Set forth below is the text of a comment that I recently posted at another blog entry at this site:
Didn’t a coach in the Financial Blogger audience tell you that you came across as bitter?
You are thinking of Jaime Tardy, owner of the Eventual Millionaire site.
I talked to Jaime at FinCon13 and told her I would like to hire her for help with spreading the word about Valuation-Informed Indexing. She asked me a number of questions about the VII concept and about my experiences spreading the word on it and all this sort of thing. She was in the audience when I gave my Ignite presentation (“How to Become the Most Hated Blogger on the Internet”). She said that she was sitting with a number of millionaires when I gave the talk (there is a video of the 5-minute talk at the home page of this site) and that a number of them offered the view that I was “bitter.” She didn’t say that she agreed with them (she said that she found my ability to stick to my guns in the face of such brutal opposition “inspiring”). But she said that she did not want to work with me unless I agreed to no longer engage with “the haters” (she was referring to you Goons).
I am certain that Jaime was shooting straight re what the millionaire bloggers said. I detected a coldness in the vibe in the room when I was giving my talk. My impressions are vague ones. But I think I am good at picking this sort of thing up and I obviously have a lot of experience watching reactions re this particular issue. I got a VERY positive reaction when they announced the title of the talk. People laughed and applauded, more than they had for any of the other speakers. I found that very encouraging. I felt at the beginning of the talk that I had the crowd in the palm of my hand. There was a second round of laughter and applause after I said the first few lines. And then I never heard any further reactions until the applause at the end of the talk (which sounded to me to be equal to that given all the other talks). There was never any booing. People were not hostile. But the reaction to the material following the title and the first few lines (my recollection is that the line that got people laughing a second time was a line about how I had been banned at 15 different places) was subdued. I no longer felt that I had the crowd in the palm of my hand as the talk progressed.
There was lots of powerful stuff in the talk, stuff that in ordinary circumstances would get people excited in a positive way. For example, I noted that I had produced with Wade Pfau research that shows millions of middle-class people how to reduce risk by 70 percent. The ordinary reaction to this would be for the bloggers to come up to me to ask how they could get involved in the effort to spread the word about Valuation-Informed Indexing all over the internet. Not one person has asked me that as a result of the talk (my e-mail address is available in the conference materials). That tells me something.
There were several people who came up to talk to me when the presentations ended. One was Joe Taxpayer. Joe ended up including me in his write-up re the conference and saying that you Goons should permit honest posting on Shiller’s findings. One of the other people who came up said that I should play up the “Most Hated Blogger” thing in all my marketing. I think that makes sense but I already do that to at least a limited extent. Another blogger congratulated me and then followed up with an e-mail following the conference (to which I responded) but has not yet done anything more than that. Another blogger said that I should send out lots of promotional materials noting that Shiller recently won the Nobel prize. I agree that that makes perfect sense. But I have zero confidence that that would help in the particular circumstances that apply in this case. People were not banning the discussion of Valuation-Informed Indexing because Shiller had not won a Nobel prize and the award is not going to change things in any significant way. The awarding of the Nobel prize is a small plus but not a game-changer.
There are no intellectual issues here. The intellectual case for Valuation-Informed Indexing is overwhelming. ALL of the evidence supports it and there is no evidence supporting Buy-and-Hold. The issues holding us back are all PSYCHOLOGICAL in nature.
The people who get it best are the academics to whom I wrote about the Wade Pfau matter and who came back to me saying that this is a case of the sort of paradigm change described in the book The Structure of Scientific Revolutions, by Thomas Kuhn. A society accepts small advances without too much trouble. It has a much harder time with big advances. This is a HUGE advance. It changes life in the United States forever for us to be able to reduce the risk of stock investing by 70 percent. It is of course a hugely POSITIVE change. But it is a huge change all the same. And as a society we are having a hard time accepting that this huge positive change is a real thing.
One of the academics told me that we either need to wait for the people whose careers were built promoting Buy-and-Hold to die or for a crisis. If Shiller is right (I obviously believe that he is), the crisis is coming within the next year or two or three. That should do it. The next price crash should shake people up enough that they will hear out people who go forward with the Valuation-Informed Indexing concept. Once we reach a certain acceptance level, support for Buy-and-Hold will collapse and VII will spread like wildfire.
The question is — Should we just wait around for that to happen?
My sense is that that is how Shiller and a lot of others have elected to play it. There are a good number of people who hint at a belief in VII but who hold back from a full endorsement of all of the amazing implications of Shiller’s research because they know that Buy-and-Holders will go nuts if they go public with them. I obviously don’t play it that way. I believe that responsible people should be doing everything they can do to help us AVOID another price crash. I also believe that, once people are ready to hear about VII, we need to have a record that people can turn to for answers to all of their questions about why it took so long for us to get to a good place. So I believe in continuing to knock on doors and on detailing the results of those efforts here at the blog.
People have a wall of resistance to hearing about this stuff. A good part of it is shame.
I call out the Wall Street Con Men all the time. But the full reality is that all that the Wall Street Con Men are doing is trying to make a sale. You complete a sale by forming an emotional connection with your reader. People love Get Rich Quick. Buy-and-Hold is pure Get Rich Quick. It sells like hotcakes. So the Wall Street Con Men love to use it. They go with what works.
The point here is that it takes two to tango. The Wall Street Con Men are conning us. They obviously know that there is this fellow Shiller who showed 33 years ago that valuations affect long-term return and that there is zero chance that Buy-and-Hold can work if valuations affect long-term returns. But they keep it zipped because their readers and their clients DO NOT WANT TO HEAR ABOUT IT. Mike Piper did not want to ban honest posting at his blog. He HATED the idea. But he sincerely believed that his readers would abandon him if he permitted me to continue posting there about the implications of Shiller’s research. I don’t know that things are quite as bad as he believes. But I do agree with Mike that he would have taken a big hit. For Mike Piper permitting honest posting would have meant earning less money from his blog, at least in the short run.
That’s not true just of Mike. It’s true of Motley Fool. It’s true of Morningstar. It’s true of Index Universe. It’s true of just about everyone. Buy-and-Hold is a marketer’s dream. It’s a Get Rich Quick approach that sounds responsible if you don’t study it too closely. Valuation-Informed Indexers tell people that much of the money in their retirement portfolios is not real, that it is cotton candy fated soon to be blown away in the wind. Buy-and-Hold is a Snickers bar and VII is spinach. VII is a hard sell compared to Buy-and-Hold until the next crash shows people where Get Rich Quick always takes everyone who follows it in the end.
This is a one-time thing. VII was impossible before 1981 because we didn’t have the research to support it. It didn’t catch on through 2008 because people were too happy with their phony bull market gains to be open to considering a new strategy. Since 2008, the door has been opened a bit. But it appears that it is going to take another crash to kick the door open all the way. Those are the realities that apply.
The next part is a little hard for most people to understand. But it is rooted in a psychological reality. People often know things that they are not willing to acknowledge they know. If you talk to an alcoholic about cutting back on drinking, he will deny having a problem. That’s not because he believes deep in his heart that he does not have a problem. It’s because he knows ten times better than you do how big the problem is and cannot bear to have you say the words out loud. The alcoholic is in deep denial. But he of course knows. That’s the story of the Buy-and-Holder. Every Buy-and-Holder has doubts about his strategy. Buy-and-Holders hate Rob Bennett because Rob Bennett spells out all the reasons why those doubts are legitimate. My stuff causes people to feel emotional pain.
The millionaire bloggers in the audience for my Ignite talk have probably followed Buy-and-Hold themselves and have probably recommended it to others. So my stuff made them feel shame. They are not ready to acknowledge what the research says. So they need some psychological defense. They felt that my presentation was too compelling to argue against it on substantive grounds. So they attacked it on process-oriented grounds. I wasn’t wrong. I just was too “bitter” about the fact that the ideas haven’t caught on yet. I deliberately chose images for the slides that focused on the soft, funny side of things. There was nothing even a tiny bit bitter about my presentation. That assessment was employed as part of a psychological defense.
We are making progress. I wouldn’t have been permitted to give the Ignite talk a few years ago. Now I am able to do that. Now I can get guest blog entries posted at lots of places. There are more and more people expressing doubts about Buy-and-Hold every day. But, yes, as of today there are smart and good people in this world who are going to respond by saying that I am “bitter” when they hear my presentation. Jaime was shooting straight with me and reporting on the reality that applies today. I liked the idea of working with her. I think that she could provide something that I am not able to provide. But I at least learned something as a result of my association with her and I am of course grateful for that.
I hope that helps a bit, Trebor.