Set forth below is the text of a comment that I recently put to another blog entry at this site:
Seems like a vast conspiracy, Rob. Maybe you should contact Alex Jones (prison planet) and see if you can write a financial column.
It’s a Conspiracy of Ignorance, Anonymous.
Prior to 1981, we genuinely didn’t know how stock investing worked. Then we did. But the “revolutionary” (Shiller’s word) advance we achieved was so big that it came as a shock and was hard to take in.
When prices crashed in 2008, million of people were ready to consider new ideas. But the Buy-and-Holders feel embarrassed to acknowledge that the peer-revewed academic research revealing their errors has been around for over 30 years and they continued pushing Buy-and-Hold pretty darn hard all that time.
The cover-up can fairly be described as a conspiracy. I don’t have a problem saying that someone who fails to speak up about death threats and unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs is involved in a conspiracy to commit financial fraud. That’s why I often refer to “The Buy-and-Hold Mafia.”
But I am not aware of any evidence that the Buy-and-Hold Pioneers intentionally got anything wrong. I have seen a lot of evidence pointing in precisely the opposite direction. Why did Bogle include the words in his book that helped me understand the safe withdrawal rate issue if he was involved in a conspiracy? Why did Bernstein acknowledge that the numbers in the Old School studies are wildly wrong if he was involved in a conspiracy? Why did Swedroe get himself banned from the Vanguard Diehards board if he was involved in a conspiracy?
The reality here is that just about everyone in this field would like to see the Ban on Honest Posting lifted. I am confident that Bogle and Bernstein and Swedroe would. And I am confident that hundreds of others (probably thousands of others) would. I’ll let you in on a little secret. I think you Goons would like to see the Ban lifted. If you could go back in time, I think you would play things very differently.
The trouble we all are having is that the Buy-and-Holders painted themselves into a corner. They genuinely don’t know all the ins and outs of Valuation-Informed Indexing. They know that there are many holes in the Buy-and-Hold story. But they have never engaged in extensive discussion of what the last 33 years of research means. And so they really are pretty much in the dark re a large number of critically important investment-related topics. They tell themselves that it is okay not to speak out about the flaws in Buy-and-Hold so long as there is at least a chance that it might more or less work. And they continue to believe that it might more or less work because they have prohibited the sorts of discussions they would need to participate in to come to understand clearly why that is not the case.
How do we get the Buy-and-Holders out of the corner they have painted themselves into?
I gave it a very good shot. I suggested that we explain their lack of understanding of the research as a huge case of cognitive dissonance. That’s not a lie. Cognitive dissonance is a real phenomenon. And there is tons of evidence that it applies here. I was doing a great kindness to my Buy-and-Hold friends to put forward that suggestion. You cannot be held liable either civilly or criminally for mistakes you made when suffering from cognitive dissonance. I have put a good deal of effort into getting all of my Buy-and-Hold friends off the hook.
There’s one big problem casting a shadow over these efforts today. You cannot excuse death threats by citing cognitive dissonance. You cannot excuse unjustified board bannings by citing cognitive dissonance. You cannot excuse tens of thousands of acts of defamation by citing cognitive dissonance. You cannot excuse threats to get academic researchers fired from their jobs by citing cognitive dissonance.
So now we have a large number of people who will be going to prison following the next price crash. And now we have a large number of people who will be on the hook for trillions of dollars of financial losses following the next price crash.
That’s why I began mentioning the prison sentences a ways back. For a long time, I kept my mouth shut about them because I thought that mentioning your prison sentences would just inflame you Goons all the more. But you obviously were aware of the risk that you would be going to prison on at least one level of consciousness. Otherwise, you never would have threatened Wade. By the time that Wade and I had published our research, you had in your Goon minds already passed the point of no return. You were going to prison if the truth ever got out and so you had to do absolutely anything to stop that from happening. Even threatening an academic researcher was no longer beyond the pale if that was what it took to keep millions of middle-class investors from learning about the long cover-up of the errors in the Old School studies.
Once I knew that that was the reality, it made no sense to keep quiet about the prison sentences. People who are pretty darn certain that they are headed to prison once people learn the realities are not going to come clean. And, by keeping quiet about your prison sentences, I was encouraging others (like Wade) to engage in behavior that would end up with them going to prison as well. Being “diplomatic” re this point was causing lots of people to suffer in very big ways.
So I stopped that b.s.
Call it a conspiracy if that makes you happy in some twisted sort of way. It’s not a conspiracy in the way that people generally use the word. It’s a case where some wonderful people came up with some wonderful insights but messed up one one point (the need to engage in long-term timing) because we humans just aren’t born knowing everything. Now we know and we should all be jumping up and down at our good fortune. But instead we have been subjected to 12 years of ugliness because the most abusive poster in the history of the internet really, really, really, really, really, really doesn’t want to acknowledge getting the numbers wildly wrong in a retirement study posted at his web site.
I don’t call it a conspiracy. But I sure don’t intend ever to agree to post dishonestly on safe withdrawal rates and thereby participate in the cover-up myself and earn myself a prison sentence to match yours, Anonymous. Please try to find someone else re that one. Call me madcap. No can do.
I will continue posting honestly and you will continue posting abusively and we will meet somewhere on the other side on some future day.
I can wish you well. It’s not a felony to do that. So I feel comfortable offering you my best and warmest wishes.
And that’s where I get off the train. If there is ever a time when I can help you out in any way that does not involve me posting dishonestly re the numbers that my friends use to plan their retirements, I hope you will let me know. It would be cruel for me to suggest that there is any give whatsoever re the honest posting matter. So I won’t insult both of us by suggesting that there is even the tiniest chance that you will in 12 billion years see any change re that one.
That covers it, no?