honest posting should be permitted at every discussion board and blog, without a single exception.

I don’t mean just on safe withdrawal rates. Yes, we should be permitting honest posting re safe withdrawal rates. But we should be permitting it on scores of other critically important investment-related topics as well. Asset allocation. Risk management. Retirement planning in general. On everything, really. Just as we do in every field of human endeavor other than the investment advice field.

That is my sincere take re this terribly important matter, in any event.

My best and warmest wishes to you and yours, in any event.

Rob

Valuation-Informed Indexing #559: We Need More Information to Get Stock Prices Right

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I’ve posted Entry #559 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called We Need More Information to Get Stock Prices Right.

Juicy Excerpt: The market can only perform the function of setting prices properly if there is a free flow of information to the investors who are causing the market to move in one direction or the other. For so long as people do not feel free to state their views clearly (including the view that the retirement calculator of the owner of the site gets the numbers wrong), the market cannot do its job. I do not believe that our stock market is doing its job today.