Financial Samurai: “How Come I Continue to Not Understand What the Debate Is About?”

Yesterday’s blog entry set forth the text of a comment put to this blog by the author of the Financial Samurai blog. Set forth below is a follow-up comment that Sam put to a different blog entry thread, the thread relating to the blog entry called “We Don’t Want to Know What Works, We Want to Hear What Makes Us Feel Good.” Below that is the text of my response.


How come I continue to not understand what the debate is about? Seems like nobody else can either, which is why there are no comments?


Thanks again for helping out, Sam. You are a smart guy and you ask questions that get to the heart of things.

Say that you lived in pre-Civil Way days and say that you opposed slavery. Say that you noticed what happened to other people who spoke out against slavery. They were beat up. They were turned down for jobs for which they were well-qualified. Their families were shunned. All this sort of thing. Would you conclude that it was the better thing to speak out against slavery or to keep your mouth shut?

To be able to function, societies need to develop Social Taboos. We think of our society as an open society and we indeed are more open than most. But no society is totally open. A society that was totally open would collapse. There are things that cannot be said in our society and in all societies.

For a long time now, one of the things that could not be said in our society is that Buy-and-Hold Investing does not work. The question is of huge importance. Millions of people have their retirement money invested pursuant to Buy-and-Hold principles. This is why a Social Taboo has developed that says — You Cannot Go There, This Is a Third Rail. This taboo was needed (or at least we as a society came to believe that it was needed) for social stability.

The Social Taboo has outlived its usefulness. Today, it is the unwillingness of many to question Buy-and-Hold that is causing social instability. The promotion of Buy-and-Hold is the primary cause of the economic crisis. If people could learn about Valuation-Informed Indexing, we could get out of the economic crisis and we could enter The Golden Age of Middle-Class Investing. It’s a win/win/win, with no possible downside.

So why don’t we make the shift?

There have been thousands of books written promoting Buy-and-Hold. Academics have produced thousands of studies. There are hundreds of blogs that promote Buy-and-Hold. Reputations are tied up in retaining a public belief in Buy-and-Hold. And on and on.

We maintain the Social Taboo because pointing out the dangers of Buy-and-Hold is going to cause a huge social upheaval. Just as doing away with slavery caused a huge social upheaval. The people who failed to speak out against slavery were not bad people any more than the people who fail to speak out against Buy-and-Hold are bad people. They had lives to live. We cannot always be taking on every battle. If we did that, we would never get our jobs done or our families fed.

That said, there comes a time when one of these things must be taken on. Please understand that I did not volunteer for this assignment. If it had been up to me, I would have continued writing solely about saving and I would still today be the most popular poster at the Motley Fool site. That’s not the role that the Fates had carved out for me. I was to be the one who would take on the Buy-and-Hold Monster, whether I liked the idea or not. I feel into all this with zero desire on my part to walk this road.

It had to be someone, eh? Someone has to do it, Sam, We need to make this transition. Buy-and-Hold was a mistake. It can be reformed into something wonderful and all the people who promoted Buy-and-Hold can have their reputations saved by us all pointing out that we wouldn’t have that something something wonderful if it had not been for the amazing work done by the Buy-and-Holders, who laid the foundation for the Second Draft approach, the approach that actually works. But we MUST make this transition if our economic and political systems are to survive. For us to continue to promote Buy-and-Hold today is for us to commit national suicide, Sam. I can work through this step by step and show you why this is so with numbers.

I am very much aware of the need not to tear our social fabric apart making this transition. This is why you always hear me singing the praises of Bogle and Fama and Malkiel and all the other pioneers. We need to applaud the good work they have done while also moving onto a better path for the future.

I need some help in pulling this off successfully! That’s what it all comes down to,. I know what needs to be done. There is not one person who loses out from this. It is just all winners, all big winners. But one person cannot make this happen. It is a community project. I need at least a small number of responsible and loving people to step forward and then all the rest will just sort of go. Once people see that it really is going to happen, everyone will be pitching in and we will be picking up steam. The next thing you know we will be meeting with Bogle and he will be making the speech he needs to make and we all (including Bogle, to be sure!) will be heroes!

We are trying to move humanity forward, Sam. The Buy-and-Holders were trying to do a wonderful thing. The root ideas were gold. They made a mistake. This happens from time to time with the humans. Perhaps you’ve noticed. If we fix that mistake, we all get to learn how to invest far more effectively than we ever have before. We all get higher returns at less risk and we all achieve financial freedom years sooner. We all have wildly successful blogs.

The rub is the three words “I” and “Was” and “Wrong.” There is no way that a group of people can make a mistake that causes this much human misery and then just cover it up. The Three Magic Words must be said. It is the magic that comes from the voicing of those three words that open the door to all the good stuff. So long as there are millions of people trying to pretend that Buy-and-Hold can work, they are not open to be learning about what really does work. Buy-and-Hold is today sucking all the oxygen out of the room. We need to let it die.

That’s why you don’t understand, Sam. You can’t permit yourself to understand until you are ready to act. Once you (and a small number of others) act, it’s one good thing after good thing after good thing and never a negative thing. We are lucky/unlucky enough to be living at a key turning point in U.S. history. We can take things up or we can take things down by the actions we choose re whether to permit honest posting on the Big Fail of Buy-and-Hold or not.

I am voting for taking things up. I could use your help, Sam.



  1. sadface says

    This is one of the craziest things I’ve ever read. Its great!

    Somehow Rob has used his amazing analytical skills to reduce all the world’s problems to the fact that people on the Internet cannot stand him. Fabulous job, Rob.

  2. Evidence Based Investing says

    You have now posted three recent blog posts that are simply cut and paste comments that were posted at this blog not two weeks ago.

    I could understand this if you were adding new content, expanding a point with further detail or breaking out an off topic comment to allow an original conversation to continue.

    You are doing none of these things. These three posts haven’t added anything to the original conversation.

    Anyone who wishes to read this can do so already on this very site, and I suspect your audience has already seen these comments.

    I thought that your rehashing of year old email conversations was the ultimate in content free blogging but you have outdone yourself.

    If you are to build a community at this website you are going to have to up your game a whole lot.

    Cut and paste just won’t cut it.

  3. Rob says

    Sam’s comments are important, Evidence. He is a successful and respected blogger. And a nice guy to boot!

    So I want as many people as possible to see those comments. I think there’s a good chance they will be buried if they appear only as comments to other blog entries. It highlights them to make them the focus of separate blog entries.

    Thanks for sharing your thoughts.

    Um – I think!


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