Valuation-Informed Indexing #167: The Mathematics of Investing Is Overpowering — and Hated!

I’ve posted Entry #167 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Mathematics of Investing Is Overpowering — and Hated!

Juicy Excerpt: One of the slides quotes Former Financial Analysts Journal Editor Rob Arnott as saying something to the effect that it is easy to determine what stock returns are going to be if you know simple math and that it is amazing that there are so many smart people working in this field who do not seem capable of performing that simple math.

He’s making a point not too far removed from the point made by my blogger friend. Arnott is saying that there is no intellectual problem here — we could all know far more about how stock investing works he we cared to. We just don’t care to!

Why?

Because it causes us emotional pain to do the math he talks about.

If you want to be popular in this field, you hit fewer home runs. People don’t want to see you offer the best investing advice possible. That would be too “overpowering” to take. They want you to play dumb.

Comments

  1. Rob says

    I hope not!

    It appears to me that I just overlooked it. I’ll set it up for posting on the next open date.

    Thanks for the assist, Evidence.

    Rob

  2. Sensible Investor says

    The math for VII doesn’t seem to add up. It seems that buy and hold is the right choice for me, and for millions of middle class American investors.

  3. Anonymous says

    Rob,

    If people really do support your ideas, why do we not see them participating here in the comments section?

  4. Rob says

    You’re asking an intelligent question, Anonymous.

    There are lots of people who have a great interest in the ideas. I’ve seen that at every discussion board and blog at which I have posted. I’ve seen that going back to the first day of discussions — May 13, 2002.

    But you are right that people do not post comments here. And people do not stand up for me at other places when you Goons attack me. There have been a few exceptions to that general rule. But, even in those cases, people usually stick up for me one or two times and, when they see the attacks continue, retreat into silence.

    I spend a lot of time thinking this over, trying to come to a better understanding of why people behave as they do.

    One thing is that people are intimidated by the subject matter. People think investing is complicated. They don’t feel able to form their own assessments of whether the experts are shooting straight or not. They feel that they need to defer to the experts.

    The few who don’t feel that way are generally Buy-and-Holders. That is, most people don’t feel they possess enough expertise to have their own opinions. And those who do feel that they possess expertise are generally Buy-and-Holders. Buy-and-Hold is known as the research-based approach. So people who devote some effort to learning the realities usually become Buy-and-Holders.

    Another factor is that Buy-and-Hold does seem plausible. I don’t think that it really hangs together. But I acknowledge that it APPEARs to hang together. It is certainly logical. As an overall package, it seems to make a lot of sense.

    A BIG factor is that academic researchers support it. That gives Buy-and-Hold a credibility that it would otherwise not possess. If it were only people who work for mutual funds who endorsed Buy-and-Hold, people would be more skeptical. People see that people who lack a financial interest support it and that gives them confidence that all is on the level.

    Most people have a good bit of their life savings in stocks and the Buy-and-Holders are telling them that all of that money is real. That’s a more appealing message than the message that I deliver, that most of their bull market gains were comprised of Pretend Money and that we are due for a 65 percent price crash in the not-too-distant future. People are scared that they are not going to have enough money to retire and they don’t like hearing that they actually have less than they have been led to believe they have.

    People are social creatures. All advertising is rooted in this reality. So people often go by what their friends and neighbors and co-workers say. Most people today believe in Buy-and-Hold. That’s a self-fulfilling prophecy. So long as most people believe, lots of people are going to believe because everyone around them believes. At some point, the doubters will grow to a large enough percentage of the population that more people will fell free to let themselves entertain doubts.

    Many people are open to considering the merits of Valuation-Informed Indexing for so long as I do not criticize Buy-and-Hold or say that Buy-and-Hold is wrong or in error or represents a Get Rich Quick scheme or anything along those lines. I have seen this over and over. People HATE that. People’s minds close when I say that sort of thing.

    People don’t like conflict. So, when you Goons bring your poison to the table, people lose interest in exploring the new ideas. There are lots of people who would be open to exploring the new ideas so long as there was no nastiness in evidence. But they leave the room when they see ugly stuff.

    The biggest factor of all is how revolutionary a change Valuation-Informed Indexing is. If I told people that I had found a way to reduce stock investing risk by 10 percent, they would think it is wonderful. When I say that I have found a way to reduce stock investing risk by 70 percent, they lose interest. It doesn’t seem possible. So they tune it out.

    People think I lack street cred. I did not go to investing school. I have never managed a big fund. People find it hard to accept that I know things about stock investing that people with much better qualifications in this field do not know.

    The delayed-feedback thing is huge. Most people don’t like theory. They go by what they see with their own eyes, concrete results. Buy-and-Hold delivered amazing concrete results for many years. People were highly impressed by that. Valuation-Informed Indexing has worked through history in every 30-year time-period. But it takes a long time for 30 years to pass. People feel that it takes too long for VII to “come true” and that it is risky to put their confidence in it because it seems possible that it might not come true this time.

    People look askance at explanations of how stock investing works that rely too much on examinations of human psychology. Numbers strike people as hard and real. Explanations of how stock investing works that are rooted in examinations of human psychology strike people as loose and vague.

    VII hasn’t been around that long. It’s been 33 years. That’s not a short amount of time. But, given that investing has been around in some form for a long, long time, a model that is 33 years old is really just a baby. When I say something like “volatility is optional,” it strikes people as crazy. Volatility has been around for as long as stock investing has been around. It’s hard to accept claims that rules that have governed how stock investing works for hundreds of years have been turned on their heads.

    The leaders among the Valuation-Informed Indexers are tentative in how they state things. Shiller is the perfect example of this. He pulls his punches on issue after issue. Buy-and-Holders don’t pull their punches. Buy-and-Holders speak with great authority. Valuation-Informed Indexers come off sounding as if their ideas are not that big a deal or as if they do not possess great confidence in the ideas. Valuation-Informed Indexing did not even have a name until I gave it one!

    People LIKE the big-name Buy-and-Hold advocates. That’s another big one. Bogle is a very likable individual. So are most of the others.

    Finally, people are more inclined to participate at a board or blog when they see lots of other people participating. There probably are people who pass through here from time to time who would in other circumstances come forward with comments or questions. They see either that there are no comments or that the only comments are angry ones and they decide to mosey on down the road.

    Those are most of the explanations of the unfortunate phenomenon that you refer to that I have been able to come up as a result of my observations of the first 12 years of our discussions.

    Rob

  5. Anonymous says

    So, what you are saying, is that people are either too stupid or too scared. Did I get that right?

  6. Rob says

    If people really do support your ideas, why do we not see them participating here in the comments section?

    The question that I responded to above was the one after the comma, “why do we not see them participating here in the comments section?”.

    I don’t share the premise implicit in the words prior to the comma, that people “support my ideas.”

    Most people are open to learning about Valuation-Informed Indexing. Most people find it interesting and worthy of consideration.

    But the percentage of the population that today follows VII strategies is small. Nothing could be more clear. Most people do not support my ideas if the word “support” is interpreted to mean “agree with.”

    Most people DO support the idea that I have a right to talk about the VII ideas at every investing board and blog on the internet. I have strong support on the process question and weak support on the substance question.

    There are some who believe that a site owner should be free to shut down any discussion that he does not want his readers to hear. I don’t believe that that’s a majority. But many of those who believe that site owners should permit honest posting do not want to get involved in any battles to make their preference a reality. Many people feel that it’s not their problem and so they keep their mouths shut.

    Rob

  7. Rob says

    So, what you are saying, is that people are either too stupid or too scared. Did I get that right?

    That’s an exceedingly odd way of putting it, Anonymous.

    I referred to the polio vaccine above. That was a big advance. Would you say that in the day before the polio vaccine was introduced, the problem was that people were too stupid to come up with it?

    I suppose in some hyper-technical sense that is kinda, sorta so. It took intelligence to come up with that advance. Had people of earlier times possessed that intelligence, lots of people would not have had to suffer from this disease.

    But it seems odd to me to call people stupid just because humanity hasn’t always known everything there is to know. Why the nasty language?

    It’s the same with stock investing. The Buy-and-Holders have been responsible for many very powerful insights. Would you say that everyone who talked about stock investing before the Buy-and-Holders came along was “stupid”? I wouldn’t. The Buy-and-Holders knew things these earlier people did not. But it’s not because the earlier people were stupid. They were doing the best they could. We should all be grateful that the Buy-and-Holders came up with some amazing advances, in my assessment. What constructive purpose is served by calling people who did the best they could “stupid”?

    Human knowledge advances over time, Anonymous. It’s in the nature of this reality that people alive today are going to know things that people in earlier times did not know. I don’t see how it follows that those earlier people were “stupid.” The way that I look at it is that we are LUCKY that we happened to come along at a time when it is possible to benefit from all these amazing advances.

    Rob

  8. Anonymous says

    Rob,

    Anyone who wanted to lend you, or your ideas, support, could do so here anonymously very easily.

    The fact that they don’t speaks volumes to everyone else following your little saga.

    It ought to clue you in, as well. But of course, you elect not to hear what you wish you didn’t have to acknowledge. However, in your heart, I believe you actually know how sad your little quest is, and how out of bounds of reality are your claims and advice. You won’t even follow the dictates of Lucky Seven yourself! You won’t say how your own portfolio stacked up to a standard B&H alternative. In short, you are disbelieved because you are not credible. And that is very much exactly as it should be.

    Want respect? Earn it.
    Want popularity? Do something that people want to follow and to align with, and illustrate through your personal experience how it has benefited your own life in tangible ways.
    Want to get rich? Produce something of value.
    Want fame? Do something truly notable and fully worthy of that note.

    You have done none of those things, and I doubt you have the capacity to ever do so.

    This is the truth of your life and your quest.

  9. Anonymous says

    “That’s an exceedingly odd way of putting it, Anonymous.”

    So, what you are now saying is that others just aren’t as smart as you, so they just haven’t figured it all out yet like you have.

  10. Rob says

    Anyone who wanted to lend you, or your ideas, support, could do so here anonymously very easily.

    People don’t like to hear threats to kill their family members even when they are posting anonymously, Anonymous. You Goons put forward ugly, ugly stuff. People aren’t looking to add more ugliness to their days.

    Why do you think that as a society we elected to make the tactics you engage in felonies? Do you think that was an accident?

    I don’t.

    Rob

  11. Anonymous says

    Rob,

    I was reading some of the old comments over at the freemoneyfinance board. It seems that FMF didn’t want you to provide a guest post. Does that mean he is going to prison like JD Roth and Mike Piper?

  12. Rob says

    The fact that they don’t speaks volumes to everyone else following your little saga.

    The fact that thousands of our fellow community members have described the discussions we have had on Valuation-Informed Indexing as the most exciting and illuminating discussions that we have ever had at any of our boards or blogs also speaks volumes, Anonymous.

    The fact that those posting in “defense” of Mel Lindauer and John Greaney have found that they have no other options to make their case but to engage in the most abusive behavior ever seen on the internet also speaks volumes.

    The fact that you will be going to prison following the next price crash and that Lindauer and Greaney (and Bogle?) are okay with that also speaks volumes.

    I mean, come on.

    Rob

  13. Rob says

    So, what you are now saying is that others just aren’t as smart as you, so they just haven’t figured it all out yet like you have.

    No.

    Valuation-Informed Indexing is the future. Buy-and-Hold is the past. So, yes, I certainly would say that those who are still advocating Buy-and-Hold have not yet “figured it all out yet” (presuming that it turns out that I am right — If it turns out that I am wrong, then I am the one who has not figured it out yet).

    But by not stretch would I say that those people are not as smart as me.

    I have a podcast with the title “I Know More About Stock Investing Than John Bogle — And You Can Too!”

    I don’t think that I am smarter than Old Saint Jack. But I obviously think that I know more about how stock investing works than he does.

    Jack is defensive about the mistakes that he has made. That’s what is holding him back. I have done everything I can think of to help him out. He has not responded to my entreaties. Is that my fault?

    Jack is no dummy. I wouldn’t say that in a million years. But his wounded pride is holding him back in a big way (as your wounded pride is holding you back, Anonymous).

    I want to see people move forward. But you cannot move forward until you work up the courage to say the words “I Was Wrong,” Anonymous. That’s the price of admission to The Big Show.

    It’s your true friends who will tell you that. Your fake friends will tell you only what you want to hear. Not this boy. I want to see you (and Jack) achieve your potential.

    I hope that helps a bit.

    Please try to stop thinking that someone is calling you “dumb” just because there was a day when you did not know it all. I didn’t know it all on the morning of May 13, 2002. I don’t know it all today. There is no law that says you need to know it all. It’s the 12-year cover-up that is killing you, not the totally understandable fact that you did not always know it all.

    Give yourself a freakin’ break, old friend.

    Rob

  14. Rob says

    I was reading some of the old comments over at the freemoneyfinance board. It seems that FMF didn’t want you to provide a guest post. Does that mean he is going to prison like JD Roth and Mike Piper?

    I don’t know whether JD Roth and Mike Piper are going to prison or not, Anonymous.

    Mike has banned honest posting on the last 33 years of peer-reviwed academic research at his blog. His actions have cost his readers billions of dollars in losses. That’s obviously not a good thing. That’s obviously financial fraud in an objective sense.

    But there are also obviously some strange circumstances that apply here. MIke and I engaged in a long e-mail correspondence before he banned honest posting. He very, very much did not want to ban honest posting. He told me that “there is nothing I would like more” than to permit honest posting. He said that he is afraid of what Mel Lindauer will do to him and to his business if he permits honest posting. I think it would be fair to say that his fears are well-justified.

    Similar circumstances apply with JD Roth and with FMF.

    There will be civil trials and criminal trials and congressional hearings following the next price crash. Some who have engaged in objective acts of financial fraud will be held liable for damages, some will go to prison, and some will get off entirely. It is the entire nation that has been harmed by the Buy-and-Hold Crisis. So it is the entire nation that will decide who will be prosecuted and who will not be prosecuted.

    I think it would be fair to say that it is those who have put up posts in “defense” of Mel Linduaer and John Greaney on more than a handful of occasions who are at greatest risk.

    That means you, Anonymous.

    Perhaps you should be worrying more about what is going to happen after the next crash to you than about what is going to happen to JD Roth or Mike Piper or FMF.

    Just a helpful tip.

    My best wishes.

    Rob

  15. Anonymous says

    “I don’t think that I am smarter than Old Saint Jack. But I obviously think that I know more about how stock investing works than he does.”

    “His actions have cost his readers billions of dollars in losses. ”

    “Similar circumstances apply with JD Roth and with FMF.”

    These are just a few of a large number of comments that you have made that let people know immediately that you are a person with no credibility and also lead them to a conclusion that you have some mental issues that need to be dealt with.

  16. Rob says

    Most people don’t like hearing those kinds of statements, Anonymous. That much is so beyond any reasonable doubt whatsoever.

    I put those sorts of statements forward all the same because people very much need to hear them. As a society we need to be coming to terms with the realities expressed in those statements.

    The overall reality here is an amazingly positive one. We are the luckiest generation of investors that ever lived. How could there be any problems associated with that wonderful reality? Well, we humans have managed to create a big mess of problems out of it.

    Had we quickly made the transition from Buy-and-Hold to Valuation-Informed Indexing in 1981, there obviously never would have been problems. All of us would be Valuation-Informed Indexers today. It would be good stuff piled on top of good stuff piled on top of good stuff.

    It didn’t happen that way.

    Some delay would not have been a big deal. The advance really was a revolutionary one. It is hard for people to come to terms with revolutionary advances. So a delay of five years or so would not have been a biggie.

    It hasn’t been 5 years. It has been 33 years.

    It has been one of those things where someone engages in a little bit of deception, thinking that nothing will come of it. Then there are deceptions to cover up the deceptions. Then deceptions to cover up the cover-up of the cover-up.

    This is the sort of thing that happened in the Nixon administration. It is the sort of thing that happened in the Joe Paterno matter. It is the sort of thing that happened with Lance Armstrong. There are now so many layers of deception in the public record that no one can figure out the way out.

    I’ll tell you this much, Anonymous. The way out is not through more deceptions and more cover-ups.

    I’ll help you out in any way that does not require me to commit felonies myself.

    That’s a pretty amazing statement, is it not? Things have reached a pretty messed-up point when I need to say something like that, no?

    I won’t post dishonestly on the numbers that my friends use to plan their retirements.

    You figure it out from there and tell me what you come up with.

    I certainly wish you all the best of luck with it.

    Rob

  17. Anonymous says

    Rob,

    Read this post again. I think it is clearly a sign that you are in need of reflection and mental assistance:

    @Rob,

    I did not think I could change my opinion of someone so quickly.

    You have stated so many unsubstantiated things that are far beyond your basic premise that I am really no longer interested in your answers.

    1. It was Buy-and-Hold that caused that false valuation. — There is no proof of that. Margin percentages got to all time highs in the late 90′s, I am sure that had nothing to do with it. Day trading got to levels not seen in my life time, I am sure that had nothing to do with it. etc etc. Buy and Hold may or may not be wrong but it is certainly not the boogie man and the root of all evils. You hold Buy-and-Hold responsible for all that is wrong with investing and the elimination of it as a strict regiment as some kind of financial utopia. I find that extremely naive.

    2. Of FMF you said: “I can respond to any substantive question. But I cannot overcome the hostility you feel to having your ideas questioned.” and “You need to be asking yourself why FMF is hostile to the idea of learning about this stuff.” — That’s just ignorant and pathetic.

    3. “I’d prefer the discussion to be about the substantive points, Apex. If everyone would insist that we stick to the substantive points, everyone would get what they say they want. I do not control Eugene or FMF. They say what they say and I respond to what they say.” — Screw what they say (and I don’t even know what you are talking about with FMF, he didn’t say anything), why are you so defensive and spend all your time defending yourself rather than defending your theory. If you just stick to the substantive points those who are making distractions will get drowned out but all you do is debate the distractions rather than the substance.

    I can see now that the problem is that you are far beyond the basics of your theory as I understand it. You are into a war on buy and hold and some kind of Al Gore save the planet type of crusade that you believe will forever usher in an investing utopia if we can just eliminate pure buy and hold investing.

    I don’t believe a thing you have stated here beyond the basics that markets get over-valued and being fully invested in them at all times is not always the best course of action.

    Beyond that basic assertion I retract any endorsement I stated here or implied by defending what you do as it appears you have other agendas that I do not support.

    You are going to find you are regularly a lone voice if you continue to approach things in such a personal and accusatory manner. You took your one defender here and turned him into a detractor in less than 24 hours. If that was me I would reconsider my approach.

    To FMF, I am sorry that my comment seems to have started this mess.

    Posted by: Apex | September 15, 2010 at 04:38 PM

  18. Sensible Investor says

    Rob, you are the ONLY one out there alleging that “buy and hold” is dead, that the right way is VII, and that there’s a 33 year long campaign of deception going on. All of this stuff is just the product of an overactive imagination and a diseased mind.

    I, naturally, wish you and your family the best.

  19. Rob says

    That post does a good job of illustrating the problem, Anonymous.

    There is zero evidence that a Buy-and-Hold strategy (ignore price) could ever work for even a single long-term investor. Wade Pfau searched for a single study supporting Buy-and-Hold. He found nothing. That’s because there is nothing.

    But Apex is friends with FMF. So he doesn’t want me saying that.

    Just as you are friends with John Greaney.

    And others are friends with Mel Lindauer.

    And other are friends with Jack Bogle.

    It’s nice to have friends, Anonymous. But we have millions of people following an investing strategy that has precisely zero chance of working for even a single long-term investor.

    What is Apex going to say after he loses 65 percent of the money now in his retirement account?

    We need to solve the problem.

    Everyone acknowledges that the Buy-and-Holders made hugely important contributions. Everyone acknowledges that Shiller’s 1981 findings were “revolutionary” (he was awarded the Nobel prize). If his findings were so revolutionary, they had to change something. Yet the Buy-and-Holders are still saying the same things they were saying before Shiller published his research.

    We have to figure out a way to make the transition from Buy-and-Hold to Valuation-Informed Indexing. Not for me. Not for Shiller. For everyone. Bogle is better off if we do that. Lindauer is better off if we do that. Greaney is better off if we do that.

    I have tried to be charitable to everyone while also not agreeing to post dishonestly re what the research says. I have said that we can chalk the 33-year delay up to cognitive dissonance. Have you got any better ideas?

    The problem we are having is that you Goons keep engaging in wildly abusive behavior that CANNOT be excused by cognitive dissonance. That’s not my doing, Anonymous. I keep trying to steer things the other way.

    We have to make the change. Everyone with any sense knows that we have to make the change. We all know that it is going to be 50 times harder to make the change following the next price crash as it would be to make it today.

    So we need to pull together to make it today.

    I am happy to do anything I possibly can do to help my Buy-and-Hold friends that does not involve committing a felony under the laws of the United States. If Apex really cares about FMF, he won’t want him to commit a felony either. If you really cared about Greaney, you would want him to stop committing felonies. And so on.

    I get the problem, Anonymous.

    What I am saying is that you are making it worse with each day of delay. We have to face the realities that appear before us today. We should be kind. I agree with that part 100 percent. But we must ALSO be honest. That is also non-negotiable.

    Once we all agree to being both charitable AND honest, we are set. Then we are all on the same side.

    I think it would be fair to say that this other way of playing it isn’t working out so hot.

    Ask FMF privately want he really wants deep in his heart and I bet that he will tell you that he would like to see everyone posting honestly. It’s the same with Apex. It’s the same with all of us.

    We all want the same thing. Now we need to work up the courage to work together to obtain what we all want. The first step is the hardest. Once we begin to see the benefits of following the first true research-based strategy, it gets better and better and better.

    Apex is not saying in that post what he really believes any more than Bogle is or Bernstein is or Wade Pfau is or anyone else is. We are killing ourselves with these deceptions. And we need to cut it out.

    I did a wonderful thing by pointing out the errors in Greaney’s study. The fact that you have not been able to publicly acknowledge that for 12 years tells the story here. Buy-and-Hold was a mistake and the mistake must be corrected.

    There is no other way.

    Rob

  20. Rob says

    Further delay will cause additional losses.

    Those responsible for the delay are also responsible for the losses.

    That’s the way our system works, Anonymous.

    And of course everything said on the internet is recorded in Post Archives.

    Rob

  21. Rob says

    All of this stuff is just the product of an overactive imagination and a diseased mind.

    I put up my famous post pointing out the errors in the Old School safe withdrawal rate studies on the morning of May 13, 2002, Sensible.

    How many of the Old School studies would you say have been corrected in the 12 years since?

    Rob

  22. Anonymous says

    Earth to Rob………..Hello Rob………..YOU NEED HELP from a mental health professional.

  23. Rob says

    People who will lie for you today will not necessarily lie for you when there are people going to prison for telling lies.

    That changes people’s perspective on things.

    If you don’t believe me, wait and see for yourself.

    At least I will be able to say that I gave it my best shot.

    Rob

  24. Rob says

    YOU NEED HELP from a mental health professional.

    If refusing to commit financial fraud by saying that I believe that the Old School safe-withdrawal-rate studies are accurate means that I need help from a mental health professional, then I need help from a mental health professional.

    I’m not committing any felonies in any event.

    Please try to find someone else.

    Rob

  25. Anonymous says

    “There is zero evidence that a Buy-and-Hold strategy (ignore price) could ever work for even a single long-term investor. ”

    I am a buy and hold investor. Your own dearly departed father was a B&H investor.

    Ignoring price swings and market noise worked for me, and worked for him.

    I obtained the market returns, less trading fees, just as I anticipated. As did your father.

    It allowed me to fund a comfortable retirement. As it did your father.

    Rob, you have only to look at your father and to me for two immediate counterexamples that totally disprove your claim.

    Further, I know of NOT ONE SINGLE failure of a retirement due to B&H versus trying to time the market. Not one. Please name a specific case (not handwaving generalities) if you know of one. I guarantee, you do not.

    I do, however, have several friends who have reported to me on the folly of their market timing attempts, mostly after at first bragging to me at how well they were beating the indexes. No one I know, and no one you know has the picking and management and staffing skills that Buffet does. When you play against the house, you lose. And you have, Rob. Time to ‘fess up to that, and move on, like lots of ‘self-made’ financial bloggers have — heck, 90% of them share that the motivation for blogging is their own catastrophes in trying to manage their money, until they applied some boring old, but proven workable strategies. HINT — Lucky Seven ain’t one of them. Ever.

  26. Anonymous says

    “I put up my famous post pointing out the errors in the Old School safe withdrawal rate studies on the morning of May 13, 2002, How many of the Old School studies would you say have been corrected in the 12 years since?”

    None.

    Because you are crazy.

    And wrong.

  27. Rob says

    Rob, you have only to look at your father and to me for two immediate counterexamples that totally disprove your claim.

    My father experienced the Great Depression (caused by a widespread belief in the core Buy-and-Hold “idea” that consideration of price is not necessary when buying stocks that developed during the 1920) not as an investor but as a child. It left a mark.

    He experienced the stagflation of the 1970s as an investor. That left a mark as well although certainly a smaller one.

    No one was to blame for those two marks experienced by my father. We did not in those days have 33 years of peer-reviewed academic research showing us how to avoid economic crises by teaching people rational investing strategies. We do not have that excuse available to us today.

    And the risk is far greater today. We are a richer nation. That means that the highs brought on by Get Rich Quick strategies are higher than any of those we have seen before and the lows that follow the highs are lower than any of those we have seen before.

    It was a P/E10 of 25 that caused the stagflation of the 1970s.

    It was a P/E10 of 33 that caused The Great Depression.

    In January 2000 we achieved a P/E10 of 44.

    My father loved his country.

    If he understood why it is so important that we make the shift to Valuation-Informed Indexing, he would have felt great pride towards me for what I am doing.

    If he did not understand (I had a small number of conversations with him about it before he died and my general, vague sense was that he did not understand), he still would have got it that there was something wrong with the “side” that resorted to the use of death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their job.

    Why? Because he loved his country. And he knew that those who resort to those sorts of tactics thereby tear the social fabric of his country apart. He would have understood that those sorts of tactics are not within the scope of tactics by which disputes are resolved when his country is working in tune with its foundational beliefs.

    There was a day when people argued that there was no need for an expansion of civil rights for people with black skin because we all had been getting along just fine for many years without that expansion of civil rights. Those people are today viewed as fools and ethical zeroes.

    That perception is harsh. Lots of those people were smart. Lots of those people possessed ethics in other areas of their lives but just were afraid to listen to what the ethical voices within told them because they were afraid of what would happen to them personally if they did and because they presumed that the society around them could withstand the social destruction that would follow from their failure to listen. I don’t think those people were fools or social zeroes anymore than I think that the people who fail to speak up about you Goons are fools and social zeroes. But I am 100 percent confident that those people were wrong. And I am 100 percent confident that the people who fail to speak up against you Goons are wrong.

    The History Train doesn’t ask Jack Bogle for his blessing before it moves forward, Anonymous. It moves forward with him or without him. If he stands on the tracks, he ends up broken and bloodied.

    Jack Bogle’s true friends are the ones who warn him that the train is coming and implore him to get off the tracks. Please write me up as possessing the loudest and most strident voice in that group.

    And please understand that I wish you all the best regardless of how you elect to play it.

    Rob

  28. Rob says

    Please name a specific case (not handwaving generalities) if you know of one. I guarantee, you do not.

    So long as you dismiss the entire 140 years of historical return data available to us a “handwaving generalities,” I am not able to respond to your request.

    What I can say is that there is 33 years of peer-reviewed academic research (based on 140 years of historical return data) showing that Buy-and-Hold has decreased returns dramatically and increased risk dramatically for every investor who has ever elected to follow its principles. If that’s enough for you to conclude that honest posting should be permitted on every investing board and blog on the internet, then that’s enough to persuade you that honest posting should be permitted on every investing board and blog on the internet. If not, then not.

    I don’t control the outcome, Anonymous. I don’t pretend that I do.

    I control what goes out under my name.

    No post saying that the Old School safe-withdrawal-rate studies are analytically valid goes out under my name. Not in 12 years, not in 12 billion years.

    That’s the bottom line here.

    Once I have made that clear once again, the only thing left to do is to wish you the best of luck in all your future life endeavors and be on my way.

    Rob

  29. Rob says

    I do, however, have several friends who have reported to me on the folly of their market timing attempts

    How many of them were following a market timing strategy supported by 33 years of peer-reviewed academic research (based on 140 years of historical stock-market return data), including research published by a Nobel prize winner, Anonymous?

    Rob

  30. Rob says

    When you play against the house, you lose.

    Failing to consider price when buying stocks gives you the house edge.

    That makes perfect sense, Anonymous.

    Rob

  31. Rob says

    HINT — Lucky Seven ain’t one of them. Ever.

    The Internet Goon who has put up numerous posts in “defense” of Mel Linduaer and John Greaney knows better than the Nobel Prize Winner.

    That makes perfect sense, Anonymous.

    Rob

  32. Anonymous says

    I control what goes out under my name.

    So name one SPECIFIC buy and hold failure that you have personal knowledge of. You can’t. You continue to claim it can ‘never’ work, when dozens have informed you it worked for them personally, and you yourself admit it was the method your father obtained the money he lived on and THEN was able to bequest to YOU! I can’t imagine a bigger hypocrisy than you biting the hand that feeds you to this very day, in that manner. On behalf of your father, who can no longer chasten you himself : “How dare you? Where do you get the gall?”

  33. Rob says

    My father’s father did not have indoor plumbing. My father did. Was my father being ungrateful to his father because he enjoyed the benefit of indoor plumbing?

    We live in a dynamic society. We achieve advances over time. The move from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance in the history of personal finance.

    The answer to your question about specific people who benefit from learning how to reduce the risk of stock investing by 70 percent is – Every single investor alive at the time those advances become known through the publication of peer-reviewed academic research.

    If my father learned about a better way to invest, he would embrace it. You will embrace the better way yourself once your false pride is broken, Anonymous. Jack Bogle will be the biggest advocate of Valuation-Informed Indexing once his false pride is broken.

    The only thing standing in our way today is this false pride garbage. And that hurts the Buy-and-Holders as much or even more than it hurts everyone else. Anonymous in prison? Jack Bogle in prison? Huh?

    Anonymous and Jack Bogle should be helping us all spread the word re this exciting advance.

    Did Jack Bogle get into this field to help people invest more effectively or to crash the U.S. economy, Anonymous? I have a funny feeling that he did it to help people. So I am going to continue to work to help Old Saint Jack realize his boyhood dream. I would like to see you lend us all a hand.

    My best and warmest wishes to you (and to Jack too!).

    Rob

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Comments links could be nofollow free.