forgive me, but have any of you old, wise bogleheads read?

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kikie
Posts: 339
Joined: Sat Apr 09, 2011 4:37 pm

forgive me, but have any of you old, wise bogleheads read?

Post by kikie »

read this : John Williams shadow statistics, seems all but inevitable, that a big bear is coming in 2 years, not that I'm buying swiss and australian stock indexes anymore, i sold them when I became a BH follower few years back ...

http://www.shadowstats.com/article/no-4 ... tances.pdf
Those who know do not speak; those who speak do not know.
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Noobvestor
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Re: forgive me, but have any of you old, wise bogleheads rea

Post by Noobvestor »

I think the Shadowstats site is contemptible, for these reasons:

a) They do not give their data or state their methodology. There is no way to check what they post. It's simply an assertion.

b) Shadowstats claims that their SGS Alternate Inflation curve "reflects the CPI as if it were calculated using the methodologies in place in 1980." This is false on the face of it; they cannot be doing what they say they are doing. Prior to 1983, the CPI was calculated using actual housing prices; after 1983 it was changed and based on owner's equivalent rent. As noted by matt in 2010 (see below), if the SGS Alternate Inflation curve really used 1980 methodologies, the housing price collapse of 2006-2008 should have caused a much larger drop in the SGS Alternative Inflation curve than it did in the official CPI index, and the distance between the two curves should have narrowed. Instead, they stayed parallel.

c) The Bureau of Labor Statistics provides CPI-RS which is a recalculation of data from 1978 to the present using the new methodology. There's a difference, and the newer method calculates a lower number, but only by about 0.45% per year. If you believe the old method was the correct one, then the official figures understate inflation, but only about 0.45% per year, not the 6%-8% claimed by ShadowStats.
Last edited by nisiprius on Tue Apr 19, 201
Nisiprius via this thread: http://www.bogleheads.org/forum/viewtopic.php?t=73073

tl;dr ShadowStats sucks.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
KyleAAA
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Re: forgive me, but have any of you old, wise bogleheads rea

Post by KyleAAA »

I've never been impressed by anything John Williams has ever written. I'm sure he's been right once or twice. In fact, glancing at this pdf, it seems most of his argument is "the recovery is BS because the government lied about inflation." Same old, same old.
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