Where are the apologies?
I’ve generated hundreds of important investing insights in my podcasts and weekly columns and articles and discussion-board comments of the past 10 years. The Buy-and-Hold Machine is not happy to see me telling people about those insights and yet has not been able to find any flaws in the academic research that supports them. Let’s say that the insights are all baloney. Let’s say they are all wrongheaded. All but one. The first one cannot be wrongheaded because even The Buy-and-Hold Machine now (tens years later) agrees that that one is on point. The Old School safe-withdrawal-rate studies got the numbers that millions of middle-class people used to plan their retirements wildly wrong. There’s no argument anymore than I am off base re that one. We have achieved a consensus at least re that one.
So where are the apologies?
I am owed an apology re that one even if every other insight I have generated is baloney, no? It was no small insight. One of the primary reasons why people invest in stocks is to finance their retirements. The Old School studies didn’t get the retirement numbers a little wrong, they got them wildly wrong. A failed retirement is a serious life setback. I helped everyone out — or at least I tried to help everyone out — when I dared (it took courage) to step forward and tell the truth about safe withdrawal rates. I helped — or tried to help — the retirees who would have suffered failed retirements if I didn’t work up the courage to take on The Machine (the retirees may suffer failed retirements all the same because of the ten-year cover-up but I also spoke out in the strongest possible terms against the cover-up). And I helped the “experts” in this field who were leading the cover-up. They have incurred hundreds of billions of dollars in potential legal liabilities. I did all I could to help them avoid those liabilities. No?
So where are the apologies?
Where are the expressions of gratitude? John Bogle has not sent me an e-mail saying “Thanks, man!” Huh? What’s the problem here?
Where are the offers to help me spread my ideas far and wide?
Where are the links to my web site?
Where are the articles demanding that the Goons drop their Campaign of Terror against our board and blog communities, including a number of communities that I built pretty much with my bare hands?
Is there a problem?
There is a problem.
We are ashamed.
All of us.
We need to get over it.
Do you know why the Buy-and-Holders act like they know it all? A number of people who agree with my general take have said that it is because there is money in it. What industry wouldn’t want people to believe that the product it offers for sale is worth buying at any price imaginable? That’s what Buy-and-Hold says, is it not? When the stock-selling experts tell us not to time the market, what they are really saying is not to take price into consideration when buying stocks. Just buy stocks! Lots of them! Price be darned! As Church Lady might observe, “How convenient!”
I certainly agree that money-making comes into play here. I do NOT believe that this is the primary problem, however. I think that some of my friends may at times fall into the trap of being a little too cynical.
Say that we were to open up every internet board and blog to the discussion of Valuation-Informed Indexing. Say that the idea spread like wildfire. Say that one year from now 90 percent of investors were Valuation-Informed Indexers. Would the profits of The Stock-Selling Industry go up or down?
They would go up. Investors who understand how stock investing works have confidence in their financial futures. People who have confidence in their financial futures buy stuff. If most investors became Valuation-Informed Indexers, the fears that keeping consumers from spending and extending and worsening our economic crisis would be overcome. We would see an economic boom. And investors who understand how stock investing works buy more stocks than investors who are intimidated by the subject. Valuation-Informed Indexing is common-sense investing. If the experts got behind the idea, more people than ever before would buy stocks. The transition from Buy-and-Hold to Valuation-Informed Indexing would be a boon for millions of middle-class investors and for the industry that advises them both.
So this is not really a money thing. Those who participated in the ten-year cover-up of the errors in the Old School SWR studies are worried about lawsuits. To that extent it’s a money thing. But the opposition to honest posting came long before lawsuits were a big concern. The core problem here is something different. If we are going to overcome this mysterious force that is holding us back from an economic boom and that is threatening to pull us into the Second Great Depression, we need to develop a true understanding of what it is.
What is really at the core of all this craziness?
On the surface, it appears to be arrogance. The Buy-and-Holders don’t admit mistakes. They don’t ever, ever, ever, ever, ever admit mistakes.
But what’s behind the arrogance? Why are they like this?
Say that you were a doctor and that you thought that cutting someone open might help them with their problem but you were not sure. What would you do? A lot of us would not be able to cut unless we were sure. So we would try to convince ourselves that we were sure. Then, if there were a bad result and someone questioned our decision, we would become angry and defensive. The person questioning the choice is giving voice to our own doubts. So their words really hurt. And it becomes important to us to silence that voice.
That’s why the Buy-and-Holders hate me. It’s not that I am saying something they don’t think makes sense. If they thought that what I said doesn’t make sense, it wouldn’t bother them. They would laugh it off. They wonder themselves if what I am saying is right and, when I give voice to their doubts, it makes them go crazy. The want me to shut up. And I won’t. Not because I want to hurt them. Because I believe that they are on the wrong track and that deep in their hearts they want to be on the right track. So I am doing for them what they would want me to do for them if they were able to think straight about these issues.
Why can’t the doctor acknowledge that he really doesn’t know if cutting is a good idea or not? Because cutting is a big deal. No one wants to be cut for no good reason. You can’t just go ahead and cut unless you are sure. Unfortunately, the humans are born ignorant. We don’t it all. Sometimes we are guessing. That’s sometimes so even when we are making decisions as important as whether to cut another human body or not.
If a perfect world, the investing experts could continue doing studies until they learned everything there is to know and only then offer any advice to investors. We don’t live in an ideal world. In the world in which we live in people need investing advice TODAY. We don’t have perfect information today. So we might mess up. But we cannot take a pass. We have to recommend something.
The Buy-and-Holders did the best they could given the limited extent of their knowledge when they designed the Buy-and-Hold Model. But, since the matter they were advising people on (what to do with their retirement money) was so important, they acted like they were a lot more confident than they were. And, because they cannot stand the thought of having caused the great human misery they caused if they really are wrong (as they now suspect), they become highly defensive when challenged. They cannot admit they were wrong. They feel that their lives will have been wasted if they admit that.
I don’t say that the investing experts did nothing wrong. What I say is that we all did wrong too. We should have made clear to them that we don’t expect them to have all the answers. We never should have started calling John Bogle “Saint Jack.” That put him in a terrible spot. That made it that much harder for him to acknowledge his mistakes. He feels that he needs to live up to the exalted view we have of him. We would have been better friends if we had made it a practice to ask hard questions of him, to always challenge him to learn more and to sharper his ideas over time.
So it is not only John Bogle who today is feeling shame. All the people who followed John Bogle’s ideas are feeling shame too. That’s most of us.
The shame makes us defensive and our defensiveness causes the problem to grow worse and the problem growing worse makes us feel more shame. We’re caught in a trap of self-recrimination.
I believe that the next price crash will help. The next crash will scare us more than did the first one. People who become very scared give up their pride in desperation. If we give up our pride, we will open our minds to accepting ideas that show that we got things wrong in earlier times. That sort of thing doesn’t seem like such a big deal when things reach a point where your way of life is at risk.
We need to hurt. We need to suffer. It’s the only way past the defensiveness and the anger and the shame that keeps us in ignorance today.
We all want the same things. I did not develop the Valuation-Informed Indexing concept by myself. Hundreds of people helped me. Including lots of Buy-and-Holders. Including John Bogle.
I wish that John Bogle and my other Buy-and-Hold friends could see that and that it could help them feel less ashamed of the mistakes they have made. If they felt less shame, they would find it easy to thank me. And I would find it easy to shake their hands and say “don’t worry about it” and begin working together with my Buy-and-Hold friends to rebuild our broken economy.