Set forth below is the text of Comment #18 to a blog entry (by Doug Brady) at the www.Conservatives4Palin.com site reporting on my column arguing that Governor Palin is the political figure most likely to come out in favor of permitting honest posting on the Big Fail of the Buy-and-Hold Model on the internet.
Gov. Palin cannot do it on her lonesome. But she can provide an element that is absolutely needed that no one else can today provide — leadership. There is a vast wasteland in the leadership department today. That’s the true cause of the economic crisis. Palin has the influence and heart and courage and intelligence needed to pull people together, help them learn the true nature of the problem, and then overcome it. She is the only one I know of who can play this role effectively today.
All Palin followers are sickened by the smear campaigns that were used to try to drive her out of politics. People need to stop for a moment and consider — Is this only a problem in the politics field? Or are there similar things going on in other fields? I am here to tell you that the same thing is going on in the investing field. Lots of people know far better ways to invest than Buy-and-Hold and have been trying to tell people about them for 30 years. They are silenced by the “experts” who just happen to be bringing in millions per year promoting Buy-and-Hold. It’s a shocking and upsetting story. But all that I say here can be verified with internet links.
What happened is that the academics once really believed that Buy-and-Hold made sense. We learned otherwise as the result of research that was done in 1981. A decision was made to keep that covered up. Promotion of Buy-and-Hold led to U.S. stocks being collectively overvalued by $12 trillion in January 2000. Stocks always return to fair value; there has never been one exception in the historical record. So everyone who follows investing events closely knew in 2000 that $12 trillion of wealth was going to disappear from the U.S. economy over the course of the next 10 years or so. And there are people who express surprise that we are suffering through an economic crisis today? No economy can lose $12 trillion of wealth without collapsing.
Palin cannot get the $12 trillion back. What she can do is to tell people why they lost so much of their retirement money in the first place. And she can make it impossible for the “experts” to continue to play their games. We know now about simple strategies that would permit people to invest in stocks with far less risk and to receive far higher long-term returns. To tell people about these strategies, we need to overcome the opposition of the Good Old Boy “experts.” Palin has the infrastructure (and most importantly the personal integrity!) in place to do that.
Once people see that there is a better way, they will begin to regain hope for the future. That’s the single most important thing. What people most need today is hope that the future is going to be better than the past. Hope comes from trying to move forward. Just knowing that we are all trying would make a huge difference. It would help us pull together. Today, most of us are living in shame. We suspect that we played a role in causing this crisis, but no one is speaking out loud the words that need to be spoken to help us come to terms with what has happened.
As Nordlinger suggested, no other political figure has the guts to take on this simple but very, very important project. Palin has the courage to do what it would take to make it all happen. And I believe that she will. I believe that it’s just a matter of time. As the economic crisis worsens, those of us hoping to save our free market economy are going to have no choice. I cannot guaranty that this will happen before the next election. But I think it is possible. And I certainly hope that that is how it will play out. The sooner we start talking frankly and honestly and reaiistically about these issues, the better for every single person involved, in my assessment.