Set forth below is the text of a e-mail that I sent to the owner of the Frugal Dad blog on January 14. I did not receive a response.
On January 19, Frugal Dad posted a blog entry entitled Have We Been Sold a Bunch of Lies About Money? He stated in this blog entry that “My 401(k) has been demolished” and “family members’ 401(k)s have been demolished, even those in target retirement funds that should have been comprised of more conservative options based on their upcoming target retirement date.” He concluded that: “After watching these wild market swings, I’m starting to wonder if I really have the stomach for it” and indicated that he may move to a less risky investing strategy, one not involving the purchase of stocks. I posted a comment to the blog entry and responded to questions put forward by several community members (a few at the end of the thread are abusive, but several earlier in the thread raise reasonable points or ask good questions). I also sent a follow-up e-mail.
I will post the follow-up e-mail as Thursday’s blog entry. I will offer commentary in next Tuesday’s blog entry.
Frugal Dad:
This is Rob Bennett, publisher of the “A Rich Life” blog at www.PassionSaving.com. We exchanged e-mails a ways back in connection with your article re paying off the mortgage (you linked to an article of mine). I hope things are going well with you.
I am looking for a partner to help spread the word re some exciting investing ideas that have been developed in the Retire Early and Indexing discussion-board communities in recent years. Based on what I have seen from following your blog, I think you would be a great person to work with (I am looking for someone with an audience that is large and active but that is not comprised of people primarily interested in investing issues).
The investing strategies that are today conventional wisdom (“timing doesn’t work, “stocks for the long run,” “buy-and-hold,” etc.) have been increasingly discredited by the academic research of the past two decades. There is truth in all these ideas, but not complete truth; there is good in them but there is also danger in them. I have been reporting on these realities for close to seven years now and have produced a wealth of material related to them (including three unique calculators, over 50 podcasts, scores of articles, and tens of thousands of discussion-board posts). I have communicated with hundreds of middle-class investors who showed great excitement to have found for the first time a description of how investing works that truly makes sense. Unfortunately, these ideas have also met with intense opposition among people who view themselves as “expert” in their understanding of the discredited, conventional ideas. Abusive posting by the defensive group has blocked the efforts of many to learn about these ideas (I call the strategy that I recommend “Valuation-Informed Indexing”) for years now.
There has been a big change in discussions of investing since the big price crash. There is greater interest now than before in new ideas and those inclined to dismiss new ideas are feeling increasingly defeated by real-world events. I want to launch an effort to publicize the ideas on the internet. If you have an interest, your blog would be a great place to do this. My guess is that your readership is concerned about the recent stock-market developments and would love to hear informed and straight-talk answers to their many questions. But your readership is not comprised of the sort of people who would become defensive on being exposed to some unconventional takes on how stock investing works.
If you think this idea holds any potential, I propose that you explore it a bit by directing a question or two of your own to me. I would respond, using the research that I have done with John Walter Russell (owner of the www.Early-Retirement-Planning-Insights.com site) over the past seven years as the basis for my answers. If you found the discussion helpful to your understanding, you could share what you learned from it with your readers in any of several ways: (1) you could write up articles summarizing the discussions; (2) you could post the actual words of the discussions if you thought that a better approach; (3) you could invite your readers to put forward their own questions and seek responses from me re those questions; or you could follow some other approach of your choosing.
The goal would be to inform your readers of what is happening in the stock market, why it is happening (none of what has happened is the least bit surprising to those familiar with the literature of the past 20 years, much of which unfortunately is rarely discussed in the conventional media), and what they need to be doing to invest more effectively. Ultimately, I hope to see this debate over the future of investing spread to other blogs and other sites. I believe that we need a national debate on the errors that caused the greatest loss of middle-class wealth in the history of the United States. Your “promotion” of my work would obviously bring attention to my site. My belief is that it would also enhance the value of your blog by offering great benefits to your readers and ultimately would gets lots of other people talking about some issues that very much need to be talked about more at this time.
If you have no interest, I of course understand that this is an unusual request and one that you might for perfectly good reasons not see much appeal in; I’d be grateful if you would just send an e- mail saying “no thanks” so that I would know. If you have a limited interest but also have questions, please ask. I have all sorts of resources that I can point to in response to just about any question you can ask. And this project is my baby — I have been preparing for the launching of this initiative by working 10 hour days six days a week re this matter for close to seven years now. I am more than happy and prepared to point you to materials showing the legitimacy of all of the claims that I put forward.
I of course would not expect you to be willing to endorse any of these ideas unless you were confident that there was merit to them. My thought is that you might serve as a go-between for your readers. Your questions are probably to a large extent their questions. If you found my answers convincing, you could forward them (perhaps with your own take attached). If you did not, you could of course elect not to report on them or to report negatively on them.
Please understand that none of the questions that I address are complicated ones. I address the BASICS of investing, the stuff that the typical middle-class worker needs to understand. Unfortunately, it is at the basics level that the conventional advice is most flawed.
I’ll leave you with a few links that will give you a general sense of the issues involved:
1) This is the Podcasts section of my site:
http://www.passionsaving.com/personal-finance-podcasts.html
2) The Stock-Return Predictor is key to making the Valuation-Informed Indexing approach work:
http://www.passionsaving.com/stock-valuation.html
3) Here is a nicely balanced write-up of the Predictor by Felix Salmon that appeared at the Market Movers blog:
4) “Elizabeth’s Story,” which appears at this link, provides a good indication of how these ideas have affected some typical middle-class workers (I can provide many more such stories if they help you make sense of all this):
http://www.passionsaving.com/finding-life-purpose-page-three.html
Rob
I’m a bit surprised to see this posted here. Essentially, you asked a fellow that runs a successful website if he could throw you a life ring and he never bothered replying to you. Embarrassing!
Ah, never mind. Please don’t post the previous comment. Not worth it.
Embarrassing!
I’m proud of the work product that our community has generated, Lurker. I think the Frugal Dad blog is a fine blog and I would be thrilled to work with the fellow who runs it. He has elected not to move forward on the idea and that is of course his right. I don’t see any reason why I should be embarrassed or why he should be embarrassed or why anyone else should be embarrassed. There’s a sense in which I see your take as an exceedingly odd take.
However, there is another sense in which I think you may be putting your finger on something important. I think it may well be that there are a good number who really do feel embarrassed to state the realities of stock investing plainly and directly and frankly. We all were created in such a way as to care about what others think of us. At times of insanely dangerous prices, many of our fellows would prefer that we not point out the realities. The shame that we feel when we find ourselves outside of “the group” causes a lot of us to soft-peddle any thoughts we have that perhaps the idea of investing passively is not so hot an idea given its track record.
The question on the table is — is that a good thing or a bad thing? My view is that it is a very bad thing. It is only when people coming from all sorts of perspectives feel free to speak their minds that community interaction bears good fruit. When prices get so out of control that those who possess an informed understanding of the realities are shamed into silence, we all are in very hot water indeed.
I think that we need to encourage people to speak out more. The last thing we should be doing is discouraging those who can protect us from massive price crashes from sharing what they know with us. No one should feel shame over reporting accurately the realities of stock investing as revealed in the historical data.
I believe that you are right that some do feel shame over this sort of thing. I see it as part of my job to help people to overcome those feelings for the good of the entire community of middle-class investors.
Rob
Please don’t post the previous comment.
I’m willing to consider the idea of taking down your comment, Lurker. Please let me know your reasons for making the request. You may respond with a post here or you may contact me confidentially by sending an e-mail through use of the “Contact Rob” button at the left-hand side of each page at the site.
Rob