“Re the Issue of Being Labeled a Nut, I’m Afraid that It’s a Bit Late to Help Me Out re That One!”

I have been contacting numerous people to let them know about my article reporting on The Silencing of Academic Researcher Wade Pfau by The Buy-and-Hold Mafia.

Yesterday’s blog entry reported on my correspondence with Robert Savickas, Associate Finance Professor at George Washington University Business School. Set forth below is the text of the e-mail that I sent to Robert in response to the e-mail of his that is described in the earlier blog entry:


I believe that we are on the verge of discovering powerful insights re the nature of investing risk.
Take a look at Wade’s paper if you get a chance. He has a graphic (I believe it is on page 8) where he compares the Maximum Portfolio Drawdown for a Buy-and-Hold portfolio with the MPD for a Valuation-Informed Indexing portfolio. The difference is 60 percent vs. 20 percent. That’s a good measure of risk, is it not? Losses don’t really matter unless you sell and thereby lock them in. So the thing you want to avoid is big portfolio losses. You reduce the potential drawdown by close to 70 percent by being willing to take price into consideration when setting your stock allocation. Showing investors how to reduce stock risk by 70 percent is huge. I think it would be fair to say that this is the biggest breakthrough yet achieved in the history of investing analysis.
Risk is essentially optional for stock investors today. It is following Buy-and-Hold strategies that creates risk. Once we all get about the business of warning investors of the dangers of Buy-and-Hold, we can pretty much say goodbye to the problem of stock investing risk.
Re the issue of being labeled as a nut, I’m afraid that it’s a bit late to help me out re that one! I’ve been banned at 15 different discussion boards and blogs. Here’s a web site whose entire purpose is to ridicule me:
The other side of the story is that lots of good and smart people have said exceedingly kind things at my work. There are 120 endorsements at the “People Are Talking” section of my site, which runs down the left-hand side of the home page of my blog:
And I have had hundreds of ordinary middle-class people thank me for being the first person ever to explain how stock investing works in a way that makes sense to them. That counts for something.
I would of course be happy if the Goons would stop attacking me. But the thing that drives me is doing right by my readers. So I don’t feel comfortable signing on to ideas that I know don’t hold water. I have hopes that we are going to see hearts melt following the next crash. I believe at that time that I will be working side-by-side with all of my many Buy-and-Hold friends (most of the people who post at that hate board were friends of mine in an earlier day) to rebuild our broken economy.
Someone has to stick his neck out for human knowledge to advance over time. No? It amazes me that Shiller published his research 30 years ago and so few in this field have picked up on the many exciting implications. I love the humans dearly (the title of the book I am writing is “Investing for Humans: How to Get What Works on Paper to Work in Real Life”) but they can be a trial from time to time. Come to think of it, trying to help the humans learn what it takes to invest effectively for the long run is not all that different from being married!


  1. The Pink Unicorn says

    “The other side of the story is that lots of good and smart people have said exceedingly kind things at my work. There are 120 endorsements at the “People Are Talking” section of my site, which runs down the left-hand side of the home page of my blog:”

    It is funny what you call an endorsement. Many of those comments ate not very positive.

  2. Rob says

    I included some Goon comments so that people can see what we are up against.

    And I included some comments by skeptical Normals. Because there are lots of good and smart people who possess a sincere skepticism and their views obviously need to be heard.

    But the vast majority of the comments are INSANELY positive, Pink.

    There is no other blogger on the internet who has won even a tiny percentage of the positive comment from big-name experts that I have won, Pink.

    Rob Arnott is the former editor of the Financial Analysts Journal, the most important journal in this field. He says of me: “Your ideas are sound.”

    He doesn’t say that about Jack Bogle or about Bill Bernstein or about Larry Swedroe or about Rick Ferri.

    A person isn’t given that kind of endorsement. A person EARNS it with hard work and a hard-won reputation for integrity.

    You hate me because you believe that there is zero chance that you could ever win an endorsement of one-tenth that importance in this lifetime.

    I say you are wrong. I say you could begin posting honestly today and end up somewhere very magical five years from today or ten years from today or whenever.

    But all I can do is make the suggestion, Pink. It is you who determines what path you will walk as you create your own future.

    That’s as it should be, in my assessment.

    I naturally wish you all the best that this life has to offer a person.

    Rob the Sound

  3. The Pink Unicorn says

    “But the vast majority of the comments are INSANELY positive, Pink.”

    Insane is the key word, Rob.

  4. The Pink Unicorn says

    “You hate me because you believe that there is zero chance that you could ever win an endorsement of one-tenth that importance in this lifetime.”

    I accomplish more in one day than you do in a decade. You have spent the last decade wasting your time on the Internet, repeating your same lines. None of your so called endorsements add up to anything.

  5. Rob says

    We disagree, Pink.

    But I certainly wish you all the good things that this life has to offer a person.

    Hang in there, man.

    Rob, the Fellow Who Wishes Pink All Good Things But Who Does Not Agree With Pink About the Effect of Valuations on Long-Term Stock Returns

  6. The Pink Unicorn says

    “I would of course be happy if the Goons would stop attacking me”

    Yes, those attacks, like threats of jail time and lawsuits, are really disturbing and should not be tolerated.

  7. Rob says

    If I could wave a magic wand in the air and make the lawsuits go away, I would do it, Pink. It is not in my power to do this thing.

    I care about you Goons. But you Goons are not the only ones I care about.

    I also care about the millions of middle-class investors whose lives you have destroyed.

    You need to think about what we are going to do about those people.

    I can tell you the smart thing to do.

    The smart thing is to focus on the positive. The research that I did with Wade shows us how to reduce the risk of stock investing by 70 percent. That’s the biggest advance in the history of personal finance. That changes capitalism in a fundamental way.

    Everyone benefits. Women and men. Black and white. Republicans and Democrats. Old and young. Buy-and-Holders and Valuation-Informed Indexers.

    It is advances of that nature that have made our nation the envy of the world for many years. It is advances of that nature that pull us all together and make us all happy and proud to be Americans.

    The longer we delay telling the millions of middle-class investors whose lives have been destroyed about this advance, the better off we are all are. Every single one of us.

    I have been saying over and over and over again for 11 years now that we should be sharing what we have learned together with everyone, that we should be working to get this all written up on the front-page of the New York Times.

    How much help have you offered me?

    How much help has Bogle offered?

    Or Bernstein? Or Swedroe? Or Ferri?

    This is not a one-man job. The Stock-Selling Industry has spent hundreds of millions promoting Buy-and-Hold. I need a few hundred million working things from the other side of the table.

    Do I care whether you go to prison or not if we get the word out on the first truly research-based investing strategy?

    Why the heck would I care? It’s a trivial matter to me. If you want a piece of paper with my name on it recommending against prison sentences, I will sign it.

    But do you think that’s going to do the trick?

    That’s the rub.

    I don’t believe that there are any words that I can say that will do the trick at this point in the proceedings.

    If you have something that you want me to say, I will say it. But I will not make false promises to you. That would be cruel. I have to say what I believe. There’s no other way to play it.

    I am certain re one point. Whatever prison sentence we are talking about today, we are talking about a much longer prison sentence if this all comes out following the next price crash, when we will be in the Second Great Depression.

    My focus is avoiding that scenario. My job is to pull us all together before that happens. My job is to REDUCE your prison sentence to the greatest extent possible.

    What have you done to make it happen?

    Anything at all?

    Don’t complain to me when I am doing all the work to make things turn out as good as possible for every single person involved and you are doing nothing.

    My warmest wishes to you, old friend.

    Rob, the Fellow Trying to Pull Everyone Together So That We Avoid the Tragedy of Going Into the Second Great Depression (and Getting Precious Little Help From the Goon Community)

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