Set forth below is the text of a comment that I recently put to another blog entry at this site:
We cannot ignore the Goons, Pink. The Goons are a big part of the story.
When the book “A Random Walk Down Wall Street” was published in 1974, Buy-and-Hold was the state-of-the-art strategy. People truly believed in those days. There was genuine peer-reviewed academic research that at least appeared to support the Buy-and-Hold strategy.
Buy-and-Hold was discredited in 1981, when Shiller published his research showing that valuations affect long-term returns.
Most of us didn’t immediately see the implications. This was a shock. Our minds were wrapped around the old paradigm. We minimized the importance of the breakthrough. We rationalized. We suffered cognitive dissonance.
There were obviously exceptions, however. There were people trying to lead us in the right direction — Shiller, Grantham, Arnott, Smithers, Hussman, and on and on.
Why wasn’t the study that Wade and I did together done by someone else in all those years?
I wasn’t around. So I cannot say with certainty or precision. But I can sure offer a general guess.
It was made clear that any researcher who published research showing the huge implications of Shiller’s breakthrough finding would find his or her career ruined by The Buy-and-Hold Mafia. Signals were sent. Signals were received.
We need to hear about all that. Books need to be written about the intimidation tactics that were employed in those years to keep millions of middle-class investors from learning how to reduce the risk of stock investing by 70 percent.
But I wasn’t part of the story then. I entered the story on the morning of May 13, 2002.
What did I represent?
I represented a new kind of threat to The Buy-and-Hold Mafia.
I was some guy whose primary expertise in this field was that I had figured out how to post junk on the internet. You couldn’t threaten to destroy my investing advice career because I didn’t have an investing advice career. You couldn’t threaten to destroy my career as an academic researcher because I didn’t have a career as an academic researcher.
What to do, what to do?
Enter –
The Linduaerheads and the Greaney Goons.
Did Jack Bogle and other powerful people in this field lend direct encouragement and support to the Goons? We don’t know for certain. We don’t know details. But all that will come out in the congressional hearings and in the criminal and civil trials. People will be asked questions under oath and we will hear very different answers than the nonsense gibberish we have been hearing on discussion boards for 11 years now.
The Goons are part of the story. The Ban on Honest Posting could not be extended in the age of the internet without the “work” of you Goons. So the smelly garbage that those who have posted in “defense” of Mel Lindauer and John Greaney have brought to the table is part of the story.
It is obviously not the main event. The main event is the finding that we can reduce the risk of stock investing for millions of middle-class people by 70 percent just by opening the internet to honest posting on safe withdrawal rates and other critically important investment-related topics.
But the Goon story is a big part of the story of how our gangbusters economy happened to be cratered and how millions of people happened to find themselves out of work.
So I will continue to report on that story.
While also reporting on the more important story — the breakthrough substantive findings that have been the product of the first 11 years of our discussions of the realities of stock investing.
I naturally wish you all the best things that this life has to offer a person, Pink.
Rob the Substance Guy (Who Understands That It Would Not Be Responsible to Ignore the Smelly Goon Stuff All the Same)
“It was made clear that any researcher who published research showing the huge implications of Shiller’s breakthrough finding would find his or her career ruined by The Buy-and-Hold Mafia. Signals were sent. Signals were received.”
Could you please provide a link to the 3rd party proof sources for this claim.
http://wp.me/PgmvI-1IX
and
http://wp.me/PgmvI-1Fr
(Copies of Both Articles Reside on a Disk Stored in My Safe Deposit Box)
Rob, the Keeper of the Post Archives
On what basis do you think there will be Congressional hearings over your disagreements with the Bogleheads? Other types of investors such as the Graham disciples have been able to espouse their views openly and without the sort of harassment that you allege.
NO ONE is speaking with 100 percent honesty on stock investing matters today, Goon. NO ONE.
I even apply that statement to myself. I TRY to say what I truly believe. I try very hard. But I know from experience that I do not always manage to pull it off.
We ALL are affected by what our peers say about us. And the Buy-and-Holders are so vicious and ruthless in their hateful comments about those who recommend research-based strategies that there is not one person alive today who has demonstrated a willingness to take them on.
That includes Robert Shiller, the Yale Economics Professor who published the research discrediting the Buy-and-Hold strategy 32 YEARS AGO. Shiller pulls his punches ALL THE TIME.
I am the person who discovered the errors in the Old School SWR studies over 11 years ago. That was one of the most important discoveries in the history of personal finance. Millions of middle-class retirements are at stake. NOT ONE OF THE DISCREDITED STUDIES HAS BEEN CORRECTED to this day.
Academic Researcher Wade Pfau worked with me for 16 months to correct this problem. He saw the need for the studies to be corrected. He wrote to the authors of one of the studies. The response of the Buy-and-Hold Mafia was to threaten to get Wade fired from his job. NO ACADEMIC RESEARCHER SHOULD EVER BE INTIMIDATED IN THAT WAY. We are talking about the biggest case of financial fraud in the history of the United States.
My job is to see to it that as few people as possible go to prison. The key to that task is getting some of the leading figures in this field (people like my good friend Jack Bogle) to come clean. When Bogle speaks out about the 11-year cover-up of the errors in the retirement studies, it is all over. The next day, we will see articles in every major newspaper letting people know that informed people in this field have known for YEARS now that Buy-and-Hold is a big pile of smelly garbage.
But Bogle is very afraid to speak out. He worries that, if he does tell the truth, the same sort of tactics that were used against Wade Pfau will be used against him. We are in a Catch-22. We are ALL afraid to post honestly. But we will all remain afraid to post honestly only so long as we all remain afraid to post honestly. Once a small number of us work up the courage to tell the truth about what the last 32 years of peer-reviewed academic research says, NONE OF US WILL BE AFRAID ANY LONGER. Because we all will see that the Buy-and-Hold Mafia cannot do a thing to a group. Their power to intimidate us comes to an end when a group of us vow to stick together and protect each other when the Buy-and-Holders attack us.
The Graham disciples don’t think that death threats are appropriate in discussions of stock investing. They don’t think that board bannings not justified by the published rules of the investing sites are appropriate. They don’t think that tens of thousands of acts of defamation are appropriate. They don’t think that threats to get academic researchers fired from their jobs are appropriate.
Do you hear the Graham disciples speaking out on those important issues?
Neither do I.
The Graham disciples are afraid to take on the Buy-and-Hold Mafia and all its power and wealth and connections.
All of us are.
But we cannot bring the economic crisis to an end without working up the courage to do so.
Please do all you can to help us all work up the courage.
Take care, my old (Goon) friend.
Rob, the Graham Disciple
Rob, some of the richest and most powerful men in the world are Graham disciples. They buy stocks and hope to hold them forever, but are willing to sell from time to time.
For the average Goon, the Boglehead, Buy and Hold works because it takes a lot of guesswork and emotion out of investing. When the market goes down, hold and keep contributing. Over time, you wind up with a very good ROI simply buying and holding index funds! IMHO your market timing ideas would simply bring the guesswork and emotion back into investing, and quite frankly that’s not a good idea for your average Joe.
We disagree, Goon.
I naturally wish you the best of luck in all your future endeavors.
Rob
Rob,
Those are just links to your own pages and not 3rd paty documentation.
Wade will confirm what he said in his scores of e-mails to me when he is called to testify under oath, Deleted.
I know my old friend well enough to know that it makes him sick to commit felonies. He has zero interest in adding perjury to the mix.
These are the last days of Buy-and-Hold. Advocates of strategies that inspire confidence in those who believe in them do not behave in this manner. There are no Valuation-Informed Indexers committing felonies to make the case for their preferred investing strategy.
I wish you well.
Rob