Tuesday’s blog entry set forth the text of an e-mail that I recently sent to the owner of the Frugal Dad blog proposing an arrangement in which we would work together to publicize the findings of the Retire Early and Indexing discussion-board communities from the first seven years of our investing discussions.
Set forth below is the text of a follow-up e-mail that I sent following the posting of a blog entry at the Frugal Dad site entitled Have We Been Sold a Bunch of Lies About Money? I’ll offer commentary in next Tuesday’s blog entry.
Frugal Dad:
This is Rob Bennett. I sent you an e-mail last week re the extensive investing research that I have done. I have not received a response, and so I assume that you do not have an interest in the idea that I advanced. That is of course fine. But your blog entry today is on precisely the topic that I have explored, and so I felt a need to try one more time to get you interested in exploring this question in some depth.
You are not too far off in suggesting that we have been sold a bunch of “lies” re investing. I think that use of the word “lie” is not appropriate. But it is certainly true that we have been misled in terrible ways. I can explain the entire story and provide links backing up my conclusions on just about all of the important points. I very much want to get this story out to a wider audience and I would be thrilled to work with you in doing so if you have any interest in the idea.
What happened is that there was exciting research done in the 1960s and 1970s showing that short-term timing (changing one’s stock allocation in response to price changes with the thought that this would bring good results within a year or two) does not work. Many “experts” interpreted this to mean that ALL forms of timing (both short-term and long-term) do not work. The result was the investing advice that became the conventional wisdom for the past 30 years — always invest heavily in stocks, even when prices go to insanely dangerous levels. This is the worst possible advice that could have been offered. But it is the result of a MISTAKE, not a lie.
We need to fix the mistake. I have found this to be a tough business. Many “experts” are highly reluctant even to consider the possibility that they made such an obvious mistake that caused such great human misery. Still, the evidence is very strong that this is what happened. It is important that the mistake be corrected before too many more investors become so disillusioned with stocks that they take all their money out. Many people are coming to conclusions along the lines of your own, and this could cause stock prices to drop another 50 percent over the next few years. This could lead us to an economic depression. The stakes here are as high as they could possibly be,.
I hope you will not consider me a pest for writing again. I hope that you will give some thought to my idea. Your readers need to learn the realities. The “experts” have indeed let us down. But it is not right to conclude that they are liars and it is not right to conclude that stocks are a bad investment even when purchased at reasonable prices. If you change your stock investing strategy to one in line with the research of the past 20 years, you can obtain the benefits that stocks really do offer while reducing your risk to a fraction of what applies for those following the strategies that became popular during the past 30 years.
If you have doubts about anything that I am saying, please ask questions. I really can tell the whole story, it really is an important story, and it really is a story that you can understand if you spend just a little bit of time getting up to speed on realities that it took me years to uncover.
I am sorry about your losses. If you check my well-documented record, you will see that I have been warning about this stock crash for a long time. I have worked this incredibly hard for a long time. There IS a good deal to be said for the Your Money or Your Life approach (reading that book’s treatment of investing led me to asking the questions that sparked all of my research into these questions) but the YMYL approach has flaws of its own. I have been working with hundreds of people to come up with something a lot better and we have enjoyed a great deal of success in the work we have done. Our one big problem has been on the publicity side. You obviously could be a huge help in that area.
Rob
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