“People Are Scared. They Will Become Less Scared as They Start to See a Payoff for Endorsing Valuation-Informed Indexing and for Coming Forward With Strong Words of Warning re the Dangers of Buy-and-Hold.”

Set forth below is the text of a comment that I recently put to a discussion of an earlier blog entry here:

I’ll put forward another answer, focusing on one aspect of what you say above that contains a tiny bit of a real and legitimate point.

Over and over again you make the point that even people who agree with me don’t come here to post. That is true. And it is certainly an odd reality. I certainly have to give you that much.

It’s not because of any deficiency in the Valuation-Informed Indexing concept. If that were the problem, someone would have identified the deficiency in 11 years. Nothing of that nature has ever been put forward.

People are afraid.

There is a Social Taboo that blocks us all from telling the truth about stock investing. The bull market of the late 1990s caused the economic crisis. We all played a part in that. We either participated in the bull or failed to speak up in opposition to it in clear and firm and uncompromising language. We have hurt ourselves and our families and our friends and our country in very serious ways. So we are ashamed.

We don’t want people reminding us of our shame. I never shut up about it. So some people hate me. Others don’t hate me but tune me out. Others suggest that I say things differently. And even people who think my stuff is amazing rarely advocate on my behalf or come here to post or whatever.

That doesn’t mean that I am doing something wrong, Trebor. It illustrates how dangerous Buy-and-Hold is.

Look at the mess it has gotten us into!

Once we create a bull market, we can’t get out of it. We come to feel shame for what we did and then we engage in these endless cover-ups. For what freakin’ purpose??????

I get it that people don’t like hearing what I have to say. I get that loud and clear. <b>But what I am saying is important. What I am saying very much needs to be said.</b> If there had been enough people saying what I am saying going back to the mid-1990s, we never would have created an insane bull market in the first place. We need more people saying this stuff, enough so that it comes to seem normal and no longer shocks people. We certainly don’t need fewer.

When we move to Valuation-Informed Indexing, we all win. Every last one of us.

Yes, I guess there is a bit of embarrassment for the Buy-and-Holders in acknowledging that they got some things wrong. But it doesn’t have to be such a huge freakin’ deal. That’s on them, not me. And, once we make the transition, we never need to go back. It is a one-time thing. It reduces the risk of stock investing by 70 percent. So is it not worth it 100 times over?

We cannot get from where we are to where we all want to be without someone saying these things, Trebor. So it’s not like there are any other options.

If we don’t make the switch, our economic system collapses. A good result, in your assessment? Please be honest.

When you know that you have to do something and there is absolutely no way around it, the thing to do is just to do it and get it behind you. I could be wrong about that. But I’m not, you know? I’m obviously right about that one.

People are scared. That’s the story.

They will become LESS scared as they start to see a payoff for endorsing Valuation-Informed Indexing and for coming forward with strong words of warning re the dangers of Buy-and-Hold.

We need to see prison sentences for those who have posted in “defense” of Lindauer and Greaney, Do you not see how that helps us all out? After the announcement of the prison sentences, people are going to be a whole lot less likely to put forward death threats or to demand board bannings or to engage in tens of thousands of acts of defamation or to threaten to get academic researchers fired from their jobs. I don’t see how any sane person could even question that.

And we need to start awarding big financial sums to those who advocate Valuation-Informed Indexing and to give them Nobel prizes and Pulitzer prizes and steak dinners and lots of links to get their blogs high on Google and all this sort of thing. When I get that $500 million settlement payment, every financial blogger on the internet is going to look into Valuation-Informed Indexing. Why the heck wouldn’t they?

The problem we have today is that The Buy-and-Hold Mafia has scared people with its ruthlessness. We need to flip it. We need to start holding people who recommend Buy-and-Hold strategies responsible for their behavior and providing incentives for all in this field who give honest and accurate and research-backed investing advice. What you incentivize, you get more of. We will see more people posting words in support of me when we start rewarding those who work up the courage to do so.

Does that all not make a good bit of sense to you, Trebor?

Rob the Sensible

Comments

  1. The Pink Unicorn says

    We keep hearing about your fantasy of getting $500 million and you watching all those that don’t agree with you going to prison. It has not happened, nor will it. Repeating it over and over again will not make it happen.

    No one is scared. We are all big girls and boys and will be just fine.

  2. Trebor Martin says

    Rob

    Have you so little to say that you have been reduced to regurgitating old comments and responses as new blog entries?

    Trebor

  3. Rob says

    We are all big girls and boys and will be just fine.

    So you say, Pink.

    I obviously think otherwise. I believe that you ARE going to prison. And I view you as a friend and so that belief causes me to feel pain. So I do feel an obligation to do what I can to see if I can get that prison sentence reduced a bit.

    Please know that I wish you the best of luck in all your future life endeavors, in any event.

    Rob the Goon Lover

  4. Rob says

    Repeating it over and over again will not make it happen.

    No, it won’t.

    But how about a 65 percent price crash, one that puts us in the Second Great Depression?

    I believe that that just might make it happen. So I soldier on.

    My best wishes to you and yours.

    Rob the Future-Minded

  5. Rob says

    Have you so little to say that you have been reduced to regurgitating old comments and responses as new blog entries?

    The comments are recent ones, Trebor.

    They make important points re where our discussions are headed. I want to highlight them.

    A comment doesn’t get assigned a Category. So people who come to the site following the next crash will have a hard time finding them all. Blog posts are assigned to Categories under the WordPress system and are therefore easier to locate.

    My usual practice is to post the responses I receive to my e-mail campaign until I fall too far behind on these sorts of comments. Then I post comments like this until I fall too far behind on the responses to my e-mail campaign. I try to balance the two types of posts (the ones providing links to my Value Walk column get mixed in too).

    Starting next year, I am going to try to mix in as well the e-mails that I get from readers of the site asking questions about how to implement Valuation-Informed Indexing strategies and my responses to those questions. I have several hundred of those that I want to report on.

    All of these types of materials help to spread the word about the true cause of the economic crisis and about how millions of middle-class investors can invest in stocks in a virtually risk-free way. I love this stuff. I see the shift from Buy-and-Hold to Valuation-Informed Indexing as the biggest advance in our understanding of how stock investing works ever achieved in history. I am humbled to be playing the role that I am playing in bringing about the shift.

    My warmest wishes to you and yours.

    Rob the Humbled

  6. Rob says

    I’ll be speaking at the Ignite sessions, Evidence. The idea here is that you need to present 20 slides over the course of a five-minute presentation (15 seconds per slide). I think that will be a kick. My topic is: “How to Become the Most Hated Poster on the Internet — in Five Easy Steps!”

    I applied for a presentation on “How to Win Big-Name Endorsements.” They are publishing an article by me on that theme in the newsletter for the conference. But they turned me down re the presentation.

    If any of you Goons elect to make the trip to St. Louis, I’d be happy to get together for lunch or coffee or whatever.

    Take good care, man.

    Rob the Hated

  7. Rob says

    I believe they have a hook that comes out, Evidence. These Ignite people don’t fool around. I don’t even control the projector. An Ignite person does. If you are still talking about Slide One when Slide Four is on the Projector, it’s just too bad for you, you know? It will be a challenge for me, to be sure.

    I wouldn’t be shocked and amazed if I saw the hook coming for me at about the time I say the words: “So with that brief introduction, I am now ready to proceed to the actual presentation.”

    Oh, my!

    Rob the Long-Winded

  8. Rob says

    They’re doing it in a room that doubles as a bar.

    So at least I will be able to drown my troubles afterwards.

    All part of the wonderful game.

    Rob the Player

  9. The Deleted plop contributor says

    Rob,

    Could you please provide us a list, by name, of everyone you believe should go to prison as well as for those that you believe should be paying you your requested $500 million.

  10. Rob says

    I will be suing those who have done harm to my business, Deleted. If someone says that Buy-and-Hold is the greatest strategy ever known to humankind, that is of course 100 percent positive and constructive and life-affirming. If someone threatens to kill my wife and children if I continue posting honestly on safe withdrawal rates, that person pays me damages. If someone demands that I be banned from an investing site solely because I pointed out an error in a retirement study, that person pays me damages. If someone advances tens of thousands of acts of defamation as a means of intimidating me or people who have expressed support for my work, that person pays me damages. If someone threatens to send defamatory e-mails to an academic researcher who has co-published Nobel-prize-quality research with me, that person pays me damages.

    The names will be listed in the legal papers. I will meet with a legal team following the next price crash and will share the Post Archives with that team. The lawyers will make decisions as to who should be sued and for how much. That’s their job.

    I don’t feel comfortable expressing a personal opinion re who should go to prison and who should not. The matter of civil liabilities is personal to me. So I feel that I can express a view re that one. The matter of prison time is something we need to debate as a society. My personal view is that we want to keep the prison sentences as limited as possible. If we start getting involved in revenge stuff, we will tear our society apart with negativity. There obviously have to be prison sentences. The 11-year cover-up of the errors in the Old School SWR studies is the biggest act of financial fraud in the history of the United States and people went to prison over much smaller things. So we are going to need as a society to make a statement that includes prison sentences. But I think it would be a mistake to get carried away with that aspect of things.

    I’ll give one example to illustrate the point.

    Jack Bogle is a hero to me. I learned what I needed to know to report on the errors in the Old School SWR studies by reading Bogle’s book. There has never been anyone in this field who cared as much about the ordinary middle-class investor. My dad loved Bogle and taught me to love him. There would be no Valuation-Informed Indexing but for Bogle’s many huge contributions.

    All that said, the reality is that Bogle has committed financial fraud in an objective sense. He knows about how Mel Lindauer uses threats of physical violence and smear campaigns to keep people from talking about the 11-year cover-up at the Bogleheads Forum. He has an obvious responsibility to take action. He has not done so. For many years. The fact pattern here is not good for Old Saint Jack.

    There’s yet another factor that needs to be considered. There is a wealth of evidence indicating that Bogle is suffering from cognitive dissonance. He did not wake up one morning and say to himself: “Wouldn’t it be cool if I could bring the U.S. economy to its knees by promoting the purest and most dangerous Get Rich Quick scheme in U.S. history?” If Bogle took a lie detector test and was asked “Do you think Buy-and-Hold caused the economic crisis?”, I think he could answer “No” and not cause the buzzers to go off.

    To have financial fraud, you have to have bad intent. Does Bogle have bad intent? He does and he doesn’t. It’s a sign of bad intent that he says positive stuff about Lindauer. He empowers the Goons when he does that. But Bogle’s views about stock investing are just misinformed (in my view!), not evil. So there are different ways to look at this question.

    There’s no one other than me talking today about Bogle going to prison. So he is safe for the time-being. But what happens following the next price crash? I can see things getting very, very ugly at that point. For prices to crash, people need to give up on Buy-and-Hold. When millions of people give up and lose most of their retirement money, they are gong to be angry and they are going to be looking for people to hang from a tree. I think it would be fair to say that Old Saint Jack is an obvious candidate.

    My guess is that I will be the one trying hardest to save Jack’s neck at that time. Partly that’s because I love the guy. Partly it’s because I just don’t like to see ANYONE go to prison. And partly it’s because I think our nation is going to be in dire need of healing at that time. But I cannot dismiss the idea of prison time for Jack out of hand. If I do that, I lose credibility with the millions of middle-class people whose lives are in the process of being destroyed because of Jack’s continued promotion of Buy-and-Hold and because of Jack’s continued support for the Goons who are responsible for the 11-year cover-up.

    I need to evidence balance in all I say re these matters. My hope is that Jack will do things that put him in a better light and that the millions of people who have lost money because of his mistakes (that’s truly what I think they are at the core) will be appeased by positive actions on his part. If that doesn’t happen, that doesn’t happen. But I sure don’t want to say anything here that serves to diminish the chances that it will happen.

    The motto that I follow is to be as honest as it is possible to be without crossing the line and being uncharitable while also being as charitable as possible without crossing the line and being dishonest. I believe that if we all (including my good friend Jack!) followed that motto that we would end up in a good place at the end of the day. We have seen some ugly stuff over the first 11 years of our discussions. We have seen ten times more magical, wonderful, amazing, exciting stuff. So I want to encourage all who are reading these words to focus on the positive side of the story. We jeopardize getting to the good place where deep in our hearts we all truly want to be when we let our negative emotions gain the upper hand.

    I hope that helps a bit, Deleted.

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

    Rob, the Fellow Working His Butt Off to Get Jack Bogle’s Prison Sentence Reduced or Possibly Even Eliminated Altogether (And Getting Precious Little Support From Old Saint Jack for His Efforts to Do So!)

  11. The Deleted plop contributor says

    Rob said” If we start getting involved in revenge stuff, we will tear our society apart with negativity”
    But Rob, your entire campaign is built on revenge to those that don’t agree with you. You also don’t have any facts to back up your allegations.

    This all seems to be a waste of time, except for its entertainment value.

  12. Rob says

    We don’t agree, Deleted.

    I wish you well.

    Rob the Friendly But Firm (When It Comes to Issues of Personal Integrity) Poster

  13. canyon wanderer says

    can you explain how a lay investor, like me, can use VII? when do i buy and sell? what do i buy and sell?

  14. Rob says

    There’s only one difference between Buy-and-Hold and Valuation-Informed Indexing, Canyon. Buy-and-Holders stay at the same stock allocation at all times, permitting their risk profiles to get wildly out of whack by failing to adjust their stock allocations in response to big swings in stock prices. Valuation-Informed Indexers change their stock allocations as needed to keep their risk profiles roughly constant.

    I wish you all the best of luck with it.

    Rob

  15. Rob says

    What metrics do you use to set your allocation as a Buy-and-Holder, Canyon?

    You will use all the same ones plus one that tells you how much of an adjustment to make for the effect of valuations.

    You will have zero problem when Valuation-Informed Indexing is being discussed at every investing site on the internet. The problem is the Buy-and-Hold Mafia. They have used their power and money to keep middle-class investors in the dark about what the peer-reviewed academic research in this field really says. So anything other than GRQ/Buy-and-Hold sounds strange to you.

    There’s nothing even a tiny bit strange about going with a research-based approach. You consider price when you buys cars and bananas and sweaters, do you not? If this field were not 100 percent corrupt, that’s what all the experts would be telling you to do when buying stocks as well.

    It’s important to understand that the thing those who recommend Buy-and-Hold strategies are truly expert in is marketing. A genuine expert stays up to date on the academic research.

    My best wishes to you.

    Rob

  16. canyon wanderer says

    instead of worrying about what every other internet forum may or may not be doing, why not devote some time here to explain how wonderful VII is?

  17. Rob says

    The peer-reviewed research that I published with Wade Pfau tells the story of how wonderful Valuation-Informed Indexing is, Canyon. We show that by taking valuations into consideration when buying stocks, you reduce the risk of stock investing by 70 percent while also increasing returns dramatically. That’s investor heaven. It doesn’t get any better than that.

    The problem is that VII is too big an advance. It makes the Buy-and-Holders feel bad. It’s not my intent to make them feel bad. But that’s how it is.

    And people do not trust something that they hear from only a few sources. People wonder — If the research really says this, why doesn’t John Bogle say that? And why doesn’t Bill Bernstein say that? And why doesn’t Scott Burns say that? And why doesn’t Larry Swedroe say that?

    We need everyone telling the same story. Everyone in this field should be familiar with the research. So everyone should be telling the same story. That would make all investors feel a lot more comfortable in giving up Buy-and-Hold.

    I’ll let you in on a little secret. Bogle and Bernstein and Swedroe and Burns and all the others WANT to be telling the truth. If they could wave a magic wand in the air and just have a do-over, they would take it. But they feel stuck. They have incurred huge financial liabilities. They have committed felonies and are afraid that they will be serving prison sentences. That’s the only thing holding us back from bringing the economic crisis to an end and entering the greatest period of economic growth in history.

    We all want the same thing, Canyon. None of the Buy-and-Holders got into this field with the aim of bringing the U.S. economy to its knees. They all want to help people. They all want to do good work.

    Instead of asking me why do I keep trying to help all these people, you should be asking yourself why you do NOT seem inclined to help them. We all are in the same boat. We all should be trying to help each other.

    That’s my sincere take re this important matter, in any event.

    Rob the Helper

  18. Rob says

    I’ll give you a concrete example, Canyon.

    When Lindauer is trying to intimidate people into not posting honestly re the academic research at the Bogleheads Forum, he cites his relationship with Bogle. Bogle says nothing, leaving the impression that the abusive tactics being employed are okay with him. This scares people. People know that Bogle is a powerful and wealthy and well-connected man.

    We need to see this change. We need Bogle helping out the good guys.

    There is no downside to letting people know what the research says. That’s a win/win/win/win/win.

    But if Bogle fears a prison sentence, how do we get him to come around?

    The cover-up has gone on too long. The longer it goes on, the more scared people are.

    I have done everything I can think of to make the transition as easy as it possibly can be for Bogle and all my other Buy-and-Hold friends. But they feel they are trapped. They feel that they have painted themselves into a corner.

    I focus on that because that is our ONLY problem. The research findings are an amazing steps forward. All that is good stuff piled on top of good stuff piled on top of good stuff.

    But we need to find some way to make the Buy-and-Holders feel less afraid of what will happen to them when they come clean. If you have any suggestions, I would sure like to hear them.

    I am open to anything short of committing a felony myself. I won’t say that the safe withdrawal rate is always the same number since it would obviously be financial fraud for me to say that. But I am open to just about anything else.

    Please let me know if you come up with anything.

    Rob, the Fellow Working Hard to Get the Buy-and-Holders Out of the Corner They Have Painted Themselves Into

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