Mike Piper, author of the Oblivious Investor blog, wrote me an e-mail in response to Tuesday’s blog entry (“Mike Piper of Oblivious Investor Bans Discussion of Lindauer’s Campaign of Terror Against Diehards“). Reading the e-mail was a painful experience for me (you will understand why when you read the words of the e-mail, set forth below [Mike had given me permission to post his words here]). However, I am highly confident that Mike’s words are honest and well-intentioned and brave words. I sent him a response e-mail expressing my gratitude. I hope that we can all read his words, consider their significance and act constructively in response to them.
Hi Rob.
I believe that:
a) You’re a genuinely good guy, and
b) You believe deeply in the validity and importance of your message, and are doing what you can to spread it.
I can appreciate that.
It’s my respect for you that’s spurring me to write this email to honestly inform you about something I’m not sure you’re aware of.
I’ve had multiple people ask me in the last week why I continue to allow you to comment on the blog.
(Note: These are not the “goons” to whom you refer. These are real-life friends and family members of mine. I can assure you with 100% confidence that they read no other investing-related blogs or forums. So their thoughts have nothing to do with what has occurred elsewhere on the web. Also, these people do not work in the investment industry, and they themselves follow a myriad of investment strategies, so they have no vested interest in one investment strategy as opposed to another. As far as I can tell, these people are about as impartial as anyone could be.)
These people–good people–have described your comments as “spammy”, “obnoxious”, and “like the guy in a town hall meeting who won’t shut up about something everybody else doesn’t care about.”
Note: none of these people have voiced any issues or arguments with your message. They take issue with the way you’re attempting to spread it.
I think what’s happening here is that:
- To you, your comments are on-topic and essential whenever concepts such as asset allocation or expected return come up on the blog. That’s why you bring the topic up so frequently and with such fervor.
- To others–to whom the connection is not so clear–your comments come across quite differently.
I encourage you–for the sake of your own success–to take a look at your methods. I suspect that in some cases, perhaps your being banned from various sites has more to do with the manner in which you go about spreading your message than it has with the actual content of your message. I genuinely believe that you would reach more people if you scaled it down a level.
As to my own website, my goal is to both help investors succeed and make the site a place that people enjoy visiting. I’m requesting that you limit your comments to 2 per thread and to ask yourself whether other readers would see a comment as “on topic” before you post it. If you call that “putting marketing considerations above his desire to inform his readers what works in stock investing” then so be it.
Sincerely,
Mike
Rob,
This is only the thousandth time you have gotten the exact same message.
i predict you will do precisely the same thing you did the other 999 times you got this message: Nothing.
Having blog owners limiting your posts to ‘two per thread’ is obviously not an effective cure for what ails you.
You need serious and continued psychological help, and deep inside you know it, but refuse to admit it (acting as many who are so afflicted do).
I know you will never allow this comment to be seen in public on your blog, even though it is well-meaning, not spam, not ‘abusive’ contains no profanity, is on topic, etc. because while you SAY you want diversity of opinion and ‘free speech’, the truth is that like many others who claim that, you mean no such thing. But I do know you will read it, and that is the real intent — a plea from one human being to another for you to seek out assistance before you do even more damage.
Do it before close of business today.
I can see no downside.
You’re right that in ordinary circumstances I would not permit these words to appear here, Tired. I have a responsibility to protect my fellow community members from this sort of thing and I make an effort to honor those responsibilities.
Mike’s e-mail was honest and helpful. I certainly do not want people to group his efforts (which are constructive) with the efforts of you and the other Goons. They are as different as night and day. In fact, Mike himself made the point that the people he was referring to could not fairly be described as Goons.
That said, I think it is appropriate to permit people to see where the Goons are coming from since the reality is that the Goons have had influence on the discussions. Many of the people who have faced the sorts of pressures that Mike is facing have given the Goons a veto power over what can be said at their boards or blogs. It’s an ugly reality, but it’s a reality all the same.
Hate is not an effective long-term investing strategy, Tired. You not only hurt others when you give in to feelings of hate, you also hurt yourself. I will say a prayer that over time you make a turn in the direction of your better nature and come to advance a more constructive and positive purpose.
I am confident that you are capable of better. None of us were given life to use our energies in the way in which you are making use of yours when you compose the sorts of words that you have put forward here. Please fix.
Rob
So, I am now honestly TOTALLY confused Rob.
1)
* Do you agree with what Mike said?
* Do you consider his communication “goonish” or offensive?
2)
* Do you agree with what I said?
* Do you consider my communication “goonish” or offensive?
If you find there is a difference in your mind between Mike’s communication mine, would you be good enough to point it out, specifically?
Because I see them as on exactly the same wavelength, and with the same tone of a difficult item, expressed gingerly, but with hopes of being an agent for change.
I think if we are really on a journey of listening, consideration, and exploration of alternatives, you could do me that favor.
Thanks!
T.O.B.
I believe strongly that Mike’s e-mail contained honest and sincere and accurate and brave reporting of things that he was told by others. I view his e-mail as constructive and helpful and positive. If everyone on “the other side” were playing it the way Mike is playing it, I don’t believe that we would be having any problems in our discussions. We all would be enjoying a wonderful learning experience. I applaud Mike for the courage and compassion evidenced in his e-mail.
Your comment above was obviously goonish.
Your act of pretending that you don’t know the difference is also obviously goonish.
I repeat — please fix. You knew the rules for participation in our communities when you signed up to put forward your first post. If you are not able to abide by those rules, please find some other places on the internet to which to direct your posting energies. In the Retire Early and Indexing discussion-board communities, we don’t need the business that bad.
Rob
Rob, for many years you have always said that it is the message and not the messenger that turns people off to you.
What do you think now? I am pretty sure the problem has been your attitude the entire time. If you were half way decent at communicating you would actually have those legions of followers you always talk about (but don’t actually exist).
you have always said that it is the message and not the messenger that turns people off to you. What do you think now?
I think it’s the message, Hello World.
Mike is reporting the truth when he tells us that these people say that it’s not the message. And I think that if we set those people up to a lie detector, they would say that it’s not the message and the lie detector would say that they are telling the truth. People believe that it’s not the message on some level of consciousness.
But if these people had no problem with the message and if Mike had no problem with the message, Mike would be promoting Valuation-Informed Indexing at his blog today. If there were no problem with the message, it would be a win/win/win/win/win. He’s not. So there must be some concern with the message.
I think that the single biggest concern is that the evidence is so strong in support of Valuation-Informed Indexing and there is no evidence in support of Passive Investing. It makes people feel dumb that they once invested passively and people do not like to feel dumb. Unfortunately, there is no way to get to the good stuff without first accepting that the bad stuff is dumb stuff.
I don’t mean to hurt people’s feelings by pointing out that Passive Investing is dumb investing. There is just no other way to help people learn how to invest effectively other than to point this out. I do not think that the people who fell for the Passive idea are dumb. They just happened because of various circumstances to fall for one particular dumb idea.
you would actually have those legions of followers you always talk about (but don’t actually exist).
There have been hundreds of community members who have helped us develop the ideas and there have been thousands who have expressed a desire that honest posting be permitted at the boards. You demean yourself when you put forward a comment like this, Hello World. I left it up only because I believe that the other comment in the same post raised an interesting question and I wanted people to be able to see it.
Rob
Also, I do not know anyone who’s retirement, which was otherwise properly prepared for, was ‘busted’ by following the traditional passive investing tactic. On the other hand, I know of many, many success stories.
Can you give some examples of these millions of failed passive investors? Maybe with a detailed description of their investing strategy so we can see exactly why it failed and if they were truly investing as per recommendations or if they were putting half their retirement in some random Internet start up.
Because right now, it just looks like unsupported rhetoric.
Can you give some examples of these millions of failed passive investors?
The Old School studies have been cited by numerous financial planners, Hello World.
Ak yourself this question — If the Old School studies had not caused millions of busted retirements, would there be any reason for advocates of Passive Investing to insist on a ban on honest posting on what the historical data says?
There are now bans in place at the following places:
1) Motley Fool
2) Bogleheads.org
3) IndexUniverse.com
4) Morningstar.com
5) Early Retirement Fourm
That fact along tell a tale.
Rob
I think the ‘ban on honest posting’ and ‘millions of busted retirements’ are completely unrelated.
Why do you think they are related?
Is that the extent of your research? It is very thin.
The ban on honest posting and the busted retirements caused by Passive Investing are 100 percent related, Hello World. Do you think that people want to suffer busted retirements? If people knew that the Old School studies were analytically invalid, they would not use them. If people were able to post honestly about what the historical data says, everyone would know that these studies were analytically invalid.
The ban on honest posting is the entire problem. There is no other problem. That’s why I speak out against it so often.
Rob
First, it is simply improbable that a ban on some niche message boards with far fewer than 1 million distinct viewers is the cause of millions (that is more than one million) of busted retirements.
It absolutely does not make sense.
Second, do you have one example of a ‘passive investor’ who invested according to ‘proper’ ‘passive investing’ guidelines and suffered a ‘busted’ retirement primarly due to this investing strategy decision?
I am asking for a single example – amongst the ‘millions’, this should be trivial to find – should it not? This has been your main activity for 7+ years it seems, you must have run into at least one person who can speak up and warn us all with their first hand experience of a ‘busted’ retirement due to passive investing. I don’t see any testimonials along these lines on your website – very surprising given your claims.
I am getting a very weird vibe from your responses, honestly.
it is simply improbable that a ban on some niche message boards with far fewer than 1 million distinct viewers is the cause of millions (that is more than one million) of busted retirements.
The ban does not only apply at the niche message boards, Hello World.
Robert Shiller is a tenured Yale professor. He said recently that he has never felt comfortable saying all that he knows about stock investing because if he dared to do so he would be viewed as “unprofessional.” Rob Arnott asked 200 academics whether they believed in the Efficient Market Theory. No one raised his or her hand. Then he asked how many were going to use the theory in the research they did when they got back to the office. Nearly every hand in the room went up.
The ban applies everywhere. It is a social taboo that stops us from talking about the realities of stock investing. Once the ban is lifted, Passive Investing is no more. Passive Investing cannot survive if people are able to learn what the historical data says. That’s the reason why we have a ban in the first place.
We all have to make a decision. Do we want to protect Passive Investing from questioning or do we want to learn how to invest effectively for the long term? It is an either-or question. If we permit honest posting, Passive Investing goes down. If we continue to protect Passive Investing from effective questioning, we thereby give up any opportunity we would otherwise possess to learn how to invest effectively.
I’ve made my choice. I don’t want tuna with good taste. I want tuna that tastes good.
Rob
I don’t see any testimonials along these lines on your website – very surprising given your claims.
There are thousands of people who have described the financial losses they have suffered on our boards, Hello World. An outstanding example is Taylor Larimore, the author of “The Bogleheads Guide to Investing.” He explained at the Bogleheads.org board that he needed to abandon the Passive model (he did not use those words but selling everything at market lows is obviously not an idea that was ever endorsed by those promoting Passive prior to the crash) or else he feared his retirement would go under. He concluded that if stock prices continued downward (as is likely in coming days, according to the historical data), he would need to sell everything at prices far lower than those at which he bought.
Taylor is not alone. There are millions who bought into the Passive model and who are today facing the likelihood of experiencing busted retirements as a result. We should permit honest posting on what the historical data says re safe withdrawal rates on all of our boards.
Rob
Hello Rob,
You seem to believe there is a great conspiracy against ‘honest’ posting and have cited a few examples. I will go one by one.
“Robert Shiller is a tenured Yale professor. He said recently that he has never felt comfortable saying all that he knows about stock investing because if he dared to do so he would be viewed as “unprofessional.””
Here is the actual quote:
“”Nothing I did (professionally) was ever part of the core theory (but) I had to downplay my own beliefs. I couldn’t get up there and say a depression was coming, not in front of the students. I would have been considered unprofessional.””
He is talking about his lectures. I seriously doubt the topic of his lectures are relevant to the immediate condition of the market, he teaches general business and equity valuation courses – he does not sit on a bully pulpit and give his opinion of market conditions – that is not what he is being paid to teach. However, the guy does publish papers and books on the topic in which his opinions are pretty clear. So, not much to see here.
You have once again taken statements completely out of context. His point was that if your plan A sucked (i.e. was NOT CORRECT) and you cannot afford to suffer additional losses, re-organize your portfolio. Here is the quote from Jack Bogle, whom I am sure that Taylor was basing his discussion from.
_______________________________________________
“So this isn’t the time to sell, he [Bogle] said, but he allows one big exception: “If you cannot afford to lose another penny, then you simply have no recourse but to get out of the stock market.”
Stocks could easily fall further, and if you aren’t in a position to absorb more losses, you must protect yourself. And retirees should hold a big dollop of bonds, which generate income and provide ballast in a shaky market. “Investing isn’t just about probabilities,” he said. “It’s about consequences, and you’ve got to be prepared for them.”
Source: http://www.nytimes.com/2008/10….gewanted=1″
_______________________________________________
Ok, so both of your examples are completely bunk. Furthermore, the ‘passive investors’ with ‘busted’ retirements are fairly on track now, see:
http://www.bogleheads.org/forum/viewtopic.php?t=41240&highlight=plan
Here is the summary:
_______________________________________________
“So, for a 9.5-year period which featured two spectacular stock market declines of approximately 50%, this buy-and-hold investor with a very simple allocation to low-cost index funds earned a rate of return of nearly 4%. No market timing, no tilting to other risk factors, no alternative asset classes, just plain vanilla stocks and bonds. Furthermore, since the end of 2007, the above investor has a total return of -9.23%.
So, in the worst global credit crisis in 80 years, where stocks, real estate, many bonds, commodities, private equity, etc. all lost value in excess of 50%, a buy-and-hold mid-risk investor is down less than 10%, and this is somehow a problem??????? GMAB.”
_______________________________________________
Sorry Rob, you need more compelling stories than these – they just do not pan out.
I couldn’t get up there and say a depression was coming, not in front of the students. I would have been considered unprofessional.””
Why is it viewed as “unprofessional” for those who follow Rational Investing principles to warn us that, if we continue to permit the promotion of Passive Investing principles, we are going to cause an economic depression? I want to see the Robert Shillers of the world speaking up on these issues, Hello World. It is far better to stop a depression by telling people about the dangers of Passive Investing than to try to dig your way out of one after you cause it.
Honest discussion of what the historical data says is not a bad thing. It is a good thing. We should be encouraging people to speak out on these sorts of things. They are helping us when they do so. We should all encourage more of this, not suppress what little straight talk we have.
There were engineers who knew about the problems of the Apollo launch that blew up. Do you think that they all should have kept quiet about what they knew? I mean no personal offense, but my personal view is that that is an insane take. I want us to know about the depression before it happens so that we all can take steps to avoid it (the key to avoiding it was letting people know that they needed to lower their stock allocations if they wanted to protect their retirement portfolios).
I am grateful to you for raising this point, Hello World. I think you are asking a question that is on the minds of many. I do not view this post as a Goonish post. But I do disagree with your take. We are coming at this from very different places. I view it as irresponsible for our economic leaders and political leaders to fail to warn us of the dangers of Passive Investing. I view it as shameful behavior that so many have been quiet for so long.
Rob
Here is the quote from Jack Bogle, whom I am sure that Taylor was basing his discussion from.
Bogle says that, if you cannot afford to lose another penny, you should get entirely out of stocks. That’s obviously correct. So, yes, Taylor was right to conclude that he would need to go to a zero stock allocation if stocks fell any further. All that is fine.
The problem is that Taylor has not publicly acknowledged the reason why he ended up in circumstances in which he could not afford to lose another penny. He invested passively! The entire idea of Passive Investing is to miscalculate risk. The risk of stocks obviously changes as valuations change. The Passive Investor has committed to never making the necessary allocation changes. So when valuations get to truly insane levels, he becomes so anxious about his investment “strategy” that he becomes angry and defensive if anyone even happens to mention what the historical data says about the risk level he has taken on. I think it would be fair to say that Taylor became anxious indeed when his risk level went to insane levels. Otherwise, why would he have supported the ban on honest posting that was imposed at Vanguard Diehards and at Bogleheads?
I believe that Taylor should try to learn from his mistakes. He cannot learn from them until he first acknowledges them in plain and simple language. Right now, he is still engaging in word games, pretending that even an investor who goes to a zero stock allocation in a market crash can fairly be characterized as a “Passive” investor. Going to zero after you have wiped out your retirement account is NOT Passive Investing, Hello World. It is the OPPOSITE of what Passive has always been marketed to be.
Taylor is right to go to zero stocks. He has put himself in a very precarious situation. Where he is wrong is in his emotional refusal to acknowledge his mistake in falling for the crazy idea it all might turn out different this time and that this might be the first time in which Passive delivered good results in the long term. Emotional investors always thing it is going to be different this time. But in the real world it never is. In the real world, the market continues to function just as the Rational investing principles show it must.
Rob
the ‘passive investors’ with ‘busted’ retirements are fairly on track now
The historical data shows that those who used the Old School SWR studies to plan a retirement that began in January 2000 have only a one-in-three hope that that retirement will not go bust within 30 years. Those studies should have been corrected on the day the authors of the studies learned of the errors made in them. My post pointing out the errors in the Old School studies was posted to the Motley Fool board on May 13, 2002.
Are you willing to cover the losses of the investors who placed their confidence in the demonstrably false claims of the Old School studies, Hello World? If not, you should drop your opposition to honest posting on the errors made in these studies.
My sincere take.
Rob
Rob, you keep trying but I think you are nearly out of rope. The length of your posts is extreme but the relevant content is miniscule so I will stock to the key parts:
“The problem is that Taylor has not publicly acknowledged the reason why he ended up in circumstances in which he could not afford to lose another penny”
AFAIK, Taylor did NOT sell his stocks and was NOT in a position where he could not afford to lose another penny! Please post a link that says this! AFAICT, he was simply recounting Bogle’s advice – albeit poorly.
http://www.bogleheads.org/forum/viewtopic.php?t=30085&highlight=afford+lose
“Why is it viewed as “unprofessional” for those who follow Rational Investing principles to warn us that, if we continue to permit the promotion of Passive Investing principles, we are going to cause an economic depression?”
Frankly, I already explained this but it IS unprofessional to use a classroom as a setting for a bully pulpit. During my times at business school professors ALWAYS avoided trying to impress their personal opinions on the students because
1) They could be wrong
2) The students may come up with much better ideas so it is not a good idea to stunt their growth by limiting possibilities.
Also, as I said, Shiller does post a lot of stuff that DOES express his full opinion.
“If not, you should drop your opposition to honest posting on the errors made in these studies.”
I have no opposition to honest posting – I am simply trying to keep you honest, you are simply trying to create an adversarial condition where none exists. One of your big problems is that you post a lot of controversial material with very selective quotes but hardly EVER post the original link. After looking at the original links – it is clear why that is.
So, do you have any real ‘passive investors’ who suffered busted retirements?
If neither you nor I can find any, it is not clear what problem you are trying to solve.
AFAIK, Taylor did NOT sell his stocks and was NOT in a position where he could not afford to lose another penny!
He said that, if stocks dropped any lower, he was going to a zero stock allocation.
That’s not Passive Investing as it has been promoted for 30 years.
That’s Emotional Investing.
The reality is that Passive Investing always becomes Emotional Investing in the long run because it always causes those who follow it to go with wildly inappropriate stock allocations. So in that sense Taylor is the quintessential Passive Investor. But Passive is not marketed as a strategy that requires you to sell everything at the bottom. Taylor’s case shows us what Passive is in reality, which is not at all what it is marketed to be.
Rob
it IS unprofessional to use a classroom as a setting for a bully pulpit. During my times at business school professors ALWAYS avoided trying to impress their personal opinions on the students
It is not a “personal opinion” that Passive Investing has caused massive losses for all those who followed it on the four times in history when it has been tried. The average price drop on those four occasions is 68 percent. We have seen an economic crisis on each of those occasions (for reasons that should be obvious to anyone who considers for a moment what it means for millions of people to lose 68 percent of their life savings). Dating back to 1900, we have never had an economic crisis except in the aftermath of a time-period in which the Passive Investing “strategy” (setting one’s stock allocation without concern for the price of the stocks one is buying) became popular.
Citing the historical data is not pressing one’s opinions on someone, it is reporting facts. Those who advocate Passive Investing say that they are advocating a data-based approach. But we have seen Passive Investing advocates react with great hostility at numerous places at which accurate reporting on what the historical data says was permitted for a time.
When you advocate a data-based model, you take on an obligation to report what the data says accurately.
That’s my sincere take, Hello World.
Rob
So, do you have any real ‘passive investors’ who suffered busted retirements?
Retirement do not go bust in a day, Hello World. The fact that there are millions of middle-class retirees today who have retirement plans that they thought were safe when then retired but which in fact have less than a 50 percent chance of surviving 30 years tells me that we should be permitting honest posting on the errors made in the Old School SWR studies at all of our boards.
There have been thousands of community members who have expressed a desire that honest posting be permitted. I think they are right on.
Here is a link to an article at which a number of community members point to some of the benefits that follow for all of us when we permit honest posting on investing topics at the Retire Early and Indexing boards:
http://www.passionsaving.com/retirement-risks.html
Rob
I see my honest comments are being removed. This is really what I expected in the end anyway. Good luck to you, you need it.
I see my honest comments are being removed.
Hello World is reporting accurately that I deleted the comment that he put up prior to the one quoted above.
Rob
I think my comment was removed because it showed that Rob is being very dishonest with his comments about Taylor Larimore. One at least one occasion in the thread on bogleheads referenced above, Mr. Larimore explicitly said that the conversation had NOTHING to do with his personal portfolio. This is in direct conflict with many of Rob’s comments above, which are deliberately misleading.
Here is a link to the thread in issue:
http://www.bogleheads.org/forum/viewtopic.php?t=30085&postdays=0&postorder=asc&start=50&sid=7875edc56145a082239b1f8ed3db152e
If Taylor had said “I miscalculated risk,” there is not one person who would have found fault with him.
The reason why that thread is so long is that he cannot bring himself to say the three magic words “I” and “Was” and “Wrong.”
Our seven years of discussions show that this problem is endemic among Passive Investing advocates.
Not good.
Rob