“Many Site Owners Don’t Want the Majority of Their Community Members to Be Hurt and Scared and Enraged. So They Go Along with the Demands Made By the Buy-and-Holders to Ban Further Discussion of the Findings of the Last 33 Years of Peer-Reviewed Academic Research. That Is Not the Answer! That Prolongs the Agony!”

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


Can you please define what you mean by that. I am unaware of any topic that has not been discussed.

That’s a good question, Anonymous.

What’s honest for you is not the same as what is honest for me.

You believe in Buy-and-Hold. So you can put up a post saying “a high stock allocation makes sense today” or “there’s no reason to believe that we are going to see another price crash over the next year or two or three” or “the Old School safe-withdrawal-rate studies provide a reasonable guide for what withdrawal rate to use in your retirement plan.” All signs are that you believe these things. So for you it is honest to say these things.

I do not believe these things, as you know. So for me it is obviously not honest to say these things.

You represent something close to the farthest extreme on the pro-Buy-and-Hold side and I represent something close to the farther extreme on the anti-Buy-and-Hold side. The vast majority of posters at every investing board and blog hold views somewhere in the middle of those held by you and me. There are many more who hold views closer to what you believe than there are who hold views closer to what I believe.

We all should be saying precisely what we believe. A board in which every poster says precisely what he or she believes is a board at which honest posting is permitted. A board in which some hold back because they worry about what will be said about them or done to them if they express their sincere views is not an honest board. Such a board offers those listening in to the conversations held at it a false impression of what the community believes. Any board at which people on one side of a spectrum of beliefs feels disinclined to state its sincere views is a dishonest and corrupt enterprise.

You post honestly already (except when you are trying to get someone kicked off a board and you use deception as one of your tactics). When I post honestly, I am banned. Others who share my views see that and refrain from posting honestly so as not to be banned. You see that few are posting in support of me and you conclude that few support me. But this is a false conclusion. At times when there were not Goons like you engaging in wildly abusive posting practices or when those abusive practices had not been going on long enough for people to realize how great the penalty would be for posting honestly, there were many community members saying that I had started the most exciting series of discussions ever held at any of our board or blog communities. When threats were made to kill family members of any posters who showed interest in discussing the last 33 years of peer-reviewed academic research, those posters either left the board altogether or stopped posting on the subjects re which they had learned that honest posting would not be tolerated by the Goons and by the site administrators.

Here are some topics that are not discussed regularly at the boards and blogs that have banned honest posting:

1) The question of whether it was the promotion of Buy-and-Hold strategies that was the primary cause of the economic crisis;

2) The fact that the Wall Street Journal and the Economist and Smart Money and numerous other big-name journals have published articles in recent years saying that Rob Bennett was right all along in what he said about safe withdrawal rates way back in May 2002;

3) The question of why it took so long for these journals to acknowledge that the numbers in the Old School safe-withdrawal-rate studies are wildly off the mark;

4) The question of what is the ACCURATE (that is, valuation-adjusted) safe withdrawal rate;

5) Why the research that I co-authored with Wade Pfau that shows millions of middle-class investors how to reduce the risk of stock investing by 70 percent has not yet been written up on the front page of the Wall Street Journal;

6) Why Jack Bogle has not taken action against Mel Lindauer and those who have posted in “defense” of him even though he has been made aware of the tactics employed by Lindauer at a discussion-board community that bears Jack’s name;

7) Why Jack says that investors only need to change their stock allocations by 15 percent at times of insane overvaluation even though the last 33 years of peer-reviewed academic research in this field shows that the difference in return that results when we go from the sorts of valuations that applied in 1982 to the sorts of valuations that applied in 2000 is 16 percentage points of return per year for ten years running;

8) Why Wade Pfau felt that his career would be destroyed if he continued doing honest research, research that believed to be the most important work he had ever done in his life, research that he thought was worthy of publication in the Journal of Finance;

9) Why following Buy-and-Hold strategies makes investors so darn emotional; and

10) Why Buy-and-Holders say that they agree that valuations matter but are unable to point to a single change they have made in their investing strategies as a result of the “revolutionary” (Shiller’s word) findings of the past 33 years of peer-reviewed academic research published in this field.

And the list goes on and on and on and on.

Shiller changed out understanding of how stock investing works in a fundamental way in 1981. We can never put the genie back in the bottle. Buy-and-Hold was once thought to be the first research-based strategy. We now know that the research never supported Buy-and-Hold, that the belief that it did was mistaken. I didn’t create that reality. That reality was in place long before I came on the scene. What I did was post in accord with that reality. I believe that Shiller’s research is legitimate and so I naturally only believe things about stock investing that are logically consistent with Shiller’s findings. Buy-and-Hold is not logically consistent with Shiller’s findings. Shiller showed that all investors MUST change their stock allocations in response to big shifts in valuations to have any hope whatsoever of keeping their risk profiles roughly constant.

Millions of good and smart people believe in Buy-and-Hold today. That’s so beyond any reasonable dispute whatsoever. That’s why we see friction on the boards and blogs when someone like me advocates Valuation-Informed Indexing strategies. If Shiller is right, Buy-and-Hold is the most dangerous strategy ever concocted by the human mind. It hurts Buy-and-Holders to hear that. It scares Buy-and-Holders to hear that. it enrages Buy-and-Holders to hear that. Many site owners don’t want the majority of their community members to be hurt and scared and enraged. So they go along with demands made by the Buy-and-Holders to ban further discussion of the findings of the last 33 years of peer-reviewed academic research.

That is not the answer!

It’s a temporary answer. It brings an appearance of peace to the board community filled with upset Buy-and-Holders. But banning discussion of the research ultimately only prolongs the agony. Buy-and-Hold doesn’t work! It has never worked for a single long-term investor! Not once in 140 years! The research that I co-authored with Wade Pfau shows that as clearly as it can possibly be shown. There are no two “sides” to this debate. We are all on the same side. We all want to see an end to this economic crisis. We all want to see our retirement plans survive. We all want our nation to enter the greatest period of economic growth ever seen in our history. We all want our board and blog communities to be non-corrupt and honest and helpful.

The question here is not whether honest posting should be permitted or not. Our social norms DEMAND that honest posting be permitted (just as our social norms demanded in the early 1960s that the laws that forbid people with black skin from drinking at the same water fountain as people with white skin be repealed). We are not a people that feels comfortable banning honest posting on important public policy questions. And how we invest is a critically important public policy question given that the false understanding of the question that applied prior to 1981 has now caused four economic crises, including the Great Depression.

We need to all reach 100 percent, total agreement that honest posting is going to be permitted at every investing board and blog from this day forward. Then we need to agree to processes that will help us all live with that decision.

There are sensitivities here. The Buy-and-Holders do not want to go to prison for having committed financial fraud. The Buy-and-Holders do not want to be held liable for financial damages for the millions of failed retirements they have caused. The Buy-and-Holders get upset when confronted with numbers showing that they have made a horrible mistake with their investing strategies. The concerns that Buy-and-Holders feel re these sorts of questions need to be addressed if we are to move forward.

I cannot address those questions on my own. These are public policy questions and they can only be addressed by the nation as a whole. Perhaps we will have Congress adopt some sort of amnesty for things that were done at earlier times. I simply cannot say. There has to be a national debate on these questions for us to figure out as a nation how to proceed. People like Jack Bogle and Robert Shiller obviously need to be involved in that debate. I can offer my thoughts. But this is not a matter that is going to be decided by any one person or any small group of persons. Every one of us has been affected by what has happened and every one of us has to have a say in the resolution.

We need to see responsible people taking responsible steps. That’s the bottom line here. When Bogle gives his “I Was Wrong” speech, that is going to change things in a big way. Once Jack gives that speech, people are no longer going to be afraid that they are going to be sued by the Wall Street Big Shots. That will cause a lot more people to speak out. Once Bogle gives that speech, people like Lindauer and Greaney won’t be able to get away with their b.s. intimidation tactics any more. That will also cause a lot more people to speak out. Once Bogle gives that speech and more people begin speaking out, bloggers and others who try to make money off this stuff are going to see that there is a huge opportunity to make lots of money creating tools that help people following Valuation-Informed Indexing strategies. That will cause even more people to speak out. One good thing will beget another good thing, which will beget another good thing, and on and on.

The tough part is getting Bogle to make that speech. We all should be working together to try to help Old Saint Jack understand how critical it is that he give that speech by the close of business today.

There are two things holding my good friend Jack back.

One, he is suffering from cognitive dissonance, as are so many other Buy-and-Holders. He really believed that this strategy worked. He is proud of the word he has done. He is capable of seeing that there might be small flaws in it. But he has a very hard time believing that his wonderful idea was the cause of the economic crisis and the cause of millions of failed retirements and all this sort of thing. It’s all just too much for him to take in at this moment in time.

We need to help Jack (and all the other Buy-and-Holders) understand what happened here. There are no magic words that can be said to make this happen. Jack will come around in time. He is obviously not dumb. But it is rare to see anyone get this on their first exposure to the ideas. People come around gradually. They need to be able to ask lots of questions. They need to hear lots of people offering their thoughts. They need to be exposed to the ideas multiple times for them to kick in. All this sort of thing.

The bottom line is that Jack must hear honest discussions. And of course the same is true of the many other Buy-and-Holders who today are having a hard time with this.

Two, Jack wants to be loyal to his tribe, the Buy-and-Holders. He doesn’t want all of his friends to become angry with him. He doesn’t want to see people held financially liable for giving bad advice for so long after the Buy-and-Hold Model was discredited by the academic research. He doesn’t want to see people go to prison. We need as a nation to address those concerns of his. We need to hear him give that speech and so we need to do what we can do to make him feel comfortable giving it.

The core issue here is that Buy-and-Hold and Valuation-Informed Indexing are OPPOSITE strategies. They are the same on every point except one — how the investor sets his stock allocation. But getting your stock allocation right is 80 percent of what it takes to be a successful long-term investor. So the real-world differences between these two strategies are great. And the Buy-and-Holders really believed that they were promoting something good, the world’s first research-backed strategy.

Under the ordinary way of doing business, people would have gradually been exposed to the new ideas starting in 1981 and, by now, we all would have made the transition to Valuation-Informed Indexing. It was the huge bull market that caused things not to turn out that way. People gave Buy-and-Hold the credit for the huge gains they thought they were earning in the late 1990s. They fell in love with Buy-and-Hold. So there is now a huge psychological resistance to making the switch to Valuation-Informed Indexing.

We have to start somewhere. We have to get the ideas out there. We need to hear lots of people commenting on them. If there are holes, we obviously need to hear that. If there are not holes, we need to hear that. We need to hear as much as we can hear from as many people as we can persuade to participate constructively.

We need to work together to bring the abusive tactics to a full and complete stop. We have seen from the first day that the majority of our community members LOVE exploring the Valuation-Informed Indexing idea so long as they do not see any death threats or demands for unjustified board bannings or tens of thousands of acts of defamation or threats to get academic researchers fired from their jobs. We need to be 100 percent adamant that that stuff comes to a full and complete stop. We are the luckiest generation of investors who ever lived. So we can figure out the rest together so long as we deal with the Goon problem in a clear and firm and absolute and final way.

I think that covers it, Anonymous.

If I was asked to give a short version, I would say that we will have honest, non-corrupt boards and blogs when every last one of us feels free to say that Buy-and-Hold is a dangerous Get Rich Quick scheme if that is what we believe. I remember saying that at a blog and one fellow telling me that he had never heard that idea expressed before. That fellow’s reaction tells the story of why we are in an economic crisis today. There is now 33 years of peer-reviewed academic research showing that Buy-and-Hold is the purest and most dangerous Get Rich Scheme ever concocted by the human mind (not intentionally, to be sure — but still). People need to hear that, over and over and over again. They need to hear the other side of the story too, of course. But they already DO hear the other side of the story. People need to hear the anti-Buy-and-Hold story as firmly and clearly and regularly as they today hear the pro-Buy-and-Hold story.

All of this will happen naturally once the intimidation comes to a stop. But the intimidation MUST come to a stop. It is killing us. We all know on some level of consciousness how dangerous the intimidation tactics are to our way of life. That’s why they are prohibited by the published rules of every board and blog. That’s why we adopted laws making financial fraud and the cover-up of financial fraud a felony under the laws of the United States.

I hope that helps a bit. Please take good care.



  1. Sensible Investor says

    Rob, what do you think the ‘final solution’ for the Goon problem should be?

  2. Rob says

    That’s a great question, Sensible.

    What I believe is that we all need to recognize that we are all on the same side and that we all need to work together to get things on the right track.

    The Buy-and-Hold advocates are good and smart people. They are responsible for a long list of amazing breakthrough insights. I want everyone to know that. I want to be viewed as one of the lead people saying that. I HATE it that the public perception of me is that I am anti-Buy-and-Hold. I AM anti-Buy-and-Hold as it is currently promoted by most Buy-and-Holders. But I LOVE what the Buy-and-Holders did for all of us. I obviously love Valuation-Informed Indexing and VII is just Buy-and-Hold with one change (because of a perfectly understandable mistake that was made in the pioneer days). I want to be working WITH all of my Buy-and-Hold friends, not against them. So the very first step to bringing all the nastiness to an end is recognizing the amazing contributions that the Buy-and-Hold Pioneers brought to the table.

    The second thing is that we need to bring all the nastiness to a full and complete stop. Not a partial stop. A FULL AND COMPLETE stop. We need to do that by the close of business today. I’d like to think there there will not be one person raising any sort of objection to that at this point in the proceedings. Let’s roll!

    The third thing is that we need to educate the public as to the wonders of Valuation-Informed Indexing. For obvious reasons. We all want to bring the economic crisis to an end. We all want to bring on the greatest period of economic growth in U.S. history. We all want to reduce the risk of stock investing by 70 percent. We all want millions of middle-class people to learn what they need to learn to be able to retire five to ten years sooner than they ever before imagined possible. We all want to free everyone in this field to do honest, productive work. We all want to see thousands of people become super-rich developing the tools we all need to become truly effective long-term investors. This one would be a no-brainer if only Shiller had published his “revolutionary” (his word) research in 1961 rather than in 1981.

    The fourth thing is that we need to subject Valuation-Informed Indexing to the same level of scrutiny to which I have been arguing we should subject Buy-and-Hold. My good friend Jack Bogle does not have complete confidence in Buy-and-Hold. His behavior re all these matters makes that clear. But Jack does not have full confidence in Valuation-Informed Indexing either. That is also clear. We need Jack coming clean re his doubts re Buy-and-Hold. But we also need him working as hard as he can to find holes in Valuation-Informed Indexing. And we need that from all the other Buy-and-Holders as well.

    That’s my four-step program: (1) Make it clear to all that Buy-and-Holders and Valuation-Informed Indexers are on the same team and are pursing the same goal — using the peer-reviewed research to learn how stock investing works in the real world; (2) Bring the Ban on Honest Posting to a full and complete stop by the close of business today; (3) Spread the word about Valuation-Informed Indexing to every investor in the world; and (4) Continue the learning experience by applying the same tough-minded questioning that we have applied over the past 12 years to Buy-and-Hold to Valuation-Informed Indexing as well.

    I see this as a win/win/win/win. My feeble, human brain is not even able to imagine any possible downside, Sensible. Does the four-step plan that I have outlined make good sense to you as well?

    Rob the Ever-Hopeful

  3. Anonymous says

    You represent something close to the farthest extreme on the pro-Buy-and-Hold side and I represent something close to the farther extreme on the anti-Buy-and-Hold side.

    I see. So can you give us a sense of how much you’ve varied your allocations due to the wild valuation swings of the past 20 years? Do you actually practice this stuff?

  4. Rob says

    It is June of 2014. So you are asking me to go back to June of 1994.

    There have not been wild valuation swings over that time. There are only two times when allocations shifts were called for.

    I changed my allocation in 1996 because prices had reached insanely dangerous levels. I had most of my money in stocks in 1994. I went to a zero stock allocation in the Summer of 1996.

    That’s the only change I made. In 2009, valuations went to moderate levels. So it would have made sense for me to increase my stock allocation at that time. But there certainly is nothing in the VII concept that required me to do so. It was a judgment call.

    The P/E10 value did not drop below 10 and it always does in a secular bear market. Had I bought stocks, the research shows that I would have done well at the end of 10 years. But I would also be put through hell getting to that point. A drop to 8 from where we are today is a drop of 65 percent. Is it worth going through such a drop to get that good long-term return? Perhaps. But I can still get the good long-term return by buying stocks following the next crash. That’s the path I chose.

    You bring this up over and over again, Anonymous. Are you able to say why?

    There is no one path for all to follow under either Buy-and-Hold or Valuation-Informed Indexing. So why does it bother you that, when faced with two possible good paths, I chose one of them? Had I chosen the other good path, I would not have been able to choose the good path that I am on. What’s the difference?

    The key point here is that the Valuation-Informed Indexers have two good paths available to them and the Buy-and-Holders do not have any. Stocks were priced at three times fair value in 2000 and all secular bears end with stocks priced at one-half of fair value. So Buy-and-Holders are today in the process of losing five-sixths of their life savings. For what friggin’ purpose? WHY?

    You are free to do what you want with your money. But I am also free to do what I want with mine. And I cannot say that the Get Rich Quick path that you have chosen offers much appeal to me. Is it your goal in life to make the Wall Street Con Men rich no matter how much it costs you? Again — Why? What’s in it for YOU?

    This is what I don’t get. It’s my money. I earned it. So I like to invest it to benefit ME. The Wall Street Con Men are rich guys. I figure that they can take care of themselves.

    What are you thinking? Why are you so angry? What is it about the last 33 years of peer-reviewed research that gets you so upset? Why do you even CARE if someone chooses to invest in a manner different than the manner that you have chosen for yourself? Why is this such a big deal for you?


  5. Rob says

    Do you actually practice this stuff?

    Yes, I practice it.

    Do you understand it?

    If you understood it, you wouldn’t ask that question.

    You don’t permit yourself to understand because it pains you to see how easy stock investing can be and how much you have missed out by becoming too filled with pride to look at the last three decades of research.

    Is that not what is really the driver here? There is a REASON for your anger, no?


  6. Anonymous says

    I changed my allocation in 1996 because prices had reached insanely dangerous levels. I had most of my money in stocks in 1994. I went to a zero stock allocation in the Summer of 1996.

    That’s the only change I made. In 2009, valuations went to moderate levels.

    There is no one path for all to follow under either Buy-and-Hold or Valuation-Informed Indexing.

    You are free to do what you want with your money. But I am also free to do what I want with mine.

    This is what I don’t get. It’s my money. I earned it. So I like to invest it to benefit ME.

    Ok, so it sounds like this asset allocation stuff is just a judgement call. You could even choose to maintain an extreme 100% bond or 100% stock allocation, and not even vary that allocation when P/E 10s are at generational highs or lows, as you did.

    Where you set, and whether or not you vary your stock/bond mix is a personal decision. So there’s really no need for dogmatic or bullying words when debating such a fuzzy topic. Simply state your opinion politely and move on to the next subject.

  7. Rob says

    Here are four statements that I am always happy to be associated with, at any time and at any place:

    1) The Buy-and-Holders are good people;

    2) The Buy-and-Holders are smart people;

    3) The Buy-and-Holders have made many contributions of huge importance that added to our understanding of how stock investing works; and

    4) We all should feel respect and affection for the Buy-and-Holders because of the many ways in which they have helped us out.

    There are four types of statements re which I do not want to be associated in any way, shape or form and re which I will always feel bound in conscience to appeal to a site administrator, and in the event that fails, to the community as a whole, to see that prompt and effective action is taken:

    1) Death threats and other acts of physical violence;

    2) Demands for unjustified board bannings made as part of an effort to intimidate community members into not expressing their sincere beliefs re the subject matter discussed at the board or blog;

    3) Campaigns of Terror in which tens of thousands of defamatory posts are advanced in an effort to destroy a person’s name or business; and

    4) Threats to get an academic researcher fired from his job for the “crime” of having published honest research.

    My best wishes to you and yours, Anonymous.


  8. Anonymous says

    Right, right, there are certainly good and bad people in the world. I just wanted to confirm with you (as you did in the statements I quoted) that asset allocation, and whether one prefers to vary it with valuations, is a personal matter with no right or wrong answer. We make take differing views, but there’s no need to be dogmatic about them.

  9. Rob says

    Dogmatism hurts us.

    There are two schools of thought. One is rooted in the research of Eugene Fama. One is rooted in the research of Robert Shiller. Both Fama and Shiller have been award Nobel Prizes in Economics for their work.

    Members of both schools should respect members of the other school.

    But there ARE right and wrong answers. We should avoid dogmatism because none of us know with certainty which school of thought is the right one. But it is not possible that both schools of though are equally correct. The two schools of thought are rooted in opposite premises.

    We don’t know everything. That’s why we should avoid dogmatism.

    But we DO know some things. So it would be a terrible mistake to pretend that this is all just a matter of personal choice, that every allocation choice is equally supported by the peer-reviewed research in this field.

    You are suggesting that only two extreme positions exist: Either everything is known and there is no room for judgment calls or nothing is known and every choice made is equally supported by the research. I reject both extremes and favor a middle-ground position. We have learned many important things about how stock investing works over the past 50 years and we should hope and expect to continue learning in days to come. We should be happy about what we have learned and we should share what we have learned with as many people as possible. But we should never become so full of ourselves as to imagine that we have learned it all and that there is no room for future learning experiences.

    Each investor should make the calls as to how he or she invests. But any advisor who says “every allocation call is equally valid according to the research” is failing to do his job. We should be telling people what the research says in a non-dogmatic fashion. We should tell people what the research reveals and what the research does not reveal and then leave it to them as to what allocation choice to make.

    If someone were to say “I am going to go with zero stocks at all times,” I would say that that position is not supported by the research. But I certainly would remain friends with that person. I certainly would see no call to be abusive in any way to that person. Perhaps I have misunderstood the research or perhaps there will be new research supporting that person’s view in coming days. I cannot in good conscience endorse a permanent stock allocation of zero given what I know about what the research says. But I respect the right and responsibility of all investors to make their own calls and I would never think of dogmatically insisting that any investor follow my recommendations.

    I am dogmatic about my right (and the right of every one of my fellow community members) to post honestly. But that’s as far as the dogmatism goes. It would be a lie for me to say that the numbers in the Old School SWR studies are accurate and I would never dream of doing such a thing. But I certainly have been friends with many people who use those studies for guidance and I certainly respect and like those people.

    Does that answer your question, Anonymous?


  10. Anonymous says

    I think you’ve got it, Rob. Now see if you can put this new attitude into practice – create an account at Bogleheads and contribute to a few threads on this topic.

    Remember, no dogmatism, no off topic rants, no thread hijacking, no bullying, just, to quote you:

    We should be telling people what the research says in a non-dogmatic fashion. We should tell people what the research reveals and what the research does not reveal and then leave it to them as to what allocation choice to make.

    Dozens of people are able to do that on Bogleheads, so I don’t think it’s beyond your ability if you try.


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