A Rich Life

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

“If You Don’t Get the Question of Whether Market Timing Is Required or Not Right, You Can’t Get Anything Right. That One Is Fundamental.”

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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:

“ If everyone has all the information at their fingertips, why do we even have academic researchers? ”

They are not researchers. Research is making discoveries. What they are doing is analytics. This is why you have such a large disconnect.

Shiller made a discovery. He discovered that the market is not efficient, that valuations affect long-term returns, that risk is variable and that market timing is required. That’s huge. That changes the analysis of every strategic question that comes up in stock investing.

If you don’t get the question of whether market timing is required or not right, you can’t get anything right. That one is fundamental.

Rob

 

“You Say That Because You Are a Buy-and-Holder. You Are Biased. And You Are Highly Emotional on This Subject.”

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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:

If you were paid even 5 cents, you would have been vastly overpaid for your contributions to the investing community.

Yeah yeah.

You say that because you are a Buy-and-Holder.

You don’t want to see people learning about the far-reaching implications of Shiller’s Nobel-prize-winning research. You are biased. And you are highly emotional re this subject.

My sincere take.

Rob

“When People Considered the Error in the Greaney Retirement Study, They Lost Confidence in the Study. That Was Why Greaney Got So Upset. He Wanted to Maintain Confidence in the Study. And the Point That I Was Making Was Undermining Confidence in the Study. Each Time That Someone Points Out the Error at the Root of the Buy-and-Hold Project, It Helps People to Think More Clearly About How Stock Investing Works in the Real World. It’s New Information, Valuable Information.”

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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:

There are no victims.  We each have a personal responsibility in saving and investing for our retirement.  We have all the information that we need at our finger tips.  If your retirement fails, then it is your own fault.  End of story.

We do not have all the information at our fingertips.

When I put forward my famous post from the morning of May 13, 2002, there were numerous people who thanked me for starting the most exciting discussion in the history of the Retire Early board. If people had all of the information contained in that post at their fingertips all along, what were they thanking me for? They hadn’t had the information contained in that post at their fingertips all along. I pointed out that the Greaney retirement study lacked a valuation adjustment. That was something new to think about that many people at that board had not considered.

When people considered that point, they lost confidence in the study. That was why Greaney got so upset. He wanted to maintain confidence in the study. And the point that I was making was undermining confidence in the study. Each time that someone points out the error at the root of the Buy-and-Hold project, it helps people to think more clearly about how stock investing works in the real world. It’s new information, valuable information.

There was a day when people did not know that smoking causes cancer. Research was published showing that it does, just like the research that Shiller published showing that valuations affect long-term returns. The tobacco companies went nuts. They threatened people who told people about the harm done by smoking, just as you Goons have threatened me for telling people about the error in the Greaney retirement study in particular and about the error in the Buy-and-Hold strategy in general. The con doesn’t work if people become aware of it. So the Buy-and-Holders have to keep the error hushed up. But I want to talk about it. I want to help people. A lot of the people who were being misled by Greaney had become friends of mine over the years.

If everyone has all the information at their fingertips, why do we even have academic researchers? Why not do away with them if we already know everything there is to know? We have researchers because we want to continue learning new stuff. Shiller’s research has taught us the most important thing that we have ever learned about stock investing — that market timing is always 100 percent required, that it is the secret to successful long-term stock investing. I want to spread the word all across the internet.

If all retirement failure are solely the fault of the person whose retirement failed. why do we have laws against fraud and against extortion? Those laws suggest that there are lines that those working investment cons should not be permitted to cross, that there is a point at which the retirement failure becomes the responsibility of the person working the con. I believe that those laws are good and necessary laws.

My best and warmest wishes to you and yours.

Rob

“It Is Very Scary That We Are 19 Years Down the Road and the Study Has Not Been Corrected to This Day. That’s the Number One Public Policy Issue Before Our Nation Today. We All Should Be Talking About That. We All Have to Invest to Finance Our Retirement. So We All Need Access to Honest and Accurate and Research-Based Investment Advice.”

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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:

When nothing has changed for you, why wouldn’t you consider the fact that you have been wrong all this time.  While some people might just be looking to make fun of you, most others are just looking at the facts and trying to point them out to you.

Because the Greaney retirement study is available on the internet and I can pull it up at any time and take a look and I am no more able to find a valuation adjustment today than I was 19 years ago. If there really is no valuation adjustment in that study, then I was right in what I said in my famous post from the morning of May 13, 2002.

And, if I was right, then it is very scary that we are 19 years down the road and the study has not been corrected to this day. That’s the number one public policy issue before our nation today. We all should be talking about that. We all have to invest to finance our retirement. So we all need access to honest and accurate and research-based investment advice.

My best wishes to you.

Rob

“If Irrational Exuberance Is a Real Thing, It Is the #1 Enemy of Stock Investors.”

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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:

Buy and hold is a strategy.  Market timing is a strategy.  Neither are human.  We are comparing strategies. Look at what you are describing.  You are actually making the case for buy and hold.

One of the two strategies is suited for use by humans. The other is not. That’s the difference.

There was a widespread academic belief at the time that the Buy-and-Hold strategy developed that the market is efficient. For the market to be efficient, investors would need to be engaged in a rational pursuit of their self-interest. If the market were efficient, Buy-and-Hold would be the ideal strategy.

Shiller discredited the Efficient Market Theory with his Nobel-prize-winning research. He showed that investors are NOT rational. They are self-destructive. They bid prices up to insane, unsustainable levels. They fool themselves into believing that the crazy nominal prices that apply during bull markets are real, that they can use that money to finance their retirements. Then they suffer the horrible consequences that follow from the inevitable price crash and economic crisis.

If irrational exuberance is a real thing, it is the #1 enemy of stock investors. We all should be doing everything in our power to rein it in. That means telling investors about the amazing wealth-protecting and wealth-enhancing power of market timing at every site on the internet. Once every site on the internet is opened to honest posting re the last 40 years of peer-reviewed research, there can never be another out-of-control bull market. Stock prices are self-regulating in a world in which Shiller’s research is available to investors and in which honest posting re the far-reaching implications of that research is permitted.

Humans are flawed creatures, not perfectly rational creature. We all have a Get Rich Quick impulse residing within us. The “idea” that market timing might not be 100 percent required at all times pushes that Get Rich Quick impulse to places it has never been pushed before. We should all back off the dangerous Buy-and-Hold stuff and get about the business of making the case for market timing/Valuation-Informed Indexing.

That’s where I am coming from, Anonymous.

Rob

Valuation-Informed Indexing #552: When We Reject Market Timing, We Are Rejecting Rationality

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I’ve posted Entry #552 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called When We Reject Market Timing, We Are Rejecting Rationality.

Juicy Excerpt: Most of us don’t want to do that. We want to pretend that bull market prices are real. It would be to our benefit to identify our likely long-term return before we made stock purchases. But doing that would shatter the illusion that overpriced stocks are as valuable as fairly priced stocks or underpriced stocks. The illusion has more appeal to us than the information that would permit us to invest in stocks in an intelligent way. Stock investors are wary of rationality! Rationality is the enemy of illusion and stock investors cherish bull market illusions.

“Pull Up the Retirement Study at John Greaney’s Web Site and See If It Contains an Adjustment for the Valuation Level That Applies on the Day the Retirement Begins. The Answer to That Inquiry Tells You What You Need to Know About the Buy-and-Hold ‘Strategy.’ “

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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:

Again, you make more silly allegations, yet fail to provide any proof.  You are a complete joke.

The proof is easily available to anyone who knows how to perform a Google search. Pull up the retirement study at John Greaney’s web site and see if it contains an adjustment for the valuation level that applies on the day the retirement begins. The answer to that inquiry tells you what you need to know about the Buy-and-Hold “strategy.”

My sincere take.

Rob

“There Is No Subject Matter re Which All Humans Agree. In All Areas Other Than the Investment Advice Field, We Permit All Sorts of Different Viewpoints To Be Expressed. That Way, Different Ideas Circulate. As New Knowledge Is Generated, It Spreads and the Overall Understanding of the Subject Matter Gradually Increases.”

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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 have often said that we have to wait to see how things play out.  Is there a time in your mind in which it is too late for us to all continue to wait for some kind of crash?

We all should encourage honest posting AT ALL TIMES.

There is no subject matter re which all humans agree. In all areas other than the investment advice field, we permit all sorts of different viewpoints to be expressed. That way, different ideas circulate. As new knowledge is generated, it spreads and the overall understanding of the subject matter gradually increases.

It is my strongly held belief that that operating procedure that already works well in every field other than the investment advice field would work well in the investment advice field as well. I favor permitting honest posting. Then there’s no question about how long to wait for a crash or anything along those lines. If a crash arrives in x amount of time, then it does. If it does not, then it does not. Either way you are covered.

You don’t have to wait if you do not want to wait. That’s up to you. I am going to wait because I do not have any other choice. I sincerely believe that the Greaney retirement study lacks a valuation adjustment. So I say that when the topic of safe withdrawal rates comes up in internet discussions. When Greaney engages in criminal behavior to suppress the discussion of the error in his study, I am put in a spot if authorities do not take effective action. So I have to wait for attitudes to change. That’s me. You don’t have to do that if you do not care to. You can do as you please.

You are here. So I presume that there is something that you would like me to do for you. Tell me what it is and I will try to help out. I cannot say that I believe that the Greaney study contains a valuation adjustment. If that is what you want, you are going to have to wait. Because I cannot go there. But you are not required to want that. You are free to go on your way.

Does that help at all?

Rob

“Try Doing It Without the Criminal Stuff for a Few Weeks and See What Happens. The Internet Will Explode If You Do 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:

If there was all this “tension” you speak of, then your website would have loads of people commenting.  Instead, we just have crickets.

When I put up my famous post from the morning of May 13, 2002, the place exploded. Community member after community member said: “Thanks for starting the most exciting discussion we have ever seen!” That’s how it would be here and at every other investing site on the internet today if not for the criminal acts.

That stuff scares people. The criminal stuff suppresses discussion. Try doing it without the criminal stuff for a few weeks and see what happens. The internet will explode if you do that. There are good reasons why we have laws against death threats and against extortion and all the rest. We need to begin enforcing the law in the investing advice field in the same manner as we enforce it in every other field of human endeavor.

Do that and it will just be good stuff piled on top of good stuff piled on top of good stuff. But for so long as the law is not enforced against the Buy-and-Holders, they have too much of an edge. Being a pure Get Rich Quick approach gives them a huge edge right from the start. Add in that the Buy-and-Holders got there first and this have inertia on their side and they have a second major edge. Throw in that telling people that irrational exuberance is real money is the greatest marketing gimmick in history and they have a third major edge. The Valuation-Informed Indexers could overcome all that if we did something about the death threats and the extortion. But give the Buy-and-Holders a fourth huge edge by granting them an exemption from U.S. and the hill is just too big to climb.

I don’t believe that that will continue to remain true in the days following the next price crash. But for now, we will need to do something to rein in the criminal stuff if we want people to learn what the last 40 years of peer-reviewed research teaches us all about how stock investing works in the real world.

My best wishes to you, Anonymous.

Rob

“If Buy-and-Hold Were a Real Thing, No Buy-and-Holder Would Be Banning Anyone From Anything. If It Were a Real Thing, the Buy-and-Holders Would Be Inviting Challenges to Their Thinking. That’s How You Deepen Your Understanding of a Subject Over Time.”

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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:

Wrong again. After your long response to him after the first comment, he then followed up by saying:

“Sadly, your response is exactly what I wrote you about.” He then banned you from the Asset Builder website.

If Buy-and-Hold were a real thing, no Buy-and-Holder would be banning anyone from anything. If it were a real thing, the Buy-and-Holders would be inviting challenges to their thinking. That’s how you deepen your understanding of a subject over time.

The appeal of Buy-and-Hold is the Pretend Money that it creates. The downside is that the Pretend Money always disappears in time. Millions of people get hurt in very serious ways when that happens. I believe that we would be better off just telling people the truth about how stock investing works in the real world. Then there are no price crashes and no economic crises and many fewer failed retirements. I can live with that.

Rob