Set forth below is the text of an e-mail that I wrote to John Ziegler, producer of the Media Malpractice: How Obama Got Elected and Palin Was Targeted video, on November 19, 2009.
My name is Rob Bennett. I am the author of the “A Rich Life” blog and a big fan of the work you have done relating to Sarah Palin. I am hoping that you may be able to help me get publicity for another press accountability issue, one relating to the conventional stock investing advice and its effect in causing the economic crisis.
In May of 2002, I put a post to a Motley Fool discussion board noting an analytical error in the studies that financial planners use to help people plan their retirements. The studies fail to consider the effect of stock valuations and thus get all the numbers wildly wrong. The likely result is that millions of middle-class investors are going to suffer failed retirements in days to come. My findings on this question have been confirmed by numerous big-name experts in the time since.
While the findings have been confirmed, the reaction among investing experts has been to avoid pointing out the error publicly for the seven-plus years since. I have reported on the error (and on other errors in the conventional investing advice that I discovered through follow-up investigations at numerous web sites and blogs. The result is that vicious smear campaigns have been directed at me and at people posting in support of me. These efforts have included death threats, organized efforts to destroy my business, web sites set up solely to ridicule me and intimidate those posting in support of me and contacts with reporters writing favorable articles in which defamatory claims have been advanced. I have been banned from numerous discussion boards and blogs despite never once having had a post removed on grounds that it was abusive (in each case the ban was demanded by those leading the smear campaigns).
The historical background is that the conventional investing advice (Buy-and-Hold Investing) was discredited by research done by Robert Shiller in 1981 and by a mountain of research confirming Shiller’s findings done in the years since. But Buy-and-Hold has brought in hundreds of millions to The Stock-Sellling Industry and so leaders in the field do not want the errors revealed. When you do that math, you realize that the poor investment advice that we have been hearing for the past 30 years was the primary cause of the economic crisis and that telling people what actually works would be the quickest means to getting out of the crisis. But I have not been able to find any influential figure willing to speak out candidly on this issue.
The general feeling is that this is just too darn explosive. The root mistake is the biggest mistake ever made in the history of personal finance and the feeling is that it does not “look good” for investing “experts” to acknowledge mistakes.
I will share with you one quote from a journalist in the field that tells the story succinctly. I sent e-mails to Scott Burns of the Dallas Morning News for close to a year trying to persuade him to write a story warning his readers of the dangers of the conventional retirement studies. He did eventually write such an article. But he gave it as little play as possible (placing it as a response to a reader question rather than as a separate article) and then went right back to endorsing the conventional studies the next day. Scott explained in his brief write-up why the media has not been willing to report on the flaws in the retirement studies and in the conventional model in general. He said: “It is information most people don’t want to hear.”
Investing “experts” do not tell us what works but what it is popular to say, which is often just the opposite. Almost all that is written in this field is governed by marketing considerations. The academic researchers made a mistake back in the 1960s and 1970s and then discovered it in the 1980s. But the marketing campaigns pushing Buy-and-Hold were so successful that there is now a widespread feeling that it would cause too much embarrassment to too many people to report the realities as known today. So we go on year after year after year giving bad advice and causing ever more financial misery.
I have spoken to financial planners who have indicated that they would like to speak more frankly on these questions and who told me that their clients are pleading for new approaches. But so far the vast majority are unwilling to speak frankly in public. We have a Tyranny of the Commons situation. Everyone would be better off if we could all learn and discuss the realities. But there is so much pressure not to spill the beans coming from those who endorsed the now-discredited ideas that few dare to say things in ways clear enough for middle-class investors to understand. And so the pressure from the people hearing the bad advice is for ever more bad advice.
This is a circle that must be broken. Hundreds of people have expressed interest in learning more. But people need to be able to ask questions and consider these matters over time before they will feel comfortable changing their investment strategies. So I need to create a internet community where people will feel safe asking whatever questions they have and learning over time. To do that, I need to bring some publicity to this matter. My hope is either that you will be interested in exploring the matter or that you will be able to point me to someone who might be interested.
Everything that I say here can be documented with materials at my web site.
If you would like to check on what other people have said about me and my work in this area, I’d be grateful if you would look at the “People Are Talking” section of my blog (on the left-hand side of the home page of the blog) where 50 or so people offer highly complimentary reactions (each quote links to the page on the internet where the kind comment was advanced):
Here is a page at which 20 authorities note that the Efficient Market Theory (the intellecutal framework for the conventional investment advice of the past 30 years) has been entirely discredited in recent years:
Here is a page that makes the case that the failure of the “experts” in this field to change their advice after it was discredited by the academic research is the primary cause of the economic crisis:
Here is a page at which 101 posters at various boards express a desire that the smear campaigns that have been used to block reasoned discussions be brought to an end and that honest posting on these matters be permitted:
Please let me know if you have any questions. (I will be out of town and away from my computer from Monday, November 23 through Monday, November 30.)
Best of luck in your future endeavors!