Valuation-Informed Indexing #191 — TIPS, IBond and CDs Are Better Alternatives to Stocks Than Bonds

I’ve posted Entry #191 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called TIPS, IBonds and CDs Are Better Alternatives to Stocks Than Bonds.

Juicy Excerpt: Perhaps most important of all, it is an easy thing to shift money from TIPS or IBonds or CDs to stocks when stock prices drop. Bonds are like stocks in that there are time-periods in which you are down and in which you very much do not want to sell. The Valuation-Informed Indexer looks to stocks for growth. So he always wants to be able to take advantage of the juicy long-term returns available when stocks are selling at fair-value prices or better. You don’t want to be stuck in bonds at such times.

“As Of Today, Intimidation Works Because, As Much As People Want To Learn About The New Idea, They Are Unsure Of Their Own Knowledge And Don’t At All Like The Idea Of Being Confronted With The Brutal Abusiveness That Those Posting In “Defense” Of Mel Lindauer and John Greaney Have Been Employing For 12 Years Now. All Of Us Are Terrified By The Tactics That Have Been Employed By You Goons. We Will Overcome You. You Goons Will Be Sent Off To Long Prison Terms.”

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

Yes, they all love you. They’re just too frightened to show it. ALL of them. 100% terrified of the Goons. This is just SO much more likely than any other possibility. Such as the ridiculous notion that they find you vacuous, narcissistic, irritating and/or just plain nuts.

Yes, that is the problem, Miasma.

There is of course a lot of misunderstanding as well. The vast majority of people who recommend Buy-and-Hold strategies (I think it may be ALL of them) BELIEVE that Buy-and-Hold can work. Many have doubts. But those with doubts generally believe that, even with its flaws, Buy-and-Hold is the most responsible option. They might not think it works perfectly but they sincerely believe that it works well enough.

Valuation-Informed Indexing is the new thing. There have been hundreds of BILLIONS of dollars directed to the promotion of Buy-and-Hold. Money magazine has promoted Buy-and-Hold strategies in every monthly issue going back to the mid-1970s. Many people are afraid of stocks. So it gives them comfort to go with a strategy that has been around for a long time and that has been endorsed by numerous experts. Buy-and-Hold is the safe choice in a field where safety is prized. Valuation-Informed Indexing is something new and different and strange. So it starts out at a big disadvantage.

But thousands and thousands of people have expressed a desire to learn more about the new strategy over the course of the past 12 years. Including some of the biggest names in the field. And, yes, you Goons have made them afraid to participate in the discussions they want to participate in, afraid to learn the things they want to learn, afraid to ask the questions they feel they need to ask to become more comfortable with the new strategy.

Fear won’t work anymore once the entire world knows about Valuation-Informed Indexing and about the trickery that you Buy-and-Hold Goons have employed to keep millions in the dark for 12 years now. There will come a day when your Goon tactics will become 100 percent ineffective. But that is not where things stand today. As of today, intimidation works because, as much as people want to learn about the new ideas, they are unsure of their own knowledge and don’t at all like the idea of being confronted with the brutal abusiveness that those posting in “defense” of Mel Linduaer and John Greaney have been employing for 12 years now.

All of us are terrified by the tactics that have been employed by you Goons. That’s why we have published rules prohibiting such tactics at every discussion board and blog. That’s why we have made your tactics felonies under the laws of the United States. We wouldn’t be sending people to prison for behaving as you Goons do if we didn’t believe as a society that the behavior that you have engaged in is very, very, very bad stuff.

Most of us do not today understand how stock investing works. Investing was not even studied in a systematic and serious way until the 1960s. And we didn’t as a society know it all at the time when Buy-and-Hold was being developed. So we got off on a wrong track and for 33 years now have needed to set things straight again. People have become more open to the research-based approach as Buy-and-Hold has caused more and more financial devastation. But, yes, our knowledge base is still not strong enough for the learning project to go forward in the face of your abusiveness.

We will overcome you. The people of the United States will learn what they need to learn and you Goons will be sent off to long prison terms. We will collectively work up the courage to take you on and to free ourselves as a society from the ignorance in which we have suffered for the past 33 years.

People who want to learn are afraid of you Goons and of the Wall Street Con Men who pretend that they see nothing wrong with your behavior. But as you destroy more and more middle-class lives, we will work up the courage to stand up to you and to transform Buy-and-Hold into what it was intended to be in its early days by removing the Get Rich Quick element of the first-draft version and offering people for the first time in history a true research-based investing strategy.

I wish you all good things, Miasma.

Rob

“One Big Reason Why the Behavioral Finance School Has Not Achieved More in the Practical Realm Despite the Many Powerful Insights It Has Advanced Is That Too Many Are Afraid to Describe and Document the Goonishness of the Buy-and-Holders. Goonishness Is the Thing We Need to Overcome to Become Effective Investors. We Will Not As a Society Become Able to Combat Goonishness Until We First Work Up the Courage to Talk About It.”

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

Calling someone a goon speaks more about you instead of the person you have targeted.

It says that I do my job, Anonymous. I am a journalist. Journalists tell people what is going on in the world. The 12-year cover-up of the errors in the Old School safe-withdrawal-rate studies is the biggest economic and political story of our time. Pointing to the behavior of you Goons is part of the job of telling this story. Things could not have played out as they have played out without a heavy helping of Goonishness. The story doesn’t make even a tiny bit of sense if the Goonishness is ignored.

One big reason why the Behavioral Finance School of personal finance has not achieved more in the practical realm despite the many powerful insights it has advanced is that too many people in this school are afraid to describe and document the Goonishness we all see taking place all around us every day from those who believe and follow the conventional (Buy-and-Hold) investing advice. Goonihsness is the story. Goonishness is the thing we need to combat if we are to become effective investors. We will not as a society become able to combat Goonishness until we first work up the courage to at least talk about it.

I am the fellow who doesn’t hold back from noticing and talking about and exploring and commenting on and trying to rein in Goonishness. That’s why I am today 12 years ahead in my understanding of how stock investing works of people like my good friend Jack Bogle. Jack shies away from this topic. It has its ugly side. I certainly don’t say different. But you know what? A doctor who wants to cut out cancerous tissue has to draw blood to do so. There are times when a person seeking to do something good has to engage in some awful task to get the job done.

Jack Bogle has more I.Q. points than I possess and he has more training in this field and he has more experience. But he has held himself back because of his fear of talking about the ugly Goonishness that has come to dominant this field in the Buy-and-Hold Era. I care about what happens to the people who read my words. And so I cannot go there. I talk about non-Goon stuff all the time and I enjoy being able to do that when it is an option. But when the Goon stuff stares me in the face and demands to be reported, I make an effort to work up the courage to do that. I work it hard and I think it would be fair to say that I have gone to places that no one else in this field has ever gone to before. I pray that I will continue to push when called on by realities taking place before me to do so.

Had Shiller published his “revolutionary” research in 1961 instead of 1981, there never would have been any Buy-and-Hold. The Buy-and-Holders don’t want to destroy our economic system. They don’t want to invest ineffectively themselves. Valuation-Informed Indexing has been shown to be so far superior to Buy-and-Hold in every test that has been done that it is silly to suggest that there is any intellectual debate here. There’s a mountain of evidence on the Valuation-Informed Indexing side and zero evidence on the Buy-and-Hold side. Zero evidence combined with a huge amount of Goonishness. Which has been enough to block the intellectual debate for 12 years now (it’s 33 years if you date things back to when Shiller published his revolutionary research). It will soon become 34 years if we don’t as a society work up the courage to face the Goonishness this year. It will soon become 35 years of we don’t as a society work up the courage to face the Goonishness either this year or next year. And so on.

The reason why we are in an economic crisis today instead of enjoying the greatest period of economic growth in our history is that we are not all Vulcans who pursue our self-interest in a purely rational manner. Eugene Fama is responsible for some major advances. We all owe him a debt of gratitude for the good he has done. But he also made one huge mistake that has caused a huge amount of human misery. And he doesn’t want to acknowledge it. He feels ashamed. He wants that mistake covered up. The mistake has destroyed millions of middle-class lives. So as a society we cannot permit the error to be covered up any longer.

And of course it is not just Fama. LOTS of people want the realities of what we know about how stock investing works in the year 2014 covered up. And that cannot be. These realities cannot be covered up any longer. We all want to be enjoying life on the other side of the river. But the only way to the other side is struggling through the hard stuff. The only way to the other side is exposing the Goonishness and talking about it and punishing it (both through civil and criminal actions) and then forgiving it and then putting it all behind us and moving on to all the good stuff.

It’s not an accident that we have gone 33 years since Robert Shiller proved that there is precisely zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor without every expert in this field declaring that to be the case. There’s money in Get Rich Quick investing strategies. A LOT of money. And so a lot of smart and otherwise good people have been attracted to the wrong side of the ethical lines out of a desire to be popular and make lots of bucks while the Get Rich Quick garbage is still paying out its huge payouts to those who put obtaining huge personal payouts above helping their clients and readers learn how to invest effectively for the log run.

Those people very, very, very, very, very much don’t want the truth getting out. And the only hope they have with 33 years of peer-reviewed research behind them showing that they are talking garbage when they say that there is no need for investors to practice price discipline when buying stocks is engaging in and tolerating and encouraging Goonishness. That’s where things stand. I didn’t create the reality. I report on it. I care deeply about my many Buy-and-Hold friends and I want to help them. But I know that I am not helping them by causing them to travel even farther down the dark path that they have elected to travel.

I will continue to report on the behavior of you Goons and on the behavior of the Wall Street Con Men that makes possible the existence of you Goons in a society that has adopted laws protecting us from this sort of behavior. I can do no more and I can do no less.

I wish you all good things, Anonymous.

Rob

“There Are Millions of People Who Today Believe the Buy-and-Hold Lies. I Know Because I Have Talked to a Good Number of Them. I Have Had People Tell Me That Everything I Say About Investing Sounds 100 Percent Right On. But That One Thing Concerns Them. Big Shots Like Jack Bogle Are Saying the OPPOSITE of What I Am Saying, the OPPOSITE of What Makes Sense, the OPPOSITE of What the Peer-Reviewed Research in This Field Reveals. Research-Based Strategies WORK But Get Rich Quick Strategies SELL.”

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

No one is stopping you from selling your lucky VII scheme. Go short the market. Go start up a fund using your strategy. Do whatever you want. You can do whatever you want. Meanwhile, the rest of us will do what we want.

We are all big boys. We can make our own decisions and don’t need you telling us what to do. Advice can be be taken or rejected. What you want to do is shut down other people and then have you cecome the vaulted leader. How is that working out for you? Not very good, is it. It is not the so called “goons”. It is not some wall street conspiracy. You can find the source of the problem by looking in the mirror.

And you can market Buy-and-Hold, Anonymous. No one is trying to stop you from doing that.

But you cannot engage in acts of financial fraud to stop people from learning what the last 33 years of peer-reviewed research says. Advances in knowledge belong to EVERYBODY. If I want to post honestly at a discussion board about safe withdrawal rates, I have every right in the world to do so. So does Michael Kitces. So does Wade Pfau. So does Bill Bernstein. So does Larry Swdroe. So does everyone.

You have to make a distinction between marketing and research. Marketing is something you do to make a buck. If you want to make some marketing claim to make a buck, that’s your business. But your marketing claims cannot contain false statements about the peer-reviewed research in this field or you will be going to prison following the next crash. That’s financial fraud. That’s a felony.

There obviously is not a sliver of research showing that it is okay to ignore the valuation level that applies on the day a retirement begins when calculating the safe withdrawal rate. There is 33 years of peer-reviewed research showing that that is the most important element of the calculation. I understand that it helps your marketing efforts if you lie about that point. You need to understand that that’s a crime and that you can expect to be prosecuted for it.

There are millions of people who today believe the Buy-and-Hold lies. I know because I have talked to a good number of them. I have had people tell me that everything I say about investing sounds 100 percent right on. But that one thing concerns them. Big Shots like Jack Bogle are saying the OPPOSITE of what I am saying, the OPPOSITE of what makes sense, the OPPOSITE of what the peer-reviewed research in this field reveals. They want to know why.

The reason why is that Get Rich Quick sells. Research-based strategies WORK but Get Rich Quick strategies SELL. The Buy-and-Holders introduced the idea of rooting one’s strategies in the peer-reviewed research. That was a wonderful advance. But then when research was published showing that there is precisely zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor, they flipped. At that point, they continued SAYING that people should root their strategies in research but they began engaging in insanely abusive behavior aimed at intimidating people who reported honestly on the research (which has since 1981 shown that Buy-and-Hold NEVER works) into not doing so. That doesn’t fly.

This is not just an investing matter. Whether the millions of investors who need to know what the research says have some means to find out or not is a matter of grave ECONOMIC importance. When people cannot find out the truth about what the research says, they see their retirement portfolios wiped out. When people see their retirement portfolios wiped out, they stop buying goods and services. When they stop buying goods and services, hundreds of thousands of businesses go under. When hundreds of thousands of businesses go under, millions of workers lose their jobs. We are in an economic crisis today because the Buy-and-Holders are not willing to acknowledge that the “idea” that it is okay not to consider price when setting one’s stock allocation is a MARKETING claim with ZERO support in the peer-reviewed research in this field. That needs to change.

And this isn’t just an economic matter either. It is a POLITICAL matter. There are millions of people who are in the process of seeing their retirements fail because of the 12-year cover-up of the errors in the Old School safe-withdrawal-rate studies. Those people did nothing wrong. They listened to the “experts” (who were telling lies about SWRs for marketing reasons). We have no choice as a society but to bail those people out. That is going to cost us trillions of dollars in taxpayer money. The Federal budget deficit is going to EXPLODE. That’s all on the Buy-and-Holders and their unwillingness to permit honest posting on any of these questions because honest reporting of what the last 33 years of peer-reviewed research shows puts a crimp in their nasty MARKETING efforts.

There is a limit to how far you can take marketing, Anonymous. The Buy-and-Holders have destroyed millions of middle-class lives through this massive act of financial fraud. People are going to be sent to prison over this. We are going to see hundreds of thousands of civil lawsuits filed. Many reputations will be destroyed as word gets out about what the Buy-and-Holders have done to our country. Giving investing advice is not just about turning a quick buck. There are responsibilities involved. Jack Bogle and the other Buy-and-Hold advocates have failed in their responsibilities to their profession and to their clients and to their readers and to their country in a very, very big way.

No one is stopping you from selling your Buy-and-Hold garbage. But I AM in the process of stopping you from making claims that there is some mystical, magical “research” somewhere that supports it. Wade Pfau has a Ph.D. in Economics from Princeton. If there were ever a sliver of peer-reviewed research supporting Buy-and-Hold, he would have been able to find it. He searched for a long time. He found nothing. He couldn’t believe what he had learned. So he went to the Bogleheads Forum to see if anyone there had ever come across a single peer-reviewed research paper supporting Buy-and-Hold. Jack Bogle had never heard of a single study supporting the smelly Buy-and-Hold garbage. Bill Berntsein had never heard of a single study supporting the smelly Buy-and-Hold garbage. Larry Swedroe had never heard of a single study supporting the smelly Buy-and-Hold garbage. I wonder why.

I will continue posting honestly re safe withdrawal rates and scores of other critically important investment-related topics. If there comes a day when you want help from a friend re the mess you have created for yourself and many, many others, let me know, I will be your guy. So long as the price of admission to your “discussions” is engaging in a felony under the laws of the United States, I am afraid that you will need to find someone else. Not this boy. I can’t go for that. No can do. It’s not my particular cup of tea.

My best wishes to you and yours, Anonymous.

Rob

“The Experts Feel That Their Clients and Readers Won’t Think of Them as Experts Unless They Say Something More Definitive Than ’80% Stocks Might Be Good But 20% Stocks Might Be Good Too.’ They Cannot Tell Their Clients and Reader to Wait 20 Years Until We Figure Out Whether It Is Fama or Shiller Who Got Things Right. So They IGNORE Shiller.”

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

Would you agree that your inital response in this thread can be reduced to the following dilema:

Either nearly every finance author, lecturer, blogger, advisor, and commenter on the planet is purposely corrupt and involved in a single-minded tight and as-yet completely unbreached unreportred and ongoing conspiracy against the truth that caused a major economic meltdown…

OR…..

a single unemployed layman blogger in Virginia has a profound [willful?] misunderstanding of mathematics and investing principles.

What really happened is that Shiller’s findings came as a shock. He turned what we believe about how stock investing works on its head. It takes some time for people to process such a fundamental change in our understanding of so important a matter. I don’t think it would have been too strange for it to have taken five or ten years for Valuation-Informed Indexing to catch on. That would have taken us to 1986 or 1991.

By that time, a huge bull market had been established. People did not want to hear that Buy-and-Hold does not work. They were getting daily feedback that it was working very well. And it wasn’t until late 2008 that the bull market ended in the popular perception. So it has only been for five years that most people have been open to questioning of Buy-and-Hold. And we HAVE seeing the door begin to open during that time. We are not yet where we need to be. But we are making slow but steady progress.

Another big factor here is that investing is too important to get wrong. Intuitively, you would think that that would make people super cautious about making dogmatic claims. The reality is that it has worked the other way around. Because investing is so important, experts feel that they need to demonstrate confidence in what they say. And the Buy-and-Hold and Valuation-Informed Indexing models often lead to OPPOSITE strategic recommendations. Experts feel that it would sound funny to say: “I believe that you should be at an 80 percent stock allocation but I also want you to know that there are good and smart people in this field who follow research that indicates that 20 percent stocks is a much better choice.”

That’s what people should be saying. There are two models for understanding how stock investing works and anyone who is educated re the research has a responsibility to let his clients or readers know that there is another school of thought that leads one to very, very different conclusions. But the experts feel that their clients and readers won’t think of them as experts unless they say something more definitive than “80 percent stocks might be good but 20 percent stocks might be good too.” The REALITY is that we are as a society today at a primitive level of understanding of how stock investing works. But the experts have to give advice on how to invest TODAY — they cannot tell their clients and readers to wait 20 years until we figure out whether it is Fama or Shiller who got things right. So they IGNORE Shiller. They act like he doesn’t exist. It’s a terribly irresponsible thing to do. But when you think this through carefully you can begin to see why things happened as they did.

It is certainly not the case that everyone in the field is purposely corrupt. That is OBVIOUSLY not true. Even people like Bogle and Bernstein and Swedroe include LOTS of honest and accurate comments in their books and articles and speeches. They even include comments that argue against their Buy-and-Hold recommendations. I learned about the errors in the Old School safe-withdrawal-rate studies by reading Bogle’s book. If he were 100 percent corrupt, he would not include that sort of language in his book. It would make no sense for an entirely corrupt person to do so.

What is going on is that we are living through a state of transition from Buy-and-Hold to Valuation-Informed Indexing. Bogle (and all the others) understands that there are problems with Buy-and-Hold. He is DEFENSIVE about the many obvious weak points in his model. But he has a lot invested in Buy-and-Hold and he once truly believed in it. So he is highly reluctant to give up on the model. So he downplays the weaknesses. Not only in his public comments. My sense is that he does this even in his own mind. He has convinced himself that Buy-and-Hold can at least kinda sorta work. He has convinced himself that he is not doing anything too horrible in failing to explore the challenges that have been presented to his model.

There is now a mountain of evidence that he IS doing something truly horrible. The relentless promotion of Buy-and-Hold strategies was the primary cause of the economic crisis. Bogle has caused tens of thousands of businesses to fail. He has caused millions of people to lose their jobs. He has caused millions of retirements to fail. He has even caused a significant number of people on both the left (The Occupy Wall Street Movement) and the right (The Tea Party Movement) of the political spectrum to begin to lose confidence in our system of government. That’s very bad stuff. But it does NOT amount to financial fraud so long as Bogle (or any of the others) is suffering from cognitive dissonance, a condition that afflicts all of us humans from time to time.

Death threats? Demands for unjustified board bannings? Tens of thousands of acts of defamation? Threats to get academic researchers fired from their jobs? We cannot excuse those sorts of things with stories about people suffering from cognitive dissonance. There are reasons why we have rules and laws protecting us from those sorts of behaviors. Those sorts of behaviors make our system unworkable. We all are capable of making mistakes and those sorts of behaviors make it impossible for us to discover our mistakes through civil and reasoned discussion. Those who engage in those sorts of behaviors or who see others engage in those sorts of behaviors and fail to take prompt action are guilty of financial fraud, a felony under the laws of the United States. Of that there can be no doubt whatsoever.

And there can be no doubt whatsoever that it is no act of kindness to cover up such acts of financial fraud or to fail to work hard to have them discovered and prosecuted. When we tolerate financial fraud, we insure that additional acts of financial fraud will take place by people who feel threatened by the findings of the last 33 years of peer-reviewed academic research in this field. The people who fail to speak up are insuring that more people will go to prison and that the prison sentences will be longer.

We are the luckiest generation of investors ever to talk Planet Earth. Once we make it to the other side, we will all know how to obtain far higher returns from stocks while taking on dramatically reduced risk. That’s investor heaven! It is because the advance we have achieved (at least intellectually!) is so great that as a society we have been slow to make the transition. We are naturally skeptical of such huge changes and so it is proper that we have proceeded cautiously. It is of course NOT proper that some of us have engaged in acts of financial fraud to block the change from taking place.

We are not a bad people. But we have made some bad choices that have caused huge amounts of human misery. We need to turn things around. We all should be doing everything in our power to insure that we do so by the close of business tomorrow.

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

Rob

“I Need Help From My Fellow Bloggers to Get the Message Out. And I Need Help From Economists. And I Need Help from Journalists. And I Need Help From Researchers. And I Need Help From Venture Capitalists. And I Need Help From Policymakers. When Others Work Up the Courage to Provide the Help I Need, We Are All Off to the Races. Until That Happens, the Good Stuff Doesn’t Happen.”

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

Rob,

It is actually stupid to NOT put up the link. When you don’t, it just tells people that you are lying or hiding something. It is pure simple nature. We expect to see facts that can back up a statement because we are skeptical as a society.

No one is even a tiny bit skeptical re the abusiveness of you Goons, Anonymous. I have talked with thousands of people about this. The only ones who ever express skepticism are you Goons. And you obviously know the full truth of the matter.

What people are truly skeptical about are the substantive claims. People truly find it hard to believe that we today know what we need to know to reduce the risk of stock investing by 70 percent. Re that one, people need to ask lots of questions and engage in lots of discussion before they will come around. Something they cannot do until a number of us work up the courage to stand up to you Goons!

We all want to invest more effectively. There are no two sides re this one. We are all united re the most important issue.

But the Wall Street Con Men and you Goons are embarrassed that you made a mistake that has caused millions of failed retirements. So you possess zero willingness to permit those discussions to take place.

I have documented everything that has happened for 12 years now. I have developed five unique calculators. I have recorded 200 RobCasts. I am happy to respond to any questions that the Wall Street Con Men or you Goons or the millions of Normals need answered. I’ve done my part and then some more on top of that and then some more on top of that.

I am not Superman, Anonymous. I need help from my fellow bloggers to get the message out. And I need help from economists. And I need help from journalists. And I need help from researchers. And I need help from venture capitalists. And I need help from policymakers. When others work up the courage to provide the help I need, we are all off to the races. Until that happens, the good stuff doesn’t happen. That’s the reality here. I don’t like it. But I accept it.

If you find some pleasure in playing a stupid game where you pretend that John Greaney did not threaten to kill family members of any poster who posted honestly on safe withdrawal rates, then you find some pleasure in that. I believe that your pleasure will come to an end following the next price crash. I am not God. So I could be wrong. But that’s what I believe. And I am playing it according to that belief.

When as a society, we want to know how the Buy-and-Holders have gone about the business of destroying our economic and political system through their stubborn unwillingness to fix a mistake revealed by the peer-reviewed research of a Nobel-prize-winning economist 33 years ago, we will get about the business of spreading the word far and wide about the far superior Valuation-Informed Indexing model. Until we do, the Buy-and-Holders will continue to destroy wealth on a daily basis and the prison sentences for those who have put up posts in “defense” of Mel Lindauer and John Greaney will grow ever longer day by day.

That’s the deal here.

My best wishes to you and yours.

Rob

“Say That Most Members of the Board Community Believed That There Was Only a One-In-a-Hundred Chance That One of You Goons Would Come to My House and Kill One of My Loved Ones. That’s Enough to Persuade Them to Keep Quiet. People Don’t Want There To Be Even a One-In-A-Hundred Chance That Their Loved Ones Will Be Killed. So They Tell Themselves ‘It’s Not My Fight, Let Someone Else Speak Up.”

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

If death threats were made, why were there no charges. Someone threatened me several years ago and I had no problem getting help from law enforcement.

Because it happened on the internet.

The police came to my house when I reported the death threats. They asked me if I believed that someone was really going to try to kill me or members of my family. I said that I thought that the purpose of the threats was probably to intimidate people into not posting in support of me.

Most people at the board didn’t think that someone would really come to my house and kill my wife and children. But they weren’t 100 percent sure. Someone crazy enough to put forward a death threat is at least theoretically capable of doing just about anything.

Say that most members of the board community believed that there was only a one-in-a-hundred chance that one of you Goons would come to my house and kill one of my loved ones. That’s enough to persuade them to keep quiet. People don’t want there to be even a one-in-a-hundred chance that their loved ones will be killed. So they tell themselves “it’s not my fight, let someone else speak up.”

The internet will never achieve its potential until this problem is solved. I believe that this case (YOUR case, Anonymous) will be the one to solve it. People have come to believe that death threats on the internet are a joke. This is a case where you Goons were able to make use of death threats to block discussions that would have prevented millions of failed retirements, discussions that would have permitted us to avoid this economic crisis, discussions that would have permitted us all to learn how to reduce the risk of stock investing by 70 percent, discussions that would have permitted us all to enjoy the biggest advance in our understanding of how stock investing works every achieved in the history of Planet Earth.

I believe that following the next crash we will be able to persuade millions of people that the same laws that apply in the non-internet world need to apply on the internet as well. Once we get Goons like you thrown in prison, the power of this new communications medium to do good soars. There are millions of good and smart people who could be making valuable contributions at every board and blog on the internet who hold back from doing so because they have seen Goons like you in action and want no part of of any activity in which your presence is tolerated. We need to hear the contributions of those people. And, after you Goons have been sent to prison, we will enact legislation to make sure that those millions of people will feel safe making positive contributions.

This is a story separate from the investing story. But it is possible that in the long run it is even more important.

Investors need honest discussion boards so that they can get help from their fellow investors when the Wall Street Con Men are trying to entice them with their Get Rich Quick garbage. Once we open up the internet to honest posting, the Wall Street Con Men just cannot get away with their trickery anymore. Sunshine is a disinfectant.

But it is not only in the investing field that this is so. There is huge value to permitting honest posting at economics sites. And at political sites. And at car-buying sites. And at science sites. And at baseball sites. And on and on and on.

The internet is a POWERFUL communications medium. But it becomes a powerful force for bad when we give you Goons veto power over what we say. We very, very, very much need to do something about you Goons. And we will. When people see that their retirement accounts have been destroyed by you Goons, they will see why this matters so much.

I can see the people who put together the Financial Bloggers Conference spearheading a movement to get you Goons removed from every board and blog on the internet. There would be a huge public relations gain in doing that. And all the bloggers would feel ten times better about themselves with you Goons not around. Mike Piper told me that. He said that there is nothing he would like more than to be able to do honest work. But he is afraid that Mel Linduaer would demand the destruction of his site (which is his livelihood) if he were to come out in favor of permitting honest posting. So he lives in fear. I don’t like the idea of my friend Mike living in fear. I don’t think that after the next price crash my friend Mike Piper will have to live in fear much longer.

The worst thing to do with bullies is to empower them by backing down in the face of their intimidation tactics. Internet bullies are people who are losers in the real world. They’ve run to the internet because that’s a place where people who are losers in the real world can gain a level of influence that it would be impossible for them to achieve in the real world. The influence is 100 precent negative. But in the eyes of losers it is the only influence that they are ever going to have and that’s what matters. The thing to do with bullies is to stand up to them and to be sure that they suffer negative consequences for their bad behavior.

We Normals outnumber you Goons ten to one. So it won’t take us long to solve the problem once we put our minds to it. What we need is a clear showing that the Normals are in the majority. When one Normal doesn’t see other Normals speaking up, he gets scared that you Goons really can hurt him in some way. Once the individuals who have posted in “defense” of Mel Linduaer and John Greaney have been sent to prison, no one will be afraid of you Goons anymore. I mean, come on. The only thing that people will be afraid of is the possibility that they won’t be able to get you Goons removed from their sites fast enough.

A long time back, John Walter Russell put forward the idea that this saga would end in a more positive way than any of us participating in it even imagined possible. I thought those words had the ring of truth to them at the time. And I still believe that John was right. We’ve walked a long, crooked path. But I believe that we are walking a long, crooked path that leads us in the end to a very good place.

The full truth is that I probably need to believe that to get out of bed in the morning. I am obviously biased. So subtract whatever number of confidence points you want to subtract to reflect that bias. The truth remains that that is what I believe and that every action I take is rooted in the belief that the good guys win this one in a most dramatic way on the last page of the saga.

We will see.

Hang in there, man.

Rob

“The Corruption Is WITHIN Us. Humans LOVE Them Some Get Rich Quick. The Wall Street Con Men Exploit Us Because We Want To Be Exploited. They Push Buy-and-Hold Because THEIR CUSTOMERS DEMAND IT.”

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

Rob,

I was curious as to why you never post a link to the actual death threat tat you claim was made. All I have seen is your link to your own comments. Can you enlighten us?

I don’t do it because it would be stupid to do it, Anonymous.

The Campaign of Terror has been going on for 12 years. There are THOUSANDS of cases of brutal abusiveness. I posted about the errors in the Old School safe-withdrawal-rate studies on the morning of May 13, 2002. The studies have not been corrected TO THIS DAY. This sort of thing was obviously going on for years before I came on the scene. Shiller published the research showing that there is precisely zero chance that a Buy-and-Hold strategy can ever work for even a single long-term investor in 1981.

Why is it that I was the first person to discover the errors in the Old School studies? It wasn’t because I am some super-genius. IT HAPPENED THAT WAY BECAUSE THE BUY-AND-HOLD MAFIA DOES NOT WANT MILLIONS OF MIDDLE-CLASS PEOPLE LEARNING THE REALITIES OF STOCK INVESTING. It happened that way because of the massive corruption in this field. I mean, come on.

It’s a waste of my time to prove the corruption. Anyone who wants to assure himself that the investing advice field is 100 percent corrupt just needs to look around for about 10 seconds to gather all the evidence he needs to prove the case beyond any reasonable doubt whatsoever. The question that we struggle with is not — Is the investing advice field 100 percent corrupt or not? The question we struggle with is — Why do so many of us NOT CARE that our retirement accounts are being destroyed by this corruption?

I remember the first article that I had published at the Daily Caller site. I thought that it was going to be a breakthrough. One, the site is bigger than most of the sites I have posted at. So the potential of my article going viral was much higher. Two, it is not an investing site. So I didn’t have to worry that the people who own the site want to make a buck giving Get Rich Quick investing advice or want to get links from the Big Shots in the investing field or whatever. So I thought that publication of that article was going to be a turning point.

I wrote about the errors in the Old School SWR studies. I don’t think I directly said that there was a cover-up but I hinted at it by pointing out how long it had been since I had put up my post pointing out the errors. And I hinted at the political implications since this was a political site. Those errors were in the process of causing MILLIONS of failed retirements. That’s a huge social problem, one of the biggest we have faced as a nation. And this wasn’t a case where it was other unfortunate people who were being hurt. The retirements of the people reading the article were the retirements being destroyed. Looking at this objectively, there should have been a HUGE reaction to that article.

There was no reaction. No going viral. No comments even. Nothing.

That’s why I rarely write Guest Blog Entries today. So long as people refused to run my Guest Blog Entries (this was usually the case in the days before the first price crash) I kept fighting to get them posted because I felt that getting them posted was the answer. After the crash, I got lots of Guest Blog Entries posted. But that didn’t change things. It was a step in the right direction. The truth about stock investing now appeared on people’s computer screens. The corruption was now exposed in an objective sense. But no one took action to fix the corruption! So what the heck good did it do?

We saw this at FinCon13. I gave a presentation presenting an airtight case for why we are in an economic crisis today. You couldn’t have a more exciting topic for a financial blogger’s convention. But what was the reaction? A number of people in the audience told Jaime Tardy that I seemed “bitter.” These people are not interested in doing anything to fix the corruption or to tell their readers how to invest more effectively. They LIKE Get Rich Quick. They won’t acknowledge it if you ask them but that’s the reality. They view anyone who does battle with Get Rich Quick as “bitter” because they LOVE Get Rich Quick.

Evidence is of great importance in intellectual battles. We have evidence of the corruption coming out of our ears and it is not helping us. That’s because this is not an intellectual battle. This is an EMOTIONAL battle. We cannot persuade people to give up their love affair with Buy-and-Hold by presenting them with evidence. Evidence speaks to the intellect. There is no intellectual case for Buy-and-Hold. The case for Buy-and-Hold is EMOTIONAL. We need to change people’s hearts.

Bernie Madoff did not get people to sign up for his fund by pointing a gun to their heads. He enticed them by appealing to the Get Rich Quick urge within them. It’s the same trick that Bogle uses to entice people into Buy-and-Hold, except Bogle practices it on a scale 5,000 times bigger. The Wall Street Con Men are destroying the lives of millions of people. But they don’t have to use force to do it.

And the full reality is that they don’t even need to use all that much secrecy to do it. The peer-reviewed research showing that there is zero chance that Buy-and-Hold could ever work for even a single long-term investor was published in 1981. And Shiller wrote about those findings in a best-selling book that is available in most public libraries. The corruption is taking place out in the open. But the millions of us who have been taken in by Get Rich Quick strategies look the other way each time we see it appear before us.

The investing advice field is 100 percent corrupt today, Anonymous. The evidence is everywhere. I don’t need to lift a finger to prove the case because the evidence is all around us.

The corruption is WITHIN us. Humans LOVE them some Get Rich Quick. The Wall Street Con Men exploit us because we WANT to be exploited. They couldn’t pull off what they have pulled off without our cooperation. The Wall Street Con Men don’t push Get Rich Quick so hard because they think it is a hot idea. They push it because they want to be popular and they want to make a buck and THEIR CUSTOMERS DEMAND IT.

After the next crash, I don’t think the customers will be demanding it anymore, Anonymous. At that point, everyone will see the massive corruption in this field everywhere they turn. Even you.

I naturally wish you the best of luck in all your future endeavors.

Rob

Valuation-Informed Indexing #190 — How I Came to Name Shiller’s Model “Valuation-Informed Indexing”

I’ve posted Entry #190 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called How I Came to Name Shiller’s Model “Valuation-Informed Indexing.”

Juicy Excerpt: I was amazed when I took a look around Planet Internet in 2002 and learned that there was not a single site that explored the far-reaching implications of Shiller’s revolutionary findings in any great depth. This was the opportunity of a lifetime! And it’s a lot of fun (and potentially very profitable!) exploring territory that has not been explored by hundreds of others before you came on the scene. So I took on the job.

Shiller has never given a name to his model. It may be that he feels that that’s too immodest a thing for a university professor to do. The reality, though, is that that one big finding (that valuations affect long-term returns) changes everything. It changes how we plan our retirements. It changes how we understand and manage risk. It changes our asset allocation strategies. When a new way of thinking about stock investing changes that much, we need a name for it.

“The People Who Demanded That Larry Swedroe Post Dishonestly Should Cover the Losses of All Those Who Lose Money As a Result of the Ban, No? Those People Did Nothing Wrong. How Could They Ever Suspect that Honest Posting Was Banned at an Investing Forum? We All Should Be Speaking Up Against This Sort of Thing EVERY TIME WE SEE IT.”

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

I could if I were willing to take the time to look it up, Evidence.

This happened before I posted there. Several community members made reference to Swedroe’s banning. It’s not hard to figure out what caused it. Swedroe talks about the importance of valuations all the time. During the time I was posting there, he never once posted in support of those of us who were saying that honest posting should be permitted on safe withdrawal rates. But I’ve seen that he has in recent days written an article that points out the errors in the Old School SWR studies. When he is not on the Bogleheads Forum, he is willing to post honestly on SWRs. Perhaps it was that.

But it could have been any of a hundred things. Valuations affect every aspect of the stock investing project. So it could have been just about anything. What I know from reading posts that others put up is that Larry was banned for a time and then he agreed not to post honestly and he was let back on.

People said that he did this because he wanted to use the forum to promote his books. I suppose that that is speculation. No one can know the precise motive. But it certainly is a reasonable guess. Say that it’s not that. Say that Larry just wanted to be able to talk things over with other people. It’s still wrong to demand that he post dishonestly as the price of admission to the forum, no? It’s degrading. And it’s dishonest. And its fraudulent.

The people who demanded that he post dishonestly should cover the loses of all those who lose money as a result of the ban, no? It certainly does not make sense to have those who followed advice offered at a forum where the one thing that is banned is honest posting on what the last 33 years of peer-reviewed research says pay the price for those acts of fraud. Those people did nothing wrong. How could they ever suspect that honest posting was banned at an investing forum? The published rules of the site suggest that honest posting is PERMITTED. So how would they know?

We all should be speaking up against this sort of thing EVERY TIME WE SEE IT. Bogle should be speaking out against it in the strongest possible terms. Wade Pfau too. Scott Burns too. Bill Bernstein too. Mike Piper too. EVERYONE. That’s how we bring Buy-and-Hold down and put the first true research-based strategy (Valuation-Informed Indexing — which is Buy-and-Hold with the dishonest Get Rich Quick part removed) in its place.

I have a file where I keep copies of hundreds of threads from the Bogleheads Forum (which was called the Vanguard Diehards forum in an earlier day). When the time comes to testify, I can go to that file and pull up the posts at which Swedroe’s banning was discussed. I am not going to go to the trouble today because anyone who spends a little but of time at this site gets it that Buy-and-Hold is today a 100 percent discredited strategy promoted through corrupt means. Those who pretend otherwise aren’t going to start posting honestly because I provide the links to the threads where Swedroe’s banning was discussed. But, if a jury needs to see them for some reason, I have them.

We are not talking about a simple cover-up today, Evidence. We are talking about a cover-up of a cover-up of a cover-up of a cover-up. As times passes, it gets worse and worse and worse. It can never get better until my good friend Jack Bogle walks to the front of a room and says those magic words “I” and “Was” and “Wrong.” It is by Jack’s speaking of those magic words that we all come clean and gain the ability to bring this economic crisis to an end, show millions of middle-class Americans how to reduce the risk of stock investing by 70 percent, and bring on the greatest period of economic growth in our history.

My best wishes to you, Evidence.

Rob