Set forth below is the text of an e-mail that I sent to Mike Piper (author of the Oblivious Investor blog) on October 27, 2009, in response to the e-mail that he sent to me that was posted as yesterday’s blog entry.
Mike:
The book The Wisdom of Crowds makes what I consider one of the most persuasive arguments that I have heard in favor of the idea that the market sets the price better than any one individual could set it. But the author advances a caveat on page 19 of the Introduction:
“Diversity and independence are important because the best collective decisions are the product of disagreement and contest, not consensus or compromise. An intelligent group, especially when confronted with cognition problems, does not ask its members to modify their positions in order to let the group reach a decision everyone can be happy with. Instead, it figures out how to use mechanisms — like market prices or intelligent voting systems — to aggregate and produce collective judgments that represent not what any one person in the group thinks but rather, in some sense, what they all think. Paradoxically, the best way for a group to be smart is for each person in it to think and act as independently as possible.”
The group that meets at your blog is a community. I have a role in that community. My role is to make the strongest case against Passive Investing that I am able to put forward. That helps the community in several ways. One, it helps those who have doubts about Passive Investing to develop their thinking about why they have doubts. Two, it helps some of those who in the past have had no doubts by causing them to experience the first stirrings of doubt, And, three, it helps those who have had no doubts before and who continue to have no doubts to gain confidence in their contrary views by seeing them challenged effectively and by seeing that challenge fail in their eyes.
Yes, I CERTAINLY view your earlier e-mail as an act of intimidation. It makes me feel that there is something wrong or dirty or rude or not nice about challenging Passive Investing at your blog with the strongest arguments that I can muster against it. Do you respond with that sort of e-mail to community members who agree with you on Passive Investing? Your role as a writer and commenter is also to make your case as effectively as you can make it. Your role as a MODERATOR is very different. Your role as a moderator is to play it straight down the middle, not to slant things in favor or against the Passives and not to slant things in favor or against the Rationals.
You shouldn’t be merely PERMITTING me to make a strong case against Passive at your blog. You should be ENCOURAGING me to do so. You should of course argue effectively against me when you disagree. But you should never raise even a hint of a suggestion that there might be some sort of punishment to follow if community members put up posts not in agreement with your own views. Those comments help you more than the ones that say “attaboy!” on every word you put forward. It is those who challenge you who bring on your greatest learning experiences. Those who challenge your thinking often end up being your best friends, Mike.
You should be writing about the fact that you have community members who are upset to hear criticisms of Passive Investing. That’s part of the story. That’s news. Discussion of that reality is likely to bring on a learning experience for everyone concerned. To the extent that you share these feelings, you should say so. But you should NEVER indicate to anyone at the blog that you have given thought to punishing those with different viewpoints. That i so far over the line that I cannot even describe how far over the line it is.
You have indicated that you don’t believe that you could ever change your mind on these issues. I don’t think that’s right. There was a time when I thought Passive Investing was just peachy. I obviously changed my mind, right? I wouldn’t have predicted in advance that that would happen because I hadn’t yet worked through the changes that I needed to work through to get me to where I am today. You need to open yourself to arguments and ideas that you today cannot today imagine supporting because it is only by opening your mind to the possibility of changing your mind that you will even be able to hear the arguments with a fair mind.
The purpose of the First Amendment is not to protect majority viewpoints from criticism. Majorities can generally take care of themselves. The purpose is to protect minorities. Minorities NEED protection. Minority viewpoints are often hated. It is often the case that they are hated not because they are wrong but because they are right. Think slavery. The idea that slavery should be abolished was once hated with the same passion that a good number of people today feel for the idea that Passive Investing is dangerous investing. We have a First Amendment not because hearing the other side always feels good. We have it because we have learned from experience that it is in our long-term best interest to keep the door open to new ideas. The stomping out of minority viewpoints has in the past often ended up causing more harm to the majority than it did to the minority. We often cannot see how it could ever end up that way. But it has ended up that way many times in history. The First Amendment is there to protect us from our own worst inclinations to stomp out the voicing of minority viewpoints.
We need to bring about Normalization of these discussions. I don’t mean just at your blog, I mean across the entire internet. We don’t get there through further bannings or through further threats of bannings. You should put out of your mind even the idea of ever banning anyone for anything except abusive posting. Those of us who want to see the blog achieve its highest possible potential (that obviously includes both Mike Piper and Rob Bennett) should be working together to make that happen. It cannot happen by silencing the anti-Passive Investing viewpoint. There are probably lots of constructive things that could be done to further that objective and I am happy to work with you to advance any positive options. But I don’t think we can get to Step A until we banish even the idea that a ban on honest posting could ever be good idea. Yes, the advancing of that idea intimidates. It poisons the atmosphere for any community member to feel that he might be excluded from a community solely because he puts forward his honest take on the subject under consideration.
I want to work to make your blog the best blog it can be. That’s why I share my thoughts on Passive Investing at your blog. I want to be able to feel that you WARMLY WELCOME my contributions regardless of whether they happen to be in agreement with your views or not. When we achieve that, I believe that the rest will be downhill sledding. I don’t put forward my words with the aim of winning popularity points (although I of course believe in interacting with others in a spirit of friendship and warmth). I put them forward with the aim of helping us all to learn more about the realities of stock investing. That should be enough to win a hearty endorsement from you for my continued active and honest participation, in my view.
Rob
Haha…Rob, the problem is that you don’t know when to stop. You keep going until the point where you are beyond annoying and people just have to be rid of you.
Oh, and you are _very_very_ annoying. Just look at the amount of paragraphs you can churn out. it is irritating just to look at the page full of text that says almost nothing.
Please take a look at the comments put forward in the “People Are Talking” section (on the left -hand side of the page), sadface. There are many middle-class investors who would like to know the realities of stock investing and who don’t find it even a tiny bit “annoying” to hear about them.
There is a group that is annoyed. That much is certainly so. But that group is not required to read any of my posts. They can just skip them if they don’t happen to be their particular cup of tea.
Those of us who understand the realities need to speak up more frequently, in my view. I have had many people tell me “Oh, you are right in everything you say, Rob, but I have learned to keep my mouth shut about this stuff.” That’ the entire problem! That’s why the Old School SWR studies remain uncorrected to this day! That’s why we are all suffering through an economic crisis!
We should all be polite. We should all be charitable. We should all be willing to hear the other guy out.
I don’t bring up the subject of valuations on my own. I offer comments only when some other community member makes a comment in support of Buy-and-Hold. But, once the subject is put on the table, I think the right thing to do is to post honestly so that people listening in get to hear both sides of the story.
That is the process followed on thousands of other topics discussed on the internet every day. It is the fact that a different process is followed in discussions of stock investing that is the entire problem we face, in my assessment. My intent is to continue being polite and charitable and warm and friendly in my comments. But to also continue being honest. I see that as the balanced and human way to proceed.
I think that’s the approach most likely to bring us to the place where we all deep in our hearts very much want to be. There is not one person alive who benefits from investing ineffectively, sadface. Not one. Not even you.
Rob