“Mike Piper’s Problem Is That He Really Did Have Readers Tell Him That They Would Abandon His Blog If My Posts Continued to Appear at His Site, Causing His Readers to Experience Doubt re the Strategies Mike Was Advocating and They Were Following. Mike Was Put in a Position In Which He Could Either Make Money or Run His Blog in an Honest Manner.”

Set forth below is the text of a comment that I recently put to another blog entry at this site:

“Mike told me that “there’s nothing I would like more” than to see this matter resolved. Why do you think Mike said that?”

Because, as usual, you take his meaning at cross purposes, probably on purpose. What he clearly meant, and the entire convo in context would likely prove, is he hoped that YOU would ‘resolve’ your own irrational and illogical “issues” in terms of berating and besmirching and disparaging good honest knowledgeable people who have done nothing more than share their knowledge and interest with the world. But sionce you see anyone else’s success as an obstacle to your own pie in the sky dreams, you lash out and attack, thinknig this will somehow elevate yourself. Mike knows it won’t, of course, so that is what he means by ‘hoping to see it resolved’. IT has nothing to do with prison for others who disagree with your nutty approaches, or big speeches from notables publicly saying “I was wrong, let me introduce you to Rob Bennett…,” or truth commissions set up with Hocus as sole trier of fact, etc.

You are loony, AND you are a liar. Do this: ask Mike to send you an email confirming your version of dialog, then print that email IN IT’S ENTIRETY, right here. I double-dog dare ya to do so. Trust me, that’s a post you will not ever make here, because the confirmation simply will not happen.

You are living in a dream world.

So long as Mike does not feel that it is safe for him to post honestly, we cannot go by what he says, Anonymous. So your idea is not helpful. If Bogle gave an “I Was Wrong” speech or, at the very least, an “I Don’t Know for Certain” speech, then, yes, the idea of listening to Mike’s take would be a good one. But we are not there yet.

You can go back to things Mike has said at earlier times. He has provided important clues. Mike did not want to ban me. We engaged in a long e-mail correspondence before he did so. Read those e-mails. Those e-mails tell the story. Mike believes in Buy-and-Hold. Mike does not in his heart believe that he is destroying people’s lives. But Mike also believes that the Ban on Honest Posting is wrong. He is extremely uncomfortable with the ban. That’s where Mike really stands re all this.

I can help provide more context for the things Mike told me when we spoke at the Financial Bloggers Conference. After he said that there is nothing more he would like to see than a resolution of the matter, I asked him to describe practical steps that could be taken. He said that I needed to take down two articles at my site, the article that focuses on Mel Lindauer and the article that focuses on Taylor Larimore. I told him that that was a trivial demand, that I of course would be happy to take those two articles down if doing so would bring about an end to the Ban on Honest Posting.

But I also said that I did not believe that there was any chance that taking down those two articles would really solve the problem. I pointed out that, once the Ban was lifted, I would be posting daily at the Boglehead Forum. And that the safe withdrawal rate issue comes up there frequently. And that, when the SWR issues comes up, I would be posting that the Old School studies get the numbers wrong. I asked Mike what he thought would happen at that point?

That’s when he said that he agreed with me that Mel Linduaer is a “jerk.” He made clear that he wa afraid of Mel and that he would not be giving public voice to his belief that Mel is a jerk. So we both saw that he was not willing to participate in an effort to bring the matter to a successful close.

The Buy-and-Holders believe in Buy-and-Hold, Anonymous. They follow it. That’s an indication of belief.

The problem is that they lack CONFIDENCE in it. There is a voice in their heads that tells them that any strategy that is rooted in a belief that price doesn’t matter cannot possibly work in the real world. I didn’t put that voice in their heads. But I sure do all that I can to support the message being told by that voice. That’s why I am hated by many Buy-and-Holders. Not because they are sure that I am wrong. Because there is a part of them that suspects that I really might be right.

That’s the true story here, Anonymous.

Mike wants to tell the truth. For him, telling the truth means writing articles saying “Buy-and-Hold is the answer.” He believes that and he has both a right and responsibility to say that he believes it. But Mike ALSO believes that he should be permitting posting by people who believe in Valuation-Informed Indexing and it pains him that he has betrayed his deeply felt beliefs re this issue. Mike knows that he has made a terrible mistake.

His problem is that he really did have readers tell him that they would abandon his blog if my posts continued to appear at his site, causing his readers to experience doubt re the strategies that Mike was advocating and that they were following. Mike was put in a position in which he could either make money from his blog or he could run the blog in an honest manner. He was not able to see a way in which honesty and making money could be combined. So he made the choice he made.

Wade Pfau is in the same position. He wants to be honest. He also wants to make a buck doing the work he loves. He should be able to achieve both goals. But the world as it exists in December 2013 does not permit him to achieve both goals, at least not according to his assessment of the realities.

Jack Bogle is in the same position.

Larry Swedroe is in the same position.

Bill Bernstein is in the same position.

Motley Fool is in the same postion.

Index Universe is in the same position.

Early Retirement Forum is in the same position.

Morningstar is in the same position.

We need to solve the problem.

There’s one way that we conduct affairs that applies to every issue other than what the academic research says about how stock investing works. And there is a different way we conduct affairs that applies to our handling of discussions of the last 32 years of peer-reviewed academic research re stock investing. We need to decide what kind of society we are and then apply rules that make sense given our decision to our handling of stock investing issues as well as our handling of every other issue that comes up.

This is not optional. This is mandatory.

The only thing that is optional is the timing. We can act today or we can delay our decision to act. Delay will cause us all great pain while acting today will cause us all to live far freer and richer lives than we ever before imagined possible. But it is our choice whether to act today or to delay. It doesn’t make any sense to consider any choice other than acting today. But the other choice is available to us whether we decide to act on it or not.

I am not living in a dream world. Unless you consider the entire history of the United States to be a dream world. Some do indeed believe that our economic and political systems are dream-like in their perfection. In that sense, yes, I am living in a dream world. I am saying that the laws of the United States that have made this such a wonderful country for such a long time should be made applicable to the world of investing advice. But our political and economic systems only SEEM like a dream to those who have never lived under them. Those of us who have experienced their great wisdom and beauty know that the riches that follow from having confidence in our political and economic systems to work things out for us are not the product of mere dreams. Those riches are a dream come true to many of us. And I believe that there will be many who will work to defend those dreams once the threat to them becomes clear enough for them to see what is at stake here.

Anyway, we have the context of Mike’s comments available to us. He does believe in Buy-and-Hold. He does believe that comments rooted in the last 32 years of peer-reviewed academic research should be permitted at his blog and at all other blogs on the internet. He does fear Mel Lindauer and his Goon Squad and what they would do to him and his blog if he were to work up the courage to permit honest posting at his blog. And he hates himself for his lack of courage. If Bogle were to speak out in a clear and honest way re the Lindauer matter, there is every reason in the world to believe that Mike would open his blog up to honest posting again. I have zero doubt in my mind that this is so.

Every citizen of the United States who wants to see the economic crisis brought to an end should be writing to Jack Bogle and imploring him to give that speech. That speech is the thing that turns things around. That speech is the thing that takes us from the Second Great Depression to the greatest period of economic growth in our history.

I’ll let you in on a little secret. There is a part of John Bogle’s heart in which he would prefer to be known through history as the person who took us to the greatest period of economic growth in U.S. history over being known as the person who took us to the Second Great Depression.

How do I know?

I know because Jack said in his book that, when one of his friends saw that he got something wrong, he wanted that person to tell him about the error rather than cover it up.

I think it would be fair to say that I am the #1 Boglehead in our community, Anonynous. And I think it would be fair to say that Mike Piper deep in his heart is a Boglehead as well. I am an optimistic enough person to believe that even Anonymous has a soft spot somewhere in his heart for Old Saint Jack.

That soft spot is what makes you human, my pretend-Goon friend.

My best and warmest wishes to you.



  1. Earl says


    Yesterday you posted a little bit about how you personally will try and implement your VII. “On the way down” you will have 0% stock allocation when PE/10 is 20 but “on the way up” you would remain at about 90% stock allocation until PE/10 is 20.

    How does this make any sense with what you have been harping on all these years. I thought we want to buy into stocks when there is good value but at one certain point in time PE/10 of 20 is such a bad value we would want 0% stock allocation yet at another time it is such a juicy value proposition we would still be at 90% stock allocation.

    This makes absolutely no sense with what you have said in the past. This is the definition of short term market timing. Your strategy can now be reduced to the single statement “have a lot of money in the market when it is on its way up and none when it is on its way down”. Something you just have to know inherently because the market can be on its way down or up at the exact same PE/10 number according to you.

    Please admit you are clueless when it comes to implementing your own VII and have not even laid out a plan that meshes with its hypotheses.

  2. Rob says

    You don’t understand Valuation-Informed Indexing, Early. You need to drop the Buy-and-Hold mindset to understand how stock investing works.

    The Get Rich Quick impulse is the driver on the way up. If you ignore the short-term noise, you see that stock prices always go steadily up from a P/E10 of 8 to a P/E10 of 25 or higher. Then they go steadily down from a P/E10 of 25 or higher to a P/E10 of 8 or lower. That pattern has been repeating for 140 years. It cannot possibly be the product of coincidence. The odds are at least 1,000 to 1 against that.

    At 20 on the way down, the value proposition of stocks is slight. The only thing you have going for you at 20 on the way down is that the P/E10 could remain at 20 or a bit higher for a number of years. You would earn a return of 6.5 percent real for so long as the P/E10 remained at 20. If short-term timing were possible, you could jump out before prices started heading downward again. But short-term timing doesn’t work. So you are taking a big risk at 20 on the way down in exchange for a chance at a small gain.

    At 20 on the way up, you are just getting to the point where stocks start to be dangerous. An investor open to taking on some risk could own stocks at 20 on the way up and do well. Look at what happened in the last bull market. We went all the way from 20 to 44. That’s a lot of gain! I got out at 25. I think that makes sense. 25 is the point at which stocks are insanely risky. Stocks are a little risky at 20 on the way up but certainly not insanely so.

    There is nothing even a tiny bit short-term about this. We can say that stocks offer a very poor long-term value proposition at 20 on the way down but we cannot say that a crash will come immediately. We cannot predict the short-term, only the long-term. The long-term value proposition is poor at 20 on the way down. We cannot say anything about the short-term. It is unknown.

    Something you just have to know inherently because the market can be on its way down or up at the exact same PE/10 number according to you.

    You have to accept that stock prices are determined by investor emotion, Earl. You know which way the market is headed by knowing which way investor emotion is headed. Investor emotions always pushes prices upward until prices become insanely high enough to scare investors out of a belief that Get Rich Quick strategies can work. Once that happens, investors do not regain their confidence that Get Rich Quick strategies can work until we hit 8 or lower.

    We lost confidence in Get Rich Quick in 2008. We are now on the way down to 8 or lower.

    If it were not for the 33 years of peer-reviewed academic research showing us for the first time how stock investing works in the real world, we would start heading back up to 25 again after we hit 8 or 7. That’s not what will happen this time. Once we open the internet to honest posting, we will all know what works. Then we will go to 15 and stay permanently somewhere in that neighborhood. We will all have the tools we need to know when to sell enough stocks to bring prices back to fair-value levels.

    I hope that helps a bit.


  3. Anonymous says


    The thread on the FMF board is an example of why people don’t want you around. You have an agenda and that is all you want to talk about. You are not really there to have a conversation. You are there to preach. When people ask you questions, you either avoid the question or divert the topic. You then fill up 90% of the content and it becomes the “Rob Bennett Show”. People are tired of you and your canned comments which are flawed and without factual backing.

    People like Mike, JD, Wade, etc, have given you the real reasons you are rejected, yet you want to tell us you know what they think. You are not a mind reader and this is not some vast conspiracy.

  4. Curious says

    Rob, what you’re clearly missing is that the financial markets aren’t subject to the laws of physics — just because something has happened in the past doesn’t mean it will happen again. And mistakenly believing that might mean that someone misses out on a tremendous buying opportunity.

    Shiller recognizes this, which is why he decided that prudence dictated he allocate 50% of his portfolio to stocks. He realizes that it’s folly to stay on the sidelines waiting for a pe 8 bus to appear when the reality is that it might not show up in our lifetime. Better to be approximately right than precisely wrong.

  5. Rob says

    I have an agenda, Anonymous. That is 100 percent true. My agenda is to teach millions of middle-class investors what they need to know to invest effectively. My agenda is to bring this economic crisis to an end. My agenda is to reduce the risk of stock investing by 70 percent for each and every one of us. My agenda is to end all the friction we have seen for 12 years at our boards and blogs. My agenda is to free not only Wade Pfau but hundreds of other academic researchers to do honest, breakthrough research. My agenda is to help my good friend Jack Bogle to realize his dream of helping millions of investors to follow a safe, simple, and smart investing strategy. It’s a pretty darn wonderful agenda that I am pushing.

    You have an agenda as well. Yours is not so wonderful. Yours is to keep those millions of middle-class investors in the dark. Pursuing that agenda means that the economic crisis continues. Pursuing that agenda means that the big pile of lies grows larger and larger and larger. Pursuing that agenda means that your prison sentence lengthens. Pursuing that agenda means that we all end up living through the Second Great Depression. Pursuing that agenda means that millions more people lose their jobs. Pursuing that agenda mean that tens of thousands more people see their businesses fail. Your agenda sucks, Anonymous. No personal offense intended, but that’s the simple and clear way of putting it. Your agenda sucks big wind.

    The Buy-and-Hold Pioneers are heros. On that we are agreed.

    They made a mistake. It was unintentional. No one faults them for the mistake.

    The mistake was uncovered in 1981. For various reasons, as a society we put off the project of correcting the mistake for a good number of years.

    I came on the scene in 2002. I of course didn’t know that all this stuff was going on at the time. I posted at a discussion board where I had made a lot of friends, these friends of mine were being hurt in a very serious way by false claims about safe withdrawal rates, and I worked up the courage to do something about it. I have had thousands of people thank me in the 12 years since. I have had the biggest names in the field tell me that my ideas on investing are sound. I co-authored the most important peer-reviewed research published in the field in the past 30 years. I may not have everything 100 percent right. I am obviously one of the flawed humans. But I am clearly on the right track. I obviously have something very, very, very important to contribute.

    No one gets hurt by me making that contribution. To the contrary, every single person alive on the planet benefits. The people who have built careers promoting Buy-and-Hold may suffer some embarrassment in having to acknowledge that they have made mistakes in the past. But they are going to suffer that embarrassment sooner or later anyway. At least with me involved they have someone putting things in the kindest possible context.

    I have argued for years now that these people are suffering from cognitive dissonance. That lets them off the hook. That permits them to become heroes all over again by getting behind the Valuation-Informed Indexing concept. There’s a lot of fame to be won and there’s a lot of money to be made in the transition to the new model. And I have showed precisely zero desire to block anyone from sharing the limelight. I have invited and welcomed and warmly embraced Wade and lots of others who have shown an inclination to learn about the future of investing analysis. When we put the focus on the future, we ease the anger of the millions of people who have been hurt by the mistakes. We are the luckiest generation of investors who ever walked Planet Earth. We should start reaping the benefits with which we have been blessed rather than pissing them away because of our stupid, false, hurt pride. I am sure.

    It’s not people in general who don’t want me around. A significant percentage of every board and blog community wants me around very, very, very much. What those people don’t want around is the tactics that have been employed by the people whose noses get out of joint when we discuss the findings and implications of the last 33 years of peer-reviewed academic research in this field. They don’t want to see death threats, they don’t want to see demands for unjustified board bannings, they don’t want to see tens of thousands of acts of defamation, they don’t want to see threats to get academic researchers fired from their jobs. So we all need to pull together to be sure that you Goons knock off the funny business by the close of operations today.

    We need Democrats and Republicans working that one. We need old people and young people. We need whites and blacks and browns and yellows working it. We need men and women working it. We need Valuation-Informed Indexers and Buy-and-Holders working it. We are going to get everyone working it. I will see to it. It may take another price crash for me to pull it off. But we will get past you Goons and realize the benefits of the most important 33 years of peer-reviwed academic research ever published in the history of investing analysis.

    Things will obviously go a lot easier for you Goons if we do this before there is another price crash and people are 20 times angrier than they are today. But we will get it done one way or another. We have no choice. The viability of our economic system is at stake. There are millions of middle-class people who have been tasked with the project of financing their retirement plans. They need accurate and honest information, whether it hurts the feelings of those who have in the past advocated Buy-and-Hold strategies or not.

    We’re moving forward, Anonymous. That’s not up for discussion. That was decided on the morning of May 13, 2002. I have said it is going to happen and so it is going to happen. Accept that much and the rest will come easy, I would never suggest to you that there is any possible outcome here other than us all moving forward to an exploration of the implications of the past 33 years of peer-reviewed research. It would be cruel of me to do so. And I think of you as a friend. So I obviously have zero interest in choosing the cruel option here.

    We’re moving forward. That’s settled.

    I am very interested in having a conversation. The conversation is one in which I will be respectful and kind to all of my many Buy-and-Hold friends, for whom I feel gratitude for the many powerful insights with which they have blessed all of us. But it won’t be a conversation in which I will be arguing that Buy-and-Hold should remain stuck in the past. It will be a conversation in which my energies will be aimed at transforming or revising or reforming or changing Buy-and-Hold into what the Buy-and-Hold Pioneers wanted it to be when they first advanced the concept. Valuation-Informed Indexing is a form of Buy-and-Hold that works in the real world. I will be devoting my energies to seeing that the conversation takes us from the horrible place where we are today to the wonderful place where deep in our hearts we all want to be tomorrow.

    It will be The Rob Bennett Show for a time. I have been the leader of the transition for 12 years now. So obviously I will be the center of attention for a time. That will change. Once people like Wade Pfau and Bill Bernstein and Rob Arnott and Robert Shiller and Larry Swedroe and Scott Burns and Jack Bogle and thousands of others all feel comfortable saying precisely what they believe about how stock investing works, there will be lots of smart and good people advancing amazing insights and the Rob Bennett name will fade into the background. That is as it should be.

    When I have opened the entire internet to honest posting on what the research says about how stock investing works in the real world, I will have done my part and then some. I want to hear what other people think of the scores of powerful insights that we have developed over the first 12 years of our discussions. Other people want to be involved with developing those insights. Lots of investors want to hear what these other people think of the insights that we have developed together and that I have described and explained at my site. The spotlight will move naturally once we let all of the wonderful people who long to make important contributions step forward and do so. The Rob Bennett Show nonsense is an artificial consequence of your Goon tactics. Good riddance to it!

    That’s where things stand, Anonymous. Your prison sentence grows longer with each day of delay and with each new abusive post. Give the millions of middle-class investors a break and give yourself a much-needed break while you are doing it.

    Or don’t. And get prepared for the History Train to run you over.

    I naturally wish you all good things regardless of what investing strategy you elect to pursue.


  6. Rob says

    The thread on the FMF board is an example of why people don’t want you around.

    The author of the Free Money Finance blog is embarrassed that he continued to promote Buy-and-Hold for decades after the peer-reviewed academic research in this field showed that there is precisely zero chance that it can ever work for a single long-term investor. I called him out and his reaction was to go into cover-up mode. How much more embarrassed do you think he is going to be following the next price crash? How much larger do you think his financial liabilities to his misled readers are going to be then?

    I did the guy a favor. I have done all of my Buy-and-Hold friends a favor. The mistakes that were made mean nothing. People make mistakes. We all do. So what?

    Where Buy-and-Holders go off the deep end is when they engage in or tolerate a cover-up. That’s serious stuff. That’s where you make yourself the target of lawsuits. That’s where, if you go to the extremes to which a good number of you Goons have gone, you find yourself looking forward to a long prison sentence for fraud.

    I have opposed this stuff going back to the first day. I am clean re this one, Anonymous. There are Post Archives.

    We are not watching a cover-up today. We are watching a cover-up of a cover-up of a cover-up of a cover-up. Each day there are new people who feel pressured to join in, knowing that the Buy-and-Hold Mafia will destroy their careers and their reputations if they dare to “cross” all those already involved in the most massive act of financial fraud in U.S. history. It ends when we find bloggers and journalists and venture capitalists and academic researchers and economists and politicians and investing advisors too sickened by the financial devastation that has been brought to millions to add their names to the list of those who have put up words in “defense” of Mel Linduaer and John Greaney (and Jack Bogle?).

    It ends when as a society of people living through the worst Buy-and-Hold Crisis in U.S. history we develop a spine.

    That’s when the wonderful times begin. Good stuff piled on top of good stuff piled on top of good stuff piled on top of good stuff.

    I cannot wait.


  7. Rob says

    People like Mike, JD, Wade, etc, have given you the real reasons you are rejected, yet you want to tell us you know what they think.

    Mike and J.D. and Wade are obviously going to be called to testify under oath following the next price crash, Anonymous.

    I have a funny feeling that their under-oath testimony will agree in every particular with what I say in my comments at this blog and elsewhere on the internet.

    Just another one of those crazy hunches that I have been known to experience from time to time.


  8. Rob says

    this is not some vast conspiracy.

    No one in the investing advice field has ever given consideration to spinning things in a way that would put big piles of money in his pocket to the detriment of his clients or readers.

    Good point, Anonymous.

    I forgot.


  9. Rob says

    Rob, what you’re clearly missing is that the financial markets aren’t subject to the laws of physics — just because something has happened in the past doesn’t mean it will happen again. And mistakenly believing that might mean that someone misses out on a tremendous buying opportunity.

    Shiller recognizes this, which is why he decided that prudence dictated he allocate 50% of his portfolio to stocks. He realizes that it’s folly to stay on the sidelines waiting for a pe 8 bus to appear when the reality is that it might not show up in our lifetime. Better to be approximately right than precisely wrong.

    Every word you put forward in that post is on the right side of the line, Curious. You have not only a right but also a responsibility to say that on the boards and blogs at which you participate, presuming that it is your sincere take (I believe that it is).

    I am 100 percent certain that a large percentage of the good and smart people posting at those board and blog communities will agree with you. Every indicator that I have seen over the past 12 years tells me that this will be the case.

    I wish you the best of luck with it and with all your other future life endeavors.


  10. Rob says

    It’s working like a dream, Anonymous.

    We’ve learned more about how stock investing works in the real world in the past 12 years than we learned in the 100 years before that.

    It wasn’t just me. There are hundreds of people who made positive and constructive and life-affirming contributions. And of course the work we have done in the past 12 years was built on the fine work done in earlier times by the Buy-and-Hold Pioneers. I’ve led the effort. I have been the one demanding that we permit honest posting so that we can learn more and more and more. But we have had lots of people working up the courage to step up to the plate. We have had thousands express a desire that we move forward. And we will obviously have tens of thousands expressing that desire following the next price crash.

    So it is working like a dream.

    It’s the stuff done on the substantive side that matters. The Goon stuff slows us down. The Goon stuff embarrasses us and shames us and depresses us and scares us. But it is the stuff done on the substantive side that matters. When these 12 years are written up in the history books, what do you think the focus is going to be? Do you think they are going to go on and on about the death threats and the board bannings and the defamation and the threats to get academic researchers fired from their jobs?

    It’s the scores of powerful insights that we developed that are going to be the focus. That’s what people care about. That’s why we created the darn boards and blogs in the first place — the idea was to help people learn how to invest more effectively. That’s always going to be what people care about. So you Goons are doomed.

    There’s a reason why there are rules at every board and blog prohibiting your deception and intimidation tactics. There’s a reason why we have laws in the United States making financial fraud a felony. Those rules and those laws were intended to protect us all from the garbage that you Goons bring to the table That was the entire idea.

    We have accomplished great things. We have changed the world of investing analysis in a fundamental way. We have transformed stocks into a virtually risk-free asset class. Things will never be the same again. And that’s a very, very, very good thing.

    It’s working like a dream.

    The ugliness you bring to the table counts for nothing in the long run. It is a negative force. You know how to destroy. But you do not know how to build. And it is only building that counts for anything in the long run.

    The people of the United States of America will overcome you Goons and you will be subject to our laws. I have said it and so it will happen. I am sure.

    My best and warmest wishes to you.


  11. Sensible Investor says

    Rob, do you think the news about the US handing control of ICANN to the international community will be good for honest posting?

  12. Rob says

    I know next to nothing about it. So it’s not right for me to venture an opinion. The tiny bit I have read about it has been negative.

    The one thing that I can say is that it is not procedural issues that are the problem. The published rules at the Motley Fool site were perfect at the time I was posting there. The same thing was true at Morningstar. We don’t need new rules. We need better enforcement of existing rules.

    We have lots of positives. The people working in this field are smart and hard-working and good. We all want the same thing. The research is rock-solid. There’s tons of money to be made advocating a true research-based approach. That provides a lot of incentive for spreading the word.

    The way that I often put it is to say that we are on the one-yard line. We need one front-page article in the New York Times. Or one big blogger who makes this a cause. Or one venture capitalist who gets behind this. That’s all it would take to swing the door open at this point. Once it became clear to people that it is safe to post honestly, we will see hundreds of people doing it and then thousands not too long after. We are very close. And yet of course in another sense we remain today very far away from where we need to be.

    The biggest problem we face is that this is so darn important. Intuitively, you would think that people would focus on the most important matters. That’s true to a point. But there comes a point at which something is too important to deal with. It’s like the thing where they say that a business is too big to fail. This mistake is a mistake too big too fix. It would mean rewriting every textbook in the field. People look at that and say “no, we cannot go there.” They overlook the fact that it means being able to bring the economic crisis to an end and being able to reduce the risk of stock investing by 70 percent and being able to help people to retire 5 to 10 years sooner and all this other wonderful stuff. They notice that it means rewriting all the textbooks and they conclude that it is just too big an advance to accept.

    The other one is that people care. The Buy-and-Hold Pioneers were trying to do something good. I cannot see into their minds. But all the evidence I have seen points in that direction. So people say, “oh, don’t mention their mistakes, their hearts were in the right place.” I see it just the other way. I say “their hearts are in the right place, so they obviously don’t want to hurt millions of people, make sure that they get those mistakes fixed fast!” But lots of people feel strongly today that that’s not the way to go. There’s a line that you cannot cross. You can say “I do things differently.” But you cannot say “these good people got something wrong and they are hurting lots of people as a result.” People close their minds when you say that.

    I guess what I am saying here is that it is not procedural rules that we need to change. The procedural rules that exist are just fine. We need to change people’s hearts. We don’t have to persuade people to want to be able to invest effectively. We of course already have that. We need to figure out some way to get people to come to terms with mistakes made in the past.

    A big cause of our problems is the unfortunate reality that in the investing advice field, you can’t just put forward ideas as something to think about. People have to invest. They have to take Choice A or Choice B. And people don’t want to invest their retirement money according to something that you claim has a 50 percent chance of working or a 30 percent chance of working or a 70 percent chance of working. They want 100 percent certainty. They are scared of losing their retirement money and so they very much want to hear that you are sure. People in this field pick up on that and they try to respond to it by expressing a level of confidence that is not justified. And then of course it becomes hard for them to back away from what they have said when it comes out that their confidence in discredited ideas was very much misplaced.

    The reality is that there are two research-based models for understanding how stock investing works. Buy-and-Hold is dominant. It is probably supported by 90 percent of investors. I obviously believe that Valuation-Informed Indexing is superior. But it is today supported by perhaps 10 percent of investors. How do we increase support? We have to talk about the new ideas. But these ideas are very threatening to the 90 percent following the other model. The ideas are too powerful. If they were less compelling, the Buy-and-Holders could just laugh them off. But there is rock-solid support in the research and the stakes are as high as they can be and so the Buy-and-Holders feel that they must shut down the learning process at all costs.

    That’s the problem that we have to solve, Sensible. We need to get the Buy-and-Holders to calm down enough to listen to the other side of the story. If we do that, we will win them over. Then there will be no conflict. But the pain that the Buy-and-Holders feel when they hear that the investing strategies they have been following for years are wrong-headed is very real. I need to figure out how to make people feel less pain long enough to realize how great the benefits are that follow from adopting a true research-based approach. I obviously spend every day trying to figure that one out. If we knew the answer to that one, we could turn the key and there would be zero conflict from that point forward.

    I am not a person who likes conflict, Sensible. I am probably the most conflict-averse person you are ever going to meet. PeteyPerson nailed it when he described me as a “teddy-bear-type poster” in the days before May 13, 2002. But conflict is part of this fallen world we live in, you know? I like the analogy that I make to the Civil Rights days. There were racists in the pre-Civil Rights days. But the ugly forms of racism were never the real problem. The real problem was that lots of people who did not like racism one little bit feared change. A change was being proposed that was very, very, very positive and people saw that on one level of consciousness and yet on another level of consciousness they feared this big change that was being proposed. That’s where we stand today re the Social Taboo that blocks us from talking about the realities of stock investing as revealed by the last 33 years of peer-reviewed academic research in this field. We need to work up the courage to make the change needed to enrich our lives in hundreds of amazingly positive ways.

    The process rules are already in our favor. So trying to come up with even better process rules won’t make the difference. We need to change human hearts. We need people to see that change is not bad here, change is a very, very, very good thing in this context. You can’t change people’s hearts without talking to them, however. We are stuck in a Catch-22 because the thing we need to solve the problem is civil and reasoned discussion and that’s the very thing that the Buy-and-Holders most fear because they understand that the research-based case for Valuation-Informed Indexing is so strong that “their side” cannot possibly prevail if civil and reasoned discussion is permitted. So for a time we are stuck.

    We figured out the Civil Rights thing, right? Lots of people got hurt. Lots of blood was shed. That part terrifies me. I see that happening here. That’s why I talk about the prison sentences whenever an opportunity presents itself. The prison sentences are the dark side of all this. I feel a responsibility to pull things in a positive direction and I don’t see how we get there by ignoring felonies. Each time we turn our heads to that sort of thing we make things worse. We give people who are afraid of change an out. We’re telling them “you don’t need to follow the laws of the country you live in, we will make an exception for you because of the emotional pain you feel over accepting the need for change here.” That’s deeply wrong, tragically wrong. It’s cowardice and selfish. We need to apply the same standards of personal integrity to the investing advice field that today apply in every other field of human endeavor. So we need to point out when people sink below minimal ethical standards.

    The phrase that I use about Jack Bogle is that, after the next crash, his heart will melt. I think that that is where we are going to see the change. Millions of people are suffering today. But to a lot of us those people are abstractions. We hear that millions are unemployed and we think “oh, that’s someone else’s problem, you cannot put that one on me just because I make it a daily practice to post abusively over the 12-year cover-up of the errors in the Old School safe withdrawal rate studies.” It gets harder to do that when we are in the Second Great Depression, when we are all seeing photographs of the human misery we have caused in the newspapers every morning.

    The pain has to get worse for us to work up the courage to do what is needed to make the pain go away. That’s a hard way of putting it but a true way too, I believe. Sometimes there are things in life that we know we have to do but for some reason we don’t want to give up our old ways. Maybe there is a diabetic who needs to give up drinking beer or his leg is going to be cut off. He ignores the warnings because he has been drinking beer his entire life and he cannot accept that he needs to give it up. Maybe he has a friend with the same problem and he visits the friend in the hospital after his leg has been cut off. Now he cries. Now he sees that he really must make this change that he has resisted for so long. All of a sudden, there is a total change in the guy’s attitude. Now he is capable of accepting reality and doing what he needs to do to save his own leg.

    We don’t need new procedural rules. We need a change in human hearts. My guess is that it is the next price crash that will help melt human hearts. I hate it that it has come to that but it is my perception today that that is where things stand. We will see.

    My best and warmest wishes to you, Sensible.


  13. Anonymous says

    And yet another canned response from Rob. Save some time Rob and just use cut and paste. It will give you the same result.

  14. Rob says

    The peer-reviewed academic research in this field says the same thing today that it said 12 years ago, Anonymous. It will say the same thing 12 years from today.

    The thing that changes over time is how people respond emotionally to learning that they have been lied to by the Wall Street Con Men and their internet Goon squads. People feel one way about being lied to when they see numbers on their portfolio statements that make it look like they are closer to a decent retirement than the real numbers do. People feel differently about being lied to when they see numbers on their portfolio statements that make it look like that are farther away from a decent retirement than the real numbers do.

    We are today in the transition period from Scenario One to Scenario Two. The acts of financial fraud that you commit while Scenario One applies get prosecuted when Scenario Two applies. That’s how our system works, my long-time Goon friend.

    My best wishes to you and yours.



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