Set forth below is the text of a comment that I recently put to the Goon Central site:
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That’s the point, GW.
Being “overpowering” is a good thing, not a bad thing. When you Goons say “it’s not what you say, it’s how you say it,” you are telling me to be less “overpowering.” I am not interested. I play to win. I LIKE hitting home runs. I want Valuation-Informed Indexing to become the dominant model. I want to see Buy-and-Hold buried 30 feet in the ground, where it can do no further harm to humans and other living things. Do you see? People who believe in Buy-and-Hold should be putting forward the best possible case they can. They should aim to be “overpowering.” If they are not doing that, they are letting the entire community down. It works the same way with Valuation-Informed Indexers. We need to argue our case as forcefully as we possibly can. That’s how we help the community as a whole. The sharper we are in our arguments, the sharper the Buy-and-Holders need to be in response. The sharper everyone is, the better off we all are. I offer zero apologies for being “overpowering.” J.D. was offering me a compliment. He didn’t intend to. But what I heard was a compliment. And every time one of you Goons says “it’s not what you say, it’s how you say it,” I hear a compliment. You are telling me that you can tolerate the people who question Buy-and-Hold in a soft way but that my stuff is just too darn “overpowering,” so “overpowering” that it wins converts. Good. I want to win converts. I hope that I can learn more about all this stuff and thereby make my stuff that much MORE “overpowering.” If I hit 60 home runs this year, I will aim for 70 next year. I want my team (the Valuation-Informed Indexers) to win. Period. End of sentence. End of paragraph. End of chapter. End of story. I play to win, man. That’s been so going back to even BEFORE May 13, 2002. I played to win when I was posting about saving strategies too. That can never change. One of the things I like about you Goons is that YOU play to win. You cheat. I don’t like that part. But at least you play to win. If all the wussies on my side played to win one-tenth as much as you Goons do, we wouldn’t be in an economic crisis today. LOTS of people see that Buy-and-Hold is b.s. The trouble all along has been that most of them are wussies. I have wussy tendencies in other areas of my life. I am a mild-mannered reporter by nature. But when the bell rings and it is time to post about early retirement stuff, I go into a telephone booth and become Superman, the Overpowering One. Or at least that’s what I aim for. At least that’s always the idea. Trying to teach me to be less “overpowering” is like trying to teach a dog to meow or to teach a cat to bark. It never, ever, ever, works. It ain’t in me to give this stuff anything less than my absolute best. And, truth be told, J.D. is just the same when it comes to any subject other than stock investing. He aims to be less than overpowering when he writes about investing because of the massive social pressure he sees applied for us all to enable the Buy-and-Holders and their Get RIch Quick fantasies. Not this boy. Find someone else. I’d rather be banned at every site on the internet than know in my heart that I gave the job less than 100 percent. Say it loud — I am overpowering and I am proud! No apologies. Rob |
I think he meant your behavior was overpowering which is a turnoff and a undesirable and unattractive trait that has led to your complete and utter failure for more than a decade. Your actual argument/logic is pretty flimsy.
I LIKE hitting home runs.
Since we’re using baseball analogies, consider a guy who swings wildly at the plate and strikes out every time. His teammates groan. The fans mock him. But after every strikeout, he does a happy dance. He just can’t wait to get up there and strikeout again. His kinder teammates offer advice, which he ignores. It never even occurs to him that hitting the ball is the goal, and strikeouts are bad, and therefore maybe he ought to change something. Nope. He says the game itself and everyone playing it is wrong. They are cheating him. He says he hits a home run every time. He says he is the greatest baseball player who ever lived. He is happy. But nobody cheers for him. Except himself.
I think he meant your behavior was overpowering which is a turnoff
I don’t think you are so terribly far off the mark with this, Laugh.
My stuff IS overpowering. I get that.
I am the person who discovered the errors in the Old School safe withdrawal rate studies. I have over 200 endorsements of my work in the slider at the top of every page of my site, some from the biggest names in the field. No other blogger has anything even close to that. I have 5 unique calculators, each of which changes our understanding of how stock investing works in a fundamental way. I am the co-author of the most important piece of research published in this field in the past 30 years, research that shows millions of middle-class investors how to reduce the risk of stock investing by 70 percent. I have 200 podcasts that explore the realities of stock investing from every possible angle. And on and on and on and on and on.
Now THAT’s overpowering.
The odd thing here is that J.D. (and lots of others, to be sure) sees something bad about that. Valuation-Informed Indexing is Jack Bogle’s dream come true. It is the first true research-based strategy. We are looking at good stuff piled on top of good stuff piled on top of good stuff. What the heck is the problem?
The problem is that J.D. has lots of blogger friends who have recommend Buy-and-Hold strategies. It makes those people look bad for millions of middle-class investors to learn what really works. That’s the problem here, Laugh. It’s a turf fight. In ordinary circumstances, J.D. would want to help his readers. But his friends in the blogging community will hate him if he tells the truth. So I have put him (and lots of others, to be sure) in a tough spot. That’s why in this particular case “overpowering” stuff has a negative side to it in the eyes of many. It’s a turf fight, nothing more and nothing less.
Now —
Say that we were all 100 percent cynical people and we didn’t give a darn for whether the lives of millions of people were destroyed or not, all we cared about was making a buck. Would I be a true friend to my Buy-and-Hold pals if I kept everything hushed up?
I would not.
The cover-up cannot continue much longer. The total losses from the Buy-and-Hold Crisis will end up being in excess of $20 trillion. No economic system can survive that big a loss. So we are all going down together if we don’t work up the courage to correct the mistakes that the Buy-and-Holders made. We are ALL winners from having those mistakes corrected.
The mistakes are going to be corrected whether the Buy-and-Holders like the idea or not. Given that the mistakes are going to be corrected, why not just correct them now, when the embarrassment factor for the Buy-and-Holders is a lot less than it will be following the next price crash? That sure sounds like a good idea to me.
The other way to look at it is to consider the opportunities that follow from opening the internet up to honest posting on investment-related topics. We are going to see hundreds of super-successful blogs once people feel safe posting honestly. We are going to see tens of thousands of helpful books published. We are going to see thousands of people establishing successful careers HELPING investors with honest, research-based advice rather than destroying their lives with more of the smelly Buy-and-Hold garbage.
How do you hold that back indefinitely, Laugh? You can’t. If you cannot hold it back indefinitely, you are better off just making the move to the research -based stuff now, before you do yourself more harm. If you’ve got to make the change, make it now, for heaven’s sake! It’s not going to get easier after you cause more human devastation.
The reason my stuff is so overpowering is that we don’t have thousands of people promoting true research-based strategies today. Is that my fault? There is only one way to get from where we are today to where we all want to be tomorrow. My stuff is shocking because people have been afraid to tell the truth and thereby alienate the people pushing Buy-and-Hold. Lift the ban on honest posting and you will have thousands of people promoting Valuation-Informed Indexing all over the internet. No more surprise! No more shock! No more “overpowering”!
The first guy who works up the courage to tell the truth about something as important as stock investing is going to be perceived as “overpowering,” Laugh. There’s no getting around it. You know what the answer is? We all should be working TOGETHER to tell people the truth about stock investing. YOU could build a business telling the truth about stock investing. J.D. could build a business telling the truth about stock investing. Jack Bogle could build a business telling the truth about stock investing. When we are all doing it, there will no longer be anything overpowering or odd or special about it. When everyone else in the investing advice field is aiming to give honest advice, I WILL NO LONGER STAND OUT.
My stuff is as overpowering as all get out. All I intend is for it to be honest. The reason why my stuff stands out so much is that just about everyone else in this field is AFRAID to give honest advice. How about we try holding back a bit on the death threats and the unjustified board bannings and the tens of thousands of acts of defamation and the threats to get academic researchers fired from their jobs? Then we will have thousands of people putting forward honest stuff and my stuff will not stand out so much and I will no longer be perceived as being so darn “overpowering.”
Does all that not make good sense?
Rob
Since we’re using baseball analogies, consider a guy who swings wildly at the plate and strikes out every time. His teammates groan. The fans mock him. But after every strikeout, he does a happy dance.
I have won every battle fought on the content side. Over and over and over again I have hit grand slam after grand slam after grand slam.
Every grand slam I have hit makes the Buy-and-Holders more angry. Valuation-Informed Indexing is so superior that it makes those who have advocated Buy-and-Hold look really, really bad.
The Wall Street Con Men have lots of money and lots of power and lots of influence. So they can do a very good job of destroying their “enemies,” including bloggers who work up the courage to “cross” them by posting honestly on the last 32 years of peer-reviewed academic research.
I want the Campaign of Terror to come to an end, X.
But I don’t want to give up all those insights. I certainly don’t want to post dishonestly on safe withdrawal rates. If I do that, I go to prison right along with you. For some crazy reason, I find very little appeal in the idea.
If giving investing advice is a popularity content, I am a loser.
If giving investing advice is about reducing risk while increasing return, I am the biggest winner there ever was.
I don’t see it as being ONLY about making a buck.
I want to make a buck. But I want to find a way to make a buck without giving up my personal integrity.
So I soldier on.
My best wishes to you.
Rob
X Files says He says he hits a home run every time. He says he is the greatest baseball player who ever lived. He is happy. But nobody cheers for him. Except himself.
Rob says Over and over and over again I have hit grand slam after grand slam after grand slam.
X Files nailed it.
Rob,
What are your predictions for 2014? Will a simple buy and hold strategy once again massively outperform VII? Or will we finally see the largest market crash in history that will bring buy and holders portfolios down to the level of VIIers? Do you honestly think 2014 will be the year the buy and hold goons/mafia start getting shipped off to prison in droves?
X Files nailed it.
Okay, Evidence.
Please take good care.
Rob
What are your predictions for 2014?
The research shows that short-term predictions don’t work, Tron. So I make a serious effort not to engage in that sort of thing.
If you asked me to give expression just for fun to my rough sense of how things may go, I would say that I see a 30 percent chance of a crash in 2014, a 30 percent chance of a crash in 2015, a 30 percent chance of a crash in 2016, and a 10 percent chance that I don’t know what the heck I am talking about.
Rob
I am pretty sure that last year about this time you said that there was a 90% chance of a crash by middle of 2015. A year later now its the same probability but another 18 months added on. You are very bad at prediction.
Glad I did not listen and packed myself off to Baja instead.
We’re all bad at short-term predictions, Baja.
I talk all the time about the 32 years of peer-reviewed academic research showing that long-term, valuation-based predictions always work. The research showing that short-term predictions never work goes back even further than that — it dates back to the 1960s!
Please build a nice sand castle in my honor when you get a chance, my old friend.
Rob
“I would say that I see a 30 percent chance of a crash in 2014”
So then a 70% chance buy and hold outperforms VII for like the 12th year in a row?
Here’s a column that I just wrote re this question, Tron:
http://www.valuewalk.com/2013/12/valuation-informed-indexer-dont-good-bad-years-measure-success-10-year-time-periods/
Rob
Rob,
In the column you just linked to Tron as well as other recent posts, you say the market is overpriced by 65% and, as such, will drop 65%. When I look back at posts from 2 years ago, you make the same claim that the market is overpriced by 65%. It seems you just pull this number out of the air. Look how much the market has gone up in the last 2 years. If you said it was overpriced by 65% 2 years ago, wouldn’t your percentage also increase?
Thanks for asking an intelligent question, Pink.
The market is NOT overpriced by 65 percent.
The fair-market-value P/E10 value is 15. Today’s P/E10 value is 26. Rationality calls for a big price drop but NOT a drop of 65 percent. A drop of 50 percent would put us at a P/E10 value of 13, which is a bit below fair value.
There’s another issue here. Prices do not fall only to fair value at the end of one of the long bull/bear cycles. It always (there has never been a single exception in the history of the market) falls to a P/E10 value of 7 or 8, one-half of fair value. This is 100 percent irrational. It is even more irrational for the market to go to one-half of fair value than it is for the market to go to two times fair value value. Going to two times fair value at least provides investors with a temporary feeling of well-being. Going to two times fair value is at least FUN. Going to one-half of fair value works AGAINST the short-term interests of the investors bringing about the price drop. These overly big price drops always occur in economic recessions and they always worsen those recessions (by diminishing the spending power of millions). Viewed objectively, the drops to one-half fair value are insane acts of self-destruction.
So why do we always see them?
It is important to keep in mind that stock price changes are not determined primarily by economic developments but by investor emotion. When we were at a P/E10 value of 44, we were all a lot richer than we are today. We knew on some level of consciousness that our Pretend Wealth would be disappearing in time. But we liked the feeling that came from imagining that the Pretend Wealth was real. We made plans for what our financial futures would be if for the first time in history the Pretend Wealth did not disappear. To help ourselves to continue having confidence in the fantasy, we suppressed all suggestions that the stock market might continue to behave in the future somewhat as it has always behaved in he past (that is, that the Pretend Wealth would disappear). We banned honest posting on the internet. All that sort of thing.
When the P/E10 value of 44 becomes a P/E10 value of 15, we will have wiped out $12 trillion of Pretend Wealth. We will be emotionally devastated. To use a term from the economic literature, we will be entering a Great Depression. THAT”S why prices will continue downward. We will hate ourselves. We will want to punish ourselves. We will reject with bitterness the idea that we can rebuild or that things can ever be good again. We will continue doing that until we have elected as a community of investors to pull the P/E10 value to 8, not fair value but one-half of fair value. That’s a little more than a 65 percent price drop from where we stand today.
It is very important to understand that the process I am describing here is OPTIONAL. This is what has happened every time in history when we have permitted the P/E10 value to reach 25. But we have something available to us this time that we did not have available to us on the three earlier occasions on which we permitted a belief in Buy-and-Hold strategies to bring about an economic collapse. This time we have 32 years of peer-reviewed academic research showing us how stock investing works in the real world. That (at least potentially) changes everything.
If we were to open the internet to honest posting about the last 32 years of peer-reviewed academic research, investors would not be depressed anymore. There is nothing to be depressed about! We now know how to reduce the risk of stock investing by 70 percent while increasing returns by enough to be able to retire five to ten years sooner than any of us imagined possible back in the Buy-and-Hold Era. If that gets out, forget about dropping to 8. It ain’t gonna happen!
Forget about rising too much above 15 ever again either. Bull markets are out too. But at least we won’t be falling to 8 if we get the word out If we get the word out, we would see a drop from 26 to 15. That’s a drop of a bit less than 50 percent. The difference between a loss of 65 percent and a loss of perhaps 45 percent is huge. People are going to be suffering big time. Reducing the loss they experience by 20 percentage points might well be the difference between putting our economy in the Second Great Depression and getting started on the way to the greatest period of economic growth ever seen in our history. I vote for Option Two!
Anyway, that’s the story. My claim that we are looking at a price drop of 65 percent assumes that we don’t open the internet to honest posting in time to hold off the Second Great Depression. If we elect as a people to open the internet up to discussion of the last 32 years of peer-reviewed academic research, we will still see a big price drop but one not quite as big. And that difference may make a very, very big difference in the financial futures of every last one of us. We all need to see our economic system survive to enjoy any stock market gains whatsoever. Seeing that the economic system survives should be Job #1 for Valuation-Informed Indexers and Buy-and-Holders alike, in my assessment.
Thanks for stopping by, Pink.
Rob
You didn’t really answer the question Rob. Read my question again.
The answer to your question is obvious when you understand what the last 32 years of peer-reviewed academic research tells us about how stock investing works, Pink. That’s why I focused on explaining what the last 32 years of peer-reviewed academic research tells us about how stock investing works.
The Wall Street Con Men are jumping up and down about the amazing moves up we have seen in recent months. So are all you Goons. Hey! Maybe Buy-and-Hold is really going to work this time! It COULD happen, right? Pretty exciting!
It’s not so exciting.
Valuation-Informed Indexers don’t pay ANY attention to all that jizz-jazz. It just doesn’t matter. It is an ILLUSION. What you want to do is to try to look at the stuff that matters and stop focusing so much on short-term nonsense.
The short-term numbers have been moving around a little bit. They always do. But, as you note, that hasn’t changed the long-term picture AT ALL. We were priced for a 65 percent crash before and we are priced for a 65 percent crash now. It turns out that all the hand-waving of the Buy-and-Holders amounts to absolutely nothing of real value. Whoever thought that something like that could happen? I mean, it’s only been playing out that way for 140 years running now!
This is why there is no need to make frequent changes in your stock allocation. Prices jumped around a bit from 1982 to 1996 too. But not enough to change the long-term picture in a significant enough a way to require any allocation changes. And prices jumped around a bit from 1996 through today. But not enough to required any allocation changes. So it goes. So it has always gone.
If you get the long-term right, you get it all right. The Wall Street Con Men focus on the short-term over and over and over again. That’s all they’ve got. If you are trying to trick people into following a pure Get Rich Quick approach, you had better focus on the short-term. You won’t find any support for your smelly GRQ garbage in the long term!
My advice is that you let all that garbage go and turn your focus to the first true research-based strategy. You’ll sleep better at night. You won’t be lying awake puzzling over short-term silliness. You will have confidence in your strategies because they make sense and because they are the strategies that have been working for 140 years now.
Anyway, I certainly wish you well.
Rob