I recently posted a Guest Blog Entry at the Options for Rookies blog. It’s called Advice on Options from a Fellow Who Knows Nothing About Options.
You won’t see the blog entry if you follow the link. Mark Wolfinger, the owner of the blog, explains why in comments that now appear at the link under the headline “Guest Blog. Deleted.”
Juicy Excerpt: Permitting this specific guest blogger to post here has opened an unintentional can of worms. I do not want to be involved in his controversies. Thus, the post, along with all related comments have been expunged as of 7/20/2009.
Mark expressed enthusiasm re the Guest Blog Entry at the time he posted it. There were several excellent comments filed in connection with it. Another blogger who linked to the Guest Blog Entry also expressed positive comments. A community member who saw the Guest Blog Entry (“DJ”) checked out this site, became excited about what he found here, and asked a good question about Valuation-Informed Indexing at this blog.
Mark’s concerns arose in reaction to a second comment put forward by “DJ.” DJ followed up his constructive post with a defamatory post based on claims advanced by the Greaney Goons. Mark responded by saying that “I have research to do.” I put up a post setting forth links to articles at this site that detail the seven-year-long Campaign of Terror against the Retire Early and Indexing discussion-board communities led by John Greaney and Mel Lindauer.
Mark and I engaged in extensive e-mail communication re what he should do if the Goons appeared at the site after I posted a link to it at this blog. He expressed concern that his readers would be repulsed by the sewage. I said that I thought that made perfect sense given that his blog is a money-related blog and that the sort of ugliness we have seen put forward by Greaney and Lindauer “defenders” obviously does not belong at such a blog. My sense is that he was extremely concerned about what the Goons would do to him and his site in the event that he deleted their comments (Mark would not say it this way, but that is the best take that I can offer on the comments he advanced in his e-mails, which were intensely emotional in nature).
I think this experience illustrates well why we need to have the same defamation laws that apply in all other areas of life activity apply on the internet as well. People fear the tactics employed by internet predators. All civilized peoples have adopted laws protecting people from these tactics and we very much need to make such laws applicable on the internet. I am planning to open a new section of the site in months to come that will focus on the need for blog and site owners to unite in support of legislation in this area. I expect that I will report more on my correspondence with Mark in an article that will be posted to that section of the site.
Juicy Excerpt: I found that I tend to follow other traders on Twitter who confirm my own market beliefs. After realizing this, I made an effort to follow other traders who trade opposite of my style and beliefs. Not that they’ll influence my trade plan, but that they’ll give me a perspective I lack…and perspective has always grounded me during times of trading euphoria or when I think I’m invincibly right.
Taking the other guy’s thoughts into consideration when forming your investing strategies — imagine the possibilities!
DJ offered a nice common-sense observation re the safe withdrawal rate “controversy” in the comments section at the Options for Rookies blog.
Juicy Excerpt: Choosing safe withdrawal rates based on data rather than a rule-of-thumb seems like such a no-brainer when you think about it!
That sounds right to me. Perhaps I’m just not “expert” enough to appreciate the benefits of getting all the numbers wrong when putting together a retirement plan!
Here is the text of the Guest Blog Entry:
I don’t know anything about options. Yet I asked Mark if I could write a guest blog entry here, a site focused on options.
Huh?
I’ve learned some things about investing over the past seven years that I think can benefit all investors, even those using strategies that I know little about.
What I learned is that investors are nutso.
I’m not kidding. We’re nutso. Bonkers. Wacko. Touched.
I used to post at a Motley Fool board on early retirement. Our discussions frequently focused on studies that purported to tell us the safe withdrawal rate, the amount that we could take out of our portfolio each year without risking the long-term survival of our retirement plan. I discovered that there were errors made in the studies that caused the numbers to be wildly off the mark. I thought that I was helping out my fellow community members to let them know the correct numbers.
Some thanked me. A good number didn’t.
Actually, there was a group that threatened to kill me and my family members and the guy who delivers our mail too. It turns out that some people very, very, very much do NOT want to know the right retirement-planning numbers.
The studies have never been corrected in the seven years since. I’ve notified several big-name experts. They are not concerned. They do not deny that the numbers are wrong. In fact several of them acknowledge this. But they don’t see any pressing need to push for corrections. It turns out that getting the retirement numbers right is a low priority in the investment advice business.
Why?
Because we’re nuts.
And the experts know it.
What some of the experts have told me is that it is not realistic to expect them to report numbers accurately. It upsets people. People developed ideas about stock investing during the wild bull and they don’t want to feel a need to change those ideas. To point out to them that the numbers in the studies are wrong makes them feel pressed to look at the right numbers. It’s rude. It’s not done.
Investing is a highly emotional endeavor. That’s what it comes down to. We like to think that we’re trying as hard as we can to get things right. The reality is that 80 percent of the effort we put into learning about investing is directed not to learning new stuff but to rationalizing old beliefs that we don’t want to give up just yet.
The implications of this insight reach in a hundred directions. If most of us are not even trying to learn the realities, can it be said that there is even such a thing as a true investing “expert” today? I say “no.”
Investing is done by humans. Humans are not entirely rational creatures. We can never learn how to invest through logic alone. We are going to need to bring psychology into the discussion. Behavioral finance is the future.
I don’t know exactly how these thoughts affect investors who use options. But I know that they do. Options investors suffer from a disability they share with all the rest of us — they’re human.
It matters.
A lot more than 90 percent of today’s investing “experts” realize.
Addendum: This matter came up in the discussions held today at the Oblivious Investor blog.
John Walter Russell says
Rob,
Regarding “Today’s Passion” that CDs have beaten the S&P500 from 1994-2008:
Notice that the CDs selected are 6 month CDs. An actual investor would have locked in higher rates. As a minimum, an actual investor would have considered a CD ladder.
The advantage to the non-stock investor is much greater than indicated.
Have fun.
John Walter Russell
John Walter Russell says
Rob,
I thought that the laws still apply on the internet. The problem has been identifying the offenders.
Have fun.
John Walter Russell
Rob says
Absolutely.
And the type of investor who in interested in CDs over stocks is really just interested in safety. So he would also consider locking in the amazing rates that were for a time available from IBonds and TIPS.
Jonathan Clements (and all the others who advocated Passive Investing in stocks) should apologize.
Rob
Rob says
I thought that the laws still apply on the internet. The problem has been identifying the offenders.
No. I have contacted a number of lawyers re this.
The biggest problem on the internet today is uncertainty over the interpretation of a law called (ironically) The Communications Decency Act.
Here is a link to the article that sets forth the text of my e-mail to Rep. Frank Wolf (seeking legislation to open up the internet to honest and informed posting on safe withdrawal rates and other important investing topics):
http://www.passionsaving.com/internet-harassment.html
The Forbes article on internet predators referred to there provides the best overview I have found on this problem. Both the Forbes article and my e-mail discuss The Communications Decency Act. The language in this act makes lawyers concerned that it may not be possible to hold entities like Motley Fool and Morningtar.com liable when they allow their discussion boards to be used to advance defamation of people who post at them and perhaps say something that a Big Shot does not want other community members to learn about.
There is a case working its way through the courts in which a Yale Law student is bringing an action against a large number of internet predators who defamed her on a discussion board. I spoke to the lawyer bringing the case. He is a Yale graduate who took the case on a pro bono basis (presumably because he sees the crying need for reform in this area of the law). I believe that this case will go to the Supreme Court and settle the matter so that many lawyers will be happy to bring cases against the predators who have done so much damage to the Indexing and Retire Early boards (and to all middle-class investors and to the entire U.S. economy as well, of course) in recent years. If that case doesn’t do it, I believe that our case will.
When some time opens up, I am planning to open a new section of the site entitled “Take Back the Internet!”. This section will contain articles reporting on our efforts to unite site owners and blog owners in opposition to the abuse tactics that have been used to destroy or compromise so many of our boards and also now a number of personal finance blogs.
All civil societies have laws against defamation and death threats and this sort of thing. The problem is that The Communication Decency Act was written in such a way that some have interpreted it to say that the laws of the United States do not apply on the internet. I don’t buy it.
Rob
Law Talkin' Guy says
Mr. Bennett,
Your legal analysis:
“The problem is that The Communication Decency Act was written in such a way that some have interpreted it to say that the laws of the United States do not apply on the internet. I don’t buy it.”
could not be less correct. The laws, regarding Torts in particular, are not somehow held in abeyance on the condition that the Internet is found to be involved in the crime. Instead, ISPs and blog owners have (properly, IMHO) been found to not be the responsible parties should a libel occur using their venue, just as a restaurant owner is not responsible if one patron begins to assault a fellow patron in the establishment. I hope you are more careful with your financial reasoning than you are with your legal thinking. I don’t expect you will publish this comment, but certainly you now can not claim to be ignorant of the true facts. IMHO, you are tilting at windmills — and the wrong windmills, at that — in your quest to force the Internet to give you the credence you feel you otherwise lack; but this is America and every citizen has the right to sue. I am curious as to why you have yet to do so; again, the law is absolutely NO obstacle, I assure you. If you have been advised otherwise, you are simply not receiving proper counsel. I hope this information is helpful to you on your quest.
Rob says
ISPs and blog owners have (properly, IMHO) been found to not be the responsible parties should a libel occur using their venue, just as a restaurant owner is not responsible if one patron begins to assault a fellow patron in the establishment.
It’s not that they have been “found” to not be responsible, Law Talking Guy. The problem is that the Communications Decency Act includes language that many believe leaves them immune from legal action for defamation they permit or even encourage on their sites. The key question is — If a blog owner or a site owner permits defamatory or threatening materials on his site with knowledge that that material is defamatory or threatening, should that blog owner or site owner be held liable for the consequences?
You made an analogy to a bar owner being held responsible for fights between two patrons of his establishment. I think that’s a reasonable analogy. If two people get mad at each other in a bar and one assaults the other without the bar owner’s knowledge, I don’t believe that the bar owner should be held responsible.
However, I do believe that the bar owner should be held responsible if his own actions contribute to the problem. What if the bar owner is aware of death threats being made by one customer and encourages that customer to proceed? That’s a different story. That’ the situation we have with Motley Fool and with Morningstar. These two corporate entities encouraged Greaney and Lindauer in their abusive and defamatory and threatening posting. Morningstar still permits Lindauer to post at its site to this day. That’s irresponsible behavior and I believe that they should be held accountable for the consequences that resulted from that irresponsible behavior.
It is not clear today that blog and site owners can be held liable even when they are aware of the problem or even when they contribute to it with their own irresponsible acts.If you want to learn more about the nature of the problem we face, I suggest you read either the Forbes cover story or my e-mail to Rep. Wolf. You also might want to do a Google search on the case being brought by the Yale law student. That was written up in the Washington Post and lots of other places and. given the firepower behind that case, I expect that that one is going to be the one that is going to set the precedent.
America does its business on the internet today. There are good reasons why we have adopted laws re defamation and death threats and all this sort of thing. All citizens need protection from the sorts of internet predators that have caused such destruction to our board communities and to the Personal Finance Blogosphere (and to the entire U.S. economy in a less direct sense). I don’t see any way that we can avoid addressing these questions head on in the not too distant future. I believe we will and I will do what little I can to speed up the day the questions are addressed and to see that they are addressed in a positive and constructive way.
The full reality is that addressing these issues in a constructive way is a win/win/win/win/win. There is not one person on Planet Earth who suffers in any way from a positive resolution. Motley Fool would have a thriving Retire Early board today if its published posting rules had been administered in a reasonable way. Morningtar.com would have a thriving Vanguard Diehards board if its rules had been enforced reasonably. And every single poster who has posted in “defense” of Lindauer or Greaney would feel better about himself or herself had the rules been enforced reasonably. And Lindauer and Greaney would of course be 10,000 times better off.
This is a case where a society is destroying itself because it frets over taking on an issue of critical importance — whether free speech should be permitted in discussions of stock investing on the internet. I vote “yes!”
Here’s a link to my e-mail to Rep. Wolf, which contains numerous references to the Forbes article:
http://www.passionsaving.com/internet-harassment.html
Rob