Set forth below is the text of an e-mail that I sent to Michelle Malkin, author of the Michelle Malkin blog, on April 22, 2009.
My name is Rob Bennett. I am the author of the “A Rich Life” blog. I would like to interest you in writing about a story that I have been developing for seven years now, the cover-up of the true cause of the economic crisis.
The true cause is that people invested recklessly in stocks for years, bringing prices to levels far higher than they have ever gone before. The primary reason why this happened is that The Stock-Selling Industry promoted an approach to investing called “Passive Investing,” which advises that “you can’t time the market.” This is a half-truth.
It is true that it is not possible to say how stocks will do over the next year or so. But there is a wealth of literature that shows that shows that huge price crashes always follow when we get to the price levels that applied in the years before the crash (there is not one exception in the historical record). The phrase “you can’t time the market” is a MARKETING slogan, a slogan aimed at making people feel comfortable engaging in reckless behavior that their common sense would otherwise warn them to avoid.
Until now, I have thought of this story as a personal finance story. I have learne through hard experience that it is not possible to write about this story at persona finance discussion boards or blogs.
The story can be fully documented. The historical data shows that stocks are far more risky when prices are high and that the experts should have been advisin people to lower their stock allocations after prices got out of hand. I have spoken with a good number of experts and can provide on-the-record statements in which they acknowledge this. However, there is an intense institutional opposition in the personal finance field to permitting discussion of these realities and their implications. I am writing to you because I have come to the conclusion that the story can only be aired by those whose interest in the investing questions is secondary but who are deeply concerned about the economic crisis and about the cover-up of the story taking place among those whose focus is on the personal finance questions.
The extent of the cover-up is breathtaking. I have been banned at the following places for reporting on this matter: (1) the Motley Fool web site; (2) the Morningstar.com web site; (3) the Early Retirement Forum; (4) IndexUniverse.com and (5) The Money Bloggers Network.
Huge smear campaigns have been directed at me for telling the story, including death threats aimed at me and my family members, efforts to destroy my web site, and efforts to insure that bloggers in the personal finance field do not report on the story.
I can provide extensive documentation of all that is said here. I can show that the studies that financial planners use to tell people how to structure their retirement plans get the numbers wildly wrong. I can point you to leaders in the field who have noted that the conventional advice has been shown to be wrong and that we are soon going to see a “revolution” (that’s Rob Arnott’s word — he served as editor of the Financial Analysts Journal for several years) in our understanding of how stock investing works.
The trouble is — the people who work in this field are embarrassed about the bad advice they have given for many years and concerned about what it will do to their reputations among other experts to tell what they know or even to permit others to discuss the issues. Because the errors at issue here are errors in numerical calculations (caused by reliance on a now discredited theory), there is great shame over the idea of letting these matters come to light. There is of course huge money made in this field and having solid connections is the key to making the huge money.
I believe that many would like to see the story told but that no one else today dares to be the one to try to bell the cat.
If you are able to help, I am of course happy to respond to any questions.