Set forth below is the text of an e-mail that I sent to Mike Piper (author of the Oblivious Investor blog) on October 29, 2009, in response to the e-mail correspondence described in yesterday’s blog entry and other recent blog entries.
I have continued to ponder the issues raised in our recent e-mail discussions. I have come up with a slightly far-out proposal which would make me perfectly happy. It’s something that I have zero right to demand of you. I thought that I would put the idea forward just on the off-chance that you found it a satisfactory approach for satisfying both the Passives and the Rationals (a small group today, to be sure, but one that I hope will be growing with time!) among your readership.
My sense is that your biggest concern is that regular iteration of the idea that Passive doesn’t work antagonizes a good percentage of your readers. I believe you are right about this. My counter is that it is critical that the indexing community as a whole take Bogle’s ideas in a new direction and it is not possible to do this without having people regularly exposed to the new ideas. People are rarely convinced of something by seeing it argued one time. Ideas sink in and come to seem less “strange” only after repeat exposure. So I feel that it is critical that indexers have some means of hearing about the argument against Passive on a repeating basis.
My view is that the most natural way to give people regular exposure is by giving the Rational perspective each time you advance a blog entry giving the Passive perspective. It is not at all my intent to make people feel uncomfortable or to be disruptive or anything along those lines. As you have pointed out, it defeats my purpose if people have a negative reaction to seeing my name in the Comments section.
You asked two good substantive questions during our e-mail exchanges: (1) Why is it that I say that Passive can never work even though you can identify many people for whom it HAS worked?; and (2) Why is it that I say that Passive Investing CAUSED the bubble when Passives argue for remaining at a CONSTANT stock allocation?
My thought is — What if you gave me space on a once-per-month basis to write a Guest Blog Entry making the case for Valuation-Informed Indexing (the strategy I favor) or Rational Investing (the model I favor) in which I would address some question about the strategy or model put forward by you or by one of your pro-Passive readers? You could of course put forward introductory language saying that you do not endorse these ideas but are merely permitting them to be aired at your blog. Your readers could agree with the arguments or disagree with them or ignore them as they pleased.
If your readers were being exposed to the ideas in a high-profile way and on a regular basis, my concerns that they are not being permitted to hear about them in a meaningful way would be addressed. In those circumstances, I would be happy to agree to refrain from putting up comments finding
fault with your Passive claims on all the other days of the month (I would of course continue to put forward comments on the many aspects of Oblivious Investing re which we are in solid agreement).
Again, please do not think that I am making a demand. I am asking for an unusual arrangement for what I view as an unusual set of circumstances. My intent is to put forward a suggestion that makes sense only if it would make
you happy to proceed this way. I am trying to come up with an approach that leaves us both feeling that the Oblivious Investor blog community is being well served.
I would be grateful if you would let me know your reaction. You will not hurt my feelings if you respond simply by saing “no, thanks.” If you have alternate ideas along these lines, I of course would be happy to hear about them.