“We Are Going Up Against Heavy Hitters — Vanguard, Motley Fool, the Get Rich Slowly Blog, Index Universe, Morningstar, the Bogleheads Forum”

Set forth below is the text of a comment that I recently put to the Goon Central board:

Personally, if I was confident that I’d been wronged and could make $500 million in a lawsuit, I’d pay the lawyer!   It works the other way around too, GW.

If the lawyers were as confident as I need them to be to be sure they can win the case, they would be happy to take it on contingency.

This is what changes with the next crash. After the next crash, what Buy-and-Hold has done to us is in all the newspapers and people are looking for villains to hang from trees. A good lawyer can take advantage of that reality. But that reality is not today’s reality. So the smart lawyer and the smart client wait it out a bit.

I met one lawyer in his office. He liked the case. But he felt that his firm was not big enough to handle it. It was my conversation with him that got me thinking that maybe it was better to be patient. I liked that guy and I would have gone forward had he taken the case. But what he said about needing a big team of lawyers for this particular case struck me as being true. We are going up against heavy hitters — Vanguard, Motley Fool, the Get Rich Slowly blog, Index Universe, Morningstar, the Bogleheads Forum. This is not a job for a small firm.

I don’t want just to bring the case. I want to win the case. A case for $500 million (the case will obviously be for a much larger number — that’s a number that I have put forward as a possible settlement amount for a settlement achieved PRIOR to the next crash) needs to be brought by a team of the best lawyers in the country. Can I get them today? I probably could if I had the right contacts and that still may happen. It could be that one of my e-mail contacts will have an in with some big-name lawyers. But, if I wait until the crash, I will have lawyers lined up around the block. What’s the rush?

My preference in the early days was to bring the case and get the ugly stuff behind us. I still would bring the case today if I had a team of top-flight lawyers showing their confidence by taking it on contingency. But I need to see from the lawyers that they are confident enough to put a good bit of skin in the game. I have a funny hunch that I will see a whole big bunch more of that sort of action FOLLOWING the next crash than I am seeing today. I would rather wait and get a number far in excess of $500 million than rush things and perhaps have to settle for a number a bit smaller than $500 million. Huh? For this case?

You are essentially placing all your bets on a hope that stocks will perform in the future in a manner unlike how they have ever performed before. I am doing the opposite. I say that today’s price is comprised largely of cotton-candy nothingness. It is the product of a huge confidence game, a huge flood of dangerous, worthless emotions. When those emotions fade, you lose it all. You lose the bull market gains you are today counting as real. You also lose the public’s confidence in your SWR studies and the experts’ willingness to pretend that there is some mystical data somewhere supporting those irresponsible claims. You ALSO lose the reluctance of the nation’s top lawyers to bring this case on a contingency basis. Lawyers read the papers. They will see how mad people will be. They know that it is juries that decide legal cases and that juries are comprised of humans.

So it may be that it all flips at the same time.



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  1. Evidence Based Investing says

    Motley Fool, the Get Rich Slowly blog, Index Universe, Morningstar, the Bogleheads Forum

    In others words, this is all about Rob “hocus” Bennett getting banned from internet discussion boards.

    I hate to be the one to break this to you but you aren’t going to get $500 million because of your inability to interact with other users of discussion boards.

  2. Rob says

    Good point, Evidence.

    The only person who has been harmed by the economic crisis is Rob Bennett. All of the people who lost their jobs need to just buck up.

    Take care, man.


  3. what says

    Yes, the bogleheads forum. A heavy hitter indeed. More lawyers than K street!

    You truly are a hero taking on the biggest monster in the room…WOWZA!

  4. Rob says

    If you think that the Bogleheads Forum does not have great power to help or hurt people, we have a very, very different take re the matter.

    When I was at Bogleheads, there were hundreds of very smart and good people who expressed a desire that honest posting be permitted. Mel Lindauer hated that idea. He was willing to destroy the board rather than permit honest posting there. But how did he pull that off? He’s one guy and there are hundreds on the other side. How did he do it?

    He did it with Jack Bogle’s help.

    Jack never personally advanced death threats. But he appeared in threads with Mel. He got Mel that column with Forbes. He showed up at events with Mel. I saw a photo once at the Goon Central board in which Jack and Mel are standing close enough together that you can see them both in the same photo!

    People respect and admire Jack Bogle. When he sees a Mel Linduaer behaving in the manner in which Mel Lindauer behaves and does nothing about it, that scares people. Bogle has power in this world. And when he fails to speak up about a Mel Linduaer, he puts that power to a very great negative use.

    The other side of the story is that that board has the power to bring the economic crisis to an end. That’s a big deal. There are many influential people who participate or lurk at Bogleheads. If we had been talking there about the true cause of the economic crisis going back to the first day, that front-page New York Times story on Buy-and-Hold that we all deep in our hearts long to see would have appeared a long, long time ago.

    The internet discussion board is a powerful communications medium of the future, What. You couldn’t be more wrong than you are in the suggestion you make here.

    The question is whether the power of that board community is going to be put to use serving good purposes or bad ones. I entertain both hopes and fears re that one. I know how much good that board can do and I hope to see the day it gets about the business of doing it. And I know how much harm that board is doing in its current incarnation and I fear for how those doing the harm are going to feel about themselves when they finally come to realize how many human lives have been destroyed.

    There is a power that comes with being the biggest investing board on Planet Internet, What. And with power must come a sense of responsibility.

    I am sure.


  5. Rob says

    More lawyers than K street!

    My first job out of law school was on K Street. I had my own couch and my own secretary and one of those floor-to-ceiling windows that looked out on all the action. It’s been all downhill ever since!

    There are a whole big bunch of powerful lawyers working on K Street. You got that one right.

    But there are every bit as many in the employ of Wall Street.

    In fact, I wouldn’t be too terribly surprised to learn that one or two of the K Street types even get their paychecks delivered from a Wall Street address.

    Oh, children!


  6. The Pink Unicorn says

    I think ir is more likely that I (the pink unicorn) exist versus Rob winning even one dime in his fantasy legal case.

  7. Rob says

    I have a funny feeling that you were one of the ones saying that there was no need for corrections in the Old School safe withdrawal rate studies back in May 2003, Pink.

    Things change.

    Paradoxically enough, it is one of the constants of life.

    Take care, old friend.


  8. Rob says

    My personal thought is that there is a good chance that I will never even need to file the papers, Pink.

    I think that Bogle’s heart is going to melt following the next crash.

    Once Bogle gives his “I Was Wrong” speech, we are all off to the races.

    I doubt very much that there will be anyone questioning whether the work I have done over the past 11 years is worth $500 million at that point.

    My guess is that our troubles will be addressed in a spirit of warmth and cooperation and mutual respect.

    That’s certainly my hope as well!

    Hang in there, man.


  9. The Pink Unicorn says


    Maybe you could hire one of those lawyers that advertises during the commercial breaks for the Jerry Springer show.

  10. Rob says

    I think it would be fair to say that the lawyers who advertise on the Jerry Springer show have higher ethical standards than the Wall Street Con Men who have known about the errors in the Old School safe withdrawal rate studies for 11 years now and have not raised a finger in that time to get them corrected.

    Fair enough, Pink?


  11. Rob says

    “There’s no success like failure,
    And failure is no success at all.”

    — Dylan (Love Minus Zero/No Limit)

    Take care, old friend.


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