“I Believe That What I Have Done in the Investing Field Can Be Done in Lots of Fields By People Possessing a Reasonable Amount of Intelligence (All That I Possess) Who Take Advantage of Opportunities Created by the Creation of the Internet”

Set forth below is the text of a comment that I recently posted to the Suckers Buy It! forum:

The purpose of this thread-starter is to offer some ideas on how blog and site owners can obtain big-name endorsements for their work. The obvious benefit of doing so is that big-name endorsements give you the credibility you need to persuade customers to buy your products and services. They can also help you obtain citations in big-name media outlets, which can generate traffic gains.

I have a slide show at the upper right-hand side of my home page that sets forth my 15 most important endorsements:

http://www.passionsaving.com/index.html

A more complete collection of them is set forth at the “People Are Talking” section of my “A Rich Life” blog, which runs down the left-hand side of each page of the blog:

http://arichlife.passionsaving.com/

I need to tell a little of the story of where the state of knowledge of how stock investing works stands today to explain how I obtained these endorsements. There are two models for understanding how stock investing works: (1) The Buy-and-Hold Model, which is rooted in the research of University of Chicago Economics Professor Eugene Fama and which has been the dominant model for several decades; and (2) The Valuation-Informed Indexing Model (I gave it that name), which is rooted in the research of Yale University Economic Professor Robert Shiller. The allocation strategies that follow from the two models are VERY different.

Few people have ever heard of the new VII model or are able to appreciate quickly how it works. But there is now 32 years of peer-reviewed research supporting it. In contrast, there is no research supporting the Buy-and-Hold Model. Lots of smart and good people think there is. But if Shiller is right, the Buy-and-Hold Model was rooted in a mistaken interpretation of the historical return data. Interpreted properly, none of the data available to us today supports Buy-and-Hold ([presuming that you believe in the VII Model).

Shiller is a well-respected figure. He wrote the book Irrational Exuberance, which was a best-seller and which was reviewed at most of the top-name publications. I discovered some years back an amazing reality: No one has ever explored the practical implications of Shiller’s findings. Shiller discusses only theory in his book; it contains not a word on how to invest effectively. And there is not one web site today other than my own that explores the practical significance of his findings. I have had this field to myself for 11 years now.

That’s why I have been able to obtain all these powerful endorsements. I believe that what I have done in the investing field can be done in lots of fields by people possessing a reasonable amount of intelligence (all that I possess) who take advantage of opportunities created by the creation of the internet.

What I do is bounce ideas off people. I started with things that seemed to be obviously true. For example, I found that a calculation (the safe withdrawal rate) that millions of people have used to plan their retirements is in error. I went to discussion boards and blogs and asked people whether they were able to explain why the studies were set up the way they were (they excluded from consideration a key factor — the valuation level that applies on the day the retirement begins). At first, I assumed that I must have missed something. But when I saw lots of smart people were not able to respond effectively to my inquiries, I came to accept that I really was on to something.

Then I went higher. I started writing to columnists at major newspapers and that sort of thing. Sometimes I got hostile responses. Again, that told me that I was onto something. Other times I got helpful feedback. That of course helped me to put pieces of the puzzle together. Never did I obtain reasonable explanations of why the valuations factor was excluded from consideration. So I grew more and more confident that there was some strange stuff going on.

I now believe that strange stuff like this probably is going on in all sorts of areas. We are cowed by “experts.” Lots of times experts are just people who learned to repeat back what they read in a book written years ago. We are learning new things all the time. But the new knowledge often does not get put to use because people do not see any immediate financial benefit in putting it to use (that is the issue in the investing realm — I am virtually certain today that Shiller is right but people have not wanted to say so because for the time being there are marketing benefits associated with going with the Fama model).

My biggest success came as a result of posts that I put to the Bogleheads Forum. A researcher named Wade Pfau never posted to the forum at the time but he was as a lurker reading my posts with great interest. He eventually wrote to me to ask if I would be willing to work with him to develop research that he and I believe may someday down the road win a Nobel prize. We worked together for 16 months and the research paper has been published in a peer-reviewed journal. We showed that by adjusting their stock allocations in response to valuation changes investors can reduce the risk of stock investing by 70 percent. If that finding holds up (all signs are that it will), it is going to change all that we know about stock investing in a fundamental way.

The trick here is to come to the subject you write about with the perspective of a journalist rather than a marketer. Marketing is what generally wins on the internet. I made my living as a journalist for years before starting my site — So I have the head of a journalist. Journalists don’t tend to look for what is popular or what sells. We look for what is important in a long-term sense. We have an inclination to ask lots of annoying questions. We don’t buy it when authority figures try to give us the run around. We drill down until we figure things out, until we can put a narrative together that solves all the puzzles that trouble us.

I couldn’t have done what I have done in pre-internet days. The internet allows me easily to contact people all over the globe. When I was in communication with Wade, we would often send several e-mails back and forth to each other in a single day. Things would have moved forward at a deadly slow pace if we hadn’t been able to do that. Also, I have had a level of access to big names that I would not have had in earlier days. I announced one day that I was going to appear at the next annual meeting of the Bogleheads community to ask John Bogle some questions. The leaders of the board took the entire board down from the Morningstar site so that they could ban me and “protect” Bogle. That told me that Bogle does not believe that he can give effective answers to my questions.

That’s the basic idea. If anyone has questions, I am happy to help in any way that I can.

Rob

Comments

  1. Rob says

    The Goons posted some comments here and I posted some reactions. Both the comments and reactions were lost due to a technical problem.

    The comments and reactions were nothing terribly new or shocking. I don’t like to lose them. But these things happen from time to time.

    My best wishes to all (including my Goon friends!!) who read these words.

    Rob

  2. Rob says

    One of my comments was reposted over at Goon Central. Here it is:

    Rob said, in June 28th, 2013 at 11:34 am

    John Greaney engaged in a criminal act on the evening of August 27, 2002, when he threatened to kill my wife and children in the event that I continued posting honestly on safe withdrawal rates, Pink.

    No one did him any favors by ignoring his criminal behavior. Had he been removed from the Motley Fool site, pursuant to the promise that the owners of the Motley Fool site make to all of us in their published rules, Greaney would not be on his way to a prison term today. Nor would any of those who have furthered the 11-year cover-up of the errors in the Old School SWR studies by posting in “defense” of Greaney. They obviously would not have posted in “defense” of him if he were no longer around to be defended.

    There is a reason why every one of our boards and blogs has published rules prohibiting the behavior we have seen from those posting in “defense” of Mel Lindauer and John Greaney, Pink. We hurt ourselves and our friends when we fail to demand reasonable enforcement of those rules.

    I am not threatening you when I say that you will be going to prison for financial fraud as a result of your support of the 11-year cover-up. Only a Goon would view a citing of a Federal statute as a “threat.”

    To the contrary, I am putting more of my friends at risk of going to prison if I fail to point out that that is where you are headed. Wade P*** is a friend of mine. He is also a brilliant researcher. We worked together to produce peer-reviewed research that merits a Nobel Prize. Wade should today be celebrating his good fortune and his amazing success instead of worrying when his prison sentence will begin.

    Is it Wade’s fault that he committed financial fraud?

    Of course. Wade is a grown man. He knows about the laws prohibiting financial fraud. He made the bed that he now lies in.

    But Wade’s current circumstances are not entirely Wade’s fault. Had Greaney been banned from Motley Fool on August 27, 2002, Wade obviously would not have been engaging in financial fraud many years later in “defense” of Greaney (because he feared that the Greaney Goons would send defamatory e-mails to his employer if he continued to “cross” him). Wade failed us. We also failed Wade by failing to take effective actions re you Goons for 11 years now.

    I expect to have hundreds if not thousands of academic researchers publishing peer-reviewed work showing millions of middle-class investors the benefits of the Valuation-Informed Indexing model in days to come. I do not intend to see any more of them going to prison because in the aftermath of their wonderful work they are threatened by you Goons and they end up joining you in your massive act of financial fraud.

    I will do all I can to see that your prison sentence begins as soon as possible. I would see that it happen by the close of business today, if that were in my power. Is that because I like to see my friends sent to prison? It is not. I will do that because I do NOT like seeing my friends sent to prison. The sooner your prison sentence is announced, the sooner everyone in this country will join together to bury the smelly Buy-and-Hold garbage 30 feet in the ground, where it can do no further harm to humans and other living things. The sooner your prison sentence is announced, the fewer of my friends there will be serving prison sentences and the shorter those prison terms will be. It’s a win/win/win/win/win.

    People respond the way they do because they fear you. People fear you because my good friend Jack Bogle does not speak up when he sees your behavior play out in front of him. That’s what needs to change.

    When that changes, we are all off to the races. We are the luckiest group of investors who ever walked Planet Earth. On the day following Jack’s coming clean, we all begin appreciating how fortunate we are to live in the day when the first true research-based investing model is available to millions of middle-class people.

    I have asked Jack to come clean. He has not yet seen fit to reply to my requests. I think it is fair to say that he will respond following the next price crash, when the pressure to do something about this madness will be unbearable. I wish it didn’t have to be that way. I wish that Jack had responded promptly to the first e-mail. But things are what they are. I accept that things are what they are, but never will I do anything to help things remain what they are.

    I want your prison sentence shortened to the extent possible, Pink. Only your Goon brain interprets my efforts to get your prison sentence shortened as a “threat.”

    I wish you all good things, in any event.

    Rob. the Fellow Trying to get the Prison Terms of the LIndauerheads and the Greaney Goons Shortened a Bit (and Seeing Precious Little Cooperation from the Lindauerheads and Greaney Goons He Is Seeking to Help)

  3. Rob says

    I think I’ve found a way to access copies of the other comments that were lost. I’ll post them here in the order in which they were posted the first time. Naturally, I will be listed as the author of them all. But I will note the screen-name of the Goon who posted each of the Goon comments.

    Deleted said: “Rob “Hocus” Bennett, a legend in his own mind.”

    I said: “I believe that the shift from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance in the history of investing analysis, Deleted.

    I couldn’t be more proud of the work that I have done over the past 11 years.

    Thank you for stopping by to share your thoughts with us.

    Rob, the Proud Creator of the First True Research-Based Model for Understanding How Stock Investing Works

  4. Rob says

    Pink said: ““I believe that the shift from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance in the history of investing analysis, Deleted.”

    And I like to ride down the magic rainbows, Rob.

    I guess we both live in a land of make believe.”I guess we both live in a land of make believe.

    Why is it that I have a vague recollection of Buy-and-Hold advocates saying similar things on the morning of May 13, 2002, when I put forward my famous post pointing out the errors in the Old School safe withdrawal rate studies?

    Rob, the Author of the Post Heard ‘Round the World”

  5. Rob says

    Pink said: ““The reason why we are not today living in the greatest period of economic growth in our history is that the Buy-and-Hold Mafia terrorizes anyone who tries to share what we have learned with the millions of middle-class investors who need to know about it. Following the next crash, those who have engaged in criminal acts of financial fraud will be going to prison. The phrase “Buy-and-Hold” will be an obscenity. What’s to hold us back then?”

    Once again, Rob you resort to threats and make a claim that has no basis. It is all a fantasy made up in your head and you still wonder why people respond to you the way they do.”

    Then I posted the long one up above.

  6. Rob says

    Pink said: “Rob,

    You can repeat it as many times as you want, but it doesn’t make it true. Your threats and lies continue to demonstrate your lack of ethics and morals.”

    I said: I will continue to repeat it, Pink.

    If you would be willing to help spread the word about my lack of ethics and morals, as evidenced by the message I will continue to repeat, I would be most grateful.

    My best wishes to you and yours, my old friend.

    Rob the Endless Repeater”

  7. Rob says

    Pink said: “Rob,

    You have already done plenty to spread the word on your lack of morals and ethics. The behavior you have exhibited has resulted in your getting kicked off a large number of boards.”

    I said: “It’s certainly a fact that I have been banned from more boards than anyone I know of who has posted on stock investing on the internet. Mel Lindauer has never been banned at a single board, to my knowledge. Neither has John Greaney, to my knowledge.

    Someone doesn’t get banned at 15 different boards for no reason, Pink.

    Take care, man.

    Rob”

  8. Rob says

    Whew!

    I wouldn’t want to have to face my Creator knowing that I was responsible for depriving future generations of any of those gems!

    Rob the Relieved

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