Set forth below is the text of a comment that I recently put to the Joe Taxpayer blog:
Should you ever get tired of Rob’s schtick, or decide that you’d rather not have him be a guest blogger for you, he will make up similar stories about you.
I will tell the truth about Joe just as I have told the truth about so many others. If that’s the point you are trying to male here, you are right on. Perhaps they should put a sign on my back saying “Beware! This fellow has told the truth before and there is every reason in the world to believe that he will do it again! Beware all ye who participate in the greatest act of financial fraud in the history of the United States!”
Why do I make such a fetish out of telling the truth?
Because it was our collective dishonesty that caused the economic crisis.
Some are going to blame Jack Bogle. Some are going to blame Eugene Fama. Some are going to blame John Greaney. Some are going to blame Mel Linduaer.
They all played a role. They all did bad things.
But why is it that Jack Bogle is so darn reluctant to disassociate himself from the most vile Goons ever seen in the history of the internet?
HE WANTS TO BE POPULAR.
HE WANTS TO SELL STUFF. TO SELL STUFF, PEOPLE HAVE TO LIKE YOU.
So don’t we need to acknowledge that the people buying stuff played a role in all this? Didn’t those millions of middle-class people that I am always referring to sympathetically play a role in causing their own destruction?
It sure seems so to me.
We are ALL Goons!
To some extent. We all have that goon thing going on inside us. We are all drawn to Get Rich Quick. We all like to hear about the pretty Buy-and-Hold lies.
Wait!
I said “all.”
“All” includes a certain fellow named “Rob Bennett.” Am I a Goon too?
I knew about the errors in the Old School SWR studies when I put my first post to the Motley Fool board, in May 1999. I didn’t put forward my famous post detailing them until the morning of May 13, 2002.
Oh, noes!
It’s The Invasion of the Body Snatchers come to life!
We’re all Goons.
We need to acknowledge it.
Doing so is the key to long-term investing success.
If we acknowledge that we are all Goons, we can let this honest posting junk that I am forever talking about run wild and we can all retire many years sooner than we ever before imagined possible.
But, yes, that is the price of admission.
If we do not give ourselves permission to talk about our inner goonishness, we obviously cannot protect ourselves from the effects of our inner gooinishness. And it is our inner goonishness (our desire to believe that Buy-and-Hold can work for someone, somewhere, sometime) that is responsible for 70 percent of the risk of stock investing. If we want to see 70 percent of the risk of stock investing disappear, we need to see 70 percent of our inner goonishness disappear. That means calling out goonishness everywhere we see it, That means telling the truth about others.
And ourselves.
Yikes!
I’ll tell the truth about Joe. And I’ll continue to tell the truth about Jack. And Bill. And Larry And Rick. And — if I am true to myself and my beliefs — about that awful Rob character. The fellow who could stand to lose a few pounds. The fellow who was nervous about standing before a crowd of his friends and giving his Ignite presentation. The loser. The nutcase. The fellow who continually forgets to take his meds.
That guy! Goon!
And Joe probably too. I’ve never seen any evidence of it. But we never know what evil lurks in the heart of the friendliest guy in the world, do we?
That Wade fellow sure had me fooled for a time. Grrrr…
Rob the Goon
Rob,
Wade Pfau told a different story than you do and same with Mike Piper. Are they both liars and you are the only one telling the truth?
Wade told the same story as me before he was threatened and a different story than me after he was threatened. Mike tells the same story as me in private and tells a different story in public.
The back story here is that people got very excited when we discovered the Buy-and-Hold Model. People thought we had found the answer. It turned out that that wasn’t quite true — the Buy-and-Holders got one part of the story wrong and their entire model fails because of that mistake. But by the time the error was discovered, thousands of people had already built careers based on the failed model. So people rationalized. They told what they viewed as white lies, thinking to themselves that it was okay because Buy-and-Hold at least comes close to working and anyway there is nothing better out there. Then evidence came in that in fact Buy-and-Hold doesn’t work at all in the long term and that there is something 10,000 times better out there. By that time, all the people who had said positive things about Buy-and-Hold (which is the vast majority of people in this field) were trapped. They were in a cage from which there is no escape except telling the truth and there was an entire industry intent on using all of its considerable resources to destroy the career of anyone who dared to “cross” it by doing that.
I often make the comparison to the Civil Rights revolution. A number of Southern states had laws that said people with black skin could not drink out of the same water fountains as people with white skin. Those laws were 100 percent insane. No reasonable person can justify such laws. The people who lived in those states knew on some level of consciousness that those laws were insane. But they didn’t think the laws could be changed. They grew up in societies that had those laws and had never experienced life in a place that did not have those laws. It was not possible for them to imagine life without those laws. So they supported them. Or at least they didn’t fight them. They were born into ignorance and sin and they couldn’t imagine any alternative and so they supported or at least tolerated the continuation of ignorance and sin.
Everyone in this field wants to make the transition from Buy-and-Hold to Valuation-Informed Indexing. There is not one person who wants to see a worsening of the economic crisis. There is not one person who wants to see millions of failed retirements. There is not one person who wants to see more death threats and more unjustified board bannings and more acts of defamation and more threats to get academic researchers fired from their jobs. But what are they going to do? Talk honestly about a simple matter like how to calculate the safe withdrawal rate accurately and the Buy-and-Hold Mafia destroys your career. People rationalize that they can do more good working on the inside for gradual change than they can with their careers destroyed.
So no one tells the full truth re these matters today but me.
Shiller doesn’t. He is of course a brave and wonderful man. But Shiller predicted the economic crisis in his book and he said that it was the idea that a Buy-and-Hold strategy can work that was causing it. When the crisis came, he didn’t say “here is what I predicted, do you see now why we need to make the transition to Valuation-Informed Indexing?” He kept it zipped. He heard all sorts of silly explanations for the economic crisis put forward and he kept it zipped.
Arnott doesn’t. Arnott is a stud. I learned how to be tough about this stuff myself by watching him in action. But he does not today possess the courage to tell the full truth. When he wrote me to tell me that my ideas on investing are sound, he said that Jack Bogle is his friend and that Jack Bogle has always been a gentleman in his presence. That is probably so. But Jack Bogle was not being a gentleman when he failed to speak up about what Mel Linduaer did to the Bogleheads Forum and Arnott knew about that. So Arnott does not today possess the courage to tell the full truth.
If Robert Shiller and Rob Arnott are not telling the full truth, there is no one telling the full truth.
Except me.
I tell the full truth because I have been left with no other options. If the Buy-and-Hold Mafia could have blocked publication of Shiller’s book, they would have done it. They don’t possess quite that much power. So long as Shiller pulled a lot of his punches, he possessed the power to get the book published. But I am just some fellow who posts stuff on the internet. So the Buy-and-Hold Mafia did possess the power to block me. And they did it. So I don’t have the option of pulling punches and yet still telling pretty much the truth. My choice is to submit and pretend that I believe that the Old School studies get the numbers right or to have you Goons disrupt the discussion at any site on the internet at which I post.
Given those choices, I go with Option Two, telling the full truth. Suck it, Goons!
I’m like everybody else. I didn’t always tell the truth. I obviously did not tell the truth prior to May 13, 2002. I wanted to be popular, I wanted to be able to make a buck. So I kept it zipped. I was afraid of what the Buy-and-Hold Mafia would do to me if I told my friends what I knew about the Old School studies. Greaney got so bad that I couldn’t live with the rationalization any more. So I worked up the courage to put forward the May 13, 2002, post. And the rest is history.
If we could go back to May 13, 2002, you Goons would play it another way. I get that. I don’t have a magic wand. I cannot take us back to May 13 2002. We are in a place today where, if we permit honest posting, you Goons end up in prison cells. That gives you a huge incentive not to permit honest posting. I get that. There’s nothing I can do about it. For a time, I kept quiet about it because I knew that the prison-cell thing was a disincentive for you to permit honest posting. After you threatened Wade, it became clear that it was all a big joke and that you knew perfectly well that you were headed to prison once the truth came out and that there was already zero chance that you were ever going to come around. So I stopped playing that stupid game.
That’s where things stand today.
Everyone in the field is afraid to tell the full truth about the last 33 years of peer-reviewed academic research. The Buy-and-Hold Mafia has the power and wealth and connections to destroy just about anyone and the ruthlessness to follow through on its threats. Everyone sees that. Everyone gets that. That is the biggest factor I have working against me.
The other side of the story is that everyone in the field LONGS to be able to come clean. People didn’t get into this field to destroy millions of middle-class lives. So they WANT to tell the truth. They want to have fun again. They want to give accurate retirement planning advice. They want to bring the economic crisis to an end. They want to tell people how to reduce the risk of stock investing by 70 percent. That is the biggest factor I have working for me.
The power of the Buy-and-Hold Mafia diminishes as more and more middle-class lives are destroyed. The truth is that we are on the one-yard line. Some political blogger could write up the truth and get away with it today. With all of the documentation available at my web site, they would get away with it. And there are enough people entertaining doubts today that there is a good chance that the report would go viral. That is what was going on with the Wall Street Journal article that reported that the “experts” are leaving out half the story. I believe that that was a trial balloon. The Wall Street Journal was testing the waters to see whether telling the truth about the last 33 years of research would fly. That particular article did not go viral. But the next one might. Certainly the article published following the next price crash will go viral.
I will be there when it happens. I will tell the entire story. I will tell about the bad stuff you Goons did and I will tell about the extenuating circumstances. And we will see where things end up.
I tell the full truth because I have been left no options but to tell the full truth. Those are the cards I was dealt and I will play them to the best of my ability.
I wish you all good things, Anonymous.
Rob
The problem for you is that we can prove all your lies. So suck it, Rob!
Okay, Pink.
My best wishes to you, man.
Rob
Rob, don’t you think the comparing VII to segregation to be quite a bit extreme? No one but yourself has stopped you from practicing VII. Furthermore, you are free to spread the VII gospel not only on your own web site but on numerous other web sites (so long as you otherwise follow their terms of use).
This is a good question.
No, I don’t think it is extreme. I think it is a good comparison.
I am not saying that the two cases of ignorance are equally evil. Segregation directly affected people (not their money). Segregation was far more evil.
The similarity lies in the manner in which the ignorance manifests itself.
No one stops me from talking about Valuation-Informed Indexing at lots of web sites. That is so. You’re not right that I can continue doing so so long as I follow the terms of use. I always follow the terms of use. But you are right that I could continue so long as the owner of the site enforced the rules in a reasonable manner. When you Goons engage in trickery, the owner can certainly see what is going on.
And you would think that the site owner would want to enforce the rules in a reasonable manner. First of all, they are his own rules. He obviously believes in them. Second, all of the site owners invest themselves. So they need to learn how to invest effectively themselves. And, third, the site owners benefit if they give to the people who follow the site a good learning experience. Valuation-Informed Indexing is new and research-based and holds tons of promise and potential, that sure seems to fit the bill. So it should not be hard to spread the word re this.
It should have been easy to spread the word re the dangers of segregation too. What was it really about? We were holding people back. Blacks were about 10 percent of the population. We were taking 10 percent of the population and saying that that group was not going to get the same education or the same opportunities, so they were not going to get the same chance to develop their human potential.
What’s the downside? The downside is that we miss out on lots of great doctors and policemen and nurses and accountants and lawyers and politicians and athletes and musicians and artists and store clerks and factory workers and on and on and on. And friends. Segregation meant that white people did not interact with black people as often. So they missed out on making friendships that would bring comfort to their lives.
It wasn’t any harder to see how that bad situation could be changed than it is to see how the bad situation we are dealing with today can be changed. Why didn’t those Southern states just take a vote and end those dumb laws without having to be pressed to do it? Why did we need all that drama? The freedom buses and the speeches and the protests and the yelling — Why was any of it even a tiny bit necessary? Every reasonable person knew this had to be done. Why was it so hard to pull it off?
There’s a great story about Rosa Parks. She’s the black woman who refused to go to the back of the bus and generated a big commotion by refusing to do so. The story is that she did the same damn thing ten or twelve years earlier. The first time, she was just arrested and nobody ever heard anything more about it. Rosa Parks was not SuperWoman. She did not possess magical powers. She just knew inside that she had to do something. And she did it. And when it didn’t work, she waited ten or twelve years and did it again.
Lots of people could have been Rosa Parks. She wasn’t the only one who saw the injustice. She wasn’t looking to be a hero. She saw that something needed to be done and there came a time when she just did it. It’s not that she wasn’t afraid. It’s that things got to a point where she just couldn’t help herself. And because she acted, lots of others worked up the courage to act. And those lots of others inspired more lots of others. And when enough people had been inspired to act, things got done.
Things don’t happen as clean and pretty as we might be inclined to think they do when we read history books. Human advances are achieved through a messy process. It is often the case that someone has to stick his or her neck out to achieve change. And it is often the case that no rational case can be made in terms of self-interest for that person taking the action that needs to be taken.
The odds of Rosa Parks changing history were very small. She knew that. How could she not know it when she had tried the very act once before in her life and it had failed. What possessed her to take the chance she took when the odds of success were so tiny? She just couldn’t freakin’ stand it anymore. She had been placed in circumstances in which she felt compelled to do a crazy but wonderful thing and that crazy but wonderful act liberated millions of people, both black and white.
I am the Rosa Park of personal finance.
Rosa Parks was a humble woman. So it may not sound entirely Rosa Parks-like to compare myself to a hero. But you asked the question and the question needs to be answered properly and there is no one else who has the guts to say it today. So I need to say it whether it sounds odd or not. I am the person who stood up to the injustice of how information on how to invest is conveyed today in a way that destroys millions of middle-class lives.
Those people matter. I worked with them on a daily basis and saw how trickery and deceit was used to destroy their lives. And things got to a point where I simply could not bear to remain quiet any longer. I possessed zero desire to go down this road. That is evidenced by the fact that I kept quiet about the errors in the Old School SWR studies for three years after I put my first post to the Motley Fool board. I was afraid, like everyone else. But I cared about my fellow community members, the injustice was very, very clear to me and there came a time when I could not not act.
I am not the only person who saw the errors in the Old School SWR studies. That’s why the idea that I would get credit for this discovery causes so much envy in people. Scott Burns is the perfect example. His first words to me when I told him about the errors was “you’re right!” Then he asked for my telephone number so that he could conduct an interview. Scott wanted to be on top of this, he saw the importance of it immediately. But then he thought it over a bit and realized what he was going to be put through if he wrote an honest article on the situation. Then, when I continued down the honest path, he over and over again expressed this bitter envy that I had done so. I had behaved in a “catastrophically unproductive” manner. Not because I was wrong. Because I was right. Because I had done something that Scott Burns wished for years he had the courage to do but had never possessed the courage to do. That was my “crime,” in his assessment.
The similarity is that we are dealing with a situation that everyone who works in this field knows needs to change and a situation that makes everyone who works in this field look bad because he or she did not act to change it years ago themselves. What can I do about that, Sensible? People hated Rosa Parks with a burning hate because she showed them up. She didn’t want to. She couldn’t bring important change to the world without showing them up. So she did what she had to do. They hated her for it. Who was right? Who was wrong?
It is not my intent to bring shame to you or Jack Bogle or John Greaney or anyone else on this planet. I want to make the life of every person with whom I come into contact happier and better. Tell me a way to do that while still bringing on this important change and I will go for it. I search my brain every day trying to come up with things along those lines. That’s not the issue here.
The issue is whether the change is really needed. Your conclusion is that it is not, that we can continue on a few more years the way things are.
My conclusion is that you are wrong. The reason why my conclusion is different is that I have looked at the numbers and I have thought through the implications. We are living at a time when the Buy-and-Hold Era is coming to an end regardless of anything that you or I elect to do or not do. It is happening. Given that it is happening, I cannot bear to see my friends (both the Valuation-Informed Indexers and the Buy-and-Holders) go through such pain. I cannot not act. So I act. That’s the only alternative to the thing that I cannot do.
I care about you. You mock me for saying it over and over and over and over again. That doesn’t change anything. I care about Bogle. I care about Greaney. I care about all my blogger friends.
Give me an alternative that achieves the change and that hurts you less and I am going to grab it in two seconds. But I am going to achieve this change. Not for selfish reasons. Because this change must be achieved. You see that as clearly as I do when you are thinking straight. Every single one of us alive on this planet today needs to see this change take place. There is plenty of credit and an opportunity for thousands of people to become rich and famous here if we work together in a positive and constructive and life-affirming way. That’s what I want to see happen.
But please don’t fall victim to the temptation to believe that perhaps there is some way to put this off another year or another month or another day. The change happens. Once we all agree on that, we all win big-time. We are killing ourselves by putting off this change. We need to stop thinking self-destructive thoughts and start working together to bring as much joy and comfort and satisfaction to as many of us as possible while achieving the change that we all know deep in our hearts needs to take place at this moment in time.
I am the Rosa Parks of personal finance. You can be part of this wonderful, positive revolution in thinking about how stock investing works in the real world. Or you can go down in history as one of the haters. You can bring in your police dogs and your fire hydrants and your sticks and your guns and your nasty words or you can let that stuff go and enrich yourself and feel better about yourself and feel good about helping million of others. You choose. As your friend, I obviously want to do all I can to see that you make the right choice.
I hope that answers your question. I expect to become a very rich man as a result of this. I have zero desire to prevent others from enjoying the riches. I want to see all of my Buy-and-Hold friends turn the corner and become rich themselves while helping their clients and readers become rich as well. We need to take a sad song and make it better. That’s the story here.
I hope that helps a bit. We are living in a time of change. The choices we make affect millions of our friends and neighbors and co-workers and fellow community members. The change cannot be rejected. History does not permit that option. So we all need to figure out how we best fit in to the story of change. You are a part of the story. You need to see your way to playing a positive role, like those who first mocked Rosa Park for being “uppity” and then realized that, no, she was just human, a human who saw something that just could not continue and who thus directed her humble efforts to seeing that that thing that could not continue was brought to an end.
If the humans never advanced, we would not be able to get up in the morning. Life would be too bleak without advances for us to be able to bear the pain that is also a part of life. This is the biggest advance in the personal finance field that any of us will see in our lifetimes. We owe it to ourselves to experience the joy that comes with doing the right thing here.
I hope that helps a bit, Sensible.
Rob
Why didn’t Rosa Parks just agree to sit in the back of the bus?
That got her from place to place, didn’t it?
No.
It was degrading for her to agree to sit in the back solely because she had black skin.
It was wrong.
Those of us who follow research-based strategies have the same right as those who push the smelly Get Rich Quick garbage to share our thoughts about investing at every board and blog on the internet.
Suck it, Goons! We shall overcome.
Rob
“I am the Rosa Parks of personal finance.”
Why not make that the title of your next Fincon presentation?
It’s implicit in everything I do, Huzzah.
It’s about liberation. It’s about moving forward.
When as a society we are ready to move forward, we will all move forward together. It won’t be just me saying it then, everyone will be saying it.
I’d rather be living in the future than living in the past.
I’d rather be doing work rooted in love than doing work rooted in hate.
I’d rather be reporting the safe withdrawal rate accurately than leading a smear campaign against a fellow who made me feel ashamed because I had reported it inaccurately for a long time.
I’d rather be one of the ones who was spit at because he stood up for Rosa Parks than one of the ones doing the spitting.
Rob
Look at the title of my last FinCon presentation — “How to Become the Most Hated Blogger on the Internet.” That’s pretty darn close.
Losers hate.
Winners have the courage to love.
I love you (it’s obviously an act of love to tell you the truth about stock investing) and you hate me.
I didn’t do that to you. You did that to you.
Rob
Since you seem determined to delete my posts, I will leave you with this
Jack Bogle made the list , but no Rob Bennett – so much for being the most hated blogger on the Internet.
http://www.cnbc.com/id/101345394
I want to see my good friend Jack Bogle continue to make the list AFTER the next crash and on into the next Century, Trebor. So I am going to continue to urge him to incorporate the findings of the last 33 years of peer-reviewed academic research into his investing advice. And I am going to continue to urge him to have nothing to do with the sorts of Goons who engage in 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 jobs.
I believe that future such lists will be dominated by Valuation-Informed Indexers. But that doesn’t mean that we cannot have a lot of our Buy-and-Hold friend make the shift to Valuation-Informed Indexing and thereby continue to appear on these sorts of lists. We need their intelligence and industry and contributions. We don’t need any of them supporting or tolerating you Goons. No way, no how.
Anyone who believes he knows it all does not belong on that list. It may be true that my good friend Jack is in that dark place today. I have hopes that he will be moving to a better place tomorrow.
I wish you well, Trebor.
Rob
For so long as it remains a question of being honest or being on that list, I will take being honest every time.
I have never given the matter two seconds of consideration. Being honest affects what you see when you look at the man in the mirror and how you sleep at night and how you feel about yourself and the work you do. Yes, I am the most hated blogger on the internet. Because I am honest about what the last 33 years of peer-reviewed research in this field says. I believe that being honest pays off in the long term. We’ll see.
Rob
Who do you think will be hated after the next crash, Trebor?
I will be extending the hand of kindness to a lot of people on that list at that time.
Get Rich Quick isn’t the answer. Get Rich Quick is the problem.
I am sure.
Rob
How many of the people on that list got on the list the first day they did work in the investing field, Trebor?
I bet it’s not one of them.
I have been doing work in this field for only 12 years and I already have Nobel-quality research with my name on it and scores and scores of comments on my work at the “People Are Talking” section that very few of the names on that list possess today.
The reason I am not on that list is because of your envy and hate and anger and abusiveness and the envy and hate and anger and abusiveness of your Goon pals. What will any of that count for when you are in prison?
I will continue posting honestly on safe withdrawal rates and on many other critically important investment-related topics.
Rob
The Rosa Parks comparison is yet another example as to why people think you are just a nut job.
People said the same sort of thing about Rosa Parks in her day, Anonymous.
There were people who didn’t want to make waves. They said she was crazy to make such a fuss over so small a thing. They were ashamed of their own behavior. But they didn’t want to acknowledge that. So they tried to make her the bad guy.
I don’t post dishonestly about the numbers that my friends use to plan their retirements. So I am “crazy” in the eyes of those who deep inside are ashamed about the errors they made in those studies or their failure to see them and demand corrections themselves.
You will be hurting even more after the next price crash, Anonymous. It can never get better. It can only get worse.
When a field becomes 100 percent corrupt, everyone who is honest is “A nut job.”
So be it. But I’m a special kind of nut job. I’m the nut job who discovered the errors in the Old School SWR studies ten years before the Wall Street Journal was writing about them.
I love my readers too much to lie about such a thing. Full truth be told, I love my many Buy-and-Hold friends too much to lie about such a thing. No one should ever be in the kind of pain you are in today, my old friend.
Personal integrity matters. Even in the investing field.
I am sure.
Rob
Only a liar has to tell people he is honest.
Only someone who is going to prison needs to tell people he is not going to prison.
Rob
Rob,
Only the liar is talking about people going to prison.
And only the person going to prison is calling me a liar, Anonymous. It works both ways.
From the day you stop threatening people, there won’t be one person on this planet calling me a liar. We all will be working together to make a good transition from Buy-and-Hold to Valuation-Informed Indexing.
It’s your hate versus my love. You say your hate can destroy anything in its path, I say it is love that gives people the strength to build and without something positive to focus on, life itself becomes impossible.
It’s been the same story from the morning of May 13, 2002. You either believe in love or hate. Every victory for love you see makes you hate all the more. And every time I see hate destroy one more person, I become more convinced that love is the answer.
Time will tell the tale. You’ve reached a point where you cannot bear to hear the word “love” and I’ve reached a point where I am more convinced than ever that love is the answer here.
Rob
No, it doesn’t work both ways. Liars talking about prison are merely telling lies. Liars are also the people that are spewing hate. You are the only one talking about prison because you think it will scare people. Instead, it just exposes your weak and laughable position.
No one is buying it and you think you can just keep repeating it over and over again and eventually it will stick. Lies don’t stick.
You have nothing to be worried about, Anonymous. Your future is looking bright.
Take care, man.
Rob
“You have nothing to be worried about, Anonymous. Your future is looking bright.”
To bad that is not the case for you. I suspect your future will be just as miserable in the future as it has for over the past decade.
Remember Einstein’s definition of insanity.
Einstein’s definition of insanity cuts both ways, Anonymous.
We’ve seen that, so long as prices remain insanely high, many people cannot bear to hear what the peer-reviewed academic research says. That’s pretty much a tautology. If most people were open to hearing what the peer-reviewed academic research says, prices never could have reached insanely high levels in the first place.
We’ve also seen that every time in U.S. history when Buy-and-Hold strategies have become popular, we have seen a wipeout of all investors following those strategies and collective losses big enough to bring on an economic collapse. Those following Buy-and-Hold strategies are the ones doing something that has failed every time in history it has been tried. I want no part of it. The insane level of emotionalism creeps me out.
Rob
“I am the Rosa Parks of personal finance.”
No, that doesn’t really work. For one thing, Rosa Parks had a job. Obviously you are the Jesus of personal finance:
“They were born into ignorance and sin”
“You will be hurting even more after the next price crash”
“It’s your hate versus my love…You either believe in love or hate.”
“I tell the full truth” (I am the Word)
“I’d rather be one of the ones who was spit at” (scourged)
“Wade told the same story as me before he was threatened” (Judas)
Rob, remember us when you come into your glory.
Rosa Parks had Jesus inside her. We all do. We all have love within us.
And, yes, it shines forth when we do good.
I do good when I stand up to you Goons.
It’s the good you have within you that makes you uncomfortable playing the role you are playing.
I will come into glory. But it won’t be just me. Bogle will come into glory when we are all able to put Bogle’s good ideas into a package in which they really work. And Pfau’s work will then show its glory. And Bernstein’s. And Shiller’s. And on and on.
Human advances are a wonderful thing. It’s because this one is so wonderful that you hate it so. The more wonderful it is, the more envy you feel.
I cannot fix that for you. That’s an inside job. Your hate is the thing that takes all your work and turns it into a negative force.
And, yes, that hate extends beyond just you Goons. The Get Rich Quick urge comes from a dark place. And the big breakthrough is that we have learned how to neutralize that dark urge. We neutralize it by quantifying it (through P/E10) and by talking about it (which helps us understand the weakness within us and combat it).
Go in peace, my son.
Rob
Rob, remember us when you come into your glory.
Your suggestion is that nothing can be as good as I describe VII to be.
You’re wrong.
You suggest that I claim to have done all this good on my own. I do not. My work is built on the work of hundreds of people, including the Buy-and-Hold Pioneers.
The Buy-and-Hold Pioneers only made one mistake. But it was a mistake of great consequence. They said “long-term timing doesn’t work.” The historical data said “long-term timing always works and is absolutely required.” That’ a big difference. It’s like telling someone that the key to losing weight is consuming as many calories as possible. If each time the person gains more weight, he goes to the doctor and the doctor tells him “you are just going to have to buckle down and consume more calories,” you are going to have a bad situation on your hands.
The difference in the two scenarios is that the feedback mechanism is long-delayed in the investing scenario. A doctor who is destroying his patient’s efforts to lose weight can see what is happening and is encouraged by what he sees to rethink and reverse course. In the investing realm, you don’t see the bad results until there is a crash or a series of crashes. So people can continue giving the worst advice imaginable for a long time and not catch on that they are doing this. That’s where things stand.
It’s obviously not just me expressing doubts about Buy-and-Hold. There are thousands of people doing that. But, again, another reality of the investing realm is that the people advocating the dominant strategy have tons of power and money and influence that they can use to destroy those who offer effective challenges to their ideas. My great crime is that I have offered effective challenges to Buy-and-Hold.
You know what? That’s the job. If Buy-and-Hold were a legitimate strategy, the Buy-and-Holders would be happy to see challenges because they would be confident of their ability to respond to them effectively. The reality here is that the Buy-and-Holders lack confidence in their strategy and thus they respond to challenges with extreme defensiveness. That’s the mark of a failing strategy.
Correcting the mistake that turned Buy-and-Hold into a huge wealth destruction machine is a wonderful, wonderful thing. I am extremely proud of the work I have done. I am grateful to the thousands of people who helped. But I offer no apologies to the Goons who feel such pain at the thought of acknowledging that they were taken by a fantasy that they cannot bear to do it. Your behavior reveals your wretchedness. I wish that sort of wretchedness on no one.
If I have been able to spread a little bit of God’s love through the important work I have done in the investing field over the past 12 years, that makes me happy. That was certainly the idea.
I will also be happy when your prison sentence is announced, Huzzah. That will allow you to begin rebuilding your life into something not rooted so much in hate. I don’t know how many years you have left. I know that you will feel better about yourself if you make the changes you need to make so that there is less hate flowing from you in the future .
My best wishes.
Rob
“You suggest that I claim to have done all this good on my own. I do not. My work is built on the work of hundreds of people, including the Buy-and-Hold Pioneers.” (Rob, chapter 3/2/14)
“Do not think that I have come to abolish the Law or the Prophets; I have not come to abolish them but to fulfill them.” (Matthew 5:17)
“I will also be happy when your prison sentence is announced” (Rob)
“You snakes! You brood of vipers! How will you escape being condemned to hell?” (Matthew 23:33)
Or maybe:
“But whoever blasphemes against the Holy Spirit will never be forgiven; he is guilty of an eternal sin.” (Mark 3:29)
“I don’t know how many years you have left.” (Rob)
Seems to me you should know.
That justifies not correcting the errors in the Old School safe-withdrawal-rate studies, Huzzah.
At least your hate inspires thoughts rooted in logic.
Hang in there, man.
Rob
Warren Buffett says Rob is wrong. He says to Buy and Hold:
http://www.forbes.com/sites/davidwismer/2014/03/02/warren-buffett-investing-advice-for-you-and-my-wife-and-other-quotes-of-the-week/
And thereby reveals a conflict in his own thinking.
Buffett looks at the value proposition offered by every stock he buys.
Why should millions of middle-class investors follow an inferior approach now that the availability of index funds lets them take advantage of the benefits of valuation-informed strategies without having to engage in the research that stock pickers must engage in?
Buffett is right in what he does. He is wrong in what he says.
Anyone who cares about his own retirement portfolio should be asking why that is.
Rob
Most people don’t have the temperament, the wisdom, or the interest to educate one’s self in this stuff by reading annual reports and 10Ks. Very few people have the sort of business connections Buffett has, or the ability to get special deals on stocks where he might for instance get a premium dividend that regular investors do not get.
Buffett recommends buying and holding index funds for common people because it’s the responsible thing to do.
I agree 100 percent with everything you say in your first paragraph, Sensible. What you are describing here is the wonder of indexing.
The second paragraph I agree with ONLY if you include something about the investor always taking valuations into consideration when setting his or her stock allocation. That’s the part that the Buy-and-Hold Pioneers got wrong. That part is absolutely imperative. It is the mistake they made re that part that caused the economic crisis. It is the mistake they made re that part that is in the process of causing millions of middle-class people to suffer failed retirements.
Why cause all this human misery for no good reason? We know that this was a mistake. Why not fix it? This is the entire question that we have been arguing over for 12 years. I say “fix the mistake” and you say “continue the cover-up of the mistake.”
Indexing — Yes! That part is wonderful. And no short-term timing! That part is wonderful too.
But you want the darn thing to work. So people have to pay attention to price. There is no blue pixie dust you can sprinkle in the air to make price not matter. So price has to be taken into consideration. There’s just no way around that one.
Causing an economic crisis is not “Keeping It Simple.” Causing an economic crisis is making it 100 times more complicated than it needs to be.
We know what works today. And the Buy-and-Hold Pioneers are responsible for teaching us most of the good stuff that we know. But they dropped the ball on this one issue and their stubborn refusal to acknowledge that is ruining all the good work they have done. It’s not enough to get some things right. You need to get enough right for the overall strategy to work.
False pride can bring the biggest man down. None of us are exempt. Not Lindauer, Not Greaney, Not Bogle, Not Buffett, Not Bennett, Not Anyone.
Don’t let the bad guys get you down, man.
Rob
“Buffett is right in what he does. He is wrong in what he says. Anyone who cares about his own retirement portfolio should be asking why that is.”
Well, to me it’s darn clear and simple: he is obviously a prison-seeking Goon!
Add him to the Big List Of Goons!
Right, boss?
I love Buffett. I put him up there with Bogle and Shiller.
I think we should challenge him when he says something that doesn’t make sense or that contradicts something else he has said. That’s how we keep him honest. That’s how he learns about his own blind spots and improves. And that’s how all the rest of us learn by exploring different takes on things.
The people who will be going to prison are the people stopping us from doing this. Those who advance 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 jobs have hurt millions of people in very serious ways.
One thing that Buffett and Bogle and Shiller and lots of others should be doing is asking why Buy-and-Hold inspires so much defensiveness and hate of the peer-reviewed academic research. You don’t see this kind of behavior from the proponents of any other investing strategy. There is something about Buy-and-Hold that makes those following it more emotional than all other investors.
I think it is the combination of the claim that the strategy is rooted in academic research and the unwillingness to look at what the last 33 years of peer-reviewed academic research says because doing so would require an acknowledgment that the Buy-and-Hold Pioneers made a mistake in thinking that stocks are the one thing a person can buy without considering price.
That’s my sincere take re these terribly important matters, in any event.
My best wishes to you, Helper.
Rob
You may be surprised to hear this from me but yes valuations do matter. There are a number of indexers who believe that the reason you shouldn’t invest in individual stocks is because it’s straight-up gambling and even Warren Buffett himself is nothing more than a lucky gambler. Buffett of course has repeatedly mocked these true believers in the Efficient Markets Hypothesis in his letters. He doesn’t mind them because he figures if his competition isn’t even trying, it’s easier for Berkshire.
But indexing is a different beast than individual stocks. You’ve probably heard of Bogle’s phrase “the majesty of simplicity”. Simplicity is what truly makes indexing special. Any idiot can do it and be a success. Market timing, while possible, is much harder than many people including you seem to think it is. If market timing was so easy then I’m sure you wouldn’t have missed the 2009 buying opportunity. Thing is as hopeless as you (and I, and many others) are with this stuff all is not lost. Over time buying and holding the index has yielded very good results, results superior to those of most who either pick their own stocks or buy managed funds. Buffett can beat the index, one of my favorite bloggers a young Buffett wannabe Joshua Kennon can beat the index. These people are the exception, not the norm. Buffett (and Kennon) both realize this and that’s why, even though they reject some of the core beliefs of indexers, they recommend indexing for almost everyone else.
Bottom line is your approach to investing takes something that works and that is simple and makes it needlessly complicated. The end result of VII is the opposite of what you intend it to be. Just look at your own performance over the past 18 years and compare it to any diligent indexer’s performance.
We are in complete agreement re the need for simplicity, Sensible. That’s what I love about Bogle. He is the only major figure who cares enough about the little guy to devote his efforts to promoting a simple approach. If I thought that VII were more complex than Buy-and-Hold, I would not advocate it.
VII is more simple.
Buy-and-Hold is an emotional roller coaster. One day you are riding high, the next day your retirement account is wiped out. That’s not simple. That’s panic-inducing. For a strategy to work long-term, it has to take human emotions into account. Ignore human emotions and you make the thing 10 times more complicated than it needs to be.
The research that Wade and I co-authored shows that the biggest portfolio loss ever suffered by a Valuation-Informed Indexer is 21 percent. For the Buy-and-Holder it is 61 percent. The strategy where you see 61 percent of your life savings wiped out is the more complex strategy.
Even Bogle acknowledges that investor should aim to Stay the Course. Investors who are permitting their risk profiles to jump around wildly are not Staying the Course in any meaningful way.
But say that an angel came down from heaven and told us you were right. You should STILL be in favor of permitting honest posting. If you are right, people will see that and have even more confidence in Buy-and-Hold after hearing both sides of the story. Your opposition to the idea of permitting honest posting shows that you lack confidence in Buy-and-Hold. If those who advocate Buy-and-Hold lack confidence in it, how should those who are critics of it feel about it?
If you were making an argument against short-term timing on simplicity grounds, I would agree strongly. There’s no place for it for the average investor. Long-term timing is not even a tiny bit complicated. You have to spend five minutes per year checking the P/E10 level. Then once every 10 years or so, you need to make an allocation change. For the peace of mind that comes from knowing you will never see a portfolio drop of more than 20 percent, those five minutes per year are the best five minutes you will ever spend on investing stuff.
There is nothing even a tiny bit complicated about long-term timing. What is complicated are the convoluted arguments that Buy-and-Holders try to come up with to persuade people that it is not necessary.
And this goes beyond just giving advice for ordinary investors. Greaney was pushing his SWR study to early retirees. There were people at the Motley Fool board who believed that study was accurate. Those people are today well down the path to suffering failed retirements. No desire for simplicity can justify something like that.
If there are investors who find Buy-and-Hold more simple, it is certainly their business. They should go with what sounds good to them. But no desire to market something as simple can justify deception on a fundamental issue. We need to be honest with people. That is 100 percent imperative. There never should have even been any question about that.
VII is perfectly simple. The only reason you are being stubborn about it is that your pride is hurt. If those of us who believe in research-based strategies had warned people of the dangers of high valuations back when valuations first went to insanely dangerous levels, we would not be in an economic crisis today. We all would be 50 times better off. People don’t find it complicated to consider price when they buy a car or a sweater or a banana. There’s no reason why they should find it complicated to consider price when buying stocks either.
Rob
Rob, VII is not at all simpler than buy & holding index funds. You can practically practice buy & hold in your sleep. VII requires you to always be looking at the valuations. You might as well start picking up individual stocks at least then you’ll be able to buy stuff based on real valuations. Honestly, if your approach worthwhile there would be funds that follow it and produce measurable results.
I should add that I think it is possible that a big reason why the Buy-and-Hold Pioneers did not say that price should be considered in the setting of one’s stock allocation may have been a feeling that it would be more simple to have investors stay at the same stock allocation at all times. Back in the early 1980s, when Shiller published his research, valuations were at rock-bottom lows. People may not have been able then to imagine the P/E10 ever going above 20 again. There may have been a feeling that there was no harm being done in ignoring valuations.
If that is the case, the idea didn’t work. We not only went to 20. We went to 44. Things got out of hand. And it was Buy-and-Hold that caused things to go out of hand. People saw stocks delivering big payoffs and they of course liked that. They never heard the other side of the story, that unjustified payoffs lead to big problems down the road. Now that we are living through the big problems, more and more people are coming to believe that ignoring price didn’t turn out to be such a hot idea.
I like your comment because it is at least rooted in something real, Sensible. I think this simplicity concern was probably a real consideration in why things were done the way they were done. People were not bad to want things to be simple. But people need to accept that it was a mistake or at least that there is a POSSIBILITY that it was a mistake. No one gets it all right in the first draft. THere is a lot of interest among investors in the idea of incorporating valuations into their strategy. We have to permit discussion of the idea. To not do so makes people look unethical. THat’s not a line you want to cross.
It makes sense to tell people to limit their valuation-induced changes. I can see something like that being done for the sake of simplicity. And it is entirely possible for VII to work with only one valuation change every ten years or so on average. But people need to know when things get out of hand. The problem with not looking at valuations at all is that you look up one day and the most likely annualized 10-year return is a negative number. None of us should ever want to see that happen.
Bogle says that allocation changes for valuation reasons can be considered six times in an investor’s lifetime. That’s exactly correct. That’s once every ten years or so. The problem is that Bogle says that the changes should not be more than 15 percent. That’s not even close to being right. In 1982, the most likely annualized return was 15 percent real. In 2000, it was a negative 1 percent real. 15 percent just doesn’t do it.
But that’s the only point on which there is a difference between me and Bogle. And if we had all been calling for occasional allocation changes (once every 10 years on average) all along, we never would have hit 44. We hit 44 because people just stopped worrying about valuations. Had people been aware of the danger, we might have been able to get away with allocation changes not much greater than 15 percent.
There’s a lot of common ground here. If people came to this with good intent, it could all be worked out with mutual respect and warmth. If you are signaling a willingness to play it that way, I obviously am 100 percent on board. You next post will tell the story. If people want to work it out, it certainly can be worked out. The hard part is getting people interested in following a path that leads in time to a mutually positive result. Anyway, I am certainly supportive of the idea of taking such a path.
Rob
I’ll take this a step further.
Bogle has said that changes should not be more than 15 percent. That’s not enough to get the job done. But I think it could be possible to come up with a reasonable approach that doesn’t ever call for changes too much bigger than that.
Benjamin Graham suggested a 75-50-25 scheme. So long as the investor is always sure to not wait until things are so out of hand that he needs to make two switches at once, he would never need to make a switch of more than 25 percent under the Graham scheme. That’s not far off from what Bogle has recommended and the additional change can be justified on grounds that valuations ended up getting more out of hand in recent years than people realized they would in earlier days.
I’ll see what comes back.
Rob
You can practically practice buy & hold in your sleep. VII requires you to always be looking at the valuations.
VII does NOT require you to always be looking at valuations.
From 1982 through today, there is only one allocation change that was absolutely needed, the one in 1996. That’s one change in 32 years.
You of course need to check somewhat regularly to see if a change is needed. But checking once per year (it takes five minutes) is plenty.
Small changes in the P/E10 level don’t matter. It is only big changes that demand allocation changes. And big changes are rare. (Yet the benefits for making them are huge.)
You can do VII in your sleep so long as you set an alarm clock each year for January 1 and agree to stay awake for five minutes of that day.
In exchange for spending five minutes of each year awake, you obtain a 70 percent reduction in risk and are able to retire five to ten years sooner. The horror!
Rob
Compare the returns of VII vs Buy and Hold from 1996 til today.
I’ve got my name on peer-reviewed research comparing VII and Buy-and-Hold from 1870 through today. VII has won every 30-year time-period on a risk adjusted basis.
It is the long-term that matters.
Where have I heard that one before? Was it from that Jack Bogle fellow?
Who is the real Boglehead here, Sensible?
Rob
My research paper points this industry toward a very effective marketing message, by the way.
We tell people — Stop paying attention to all the nonsense, focus on your LIFETIME return instead of the mumbo jumbo in the media and in return you get to retire five to ten years sooner while reducing risk by 70 percent and taking the emotionalism out of the stock investing experience. That’s a market message for the ages.
What does it sound like with its focus on the long term and its simplicity and its injunction to tune out the noise? It sounds like what Buy-and-Hold used to be.
Marketing is not what gave Buy-and-Hold its magic. Marketing is important and marketing played a role. But all the marketing in the world wouldn’t have gotten Buy-and-Hold off the ground without its primary driver. What made Buy-and-Hold what it became was its claim that it is rooted in the peer-reviewed academic research. That told people that it was real. All the other marketing messages (like simplicity) followed from that. When you give up the claim that the strategy is rooted in research, you blow the entire deal. No one cares about your simplicity claims once they see that you are no longer rooting the strategy in the academic research.
When the academic research changes, the strategy must change. I am the true Boglehead because I am the one saying to keep it rooted in the academic research.
And there is no conflict between what the research says and the need for simplicity. It is 100 percent possible to have a research-based strategy that is simple. That can be done from a marketing standpoint. The trouble has been that we all need to recognize the need to incorporate Shiller’s findings into the package. Shiller added something important and the Buy-and-Holders have not changed their recommendations in any way to reflect the important thing that Shiller added.
Rob