“Jack Bogle’s Response When He Learned That I Would Be Appearing at the Next Meeting of the Vanguard Diehards to Ask Why He Had Not Taken Action to Get the Old School Safe-Withdrawal-Rate Studies Corrected Was to Ask His Internet Goon Squad Pals to Move the Entire Community to a Place Under Mel Lindauer’s Control So That He Would Never Need to Worry Again About Someone on the Internet Asking Questions About the Holes in His Investing ‘Stategy.’”

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

Have her INDEPENDENTLY, WITHOUT ANY INPUT OR COACHING FROM YOU, read everything you can amass that you have ever written, from TMF, FIRE board, Vanguard, the Plop, Valuewalk, etc, and read it. It might take her from a few days to a couple of weeks, and this is AFTER you have assembled all the links for her.

There was a fellow who did just what you describe here, Anonymous.

His name was Larry Evans. He somehow found himself reading the material at this site. He thought I was crazy and he was honest and brave enough to come forward and tell me so. He put up a comment at the blog saying that there was no way that the things I was saying could be so. I said that the materials supporting my claims were available at my site and at John Walter Russell’s site.

His response was to offer to spend several weeks going through all of those materials. He asked if I would be willing to post his written-up assessment on his conclusion of that review of all the materials regardless of whether it supported me or not. I said sure.

About three weeks later, Larry called me on the telephone. He told me that he was amazed to find that everything I said checked out. He had worked for Ross Perot in earlier days. He told me that he was going to contact Perot and obtain his help in getting the message out. He said that he wanted to get financial people in the states that are experiencing pension-funding problems involved. He talked about getting venture capitalists involved. I said that all that sounded 100 percent groovy. I said that all that sounded like exactly the sorts of thing that a people trying to recover from an economic crisis caused by a belief in a long-discredited investing strategy would be doing to get their country back on the right track.

That talk lasted about two hours. We had a follow-up conversation a week later that also lasted about two hours. He said that he would be in contact again to plan follow-up steps.

When Larry contacted me again, he indicated that he was too afraid of what the Buy-and-Hold Mafia would do to him if he were to go forward to continue taking the steps that he knew would save his country. We talked about that a bit and parted friends. The last time I talked to him was when I posted at the Financial Mentor blog. Todd Tressider, the author of that blog, says that I am right on all the issues of substance but refrains from saying that the internet should be opened to honest posting because he understands that it is those sorts of statements that would cause the Buy-and-Hold Mafia to come after him and destroy him. I think it would be fair to say that Larry participates today at Todd’s blog rather than mine because he remains interested in learning more about how stock investing really works and because he feels safer posting there than he would posting here, where I tell the truth about the Ban on Honest Posting and the Campaign of Terror and all that sort of thing.

I have been posting daily for 12 years. No one has ever found a single substantive point that I have made that does not hold up to scrutiny. It could be that I have made mistakes. I certainly do not say that I have gotten it all right. But I know that the only hope we have as a society at getting at the truth is permitting honest posting on every board and blog on the internet.

Some of the claims that I make today really do sound out there. I acknowledge that. Some of the claims that I make today sounded out there to me when I first came up with them. I don’t put any claim forward until I possess at least reasonable confidence that there really is something to it. And in every case in which I have put an out-there claim forward, I have come to possess more confidence in it as time has gone on.

There is a huge price to be paid for banning honest discussion on stock investing questions for 33 years, Anonymous. The price is that your knowledge of the subject matter stops growing. You make a point of the fact that I now know more about how stock investing works than big names like Jack Bogle and Bill Bernstein and Scott Burns and Larry Swedroe and Robert Shiller and on and on and on. I acknowledge 100 percent that it is a crazy reality. But it sure wasn’t my idea to have something like that happen. I have shared everything I have come up with openly and freely. I am 100 percent happy to help Bogle get up to speed. I am 100 percent happy to help Shiller get up to speech. I am 100 percent happy to help all the others get up to speed.

I cannot force them, can I? So long as they are too afraid to acknowledge that the errors in the Old School safe-withdrawal-rate studies should have been corrected within 24 hours of the time they became public knowledge (the morning of May 13, 2002), they are not able to participate in the learning experiences that they need to participate in to function as genuine experts once again. Anyone who cannot bring himself to acknowledge that errors in retirement studies that cause millions of people to suffer failed retirements should be corrected within 24 hours ain’t no investing expert, Anonymous. It’s not a close call.

What these people are today is anti-experts. They speak with great confidence as if they possessed the authority of true experts. But they (outside of Shiller) are promoting a FAILED strategy. The idea that a Buy-and-Hold strategy can work is rooted in a belief in the Efficient Market Theory. The way to test whether the Efficient Market Theory is valid or not is to see whether valuations affect long-term returns or not. Shiller ran this test 33 years ago. Buy-and-Hold failed the test. Everyone who is knowledgeable in this field knows this. No one other than myself talks about the many far-reaching implications in clear and firm and simple and bold terms.

The investing advice field is today 100 percent corrupt.

Is that a clear enough statement for you?

Buy-and-Hold is the OPPOSITE of what works. It turns out that buying stocks works just like everything else. The key is to always, always, always exercise price discipline when buying stocks. That means practicing long-term timing. The Buy-and-Holders say that it is not necessary to practice long-term timing. Nothing could be further from the truth. We have 140 years of peer-reviewd academic research available to us. There has never yet been a time when a single investor who failed to engage in long-term timing didn’t eventually suffer a massive wipeout of the accumulated wealth of a lifetime as a result of failing to do so. Buy-and-Hold is a big pile of smelly Get Rich Quick garbage.

Not by intent.

But still…

We need to get the mistakes made by the Buy-and-Holders fixed if our economic and political systems are to survive. That’s the job. I am the one who has been assigned to be the leader in this effort. I didn’t ask for the job. I was volunteered when John Greaney threatened to kill my wife and children if I continued to “cross” him by posting honestly on the safe-withdrawal-rate issue.

If someone could find a flaw in any of what I am saying, I would be thrilled. Anything that I can do to help the Buy-and-Holders save face helps all of us. No one has ever found anything. I can’t just make stuff up. I put my work out in the public partly because I want it to be challenged. I want every Buy-and-Holder looking at this and trying to find flaws. The reality as of the morning of January 26, 2014, is that my good friend Jack Bogle has not been able to find a single flaw. If Jack had found a flaw, he would sure as shootin’ not be keeping it to himself. If any Buy-and-Holder other than Jack had found a flaw, he would have shared it with Jack and Jack would have told us about it years ago.

Jack’s response when he learned that I would be appearing at the next meeting of the Vanguard Diehards to ask why he had not taken action to get the Old School safe-withdrawal-rate studies corrected was to ask his Internet Goon Squad pals to move the entire community to a place under Mel Linduaer’s control so that he would never need to worry again about someone on the internet asking honest questions about the holes in his investing “strategy.” That ain’t good, Anonymous.

The matter will be settled in the civil and criminal trials that we will all be participating in following the next price crash. Please know that I love Jack and that I love all my Buy-and-Hold friends but that I don’t love the idea of seeing them go to prison for their participation in this massive act of financial fraud. So I will never, never, never, never, never agree to post dishonestly on the numbers that my friends use to plan their retirements. I will do anything to help Jack and all my other Buy-and-Hold friends short of committing a felony myself.

I will never agree to commit a felony, regardless of how much in the way of intimidation tactics the Buy-and-Hold Mafia sees fit to rain down on me. If my good friend Jack Bogle has the power and money and influence to get me assigned the death penalty, then my good friend Jack Bogle has the power and money and influence to get me assigned the death penalty. The death penalty should do a good job of shutting me up (although I obviously have taken steps to see that control of the web site is passed on to an ethical person or people in the event of my untimely death). I would far prefer the death penalty to posting dishonestly on the numbers that my friends use to plan their retirements. I don’t think that even one of the Wall Street Con Men can dish out anything worse than the death penalty. So my sense is that I am pretty much covered at this point re the various intimidation tactics available to the Wall Street Con Men and their Internet Goon Squad supporters.

That’s it, Anonymous.

The type of review that you speak of has been conducted over and over and over and over again. There are lots of rich and powerful and influential people who would like nothing more than to find some sliver of academic research supporting the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind. No one has ever come up with anything because there is no possible means to come up with support in the historical record for a Get Rich Quick scheme. I am not to blame for that. Direct your anger at the historical data, not this friendly and mild-mannered reporter.

The investing advice industry is 100 percent corrupt today.

That needs to change if our economic system is to survive.

I didn’t ask for the job of leading the effort to bring honesty to this field. I was assigned it by the Fates.

I will do the best job that I am able to do. I will strive to be as honest as it is possible to be without crossing the line and becoming uncharitable while also being as charitable as it is possible to be without crossing the line and becoming dishonest.

That’s the deal here.

I wish you all good things.

Rob

Comments

  1. Obama says

    Hello Rob,

    Your $500M check is in the mail. Thank you for your service to this country.

  2. Anonymous says

    Rob,

    I doubt Jack gives even one minute’s thought to what you have to say. With that said, if you wanted to attend one of my meetings, I would ban you as well. You have an agenda and do not care one bit about anyone elses’s opinion. Merely, you just want to be heard.

  3. Rob says

    Thanks for your kindness, Mr. President.

    This is highly encouraging news for all of us.

    Citizen Rob

  4. Rob says

    I doubt Jack gives even one minute’s thought to what you have to say.

    I find that more than a little hard to believe, Anonymous.

    I am certain that Jack has devoted a good bit more than one minute’s thought to my demand that every board and blog on the internet be opened to honest posting on SWRs and many other critically important investment-related topics and to my request that he get the ball rolling by walking to the front of a large room and giving an “I Was Wrong” speech.

    With that said, if you wanted to attend one of my meetings, I would ban you as well.

    That tells me that you lack confidence in the investing strategies you follow, Anonymous. I think that’s terrible. It’s the worst of all worlds to be following a strategy that requires you to stick with a position and yet to lack confidence that the strategy will work in the long run. I hope that the day comes when you change your mind re this one.

    You have an agenda.

    I certainly have an agenda. I want to open every discussion board and blog on the internet to honest posting on safe withdrawal rates and scores of other critically important topics. I have hopes of becoming known all over the internet for the 12 years of work that I have put in to leading this effort. I would be grateful for anything that you might be able to do to spread the word. Every little bit helps.

    and do not care one bit about anyone elses’s opinion.

    No, that’s not even a tiny bit so, Anonymous.

    I feel as strongly about your right to have your opinion heard as I feel about my right to have my opinion heard. If some Valuation-Informed Indexer was to try to silence you Buy-and-Holders, I would be the first to speak out in support of you. I feel strongly that ALL investors possess a right to give voice to their sincere beliefs at every board and blog on the internet. It’s by interacting with each other that we all gradually come to a fuller and better and deeper understanding of the realities. That’s my sincere take, in any event.

    Merely, you just want to be heard.

    I certainly do want to be heard. You’ll get no argument from me re that one, my old friend.

    Please take good care.

    Rob

  5. Anonymous says

    I am certain that Jack has devoted a good bit more than one minute’s thought to my demand that every board and blog on the internet be opened to honest posting on SWRs and many other critically important investment-related topics and to my request that he get the ball rolling by walking to the front of a large room and giving an “I Was Wrong” speech.

    Certain based on what evidence? Got a link (assuming this isn’t just fantasy)?

  6. Anonymous says

    I feel strongly that ALL investors possess a right to give voice to their sincere beliefs at every board and blog on the internet.

    In a respectful way, or a bullying way? Bullies don’t belong in any social setting.

  7. Rob says

    Certain based on what evidence?

    1) The question of whether honest posting should be permitted on the safe-withdrawal-rate matter dominated discussion at the Vanguard Diehards board for the 18 months during which I posted there. There were some days in which there were four or five different threads examining some aspect of this general question. Jack said that he visited that board weekly to check out what was being said. It is impossible to imagine that he was not exposed to NUMEROUS threads discussing this matter.

    2) Jack obviously reads the Wall Street Journal. A few years after the ban was imposed at Vanguard Diehards (which became the Bogleheads forum), the Journal published an article saying that I was right all along re the SWR matter.Jack obviously saw that article and regretted the many acts of financial fraud that had taken place at a discussion board bearing his name.

    3) Before honest posting was banned, there were community members arguing both for and against the ban who contacted Morningstar, Vanguard and Jack Bogle.

    4) When Morningstar refused to ban honest posting at Mel Lindauer’s urging, Lindauer asked the entire board community to move to a private board where he and his Goons could control who was able to speak and what they were able to say. Bogle obviously noticed that the entire board community was moved to a different location.

    5) After the board community was moved, a number of community members who liked the idea of honest posting being permitted remained at the Morningstar site and asked that honest posting be permitted there. Lindauer hotly opposed the idea. Again, both sides contacted Morningstar, Vanguard and Bogle.

    6) Lindauer had been using threats of physical violence to intimidate community members who tried posting honestly for years before I came on the scene. It is all but impossible to imagine that some of these incidents did not come to Bogle’s attention.

    7) I wrote Bogle three times asking him for help with the Lindauer matter.

    8) Larry Swedroe was banned for a time for the “crime” of posting honestly. This would obviously be brought to Bogle’s attention.

    9) When Wade Pfau posted honestly about the research that I did with him, Lindauer accused him of engaging in unethical research practices. This was obviously both a crime (financial fraud) and a tort (defamation). It is hard to imagine that Linduaer would engage in this behavior without first having assured that Bogle would be backing him up.

    10) You Goons have yourselves interpreted Bogle’s failure to act re your numerous acts of financial fraud as an indication of his support. Why would Bogle permit his reputation to be damaged in this way if he was not aware of the threat to Buy-and-Hold represented by my call to permit honest posting on safe withdrawal rates?

    11) Bogle knows about the Bennett/Pfau research showing the superiority of Valuation-Informed Indexing over Buy-and-Hold. He obviously would be doing all he could to make every investor alive on the planet aware of it if he were not involved in the cover-up himself.

    12) At the first meeting of the Vanguard Diehards held after the Ban on Honest Posting was adopted, numerous questions about the effect of valuations were asked of Bogle. He obviously would be curious as to why this had suddenly become such a hot topic.

    13) Bogle obviously saw the article by Bret Arends in the Wall Street Journal pointing out that the Buy-and-Holders have “left out half the story” re what the research says about how stock investing works. Again, he made no effort to publicize this hugely important article. If he were not involved in the cover-up, he obviously would have done so.

    14) Bogle gave an interview to the Index Universe site in which he referred to my claim that the need to change one’s stock allocation in response to big valuation shifts is a strategic need rather than a tactical need. I am the only one who has said that. He picked up that language from listening in on the discussions held at the various forums.

    15) In that same interview, Bogle said that allocation shifts are needed six times in an investor’s investing lifetime, three times when valuations are stupidly high and three times when valuations are stupidly low. Again, this is a claim that I had been making for years that he picked up from our discussions.

    16) Bogle included language in his book that helped me understand that the Old School SWR studies got the numbers wildly wrong. He obviously read his own book.

    17) Bogle gave an endorsement to Bill Bernstein’s book, in which Bill said that two percentage points needed to be subtracted to get the accurate safe withdrawal rate at the time he was writing the book because of the high valuation that applied at that time. Bogle would not have endorsed the book without reading it. So he knew all along (Berntein’s book was published in April 2002) that the Old School SWR numbers were wildly wrong.

    18) Bill Bernstein said in an e-mail to Ataloss that it was his view that anyone who used the Old School studies to plan a retirement would have to be out of his or her mind. Bernstein and Bogle are friends and the cover-up of the errors in the Old School studies is the biggest act of financial fraud in U.S. history. It is impossible to imagine that Bill did not let Jack know of his views on the SWR matter, given that the errors in those studies are in the process of causing millions of failed retirements.

    19) Shiller’s book is available in public libraries and was widely reviewed when it was published. Bogle either read the book himself or had someone who had read it describe its contents to him.

    20) Shiller was awarded the Noble Prize in Economics for his “revolutionary” (Shiller’s word) findings. Bogle obviously would have been curious to know how Shiller’s revolutionary findings discredited Bogle’s investing ideas.

    21) Rob Arnott copied Bogle on his e-mail to me in which he told me that my investing work is “Solid.” Arnott is a personal friend of Bogle’s. So he obviously read the e-mail.

    22) Arnott’s e-mail referred to the article that I wrote on The Silencing of Academic Researcher Wade Pfau by the Buy-and-Hold Mafia. Bogle obviously would have felt a responsibility to learn all he could about this massive act of financial fraud given that it was conducted by people who follow and promote his investing strategies.

    23) One of my e-mails to Bogle described unethical practices being followed by the owners of the Bogleheads Forum. Again, Jack would obviously want to know about felonies being committed by people who owned a board carrying his name.

    24) Michael Kitces told me following the 2008 crash that many practitioners where talking amongst themselves about the need to come clean about the dangers of Buy-and-Hold strategies. Word of this would obviously have gotten to Bogle given that he is viewed as the lead advocate of this strategy.

    25) Arnott’s e-mail described acts of intimidation by Buy-and-Holders that have been experienced by Arnott. Again, the e-mail was forwarded to Bogle, who is a personal friend of Arnott’s.

    26) You Goons have been trying for 12 years to “persuade” me to post dishonestly re the SWR issue. You are at obvious risk of going to prison for financial fraud. It is more than a little hard to believe that you would put yourselves at such great personal risk without some promises of protection from Bogle.

    27) I wrote to 30,000 academic researchers to let them know about the intimidation tactics that the Buy-and-Hold Mafia used to silence Wade Pfau. It is all but impossible to imagine that none of these people alerted Bogle. I even received responses from people who have posted to the Bogleheads Forum. Are we to believe that those people contacted me and not Bogle?

    28) Vanguard’s research arm recently published a study showing that valuations (as measured through use of the P/E10 metric) predict long-term returns. Bogle founded Vanguard. It is hard to imagine that he would not be informed of the publication of a study by his own firm that discredited the investing strategy that he has been promoting for decades now.

    He knows, Anonymous.

    I don’t say that he knows every detail. I don’t believe he does.

    And I don’t say that he doesn’t rationalize his bad behavior in his own mind. I believe that he does.

    But it is silly to pretend that my good friend Jack Bogle does not possess a basic understanding that there has been a huge cover-up of the errors in the Old School retirement studies and a basic understanding that he has a responsibility to take prompt and effective action re this matter.

    We will all learn more when he is put under oath.

    Rob

  8. Rob says

    In a respectful way, or a bullying way?

    I will be saying that the errors in the Old School safe-withdrawal-rate studies should have been corrected within 24 hours of the time they became public knowledge (the morning of May 13, 2002).

    That is a 100 percent respectful act. But you Goons have been saying otherwise for 12 years now.

    I wonder why.

    Rob

  9. Anonymous says

    It is a good thing that Mel was around to keep a nutcase from bothering Mr. Bogle and wasting valuable time with his made up nonsense.

  10. Anonymous says

    I wonder why.

    I know you do Rob. But civil and civilized people don’t. They know what a bully is and how he acts. That’s the difference between you and them, and the reason you’re stuck in that basement browsing the internet all day. Much to the dismay of your family, I’m sure. :(

  11. Rob says

    They know what a bully is and how he acts.

    There are circumstances in which it can hurt to learn something new, Anonymous. In the long run, you are better off. There will be a day when you will look back at my persistence re this matter and thank me for it rather than view it as “bullying.”

    I am determined. But it is my love for you and my other readers that makes me determined. A determination rooted in love is not “bullying,” in my assessment.

    But civil and civilized people don’t.

    The same people who have tolerated your abusiveness wrote the published rules that apply at all of our boards and blogs. They also wrote the laws making financial fraud a felony. Their behavior has been inconsistent. The inconsistency will be resolved over time. I am confident that it will be resolved in favor of reasonable application of the rules and laws that govern our behavior in all areas of human endeavor other than stock investing.

    I wish you all good things, in any event.

    Rob

  12. Rob says

    and the reason you’re stuck in that basement browsing the internet all day. Much to the dismay of your family, I’m sure.

    I believe that there will come a day when there will be no punishments attached to a community member’s decision to post honestly re the last 33 years of peer-reviewed research, Anonymous. I look foreword to that day. I believe that we all will be better off when it comes.

    My best and warmest wishes to you and yours.

    Rob

  13. Anonymous says

    And you believe you should be able to act however you wish, regardless of the impact on the community all in an effort to have your opinions drown out everyone else.

  14. Rob says

    Permitting honest posting would have a positive impact on every board and blog on the internet, Anonymous.

    Consider someone like Mike Piper at Oblivious Investor. He feels bad about the lies he tells the people who visit his site. Mike has a heart and a conscience. Mike WANTS to permit honest posting. He even gave consideration to the idea of letting me write one Guest Blog Entry at his site each month so that his readers would be exposed to honest posting about the last 33 years of peer-reviewed research on a regular basis as well as to the smelly Buy-and-Hold garbage that he shoves down the throats of his readers on a daily basis.

    Why hasn’t Mike made the switch?

    BECAUSE OTHER BLOGS DON’T PERMIT HONEST POSTING.

    Mike has to compete with other blogs. There’s a saying that bad money drives out bad. Well, it works that way with investing advice too. Bad investing advice drives out good investing advice. Mike wants to help his readers. But if he gives honest, research-based advice and his competitors continue to push the smelly Buy-and-Hold garbage, guess which sites are going to get more readers? We all possess a Get Rich Quick urge. The sites pushing Get Rich Quick are going to win if there is only one site promoting research-based strategies. Readers won’t have confidence in what that site says unless they hear what it says being confirmed by other sites. Mike feels that he will be driven out of business if he switches over to providing investing advice backed by the last 33 years of peer-reviewed research.

    Now consider what happens if ALL of the blogs switch over to giving research-based advice at the same time. Then the blogs that will succeed will be the ones that have the best writing and that pick the best topics and that build the best communities and all that sort of thing. Mike is a star at all of that sort of stuff. So, in a world in which honest posting is permitted, Mike’s blog shoots to the top. And he gets to feel good about the work he does for the first time in a long time too. It’s a win/win/win/win/win.

    When Bogle gives his “I Was Wrong” speech, he frees us ALL to give honest and accurate investment advice. Bogle’s speech will be written up in the New York Times. That write-up will launch a national debate. We will advance 33 years in our knowledge of how stock investing works in a few months as a result of that debate. Everybody wins!

    When you say that it hurts the community for a community to permit honest posting, all that you are looking at is the embarrassment felt by those pushing or following Buy-and-Hold strategies. You are ignoring the misery experienced by all of the people who place their trust in the Get Rich Quick strategies pushed in that community. It’s not all about turning a quick buck, Anonymous. We need to care about what happens to the people who follow the advice too. In the long run, when we destroy our economic system through the relentless promotion of this Get Rich Quick garbage, we ALL lose.

    Communities in which honest posting is permitted do JUST FINE in all areas of human endeavor other than stock investing. Why do you believe that the stock investing field needs to be the one big exception?

    It is because investing is so darn important. Because investing is important, it causes more pain for people to learn about major advances. When we achieve major advances, we all feel bad to realize that we have been doing things wrong for a long time.

    You know what? We need to move forward sooner or later. We need to experience that pain and move past it. The pain that comes with major advances is not a bad sort of pain. It is a GROWING pain.

    We can reduce the amount of pain felt by all concerned by following the posting rules that apply at every board and blog. The Buy-and-Holders made a mistake. That should not be a cause for embarrassment in itself. We are all human, we all have made mistakes. Where we got on the wrong track was with this crazy idea that the mistakes made by the Buy-and-Holders should be covered up. When you cover up a mistake, you go from having done something understandable to doing something unethical and fraudulent. And then you need to cover up the cover-up and then cover-up the cover-up of the cover-up. That road leads down, down, down, down.

    The answer is to stop going down and to start moving up. We are the luckiest generation of investors ever to walk Planet Earth. The Bennett/Pfau research shows us all how to reduce the risk of stock investing by 70 percent (it is done by AVOIDING Buy-and-Hold strategies!). We need to get the word out about this wonderful research and thereby transform stock investing into a virtually risk-free activity.

    Will it hurt you to acknowledge that you made a mistake?

    Perhaps.

    For a short time.

    In the end, though, you will feel 50 times better about yourself when you are able to invest effectively yourself and to help your friends and neighbors and co-workers to invest effectively too.

    Learning important new things hurts because recognizing that you have made big mistakes in the past hurts. The answer is not to continue making those big mistakes for the remaining days of your life. The answer is to come to terms with the mistakes you have made and MOVE FORWARD.

    That’s my sincere take re this terribly important matter, in any event.

    I naturally wish you the best of luck in all your future life endeavors.

    Rob

  15. Rob says

    all in an effort to have your opinions drown out everyone else.

    How could my opinions possibly drown out all others unless they possess great merit?

    I DO believe that my investing views will prevail. But for a very good reason. Valuation-Informed Indexing is the first true research-based strategy. We should ALL want the first true research-based strategy to prevail.

    No?

    Rob

  16. Anonymous says

    So, you are saying you should be able to act as you wish.

    Sorry, but that is not the way civilized conversation works.

    Despite your assertion to the opposite, every topic is discussed open and honestly. The financial world does not need disrupting trolls like you looking to seek personal revenge and gain.

  17. Rob says

    I say that we ALL should be able to act as we wish.

    We adopted the laws against financial fraud for a reason. We should administer those laws in a reasonable manner and thereby bring on the transition from the failed Buy-and-Hold strategy to the investing strategy of the future, Valuation-Informed Indexing.

    The fact that honesty is permitted in every area of human endeavor other than stock investing shows that that IS how civilized conversation works. The Ban on Honest Posting will fall. It’s just a question of when. Given that we know it is going to fall sooner or later, we are better off making sure that it falls as soon as possible.

    I vote for having it fall by the close of business today.

    My best and warmest wishes to you, my long-time Goon friend.

    Rob

  18. laugh says

    You are a spec of dirt that fills up message boards with nonsense. You are an irritant and once removed from the environment, no one pays you any mind.

  19. Rob says

    Right. And the last 33 years of peer-reviewed research is a spec of dirt that can safely be ignored as well.

    It’s good that you follow a strategy rooted in science that helps you avoid the pull of your lowest emotional urges, Laugh.

    Take care, man.

    Rob

  20. Anonymous says

    And it is your version of the 33 year history as you have been given many other strategies with better returns.

  21. Rob says

    It would be dishonest of me to put my name to any version other than my version, Anonymous.

    Rob

  22. Curious says

    Rob,

    Regarding your comments above about how Bogle was using terms like “tactical” and “strategic” that no one had ever used before you.

    It might interest you to know that Bogle dedicated an entire section of his book, Bogle on Mutual Funds, to that exact topic, using precisely those terms to describe the pros and cons of those two approaches in quite some detail.

    The book was published in 1994.

    So either you devised some sort of ability to travel through time, or you’re plainly wrong.

    Given Bogle’s demonstrated study and knowledge of this topic, I’d say it’s possible that to the extent he did stumble upon on of your claims over the past 12 years, the most likely opinion he arrived at was the same one reached by nearly every other person who’s encountered you theories: there’s no “there” there.

    Just my humble opinion.

  23. Rob says

    I’d be grateful if you could quote from the section of the book in which he uses the word “strategic” to refer to decisions to change one’s stock allocation in response to valuation shifts, Curious.

    I don’t doubt that he uses the word “tactical.” People use that word all the time to refer to allocation changes. I have never heard anyone other than myself use the word “strategic.” I used to correct people all the time when they would say that I advocate tactical allocation changes (I do not). So I was excited to see Bogle use the word “strategic” in his interview with Index Universe. I think he picked it up from me and I think that it shows that he is at least trying to think through these questions a bit as a result of the huge controversy that played out at the Bogleheads Forum over them.

    I don’t say that what you are saying cannot be so. It would be great if it were true that Bogle used the word “strategic” to describe these allocation changes way back in 1994.

    However, I would be surprised if that were the case.

    If the changes are strategic (as I say), then they are not optional. You really need to stick to your strategy and to fail to make allocation adjustments would be to abandon your strategy. I have heard Bogle refer to such allocation changes on several occasions and he always presents the idea of making the changes as an option. That is, he says “it would be okay to make an allocation change” while also saying that it is also perfectly fine NOT to make an allocation change. An optional change is not a strategic change, in my assessment. I believe that that is why so many refer to these changes as “tactical.”

    I think you are wrong to say that Bogle has demonstrated “study and knowledge of this topic.” I don’t mean that as a dig. I rank him as one of the most knowledgeable investment advisors out there (second only to Shiller). But he is NOT strong re questions relating to the need to change one’s stock allocation in response to valuation shifts. In fact, he is very WEAK in this area.

    Please tell me one way in which Bogle has changed his investing advice in response to Shiller’s “revolutionary” (Shiller’s word) findings? I am not aware of one change. If Bogle has failed to make a change, he has failed to appreciate the significance of Shiller’s revolutionary findings. He doesn’t get it. This is why he struggles. Valuation-Informed Indexing is a foreign concept to him.

    I don’t think it is that there is no “there” there for Shiller or for me. It is that there is no “there” there for Bogle and the other Buy-and-Holders. Bogle gets it exactly right when he says that investors need to “Stay the Course.” But he doesn’t see that it is impossible to Stay the Course if one fails to adjust one’s stock allocation in response to big valuation shifts. Those who stay at the same stock allocation are permitting their risk profiles to get wildly out of whack. The thing that the investor should keep constant is not his stock allocation but his risk profile. That’s the core point of the Valuation-Informed Indexing concept.

    Thanks for your question, Curious. Please take good care.

    Rob

  24. Curious says

    Rob,

    Find a library. Look the book up online. You’ll see it for yourself. While you’re at it, check out his 1999 book Common Sense on Mutual Funds and you’ll see a similar discussion using, yes, the words strategic and tactical.

    Clearly your thoughts about what Bogle knows and how his opinions have changed are irrelevant, as you obviously don’t know anything about that issue.

    If I had dedicated 12 years of my life to a crusade I’d certainly make sure I had a thorough understanding of what someone like Bogle was saying about my passion and when he was saying it. Seems odd that at no point in the past 12 years you bothered to pick up one of his books to learn just that. But that’s just me.

  25. Rob says

    Is it true that you have greater wisdom than King Solomon?

    It’s true that humans advance in their understanding of all sorts of things over time but that there are cases in which they permit their pride to get in the way of their accepting their good fortune and to cause them to drag their feet for a time.

    My best wishes to you and yours.

    Rob

  26. Rob says

    Seems odd that at no point in the past 12 years you bothered to pick up one of his books to learn just that. But that’s just me.

    I have of course picked up Bogle’s books and listened to his interviews and checked out his speeches, Curious. I have been doing this for years.

    Never once have I seen him say anything close to what you are saying he said.

    And I have caught you in THOUSANDS of lies over the years. I think it would be fair to say that you Goons make it a practice to tell several lies before brushing your teeth in the morning just to stay in practice.

    So what am I to believe? That every publication that has ever quoted Bogle got it terribly wrong? Or that a Goon poster who has told thousands of lies in the past told one more today?

    If you are able to show something that lends a tiny bit of credibility to your story, I am happy to take a look at it. If not, I am going to have to take a pass and go by what every other site on the internet that has quoted Bogle says about his beliefs.

    Anyway, I do wish you the best of luck in all your future life endeavors.

    Rob

  27. Rob says

    It’s true that the Bennett/Pfau research shows millions of middle-class investors how to reduce the risk of stock investing by 70 percent while increasing their returns enough to permit them to retire five to ten years sooner than they ever before imagined possible.

    It’s true that Wade was jumping around like a kid in a candy store during the 16 months that we worked together and he was learning what he needed to learn to help write that paper. It’s true that he spent his life preparing to do work of that quality and that he has never been happier than during the time when he saw how putting his talents to constructive use could help so many people to live richer (in every sense of the word) lives.

    It’s true that I could not have achieved what I have achieved over the course of the past 12 years without the help of THOUSANDS of people. It’s true that there would be no Valuation-Informed Indexing today but for the many genuine contributions of my good friend Jack Bogle. It’s true that there would be no Valuation-Informed Indexing today but for the many genuine contributions of my good friend Bill Bernstein. It’s true that there would be no Valuation-Informed Indexing but for the many genuine contributions of my good friend Scott Burns. And on and on and on and on.

    It’s true that there are no two sides re this matter. It’s true that we are all on the same side, that we all want the same things. It’s true that Jack wishes today that he had gotten it right the first time and that he never once had to say one word contrary to what the peer-reviewed academic research teaches but that he feels that he has hurt too many people at this point to ever come clean. It’s true that Jack’s true friends are the ones who urge him to overcome his phony pride and to come clean all the same. It’s true that he will find things getting better and better and better once he does that rather than worse and worse and worse.

    It’s true that safe withdrawal rates matter. It’s true that no one should ever have given a second’s thought to engaging in financial fraud to keep millions of middle-class people from learning about the errors in the Old School SWR studies. It’s true that the discovery of the errors in those studies has led us to a wonderful adventure in which we have developed many powerful insights, insights that will be helping millions of middle-class people to live better lives for many decades to come.

    All of those things are true. Is all of that walking on water? It’s something of great importance. That much us for sure. It’s something very, very, very, very good. That much is for sure. It’s true that we are the luckiest generation of investors ever to walk Planet Earth. It’s true that we should be grateful for that and stop quarreling over whether honest posting on the last 33 years of peer-reviewed research should be permitted at every one of our boards and blogs. It’s true that the answer to that one is OBVIOUS.

    That’s my sincere take re these terribly important matters, in any event.

    I wish you well, Anonymous.

    Rob

  28. Curious says

    All you need to do is crack a couple of books open. Start on p 244 of Bogle on MFs.

    Let me know what you think and how they alter your theories.

  29. Rob says

    I went to Amazon’s “Search Inside” feature to look at pages 244 and 245 of Bogle on Mutual Funds.

    Nothing that appears on those pages is even remotely close to what you said appears there, Curious.

    Surprise! Surprise!

    Rob

  30. Curious says

    Do you care to share where you were able to view p 244 of Bogle on Mutula Funds? Not on Amazon. Care to comment on the two images linked below, which will take you to sections of that book that discuss strategic and tactical asset allocation, which are viewable online? Furthermore, don’t you have a copy of this book yourself?

    http://books.google.com/books?id=il3_T8XlRwEC&pg=PA239&img=1&pgis=1&dq=tactical&sig=ACfU3U31yQyD9Ta9gJD3-msYDJ3QSWpe-w&edge=0

    http://books.google.com/books?id=il3_T8XlRwEC&pg=PA252&img=1&pgis=1&dq=tactical&sig=ACfU3U14dUdE-e-YHLdChu2_OkjUzfQAzw&edge=0

  31. Rob says

    I don’t have a copy of the book. I read it years ago. But I did not buy a copy. I borrowed it from the library.

    I did view it on Amazon. They have a “Look Inside” feature. You can page forward or backward until you get to the page you want to look at.

    When I click on those links, I am only seeing a few lines of text. I don’t know if that is what you intended or not.

    The language I see at the first link refers to “tactical opportunities.” That’s the way that most people refer to allocation changes — as tactical rather than strategic.

    The language at the second link refers to “tactical changes to your basic strategic allocation.” Again, the allocation change is being referred to as “tactical.” The word “strategic” is used in this sentence but it is NOT used to refer to the allocation change. Bogle is saying that the investor chooses a strategic allocation based on his risk tolerance or age or financial goal or something like that. Then he suggests that TACTICAL changes can be made to the allocation.

    That is NOT Valuation-Informed Indexing. With VII, valuations influence the choosing of the initial allocation as well as the decision as to whether to make changes or not. And both of these choices are STRATEGIC ones, not tactical ones. The allocation changes are made for the purpose of keeping one’s risk profile constant. That is a STRATEGIC goal, not a tactical one. Valuation-Informed Indexers do NOT make tactical allocation adjustments.

    The way that Bogle is saying it is the way that most people in this field say it. I have never heard anyone other than myself refer to the need to make allocation changes in response to valuation shifts as strategic. In his interview with Index Universe, Bogle first refers to the allocation adjustments as “tactical..” Then he corrects himself and says “I should say ‘strategic.’” I have never heard anyone else put it that way (except myself).

    I of course cannot see into Bogle’s mind. But I find it exceedingly odd that he actually corrected himself when he used the word “tactical” and changed it to “strategic.” It appears to me that he was influenced by the discussions that were held at the Vanguard Diehards forum. He also says in that same interview that an allocation change is needed once every 10 years. I made that point numerous times in my postings at Vanguard Diehards.

    I believe that Bogle was influenced by those discussions. I acknowledge that I cannot prove it and I acknowledge that I am not certain.

    If you read my write-up of that Index Universe interview, you will see that I was encouraged by it. I felt that Bogle was putting forward a feeler, that he was aiming at reaching a compromise.

    I am not as encouraged by his words today. The big problem in the interview is that he says that the allocation change should never be more than 15 percent. That number is wildly wrong. It is not supported even a tiny bit by the research.

    I don’t say that Bogle is lying about this. I believe that he has never thought it through carefully and probably never studied the relevant research. He is like the investors who you Goons describe as following a Plan C approach. He kinda sorta believes that Buy-and-Hold can work. But he realizes that there is a problem with valuations. So he says that it is okay to make allocation changes in response to valuations. BUT HE HAS NOT STUDIED THE RESEARCH OR THE HISTORICAL DATA TO FIGURE OUT HOW BIG THOSE ADJUSTMENTS SHOULD BE.

    When you look at the data, you see that a 15 percent change does not come close to being what is needed to keep your risk profile constant. When valuations change to the extent they did from 1982 to 2000, you need to change your allocation by 60 percentage points (from 80 percent stocks to 20 percent stocks). That’s a 60 percentage point change, not a 15 percentage point change. Bogle was off by 400 percent!

    To get this, you have to be willing to look at the data. You cannot just pull numbers out of the air. I believe that Bogle may well personally FEEL that a 15 percentage point change should be enough. But the data does not support that feeling.

    I didn’t invent the word “strategic.” I developed the VII concept. The concept is rooted in a belief that, to Stay the Course in a meaningful way, investors MUST be open to changing their stock allocations enough to keep their risk profiles roughly constant. Since this is so core a need (even Bogle acknowledges that it is important to Stay the Course), the actions taken to serve the need are of STRATEGIC importance.

    With VII, there is no one stock allocation that is strategically correct. The correct allocation DEPENDS on the stock valuation that applies when the choice is being made. The SWR VARIES under VII. The riskiness of stocks VARIES under VII. The proper stock allocation VARIES under VII. This is what distinguishes VII from Buy-and-Hold. With Buy-and-Hold, these things are constant because Buy-and-Hold was developed at a time when the market was thought to be efficient (Shiller DISCREDITED that belief by showing that valuations affect long-term return, a reality that is IMPOSSIBLE in an efficient market).

    We need a national debate to help Bogle (and lots of others, to be sure) sort this stuff out. The first step is opening every board and blog to honest posting on safe withdrawal rates and scores of other critically important investment-related topics.

    My best wishes to you, Curious.

    Rob

  32. Curious says

    The national debate you’re calling for is around topics that have been discussed for nearly 80 years.

  33. Rob says

    Yes and no.

    People have obviously been discussing how stock investing works for a long, long time.

    But there have been two major discoveries in the past 50 years.

    There was Fama’s finding that short-term timing does not work in 1965. That led to Buy-and-Hold.

    And there was Shiller’s finding that long-term timing ALWAYS works and is ALWAYS required. That discredited Buy-and-Hold and led to Valuation-Informed Indexing.

    We now know how to invest in a way that permits all investors to reduce the risk of stock investing by nearly 70 percent while increasing returns enough to permit us to retire five to ten years sooner than we imagined possible in the Buy-and-Hold years.

    People have not been discussing Valuation-Informed Indexing for 80 years, Curious. Shiller provided the theoretical support for it 33 years ago. I have been developing the concept for the past 12 years. Thousands of middle-class investors have expressed a desire to learn more about it. But you Goons have engaged in a massive act of financial fraud to block them from learning what they need to learn. After the next price crash, you Goons go to prison and the millions of middle-class people who want to and need to learn the realities are off to the races.

    I wish you well.

    Rob

  34. Rob says

    The national debate you’re calling for is around topics that have been discussed for nearly 80 years.

    That explains why the errors in the Old School SWR studies were corrected within 24 hours of the moment at which I advanced my famous post of the morning of May 13, 2002.

    Makes sense!

    Rob

  35. Anonymous says

    It is not a famous post and you got your answer in only 82 minutes. The only one obsessing over it is you.

  36. Rob says

    I don’t feel even a tiny bit comfortable posting dishonestly re the numbers that my friends use to plan their retirements, Anonymous. So I will continue to “obsess.”

    I naturally wish you the best of luck in all your future endeavors.

    Rob

  37. Rob says

    I HAVE taken it up with Wade, Anonymous.

    I say that Wade should feel free to post his honest views re how stock investing works, as revealed by the last 33 years of peer-reviewed research in this field.

    I say that my good friend Jack Bogle should feel free to state his honest views.

    And my good friend Bill Bernstein.

    And my good friend Scott Burns.

    And my good friend Mike Piper.

    And on an on and on.

    Once Jack gives his “I Was Wrong” speech and it is written up on the front page of the New York Times, we are all off to the races.

    I’ve done everything in my power to make it happen. I will continue to do so.

    We ALL should be doing everything in our power. The transition from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance in the history of personal finance. It’s a win/win/win/win.

    The only thing holding you back is your wounded pride that there was once a time when you didn’t know it all.

    Big friggin’ deal. You and Jack and Bill and Scott and and Mike and Wade are human, like all the rest of us.

    Who’d a thunk it?

    Hang in there, my old friend.

    Rob

  38. Rob says

    They are all lying, Anonymous.

    Nothing could be more clear. This is OBVIOUS.

    Shiller’s book was a best-seller. It was reviewed in all the top publications. He was awarded a Nobel prize for the research reported on in the book. The Buy-and-Holders haven’t changed their investing advice ONE IOTA as a result of Shiller’s “revolutionary” (his word) findings. So OBVIOUSLY they are lying. Obviously they are not telling the full truth.

    Now –

    That doesn’t mean that they intentionally caused the economic crisis. Or that they intentionally caused million of people to suffer failed retirements. Or that they don’t follow Buy-and-Hold strategies themselves.

    All the evidence that I have seen indicates that the Buy-and-Holders DO themselves follow the strategies they advocate for others. Which measn that they DO to some extent believe in them. If they had zero belief in them, they wouldn’t follow them themselves. Does that not follow?

    They don’t have full belief because there is 33 years of peer-reviewed research showing that there is zero chance that a Buy-and-Hold strategy could ever work for a single long-term investor.

    And yet they don’t have zero belief either because they cannot bear to have zero belief. They have built careers in this field. And they have seen what happens to those who speak honestly about what the last 33 years of peer-reviewed research teaches us. So they keep it zipped.

    They not only keep it zipped when talking to others. They keep it zipped when talking to themselves. They RATIONALIZE. They tell themselves things that they know on another level of consciousness make no sense. Because they don’t feel that they have any other realistic options. Talk about what the peer-reviewed research says and you no longer have a job in this field. These people have families. So they keep it zipped.

    BUT THEY DO NO LIKE HAVING TO LIE ABOUT THIS STUFF. THEY KNOW IT IS WRONG AND THEY DON’T LIKE IT.

    I’ve documented this over and over and over again. Mike Piper wants to do honest work. Bill Bernstein wants to do honest work. Jack Bogle wants to do honest work. Larry Swedroe wants to do honest work. Wade Pfau wants to do honest work. Bill Schultheis want to do honest work. Wade Pfau wants to do honest work. Carl Richards want to do honest work. Bill Bengen wants to do honest work. Michael Kitces wants to do honest work. And on and on and on.

    And millions of middle-class investors very much want to hear what all these people would tell them if they were doing honest work. The relentless promotion of the smelly Buy-and-Hold garbage has caused an economic crisis (the full truth is that it has caused four of them over the past 140 years). We need to recover from it. To recover, we need to teach people the realities. To teach people the realities, we need to permit ourselves to be honest.

    So this is going to happen, Anonymous. There is not a thing that you or Lindauer or Greaney or any other Goon can do about it.

    We all know that it is going to happen. So our common goal is to make it happen in the least painful way possible. That means making it happen SOON. The longer the delay, the more pain for everyone. Let me put it in personal terms — The longer the delay, the longer the prison sentence that gets handed out to Anonymous. You don’t want the longest possible prison sentence. You want the shortest possible prison sentence. So we are on the same side re this matter, my long-time Goon friend.

    There are complications.

    That’s ALSO obvious.

    If there weren’t complications, we wouldn’t still be talking about this 12 years after the morning in which I put forward my fateful post of May 13, 2002. One complication is that there are millions of people who have standing to bring civil lawsuits because of the long cover-up. Another is that there are a good number of people who have participated in acts of financial fraud and could be on their way to prison. Another is that there are many people who have built careers promoting the smelly Buy-and-Hold garbage and who feel that their reputations will be destroyed if the truth gets out. Another is that there are million of people who really have been taken in by the smelly Buy-and-Hold garbage and who for the time-being are not willing to help out those of us trying to get the truth out because they are suffering from cognitive dissonance.

    The complications are realities. I certainly don’t say different.

    But the complications don’t change the basic reality that there is 33 years of peer-reviewed research showing that there is precisely zero chance that a Buy-and-Hold strategy can ever work for even a single long-term investor. Complications or no complications, we need to move forward. Consideration of the complications can change HOW we elect to move forward. But it cannot change the reality that we MUST move forward. So we are all on the same side re this matter.

    We’re all going to move forward together, Anonymous. There is no other way.

    I have said 10,000 times that I will do anything in my power to make the trip forward as painless as possibly for all of my many Buy-and-Hold friends. And I will of course do that. But never will I post dishonestly re the numbers that my friends use to plan their retirements. That’s obviously an insane demand and I obviously am never going to give that one two seconds of consideration. We will move forward together HONESTLY. Because we must. There is no other path for us to consider.

    Now –

    You can wait until after the next price crash if you like. I think that’s as dumb as dumb can be. But you clearly do not care what I think about this matter. You have it in your power to wait until after the next price crash. I cannot force you to take positive steps today. I would make it happen today if I could. But I can’t. So that’s that.

    But if you are going to wait, then wait, you know? When you continue to put up the same nonsense here, you don’t persuade me to give in to your intimidation tactics. You persuade me of your desperation. You obviously get that at this point. So the sensible thing for you to do if you have made a final decision to wait until after the next crash hits is just to stop posting here.

    Again, I cannot force you. If you want to continue to post, I will respond to some of your posts. I will delete some, I will respond to some. If that’s what you want, that’s what you’ll get. But it’s obviously stupid behavior on your part. I am not going to break and there are no signs that you are going to break. We are all going to have to wait for the next crash and then see how things play out then. Is that not so? Can we all agree re at least that much?

    I wish you well.

    Okay?

    I hope it’s okay that I wish you well. Because I do.

    That’s where things stand, you know? Like it or not.

    I don’t like it either. But that’s where things stand. We might as well part friends and see where the future takes us.

    Rob

  39. Anonymous says

    They RATIONALIZE. They tell themselves things that they know on another level of consciousness make no sense.

    Look in the mirror, Rob.

  40. Rob says

    Look in the mirror, Rob.

    I try, Anonymous.

    None of us can see our own blind spots. That’s the fortunate fate of us humans. If I were wrong about something, there’s a good chance that I would be the last to know.

    If you want to add a signature line to my posts saying “this fellow acknowledges that he might be wrong in everything he says,” I have no objection.

    However, I would suggest that that line be added to the posts of all of those posting in defense of Buy-and-Hold as well to the posts of all those posting in criticism of it. Including our mutual friend Jack Bogle.

    Something like that would make a big difference.

    Fair enough?

    Rob

Trackbacks

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Comments links could be nofollow free.