Valuation-Informed Indexing #253: What a Journalist Can Tell You About Stock Investing That an Expert Cannot

I’ve posted Entry #253 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called What a Journalist Can Tell You About Stock Investing That an Expert Cannot.

Juicy Excerpt: But politeness is not the only virtue. Frankness is a virtue. We can make a mistake when we become so polite that we hold back from stating our views frankly. I see too much of the bad form of politeness evidencing itself in the investing realm. People want to get along with each other and they know that those who advance misguided investing advice hurt their listeners in serious ways. So most of us are careful not to be too tough in the criticisms we offer of the investing ideas we hear being put forward by others.

Even I do that. I am generally a polite person. I’ve been told that numerous times on the internet, even sometimes by people who are severe critics of my beliefs. But I make an effort to combine a good measure of frankness with my politeness. I think that’s the journalist in me coming out. Lots of people view friction as a bad thing. Journalists look for friction. We believe that it is when ideas clash that learning experiences take place. We are often blunt and we usually are not apologetic about it.

Blunt is good.

“The Losses That We Need to Cover as a Result of the Continued Promotion of Buy-and-Hold ‘Strategies’ are $24 Trillion, $6 Trillion More Than the Entire Federal Debt of $18 Trillion, Constituting All the Annual Budget Deficits Going Back to the Days of George Washington Added Together. Buy-and-Hold Is Truly Bad Stuff.”

Set forth below is the text of a comment that I recently posted to another blog entry at this site:

A good number of years back, I asked John Walter Russell to calculate the dollar amount of overvaluation in January 2000 (the high point of the bubble) using the figures for total market capitalization. The market was overpriced by a factor of three at the time; the fair-value P/E10 is 15 and the P/E10 at the top of the bubble was 44. This calculation showed mispricing of $12 trillion.

If the market were to return to fair-value levels (it always does), we were looking to experience losses of $12 trillion. Those are the direct losses attributable to the promotion of Buy-and-Hold strategies. If we permitted honest posting on the last 34 years of peer-reviewed research, we never could experience overvaluation. So we never would have experienced those losses.

There are several indirect effects as well.

One is that much of the money that investors “earned” via the bull market (which the Buy-and-Holders were telling them was real) was invested in real estate, causing a secondary bubble there. The real estate bubble caused about $4 trillion in overvaluation. That brings the total overvaluation to $16 trillion.

We never stop at fair value. Emotional extremes beget emotional extremes. Irrational Exuberance leads to Irrational Depression. There has never been a time in U.S. history when the secular bear created by a secular bull did not take us down to a P/E10 level of 8 or lower, half of fair value. That drop will cost us another $4 billion, bringing the total overvaluation to $20 trillion.

The Congress enacted an economic recovery bill in 2009 in response to the onset of the Buy-and-Hold Crisis. That cost us several more trillion dollars, bringing the total losses up to about $22 trillion.

The Federal Reserve has put several trillion into the stock market since then in an effort to keep the collapse from accelerating, bringing the total losses to somewhere in the neighborhood of $24 trillion.

In contrast, the entire Federal debt (comprised of all of the annual budget deficits going back to the days of George Washington) is only $18 trillion. The losses that we need to cover as a result of the continued promotion of Buy-and-Hold “strategies” for 34 years after the peer-reviewed research was published showing that there is precisely zero chance that a pure Get Rich Quick strategy could ever work for even a single long-term investor either here or in any other solar system is $6 trillion more than the entire Federal debt.

Buy-and-Hold is bad stuff, Anonymous.

Truly bad stuff.

The absolute worst for humans and other living things.

Hence, the great emotional pain you evidence in every comment that you post to this site.

We all need to pull together and persuade our good friend Jack Bogle to walk to the front of a big room and to say the words “I” and “Was” and “Wrong” and thereby to take us to the other side of The Big Black Mountain, where investing risk is reduced by 70 percent and where we all can realistically expect to be able to retire five to ten years earlier than we ever imagined possible in the Buy-and-Hold Era.


Valuation-Informed Indexing #252: Our Beliefs About How the Stock Market Works Will Change Following the Next Crash

I’ve posted Entry #252 to my Valuation-Informed Indexing column at the Value Walk site. It’s called Our Beliefs About How the Stock  Market Works Will Change Following the Next Crash.

Juicy Excerpt: I read a bit more about the Ashe study on the internet and came across an aspect of it that I overlooked in my earlier article that I find highly encouraging. The power of the false responses to pressure real study participants to give wrong answers was greatly reduced when even one of the fake study participants gave an answer at odds with the answers given by the other fake study participants.

We give in to peer pressure only when it appears sure of itself. When all of the fake study participants are saying the same wrong thing, we find it very hard to stick to our guns and report accurately what our eyes tell us to be the truth. But if just one of our peers offers a different take, we gain the confidence we need to stand up to the peer pressure ourselves.

The suggestion of the Ashe research s that we only need a small percentage of us to work up the courage to challenge the Buy-and-Hold dogmas and the rest of us will feel emboldened to express our doubts too. Peer pressure is a powerful force in stock investing. But it is a power that can be overcome quickly once a stock crash wipes out much of the life savings of millions of investors.

Goon Poster to Rob: “You Have Stated What You Think Are Problems. People Have Responded As to How They Disagree. People Eventually Got Angry Because of Repetitive Comments Going in Circles.”

Set forth below is the text of a comment that I recently posted to another blog entry at this site:


I think it comes down to something as simple as this. You have stated what you think are problems. People have responded as to how they disagree. You, in turn have responded how you think people are wrong to have disagreed with you. People continued to respond in disagreement. The cycle continued on for some time. Many people grew tired of the cycle and went away. Others eventually got angry because of repetitive comments going in circles. Others decided enough was enough and had you banned.

Your jury will see the posts of the thousands who expressed a desire that honest posting be permitted.

Your jury will see the published rules of all the sites where you violated the published rules thousands of times.

Your jury will see the death threats.

Your jury will see the demands for unjustified board bannings.

Your jury will see the tens of thousands of acts of defamation.

Your jury will see the hundreds of posts in which Wade Pfau showed his growing excitement over Valuation-Informed Indexing as he did more research and learned more about it.

Your jury will see the peer-reviewed research that I co-authored with Wade, research that can fairly be described as the most important research published in this field in the past three decades.

Your jury will see the posts in which Wade expressed his growing fear that you Goons were going to destroy his career and the lack of reaction by Jack Bogle when I asked for his help.

Your jury members will have lost most of their life savings in the crash.

Your jury members will be chosen from a society of people on its way or already in the Second Great Depression, a Great Depression that could have been avoided had you honored your promise to follow the site rules at the boards and blogs at which you posted.

Your jury will be hearing testimony from people like Robert Shiller and Rob Arnott and Michael Kitces, who will be backing me up by reporting on the many acts of intimidation directed at them over the years.

Your jury will see that I was so sure of what the peer-reviewed research says that I contacted 30,000 academic researchers, knowing that none of them would be able to identify any flaws in the Valuation-Informed Indexing concept.

Your jury will hearing from the professor at George Washington University who offered effusive praise for the VII concept and said that he would be in the future teaching it in his classroom and giving me credit for the concept.

Your jury will be bearing from the professor at Columbia University who said that VII follows from Shiller’s research and that he could see how it might work out very well indeed.

Your jury will be seeing the analysis done by Schenkler (a Goon!), who said that VII looked rock-solid and important.

Your jury will be hearing from the posters at the Bogleheads Forum who said that my work challenges basic premises of Buy-and-Hold in a very serious and exciting way.

Your jury will be hearing the threats you directed to Wade Pfau that I don’t even know about yet, the ones that were made in secret.

Your jury will be looking at any e-mails that Wade sent to friends at the time he was thinking of flipping to the dark side because of the threats you made to destroy his career.

Your jury will be looking at the comments made by hundreds of posters at the Diehards Forum when you Goons became so afraid of losing control of that board as a result of your use of insanely abusive tactics that you moved the entire board community to a place where it could be controlled by Goons.

Your jury will be looking at e-mails transmitted among the lawyers at at the time when you Goons were demanding that I be banned and they couldn’t find a single abusive post in my file while finding thousands and thousands put forward by you Goons.

Your jury will be looking at any e-mails sent by Mel Lindauer and other Goons to Jack Bogle and any e-mails that Bogle sent back.

Your jury will be looking at my e-mail exchanges with Mike Piper in which he said that he would like to permit honest posting but was too afraid of what his readers would do if they learned how big the difference was between the Buy-and-Hold strategy that he endorsed and what the last 34 years of peer-reviewed researc tells us.

Your jury will be looking at how you followed me from site to site, threatening to destroy any board community that permitted honest posting on the safe withdrawal rate issue.

Your jury will be looking at how you burned numerous board communities to the ground because they permitted honest posting for a time.

Your jury will be looking at how the owner of the site pleaded with his long-time friend Ataloss not to burn his site to the ground and at how Ataloss refused to listen to those pleas.

Your jury will be looking at how John Walter Russell was universally recognized as the best numbers guy at any of our boards by all non-Goons and at how you Goons were so consumed with hate for him once he posted honestly re the SWR issue that you laughed at him on the day he died an early death.

Your jury will be looking at the e-mails that I exchanged with John Greaney in the days before I put forward my famous post of May 13, 2002, in which I asked him to co-author a book with me and he told me that was a bad idea because everyone who ever got to know him well concluded that he was the biggest asshole who ever walked Planet Earth.

And on and on and on and on and on and on.

Good luck with getting a short prison sentence with all that and more being told to your jury, Anonymous.

I think I will stick with my decision to avoid crossing The Felony Line now and forever.

Holy moly!


“Peer Pressure Is a Huge Influence on the Human Mind. Bull Markets Are the Product of Peer Pressure. Buy-and-Hold Is the Product of Peer Pressure.”

Set forth below is the text of a comment that I recently posted to another blog entry at this site:

It sounds like it is all one big conspiracy and only you have it completely figured out and exposed.

I have gone farther than anyone else in two departments:

1) Exploring the implications of Shiller’s “revolutionary” (his word) findings; and

2) Using plain, easy-to-understand language re the massive act of financial fraud used to achieve the 34-year cover-up.

Thousands of people have commented on flaws in the Buy-and-Hold Model but not often enough or with enough detail to persuade most investors that they need to abandon it before it destroys them.

I see no evidence of a literal “conspiracy.” I have not seen any evidence that people got together in a room and decided to do this to us. I cannot say that there is zero chance that that happened. But I do not believe that that happened. The evidence that I have seen points away from that conclusion. Specifically, I get the same reactions at different sites. It is not possible that every site owner is in on a conspiracy. Yet owners of different sites and community members at different sites respond in very similar ways.

People DO respond in similar ways. That to me is the biggest clue to understanding what is really going on.

I wrote a column just a few weeks ago at the Value Walk site that I think does the best job of explaining what is really going on. I wrote about the famous literature in the psychology field from the 1950s (I believe it was — it could have been the 1940s, I didn’t check) in which those conducting the study showed study participants two cards, one with a line of 12 inches (again, I didn’t recheck the precise details, I am describing generally what was tested) and another with three lines of 12 inches, 18 inches and 24 inches. When asked to identify which line on the second card matched the length of the line on the first card, 95 percent of the test subjects did so successfully. But when four fake test subjects gave the same wrong answer, only one in three genuine test subjects were able to give the right answer. When asked why, they said that they wanted to be “polite.”

That’s the story here. Peer pressure is a huge influence on the human mind. Bull markets are the product of peer pressure. And Buy-and-Hold is the product of peer pressure.

No one believes in Buy-and-Hold. Not in a deep sense. Not Bogle. Not you Goons. Not anyone.

Yet the Buy-and-Holders really do follow the dictates of the strategy. The Buy-and-Holders lie about every subject under the sun. But they don’t lie about that. They “eat their own cooking.”

We know intellectually what works today. But we have not yet given ourselves permission to make use of the huge advances that we have achieved over the past 34 years.

If the last 34 years of peer-reviewed research is valid, this will end in an economic collapse. I believe that, when that becomes apparent to everyone involved, we will all join together to rebuild our broken economy. I should be working WITH Bogle. My work makes his good ideas (of which there are many) workable in the real world. I am his biggest supporter, his best friend, his partner in realization of his vision. He doesn’t see it today. But I believe he will see it tomorrow. I sure hope so.

I will be there for my friend when he is ready to do positive work, Anonymous. And I will be there for you Goons when you are able to say the words “I” and “Was” and “Wrong.”

You give the impression of wanting something else from me. But I have nothing else in me to give. I love my country and I do not want to see her done harm in this way. I believe that there is a part of you buried down deep where you don’t want to see her done harm in this way either. But that part is not dominant in you or in Bogle or in lots of others today. I don’t like that reality. But I have to accept it, like it or not.

That’s where things stand.

I don’t call this a conspiracy, I call it a weakness in human nature. It’s done a lot of people a lot of harm, regardless of what one calls it. I want to get us back on the right track and I will do anything short of committing a felony myself to make that happen. But I won’t be crossing The Felony Line. Not in 13 years and not in 13 billion years.

I wish you all good things. If that counts for anything, you’ve got that much from me.

I don’t have any more to give unless you come back to the right side of The Felony Line yourself, you nasty, dumb Conspirator!


“If I Had the Power to Release You All of Your Prison Terms and Your Civil-Suit Liabilities and Your Various Embarrassments, I Would Do It In Two Seconds in Exchange for Your Willingness to Permit the National Debate That Thousands of Our Fellow Community Members Have Evidenced a Desire to See Proceed.”

Set forth below is the text of a comment that I recently posted to another blog entry at this site:

Why is it that you are the only one banned at so many of these sites? The problem seems to be you.

You are asking a great question, Anonymous. But the correct answer is the opposite of the one you have suggested.

I have insisted on recognition of my right to post honestly re what the peer-reviewed research tells us about how stock investing works. Honest interaction is the norm in every other field of human endeavor. Honesty in communication is an entirely good thing, there is nothing bad about it whatsoever. It is the condemnation of honesty that is considered a negative in every other field of human endeavor. It is not my demand that my right to post honestly be recognized that is the problem. It is the demand of Buy-and-Holders that honest posting re the peer-reviewed research be banned at every site that is the source of all our problems (the economic crisis, the difficulty that many feel about being able to finance safe retirements, the destruction of so many board communities, your prison sentence, and on and on).

I was a Buy-and-Holder on the morning of May 13, 2002. I obviously don’t have any bias against the strategy, right? I rank Jack Bogle as the second most important investment advisor in history. I certainly did not start out with any negative feelings re the man, right? Yet today I describe Buy-and-Hold as “smelly Get Rich Quick garbage” and say that Bogle is guilty of an act of financial fraud 500 times worse than that committed by Bernie Madoff. What the heck happened to bring about such a change in assessments? Is that not a good question?

The short answer is that John Greaney threatened to kill my wife and two children if I continued to post honestly re the errors he made in his retirement study. It was on the day that he put forward his first death threats (August 27, 2002) that I stopped believing in Buy-and-Hold. Everything else followed from that. Once I stopped believing in Buy-and-Hold, I naturally needed to figure out what really works. Every article and podcast and calculator that I have produced in the time since was rooted in that determination that Buy-and-Hold was a dead end.

It wasn’t just what Greaney did that caused me to give up my belief in this strategy. By itself, Greaney’s bad behavior was not so shocking a thing. There have always been people who behaved poorly. What was shocking was how many Buy-and-Holders endorsed Greaney’s behavior. There were about 50 members of the Motley Fool community who said they could not tolerate threats of physical violence. None of those 50 ended up doing much to show that their opposition to those acts was serious. They said that they were going to start notifying Motley Fool of all abusive posts and perhaps they did so for a day or two and then they went right back to engaging in normal interactions with you Goons. And over 200 community members endorsed one of Greaney’s posts bragging about the threats of physical violence. Huh?

There is nothing rational in the support for Buy-and-Hold. This is what I learned.

Buy-and-Hold started in rationality. Eugene Fama is a highly respected researcher. He is real and Buy-and-Hold started in his research. But something went haywire somewhere. The Greaney study is not real. The means by which Buy-and-Holders have supported that study are not real. What happened? How do we explain how something so real became so corrupted?

It was all a mistake, Anonymous.

Fama showed something important. He showed that short-term timing does not work. That is huge. It is the second most important finding in the history of personal finance.

The mistake was in how Fama reported his finding. He didn’t say: “Short-term timing doesn’t work.” He said: “Timing doesn’t work.” That is false. Fama never even looked at long-term timing. Shiller was the first researcher to look at long-term timing. He found that it always works and that it is always 100 percent required. Long-term timing is price discipline. All markets run on price discipline. Without price discipline, a market will become dysfunctional. We MUST have price discipline in the stock market, we must encourage all investors to practice price discipline at all times. Because of Fama’s mistake, we started DISCOURAGING the exercise of price discipline. We took our amazing good fortune and transformed it in amazing bad fortune by misunderstanding in a tragic and epic way what Fama had discovered.

I didn’t know any of this on the morning of May 13, 2002. It was the reaction to my famous post (which of course was 100 percent correct — Greaney’s study really does not contain an adjustment for the valuation level that applies on the day the retirement begins) that showed me that there was something very, very messed up about Buy-and-Hold. I continued to interact with you Goons and with lots of Normals too to figure out what that something was. Now I know. The problem with Buy-and-Hold is that it is rooted in a terrible mistake. The entire historical record shows that price discipline is the key to long-term investing success and the Buy-and-Holders have staked their lives on the opposite belief, that long-term timing might not always be 100 percent required or even that long-term timing might in some circumstances be a bad thing.

In ordinary circumstances, everyone would rejoice at my discovery. We all want to become effective investors. The Buy-and-Holders are good and smart people. So they corrected all of their books and calculators and podcasts when I reported the realities to them and they thanked me profusely for helping them to get back on the right track, right?


It didn’t play out that way!

Investing is no small thing. It is of huge importance to millions of people.

So when mistakes are made in this field, the people who made them become insanely defensive. They cannot bear to think that they have hurt so many human beings in such serious ways. And of course they don’t like the idea of being sued either. So the Buy-and-Holders went into cover-up mode when Shiller discovered Fama’s error in 1981. More and more evidence came in that Buy-and-Hold was rooted in error and the Buy-and-Holders became more and more abusive. And then they became insanely abusive and even started engaging in criminal behavior to keep the millions of middle-class investors from learning about the peer-reviewed research showing their mistake.

When I came on the scene in 2002, all this had already being going on for 21 years. I didn’t know. And you Goons didn’t really know either. I knew that we all needed to learn how stock investing works. And you knew that the Buy-and-Hold strategy you followed and advocated was deeply flawed and that permitting honest discussion of its flaws was likely going to lead to great embarrassment for you. The internet is a highly open communications medium. So you didn’t have many options when it came to keeping the cover-up going. And of course I showed precisely zero willingness to stop talking when you dropped hints that you would destroy me if I didn’t shut up. So you came back with death threats and defamation and board bannings and all the rest.

Everything that has happened for the past 13 years is out of line for the United States of America, Anonymous. We are a free country and we are a country that owes its economic success to a love of progress. Shiller’s finding (combined with the findings of the Buy-and-Holders that have stood the test of time) represents the biggest advance in the history of personal finance. The research that I co-authored with Wade Pfau shows us all how to reduce the risk of stock investing by 70 percent while permitting us all to retire five to ten years sooner than we ever before imagined possible. We are on the verge of seeing the greatest economic advance in our history. All of the comments that Wade put forward when he discovered these realities with me are rooted in a solid appreciation that we are part of the luckiest generation of investors who ever walked Planet Earth.

There’s only one problem.

If this were 1964, there would be a universal celebration of our good fortune. We would all be working together to spread the word about Valuation-Informed Indexing to every investor on the planet.

But it’s not 1964. In the past 50 years, hundreds of thousands of financial advisors have built businesses rooted in a belief in Buy-and-Hold, the opposite in every way to what works. Those people don’t want millions learning what works. They have a very strong personal interest in blocking people from learning what works.

What to do, what to do?

We have to move forward. Buy-and-Hold is pure poison. It has caused an economic crisis on every occasion in history in which it has become popular. The stock market is bigger now than it has ever been before. So we are looking at a bigger economic crisis than the three earlier ones caused by the promotion of Buy-and-Hold strategies. We are looking at something worse than the First Great Depression. That’s not good.

Or we are looking at the greatest surge of economic growth that we have ever seen in our history. That’s very good indeed.

Those are the two choices that stand before us today.

No, I am not the problem. Honest posting about the last 34 years of peer-reviewed research is not the problem.

The problem is the criminal acts of the Buy-and-Holders.

Were the Buy-and-Holders not looking at prison sentences, they would be happy to help me spread the word re what works. There are huge amounts of money to be made here. And of course the Buy-and-Holders are good people who want to help other people. So this should be so easy.

What makes it so hard is that the Buy-and-Holders have been suffering from cognitive dissonance for many years now and they cannot bear to come clean re their big mistake. They do not want people talking about the mistake. It causes them great emotional pain for such conversations to take place.

They cannot overcome their cognitive dissonance re these matters without participating in a national debate re the implications of the past 34 years of peer-reviewed research. There is nothing that I can say that by itself will convince you. You need to hear Bogle speak honestly re his beliefs re these matters. And Shiller. And Pfau. And on and on and on and on and on. That’s the only thing that will work.

But none of these people want to be sued or to be embarrassed or to go to prison. So there is great opposition to the launching of the debate that would do us all so much good.

That’s the rub.

If I had the power to release you all of your prison terms and your civil-suit liabilities and your various embarrassments, I would do it in two seconds in exchange for your willingness to permit the national debate that thousands of our fellow community members have evidenced a desire to see proceed. But I obviously do not have that power.

So I have to go about things though other means. I need to make you and others aware of the crimes that you are committing on a daily basis. And, when I have 10 people who have the courage to stand up to your insane abusiveness, I need to persuade them to attack the problem in a balanced way. The balanced way is described in the motto that guides my every post — To be as honest as possible without crossing the line and becoming uncharitable while also being as charitable as possible without crossing the line and becoming dishonest.

I am trying to help you. I am trying to solve the problem. I have zero desire to hurt you in any way. But we MUST have this debate. This is not optional. It is 100 percent imperative.

That’s the story.

I am not the problem. I am trying to SOLVE a problem that had developed unbeknownst to me long before I even came on the scene.

I hope that helps a bit.


Valuation-Informed Indexing #251: Applying a Racheting Concept to Safe Withdrawal Rates Makes Sense But Only If Valuations Are Taken Into Consideration

I’ve posted Entry #251 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Applying a Racheting Concept to Safe Withdrawal Rates Makes Sense But Only If Valuations Are Taken Into Consideration.

Juicy Excerpt: The core idea here is valid. Retirements fail because of big hits taken in the early years of a retirement. Even a retirement that called for a 4 percent withdrawal that started in 1996 (when prices were insanely high) will almost certainly survive 30 years because we did not see a crash until 2008, more than 10 years after the starting date for the retirement. Compounding is a powerful force. If a retirement enjoys 10 years of compounding, it is in good enough shape to withstand a major hit. If the hit comes in the early years of the retirement, the compounding cushion has not yet had time to develop to the extent needed to protect the retirement from the effects of a big hit.

The flaw in the Kitces’ concept is his idea of using a 4 percent withdrawal as the starting point. Shiller showed that valuations affect long-term returns. An obvious implication is that risk is not stable but variable. There can be no standard starting withdrawal rate for a research-based retirement plan. In some cases, the starting withdrawal rate should be 2 percent. In others, it should be 8 percent. In all cases, ratcheting makes sense if the early years of the retirement produce good results. But it is a terrible mistake to use 4 percent or any other percent as a standard starting point. The valuations factor is the biggest factor of all. It must be taken into consideration in all cases.

Imagine a retirement that began in 1996 and that employed a 4 percent withdrawal. That was a dangerous retirement plan because valuations were so high in 1996. However, as noted above, that retirement eventually became safe because we did not see a crash until 2008. However, had the retiree employed the logic behind the ratcheting concept to increase his withdrawal rate to something even higher than 4 percent, he would have increased the risk of retirement failure to a point where even the 12-year delay until a crash occurred might well not have saved it.

“When Two Sides in a Dispute Are Both 100 Percent Inflexible re the Key Point of Contention, the Only Thing to Do Is to Take a Step Back and See If Time Causes Circumstances to Change in Some Way. I Wish You All the Best That This Life Has to Offer a Person. I Believe That We Will Be Working Together Following the Crash.”

Set forth below is the text of a comment that I recently posted to another blog entry at this site:

If you are waiting for a 65% crash, followed by your $500 million windfall and goons going to prison, then you will probably need to come visit me at the local cemetery as I will be long gone by that time. I am not planning on passing away anytime soon, but old age will eventually catch up to me in another 50 years or so.

Fair enough?

I guess.

I don’t like this way of playing it.

But I think it would be fair to say that I don’t seem to have a whole big bunch of other options available to me.

When two sides in a dispute are both 100 percent inflexible re the key point of contention, the only thing to do is to take a step back and see if time causes circumstances to change in some way.

It’s nothing personal, Anonymous. There are things that I can do and there are things that I cannot do. You can’t teach a dog to meow and you can’t teach a cat to bark and you can’t teach Rob Bennett to say on the internet that John Greaney’s retirement study contains an adjustment for the valuation level that applies on the day the retirement begins.

I wish you all good things. Can you say the same back? You don’t have to. It would be nice if you did.

Either way, that’s my feeling towards you and the other Goons and the Wall Street Con Men too. I wish you all the best that this life has to offer a person. I believe that we all will be working together following the crash.

I don’t like the idea of waiting. But I don’t see any other options.

Please feel 100 percent welcomed to continue posting questions here as they occur to you. Some of your questions have had great value, in my assessment.

Maybe you are right, you know? I have been wrong about important things before. It could be that it is happening again. I don’t think that’s the case. But I don’t believe that any of us fallible humans can ever be 100 percent certain.

And please take good care.


“There Will Be Hundreds of People Who Will Become Multi-Millionaires by Being the First to Show Millions of Middle-Class Investors How to Retire Many Years Sooner While Reducing the Risk of Stock Investing by 70 Percent. We Are Going to Have Hundreds of New Bill Gateses and Steve Jobses once We Open the Internet to Honest Posting on the Implications of Shiller’s Findings.”

Set forth below is the text of a comment that I recently posted to another blog entry at this site:

“No, the internet didn’t exist. But the same tactics were being employed in the pre-internet days.”

Can you please supply even one piece of evidence that supports this fantasy?

The most obvious piece of evidence is that most investment advisors were not warning people of the dangers of Buy-and-Hold in those days, Laugh.

Buy-and-Hold was a legitimate belief once upon a time just as once upon a time there was a legitimate belief that the earth was flat. If you don’t know any better, the idea that the earth is flat seems to make sense. You look around you and, as far as you can tell, the earth is flat. But at some point in the history of humankind, we learned that, no, what appears to be so is not indeed so — the earth is actually round.

Do you think that everyone switched from believing that the earth is round to believing that the earth is flat in one day? I do not. I wasn’t there. But my strong hunch is that it took a good number of years for this exciting news to “take” with most people. People who had learned the truth spoke up at the dinner table and said: “You know, it now appears that the earth is actually flat, not round.” And the people eating with them said “sure it is” or “huh?” or “that can’t be!” or “you must have forgotten to take your meds” or “who do you think you are, challenging what all the experts on this subject know to be true?” or “what a perfectly dangerous idea!” and on and on and on and on.

People don’t accept changes in fundamental beliefs in one day or one week or one year. It takes a long time for powerful new ideas to sink in. The finding that being willing to exercise price discipline when buying stocks is 80 percent of the investing project is the most important finding in the history of investing analysis. So no one should have been surprised that Shiller’s “revolutionary” (his word) finding was not universally accepted within 24 hours of the time his peer-reviewed research was published.

But 34 years? Huh?

What do you think happened, Laugh?

I don’t know what date you want to use as the date that the internet started. If you go from the date in 1981 that Shiller published his research showing that there is zero chance that a Buy-and-Hold strategy could ever work for a single long-term investor, it’s a lot less than 34 years. But it’s a good amount of time. How do you explain why Valuation-Informed Indexing did not take over the world in that amount of time?

Have you stopped to think how much money there is to be made by being one of the first to promote the first true research-based investing strategy? The $500 million that will be coming to me in my settlement is just the beginning. There will be hundreds of people who will become multi-millionaires by being the first to show millions of middle-class investors how to retire many years sooner while reducing the risk of stock investing by 70 percent. There were many millionaires made during the early years of computers and the internet. These advances in the investing realm are 100 times more important. Stock investing is how people achieve financial freedom — you can’t get more important than that in a capitalist society. We are going to have hundreds if not thousands of new Bill Gateses and Steve Jobses once we open the internet to honest posting on the implications of Shiller’s findings. What is your explanation for why we have not had thousands of people step forward to claim that money?

It’s not only the intimidation tactics of the Buy-and-Holders that have caused the delay. There is real cognitive dissonance in play here too. The Post Archives show that. But it is not only cognitive dissonance causing the problem. We have seen at board after board after board that most people LOVE learning the realities of stock investing. We have seen that going back to the first day. So there is no way that this could have been hushed up in all those pre-internet years without a lot of funny business going on. There were threats of career destruction then too. It’s human nature for people making lots of money (and the Buy-and-Holders have made HUGE amounts of money!) to protect the turf that permits them to make that money. To argue that there wasn’t funny business going on in the pre-internet days is silly.

It doesn’t matter all that much. If the Buy-and-Holders want to say that the corrupt stuff started on the morning of May 13, 2002, they can say that. My strong hunch is that Shiller will be coming out with a book-length description of the intimidation tactics that were directed at him in those days once he feels safe in telling the true and full story. But if we never find out about all the ugly stuff that went on in pre-internet days, does it really matter? We sure don’t have to look hard to find out what happened in post-internet days. We have hundreds of thousands of time-stamped posts explaining in great detail and in great depth precisely how the Buy-and-Holders used their wealth and power to crush those who tried to do honest work in this field. So we know what the story is. There’s zero reason to believe that things were proceeding on an entirely different track in the days before the internet was around. I mean, come on.

Humans are humans, Laugh. Humans go on the attack when they feel threatened. Valuation-Informed Indexing is a huge advance. So it constitutes a huge threat to those pushing the opposite strategy, the purest and most dangerous Get Rich Quick strategy ever concocted by the human mind (that’s obviously in contrast to VII, which is the first true research-based strategy). So the Buy-and-Holders responded with felonious behavior when they saw that their cash cow was about to go down. Gee, what a surprise! Whoever would have thought that humans could respond in such a way to losing their livelihoods? Has anything like this ever happened before? Some of this stuff is so darn hard to figure out!

There’s a reason why as a society we adopted laws making financial fraud a felony, a crime calling for the imposition of prison sentences. The behavior we have seen over the past 13 years is behavior that has been going on since the beginning of time. This is the worst example of it. The promotion of Buy-and-Hold in the 34 years since the peer-reviewed research showed that there is precisely zero chance that it could ever work for a single long-term investor has caused more human misery that any earlier finance-related crime in the history of humankind. But the basic story here is not a new one. We have seen this general story play out over and over and over and over again. That’s why we enacted laws to protect ourselves from the sorts of individuals who have put up posts in “defense” of Mel Linduaer and John Greaney and Jack Bogle. D’oh!

Do you know why this particular act of financial fraud has been so massive in scope?

It’s because the advance is so massive and life-affirming!

The stronger the appeal of the challenge to the conventional thinking is, the more brutal are the intimidation tactics that will be used to silence those seeking to spread the word re the new idea. VII is the biggest advance we have ever seen in this field by a factor of 500. So the brutality we have coming from the other side has been off the charts, worse than anything we have ever seen before in this country by a factor of 500.

The good news is that things end up in the same place — we put some in prison, we bring civil actions against a much larger number, those who lead the opposition to the discredited idea become wealthy beyond their wildest dreams and the entire society forges forward in a very, very big way, We all live better lives for many years to come. Good for us!

There was funny business going on prior to the introduction of the internet on the scene, Laugh. I am sure of it. I can’t document much of it because I was not around. But I can document everything that has happened since the morning of May 13, 2002, in great detail. That’s the documentation we need to tell this story in a full and clear and understandable way to the millions of middle-class investors who need to come to terms with why they are in the process of losing most of their life savings. The Post Archives available to us today get the job that needs to be done here done well. So we are set.

I wish you all the best that this life has to offer a person.


“There Is No Intellectual Controversy Here. All of the Evidence Is On One Side and There Is Zero Evidence on the Other. What We Have Is a Power Imbalance. The Wall Street Con Men Have More Power and Money and Connections Than the Rest of Us and They Have Demonstrated a Ruthless Willingness to Destroy Anyone Who Exposes Their Con. This Is About Power, Not Research.”

Set forth below is the text of a comment that I recently posted to another blog entry at this site:

Rob says: “The legal way for this debate to have proceeded would have been to have permitted honest posting going back to 1981. ”

Uhm, Rob…….the internet did not exist in 1981. Not only that, it was a long time until there were financial discussion boards after the start up of the internet.

No, the internet didn’t exist. But the same tactics were being employed in the pre-internet days.

Shiller has made several comments suggesting that intimidation tactics have been directed at him. When the prison sentences are announced, all sorts of things are going to come out. I bet that Shiller could write an entire book about the intimidation tactics directed at him.

Rob Arnott posted here about two academic researchers who showed an interest in doing research showing the benefits of Valuation-Informed Indexing and were taken aside and told that their careers would be destroyed if they dared to “cross” the Wall Street Con Men by doing honest work.

And of course I reported here on discussions I had with Ravic Sethie at Columbia. He wants to do honest work. He is afraid to go there. Gee, I wonder why.

You can go back to the morning of May 13, 2002, and look at the responses we saw from my famous post pointing out the errors in the Greaney study. There were two types of reactions. All the people who were on the level (both Valuation-Informed Indexers and Buy-and-Holders) were saying how this was the most exciting discussion we ever had at the Retire Early board. And then there were the Goons threatening to kill family members of posters who posted their honest views. Huh?

I didn’t know about the financial fraud stuff on the morning of May 13, 2002, Pink. I was just telling people about the errors in the Greaney retirement study. I assumed that the errors would be fixed and that that would be the end of it. You Goons obviously knew about the errors before I posted or you wouldn’t have gone so nuts. You freaked out because you knew all along that Greaney was vulnerable if someone worked up the courage to post honestly. You were insanely defensive and there had to be a reason for that.

There are lots and lots of other examples of what I am talking about here. This site documents what happened from May 13, 2002, forward. I wasn’t personally involved in this matter before then. But it is clear that people knew about the problems with Buy-and-Hold long before I came on the scene and were keeping their mouths shut because it had become widespread knowledge that speaking honestly about Buy-and-Hold meant career death.

There is no intellectual controversy here. There never has been, at least not since 1981. All of the evidence is on one side and there is zero evidence on the other side. So what is there to discuss?

What we have is a power imbalance. The Wall Street Con Men have more power and money and connections than the rest of us and they have demonstrated a ruthless willingness to destroy anyone who exposes their con. That’s the deal. This is about power, not research. I believe Fama is real. He is a top-notch researcher. But Fama never even looked at long-term timing. So the idea that his research showed some legitimate grounds on which to conclude that price discipline might not be needed when buying stocks is pure fraud. Some believe it. I guess you could say it’s a mistake with those people. But it’s fraud for those using death threats and threats of career destruction to keep those who show an interest in exposing the con in line.

The significance of the internet is that it made it impossible for the Wall Street Con Men to keep the massive act of financial fraud going. The millions of middle-class investors whose lives were in the process of being destroyed now had a way to share what the research says and thereby protect themselves from the con. That’s where the Internet Goon Squads came into the picture.

This is why I focus on the prison sentences today. Lots of people want to make nice with the Wall Street Con Men. I tried doing it that way myself. But people who have been participating in a massive act of financial fraud are primarily concerned with going to prison. Showing them that they can help millions of readers or clients is not going to have much effect on them. The only way to change things is to get the prison sentences announced so that we can put the ugly side of this behind us and move on to all the exciting insights that have been opened to us by the last 34 years of peer-reviewed research.

The Wall Street Con Men should have jumped at the chance to come clean that I inadvertently presented them with my May 13, 2002, post. They cannot keep the con going indefinitely. So it is in their best interests to get everything out in the open and behind them. I don’t think there would have been prison sentences had they come clean in May 2002. Not too many people had been hurt in a serious way at that time and there’s a lot of genuine confusion re the content side of this. Had Motley Fool shut down Greaney, we would all be in a very different place today.

But we cannot change any of that now. Now there is too much stuff on the record for us to avoid prison sentences. I believe that even the Wall Street Con Men and you Goons would play it differently if we could go back in time. But it’s too late for that. Given where we stand, it’s best for every single person involved that everyone come clean by the close of business tomorrow. But the Goon brain doesn’t see things that way.

Anyway, it’s been going on for 34 years, going back to long before the internet became a factor. The benefit of the internet is that we have time-stamped posts to document the con from May 13, 2002, forward. Those time-stamped posts will be a huge help in all the trials. This story shows the tremendous power of the internet to do good as it achieves its potential as a new communications medium. That’s a very exciting aspect of the story, in my assessment.

Come clean tomorrow, Goon!

I know you won’t. But it doesn’t hurt to ask every now and again.

Take care, man.