Rob Bennett to Former Financial Analysts Journal Editor Rob Arnott: “The Illustrations You Offer of the Problem of Buy-and-Hold Dogmatism Are Shocking. I Know From My Discussions With Financial Planners and Bloggers That Many Others Have Had Similar Experiences. This Must Stop. I Feel More of a Sense of Urgency re This Matter. My Focus Is On the Public Policy Implications. We Are Living Through A Public Tragedy of Epic Proportions.”

Yesterday’s blog entry reported on an e-mail that I received from Former Financial Analysts Journal Editor Rob Arnott describing the hostility that his research has generated among “guardians of the status quo” in the investing field. Commenting on my report of how Buy-and-Hold Goons threatened to get Academic Researcher Wade Pfau fired from his job after he published research showing the superiority of Valuation-Informed Indexing strategies over Buy-and-Hold strategies, he said that he has on occasion experienced difficulty in getting his work published (in fact, he has not yet been able to find a journal to publish an article co-authored by Nobel Laureate Harry Markowitz!) and that journals that have published his work have received “hate mail” after doing so. Rob castigated me in his e-mail for embracing “a victim mind-set” and for characterizing those who threatened to send defamatory e-mails to Wade’s employer  as “Goons.” He copied Vanguard Founder John Bogle and The Four Pillars of Investing Author William Bernstein, whom he described as personal friends and whom I noted had failed to speak up on Wade’s behalf when he was under attack, on his response to me. Set forth below is the reply that I sent early on the morning of December 6, 2012 (I also copied Bogle and Bernstein, as well as Wade Pfau):


Thanks much for your response. I have been a huge admirer of your work for years. So it was a thrill to receive it. Your frank and balanced and helpful words have added a nice bit of good cheer to my Thursday morning.

I understand that all you know of my work is the one article that I linked to in the e-mail. It pains me to think that the words of that article may have planted the idea in your head that my respect and affection for John Bogle might be any less than your own. In my ranking of the most important investing analysts of all time, Bogle ranks second only to Robert Shiller. I love the man. I admire his accomplishments. I don’t want there ever to be any doubt in anyone’s mind re that aspect of the question. I also of course feel a good bit of respect for the others mentioned in your e-mail, and, in full truth, for all of the Buy-and-Hold pioneers. All of the work that I have done is built on the Buy-and-Hold Model. There would be no Valuation-Informed Indexing today had a number of smart and good people not rolled up their sleeves and did the work needed to generate the many powerful insights that have helped millions to come to a better understanding of how stock investing works.

The illustrations you offer of the problem of Buy-and-Hold dogmatism are shocking. I know from my discussions with financial planners and bloggers that many others have had similar experiences. This must stop.

You say that “that’s life” and that “life isn’t always fair.” That’s so. But our job is to spend every waking hour pushing in the direction of fairness, no? That’s the struggle. That’s what the work that we all do is all about. We will never succeed entirely. But we always keep pushing in that direction. That’s how Bogle achieved what he achieved, is it not? Bogle met resistance in his early days. He soldiered on. The spirit that he possesses that caused him to fight is the cause of much of my admiration of the man. If I were to give up in the face of frustrations, I wouldn’t in the end be much of a friend to our mutual friend John Bogle, in my own assessment. So I always fight on with the aim of bringing things to a better place over time.

I of course agree that Bogle (and all others) must be true to his own beliefs. If he didn’t criticize the aspects of my work that he does not find convincing with as much gusto as I criticize the aspects of his work that I do not find convincing, I couldn’t feel the respect for him that I want him to feel for me. A friend criticizes perceived deficiencies in a friend’s work not out of any animus but out of a desire to help the friend become his better self. That’s the spirit in which I have found fault with one aspect of Bogle’s teachings (the idea that long-term timing is not required for investors seeking to Stay the Course in a meaningful way) and that’s the spirit in which I hope in days to come he will be finding fault with whatever aspects of my teachings he finds unpersuasive.

My sense is that there is only one point re which you and i have a different take of some consequence. We are both seeking to push the general understanding of how stock investing works in the same direction. But I think it would be fair to say that I feel more of a sense of urgency re this matter. My guess is that the reason for this lies in our different backgrounds. I am NOT an investing expert and I do not pretend to be one. I am a journalist. My focus is on the public policy implications of the dogmatism. I would be grateful if you would take a look at two articles that I have written that argue that the heavy promotion of Buy-and-Hold strategies was the primary cause of the economic crisis: (1) The True Cause of the Current Financial Crisis; and (2) The Bull Market Caused the Economic Crisis.

Say that there is some truth to what I argue in these articles. We are living through a public tragedy of epic proportions. One the one hand, Wade’s research tells us what we need to know to reduce the risk of stock investing by nearly 70 percent (he shows that the maximum portfolio drawdown percentage is 60 percent for Buy-and-Holders and only 20 percent for Valuation-Informed Indexers). On the other, we are on our way to the Second Great Depression because we have as a society elected to impose a Social Taboo to block the frank discussion of these matters. We all want the same things. There is not one person alive, Buy-and-Holder or Valuation-Informed Indexer, who wants to see us fall into the Second Great Depression or who doesn’t want to know how to invest effectively. How did we ever get ourselves into such a crazy fix? It’s all a quirk of history. Had Shiller published his research showing that valuations affect long-term returns in 1971 rather than in 1981,the name of the book would have been “A Valuation-Informed Walk Down Wall Street” and we would today be living in the greatest period of economic growth in U.S. history. How do we get from this awful place where we are today to the wonderful place where we all deep in our hearts want to be tomorrow?

We don’t get there by calling each other “Goons” — I think that much is fair to say!

I don’t want to call anyone names, Rob. It’s the last thing I want to do. If you read my interactions with the Goons carefully (I post daily at the Goon Central site), you will see that I call those who attack me so relentlessly and in such brutally personal terms “friend” more often than I call them “Goon.” The Goons are my friends, Rob! These are people I know from the days when we worked together to build the Motley Fool’s Retire Early Board into the most successful board in that site’s history.

Why do I EVER call them “Goons? I am trying to draw attention to a problem. The death threats really did happen. The tens of thousands of acts of defamation really did happen. The board bannings really did happen. The threats to get Wade fired from his job really did happen. These people are in emotional pain. If you have any doubts whatsoever about this, please take a look at the article I wrote detailing the efforts of hundreds of non-Goons to keep the Retire Early and Indexing boards and blogs open to civil and reasoned and honest discussion of all investing issues. 

We shouldn’t be ignoring this emotional pain. We should be trying to help our friends overcome their pain. THAT”S PART OF THE JOB OF AN INVESTING ADVISOR.

Many of the experts in the field don’t see it that way today. They feel that investing analysis is a numbers exercise, that there’s no place in this field for the discussion of human emotions. This is the core mistake that caused all the trouble, in my assessment. When we see people engage in the sorts of behavior that I am referring to here (and which you have obviously experienced as well in somewhat different form because your work is not as internet-based as mine), we need to try to figure out what is going on and to address the problem. I don’t want to ever have to use the word “Goon” again. I won’t ever need to if people like Jack Bogle and Bill Bernstein and Wade Pfau make clear that they expect the published rules of all of the boards and blogs to be followed. When they fail to do this, they send a signal that in this one area the normal rules of social intercourse that keep us all human do not apply. WE NEED TO STOP SENDING THAT SIGNAL. When we start sending the right signals, good things will start happening. Lots of people want to learn but are afraid to speak up. As more and more people come to feel safe in speaking up, the entire social dynamic will change. We will reach a tipping point and things will begin getting better and better and better each day rather than worse and worse and worse. New ideas cannot grow until we create an environment in which sincere and polite and respectful questioning is permitted. And even encouraged!

That’s where I am coming from, in any event. I detect a suggestion in your e-mail that you would be willing to help in an effort to pull things in a positive direction if I would be willing to engage in private discussions. Of course! Why the heck not? I want to know about any ideas that you or Jack or Bill or Wade (I added him on the Cc for my reply) have for the five of us working together to transform these discussions into something viewed as a 100 percent positive for every single person involved in them. Let’s make that happen! Please be assured that I will do anything that I view as even remotely reasonable that you or Jack or Bill or Wade suggest. Please just shoot me back an e-mail with any suggestions or questions or concerns or thoughts or proposals.

Thanks again for getting the ball rolling on this, my plain-speaking friend.



  1. Evidence Based Investing says

    I detect a suggestion in your e-mail that you would be willing to help in an effort to pull things in a positive direction if I would be willing to engage in private discussions.

    Not correct. In fact what he said was

    “In summary, I will not be available to help you protest the injustice of it all. Feel free to add me to the list of those who declined to help, alongside Jack, et al, as long as you’re also prepared to provide your readers access to this email.”

  2. Rob says

    You have quoted Rob Arnott accurately, Evidence.

    I had a hard time understanding the phrase “so long as you’re also prepared to provide your readers access to this e-mail.”

    My first reaction was that he was encouraging me to report on his words. That’s what the phrase signifies and that is what it turns out he really meant. My first reaction was the correct reaction.

    When I was crafting my response, I experienced doubts about that reaction. I have faced lots of pressure during my ten years of reporting on these matters to NOT go public with things. So the thought formed in my head that Arnott was in a less than artful way trying to convey a message that he would be angry with me if I reported on his words. If that were so, I think it would be fair to say that he was putting forward a suggestion that he was willing to work with me (and would include Bogle and Bernstein in the discussions, as signified by his decision to copy them on the e-mail) so long as I did NOT report on what he said. Given the potential significance of such an effort for all of us if it were to transpire, I concluded that the best way to proceed was to write my response based on a presumption that my second reaction to his phrase was the correct one.

    Arnott’s response to my e-mail (reported on in tomorrow’s blog entry) indicates that it was my first interpretation of the phrase that was the right one. He DID want me to report on his words. That’s wonderful. That’s the proper way to play it, that’s the way that I wish everyone would play it.

    Rob Arnott is a straight-talker. I know this from the “Editor’s Corner” entries he used to write when he was editor of the Financial Analysts Journal. There is no one else who matches him on this trait working in the field today, in my assessment. I think it would be fair to say that I have gained a bit of a reputation as a straight talker. Armott’s words in those columns helped me find my footing. They gave me confidence that straight talk was the way to go with this thing. It’s all Arnott’s fault! (That’s a joke.)

    Anyway, your quote is accurate. And the words he used really do signify a desire that I report on his words, not that I hold back from reporting on his words. When I was pondering his words last Thursday morning, I just considered that possibility too good to be true and talked myself into believing that something very different was going on.

    Thanks for stopping by, man.


  3. banned plop contributor says

    Bennett claimed: “I think it would be fair to say that I have gained a bit of a reputation as a straight talker.”

    That is 100% inaccurate, as you well know. The exact opposite is true.

    Look at you right here, trying to twist Arnott’s plain words to mean the precise opposite of what they plainly said: He does NOT wish to get down n the mud and root around and grunt with you. Period.

    His reference to the email was clearly to ensure you did not HIDE the pain words he spoke to you about your catastrophically unproductive war on reality or try to recast them. And yet still you tried!

    Even as laughably transparent as these efforts are, the action of twisting Wade’s and others direct wording takes clear intent on your part; so even within your own mind, you obviously are fully aware and conniving with respect to the falsity you are attempting to create.

    This trait makes you very much NOT a ‘straight talker’ but instead the complete antithesis of that description.

  4. Rob says

    Rob offered a brief and warm response, which I am reporting on in tomorrow’s blog entry, Trebor.


  5. Rob says

    I never heard from Jack Bogle or Bill Bernstein or Wade Pfau, all of whom were copied on the e-mails (both mine and Rob’s).


  6. Trebor Martin says

    No reason to wonder – Wade has made it perfectly clear why he no longer communicates with you. As for Mr. Bogle’s and Mr. Bernstein’s reasons for not responding to you, I am afraid they are intuitively obvious to even the most casual observer of antics

  7. Rob says

    Wade should care about his research, Trebor. And he should care about the people who use his research to form their investing strategies. And he should care about his country and its future. And he should care about the integrity of his profession.

    Bogle and Bernstein should care about similar things and to an even greater extend as they are bigger names and thus carry more responsibility for how they go about doing the work they do.

    The idea that it is “obvious” why Bogle and Bernstein would behave in a manner that evidences a lack of integrity is a insult to two men who have accomplished things that should merit your respect and affection and gratitude.

    Your addiction to GRQ investing strategies has not just caused you to lose a lot of your retirement money. It has caused you to suffer a great deal of damage to your soul.

    That’s an investing topic we all should be addressing when we see this sort of comment appear at a blog.

    My sincere take.

    I wish you all good things regardless of which investing strategies you elect to pursue.


  8. Rob says

    I will be happy to engage in warm and positive and constructive and loving discussions with Wade or Jack or Bill at any time that either of the three of them cares to contact me. I want it on the record that that’s where Old Farmer Hocus comes down re this aspect of the matter.


  9. Rob says

    I obviously do not mean to suggest by that last comment that there is any willingness on my part to agree to post dishonestly on the numbers that my friends use to plan their retirements.

    That one remains non-negotiable.


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