Set forth below is the text of a comment that I recently posted to another blog entry at this site:
I look forward to that board you say that you will start soon, and look forward to participating in it. I would relish the opportunity to join you in moderating this said forum.
You won’t be contributing to the new forum except perhaps to a trivial extent, Sensible.
This blog is a general-interest investing blog. I both permit and encourage honest posting on the last 32 years of peer-reviewed academic research. That makes this one special in a day when as a society we have not yet worked up the courage to stand up to the intimidation tactics of The Buy-and-Hold Mafia. But the general purpose is the same as that claimed by most investing blogs — to teach people reading it the realities of stock investing.
The new discussion board will be different. The starting premise of the new board will be that The Buy-and-Hold Mafia should be brought down and that all U.S. citizens should be permitted to give voice to their sincere beliefs about the past 32 years of peer-reviewed academic research. There’s not going to be any debate at the new board as to whether honest posting should be permitted. The debate will be re how we move forward, how do we achieve our goals of bringing down the Buy-and-Hold Mafia and opening the entire internet to honest posting on safe withdrawal rates and scores of other critically important questions.
80 percent of the posts from you Goons that I leave up at this board will be taken down at the new one, Sensible.
You could compare the two boards to a board that might have existed in the 1950s on the question of whether basic civil rights should have been extended to people without white skin to one that might exist today in which discussion of that question would be viewed as insulting to every participant in the board project. On the morning of May 13, 2002, I was not aware of the role played by The Buy-and-Hold Mafia in the destruction of the financial futures of millions of middle-class investors. So I needed a board of this type to learn about the matter. I don’t need that today. I now have access to all the materials at this site, showing beyond doubt how the Buy-and-Holders have employed death threats and unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs to block millions of middle-class investors from learning about the findings of the past 32 years of peer-reviewed academic research. Today I need the new sort of board, one in which posts arguing in “defense” of the purest and most dangerous Get Rich Quick scheme in history will not be welcomed any more than a post suggesting there there is some sort of merit in the idea of denying people with black skin their most basic civil rights would be welcomed in the current-day United States.
The core idea of the new project will be that we as a nation need to move BEYOND Get Rich Quick, that we have already paid too big a price for our unwillingness to stand up to the tactics that have been employed for 11 years now by the sorts of individuals who have put up posts in “defense” of Mel Lindauer and John Greaney (and Jack Bogle?).
Rob
Rob,
It seems you have labelled all of the commenters here as goons. You say that your new board will not allow 80% of the comments by those described as goons. That 80% is also a factored number since you don’t let a large number of comments even get through on this board. How then, do you expect to get much content on this new board given those metrics?
You are right that it is rare to see a non-Goon post here, Anonymous. It happens from time to time. But it is a pretty darn exceptional event. I have zero chance of getting a discussion board off the ground by waiting for people to show up on their own. The Ban on Honest Posting makes it impossible for me to use the ordinary means of attracting people to the site. So I would have to use a different approach to get the thing going.
My thought is that I will contact people by e-mail until I have 10 who tell me that they are willing to commit to putting forward a minimum of one post per day at the new discussion board. There also has to be a commitment to honesty. No issue would be off the table. We would talk about financial fraud. We would talk about prison sentences. We wouldn’t talk ONLY about that stuff. My guess is that 80 percent of our discussions would be on substantive issues. But we would not shy away from talking about the ugly stuff.
That is part of the story here and the entire reason why things have gotten so out of hand is that so many of us have a reluctance to call out the Wall Street Con Men on their b.s. One of the things that would make the new board unique is that we would do that. We would always be charitable– I will not have my name associated with a board that is not charitable in its comments re my many Buy-and-Hold friends. But we would also be honest. We would discuss the issues that need to be aired publicly for us to move forward as a country. So the new board would combine charity and honesty in the proper proportions. Or at least that is the idea.
So long as we have 10 regulars, the board will grow naturally on its own. New people would visit from time to time and, so long as they saw regular activity, a small percentage of them would start to participate themselves. But that will never happen unless we have at least 10 regulars. If people see a board at which there are not fresh posts, they move on. You have to have activity to get activity.
I’ve mentioned the idea to about five people. I think three agreed to post regularly. If you look just at the numbers, it sounds like I could get to 10 regulars today just by asking more people. The problem is that none of the people who agreed to sign up have followed up with me after agreeing to the commitment. This tells me that they don’t have a fire in the belly. They are saying “yes” to be polite. That’s nice enough. But I don’t think that will get the job done. I need 10 truly serious people. These people are going to take hits from you Goons. They need to be serious about this. I don’t think we are there yet.
In a sense what I am trying to do is to rebuild the FIRE board. That board would take off today. The fear of questioning Buy-and-Hold is not today what it was prior to the 2008 price crash. But I need to see a little more fire in the belly than I have seen thus far to go ahead with this.
Once the board grew to 100 posters, Buy-and-Hold would be dead. There are millions of people who have doubts re Buy-and-Hold today. I know this from reading the Comments sections of articles in the New York Times. LOTS of people suspect that they have been lied to. They just are not organized. We need to organize these people to change the world. Once we do, the opposition to Buy-and-Hold will just grow and grow and the Buy-and-Holders will have no option but to acknowledge their mistakes.
I have mentioned before that there was a fellow that I had breakfast with at FinCon13 who was 100 percent on board on every issue. We were soul mates. This fellow has done some small things in Social Media to show support. But he hasn’t been sending me e-mails to talk about new developments and all that sort of thing. That’s what I need to see. He has a full-time job in another area. So that may be what holds him back. But I just don’t think that the new board will be a success until I have 10 people who will walk on hot coals to make it a success.
I still like the idea. I still think it will work. But I don’t yet think that the time is quite right. That’s where things stand.
Rob
If someone disagrees with about the fraud or lawsuits or prison sentences, will they be allowed to post? Also, why do you think you are having trouble getting people to sign on for the posting committment since finance/investing is such a hot topic and that we see so many posters at the various boards that are logging substantial volume?
If someone disagrees with about the fraud or lawsuits or prison sentences, will they be allowed to post?
If one of you Goons puts up a post denying that you threatened to get Academic Researcher Wade Pfau fired from his job, I will delete the post. The entire country needs to know the facts re what brought on this economic crisis if we are to recover from it.
If someone puts up a post saying that he does not think that Wade should go to prison for financial fraud given the unusual circumstances that apply (he has financial responsibility for two small children and he knew from seeing what you Goons did to me that you would follow through with your threats and big names like Jack Bogle would not lift a finger to help), that will of course stay up. Part of the purpose of the board is to discuss why honest posting on the 33 years of peer-reviewed research showing the dangers of Buy-and-Hold remains banned today.
Rob
Also, why do you think you are having trouble getting people to sign on for the posting commitment since finance/investing is such a hot topic and that we see so many posters at the various boards that are logging substantial volume?
There are two different reasons that apply for the two different types of people out there today, Anonymous.
Perhaps 90 percent of the population today generally believes in Buy-and-Hold. Lots of people are beginning to have doubts since the 2008 crash. But most think that, even if Buy-and-Hold is not perfect, it is close enough and probably the most responsible strategy out there.
These people would be okay with a strategy that represented a small change. For example, they could buy into the idea that Bogle sometimes put forward that it is okay to change your stock allocation by 15 percent when valuations reach extreme levels. That is a violation of a core Buy-and-Hold principle (to Stay the Course by keeping your stock allocation constant except for reasons of age). But people view that sort of change as a helpful bit of flexibility rather than as an abandonment of principle. Most people view the idea that a 60 percentage-point change in one’s stock allocation is sometimes required as extreme. Most have a distaste for even considering such an idea.
The other factor is that people are emotionally committed to Buy-and-Hold. The discussion of whether Buy-and-Hold possesses merit is not a theoretical discussion for millions of people. People who have followed the strategy themselves and perhaps have recommended it to friends feel emotional pain when confronted with claims that there is no merit to the idea. Those claims make them feel like they have wasted their lives, that they could have retired many years sooner had only they had been smart enough to have seen the holes in the Buy-and-Hold concept years sooner.
Entertaining the new ideas makes them feel that they were taken for fools and they don’t like that feeling. It also suggests to them that people like John Bogle, whom most people revere as a hero to the middle-class, are dishonest. People react with anger to this suggestion.
Finally, even people who are interested in engaging in discussion of the new ideas don’t feel comfortable sparring with the small number of Buy-and-Holders who are so intense in their feelings about the subject as to be wiling to engage in insanely abusive Goon tactics to “defend” the strategy. People are ashamed to see other human beings give up their self-respect by threatening to kill family members of those who explore the implications of Shiller’s revolutionary research.
If they thought that they could bring an end to such ugliness by reining in the Goons, they would do so. But, given that 90 percent of the population still believes in Buy-amd-Hold today, they don’t see that as a realistic option. They feel that the way to stop the abusive posting is to silence the person putting forward the new and thus currently unpopular ideas. It’s similar to the situation where a powerful male executive takes sexual advantage of a lowly woman employee. People often think that the best response is to fire the lowly woman employee because they cannot bear to see the current situation continue but also cannot imagine overcoming the power of the male executive.
A final factor is that people do not want to see their portfolio values lessened. Stock are wildly overpriced today. Accepting what the last 33 years of peer-reviewd academic research tells us means accepting that our portfolios are worth a good bit less than the numbers on the last page of our portfolio statements indicate. Lots of people are too scared about their ability to finance decent middle-class retirements to want to go there. Buy-and-Hold is a pure Get Rich Quick strategy. Get Rich Quick strategies have possessed great short-term appeal going back to the day when the first stock market opened for business.
Blogs become successful by getting links from well-established sites. Most established sites made their name at a time when the pure Get Rich Quick approach possessed great appeal. The last thing these site owners want is for the millions of middle-class investors to learn the realities. Their reputations and big salaries are at risk. The Buy-and-Hold Mafia hates honest posting on the last 33 years of peer-reviewed research because the members of the Buy-and-Hold Mafia want to protect turf won in an earlier day.
The entire Buy-and-Hold house of cards will collapse quickly once one major site permits 100 percent honest posting at its site. But new ideas cannot gain support until discussion of them is permitted. The Buy-and-Holders know or at least suspect that allowing honest posting at a single site would mean the end for the purest and most dangerous Get Rich Quick scheme of all time. But the desperation tactics show that even the most intense “defenders” of Buy-and-Hold do not believe deep in their hearts that the strategy is long for this world.
People who are confident of an idea they advocate do not employ death threats to “defend” it. Not ever. People who employ death threats know on at least one level of consciousness that the idea they are “defending” is doomed. The fight on because the emotional pain of acknowledging that they have made a terrible mistake is too great for them to bear to do otherwise for the time being.
The other group of people is the 10 percent of the population that possesses at least a fair appreciation of the implications of Shiller’s revolutionary research findings. This group is virtually without exception excessively tentative in the manner in which it advances its idea. Shiller is the grandfather of Valuation-Informed Indexing. But check out how much how-to advice he offers in his book. There’s two paragraphs worth of material addressing this aspect of the question in the entire book! And those two paragraphs offer exceedingly vague guidance. Shiller has tenure at Yale. But even Shiller fears the vicious attacks of the Buy-and-Hold Mafia that he knows will be directed at him if he states in clear and firm and direct words what the historical return data tells us about what sorts of investing strategies work in the long term (hint — it ain’t Get Rich Quick!).
Rob Arnott was kind enough to come to this site and tell me that my investing ideas are “sound.” That made me very happy because Rob is a stud. He is a straight-shooter in a field in which straight-shooters are exceedingly rare. But look at what Rob did. He said that Bogle has always been a “gentleman” in his presence. He avoided comment on whether it is gentleman-like behavior for Bogle to do nothing when the Mel Linduaers and John Greaneys of the world threaten to kill family members of any posters who dare to “cross” them by posting honestly on the safe-withdrawal-rate matter. Rob Arnott is afraid to call Jack Bogle out on his acts of financial fraud. He’s waiting for someone else to do it. He wants people to learn the realities. But he doesn’t want to take on the hits that he will take on if he does what everyone knows needs to be done.
There is a lot of money to be made in this field. That means that the penalty associated with telling the truth is greater than it would be in any other field.
The other side of the story is that the REWARDS will also be greater down the line. I have mentioned before that I expect to be one of the richest men in the United States following the next price crash. There are millions of people who even today would like to hear honest reports on what the peer-reviewed research says and who will very, very, very much want to hear those reports following the next crash. For now, though, even a stud like Rob Arnott holds back. The Buy-and-Hold Mafia is very powerful and very well-connected and very ruthless in its use of intimidation tactics. So the 10 percent that should be leading us all to a better place hangs back, waiting for some fool like me to be the first one to post honestly on scores of different critically important investment-related topics.
We need to start rewarding honesty and intelligence and discouraging deception and intimidation. The more we reward deception and intimidation. The longer the Buy-and-Hold Crisis stretches out and the more of us it destroys.
That’s my sincere take re these terribly important matters, in any event.
Rob
Just need clarity. If Zi day that O have never threatened Wade’s job security and have never seen proof of that, would you delete it? If I say that I have never made a death threat and have never seen such a threat, would this be deleted? If I say that I don’t agree with the opinions on prison threats and lawsuit threats, will this be deleted?
Can you give you an overview of the terms of device to understand your ground rules?
If I wanted to have a board that only discussed the positive attributes of buy and hold, but banned all market timing strategies since they would be off topic, wouldnt that be equal to what you are doing?
Just need clarity. If Zi day that O have never threatened Wade’s job security and have never seen proof of that, would you delete it? If I say that I have never made a death threat and have never seen such a threat, would this be deleted? If I say that I don’t agree with the opinions on prison threats and lawsuit threats, will this be deleted?
If a poster says that he is aware that the Buy-and-Holders have been employing deception and intimidation tactics for 12 years now but that he finds it hard to believe that they ever went so far as to threaten to get an academic researcher fired from his job, I would let the post stand and I would put up a link to the article reporting on the threats made to Wade. In that case, it could be that the person making the post was acting on good faith and just hadn’t seen the article reporting on the threats to get Wade fired from his job.
If you acted like you were unaware of the abusiveness, I would delete the post. There are numerous articles here exploring the abusiveness in great depth. I have one that will be going up soon that details 101 acts of intimidation by Buy-and-Holders and that provides links to articles exploring those acts of abusiveness. That article will be linked to on the Navigation Bar of the site, so everyone here will have quick access to it as soon as they arrive.
For anyone participating in discussions held at this site to pretend that he or she doesn’t know that the Buy-and-Hold Mafia has been engaging in insanely abusive behavior for 12 years now is an act of bad faith. To enter a discussion of stock investing in the year 2014 without acknowledging the insanely abusive behavior of the Buy-and-Hold Mafia is like entering a discussion of race relations while denying that slavery was ever a reality in the United States. There is no hope of making progress in the discussion of these sorts of matters without acknowledging basic facts.
Shiler didn’t publish his research showing that there is zero chance of a Buy-and-Hold strategy ever working for a single investor last week, Anonymous. He published it 33 years ago. Acknowledging the genuine accomplishments of the Buy-and-Holders (which are many) is a positive. Acknowledging the large body of evidence suggesting that the Buy-and-Holders are suffering from cognitive dissonance and thus should not be held 100 percent responsible for their actions is a positive. Pretending that there have not been 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 serves no positive purpose.
We need as a nation to COME TO TERMS with the behavior of the Buy-and-Hold Mafia if we are to bring this economic crisis to an end. Each day that we put off doing this is a day in which we see more economic destruction and a day in which we add to the length of the prison sentences of you Goons. For what freakin’ purpose? That sort of dishonesty will not be tolerated here and should not be tolerated by any man or woman who cares about the future of this nation.
If you love your country, you work up the courage to protect it from Goons like you, Anonymous. If you tolerate such dishonestly, you are yourself participating in the 12-year cover-up of the errors in the Old School safe-withdrawal-rate studies, the biggest act of financial fraud in the history of our nation. To aid the cover-up is to commit financial fraud yourself. A felony. Prison time.
Not this boy.
Rob
If I wanted to have a board that only discussed the positive attributes of buy and hold, but banned all market timing strategies since they would be off topic, wouldnt that be equal to what you are doing?
No.
If you sincerely believe that Buy-and-Hold works (millions of good and smart people do), it would be fine if you said so. But you cannot both say that you believe in following the peer-reviewed research (something Buy-and-Holders do all the time) and ALSO prohibit discussion of the last 33 years of peer-reviewed research. That’s financial fraud.
That’s like Bernie Madoff sending transaction reports for transactions that never were made. That’s over the line. That’s criminal behavior.
If someone does not know about the 33 years of peer-reviewed research showing that Buy-and-Hold can never work, that’s not fraud because there is no bad intent. But if that person advances death threats or demands for unjustified board bannings or tens of thousands of acts of defamation or threats to get an academic researcher fired from his job, that person has demonstrated bad faith and is guilty of the crime of financial fraud.
I obviously have never once engaged in such behavior. I obviously have never once even considered the idea.
You are guilty of the same felony for which Bernie Madoff was sent to prison, Anonymous. The difference is that you practiced it on a scale 5,000 times bigger.
Madoff did not go to prison until his fund collapsed. You will go following the next price crash. The last 33 years of peer-reviewed research shows that that is likely to come in the next year or two or three.
I naturally wish you all good things.
Rob
If a poster says that … he finds it hard to believe that they ever went so far as to threaten to get an academic researcher fired from his job, I would let the post stand and I would put up a link to the article reporting on the threats made to Wade.
I find it hard to believe that anyone you call a goon threatened to get an academic researcher fired from his job. The reason that I find it hard to believe is because I had lunch with Wade Pfau, the researcher you are referring to, in Philadelphia last fall and asked him whether his employment had been threatened by “the goons”. Wade denied it completely and confirmed that the real threat to his academic career started when you began publishing his email correspondence with you.
Since I have this information from the horse’s mouth, there’s no need to link any article that reports on threats to Wade by any third party. If you need to identify the culprit, you need only look in the mirror when you shave tomorrow.
I have a funny feeling that Wade will be putting forward a different answer to that question when he is under oath, Norbert.
We’ll see.
Take care, man.
Rob
I challenge you to start a proceeding that puts him under oath.
I’m a mild-mannered reporter who happens to be the person who discovered the errors in the Old School safe-withdrawal-rate studies, Norbert. I have zero power to start criminal proceedings for financial fraud. Prosecutors do that.
Following the next price crash, there will be millions of people who have lost most of the money in their retirement accounts. When those people find out why that happened, I have a funny feeling that they will be putting pressures on prosecutors to bring cases. I also have a funny feeling that the prosecutors will respond to those pressures.
When I am called to testify, I will testify honestly.
I believe that Wade will testify honestly as well.
Hold onto your hat re this next one. I believe that even YOU will testify honestly.
And I believe that our good friend Jack Bogle is going to testify honestly.
Maybe not Greaney . He’s a hard case. But with Bogle and me and you and Wade all telling the same story — well, you know.
I have offered to do what I can to help you out, Norbert. The offer remains on the table. It is not a time-sensitive offer. Any time the idea of being helped out comes to possess appeal to you, please just let me know and we are off to the races.
Please don’t embarrass yourself and me both by asking me to post dishonestly re the numbers my friends use to plan their retirements. I don’t engage in acts that are felonies under the laws of the United States. I don’t even consider the possibility. Not ever. I am a stubborn kind of fellow re that one. Ask around. Anybody who has been paying even a little bit of attention over the past 12 years will tell you it’s so.
Anything short of that, just let me know. But not that.
I naturally wish you the best of luck re all your future life endeavors.
Rob
Rob,
Why does someone who has discovered the most revolutionary investing strategy ever have significantly worse returns than Joe Schmo who just puts a percentage of his paycheck each month in a target retirement fund? In fact it would take a catastrophic market meltdown for you to even begin approaching the same long term returns good old Joe has received over the last 15 years. Strange for someone who is light years ahead of everyone else in terms of investing knowledge.
Oh thats right 15 years is still not long term enough for you. Do you ever worry that your “long term” horizon may be well after you are dead and gone?
Yale Economics Profesor Robert Shiller is the person who “discovered” Valuation-Informed Indexing, Earl. He won a Nobel Prize for the discovery. His book was a bestseller. So there are millions of smart and good people who find great value in the ideas discussed at this site.
I have developed the ideas that Shiller put on the table. I have reported on the IMPLICATIONS of his ideas and following those ideas where they take us leads us to some amazing places. I was a Buy-and-Holder myself on the morning of May 13, 2002. I lost faith on the evening of August 27, 2002, when John Greaney threatened to kill my wife and children if I continued to report honestly on safe withdrawal rates and 200 of my fellow community members endorsed his post.
That’s pure emotion, Earl. A death threat never comes from a rational place in the human mind. So it was on that night that I abandoned Buy-and-Hold and began directing my energies to the further development of the Valuation-Informed Indexing concept. I think I would be a fool to continue following a strategy that inspires so little confidence in its followers that they do not feel able to engage in civil and reasoned discussion of its pros and cons.
I don’t say that I am “light years” ahead of everyone else. What I say is that I am 12 years ahead of my good friend Jack Bogle. Bogle is a giant. I have learned many important things from him. But I am obviously now ahead of him since I now direct my energies to understanding the first true research-based strategy while he still wastes his time on a strategy that is now discredited by 33 years of peer-reviewed research (Shiller published his revolutionary finding that valuations affect long-term returns in 1981).
I want to see this change. I want Bogle to flip and to begin putting his mental energies to a positive purpose again. But the only way that Bogle is ever going to flip is if he is exposed to both sides of the argument. Right? That’s why I say that it is imperative that we open the Bogleheads Forum to honest posting by the end of business today. When we allow honest posting, we all learn. When Bogle flips, we all benefit. This is a win/win/win.
I am not down today as a result of my decision to follow the first true research-based strategy. Here is a calculator that reports on S&P returns:
http://dqydj.net/sp-500-return-calculator/
The calculator says that the annualized return for the S&P from January 2000 to January 2014 was 1.3 percent real. From January 1996 to January 2014, the number was 5.7 real.
My return has been 3.5 percent real (my money is in TIPS and IBonds earning that amount).
I got out of stocks in the Summer of 1996. So a number close to the 5.7 number is the comparison number for the assets I held at that time. But that is only a tiny percentage of my portfolio. I was saving huge amounts of money in those years ($88,000 in the year prior to my early retirement in August 2000). So the comparison number for me is much closer to the 1.3 number than to the 5.7 number. My 3.5 percent real return beats the comparison number that applies for my portfolio.
So I am ahead, not down, Earl.
And that’s before the next price crash, which will bring on a loss for Buy-and-Holders of something in the neighborhood of 65 percent. And then I will go farther and farther ahead as I earn compounding returns on that huge differential for decades to follow.
More important than my personal circumstances are the results reported on in the peer-reviewed research that I co-authored with Academic Researcher Wade Pfau. Our research hows that what has worked for me for 18 years has been working for every investor who followed Valuation-Informed Indexing strategies for 140 years. VII ALWAYS increases long-term returns dramatically. VII ALWAYS reduces risk dramatically. There has never been one exception in 140 years. VII is 140 for 140 (on a risk-adjusted basis). BH is 0 for 140. And you insist that discussion of the last 33 years of peer-reviewed research be prohibited on every discussion board and blog on the internet? Huh?
You make a reference to a 15-year time-period. I have performed hundreds of runs of the Investor’s Scenario Surfer to see how VII compares to BH over all possible 30-year return sequences. There ARE cases where VII is down after 15 years. It doesn’t happen all that often and it is usually not by that much. But it CAN happen. If you are absolutely unwilling to ever be down by even a small amount after 15 years, this is not for you. VII is a LONG-TERM strategy. That should be understood by all.That’s the INTENTION.
But so what?
Would you want to root for a baseball team that would have a winning record if games ended at the end of the sixth inning but that finished in last place because it had such a horrible bullpen? IT’S THE SCORE AT END OF THE GAME THAT COUNTS. VII always trumps BH at the end of 30 years (and of course that’s even more the case at the end of 60 years — most of our investing lives span the 60 years from age 25 to age 85). VII is ALWAYS far superior at the end of 30 years. There’s no comparison.
Our society advances in knowledge over time. VII is a huge advance over BH. You are on the wrong side of the history train. Give it up, my old friend. It’s a lot more fun to be be arguing for research-based stuff that enriches millions of lives than to be arguing for smelly Get Rich Quick garbage that sounded like a good idea once upon a time but that has been discredited by 33 years of peer-reviewed research and that has caused losses so devastating as to put us in the worst economic crisis in U.S. history.
My take.
Rob
Rob,
You are depicting the situation as though someone took all the money they ever made and will ever make and stuck it in the stock market exactly in 2000 (a market peak). Not the actual scenario where someone will be investing periodically the entire time. You are such a clown there are seriously no words.
Also by your own admission since 1996 you have gotten 2.2% worse annualized returns. That is pretty significant over 18 years my good friend. Hence why it would take 50% drop in equities just for you to be equal with Joe Schmo.
This of course doesn’t even take into account things like periodic investment of a set amount thus buying more when low and less when high, semi-annual rebalancing, etc.
If 3.5% annualized really puts you ahead of others then no one could retire yet tons of buy and holders do every single day and they are all doing better than you.
The research that I co-authored with Wade Pfau examines the entire 140 years of return data available to us, Earl. Valuation-Informed Indexing soundly beat Buy-and-Hold on a risk-adjusted basis and in the long-term in every single one of those 140 years. Valuation-Informed Indexing is 140 for 140 and Buy-and-Hold is 0 for 140. For Buy-and-Hold ever to prevail for a single year in the future, the laws by which the market has operated since the first market was opened for business would need to be turned on their heads. Anything can happen. But I am not going to invest my retirement money pursuant to a belief in such wild long-shot possibilities.
I got beat on the small amount of money in my portfolio in 1996, as of today. That much is so. But there is 33 years of peer-reviewed research showing that we are headed to a 65 percent price crash. I will be far ahead re that small bit of money at that time. I am already ahead re far larger sums of money. That’s the way it works. Valuation-Informed Indexers do indeed lose tiny bets from time to time. But because we invest with the odds on our side we always end up far ahead in the long run. That’s the power of the laws of probability as they play out in the investing realm. That’s the difference between Get Rich Quick strategies and research-based strategies. Get Rich Quick can work like gangbusters in the short term. Research-based strategies ALWAYS works better in the long term.
“Periodic investment of a set amount” is rebalancing. It is a logical impossibility that rebalancing could ever work in the long run. Say that you have 80 percent of your portfolio in stocks at a time when the most likely annualized ten-year return is a negative 1 percent. Now say that prices rise so that the likely long-term return drops to a negative 2 percent and you take a small amount out of stocks to keep your allocation at 80 percent. You still have most of your money in an asset class delivering a negative long-term return. Huh? How is that a good thing?
What you should be doing is trying to keep your risk profile roughly stable. To do that in a world in which valuations determine long-term returns, you MUST, MUST, MUST be willing to change your stock allocation in response to wild price swings. There is no other way to Stay the Course in a meaningful way. Even John Bogle acknowledges that it is important to Stay the Course and he is the biggest Buy-and-Hold advocate out there. Staying at the same stock allocation at all times is the OPPOSITE of what the last 33 years of peer-reviewed research says you must do. Buy-and-Hold is Get Rich Quick. It never works in the long run.
A 3.5 percent return puts you ahead of all those earning negative returns during time-periods in which Get Rich Quickers have driven prices up to insanely dangerous levels. The huge differential you gain can then be put into stocks after the massive price crashes that always follow time-periods in which Buy-and-Hold “strategies” become popular. After the next crash, stocks will be paying a long-term return of 15 percent real.
Why wouldn’t that be enough to support a comfortable middle-class retirement, Earl? Where do you think you are going to be able to beat 15 percent real in any event? Pigs get slaughtered. I think a 15 percent real return is just fine.
Rob
I will get this 15 percent real return same as you if it comes to be. If it doesn’t or the crash is not to the magnitude you predict you will have substantial less to invest to start getting your 15%.
18 years now and you are still waiting for the time you can maybe just start getting 15% real returns. Some people want to retire while they are still alive Rob.
You continue to be a clown to the incredibly small amount of people who know your name. Not because your investing ideas are necessarily terrible but because of how you lie, how you threaten, how you respond to questions with completely off topic rants, and above all else how your entire communication is riddled with thinly veiled jealousy and hate.
I will get this 15 percent real return same as you if it comes to be.
No, you won’t, Earl. You say the words and I can accept that you believe them on some level of consciousness. But it just doesn’t work that way.
The P/E10 value ALWAYs drops to 8 following a time-period in which Buy-and-Hold strategies become popular. That’s half of fair value. That’s INSANE.
What do you think pulls prices so low? IT IS SELLING BY THE BUY-AND-HOLDERS THAT DOES THAT.
You have not sold yet. That’s why we are still at 25. When the last Goon sells, we will be at 8. That’s how it works. The market PUNISHES Get Rich Quick. Always. It’s been doing that for 140 years now.
You are an insanely emotional investor. You show that with every post you put forward. What makes you think you are suddenly going to gain control of your emotions when prices drop? Gaining control of your emotions takes a lot of time and effort. If you want to gain the ability to invest rationally, you should have started years ago.
My view is that Bogle and Bernstein and all the others should be HELPING you. The job of an investment advisor is not to encourage emotional investing. It is to DISCOURAGE emotional investing. The experts in this field should not only be permitting honest posting on the last 33 years of peer-reviewed academic research. They should be urging people to follow strategies rooted in the research findings.
My take.
Rob
If it doesn’t or the crash is not to the magnitude you predict you will have substantial less to invest to start getting your 15%.
You’re not too far off the mark with this one.
We cannot predict short-term results at all. We cannot predict even long-term results with precision. So it is true that I do not know exactly how things are going to play out and that some possibilities yield better results for me than others.
Given these realities, the thing to do is to set things up so that you are insured of at least a good result in all realistic scenarios. I may get an A+ result. I may get only an A result. Or, if we see some amazing long-shot possibilities come through, I may get only an A-. There is no scenario in which I see a B result. Stocks would have to perform in a manner in which never before in history have they performed for me to see a B result.
Things are just the opposite for you. You have locked in a D or worse. You might get a D-. If things go really haywire, you might get an F result. But in your unwillingness to even consider the possibility that stocks might continue to perform in the future somewhat as they always have in the past, you have ruled out the possibility of anything better than a D result.
If the future is unknown, Buy-and-Hold is the ideal strategy. I certainly give you that one.
But if the future is knowable and you refuse to consider what we know, you hurt yourself in a very serious way.
You are setting your stock allocation as if the future were unknowable. There’s 33 years of peer-reviewed research showing that you are making a terrible mistake.
Please don’t ask me to make that same mistake to make you feel better. This boy ain’t going there.
Rob
18 years now and you are still waiting for the time you can maybe just start getting 15% real returns. Some people want to retire while they are still alive Rob.
Could there be a more emotional statement?
This issue has been addressed tens of thousands of times over the course of the past 12 years and it is addressed up above in this very thread.
Buy-and-Hold is science!
Rob
You continue to be a clown to the incredibly small amount of people who know your name.
You know it all Earl.
You don’t need to be learning from anyone else.
Truly outstanding!
Rob
Not because your investing ideas are necessarily terrible
This is new.
For 12 years now you Goons have been unwilling to acknowledge even the slightest possibility that Valuation-Informed Indexing is a legitimate strategy.
Now that door is opening a wee bit.
I wonder why.
Rob
but because of how you lie, how you threaten, how you respond to questions with completely off topic rants, and above all else how your entire communication is riddled with thinly veiled jealousy and hate.
Your feelings are hurt.
But not because I discovered the errors in the Old School safe-withdrawal-rate studies.
Your feelings are hurt because you were taken.
You weren’t taken by me. That was the other fellow.
I wish you well, Earl.
Rob