Set forth below is the text of a comment that I recently put to the Joe Taxpayer blog:
More of Rob’s fantasy that it is a vast conspiracy.
How about a vast cognitive dissonance, Bob? Or a conspiracy of ignorance?
Humans had the ability to fly for many years before the first airplane was put in the sky. Was the reason we did not fly for so many years that there was a conspiracy or was it just that we did not know it all.
Humans had the ability to harness of the power of electricity for many years before we made use of it. Was it a conspiracy or was it just that we did not know?
Humans had the ability to cure many diseases before we did so. Was it a conspiracy or was it just that we did not know?
We did not understand the fundamental rules of how stock investing works in 1980.
In 1981 the research was published that took us where we all deep in our hearts long to be.
We now know what we need to know. Intellectually.
But we can’t talk about what we know. Because it hurts the feelings of those who went with what we once thought we knew to do so. So knowing by itself doesn’t do us a whole lot of good, does it?
I contacted someone I met at FinCon12 to see if she would like me to hire her to help me get my message before more people. She likes me. She hasn’t said precisely what she thinks of the message but she has certainly never demonstrated any hostility towards it. She is smart. She is particularly strong in some areas in which I am particularly weak. Sounds like a good match, right?
She has shown interest in the idea of working with me. But she doesn’t think I can succeed unless I stop talking about “the haters.”
I don’t agree. THE HATERS ARE THE ENTIRE FREAKIN’ PROBLEM.
I am not some investing genius. I saw that the Old School SWR studies get the numbers wildly wrong ten years before the Wall Street Journal saw it. Do you know how hard it was to see that? It was like seeing that 2 plus 2 does not equal 22. The studies don’t include an adjustment for valuations! There’s 32 years of peer-reviewed academic research showing that valuations is the most important factor in ANY investing analysis. So the numbers HAD to be wildly wrong! In ordinary circumstances, a five-year-old child could see that.
So why didn’t Jack Bogle and all these other Big Shots see it?
They didn’t see it because they do not want to see it.
That’s the entire story.
This is not a numbers story or an intellect story or a research story. This is an EMOTIONS story.
The fact that the Buy-and-Holders have spent 11 years engaging in hate rather than in sharing with millions of people all of the amazing breakthrough insights we have come up with together is THE ENTIRE STORY.
If I don’t discuss the hate, I am not telling the story. That IS the story. Our hate is the holdup. Our burning hate for what the last 32 years of peer-reviewed academic research tells us about stock investing was the primary cause of the economic criss. We have bankrupted tens of thousands of businesses with our hate. We have put millions of people out of work with our hate. And we are just getting started! We are still in the early days of this ultimate Buy-and-Hold Crisis.
We are on the 99-yard line. Our society works. Because it is a dynamic society. When people do things wrong, our social systems have ways of figuring that out and getting those wrong things replaced with right things. We are very, very close to doing that in the investing realm. There is one thing that stands in our way.
The people who have spent decades of their lives either promoting Buy-and-Hold strategies or following Buy-and-Hold strategies very, very, very, very, very much do not want us to go forward. It hurts their feelings to acknowledge that they have been taken. It hurts their feelings to know that they are going to need to rebuild their Big Shot status in a world in which lots of other people will be competing with them for that Big Shot status.
There is nothing else.
Wade Pfau researched this question. He wanted to know if there had ever been a single study published backing up the key Buy-and-Hold assertion that there is no need to engage in long-term timing. He searched and he searched and he searched and he never found a single study.
He went to the Bogleheads Forum and asked f anyone there knew of a single study supporting the key Buy-and-Hold claim. Jack Bogle did not know of a single study supporting Buy-and-Hold. Bill Bernstrein did not know of a single study supporting Buy-and-Hold. Larry Swedroe did not know of a single study supporting Buy-and-Hold. Rick Ferri did not know of a single study supporting Buy-and-Hold.
Do you want to know what I think?
I think none of these people knew of a single study because there has never been a single study. I think Wade was right. I think that’s why they threatened to get him fired from his job if he continued to publish honest research.
And I think the cover-up is doomed.
Perhaps no one on the internet will be willing to take on the Goons. I find that an amazing reality. But perhaps it is so. It has certainly been largely so for 11 years.
But there’s this other thing.
The next stock crash. The 65 percent price drop. The Second Great Depression.
People are going to notice that.
It’s going to be written up in all the papers.
THEN people are going to work up the courage to speak out.
If they don’t, we all go down together. If we all think it is such a horrible, horrible thing to say out loud that Old Saint Jack dropped the ball re this one, then it’s out of my hands. At least I will have the small consolation of knowing that I gave it my best shot.
It wasn’t a conspiracy when it started. Had Shiller published his research in 1971 instead of 1981, the famous book would have been called “A Valuation-Informed Walk Down Wall Street.” The Buy-and-Hold Pioneers were trying to do what I am trying to do, They are trying to help people.
It’s SORT of a conspiracy now that we are in the cover-up stage. But it’s not all people trying to make a buck. The woman I contacted to help me get my message out stands to make a buck by taking it the other way. Hundreds of my blogger friends could make a buck taking it the other way. They could build blogs explaining how Valuation-Informed Indexing works and after the next crash hits, they would become famous because they would have one of the few blogs that tell the truth about how stock investing works in the real world.
Why do all these people who in ordinary circumstances are perfectly happy to make a buck not have much interest in making a buck re this one?
It’s the Social Stigma.
The woman told me that the people sitting around her during my Ignite talk felt that I was “bitter.” She doesn’t want people saying that about her. None of us want lots of other people saying that sort of thing about us. So when we have doubts, we keep it zipped. It’s not our fight, we tell ourselves. Let someone else take on the haters.
I expect to make many hundreds of millions of dollars from this.
And I expect to feel good making it. Because this is the biggest advance in our understanding of how stock investing works in the history of investing analysis.
I don’t like having the hate directed at me. Obviously. But I don’t like posting dishonestly about what the research says either. So I have never given two seconds of consideration to playing it the other way.
Either we will all win (which means I will win most of all) or we will all lose (which means my loss is no worse than anyone else’s loss). Those are the only two possible outcomes.
It’s not a conspiracy in the sense in which that word is usually used. There were not a bunch of evil people who got together in a smoke-filled room to do us in. But there WERE humans. And those humans DID make the sort of mistakes that humans have since the beginning of time been known to make. And those human mistake-makers HAVE been engaging in brutally abusive behavior to cover up their mistakes for 11 years now.
Why are these so intense?
Because it matters so much. Because the mistake was so darn big.
Is that a bad thing?
It is not.
It is a good thing.
Correcting a huge mistake takes us forward in a huge way.
I can’t wait to see all the human enrichment that will follow when we get down to the business of CORRECTING the mistake.
Do I need to tell people about the haters to get the mistake corrected?
There is no other way to explain to people why we didn’t reduce the risk of stock investing by 70 percent back in 1981, when we first learned intellectually how to do it.
I believe we will survive. I don’t believe that I am the only person alive who appreciates the good things that our economic and political systems have brought us all. So I think there will come a day when I will be able to persuade others to help out. It won’t take many. We have 32 years of peer-reviewed academic research behind us. When we have ten people standing by each other so that the Goons can no longer destroy us one by one, it will be over.
In ordinary circumstances, Buy-and-Hold would have died gradually, a little bit at a time year by year by year. Because of the 11-year cover-up, things have been set up so that it will die all at once, once we get those 10 people willing to stand up for each other in the face of the brutal assaults of the Buy-and-Hold Goons.
It’s getting better. I have had a front-row seat to all this going back to the first day, and I can tell you that there are lots and lots of signs that it is getting better.
When I get those 10 people assembled in one place (my site!), it’s going to get a LOT better very, very quickly. There will be HUNDREDS of blogs promoting Valuation-Informed Indexing in days to come. They will be the most popular blogs on the internet. Their owners will get very, very rich. And they will feel rich inside too because they will know how many human lives have benefitted from their courage.
Yours in eternal bitterness,