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