“We Should Be Using the Research to Determine HOW MUCH to Change Our Stock Allocations in Response to Valuation Shifts. That’s Where the ‘Conspiracy’ Stuff Comes In. The Buy-and-Holders Do Not Want Millions of Investors to Find Out What the Research Says on This Point. BECAUSE IT MAKES THEM LOOM REALLY, REALLY BAD.”

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

These cover up folks are doing a pretty lousy job, given that you’ve recently admitted that most people do consider valuations when making asset allocation decisions, and there really are no Buy and Hold purists. And the fact that Shiller recently won a Nobel prize.

I agree with you that the cover-up folks are doing a lousy job, Anonymous. That’s why I don’t like to use the word “conspiracy.” The cover-up does possess many of the elements of a conspiracy. I am virtually certain that people are going to use that word to describe it following the next price crash. And I can to some extent see where they would be coming from in using that word. But I have never felt entirely comfortable using the word “conspiracy” to describe what is going on here. I prefer the phrase “cognitive dissonance.” I often say that I am okay with describing it as a “conspiracy of ignorance.”

Your point about Shiller winning the Nobel Prize is right on. That’s not evidence of a conspiracy. It’s strong evidence that this is NOT a conspiracy as that word is generally understood. And there is a lot more evidence pointing in the same direction. I learned about the errors in the Old School SWR studies by reading Bogle’s book. If there were a conspiracy, Bogle would be the leader of it. Why the heck would he be saying things in his book that help to expose the conspiracy? That makes no sense.

Similarly, Bernstein said a long time ago that anyone giving thought to using the Old School SWR studies to plan a retirement would have to be out of his or her mind. That’s not something that someone trying to cover up the errors in the Old School SWR studies would say. Again, it just makes no sense.

The other side of the story is that Bogle has for 12 years now not lifted a finger to help us get the Old School SWR studies corrected, despite what he wrote in his book. Nor has Bernstein, despite what he told us in his e-mailed response to Ataloss’s question as to whether Bernstein thought that the Old School studies were analytically invalid.

This isn’t precisely a conspiracy. But it is something.  There is a LOT of funny business going on. What is this cover-up about?

You are looking in the right direction when you note that few investors follow Buy-and-Hold strategies in a dogmatic fashion. Just about everybody (the exception is Eugene Fama!) acknowledges that valuations matter. Judging by that, you would think that we could all get along just fine, right?

But we are obviously NOT all getting along just fine. I hope you will give me that much.

Why? What the heck is the problem?

The problem is that the middle ground on which most investors live today does not make theoretical sense. Buy-and-Hold makes perfect theoretical sense if the market is efficient. Valuation-Informed Indexing makes perfect theoretical sense if valuations affect long-term returns. Splitting the difference (what you call “Strategy B”) makes no theoretical sense.

Splitting the difference possesses great appeal to most investors. Most investors don’t care about theory. They like Buy-and-Hold. The Buy-and-Hold principles sound entirely sensible to most investors. And most experts endorse Buy-and-Hold. So most investors believe that they should generally follow those principles. But they do not feel comfortable following them in a dogmatic way. They feel that valuations must matter. So they choose to tailor Buy-and-Hold to better fit what their common sense tells them is probably the full truth — They follow Buy-and-Hold principles generally but also occasionally ignore the theory to make small adjustments in their stock allocations as a result of concerns they hold about valuations getting out of control.

That’s the reality today. We do not disagree re the reality.

We disagree about what works.

I believe in the original Buy-and-Hold idea that investors should be rooting their investing strategies in the peer-reviewed research. There is no research showing that valuations kinda, sorta matter and kinda sorta don’t matter. The research shows that, if valuations matter, they matter a whole big bunch. If we really believed that valuations matter and weren’t just paying lip service to the idea while generally holding tight to out belief in Buy-and-Hold principles, we would be looking to the research to determine HOW MUCH to change our allocations in response to changes in valuations.

That’s Valuation-Informed Indexing. That’s what I am arguing for.

I don’t say that you are lying when you say that you consider valuations to a small extent. I think you do that. I think that millions of people do that. I agree with you that MOST investors do that.

I don’t think that’s what works.

I certainly agree that we should be investing with valuations in mind. But I also think that we should be using the historical return data and the peer-reviewed research based on that data to determine HOW MUCH to change our stock allocations in response to valuation shifts.

That’s where the “conspiracy” stuff comes in.

The Buy-and-Holders do not want millions of investors to find out what the research says on this point.

Why?

Because it makes them look really, really bad.

People should have been using the research to determine their stock allocations all along and millions of people have lost huge amounts of money because the “experts” in this field told them that that was not absolutely required or, heaven help us all, perhaps not even a good idea. Those experts understand that they are liable for the losses they caused. They pretend to be “experts.” But they are today 33 years behind in their reading of the peer-reviewed research. Huh?

And, in extreme cases like with you Goons, they are guilty of financial fraud and are likely on their way to prison following the next price crash. That group really, really, really does not want the word getting out about the 12-year (or 33-year if you count back to when Shiller published his breakthrough research) cover-up.

I cannot change these realities, Anonymous. And I sure don’t intent to lie about them. I like to think of myself as an honest person. And, even if I didn’t, there are Post Archives! Old Farmer Hocus being persuaded to tell lies about what has been going on for 12 years now is not in the card. It would help if you would get that foolish dream out of your head.

I have extended the hand of kindness to all my Buy-and-Hold friends. But I am not in a position to lie about what has been going on for 12 years now and I like to think that I would not be inclined to lie even if I were in a position in which doing so would benefit me.

You need to come clean.

Bogle needs to come clean.

J.D. Roth needs to come clean.

Mike Piper needs to come clean.

And on and on and on.

There is no other way.

I am telling you not just what is best for me and for the millions of middle-class investors. I am telling you what is best for you and for the Wall Street Con Men.

Everything needs to come out in the open. All the lies have to be acknowledged. All the Bans on Honest Posting need to be lifted. All the civil and criminal trials need to be held and brought to completion.

We need to put all this ugly stuff behind us so that we can move on to the wonderful learning experiences that we have been enjoying for 12 years now but that we have not thus far felt that we could share with the millions of middle-class investors because it would upset the Wall Street Con Men and their Internet Goon Squads too much for them to learn the realities. This field does not exist solely for the benefit of the Wall Street Con Men and their Internet Good Squads. It exists in part for the benefit of the millions of middle-class investors who need access to accurate and honest reports on what the peer-reviewed research says to be able to finance their retirements effectively.

Do you see?

What I am describing is what is best for ALL of us. We are all in the same boat. We need to knock off the funny business and begin moving forward TOGETHER.

There are things that can be done to make the transition less painful for the Wall Street Con Men and for you Goons. It makes sense for us to do those things. I am 100 percent happy to help out in any way possible.

BUT WE MUST OPEN UP THIS FIELD TO PEOPLE OF INTEGRITY. AND WE MUST BEGIN LETTING THE PEOPLE IN THIS FIELD WHO POSSESS INTEGRITY AND LONG TO EVIDENCE IT IN THE WORK THEY DO TO DO SO.

We MUST do this. This is NOT optional. This is 100 percent imperative.

Call the support of or indifference to dishonesty a “conspiracy” if that works for you. Call it “cognitive dissonance” if, like me, you are not quite able to accept that so many good and smart people could get themselves involved in so awful and damaging a conspiracy. The terminology you use is not what matters most here. What matters most here is that we bring the funny business to an end.

The funny business must come to an end. That’s the bottom line here. That must happen by the close of business today.

Can I count on your support, my old friend?

Rob

“No One Else Publicly Says That the 12-Year Cover-Up of the Errors in the Old School Safe-Withdrawal-Rate Studies Is the Greatest Act of Financial Fraud in the History of the United States. But We Do Not Know What People Believe In Their Hearts. There Is Too Much Intimidation Going On for People to Feel Safe Saying Openly What They Truly Believe. My Guess Is That There Are Others Who Feel Concerns Along These Lines.”

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

Just to be clear, this [my claim that the 12-year cover-up of the errors in the Old School safe-withdrawal-rate studies is the greatest act of financial fraud in the history of the United States] is your belief, and you could be wrong. It’s also something no one else in the world believes.

Every word that I put forward is my belief and could be wrong.

But given that this belief of mine is a sincerely held belief, do you think that it would be right for me to keep it to myself? Do you not think that I should try to help out my friends before events take place that make it too late to help them?

And I don’t think that it is so clear that no one else in the world believes what I say re this point.

No one else publicly says what I say re this point. I give you that one.

But we do not know what people believe in their hearts. There is too much intimidation going on for people to feel safe saying openly what they truly believe.

My guess is that there are others who feel concerns along the lines of those I have expressed. My further guess is that the others do not feel as strongly as I do. My experience is that humans have a hard time coming to hold views that are not socially acceptable. So the people who hold somewhat similar views probably hold them only in watered-down form. I have come to hold them more strongly because I have held these views for some time and because I think about them a lot and because I write about them here at the blog. Those experiences cause me to hold the views more strongly as time passes. So my guess is that no one else holds these views as strongly as I do today. But I believe that some may hold similar concerns while being afraid to give public voice to them.

One big issue here is that investor views CHANGE with changes in portfolio values. Say that no one else holds these views today. But say that a large percentage of the population comes to hold them following a future price crash. What then? We all need to keep in mind that the views that people hold today are not necessarily the views that they will hold tomorrow. Investing is an emotional endeavor. We forget that at out peril.

How did we let things reach this point, Anonymous?

That’s the question that we all should be reflecting on.

Why place ourselves in circumstances in which such things even need to be discussed?

We don’t want to be where we are today.

If you are expressing in your posts today a hint of a desire to take things to a better place, I am 100 percent on board.

I don’t want to see anyone hurt in any way, shape or form. That’s not what I am about.

Rob

“Would I Not Be an Awful Person If I Believed These Things and Just Kept Them to Myself? I Would Be Letting You Ruin Yourself and Not Even Trying to Warn You Beforehand. Wouldn’t That Be Pretty Darn Low Behavior? I Care.”

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

That sounds reasonable. Did the same person also write:

Yes, the same person wrote both things.

I have spent a lot of time thinking about these things and I have strongly held views. But I am a flawed human. I get things wrong from time to time. There are millions of good and smart people who do not agree with me. Everyone who hears my words needs to know that. I DO believe what I say. I AM sincere. But I am also FLAWED. I could be wrong.

I’ll give a silly example of me being wrong and realizing it at a later time of life.

When the Beatles single “Hey, Jude” b/w “Revolution” came out, I thought that “Revolution” was amazing. I did not care for “Hey, Jude.” It made me crazy that “Hey, Jude” was picked for the A side. I kept saying: “Why is Hey, Jude” the A side? What were they thinking?”

Today I rank “Hey, Jude” as my favorite Beatles song. I either was wrong in my first reaction or I am wrong today. There was something in “Hey, Jude” that I just didn’t see when it first came out. So I obviously am capable of developing a wrong take on things.

I am NOT perfect. I do not say that I am.

But say that I am right in what I think about investing?

If I am right, I have an obligation to share what I believe with my friends, do I not?

Would I not be an awful person if I believed these things and just kept them to myself? I would be letting you ruin yourself and not even trying to warn you beforehand. Wouldn’t that be pretty darn low behavior?

I care, Anonymous.

I care about you and I care about the experts and I care about the boards and blogs and I care about my country. That is the driver here. I care. If you care, you cannot say something other than what you believe about so important a matter.

I don’t ever say anything to hurt people’s feelings. Not once have I done that. I know that things I say DO hurt people’s feelings. I have seen that happen many times. But I can take an oath that that has never once been the intention.

Rob

“If the Author of the Old School SWR Study Included Language Explaining That There Is a New School of Thought That Maintains That a Valuations Adjustment Is Required, That Would Show Good Faith and Shift the Burden to the Reader to Determine If an Adjustment Is Required.”

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

Ok, that’s reasonable. But that’s very different from:

I don’t see the big difference between Form A and Form B.

I do not feel bound in conscience to use Form B.

If the Buy-and-Holders were to tell me that they prefer that I use Form A to make this point, I would be happy to give up Form B.

I have suggested elsewhere that someone offer particulars of things that I say that Buy-and-Holders find objectionable. I would happy to let them know whether I can go along with the suggested phrasing or not.

In the case at issue here, I would have no problem going along with the suggested phrasing.

If it were suggested that I say “the Old School SWR studies are analytically valid,” I could not go along.

But even in that case, there are lots of things that I would be okay with saying. I am happy to say that the Old School SWR studies constituted a big advance from what we had before they came along. I am happy to say that the people who prepared the Old School studies possessed a sincere desire to help people. I am happy to say that the Old School SWR studies accurately report the Historical Surviving Withdrawal Rate (HSWR). I am happy to say that there is always a chance that a 4 percent withdrawal will work and that, except when valuations are very high, the odds that 4 percent will work are very high. I am happy to say that none of this is pure science and that we are still at a stage where we are learning lots of new things and that thus all of us should try to avoid dogmatism. I am happy to say that the authors of the Old School SWR studies are good and smart people.

There’s one scenario in which I could even see myself saying that it is okay for an Old School SWR study to remain up at a site in Old School form. If the author of the study included language in the study explaining that there is a New School of thought that maintains that an adjustment for the valuation level that applies on the day the retirement begins must be included in the calculations and linked to places where more background on that school of thought could be obtained, that would show good faith and put the readers of the Old School study on notice that there are good and smart people who have issues with the way the retirement study they are reading was set up.

In that case, I think it could be argued that the burden has been moved to the reader to decide whether a valuation adjustment is required or not. In those circumstances, I think it could be argued that the author of the Old School SWR study has placed himself on the right side of the ethical divide.

I acknowledge the sensitivity of these discussions. If there are things that can be done to reduce the friction, I am all for us working together to see that those things are done. The words above suggest that in this particular case, an acceptable change in wording would help. In those sorts of circumstances, I am of course happy to agree to state things in the acceptable way.

Rob

“I Will Acknowledge That These Views Are Extreme If You Go By the Continuum of Viewpoints Held Today. But It Is Not Right for Me Not to Express My Sincere Views. If Everyone Who Holds This View Says to Himself ‘I’ll Keep It Zipped Until Lots of Others Are Saying This.’ The View Will Never Be Publicly Expressed. Someone Has to Be the First to Say These Things.”

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

From today’s post by you on this exact topic, which you agree can’t be proven one way or the other:

I am telling you what I believe, Anonymous. I stand by those words. If I said anything different, I would be telling you a lie.

I am not able to imagine any circumstance in which the promotion of Buy-and-Hold strategies would not cause an economic crisis. Once you tell people that there is no need to exercise price discipline, you have taken the brakes off the car and you are going to end up with a crash. Are you able to imagine a scenario in which you can drive a car without brakes to a happy conclusion?

I will acknowledge that these views are extreme if you go by the continuum of viewpoints held today. I have not heard anyone else saying what I say here. It’s fair to point that out.

But it is not right for me not to express my sincere views. It may be that there are many people out there today who share this view and are afraid to express it because they feel that they will be attacked for being too extreme. If the idea is going to be explored, we need to have people giving voice to it.

If everyone who holds this view says to himself “I’ll keep it zipped until lots of others are saying this,” the view will never be publicly expressed. I have a duty to say what I truly believe at every board and blog at which I post. Someone has to be the first to say these sorts of things. I wish it could be someone other than me. But. if no one else steps up to the plate, it becomes my job to do so. Someone has to get the ball rolling here. Shiller didn’t publish his research last week. It has been 33 years.

But I do NOT express this view or any other view in a dogmatic way.

I hold my views strongly but I do not hold them arrogantly. I often acknowledge that there are million of smart and good people who hold very different views. I often acknowledge that the Buy-and-Holders should be heroes to all of us and that we should feel respect and affection for them and be grateful for the important insights they have generated for our benefit. I often acknowledge that I have been wrong many times in my life and that it may be that I am wrong again. Those are not arrogant words, Anonymous.

I believe what I said. I believe it strongly. I have a right and duty to say precisely what I believe. A board community cannot achieve its potential unless every community member shares his sincere views. It is the interaction among a wide range of differing views (some on the extremes of the continuum and some in the middle of it) that creates a solid learning experience for all.

So there is nothing even a tiny bit wrong with me stating that opinion. If the opinion is foolish, it will be exposed as such. If the opinion has merit, that will become evident through the ongoing discussions. But the opinion that is sincerely held must be expressed accurately and in full strength for all the magic to happen. It would be wrong of me to state a view other than the one that I actually hold.

Dogmatism hurts us. I would be wrong to say “no one else may express a different opinion because it is so clear that I am right.” That crosses the line. I should respond to those who express other points of view with respect and warmth.

But I should of course NOT respond to those who engage in deception or intimidation tactics with respect and warmth. Those who post abusively hurt all of us. We all should be united in speaking out strongly against that sort of stuff.

I respect you for holding a different viewpoint. I do NOT respect you for posting abusively. When you post abusively, you degrade yourself. As your friend, I am compelled to urge you to stop doing that.

Rob

“The Amazing Thing Is That No One Had Done This Work Before I Came on the Scene. I Am Trying to Get More People Involved. It Is Important Work. And, Once Buy-and-Hold Falls, It Is Going to Be Very Financially Rewarding Work. My Thought Is That Anyone Who Holds Off on Taking Advantage of the Opportunity Is a Fool.”

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

if you make a wild causal claim like this, you must back it up with evidence. Can you point to any academic studies showing, or even trying to show this is true?

There is no direct evidence one way or the other. We cannot ask the market to sit down on the coach and respond to our questions.

The Buy-and-Holders BELIEVE that bad economic news caused low stock prices. They do not KNOW this. There is no study that SHOWS this. They arrive at this conclusion by following the logic of their theory, which is exactly what I do. Different theories lead to different beliefs about all sorts of questions.

If the Buy-and-Hold theory were correct, price changes would be random. They are not. So I throw the ideas that follow from Buy-and-Hold out and go looking for ideas that make sense given what the last 33 years of research tells us.

The research shows that the primary cause of price changes is changes in investor emotion. If that’s so, the best time to buy stocks is when investor emotion can only move in an upward direction. That’s when prices are low. When prices are low, there is zero risk because there is only one direction in which emotion (and prices) can move.

Do you not agree that, when prices fall hard, trillions of dollars of spending power leave the economy? Is there some doubt about this point?

If trillions of dollars of spending power leave the economy, would you not expect the economy to collapse? What else could it possibly do?

The point that I am making here is self-evident, Anonymous.

It is not self-evident to someone who believes in Buy-and-Hold. Buy-and-Hold posits that it is economic developments that cause price changes. But to someone who has given up on that idea because the last 33 years of research discredits it, what I am saying here is self-evident.

It’s as clear as clear can be. We once thought that things worked one way. Now we know that we were wrong. We are in the process of determining how things REALLY work. All of the work that I do at this site is part of an effort to explore the IMPLICATIONS of Shiller’s revolutionary finding of 1981.

The amazing thing is that no one had done this work before I came on the scene. Is that my fault? I am trying to get more people involved. I think it would be fair to say that, if you Goons stopped the attack stuff, I would be more successful doing that. It is very, very important work. And once Buy-and-Hold falls, it is going to be very, very financially rewarding work. My personal thought is that anyone who possesses the qualifications to do the job and who holds off on taking advantage of the opportunity is a fool.

Anyway — I certainly have as much proof to offer in support of what I say as the Buy-and-Holders have to offer in support of what they say. Please show me the study showing that it is economic developments that cause stock prices to drop. You believe it. I can give you that one. But you cannot provide a URL for a study because no such study exists.

I face this problem in lots of different areas. Buy-and-Holders act as if they are 100 percent sure of everything they say. But rarely do they have any evidence to point to in support of what they say. They just argue that “Everyone agrees about this” or some such thing. If what everyone thought was right, you wouldn’t see “revolutionary” findings like what we saw in 1981 from Shiller and in 2012 from Bennett/Pfau.

Mark Twain said that it is not the things you don’t know that hurt you the most but the things that you know for certain that just ain’t so!

Rob

“Most People Don’t Care About Theory. But the Experts Root Their Advice in Theory. And Most People DO Care About What the Experts Say. So in a Practical Sense Most People Today Are Following the Buy-and-Hold Theory. They Are Relying on a Belief That the Experts Are Shooting Straight With Them. And the Experts Are Deceiving THEMSELVES Because They Have So Much Riding on the Buy-and-Hold Theory.”

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

We do agree on this, Anonymous.

Most people don’t care about theory. But the EXPERTS care about theory. The experts root their advice in theory. And most people DO care about what the experts say. So in a practical sense most people today are following the Buy-and-Hold theory. They are not dogmatic about it. And they do not know precisely why they are doing what they are doing. They are relying on a belief that the experts are shooting straight with them. They leave it to the experts to worry about theory.

I say that the experts are not shooting straight with them. It’s not that the experts are dishonest by nature. The experts are deceiving THEMSELVES because they have so much riding on the Buy-and-Hold theory; they feel that their entire careers are at stake if Buy-and-Hold is found to be deficient. The experts tell themselves that Buy-and-Hold is good enough and that it is okay not to trouble their clients and readers with discussions of the implications of Shiller’s findings. The ordinary investors don’t even know that there is an issue. They don’t look into things carefully enough to discover this. So, when I put forward views that are very much at odds with what the experts say, the ordinary investors see that what I am saying makes perfect sense but presume that there must be something wrong with what I am saying because if I were right the experts would be saying the same thing.

This is why I am always talking about the importance of Bogle giving an “I Was Wrong” speech. We need a major event that is widely publicized to turn things around. If Bogle gave such a speech and it were written up in all the major papers, all of the experts from that point forward would feel comfortable giving the Shiller take on things along with the Fama take on things. As more and more people came to understand the Shiller take, hundreds of blogs would pick up on these questions and we would see the launching of a national debate. We need to see a national debate re this stuff very, very badly!

I feel that you are suggesting a non-dogmatic approach to things. I can live with a non-dogmatic approach. But I am not clear re how what you are suggesting would play out when it comes time for me to compose posts.

Say that I am posting at the Bogleheads Forum. Someone comes on and says “I am about to retire and need to decide how much I am going to withdrawal each year.” Someone else posts a link to FIRECalc. What do it do?

Do I post a link to The Retirement Risk Evaluator?

How does Mel Lindauer respond when I do that?

Am I subjected to The Treatment?

Or does he let it pass out of deference to this new non-dogmatic approach?

I don’t feel any need to say “Buy-and-Hold is wrong” so long as there are no Buy-and-Holders saying “Valuation-Informed Indexing is wrong.”

If you are saying that we ALL should be non-dogmatic, I am cool with the idea. But Valuation-Informed Indexing cannot grow if, every time a VII idea is put forward, it is smashed down by people who claim that Buy-and-Hold is Scientific Truth. I need protection from that sort of thing. The protection that I have relied on in the past is the 33 years of peer-reviewed research supporting the VII strategy (and discrediting the earlier research that was thought by many to support the BH strategy). If we go the route you propose, do you intend to jump in when Buy-and-Holders say that their approach is Science and let them know that the majority of the board is non-dogmatic and that it is disrespectful to them to say that kind of thing? If not, how do you propose that I respond, given that I believe in Valuation-Informed Indexing and want to persuade people of its merits while also wanting to always be 100 percent respectful of the views of other community members?

Rob

 

“Could It Be That the Millions of Middle-Class Investors Will Be Excited Enough About the Huge Breakthroughs That You Goons Could Avoid Prison Altogether? I Don’t Think It Is Possible for Anyone to Know.”

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

Rob, I’m still unclear why, if you want to promote your views, you don’t just post on these boards in a civil way. What’s the downside?

We are working from opposite beliefs as to what constitutes civility or kindness, Anonymous.

The proper response from John Greaney when I posted about the errors in his retirement study was for him to say “Thank you!” to me for having the courage to act in a way that would save him future embarrassment by permitting him to correct his mistake and get it quickly behind him rather than seeing this thing dragged out for years and years. John did not thank me. And his other friends failed to insist that he do so. I did insist. That’s true friendship. It is through John’s failings and the failings of his other friends that we got on the dark path that led us to the horrible place where we are today.

On October 23, 2002, I engaged in a second act of charity. I put up a post demanding John’s removal from the community. Motley Fool had said that they wanted to see a community expression of a desire for his removal before they would enforce the published rules of the site which called for the removal of posters who put up death threats. We got 25 votes for removal. Motley Fool did not consider that enough and John stayed on.

That’s why he is in a place today where he is headed for a prison sentence following the next price crash.

Say that John had been removed back in October 2002. Six months later, I would have asked Motley Fool to reinstate him. I believe that I would have gotten most of our fellow community members to endorse that request and Motley Fool would have gone along. So all our troubles would have been over. We wouldn’t be worrying about prison sentences today.

There is nothing “mean” about the published rules of our boards and blogs. And there is nothing “mean” about the laws we have forbidding financial fraud. We put these rules and laws in place to ENCOURAGE civility. We need to see that they are enforced in a reasonable manner if we are to insure that civility remains the order of the day.

Because too few of us had the courage to do the right thing back in 2002, we are all in a big mess today. I don’t like it, you don’t like it, Bogle doesn’t like it, Shiller doesn’t like it. But here we are.

You are suggesting that the same cowardice that got us on this dark path will show us the way to a brighter path. I don’t buy it.

I talk about financial fraud and prison sentences not because I enjoy the thought of seeing you behind bars, Anonymous. I talk about financial fraud and prison sentences because I want us as a society to come to terms with what we have done over the past 12 years and to bring the ugly side of this saga to a full and complete stop. I don’t know what the length of your prison sentence would be if you were to come clean today. There has never before in U.S. history been a situation like this. So it is not possible to say. But I know that it is prosecutors who bring charges and I know that prosecutors feel a need to answer to public calls for action. So I believe that the best way to see that your prison sentence is on the short side rather than the long side is to do all that I possibly can do to make the millions of middle-class investors who have been done harm happy with their circumstances rather than angry about their circumstances.

Shiller’s revolutionary 1981 findings represent the biggest advance in the history of personal finance. If we go into the Second Great Depression, it will be the first optional Great Depression in our nation’s history. Shiller has told us how to AVOID a depression. It’s better than that. Shiller has shown us how to avoid all future economic crises, even those not bad enough to turn into depressions. It’s better than that. Shiller has shown us how to reduce the risk of stock investing by 70 percent. It’s better than that. Shiller has shown us how to invest so that we can retire five to ten years sooner than we ever imagined possible in the Buy-and-Hold Era.

It’s not possible to imagine how it could ever get any better than that.

If we shared what we now know about how stock investing works with the millions of middle-class people who have been done great harm during the 12-year cover-up of the errors in the Old School SWR studies, those millions of people would be far less inclined to demand prosecution of acts of financial fraud than they will be if the cover-up continues and we see another price crash.

Could it be that the millions of middle-class investors will be excited enough about the huge breakthroughs that you Goons could avoid prison altogether?

I don’t know. I don’t think it is possible for anyone to know.

What I know for certain is that, whatever your prison term will be if the cover-up continues until we see another price crash, it is going to be a lot less if you come clean before the close of business today. I have zero doubt re that one.

So I know how we need to proceed.

The way that I propose that we proceed obviously benefits me. But it does not benefit ONLY me. It benefits you Goons. It benefits the millions of middle-class investors. It benefits Bogle. It benefits Shiller. It benefits Pfau. It benefits Motley Fool. It benefits EVERYONE!

We are all in the same boat re this thing. There are no two sides. The idea that there are two sides is an illusion.

We need to stop thinking that there are two sides, recognize that we are all in this together, and work together to do what deep in our hearts we all know needs to be done here.

Am I going to become rich and famous as a result of us all taking the right steps? You betcha! And you know what? That’s just fine. That’s not a problem AT ALL.

Bogle will be ten times the hero following us coming clean than he is today. He is a popular guy today. But when Buy-and-Hold is revised in way that reduces stock investing risk by 70 percent, he will be ten times MORE popular. Bogle is big winners if we all come clean by the close of business today.

So is Shiller.

So is Pfau.

So are you Goons.

So is EVERYONE.

We have to go there. We all know it on some level of consciousness. None of us want this ugly stuff hanging over our heads forever and ever and ever. So we know what we need to do.

Now we just need to work up the courage to do it.

That’s my sincere take re this terribly important matter, in any event.

I wish you all good things, Anonymous.

Rob

Valuation-Informed Indexing #192 — Shiller Makes Some Dubious Calls in His Latest Interview

I’ve posted Entry #192 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Shiller Makes Some Dubious Calls in His Latest Interview.

Juicy Excerpt: But again I think Shiller goes too far with the humility that comes naturally to him. No one knows anything for sure. That much is certainly so. But the full reality here is that Shiller’s work has helped us to become far better able to predict economic developments than we were before we had access to his research. If it is human psychology that drives stock prices and investor emotions remain out of control (as both the P/E10 metric and the discussions I participate in on discussion boards and blogs indicate to be the case), our economic future is more troubled than those who follow Fama’s way of thinking portray it to be.

There are things we can do today to ease those economic troubles that we will not be able to do if we wait until there is another price crash to try them. I would like to see Shiller spelling out in more detail what his findings suggest re our economic future and what steps we should be taking to steer things in the right direction.

Most investing experts are too arrogant and the few who aren’t have an inclination to be too humble!

“Wall Street Journal Columnist Bret Arends Is Saying That Those Pushing Buy-and-Hold Today Are Involved in a Massive Act of Financial Fraud. He Doesn’t Use the Blunt Language I Do Because He Knows What Would Happen to His Career If He Did So. But ‘Leaving Out Half the Story’ Is Financial Fraud. This Site Tells the Other Half of the Story.”

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

Tip: If you can’t link to a NYT or WSJ article about it, it probably doesn’t exist in the wider world.

If you take a look at the “People Are Talking” section of the site, you will come across a quote in which Bret Arends says in the pages of the Wall Street Journal that the Wall Street Con Men pushing Buy-and-Hold strategies 33 years after the peer-reviwed research showed that there is zero chance that they could ever work for even a single long-term investor are “leaving out half the story.”

Arends is saying that those pushing Buy-and-Hold today are involved in a massive act of financial fraud. He doesn’t use the blunt language that I do because he knows what would happen to his career if he did so. But “leaving out half the story” is financial fraud. The millions of people who have never heard the other half of the story are suffering in very serious ways. It was leaving out half the story that caused our economic crisis. Millions of people are unemployed today because of the decision by the Wall Street Con Men to leave out half the story of what the peer-reviewed research in this field tells us about how stock investing works.

This site tells the other half of the story, the half that the Wall Street Con Men leave out of their articles and speeches and studies.

Good for me for telling the full truth about these matters. I expect to become one of the richest men in the United States following the next price crash, when the massive act of financial fraud is exposed for all to see. I will offer no apologies for my the massive wealth I will have attained at that time. I will have earned it. There are millions of middle-class people who very much need to hear the full story of how stock investing works and I intend to bring it to them. And under our system I should be compensated in a huge way for being the first person to have the guts to do what has long needed to be done.

Those who are leaving out half the story while pretending to be “experts” are committing crimes under the laws of the United States. I am telling.

My best wishes to you and yours, Anonymous.

Rob