Mike Piper, owner of the Oblivious Investor blog, this morning imposed a ban on discussion of Mel Lindauer’s Campaign of Terror against the Vanguard Diehards board community. Mel is the author of The Bogleheads Guide to Investing. When the Vanguard Diehards community showed great interest in learning about the analytical errors made in the retirement studies widely cited by financial planners and in the Valuation-Informed Indexing strategy, he and his “defenders” engaged in viciously abusive posting on nearly every thread at which these topics were addressed. When Morningtar.com refused to ban honest posting, Mel urged community members at that board to abandon it and to move to the Bogleheads.org board, where honest posting on the effect of valuations on long-term returns has been banned from the first day of operation.
Juicy Excerpt: Several comments on this thread have now been deleted. For future reference, any discussions about what did or did not happen on somebody else’s blog or forum count as “off topic” and will be deleted. The place for those discussions is elsewhere.
The Campaign of Terror that has been led by Lindauer and John Greaney (owner of the www.RetireEarlyHomePage.com site and the author of one of the now-discredited Old School safe withdrawal rate studies) is of obvious importance to middle-class investors trying to understand why they they have lost so much of their retirement money and why the U.S. economy is now suffering a crisis of confidence. Piper has made clear that he will continue to promote Passive Investing at his site even while permitting (and in some cases encouraging) abusive posting aimed at silencing those who point out the grave dangers of this “strategy” and even while indicating that his mind is closed to the idea of informing his readers about the grave dangers of the Passive model. Mike said in response to my expression of hope that he would turn to the promotion of valuation-informed indexing strategies rather than passive ones that: “That is not going to happen.”
Mike said in an earlier blog entry that: “I do see (at least a potential) value in adjusting asset allocations as a function of current price levels. But to be honest, I see the misinformation spread by the financial services industry (about active management, picking stocks, etc.) as a far larger issue. And until that battle is won — which I doubt will ever completely happen — I don’t foresee myself taking on any other issues with my writings.”
My take on those words is that Mike has (at least for now) put marketing considerations above his desire to inform his readers what works in stock investing. I do not believe that Mike possesses a full appreciation (or anything close to it) of the merits of the Valuation-Informed Indexing strategy. However, I also believe that he is aware of at least some flaws of the Pasive model and has elected not to learn more primarily because of marketing considerations (with perhaps a good bit of cognitive dissonance thrown in).
Mike has not entirely banned honest posting on the grave problems with the Passive approach, according to my reading of his statement. My intent is to continue to post on these questions and others at his blog. If Mike continues to permit abusive posting by the Greaney Goons (both the poster named “Dylan” and the poster named “Linda” have long records of abusive posting at blogs and both appear to be associated with the Greaney Goons — John Greaney runs a discussion board at which those seeking to block honest posting at discussion boards and blogs meet each day to discuss strategies for destroying or compromising these communities), I will continue to object. In the event that his adoption of the new policy translates into a decision to take action against abusive posters, the new policy could end up being a positive step (most community members are more concerned with learning the realities of stock investing than in learning about the abusive practices used by Lindauer and Greaney to block knowledge of them and anything that helps middle-class investors learn the realities will ultimately help in the effort to get the various boards and blogs opened to honest posting once again).
I think it is fair to conclude that this development is one more demonstration of the reality that we have learned over and over and over again during the course of the first seven years of The Great Safe Withdrawal Rate Debate — there is no rational case that can be put forward in support of Passive Investing. There certainly was a time when many smart and good people believed that there was. But that was a long, long time ago. And the most important initiative for all indexers today should be to help us move to the next stage of The Indexing Revolution — the valuation-informed stage.
Addendum: Mike Piper has sent me an e-mail that combines frankness and kindness in a wonderful combination that impresses me greatly (although Mike is certainly not agreeing with all that I say in this blog entry). I will report on Mike’s e-mail in Thursday’s blog entry. If Mike gives me permission, I will run the full text of the e-mail. Mike is trying very hard and I am extremely grateful to him for his efforts at understanding the other point of view. He knows how to disagree with someone while remaining friendly to that person, an essential skill of the most successful long-term investors. The right stuff!