“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.”

Set forth below is the text of a comment that I recently put to another blog entry at this site:

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

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)

Comments

  1. Evidence Based Investing says

    If I could wave a magic wand in the air and make the lawsuits go away, I would do it, Pink.

    No magic wand is needed because the lawsuits don’t exist.

    They are a figment of your imagination.

  2. Rob says

    The lawsuits don’t exist today, Evidence. But what do you think is going to happen after the next price crash?

    Those who live by emotional investing strategies die by emotional investing strategies. The same emotion that causes people to hold back from filing lawsuits today will push them forward at a rapid pace following a 65 percent price drop.

    There were no charges brought against Bernie Madoff until his investors lost money, even though his fraud was so obvious that an accountant had written a letter to the SEC spelling out in detail that the numbers he used were not just dubious but outright impossible. How is Buy-and-Hold any different? The errors in the Old School SWR studies were discovered in May 2002. They are being covered up to this day. No lawsuits? Huh?

    There will be lawsuits and there will be prison sentences, Evidence. The problem from my perspective is that there may well be TOO MANY lawsuits and TOO MANY prison sentences. A few lawsuits and a few prison sentences here and there are a good thing as hearing about them keeps the rest of us honest. But too many coming all at one time can cause a collapse of the entire economic and political system. That is in no one’s interests.

    The right way to have played this was to have brought the lawsuits when it first became clear that they were needed. The delay has made the problem much worse because the civil liabilities are now much larger than they would have been and the prison sentences we are going to see are much longer than they would have been. We have done no favors for our Buy-and-Hold friends by holding off on taking effective action for so long.

    Humans!

    Rob, the Guy Trying to Help Out His Buy-and-Hold Friends to the Greatest Extent Possible Given the Circumstances That Prevail Today

  3. Evidence Based Investing says

    But what do you think is going to happen after the next price crash?

    The same thing that happened after the last two price crashes.

  4. Questions which have no chance at all of being answered says

    Did you sleep through the 53% crash that hit bottom in 2009? Where were the buy-and-hold lawsuits? Why isn’t John Bogle in prison? And most importantly, where is your multi-million dollar judgement?

  5. Rob says

    The same thing that happened after the last two price crashes.

    That probably is what you really do believe. I can give you that much.

    I do not believe that.

    If you believe that the price of stocks matters (there is now 32 years of peer-reviewed academic research showing this to be so), then the worst possible thing that could happen is that large numbers of investors could come to believe that price doesn’t matter. That’s what has happened. We did not have Shiller’s research when the Buy-and-Hold idea was developed. And the people who promoted Buy-and-Hold were too proud to acknowledge their mistake when it was uncovered. So we pushed stock prices to levels never seen before in U.S. history.

    Every time we have seen a P/E10 of 25, we have seen an economic crisis. The one time we touched 33, we saw a Great Depression. This time we hit 44. We are looking at a Great Depression of twice the length and twice the depth of the one that began in 1929.

    It’s going to be written up in all the papers!

    The reason why everyone is not working to avert it today is that most think as you do, that stock price changes just sort of happen and that you deal with them the best you can and move on. Shiller’s research (confirmed by 32 years of follow-up research) shows that that is not how it works. It is the Buy-and-Hold “idea” (that investors don’t need to consider price when setting their allocations) that causes price crashes and economic crises. We would all know this today given the 32 years of peer-reviewed academic research showing it to be so but for the brutal and criminal acts employed by the Buy-and-Hold Mafia to keep millions of middle-class investors from learning what the research really says.

    You “believe” what you say above in one sense. You have convinced yourself that there is a chance that you will not go to prison for your many acts of financial fraud (a felony). I can give you that much.

    But you lack confidence in this belief. You show this with every post you put forward. If you had confidence, you would not favor the use of death threats and you would not favor the use of board bannings and you would not favor the use of tens of thousands of acts of defamation and you would not favor the use of threats to get academic researchers fired from their jobs. You are worried. Actions speak louder than words.

    I wish you well. That’s about all that I can think of to say to someone in your position. If there ever comes a time when we can work together to get your prison sentence shortened a bit, I hope you will contact me. I would be happy to do what I can do.

    Take care, man.

    Rob the Confident (Or So He Tells Himself!)

  6. The Deleted plop contributor says

    No one wants to promote your market timing get rich quick schemes. No one believes in your phony lawsuit mantra and no one is going to jail.

    Get a life, loser.

  7. Rob says

    Did you sleep through the 53% crash that hit bottom in 2009? Where were the buy-and-hold lawsuits? Why isn’t John Bogle in prison? And most importantly, where is your multi-million dollar judgement?

    These are intelligent questions.

    We are halfway through a PROCESS.

    At the high, we were at a P/E10 of 44. At the low, we are always at a P/E10 of 8. We are now in the low 20s. That’s a big change from 44. But it is another big change going to 8. We are halfway through the process.

    No one got sued in the 2008 drop. That’s so. But we saw VERY BIG CHANGES with that drop. The level of emotionalism in the market diminished dramatically. I was effectively banned at just about every personal finance blog prior to 2008. Since that drop, I have had Guest Blog Entries posted at scores of places that wouldn’t give me the time of day pre-2008. We have already seen huge changes.

    We have not yet seen the amount of change needed to get people sent to prison. That much is so. But why would you think that is not going to happen following the drop to 8?

    Please consider what a drop to 8 means. It means that EVERYONE sells. You can’t get to 8 without massive, insane selling. When the P/E10 is 8, stocks are selling at half of their real value. Please consider what that signifies. We all want to be able to retire. To have a P/E10 of 8 means that we are deliberately setting the price of our portfolios at HALF of their true value. Why would anyone do that?

    The answer is — There is no rational answer to that question. No one would choose to do such an insane thing. It will happen because, following the next crash, investors will no longer be sane. They will be mad. They will be furious. They will be out for blood.

    That’s why there will be lawsuits. That’s why there will be congressional hearings. That’s why there will be prison sentences.

    I am not advocating these things. I am saying that these things will evidence themselves. Angry people act in angry ways.

    The question we all should be asking ourselves is — How do we stop people from getting so angry?

    The answer to that one is — We tell them the truth!

    And there is not one of us, including the great (no sarcasm intended) Jack Bogle who possesses all truth within him. To tell the truth, we must permit honest posting by EVERYONE, Valuation-Informed Indexers and Buy-and-Holders alike.

    That’s why our system is set up the way it is. That’s why every board and blog on the internet has published rules prohibiting the tactics that have been employed by the Lindaurheads and the Greaney Goons. We don’t want people to get so carried away with their personal beliefs that they end up committing acts that down the road get them thrown in prison.

    You Goons have committed the felonies. So I cannot say it is wrong for you to be imprisoned. But I WILL say that you are not the only ones who did wrong things. Every site owner who failed to ban you when you committed felonies did wrong as well. You Goons deserved better. You Goons deserved journalists and site owners and investing experts and policymakers who would call you out on your garbage. You didn’t get that. For that, we all should be ashamed.

    We didn’t see prison sentences following the last crash. But we did see a lot of political turmoil. And we did see a lot of opening of minds to the idea that Buy-and-Hold is garbage. And we HAVE seen congressional hearings at the end of other secular bear markets (We didn’t see prison sentences but we did not have 32 years of peer-reviewed research showing that Buy-and-Hold can never work for even a single long-term investor at the end of earlier secular bear markets — that’s a big change from a legal standpoint).

    We are working our way through a process. It is to every single citizen’s benefit that we limit the prison sentences of our Buy-and-Hold friends to the extent possible. We do that by opening every board and blog to honest posting on safe withdrawal rates and scores of other critically important investment-related topics. We are the luckiest generation of investors that ever lived. We are the first generation that has access to peer-reviewed academic research showing us how to reduce the risk of stock investing by 70 percent. It is by telling people how to do that that we appease their anger. Appeasing the anger of the millions of middle-class people whose lives have been destroyed through the reckless and relentless and ruthless promotion of Buy-and-Hold investing strategies should be job #1 of every person who cares about the future of our economic and political system.

    My warmest wishes to you and yours.

    Rob, the Fellow Who Knows That He Is Part of the Luckiest Generation of Investors Who Ever Walked Planet Earth

  8. Rob says

    You are a coward. You continue to delete my posts that exposé you as a fraud.

    We don’t agree, Pink.

    I say that it is partly the fault of the site administrators who failed to honor their responsibilities to delete a percentage of your posts that you are on your way to a long prison term today.

    I will continue to delete all posts of yours that hurt you in serious ways and that offer no plus side to other readers of the site. I have permitted posts that will in all likelihood increase your prison sentence. But I have done that only when I saw some positive for others. In those cases, I have a balancing act to perform when deciding how to handle a post. When a post is pure garbage and offers no positives whatsoever, I see it as my duty to be sure that that post never sees the light of day.

    I have a saying — We Ban What We Fear.

    I fear the anger we are going to see in this country when millions of middle-class people discover what you Goons have done to them. I tell the story even though I fear the reaction because it is only by getting that story out that we are going to be able as a country to overcome this economic crisis. But posts that contain 100 percent filth have no place on an investing blog and I have zero desire to have my name associated with them.

    Take that sort of filth to some other internet where it is more welcomed, Pink. Every site that I am aware of on this internet has published rules prohibiting it.

    My best wishes to you and yours.

    Rob the Filth Deleter

  9. Rob says

    Get a life, loser.

    You’re one of them there Unemotional Investors, Deleted.

    I can tell.

    Rob the Truly Unemotional Investor (Or Is He?)

  10. The Pink Unicorn says

    Rob,

    Please explain why you delete posts that show the low savings rates of middle class Americans. Explain how that is filth.

  11. Rob says

    It’s filth because it has nothing to do with the subject matter of this thread.

    I’ve written an entire book on saving strategies. So I obviously believe that we need to increase the savings rate.

    But this thread is about something different.

    You degrade yourself when you pretend that you don’t know that this thread is about something different, Pink.

    And you degrade the readers of this site when you pretend that you believe that they are so stupid as to believe that the savings rate is the topic of this thread.

    We have all degraded ourselves enough. The errors in the Old School SWR studies became public knowledge in May 2002. Those studies should have been corrected within 24 hours. They should have been corrected regardless of whether the savings rate was low or high.

    That’s my sincere take, in any event.

    Rob the Advocate of a Higher Savings Rate (But the Opponent of Internet Filth)

  12. The Pink Unicorn says

    Rob,

    You are wrong. You opened up with a comment as follows:

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

    I pointed out AGAIN that the real problem is the low savings rate. Middle class America owns very little stock.

  13. Sanity says

    “It will happen because, following the next crash, investors will no longer be sane. They will be mad. They will be furious. They will be out for blood.”

    So you are clearly asserting that mob rule will overrun the legal system. This mob will imprison your critics, and richly reward you.

    Got it.

  14. Rob says

    Middle class America owns very little stock.

    Millions of middle-class people have lost their jobs in the economic crisis.

    It is not only stockholders whose lives are destroyed by the promotion of Buy-and-Hold investing strategies.

    We all have a stake in seeing that our economic system works and survives.

    Rob the Economist

  15. Rob says

    Middle class America owns very little stock.

    You don’t have to own much stock in a relative sense for it to play a big role in your hopes to be able to retire someday.

    When stock prices fall by five-sixths, that’s a loss of $5 million for the fellow with a $6 million portfolio and a loss of only $500,000 for the fellow with a $600,000 portfolio. But the loss of the $500,000 hurts more than the loss of the $5 million. The fellow who started with $6 million still has a portfolio of $1 million to live on. The fellow who started with $600,000 has only a portfolio of $100,000 to live on.

    The Buy-and-Hold Crisis has hurt millions of middle-class people in very serious ways. There will be prison sentences.

    Those of us who care about the future of our nation need to be working to see that those prison sentences are limited to the extent possible. That means opening every board and blog on the internet to honest posting on safe withdrawal rates and on scores of other critically important investment-related topics.

    Rob the Patriot

  16. Rob says

    So you are clearly asserting that mob rule will overrun the legal system. This mob will imprison your critics, and richly reward you.

    Mob rule is certainly a very serious risk. We saw hints of political instability (with the Occupy Wall Street and Tea Party movements) following the last price crash. The next one will hit much, much harder. The risk of political instability will be far greater.

    I don’t want the mob to imprison my critics. Political instability hurts all of us.

    I am the co-author of peer-reviewed academic research showing millions of middle-class people how they can reduce the risk of stock investing by 70 percent. It is by getting the word out about what the peer-reviewed academic research in this field says that we prevent mobs from forming. It is by enforcing the laws of the United States when they are violated by the Buy-and-Holders that we prevent mobs from forming.

    To get the word out, I need my good friend Jack Bogle to stand up on a stage and to say the words “I” and “Was” and “Wrong.” That gets the ball rolling. That gets us out of the awful place where the relentless promotion of Buy-and-Hold strategies has taken us and takes us to the wonderful place where deep in our hearts every one of us, Valuation-Informed Indexers and Buy-and-Holders alike, wants to be.

    I have sent Jack several e-mails asking for his help. He has not responded. Can you help me in my effort to deliver a good kick in the pants to Old Saint Jack, Sanity? It’s your country too.

    Rob the Pants-Kicker

  17. The Pink Unicorn says

    “Millions of middle-class people have lost their jobs in the economic crisis.”

    Brought on by debt, Rob and we see that middle class America is back to increasing debt instead of saving money.

    Economics is not your strong suit, Rob. I would never refer to you as an Economist.

  18. Rob says

    The economics profession is the source of the problem, Pink.

    They made up this concept of the Rational Man. People have known for a long time that it is nonsense. But it helps economists give people the impression that economics is a “science.” So they continue to push this garbage despite the fact that there is zero evidence that there is anything to it.

    Fama took the Rational Man concept and applied it to stock investing. When it was just economists writing about it in books, it was silly but it didn’t do all that much damage. Now we have millions of real, live people investing their retirement money according to this “idea.” Now we are seeing where failing to correct pure silliness can lead a nation over time.

    The good news is that the next price crash is the end of the Rational Man garbage.

    Let’s just hope we survive to enjoy the huge economic boom that will follow if we open the internet up to honest posting!

    Rob the Critic of Garbage Economic Theories

  19. The Pink Unicorn says

    Rob,

    It never ceases to amaze me as to how little you know and the extent at which you will go to try and rationalize your behavior.

  20. Rob says

    I see that as an emotional statement, Pink.

    I don’t know everything and I don’t claim to know everything.

    I have made many mistakes in my life and it could be that it is happening again.

    Does that help?

    It seems to me that it should.

    The fact that me saying that I could be wrong doesn’t help tells me that there is something of an emotional nature going on on your side.

    In any event, I certainly wish you the very best of luck with whatever investing strategies you elect to pursue.

    Hang in there, man.

    Rob, the Fellow Who Is Often Wrong and Who Thinks It Is Important That Everyone Reading These Words Knows It

  21. says

    Rob, why would the “stock-selling industry” be so strongly in favor of “buy and hold” when they could make more money through broker fees from active traders?

  22. Rob says

    I applaud the Buy-and-Holders for opposing active trading, Goon. I rank their finding that short-term timing doesn’t work as the second most important finding in the history of investing analysis.

    Part of the reason why the Buy-and-Holders don’t tell you that you need to consider price when setting your stock allocation is that they make money from it. They are essentially saying that stocks are worth buying at any price. That is obviously nonsense. But it is also obviously something that all industries would like us to believe about their product if they could get away with it.

    That said, I think it is a mistake to lean too heavily on the financial explanation. Prior to 1981, there really appeared to be support in the academic literature for Buy-and-Hold. So Buy-and-Hold did not start out as a money-making thing. It started out as something real and important. We wouldn’t have Valuation-Informed Indexing today had the Buy-and-Hold pioneers not built the framework on which it is built.

    One problem is that people in this field are excessively proud. They don’t like to admit mistakes.

    Another is that most of the people who work in this field do not have a background in human psychology. It is hard for them to understand how stock investing works in the real world. They are good at the things they are good at. But overvaluation is an emotional phenomenon and they are not at all skilled in understanding emotional phenomena.

    Another problem is that the Buy-and-Holders created a monster. Most investors believe that the numbers on their portfolio statements are real. It upsets them to learn otherwise. So the Buy-and-Holders have elected not to tell them.

    Yet another problem is the lawsuits and the prison sentences. The Buy-and-Holders painted themselves into a corner. They have known for a long time that Buy-and-Hold does not add up. But they rationalized. They told themselves: “Oh, how much off the mark could it be?” Now they see that they are in the soup once people find out they have been telling tales.

    Finally, there are many, many people in this field that want to tell the truth. But there are others who do not. If the ones who want to tell the truth do so, that ruins the cover-up for those who do not. So the ones who want to tell the truth have learned how to talk out of both sides of their mouths. They tell half-truths. That doesn’t get the job done. That doesn’t end the economic crisis. But the Buy-and-Hold Mafia is ruthless in its tactics and those who want to tell the truth tell themselves that they are doing the best they dare do given the hostility that will be directed at them if they come clean.

    I hope that helps a bit, Goon.

    Rob the Truth-Teller

  23. says

    Sorry, Rob, but the numbers on the portfolio statements are indeed real. If I was to take what’s in my 401K and convert that all to cash today I would have just as much buying power as the guy who had all that money in cash to begin with.

  24. Rob says

    If you were to convert it all to cash today, that is indeed so, Goon. But Buy-and-Holders don’t believe in converting to cash. They hold, remember?

    Stocks are priced today for a 65 percent price crash sometime over the next few years. So a portfolio priced today at $300,000 will be priced $100,000 in a few year’s time. The fellow holding $300,000 in cash will still be holding $300,000.

    This is why Buy-and-Hold never works in the long term. It is all based on an illusion, the temporary portfolio values we all see during insane bull markets.

    What do you think the word “overvalued” means, Goon?

    It means “mispriced.”

    A portfolio that has a nominal value of $300,000 at a time when stocks are priced at three times their real value had a real value of $100,000. This is why the Old School SWR studies get the numbers so wildly wrong. They don’t make adjustments for the valuation level that applies on the day the retirement begins. You can’t get numbers even close to accurate that way.

    This is intellectually simple stuff. It is emotionally difficult for Buy-and-Holders to accept. But it is not a tiny bit complicated.

    Rob the Simple

  25. Rob says

    By the way, you could NOT get the number on your portfolio statement for cashing in your portfolio today if we permitted honest posting.

    If we permitted honest posting, everyone would know not to give you that amount.

    It is the Ban on Honest Posting that has made the market dysfunctional.

    Fama presumed that investors would act in their self-interest. THey would if they could. But no one can act in his self-interest. To act in your self-interest, you need accurate information. None of us has access to accurate information until we lift the Ban on Honest Posting.

    Rob, the Fellow Who Wants Access to the Accurate Information He Needs to Act In His Own Self-Interest

  26. says

    Within the next few years. Are you willing to go on record as of September 3,2013 that there will be a 65% price drop within the next 3 years, Rob?

  27. Rob says

    Yes.

    That’s what the last 32 years of peer-reviewed academic research (based on 140 years of historical data) tells us.

    It might not be precisely a 65 percent price drop. It could be 50 percent. But the odds of it being 80 percent are as good as the odds of it being 50 percent. The most likely number is 65 percent. We should be looking for a price drop of something in that neighborhood.

    Rob

  28. The Pink Unicorn says

    Rob,

    If you REALLY believe in your position, you should be shorting the stock market.

    As we see time and again, market timing doesn’t work and is a failed get rich quick scheme.

  29. Rob says

    So the Dow closed at 14,833.96 today. I’ll round up and say you win if it hits 7,420 within the next three years.

    We all win if the 65 percent price drop causes us to open the internet to honest posting on what the last 32 years of peer-reviewed academic research says.

    Once we do that, we can tell people about the peer-reviewed research (with my name on it!) showing investors how to reduce the risk of stock investing by 70 percent. That should bring on the greatest period of economic growth in our history.

    It makes me want to cry that we need to see another stock crash and all the financial pain that goes with it to make this happen. But I try to accept that, if that is the way it is, that is the way it is.

    I wish you well, Goon

  30. Rob says

    If you REALLY believe in your position, you should be shorting the stock market.

    I couldn’t possibly disagree more, Pink.

    The same 140 years of historical data that shows that long-term timing always works and is 100 percent required of any investor hoping to have any realistic hope of long-term investing success also shows that short-term timing NEVER works and is essentially a quick route to investor suicide.

    It’s BECAUSE I believe in my position (which is that we should use the peer-reviewed academic research as a guide in forming our investing strategies — there is always that chance that it will NOT be 100 percent different this time!) that I am as strong an opponent of shorting the market as I am of following Buy-and-Hold strategies. Both “strategies” have truly horrible track records.

    Rob the Shorting Fool (Not!)

  31. Rob says

    As we see time and again, market timing doesn’t work and is a failed get rich quick scheme.

    If you are talking about short-term timing, we are soul brothers.

    If you are talking about long-term timing, you need to familiarize yourself with the last 32 years of peer-reviewed academic research in this field. I can assure you that there is precisely zero truth to the claim you sometimes hear from the Wall Street Con Men that they have discovered an alternate universe where there has been one or two investors who obtained good results in the long-term without engaging in long-term timing.

    If they had discovered such an alternate universe, surely they would be building spaceships to help us to get to it at this very moment.

    What’s the story with the lack of spaceships, Pink?

    Rob the Astronaut

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