“Once We Get to the Other Side of the Big Black Mountain, the People Who Now Advocate Buy-and-Hold Are Going to Be the Most Vocal Proponents of Valuation-Informed Indexing. VII Is John Bogle’s Dream Come True!”

Set forth below is the text of a comment that I recently put to the Goon Central board:

we all know how to live our lives. 

We are soul brothers re this one, Dab. Common sense TRUMPS academic research in my book.

Common sense tells us that price MUST matter. All that the academic research of the past 32 years does is CONFIRM what common sense reveals.

The reason why I focus so much on academic research is that it was a MISUNDERSTANDING of the academic research that got us on the unfortunate path we are on today.

It is the Buy-and-Holders who came up with the idea of basing one’s investment strategies in the academic research. I LOVE them for that. That gets us away from all the marketing-oriented garbage. People will tell you anything to make a sale. The Buy-and-Holders came up with the solution to that problem. Peer-reviewed academic research is INDEPENDENT. It is REAL. We all owe the Buy-and-Hold Pioneers a great debt for their focus on peer-reviewed academic research.

They made a mistake. There was research published that really does show that short-term timing doesn’t work and they jumped to a hasty conclusion that long-term timing is not required either. Big friggin’ deal! The mistake means nothing. ALL pioneers make mistakes. It’s because they take risks to help us that they make mistakes. I APPLAUD their mistake.

That said, we need to CORRECT the mistake. We need to move forward in our understanding of how stock investing works. We move forward by acknowledging the mistake and putting it behind us.

Once we move forward, we will all be on the same side again, Dab. People will be writing about our findings hundreds of years from now. They won’t be writing about these disputes. They will be writing about the end product, they will be writing about WHAT WORKS. The Buy-and-Holders will be getting credit for designing the framework. They earned that. I have obviously never said different. I WANT them getting credit for the important work they really did do.

It is the Buy-and-Holders who make the Buy-and-Holders look bad today, not me. I want them on my side. I wanted to call this “The New Buy-and-Hold” or “Buy-and-Hold 2.0.” Those ways of referring to it tell the story of how it all derives from the work of the Buy-and-Hold Pioneers. I only started calling it Valuation-Informed Indexing after a good number of Buy-and-Holders indicated that they wanted no part of it. That was their call, not mine.

Common sense is important and research is important. Each is a check on the other. If your research defies common sense, you need to check it carefully to make sure it really is on the mark. And if the research discredits what common sense tells you, you need to check for any holes in the common-sense message. What you want is to have common sense and research working together.

That’s what we have with Valuation-Informed Indexing. Common sense says price MUST matter. The last 32 years of peer-reviewed academic research CONFIRMS that price always DOES matter. That makes it a lock.

All of the conflict that we have experienced is a result of the hard reality that we didn’t always know it all. There was a tine when good and smart people really did believe that long-term timing (taking price into consideration when buying stocks) was not required. Those people built careers around that idea. Now it hurts them to learn that they were wrong. I do NOT want to make them feel bad. But I know that they will end up feeling worse if they cause even more financial devastation. Deep in their hearts, the Buy-and-Holders want to do good work. We all need to work together to bring them to the place where that becomes possible for them once again.

Once we get to the other side of the Big Black Mountain, the people who now advocate Buy-and-Hold are going to be the most vocal proponents of Valuation-Informed Indexing. VII is John Bogle’s dream come true! This is what he was trying to achieve with his life when he was a young man. Now he has it and it is better than he ever dared to imagine it could be. We all just need to work together to get him to a place where he feels comfortable saying that out loud.

Common sense does NOT support the idea that price can be ignored when buying stocks, Dab. That idea caught on because of a mistaken understanding of what the peer-reviewed academic research in this field revealed (a mistaken understanding that dates to a time BEFORE Shiller published his “revolutionary” (his word) research. It’s not timing that doesn’t work, it’s SHORT-TERM timing that doesn’t work. Long-Term Timing ALWAYS works. Long-term timing is always REQUIRED.

To fail to engage in long-term timing when buying stocks is like telling a user-car dealer to please just sell you a good car and that any price he chooses to attach to it will be 100 percent fine with you and so there is no need for you to ask any questions about that aspect of the purchase. Huh?

When a large number of the participants in a market come to believe that it is not necessary to ask about price, that market collapses.

And here we are.

Rob

Comments

  1. Anonymous says

    I have a serious question:

    Why did you bother posting this? Even though at your best your are horribly redundant, circular, and repetitive, this ‘article’ takes the cake. There is not a new word, idea, concept, thought, or phrase in it. It doesn’t advance a thing, doesn’t provide any new perspective or information, and is a complete waste of time. Rob, if YOU can’t care about your output, then how in the world would you expect anyone else to?

    Oh, that’s right — you don’t. The purpose of your writing is to hear yourself talk, and give yourself an excuse for frittering away all of the potentially useful days remaining in your life, and not to actually help or even influence others. How sad is that?

    The New Year is coming, Rob. I can think of no better resolution for you to take than to seek the help you have obviously needed for some time now.

    Godspeed, and I do truly hope you somehow manage to find some joy this Christmas, in spite of your condition.

  2. Rob says

    The point being made in this blog entry is one of great importance, Anonymous. It is also a HIGHLY encouraging point. And it is a point that the vast majority of “experts” in this field have missed.

    If you truly don’t see it, you truly don’t see it. That makes me sad. But there’s nothing I can do about it other than to repeat the point and hope that the next time these wonderful words appear before you, they get through the walls of resistance and make a mark on your consciousness.

    Here are the words of the headline:

    “Once We Get to the Other Side of the Big Black Mountain, the People Who Now Advocate Buy-and-Hold Are Going to Be the Most Vocal Proponents of Valuation-Informed Indexing. VII Is John Bogle’s Dream Come True!”

    John Bogle has money and connections to promote Valuation-Informed Indexing that I do not possess, Anonynous.

    It’s the same with Bill Bernstein. And with Scott Burns. And with Bill Bernstein.

    And it’s the same with Morningstar. And with Index Universe. And with Early Retirement Forum. And with Motley Fool.

    When all of these people and entities are promoting Valuation-Imformed Indexing on a daily basis, EVERYONE in the world is going to know about it. There won’t be any Buy-and-Hold anymore. We will all be following research-based strategies, or at least we will all be aware of what the research says and we will follow Get Rich Quick garbage only as a personal choice, not because some internet Goons engaged in trickery to block us from learning about the realities.

    And we will be DEVELOPING the VII concept at a much quicker pace when we have all these people contributing fresh insights on a daily basis and when we have millions of middle-class people contributing their thoughts on hundreds of internet discussion boards and blogs, ALL of which will permit honest posting.

    Could anything possibly be more life-affirming? Could anything possibly be more exciting?

    We will have brought the economic crisis to an end. We will have entered into the greatest period of economic growth ever experienced in our history. We will all be sharing together, topping each other with great and powerful insight followed by great and powerful insight followed by great and powerful insight. We will be retiring many years sooner than we ever before imagined possible. We will be getting all the people who in earlier times were afraid to invest in stocks investing in this great asset class because it will no longer be viewed as a risky asset class. We will be laughing and getting excited about the future and just having a good time together.

    Please tell me what you see as the down side, Anonymous.

    I see realizing my good friend Jack Bogle’s dream as a wonderful thing. My feeble human brain is not even able to IMAGINE any possible downside. Has your far superior Goon brain been able to come up with something? If it has, I sure would like to know what it is.

    We continue to work at cross purposes. But I continue to wish you all the best that this life has to offer a person all the same, my old friend.

    Rob

  3. Rob says

    not to actually help or even influence others.

    My screen-name did not appear on the famous post of May 13, 2002, pointing out the errors in the Old School safe withdrawal rate studies, Anonymous.

    I forgot.

    Truly outstanding!

    Rob

  4. Rob says

    I do truly hope you somehow manage to find some joy this Christmas, in spite of your condition.

    Yeah, yeah.

    Rob

  5. Rob says

    Why wouldn’t I want Jack helping us all out, Laugh? He has money, he has name recognition, he had connections, he has a lot to bring to the table.

    Let’s look at one simple matter. We need to get the peer-reviewed research that I co-authored with my good friend Wade Pfau written up on the front page of the New York Times, right? Well, Jack knows people there. If Jack goes to his friends at the New York Times and asks that my research paper be written up on the front page, it will happen.

    That’s how the world works.

    And millions of people benefit.

    And you see something negative about this? I certainly do not. I see it as a wonderful thing that I can help Jack out and that he can help me out and that together we can help millions of middle-class investors out.

    You detect a negative because your pride SUPPLIES a negative. You don’t want to say the words “I” and “Was” and “Wrong” and your screaming, inured ego says “I don’t care if the entire world burns to the ground, I will never, ever, ever acknowledge that it is possible that I could make a mistake!”

    I don’t buy it, Laugh.

    You and your ego live in the same world that all the rest of us live in.

    Burn that world to the ground and you hurt Laugh and his precious ego along with the millions of others.

    At some point you have to acknowledge that there are other people in the world and that they matter too.

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

    Rob

  6. The Pink Unicorn says

    Rob,

    The problem for you is that people quickly find out that you can’t back your comments with facts. That is why you have been unsuccessful for the last 11 years. You vilify buy and hold, yet we see that people have been very successful in investing this way (including myself). You have been given the data on many of these investing strategies, along with returns rates, yet you ignore it and/or delete it. At the same time, we have yet to see the successful implementation of your marketing timing scheme, which you don’t even follow.

    Your claims of death threats and job threats have yet to be supported with 3rd party links to your accusations and as your anxiety levels increase, you resort to threats of your own, including prison time and legal settlements.

    Nothing has stopped you from spewing your hate filled messages that even continue during the Christmas season.

  7. Sensible Investor says

    I imagine you could count number of people who would know what you’re talking about when you talk about “the famous post made on May 13, 2002″ using two hands, tops.

  8. Rob says

    What you are saying here doesn’t match my experience even a tiny bit, Sensible.

    When I went to my first Financial Bloggers Conference in 2011, I had over a dozen people come up to me and say “Oh, YOU”RE that guy!”

    They may not have known the precise date that my famous post pointing out the errors in the Old School safe withdrawal rate studies went up at Motley Fool, but they sure knew that there had been a lot of funny business going on for yours. So they got the basic idea. That’s what matters.

    People are not dumb. You make a mistake if you assume they are, Sensible.

    People don’t need to know the date I put up my famous post to know they have been ripped off. I have a funny feeling that, following the next price crash, there are going to be millions of middle-class investors who are going to understand that they have been ripped off and who are going to want to know how and by whom. I think it is fair to say that this site details the 11-year cover-up to an extent far greater than any other site on Planet Internet.

    People will come to know what they need to know.

    And lots of people know it now. Lots of people remain afraid to call out the Buy-and-Holders today because the Buy-and-Hold Mafia has a lot of power and money and has shown itself to be 100 percent ruthless in the tactics it is willing to employ to block millions of middle-class investors from learning what they need to know to invest effectively for the long. Do you think that that will continue to be the case following the next price crash? I sure don’t.

    We’ll see, Sensible.

    My best and warmest wishes to you and yours.

    Rob

  9. Sensible Investor says

    By your own admission those people don’t know anything about that “famous” post. I’m sure most who do recognize you know you as that crazy guy who attends FinCon and rambles on about the evils of buy and hold.

    There’s not a snowball’s chance in hell that I’ll be going to prison, Rob. Certainly I’m never going to go to prison for the crimes you allege.

    I wish you and your family a very Merry Christmas, Rob.

  10. Rob says

    I think you are going to prison, Sensible.

    So I think it is fair to say that that May 13, 2002, date looms pretty darn large in YOUR memory. No?

    You say over and over again that you don’t think you are going to prison. But, if you were even a tiny bit confident of that claim, you wouldn’t be posting here or at Goon Central. Give me a freakin’ break.

    I wish you and your family a very Merry Christmas too, Sensible. And I hope that the new year ends up being the one in which you come to see the wisdom of doing what you can to minimize the length of that prison term to the extent possible given today’s circumstances.

    I ain’t a boil on your ass.I am your friend. There’s a difference.

    Rob

  11. Anonymous says

    “I ain’t a boil on your ass.I am your friend. There’s a difference.”

    Not when you are involved, there isn’t.

  12. Rob says

    You should be asking yourself what causes you to advance such emotional comments, Anonymous.

    I am the person who taught you about the errors in the Old School retirement studies and about what the numbers are when an analytically valid methodology is used.

    I am the person who co-authored the peer-reviewed research showing you how to reduce the risk of stock investing by 70 percent and permitting you to retire 10 years earlier than you ever before thought possible.

    I am the person who detailed for you all the trickery and deception employed by the Buy-and-Hold Mafia to keep you in the dark about the most important 32 years of advances in our understanding of how stock investing works.

    You look at all that and you see a boil on your ass?

    I say that there is an emotional filter affecting your perceptions.

    The advances that I have described are so big that it makes you feel bad that you wasted years of your life following Get Rich Quick strategies. That hurts. A lot. I get it.

    You know what? I had nothing to do with any of the smelly GRQ garbage. I am the fellow who developed the first true research-based strategy. I advocate Valuation-Informed Indexing, not Buy-and-Hold.

    If you want to be angry at somebody, be angry at my good friend Jack Bogle, you know? He’s the mess-up here.

    Better yet, forget about the anger gibberish and get to work bringing Jack and all the other Buy-and-Holders up to speed so that we can all begin spending our days appreciating the benefits of being the luckiest generation of investors who ever lived and and spending not one more day debating the perfectly ridiculous question of whether honest posting on what the peer-reviewed research says about how retirement planning works should be permitted on the internet or not.

    Honest posting should be permitted, Anonymous. I am sure.

    And I am confident that the jury that hears your case is going to come to the conclusion that you were sure as well at the time you engaged in your multiple acts of financial fraud, regardless of any idiotic and dishonest comeback post you put forward in response to these words.

    The boil on your ass didn’t arise from my discussions of what the last 32 years of peer-reviewed academic research says. The boil on your ass came about because of the pain you feel knowing that you have hurt yourself and so many others with your relentless promotion of Get Rich Quick investing strategies.

    We cannot change the past. We can only change the future.

    Don’t let the bad guys get you down, old friend.

    Rob

  13. Anonymous says

    I tell you that you are being redundant and driving around in circles.

    Your reply?

    “Here are the words of the headline….”

    Amazing.

    Rob, do you really think I failed to read the headline prior to posting my comment? Do you think your own reply to my criticism tended to reinforce my argument, or do you really think you were breaking new ground or pointing out something that hasn’t already been said by you a hundred times?

    I think you should bring your hard-copy black binder of the entire Plop to your first appointment with that Mental Health Care Specialist. It would get them up to speed pretty quickly on what they are dealing with.

  14. Rob says

    I presumed that you had read the headline and I didn’t see my comment as breaking new ground.

    I don’t believe that my reply supported your argument in any other than a trivial sense.

    Buy-and-Hold is a 100 percent logical theory. So, if all that mattered was logic, we would be in agreement.

    You don’t lack anything in the intellectual smarts department, Anonymous. That’s not an issue.

    The entire issue is your unwillingness to consider emotional factors. That’s the mistake that the Buy-and-Holders made and that you make.

    So, yes, there is repetition in that over and over again I draw attention to the emotional issues and you refuse to look at the emotional issues. Is that my fault?

    That’s like saying that the people who criticized the use of leeches in medicine were wrong to repeatedly point out that they don’t get the job done. You sorta need to do that to make the essential point. So it is with Buy-and-Holders and their unwillingness to look at the emotional side of the investing project.

    It is possible that one day you will let down your defenses a bit and it will all begin to click for you. I hope that happens.

    One thing that would help a lot is if we open the internet to honest posting. Then you will be hearing research-based ideas from hundreds of different people, not just me. That could well help you out as you have a strong bias against me at this point.

    You no doubt read the headline before you put forward your comment. But you certainly did not process it effectively. That’s what you need to do.

    I put forward the words you need to hear. Now you need to let them in.

    I wish you all good things.

    Rob

  15. Sensible Investor says

    Rob, the internet is wide open for honest posting. I know that you think otherwise, but your belief is just pure delusion.

  16. The Pink Unicorn says

    Would you take weight loss advice from a fat doctor? Would you hire a contractor if his own house was falling apart? Would you take singing lesson’s from someone who can’t carry a tune?

    Of course not. So why would anyone take any financial advice from someone that has not planned well for their own retirement and won’t even follow their own suggested trading strategy (I am speaking of you, Rob)?

  17. Rob says

    Would you take weight loss advice from a fat doctor?

    Would you go to a used-car salesman to find out how much you should pay for a used car?

    Anyone who makes his livelihood selling stocks is compromised re anything he says on the subject of stock investing.

    The answer is to permit honest posting on what the peer-reviewed academic research in this field says.

    One honest report on the peer-reviewed academic research counts for 10 fairy tale claims by one of the Wall Street Con Men, Pink.

    Hang in there, man.

    Rob

  18. laugh says

    “Why wouldn’t I want Jack helping us all out, Laugh?”

    Want is different than need. You are just using lame excuses to cover your complete failure to save the world.

    “But, if you were even a tiny bit confident of that claim, you wouldn’t be posting here or at Goon Central. Give me a freakin’ break.”

    What does posting anywhere have anything to do with ridiculous and unfounded claims of prison?

  19. Rob says

    Want is different than need.

    How about we put it this way:

    I really, really, really, really, really, really want to see Jack helping us all out!

    It would put a big smile on my face to team up with my good buddy.

    Take care, Laugh.

    Rob

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