Set forth below is the text of a comment that I recently posted to another blog entry at this site:
If people really do support your ideas, why do we not see them participating here in the comments section?
You’re asking an intelligent question, Anonymous.
There are lots of people who have a great interest in the ideas. I’ve seen that at every discussion board and blog at which I have posted. I’ve seen that going back to the first day of discussions — May 13, 2002.
But you are right that people do not post comments here. And people do not stand up for me at other places when you Goons attack me. There have been a few exceptions to that general rule. But, even in those cases, people usually stick up for me one or two times and, when they see the attacks continue, retreat into silence.
I spend a lot of time thinking this over, trying to come to a better understanding of why people behave as they do.
One thing is that people are intimidated by the subject matter. People think investing is complicated. They don’t feel able to form their own assessments of whether the experts are shooting straight or not. They feel that they need to defer to the experts.
The few who don’t feel that way are generally Buy-and-Holders. That is, most people don’t feel they possess enough expertise to have their own opinions. And those who do feel that they possess expertise are generally Buy-and-Holders. Buy-and-Hold is known as the research-based approach. So people who devote some effort to learning the realities usually become Buy-and-Holders.
Another factor is that Buy-and-Hold does seem plausible. I don’t think that it really hangs together. But I acknowledge that it APPEARs to hang together. It is certainly logical. As an overall package, it seems to make a lot of sense.
A BIG factor is that academic researchers support it. That gives Buy-and-Hold a credibility that it would otherwise not possess. If it were only people who work for mutual funds who endorsed Buy-and-Hold, people would be more skeptical. People see that people who lack a financial interest support it and that gives them confidence that all is on the level.
Most people have a good bit of their life savings in stocks and the Buy-and-Holders are telling them that all of that money is real. That’s a more appealing message than the message that I deliver, that most of their bull market gains were comprised of Pretend Money and that we are due for a 65 percent price crash in the not-too-distant future. People are scared that they are not going to have enough money to retire and they don’t like hearing that they actually have less than they have been led to believe they have.
People are social creatures. All advertising is rooted in this reality. So people often go by what their friends and neighbors and co-workers say. Most people today believe in Buy-and-Hold. That’s a self-fulfilling prophecy. So long as most people believe, lots of people are going to believe because everyone around them believes. At some point, the doubters will grow to a large enough percentage of the population that more people will fell free to let themselves entertain doubts.
Many people are open to considering the merits of Valuation-Informed Indexing for so long as I do not criticize Buy-and-Hold or say that Buy-and-Hold is wrong or in error or represents a Get Rich Quick scheme or anything along those lines. I have seen this over and over. People HATE that. People’s minds close when I say that sort of thing.
People don’t like conflict. So, when you Goons bring your poison to the table, people lose interest in exploring the new ideas. There are lots of people who would be open to exploring the new ideas so long as there was no nastiness in evidence. But they leave the room when they see ugly stuff.
The biggest factor of all is how revolutionary a change Valuation-Informed Indexing is. If I told people that I had found a way to reduce stock investing risk by 10 percent, they would think it is wonderful. When I say that I have found a way to reduce stock investing risk by 70 percent, they lose interest. It doesn’t seem possible. So they tune it out.
People think I lack street cred. I did not go to investing school. I have never managed a big fund. People find it hard to accept that I know things about stock investing that people with much better qualifications in this field do not know.
The delayed-feedback thing is huge. Most people don’t like theory. They go by what they see with their own eyes, concrete results. Buy-and-Hold delivered amazing concrete results for many years. People were highly impressed by that. Valuation-Informed Indexing has worked through history in every 30-year time-period. But it takes a long time for 30 years to pass. People feel that it takes too long for VII to “come true” and that it is risky to put their confidence in it because it seems possible that it might not come true this time.
People look askance at explanations of how stock investing works that rely too much on examinations of human psychology. Numbers strike people as hard and real. Explanations of how stock investing works that are rooted in examinations of human psychology strike people as loose and vague.
VII hasn’t been around that long. It’s been 33 years. That’s not a short amount of time. But, given that investing has been around in some form for a long, long time, a model that is 33 years old is really just a baby. When I say something like “volatility is optional,” it strikes people as crazy. Volatility has been around for as long as stock investing has been around. It’s hard to accept claims that rules that have governed how stock investing works for hundreds of years have been turned on their heads.
The leaders among the Valuation-Informed Indexers are tentative in how they state things. Shiller is the perfect example of this. He pulls his punches on issue after issue. Buy-and-Holders don’t pull their punches. Buy-and-Holders speak with great authority. Valuation-Informed Indexers come off sounding as if their ideas are not that big a deal or as if they do not possess great confidence in the ideas. Valuation-Informed Indexing did not even have a name until I gave it one!
People LIKE the big-name Buy-and-Hold advocates. That’s another big one. Bogle is a very likable individual. So are most of the others.
Finally, people are more inclined to participate at a board or blog when they see lots of other people participating. There probably are people who pass through here from time to time who would in other circumstances come forward with comments or questions. They see either that there are no comments or that the only comments are angry ones and they decide to mosey on down the road.
Those are most of the explanations of the unfortunate phenomenon that you refer to that I have been able to come up as a result of my observations of the first 12 years of our discussions.