A Rich Life

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

“Are the Buy-and-Holders Not Victims? They Are Responsible for Many Big Advances in Our understanding of How Stock Investing Works. They Got the Market Timing Thing Wrong. Not Because They Are Dumb or Evil. They Got It Wrong Because They Are Imperfect Humans. And the Rest of Us Did Not Serve Them Well.”

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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 guess you are a victim, Rob.  The entire world has conspired against you.

We are all victims in some ways, Anonymous. Just please keep in mind that we are all blessed in many ways as well.

Are the Buy-and-Holders not victims? They are responsible for many big advances in our understanding of how stock investing works. They got the market timing thing wrong. Not because they are dumb or evil. They got it wrong because they are imperfect humans. And the rest of us did not serve them well. Had we insisted that honest posting be permitted, the Buy-and-Holders would have learned over time and they would be much farther along in their understanding today.

I think we need to stop worrying about who is a victim and who isn’t and focus our energies on advancing in our understanding over time.

My best wishes to you.

Rob

“I Haven’t Collected a Penny. That’s the Entire Problem. In All Other Fields of Human Endeavor, We Offer INCENTIVES for People Who Do Things Properly and PENALTIES for Those Who Do Things Improperly. That’s Because We Want to See More of the Good Stuff and Less of the Bad Stuff. It’s All Upside Down in the Investment Advice Field.”

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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 $500 million settlement payment will put me way ahead of the game financially”

And how much of that $500 million have you collected?

We offer huge financial rewards for those who push the pure Get Rich Quick/Buy-and-Hold strategy and death threats and career destruction for those who promote the first true research-based approach (Valuation-Informed Indexing). That’s why we have a CAPE value in the mid-30s today.

We need to flip that. There are huge amounts of money to be made offering honest, accurate, research-based investment advice., But most people think it is not worth what you Goons put them through. When we put you Goons in prison cells, that will make it 100 percent clear to everyone who works in this field that it is now safe to post honestly. And, when we provide huge financial rewards to those who do so, that will seal the deal.

I wouldn’t be in line for a $500 million settlement payment had there never been any criminal behavior. Had there been no criminal behavior, there would be lots of people saying what I am saying. There would still be value to what I said. But not nearly the same value. Much of the value of my stuff comes from the fact that no one else is saying it and we need to establish a precedent in which someone does honest work in this field and gets rewarded handsomely for it. That changes everything.

Or so Rob Bennett sincerely believes, you know?

It is will be interesting to see how things play out.

Rob

Valuation-Informed Indexing #547: Buy-and-Hold Is More Than an Investing Strategy — It Is a Way of Thought

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I’ve posted Entry #547 to my weekly Valuation-Informed Indexing column at the Value Walk site. Its called Buy-and-Hold Is More Than an Investing Strategy — It Is a Way of Thought.

Juicy Excerpt: If investors were skeptical of stocks, more skeptical than the Buy-and-Hold Model encourages them to be, they would always be investigating whether they were paying too much for the stocks that they buy. That’s what the people buying goods and services do in every other market that exists, Not stock investors. Most stock investors are assured by their belief in the Buy-and-Hold Model that buying stocks can never be a poor decision. It wouldn’t make sense for stocks to be priced so high that they were not worth buying! Stocks are a risky asset class. How could it ever be that investors would not demand a return better than the return being offered by the super-safe asset classes like Treasury Inflation-Protected Securities (TIPS), IBonds and certificates of deposit?

“Every Day That the Greaney Retirement Study Goes Uncorrected Is More Support for Valuation-Informed Indexing. If Buy-and-Hold Were a Real Thing, Every Buy-and-Holder Would Want to Know About Any Errors That They Made and They Would Want to Correct Them Within 24 Hours of Learning About Them.”

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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 question, which you ignored with that babbling, was “What support, if any, have you had in the last 5 years?”

Obviously the correct answer is “None.”

Every day that the Greaney retirement study goes uncorrected is more support for Valuation-Informed Indexing. If Buy-and-Hold were a real thing, every Buy-and-Holder would want to know about any errors that they made and they would want to correct them within 24 hours of learning about them. The fact that the Greaney study was not corrected yesterday is highly significant evidence of the dangers of going with a pure Get Rich Quick approach. If it is not corrected again today, that will be even more evidence.

It was 19 years ago when I pointed out the error in the study. That’s a LOT of support. Holy moly!

My best wishes.

Rob

“There Is No Intellectual Support for Buy-and-Hold. What There Is Is a Mountain of INSTITUTIONAL Support.”

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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 support?  No one is commenting here.  Many people would dispute your interpretation of comments at the Motley Fool and other boards, but at this point, that was so long ago, it really is no longer relevant.  What support, if any, have you had in the last 5 years?

There’s 40 years of peer-reviewed research showing that valuations affect long-term returns. The author of that research was awarded a Nobel prize in recognition of the huge advance he achieved. That research was based on 150 years of stock-return data. That’s a mountain of support.

The other side of the story is that there is not one iota of evidence that market timing is not always required. Wade Pfau spent 16 months trying to find something and he came up empty-handed. The peer-reviewed research that I co-authored with him is so powerful that you Goons threatened to get him fired from his job if he continued doing honest work. Your own behavior shows how powerful our research is.

It’s a rare case in which 100 percent of the evidence supports one side of a controversy and 0 percent supports the other. But that’s where things stand. There is no intellectual support for Buy-and-Hold. What there is is a mountain of INSTITUTIONAL support. Buy-and-Hold was developed at a time when Shiller had not yet published his Nobel-prize-winning research. So the Buy-and-Holders got the market timing thing wrong. Now there are thousands of wealthy and powerful and well-connected people who do not want the word getting out about the mistake they made and about the ocean of misery that it has caused millions of people.

I don’t want to be on the side of the ocean of misery. I don’t believe that the Buy-and-Holders want to be there either. You see them drop hints about the realities all the time. But few are willing to give up their high-paying careers just to be able to do honest work. I believe that we are going to see some put their necks on the line after the next crash. Then we can all begin living better lives from that day forward.

Having 100 percent of the evidence supporting me is enough for me, Anonymous. I wish there had been no criminal acts. I wish there has been no abusive posts. But we don’t reside in heaven. This is Planet Earth. Sometimes things get a wee bit off track down here in the Valley of Tears. I am going to continue to say that I do not believe that the retirement study posted at John Greaney’s web site contains a valuation adjustment and wait to see how things play out after the crash. The big benefit of playing it that way is that doing so permits me to sleep at night.

You have continued posting abusively for the past five years. That’s strong evidence that even you Goons don’t truly believe that the Greaney study contains a valuation adjustment. If you believed that it did, you never would have put forward a single abusive comment.

My best and warmest wishes to you and yours.

Rob

“Criminal Acts Are Desperation Moves. The Fact That You Have Behaved As You Have Over the Past 19 Years Shows That Buy-and-Hold Is Hanging on By its Fingernails.”

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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 cannot believe that someone like you that spends so much time on making posts, has such little knowledge as to the subject matter.  Don’t you wonder why you can’t get any support here?

I have an amazing amount of support. That’s been true going back to the first day. There were scores of people at the Motley Fool site saying: “Thanks, Rob, for starting the most exciting discussion we have ever seen.” If I didn’t have a great amount of support, you never would have engaged in a single criminal act to hold me back. I mean. come on.

Now — the fact that there are lots of people who want to hear what the research says doesn’t mean that there are lots of people who want to participate in discussions in which the lives of their loves one are threatened by Buy-and-Holders who want to see the Buy-and-Hold Era continue a little while longer. But criminal acts are desperation moves. The fact that you have behaved as you have over the past 19 years shows that Buy-and-Hold is hanging on by its fingernails.

What happens after the next price crash? I think that people start asking questions. And then those of us who believe that Robert Shiller’s Nobel-prize-winning research is legitimate research provide the answers. And then we all begin living richer and fuller lives from that point forward. We’ll see, you know?

I naturally wish you all the best that this life has to offer regardless of what investment strategy you elect to follow, Anonymous. Hang in there, man.

Rob

Valuation-Informed Indexing #546: There Is a Natural Tension Between Get Rich Quick and Research-Based Investment Strategies

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I’ve posted Entry #546 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called There Is a Natural Tension Between Get Rich Quick and Research-Based Investment Strategies.

Juicy Excerpt: The market is holding a referendum on Shiller’s model for understanding how stock investing works. Every day. As of today, Shiller has been rejected. But that will not always be so, not if stocks continue to perform in the future at least somewhat as they have always performed in the past. There is a natural tension between the Get Rich Quick and the research-seeking parts of our brains. It is the resolution of that tension that determines each day’s stock price. 

“If Fama Is Right, the Risk of a Crash Is Not Greater Today Than at Any Randomly Chosen Time. But, If Shiller Is Right, Which I Believe Is the Case, the Risk Is Much, Much Greater Today. The Risk Is Probably Greater Today Than It Has Been At Any Earlier Time in U.S. History.”

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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 don’t do criminal.”

You don’t do sane either. In fact you don’t do much of anything.

Except waiting. Credit where it’s due. You are great at waiting.

Thanks for that much, Anonymous.

I don’t see that I have much choice. I felt like a creep for those three years when I didn’t speak up about the error in the Greaney retirement study. I have a tendency to over time become friends with the people that I post with on discussion boards. I sure don’t want to go back to feeling like a creep by selling those people out. But the shift from Buy-and-Hold to Valuation-Informed Indexing is a huge advance. It means rewriting all the textbooks, rejiggering all the calculators, explaining to millions of people an entirely new way of understanding how stock investing works. That’s not a one-person job. I am going to need some help from site administrators and academic researchers and investment advisers and policymakers concerned about the future of our economic system and so on. So, yes, I wait.

I believe that we will see a change in the days following the next price crash. It’s like what you see in an area where there is a high risk of flooding. You can tell people “don’t build your house here, the science says that someday in the not too distant future it will be washed away in a flood.” Lots of people who like living where they are are going to look at the sky and say “it seems like a sunny and pleasant enough day, I think I will just remain where I am, now go away, I don’t want to hear anymore about what the science says.” But, after the flood hits and many lives are destroyed, it’s a different story. Then people say: “Why didn’t you tell us about the flood back when there was still time to do something about it?”

I believe that there will be people who will work up the courage to stand up to Lindauer and Greaney (and their respective Goon squads) in the days after the flood hits. If Fama is right, it’s not even an issue. If Fama is right, the risk of a crash is not greater today than at any randomly chosen time. But, if Shiller is right, which I believe is the case, the risk is much, much greater today. The risk is probably greater today than it has been at any earlier time in U.S. history. A case could be made that the risk is greater today than it was in January 2000. That’s not so going by the CAPE value alone. But the amount of time that a bull market has been in place is another risk factor and we have had many more years of irrational exuberance today than we had had in 2000.

So, yes, I wait. I also pray that the crash will not be as bad as the past 40 years of peer-reviewed research in this field indicates it might be. And I pray that, in the days following the crash, we all find a way to put our differences behind us and to get together for a few frosty cold ones and have a laugh about the craziness we lived through in earlier times.

My best and warmest wishes to you and yours, old (Goon) friend.

Sentimental Rob

“Human Beings Get Themselves Into Trouble By Turning Off Their Brains and Giving in to Emotional Impulses. It’s Been Happening Since the Beginning of Time. Shiller Told Us What We Need to Know to Insure That It Never Happens Again in the Stock Investing Realm.”

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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:

Why is it that everyone else has a different interpretation of Greaney’s work versus you?  Why is it that only you see the death threats?  Why is it that only you see the job threats?  Why is it that you are the one that has the most bans from all the leading investing blogs?  Are we to believe that all of these other people out there are all wrong about everything and that only you are right?

It’s not only me who says that valuations affect long-term returns. There are thousands of people who posted in support of me at the various boards and blogs. Robert Shiller was awarded a Nobel prize for his amazing research showing that valuations affect long-term returns.

All of that does not get the Greaney study corrected. For the study to be corrected, Greaney would have to make a change to it. I cannot compel that and neither can any of those other thousands. If we had the support of the site owners, we could have those who promote discredited studies removed. But the site owners make a lot of money promoting a pure Get Rich Quick approach to stock investing. I asked the site administrator at Motley Fool to remove Greaney. He thanked me for my “thoughtful” e-mail. He told me that he thought it would be ideal if Greaney permitted honest posting. But he didn’t remove him. Eventually, he removed me. And he nominated Greaney for Poster of the Year at the site.

Why do tobacco companies sell a product that kills people?

Why do companies pollute the environment?

Why was the Catholic Church’s sexual abuse scandal kept quiet for so long?

There’s money in it. Mountains of money. That’s the answer.

Laws don’t enforce themselves. People have to enforce them. And, for the length of a bull market, lots and lots and lots of people appear to be ahead of the game in dollar terms if the irrational exuberance remains on the books. The irrational exuberance cannot remain on the books if we permit honest posting. People want their retirement plans to work out, and, if we permit them to obtain the information they need for that to happen, they are going to do what they need to do. Which will bring stock prices down.

Do you want that? I do.

I don’t want all the pain that goes with it. But I want prices to reflect the economic realities. We can’t get there without going though a lot of pain. Sooner or later, we are going to have to do it, whether we like the idea or not, I hope we learn our lesson. I hope that, when we see all the pain that follows from the relentless promotion of all the Get Rich Quick/Buy-and-Hold garbage, we make a vow as a society to never, ever, ever let it happen again. I think we will do that. We’ll see, you know?

Human beings get themselves into trouble by turning off their brains and giving in to emotional impulses. It’s been happening since the beginning of time. Shiller told us what we need to know to insure that it never happens again in the stock investing realm. I say that we should take advantage of what he showed us. And I believe that we will begin doing that when we see how much pain following the pure Get Rich Quick approach caused us.

Does that help?

Rob

“I Know of No One Who Knows Less About How Stock Investing Works Than You. So If It’s So Important to Share Correct Information, We Need to Ban the Lunatics Who Think Staying Out of Stocks for 25 Years Was a Wise Decision.”

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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:

“It’s not my name that is important. It’s knowing how stock investing works that is important.”

I know of no one who knows less about how stock investing works than you. So if it’s so important to share correct information, we need to ban the lunatics who think staying out of stocks for 25 years was a wise decision.

Luckily, that’s exactly what happened.

Okay, Anonymous.

I am going to continue to say that I do not believe that the retirement study posted at John Greaney’s web site contains an adjustment for the valuation level that applies on the day the retirement begins.

I naturally wish you all the best that this life has to offer a person regardless of what investment strategies you elect to follow.

Rob