Valuation-Informed Indexing #155 — Critics of Buy-and-Hold Need to Form Communities Where Their Criticisms Are Fully Developed

I’ve posted Entry #155 to my Valuation-Informed Indexing column at the Value Walk site. It’s called Critics of Buy-and-Hold Need to Form Communities Where Their Criticisms Are Fully Developed.

Juicy Excerpt: I argued in one of my e-mails to Joachim that: “People are social animals. They need to hear others endorse an idea to have confidence in it. It would make a huge difference if there were a place where people could go to find that lots of knowledgeable folks believe in these ideas. There is huge power in community.”

Joachim agreed. He said:”I will keep my eyes and ears open. If you want to start such a [community] yourself, you can count me in as a contributor.”

I am putting this one high on my list of important projects to which I need to devote some time over the next year or two. It’s not enough for a small number of us to have learned what we need to learn to break free of the misconceptions of the Buy-and-Holders. We need to create a community in which our ideas can be openly discussed and refined and challenged and improved if Valuation-Informed Indexing is to achieve its true potential. I think that the time will soon be ripe for this initiative, if it is not already.

Comments

  1. Rob says

    It’s certainly what I am trying to do, Pink.

    I have not succeeded in building the community I want to see in place as of this moment in time.

    Thanks to you Goons! And your pals in The Buy-and-Hold Mafia!

    The investing advice that “works” for those giving investing advice is the opposite of the investing advice that works for those hearing the investing advice. Those giving advice receive a short-term financial benefit from going with a pure Get Rich Quick approach. We all are drawn to GRQ approaches and the appeal is intensely emotional. All salesmen know that the way to make a sale is to form an emotional connection with the sucker — er, the customer!

    The problem with Get Rich Quick is that, while it feels wonderful in the short term, it wipes you out in the long run. What works for the salesmen doesn’t work AT ALL for the customers. That’s why today’s investing advice is so poor. That’s why we are in an economic crisis today.

    The answer is to get the case for the true research-based approach (Valuation-Informed Indexing) well-known enough that anyone who calls himself an “expert” would be ashamed to be seen promoting Buy-and-Hold “strategies.” The peer-reviewed academic research has shown for 32 years now that there is precisely zero chance that a Buy-and-Hold strategy could ever work for a single long-term investor. The trouble is — most people do not know this! And the Buy-and-Hold Mafia very, very much wants to keep it that way! The Buy-and-Hold Mafia is on the hook for trillions in legal liabilities once people learn what has been done to them.

    My job is to get the word out.

    Today, we have a Catch-22. People are afraid to tell the truth about stock investing because the Buy-and-Hold Mafia will destroy them if they do. But the thing that gives the Buy-and-Hold Mafia the power to destroy them is that very few know the realities. If people knew what the research said, those who engaged in the tactics engaged in by the Buy-and-Hold Mafia (death threats, board bannings, tens of thousands of acts of defamation, threats to get academic researchers fired from their jobs) would be put in prison for these acts of financial fraud. But not enough know today to make an effective stand. And those who do know are destroyed if they speak up because they don’t have enough others speaking up for them.

    So, yes, we need a community where people openly speak the truth about what the academic research says without fear of what the Buy-and-Hold Mafia will do to them. Once we have a community, there’s not a thing the Mafia can do. They will have to flip themselves and start giving research-based advice. Which of course is exactly what deep in their hearts they very much want to do! So everyone wins once that community is in place. It’s a win/win/win/win/win.

    The hard part is — How do we get the darn bell on the cat?

    We need some people with influence speaking up. That’s it. Once we get an article on the front page of the New York Times, it’s over. We all win! Or once Bogle gives his “I Was Wrong” speech. Or whatever. It all comes to the same thing.

    I am sending 50 e-mails each day letting people in various fields (economists, academics, policymakers, bloggers, investing professionals, journalists, etc) know about the threats that were made by the Lindauerheads and the Greaney Goons to get my buddy Wade Pfau fired from his job because he published honest research in this field. Once that story gets big play, it’s over. The economic crisis comes to an end. We enter the strongest period of economic growth in our history. We all are working together to develop the first true research-based model and to mine more and more powerful insights from it.

    I want a big, honest community here. Just as I wanted a big, honest community at Motley Fool. JUst as I wanted a big, honest community at Early Retirement Forum. Just as I wanted a big honest community at Bogleheads. And on and on. That’s been the idea going back to the first day.

    It needs to be a community that is not controlled by the Wall Street Con Men. So long as what we all say is controlled by the Wall Street Con Men, our communities are negative forces rather than positive ones. The Bogleheads Forum today is encouraging Buy-and-Hold rather than warning people of its dangers. We obviously don’t need any more of that.

    So, yes, I am trying to build a community here, and yes, it has been a very, very, very, very hard thing to pull off.

    You know what?

    It’s worth it.

    When the community is in place, we will all be able to live richer lives than we ever dreamed of being able to live before.

    That includes you Goons.

    And that includes all of my good friends in the Buy-and-Hold Mafia. People like Jack Bogle. And Bill Bernstein. And Scott Burns. And Larry Swedroe. And on and on and on.

    All of those people got into this field because they wanted to help people. They wanted to do good and honest work. They cannot do it today. After I get this community off the ground (and after they serve whatever prison sentences we as a society determine are appropriate), they will be able to do it.

    It’s good stuff piled on top of good stuff piled on top of good stuff. It’s not even possible for the rational human mind to imagine any possible downside.

    So, yes, that is the goal.

    Do I wish it were an easier goal to pull off?

    I sure do. You got me re that one.

    But what’s the alternative?

    Engage in financial fraud myself? Huh?

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

    Rob the Community Builder

  2. what says

    How exactly are the goons keeping people from forming a community here? And how exactly will a ‘mafia’ crush those who try to post anonymously here?

    This sounds insane, because it is.

  3. Rob says

    This sounds insane, because it is.

    It’s insane in its way, What. But that’s the story of our economic crisis all the same.

    LOTS of things that the humans have done in the course of our time traveling through the Valley of Tears have been insane. And lots of those things did not appear to be insane in the minds of the people doing them at the time they were doing them.

    We are experiencing growing pains as a society. There was a time when we didn’t root our investing strategies in peer-reviewed academic research. Then we decided that that would be a good thing to do. It was indeed a very good thing. But, because we are human and prone to making mistakes in the early going, we made a mistake.

    Now we are in the process of figuring out how to correct that mistake. From one perspective, it sounds like an easy thing to do. Just correct the darn mistake. Move on. What could be easier?

    To understand why that has not happened, you need to think it through a bit.

    We have to correct all the textbooks.

    This was a mistake that cost lots of people lots of money. So there will be lawsuits. The people who will be the subjects of the lawsuits don’t like the idea of having to pay damages. These are rich and powerful and influential and connected people. They have ways of stopping the new knowledge from being spread to the millions of investors who need to learn about it.

    And some of the tactics that have been used are criminal acts. These people (including you!) don’t want to go to prison.

    So it’s not so insane after all.

    It appears insane on first glance. The benefits of going forward are so great. We all could retire many years sooner. We could reduce the risk of stock investing by 70 percent. We could bring the economic crisis to an end and launch the greatest period of economic growth in our history. We all want that. I am 100 percent confident that even you Goons want that.

    But how do we get what we all want without sending you Goons to prison and without seeing lawsuits calling for damages in the TRiLLIONS of dollars brought against the Wall Street Con Men who continue to promote Buy-and-Hold strategies to this day, 32 years after the peer-reviewed academic research was published showing that there is precisely zero chance that such strategies could ever produce good long-term results for even a single investor?

    I don’t have the answer to that one, What.

    I know we need to make the transition. I know we need to bring the economic crisis to an end. I know we need to permit honest posting on safe withdrawal rates and on scores of other critically important investment-related topics. I know that I want your prison sentence to be kept as short as it can possibly be kept given where things stand today. But I don’t have a magic wand. I don’t see any way to make things turn out precisely as we all want them to turn out.

    If you have any magical answers, I hope you will share them.

    Until I hear a magical answer, I am just going to continue to push to have things turn out as good as they possibly can for every single person involved. That means having you serve a prison sentence. But a SHORTER prison sentence than the one you would end up serving if we did not open the internet to honest posting on the dangers of Buy-and-Hold until after the next price crash.

    I hope you now see that this is not as insane as it first appears to be, What. It IS kinda, sorta insane. But there are wonderful things on the other side of The Big Black Mountain. And there are horrible things in store for us if we remain on this side for too much longer. So we very much need to be moving on.

    That’s my sincere take, in any event.

    I wish you all the best that this life has to offer a person, my old friend.

    Rob, the Fellow Writing the Chronicle of Our Kinda, Sorta Insane Journey from Belief in the Purest and Most Dangerous Get Rich Quick Scheme Ever Concocted By the Human Mind to the First True Research-Based Strategy

  4. Rob says

    And how exactly will a ‘mafia’ crush those who try to post anonymously here?

    You are making a legitimate point with your use of the word “anonymously” here, What. I have said on earlier occasions that people don’t speak up about the trickery of the Buy-and-Hold MAfia because they are afraid of what will be done to them and to their careers if they do. You are making the point that anyone who is afraid of what will happen to his or her career could post anonymously here. That’s so.

    It is fair to say that it is not ONLY fear that is holding us back.

    I’ve made the parallel before to the situation that applied in the days when people with black skin could not choose any seat on a public bus, but were required to move back to the section of the bus reserved for them.

    Why didn’t millions of people speak up about that? They knew it was wrong. It’s not exactly hard to figure out that that sort of thing is wrong. So how did we as a society “get away” with that sort of thing for so many years?

    Many were afraid to speak out, just as many are today afraid to speak out against Buy-and-Hold.

    But many didn’t speak out against racist laws even to their own friends. They weren’t afraid of their own friends, were they? Why didn’t they speak out?

    THEY WERE ASHAMED.

    They were too afraid to go public. They felt that racism was so ingrained in our legal system that there was zero chance that it could ever be overturned. So they rationalized. They told themselves that speaking out publicly was not going to do any good. That made them feel ashamed. Given their feelings of shame, they didn’t want to talk about this stuff with their friends any more than they wanted to go public. They kept it zipped.

    And many who agree with me that Buy-and-Hold is a big pile of smelly garbage keep it zipped today.

    We need an act that gets everyone’s attention. An “I Was Wrong” speech by Jack Bogle would obviously do the job. An announcement of your prison sentence would do the job. A front-page article in the New York Times about the Campaign of Terror would do the job.

    EVERYONE in this field wants the Ban on Honest Posting lifted, What. I learned about the errors in the Old School SWR studies by reading Jack Bogle’s book. I think it would be fair to say that he has at least an inkling that Buy-and-Hold is a big pile of smelly garbage or he never would have put the language in the book that taught me what I needed to know. But he also obviously does not feel comfortable coming clean today.

    It’s the same with Bernstein. Bernstein told us in an e-mail many years before the Wall Street Journal published an article on the errors in the Old School studies that anyone who was giving thought to using one of those studies to plan a retirement would be well-advised to “FuhGedDaBouDit!’ I think it would be fair to say that he at least suspects that Buy-and-Hold is a big pile of smelly garbage.

    It’s the same with Burns. Scott’s first words in response to my first e-mail to him were “You’re right.” He asked me for my telephone number because he wanted to do an interview with me and then write up the story in his column. Someone obviously reached him before that column was put to print. But I think it would be fair to say that our friend Scott Burns too suspects that Buy-and-Hold is a big pile of smelly garbage.

    It’s the same with Larry Swedroe. He was kicked off the Bogleheads Forum because he posted honesty there and Mel Lindauer did not take kindly to it. Then he came back with his tail between his legs and promised never, ever, ever to do it again and now he gets heavy promotion for all his books there. I think it would be fair to say that Larry has more than a rough idea as to why I say that Buy-and-Hold is a big pile of smelly garbage.

    The biggest reason why people don’t speak up is that they are scared.

    But, yes, there is more to it than that.

    Once people don’t speak up (either because they are scared or because they just flat-out don’t know – there are millions of ordinary people who have NO IDEA that there is 32 years of peer-reviewed academic research showing that there is precisely zero chance that a Buy-and-Hold strategy could ever work for a single long-term investor), they become ASHAMED that they have failed to speak out.

    Posting anonymously doesn’t help those who feel ashamed of having failed to speak out for so long, does it?

    Many people believe that we cannot win this battle. They believe that the Wall Street Con Man are just too rich and too powerful for anyone ever to get away with posting honestly on investing-related issues.

    Perhaps.

    But you know what?

    If those people are right, we are all going down anyway!

    So it doesn’t matter.

    If those people are right, the Wall Street Con Men are going down in the same Second Great Depression that is going to take What and that is going to take Rob. So it doesn’t matter!

    What matter is that we do have a chance DESPITE the power and wealth of the Wall Street Con Men.

    And what gives me hope is all the signs that I have seen that the Wall Street Con Men themselves want to see all this ugliness brought to a close.

    No one held a gun to Jack Bogle’s head and forced him to include in this book the words that showed me that the numbers in the Old School SWR studies were wildly wrong.

    No one held a gun to Scott Burns’ head and forced him to respond to my e-mail to him by saying “You’re right” and by asking me for my telephone number.

    No one held a gun to Bill Bernstein’s head and forced him to respond to Ataloss’s e-mail by saying that anyone using one of the Old School studies to plan a retirement would be well-advised to “FuhGedDaBouDit!”

    No one held a gun to Wade Pfau’s head and forced him to co-publish with me the most important research published in this field in 30 years, research that shows us all how to reduce the risk of stock investing by 70 percent.

    Rosa Parks refused to go to the back of the bus 10 years before the incident that made her famous as a symbol of the Civil Rights Movement.

    People were still too afraid and ashamed to come to her support in those days. We had to wait for another 10 years to pass.

    After the passage of another 10 years, people were ready. Then things happened.

    I won’t change the world of investing on my own power, What. It is going to be a community event.

    We are not ready as a community today to take this amazing step forward.

    We will be soon.

    My guess is that it is going to happen following the next price crash.

    I sure hope so!

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

    Rob, the Rosa Parks of Personal Finance

  5. what says

    So your conclusion for why no one posts here anonymously in your support is because they are ashamed?

    I see a lot of people on the Internet posting lots of shameful things. I don’t see how your post makes any sense. I think there is a much simpler and logical reason for why almost no one posts here.

  6. The Pink Unicorn says

    Rob,

    Take a step back and read you responses. First of all, you can even make a simple response. Secondly, your responses are just repetition of your speaking points and, in many cases, never answer the question directly. Third, It demonstrates that you can’t even have a simple discussion. How do you expect to have a community board in which people have a DISCUSSION when you end up posting 99% if the content. That is not a discussion. It is a lecture.

  7. Rob says

    Actions speak louder than words, What.

    Your words suggest a belief that my challenges to your belief in Buy-and-Hold do not threaten you.

    You have now put 11 years of behavior on the record showing that they threaten you very much.

    I can post anywhere. I can be outnumbered by Buy-and-Holders 10 to 1 and still prevail in a debate.

    You don’t feel that you can prevail when you are on the side with 10 against my 1. You have to have my hands tied behind my back too.

    You’re ashamed. And you’re fearful. And you’re angry. And you’re envious.

    I can help you feel better about yourself.

    But not without you taking the first step.

    I wish you all good things, in any event.

    Rob, the Fellow Who Enjoys the Confidence That Comes With Following a Truly Research-Based Strategy

  8. The Pink Unicorn says

    Correction: My post above should say that you “can’t” even make a simple response.

  9. Rob says

    I see a lot of people on the Internet posting lots of shameful things.

    I see a lot of people on the internet posting lots of wonderful, positive, life-affirming things.

    Those are the people who matter to me.

    Those are the people who built out boards.

    Rob, the Fellow Who Stands Up to the Lindauerheads and the Greaney Goons When They Fail to Honor the Promises They Made When They Were Permitted to Post at Our Boards

  10. Rob says

    you “can’t” even make a simple response.

    The question you asked is not a simple question, Pink.

    I gave an intelligent and informed and balanced response.

    If you truly care to understand what is going on, you should appreciate the effort and skill and knowledge that went into crafting that response.

    If you are playing stupid games and don’t care to understand the answer to your question, that’s on you.

    In that event, others who come along can read the question and answer and benefit from them.

    My job is to provide helpful answers to the questions posed. I did that. Your game-playing is on you. I didn’t ask you to play games. It’s not on me if you elect to do so.

    Rob the Non-Game Player

  11. The Pink Unicorn says

    “I gave an intelligent and informed and balanced response.”

    ROB……YOU STILL DON’T UNDERSTAND!!!! It is NOT balanced. It is your opinion and in this thread once again, your post makes up 90% of the content in this “discussion”. Nothing with you on your site is balance. It is always your opinion, with no consideration of other sources AND your posts take up over 90% of the content on the comments section alone. Also, notice that you NEVER allow anyone to have the last word. You always feel the need to make the last post on everything and in the event you have nothing to say or can’t figure out how to respond, you just delete the post so that it leaves your previous post as the last word.

  12. Rob says

    How do you expect to have a community board in which people have a DISCUSSION when you end up posting 99% if the content. That is not a discussion. It is a lecture.

    This is why I say that we need to open up every board and blog on the internet to honest posting on SWRs and MANY OTHER critically important investment-related topics.

    Today there are huge rewards handed out to those who help the Wall Street Con Men push their smelly Get Rich Quick garbage.

    And the thousands of community members who have expressed a desire to participate in honest discussions have been denied that basic right.

    We need to hold those who participate in abusive acts in “defense” of Buy-and-Hold accountable for their behavior. We need to hold them both civilly and criminally liable.

    And we need to say “thank you!” to those who work up the courage to post honesty about the last 32 years of peer-reviewed academic research.

    People respond to incentives.

    The fewer incentives we offer to those who push smelly Get Rich Quick garbage, the less we will see of it.

    The greater the benefits we offer to those who post honestly about research-based strategies, the more we will see of the good stuff.

    There will come a time when I won’t have to deliver any more lectures because you will be hearing about Valuation-Informed Indexing on every television program and in every investing magazine and on every investing web site.

    We have to start somewhere, Pink.

    We start with permitting one poster to post honestly re one topic.

    Then it grows. And grows some more. And grows some more.

    One day, you wake up and the smelly Buy-and-Hold garbage is buried 30 feet in the ground.

    What do you think would happen today if someone with black skin was told that he or she had to go to the back of the bus?

    That’s what will happen a few years from now to someone who threatens to kill another poster’s wife and children because that person reported the safe withdrawal rate accurately and honestly.

    Get Rich Quick is on the way out. Research-based investing strategies are the future.

    I am sure.

    Rob the Lecturer

  13. Rob says

    notice that you NEVER allow anyone to have the last word.

    I respond to the comments that are posted here, Pink. It’s called being polite.

    Often the response is: “Thanks for sharing your thoughts.”

    With you Goons, the comments often include acts of defamation or threats to kill family members or threats to get your Wall Street Con Men pals to sue me or whatever.

    In those cases, I call you out on the b.s.

    No apologies.

    I’ll do it every time.

    That’s the job.

    I wish you well, my long-time abusive posting friend.

    Rob, the Guy Who Calls Out Goon B.S. Every Time and NEVER Apologizes For Doing So

  14. Rob says

    It is your opinion

    That’s something new.

    Who ever thought that someone might dare to post his opinion on an internet discussion board or blog?

    What’s the world coming to?

    What will those crazy kids think up next?

    Rob the Newfangled

  15. Rob says

    with no consideration of other sources

    It’s not my place to make the case for Buy-and-Hold.

    It’s perfectly appropriate for people who believe in Buy-and-Hold to make the case for it.

    That ain’t me.

    Rob, the Most Severe Critic of Buy-and-Hold Alive on Planet Earth Today

  16. Rob says

    in the event you have nothing to say or can’t figure out how to respond, you just delete the post so that it leaves your previous post as the last word.

    I delete abusive posts whether they appear at the top of a thread, the bottom of a thread or in the middle of a thread. I don’t even take where the abusive post appears into consideration.

    It is my pledge to my fellow community members that I will continue deleting those posts.

    Please take good care, Pink.

    Rob, the Fellow With One Finger Always on the “Delete” Button

  17. Rob says

    your responses are just repetition of your speaking points

    That’s because both my responses and my speaking points reflect what I believe.

    The troubling thing would be if they didn’t match up.

    Rob the Consistent

  18. Rob says

    in many cases, never answer the question directly.

    I answer the questions put to me to the best of my ability.

    You don’t like the idea of taking human psychology into account when discussing investing strategies. So you view responses rooted in an understanding of the role of human psychology in investing success as “indirect.”

    My take is that it is impossible to respond in an effective or intelligent way to questions re stock investing without taking human psychology into consideration.

    You are free to ignore such considerations in your own thinking or in your own writings, Pink. I am not. For me to ignore such considerations would be dishonest.

    No can do.

    Rob the Student of Human Psychology and of How It Affects Long-Term Investing Success

  19. Rob says

    I think there is a much simpler and logical reason for why almost no one posts here.

    We disagree, What.

    Please take good care, my old friend.

    Rob, the Sayer of the Last Word

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