Set forth below is the text of a comment that I recently put to another blog entry at this site:
But you expect people to somehow anoint you as a sage when all you’ve done is repeat something that far more capable and far more schooled and far more successful people have said for decades if not centuries.And if THEY could not develop a magic timing scheme that works in today’s (and tomorrow’s) world, what gives you the hubris to think you, and you alone, could do so?
I don’t care if people anoint me as a sage or not. What I care about is that the words that appear next to my name express my sincere beliefs, that they not be lies. If I say that the Old School safe withdrawal rate studies report the SWR accurately, I am telling a lie. So I am not going to say it, no matter how much in the way of intimidation tactics you apply to me.
How is it that I have done something that smarter people who have worked in this field before me have not been able to do?
Many of those people did their work prior to 1981. Shiller’s “revolutionary” findings changed everything.
Many of the people who did work in this field after 1981 had already done work in this field prior to 1981 and had associated themselves with Buy-and-Hold beliefs. Those people were compromised by their pride in discredited belief and by the friendships they formed at times when the research they needed to put the puzzle together had not been available to them.
Many of the people who did work in this field after 1981 and who were not compromised by taking a false pride in earlier, discredited work were intimidated by the brutal intimidation tactics of those who had.
That leaves me, Anonymous.
I never did any work in this field prior to 1981. So I was not compromised by earlier, now-discredited work. I have done my work post-1981, so I have had access to Shiller’s research. And I have refused to be intimidated by the Buy-and-Hold Mafia. I think a big factor there is that I formed personal friendships with many of the people whose lives were destroyed by Greaney’s refusal to correct the errors in his study. None of this is purely theoretical to me. It is a story of human lives being destroyed by the lowest of the low on the internet.
You make it sound as if no one else has been smart enough to see that Buy-and-Hold is a big pile of smelly garbage. There is of course nothing that could be farther from the truth. The very reason why we have seen such abusive behavior from you Goons is that JUST ABOUT EVERYONE sees. Freakin’ Jack Bogle sees it! Bogle is the king of Buy-and-Hold. If the King of Buy-and-Hold sees that Buy-and-Hold is a big pile of smelly garbage, who the heck DOESN’T see it? You Goons obviously see it or you wouldn’t behave the way you do.
The others can be bought off or intimidated into silence. I cannot. Why not? One very obvious factor here is that I am not employed in this field. With Wade Pfau, you can threaten to get him fired from his job and he has to think about what will happen to his two small children if he insists on his right to post honestly. I have never received a penny of income in this field. So there is nothing you can take away from me. So I continue to post honestly despite the threats.
You can threaten bloggers that link to me and try to destroy my efforts to earn a living on the internet. That COULD work. But I’ve got 11 years worth of Post Archives that would ruin me if I were to agree to post dishonestly and 11 years worth of Post Archives that stand to make me a huge sum of money following the next price crash if I resist your demands that I agree to post dishonestly. I don’t think you need an I.Q. of 140 to figure out what is the better play for me in these circumstances.
If Buy-and-Hold hadn’t already been ready to collapse when I came on the scene, I couldn’t have done this. I wouldn’t have been able to find honest comments from people like Bogle and Bernstein and Swedroe and Burns and Kitces and Pfau and on and on and on if people had not already begun positioning themselves for the post-crash years at the time I put forward that famous post of the morning of May 13, 2002. I was born at the right time, you know? I didn’t plan this, I fell into it.
What matters is where we stand. Behind Door Number One is Valuation-Informed Indexing and the greatest period of economic growth ever known in our history. Behind Door Number Two is a continuation of the Campaign of Terror and the onset of the Second Great Depression.
I choose Door Number One. Call me madcap. I have a funny feeling that many millions will be joining me following the next price crash, regardless of your intimidation tactics.
The deal here is that you can join in on all the fun or you can stretch your prison sentence out to the longest possible period of time. Those are the two live options available to you today. I beat you a long, long, long, long time ago. The proper way to put it is that the peer-reviewed academic research beat you, I just reported on it accurately and thereby got picked up by the biggest wave ever seen in the personal finance world. Bogle and the others have given you what you need to stretch out the pain. But no one can stop the first true research-based strategy from burying the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind 30 feet in the ground, where it can do no further harm to humans and other living things.
You want my help, you’ve got it.
You demand as a condition that I post dishonestly on safe withdrawal rates, please look up someone else, I am not the right fellow for the job.
I wish you all good things.
Rob
Rob,
The biggest threat to Wade, or anyone else, is loss of credibility. If Wade puts something out there that we can show is not factually based, it would hurt his career. That goes for everyone.
That’s 100 percent correct, Anonymous. And the reality that you cite here is indeed the reality that is causing all the trouble we face today.
There was a time when the research in this field seemed to support the Buy-and-Hold strategy. That was from 1965 until 1981.
In 1981, research was published by an economics professor (Robert Shiller) who has since won a Nobel prize for his work entirely discrediting Buy-and-Hold.
The Buy-and-Holders did not fully appreciate the implications of Shiller’s findings in 1981. So they continued promoting Buy-and-Hold in the years that followed.
In the past 33 years, more and more research has accumulated that confirms Shiller’s findings. There is now a mountain of support in the research for Valuation-Informed Indexing and precisely zero support for Buy-and-Hold (Wade checked the entire library of research studies in this field and he was so amazed to find not a single study supporting Buy-and-Hold that he checked at the Bogleheads Forum and not one of the Buy-and-Holders who participate there [including Jack Bogle himself!] was able to identify a single study supporting Buy-and-Hold.
As you say, credibility is a big deal in this field. So, if the Big Shots in this field had never in the past promoted Buy-and-Hold, there would today be 100 percent support for the Valuation-Informed Indexing strategy, the first true research-based strategy (Buy-and-Hold was supported only by a mistaken understanding of what Fama’s research showed). Everyone would want to get on board to protect his or her credibility.
But the Big Shots in this field today have long track records in place in which they supported Buy-and-Hold instead of warning us of its dangers.
So what are all these Big Shots to do?
They commit financial fraud if they ignore the last 33 years of research and pretend that they believe in Buy-and-Hold.
But they lose credibility in the eyes of their clients and readers if they acknowledge today that for 33 years since Buy-and-Hold was discredited by the research they have continued to endorse it.
What to do?
We need to stop the nonsense. We need to insist that by the close of business today every last Big Shot in this field COME CLEAN re what the last 33 years of research really says.
Should we be unkind to these people?
We should not. First of all, it will tear the country apart if we are uncharitable in our assessments of what they have done. Two, they made a mistake and all of us are capable of making mistakes. Three, they have made many wonderful contributions for which we all should be grateful. And, four, they are genuinely scared to come forward; we don’t encourage more people to come forward by being uncharitable to those who work up the courage to do so.
There’s a limit to how far we can permit the dictates of charity to take us, however. May today go so far to say we should not call these people out on the massive act of financial fraud in which they have engaged by covering up the errors in the Old School safe-withdrawal-rate studies. That’s not charity, that’s cowardice.
If we don’t call them out on their acts of financial fraud, they will continue to commit more and more acts of financial fraud. That makes things worse. That means longer prison sentences and larger financial liabilities. Huh? Failing to speak out takes things in the opposite direction of where we all deep in our hearts want to take things.
We all must speak out about acts of financial fraud every time we see them. Failing to do so HURTS our Buy-and-Hold friends in very serious ways.
But, yes, once they speak out, we should be as charitable as possible in our assessments of the mistakes and bad behavior of the Buy-and-Holders.
As you say, “that goes for everyone.” There are no two sides re this matter. Every single one of us needs to insist that the Buy-and-Holders come clean by the close of business today so that we can begin rebuilding the economic system that was destroyed by the 12-year (it’s 33 years if you count back to when Shiller published his revolutionary findings) cover-up, the greatest act (by far) of financial fraud in the history of the United States.
Fair enough?
Rob
Why did Wade take a the credit for the paper instead of listing you as the lead author?
I don’t have any economics training, Douche. My guess is that it would not even have been possible to list me as co-author.
I had no problem with not being listed. So long as the paper ended up on the front page of the New York Times, we would as a society be able to make the transition from Buy-and-Hold to Valuation-Informed Indexing without seeing another price crash. That’s what matters to me. I am 100 percent confident that, once Valuation-Informed Indexing becomes the dominant model, getting my fair share of credit for the advance is going to be no problem for me whatsoever.
So there was no need for Wade to list me and I never asked him to list me or expected him to list me and he did nothing wrong by not listing me. There was never any discussion of him listing me as co-author during the time we were working on the research together.
I obviously never imagined in my worst nightmares that you Goons would so intimidate Wade (and that people like my good friend Jack Bogle would fail to take action when they learned about the intimidation) that he would agree to betray his research and his profession and his country to appease you Goons. Now that he has done that, he is not in a position to promote the research. It is my sense of things today that he is not even trying to do so.
So, since Wade was silenced, it has become necessary for me to report that I am the co-author of the research. Wade wrote many, many e-mails saying that. There certainly was no debate about it during the days when he felt free to say what he believed about stock investing. We need someone honest promoting the research and I am the obvious candidate. So I now point out that I was the lead author on the research and that Wade was the co-author.
Wade did nothing wrong in not crediting me as co-author (except in the many e-mails he exchanged with me). But he obviously did a LOT wrong when he agree to participate in the greatest act of financial fraud in U.S. history by signing up with you Goons.
I told him not to do so in the strongest possible terms. There’s a blog entry here reporting on the e-mail in which I did so. I will obviously testify honestly re the contents of that e-mail as well as re the role that both Wade and I played in preparing the most important piece of peer-reviewed research published in this field in the last three decades.
I wish you well, Douche.
Rob
Why did Wade say that you have caused him way more harm than your self described goons?
Because he is ashamed.
Because he doesn’t want people to know that he takes orders from internet Goons.
Because he doesn’t want to go to prison.
Because he is afraid that the Buy-and-Hold Mafia will destroy his career if he says what he knows.
You know how it works with the real Mafia. They require you to commit a crime before letting you know the big secrets. That way, if you ever tell, you destroy yourself as well as the others.
That’s how it works in the Buy-and-Hold Mafia too. It’s not a conspiracy in that everyone met in a room before the cover-up. But everyone watches to see what you can get away with. And everyone has been seeing for 33 years now that you don’t point out that Shiller’s research entirely discredited Buy-and-Hold.
The problem is that the damage done to the economic system as a result of the cover-up has now grown so great that we have no choice but to tell people the realities.
But how do we do that without putting most of the Big Shots in this field in prison while doing it?
I don’t have an easy answer, Anonymous.
But I know that the problem gets worse with every day of delay.
The one big thing we have working for us is that we are the luckiest generation of investors ever to walk Planet Earth. We are the first generation to have all the pieces of the puzzle. We need to make use of that in trying to calm people down.
But I won’t lie to you and say that people are not going to be angry. I think people are going to be very angry indeed.
Just not as angry as they will be if we wait until after the next crash.
Rob
Would you agree that your inital response in this thread can be reduced to the following dilema:
Either nearly every finance author, lecturer, blogger, advisor, and commenter on the planet is purposely corrupt and involved in a single-minded tight and as-yet completely unbreached unreportred and ongoing conspiracy against the truth that caused a major economic meltdown…
OR…..
a single unemployed layman blogger in Virginia has a profound [willful?] misunderstanding of mathematics and investing principles.
Rob,
You have a story for every point that you want to spin to fit your fantasy.
Dream away.
Either nearly every finance author, lecturer, blogger, advisor, and commenter on the planet is purposely corrupt and involved in a single-minded tight and as-yet completely unbreached unreportred and ongoing conspiracy against the truth that caused a major economic meltdown…
What really happened is that Shiller’s findings came as a shock. He turned what we believe about how stock investing works on its head. It takes some time for people to process such a fundamental change in our understanding of so important a matter. I don’t think it would have been too strange for it to have taken five or ten years for Valuation-Informed Indexing to catch on. That would have taken us to 1986 or 1991.
By that time, a huge bull market had been established. People did not want to hear that Buy-and-Hold does not work. They were getting daily feedback that it was working very well. And it wasn’t until late 2008 that the bull market ended in the popular perception. So it has only been for five years that most people have been open to questioning of Buy-and-Hold. And we HAVE seeing the door begin to open during that time. We are not yet where we need to be. But we are making slow but steady progress.
Another big factor here is that investing is too important to get wrong. Intuitively, you would think that that would make people super cautious about making dogmatic claims. The reality is that it has worked the other way around. Because investing is so important, experts feel that they need to demonstrate confidence in what they say. And the Buy-and-Hold and Valuation-Informed Indexing models often lead to OPPOSITE strategic recommendations. Experts feel that it would sound funny to say: “I believe that you should be at an 80 percent stock allocation but I also want you to know that there are good and smart people in this field who follow research that indicates that 20 percent stocks is a much better choice.”
That’s what people should be saying. There are two models for understanding how stock investing works and anyone who is educated re the research has a responsibility to let his clients or readers know that there is another school of thought that leads one to very, very different conclusions. But the experts feel that their clients and readers won’t think of them as experts unless they say something more definitive than “80 percent stocks might be good but 20 percent stocks might be good too.” The REALITY is that we are as a society today at a primitive level of understanding of how stock investing works. But the experts have to give advice on how to invest TODAY — they cannot tell their clients and readers to wait 20 years until we figure out whether it is Fama or Shiller who got things right. So they IGNORE Shiller. They act like he doesn’t exist. It’s a terribly irresponsible thing to do. But when you think this through carefully you can begin to see why things happened as they did.
It is certainly not the case that everyone in the field is purposely corrupt. That is OBVIOUSLY not true. Even people like Bogle and Bernstein and Swedroe include LOTS of honest and accurate comments in their books and articles and speeches. They even include comments that argue against their Buy-and-Hold recommendations. I learned about the errors in the Old School safe-withdrawal-rate studies by reading Bogle’s book. If he were 100 percent corrupt, he would not include that sort of language in his book. It would make no sense for an entirely corrupt person to do so.
What is going on is that we are living through a state of transition from Buy-and-Hold to Valuation-Informed Indexing. Bogle (and all the others) understands that there are problems with Buy-and-Hold. He is DEFENSIVE about the many obvious weak points in his model. But he has a lot invested in Buy-and-Hold and he once truly believed in it. So he is highly reluctant to give up on the model. So he downplays the weaknesses. Not only in his public comments. My sense is that he does this even in his own mind. He has convinced himself that Buy-and-Hold can at least kinda sorta work. He has convinced himself that he is not doing anything too horrible in failing to explore the challenges that have been presented to his model.
There is now a mountain of evidence that he IS doing something truly horrible. The relentless promotion of Buy-and-Hold strategies was the primary cause of the economic crisis. Bogle has caused tens of thousands of businesses to fail. He has caused millions of people to lose their jobs. He has caused millions of retirements to fail. He has even caused a significant number of people on both the left (The Occupy Wall Street Movement) and the right (The Tea Party Movement) of the political spectrum to begin to lose confidence in our system of government. That’s very bad stuff. But it does NOT amount to financial fraud so long as Bogle (or any of the others) is suffering from cognitive dissonance, a condition that afflicts all of us humans from time to time.
Death threats? Demands for unjustified board bannings? Tens of thousands of acts of defamation? Threats to get academic researchers fired from their jobs? We cannot excuse those sorts of things with stories about people suffering from cognitive dissonance. There are reasons why we have rules and laws protecting us from those sorts of behaviors. Those sorts of behaviors make our system unworkable. We all are capable of making mistakes and those sorts of behaviors make it impossible for us to discover our mistakes through civil and reasoned discussion. Those who engage in those sorts of behaviors or who see others engage in those sorts of behaviors and fail to take prompt action are guilty of financial fraud, a felony under the laws of the United States. Of that there can be no doubt whatsoever.
And there can be no doubt whatsoever that it is no act of kindness to cover up such acts of financial fraud or to fail to work hard to have them discovered and prosecuted. When we tolerate financial fraud, we insure that additional acts of financial fraud will take place by people who feel threatened by the findings of the last 33 years of peer-reviewed academic research in this field. The people who fail to speak up are insuring that more people will go to prison and that the prison sentences will be longer.
We are the luckiest generation of investors ever to talk Planet Earth. Once we make it to the other side, we will all know how to obtain far higher returns from stocks while taking on dramatically reduced risk. That’s investor heaven! It is because the advance we have achieved (at least intellectually!) is so great that as a society we have been slow to make the transition. We are naturally skeptical of such huge changes and so it is proper that we have proceeded cautiously. It is of course NOT proper that some of us have engaged in acts of financial fraud to block the change from taking place.
We are not a bad people. But we have made some bad choices that have caused huge amounts of human misery. We need to turn things around. We all should be doing everything in our power to insure that we do so by the close of business tomorrow.
That’s my sincere take re this terribly important matter, in any event.
Rob
Dream away.
My response immediately above applies to this one as well.
Valuation-Informed Indexing IS a dream come true. It is what Bogle was hoping to achieve when he first got involved promoting the Buy-and-Hold Model. We now have the missing piece to the investing puzzle. We now have the first true research-based strategy. We now know what really works. We now know how to reduce risk by 70 percent while increasing long-term returns dramatically.
I very much look forward to the day when we all pull together to bring this economic crisis to a quick end and to bring on the greatest period of economic growth in our history. As John Walter Russell suggested in a post he advanced at the Motley Fool board on Day Six of the proceedings, it won’t be much longer before we all will be “having a ball” learning the true realities of stock investing for the first time in the history of Planet Earth.
My best and warmest wishes to all of my dear Goon friends!
Rob
Pure hocomania.
That’s been your answer for 12 years now, Anonymous.
I don’t believe that that answer is going to work for you anymore following the next price crash.
But I am not God. I could be wrong.
We are all just going to have to wait and see how things go.
I naturally wish you the best of luck in all your future life endeavors.
Rob