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 recall any thread with “great excitement “. But even if there was a positive thread, so what? I see hundreds of positive posts every month that get people excited. None of that translates into a career. Just because you want a career in this field, doesn’t mean that someone is going to pay you for it. There are hundreds of people posting out there that provide significantly more value on a consistent basis versus your website, yet they do not have a career from it.
The last 39 years of peer-reviewed research in this field changes everything that we believed we knew about how stock investing works back in 1980. It is going to take decades to get the word out re what we have learned to everyone on the planet and to correct people’s misperceptions and to get all of the textbooks rewritten and all that sort of thing.
Stock investing matters. It is important to get it right. The core Buy-and-Hold idea (that market timing is not required) is the OPPOSITE of what the research says. Getting everyone’s understanding of market timing 100 percent reversed is a big job. It’s not one career. It’s thousands and thousands of careers. It is not possible to exaggerate how big this is.
Take the safe withdrawal rate issue. We talked about Greaney’s study on a daily basis at the Motley Fool board in the old days. We obviously would not have done that if we did not all think that safe withdrawal rates matter. Greaney did not get the numbers a little wrong. He got them wildly wrong. He said that the safe withdrawal rate is always 4 percent. When the calculations are done honestly and accurately, the number for those who retired in January 2000 is revealed to be 1.6 percent. That’s huge. Have you ever thought about how many lives have been destroyed as a result of Greany’s unwillingness to correct his study and as a result of his Campaign of Terror against our board and blog communities? I am not sure that it is even possible for the human brain to process how much human misery was caused by the 18-year cover-up.
Galileo faced a tough situation when his research told him that the earth is not the center of the universe and the Catholic Church put him under house arrest because he was saying things that upset people who had come to believe that the Bible says that it is and that the Bible is infallible. Do you think that there were any careers that followed from Galileo’s investigations into this question? I believe that there were. His investigations told us something important about the world and then lots of other scientific findings were built on top of what he did and then one day many years later we put a man on the moon. I don’t believe that we could have ever put a man on the moon had we not at some point just acknowledged that we had made a mistake in those days when we came to believe that the earth was the center of the universe and then corrected the error. Galileo was right. Our society has over time come to accept that he was right. Thousands of careers were created as a result of that advance and millions of lives were enhanced as a result of the progress we achieved as a people.
That’s what we are going through re Shiller’s research finding that valuations affect long-term returns. The Buy-and-Holders made a mistake. They thought that the market was efficient. If that were so, market timing really would be a bad idea, just as they say. But it is not so. Shiller was awarded a Nobel prize for his research because it is of such great importance. It changes everything, If valuations affect long-term returns, stock investment risk is not constant but variable. Investors who want to keep their risk profile constant over time MUST, MUST, MUST practice market timing. There is no other way to pull it off. The safe withdrawal rate is not the same number at all times. It is a number that drops as low as 1.6 percent at times of insanely high valuations and rises to as high as 9.0 percent at times of insanely low valuations. We need to get these numbers right. Getting all the stuff that the Buy-and-Holders got wrong corrected will provide enough work to support thousands of very exciting and life-affirming careers.
Look at your own behavior. If permitting honest posting re the last 39 years of peer-reviewed research in this field were not a huge thing, do you really think that you would have risked going to prison to block honest posting at all of the boards and blogs? The question is absurd. You know perfectly well that the market for honest and accurate investment advice is virtually unlimited. This is the biggest thing to hit this field ever in history. That’s why you fight so hard.
I am just fighting on the other side. I am seeking to enrich millions of people’s lives, not to protect a small number of Wall Street Con Men from having to say the words “I” and “Was” and “Wrong.” I think it can be a liberating experience to acknowledge an error. I believe that our Wall Street Con Men friends are like most other people, they want to do good things with their lives. Once every site on the internet has been opened to honest posting re safe withdrawal rates and scores of other critically important investment-related topics, they will be freed to direct their life energies to good purposes once again. I think that will be just great. Their careers will have meaning again. Their careers will be serving positive purposes again.
And please note that their careers will be NEW careers. You can’t compare the work that someone is going when he is giving advice based on research that was discredited 39 years ago to the work that someone is doing when he is giving advice based on the current research. That change is a complete change of career. Everyone who works in this field who be pursuing a new career once we have opened every discussion board and blog on the internet to honest posting re the last 39 years of -peer-reviewed research.
We’ve got a tiger by the tale with this thing!
I am sure!
Career-Building Rob
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