Set forth below is the text of a comment that I recently put to another blog entry at this site:
Wade Pfau told a different story than you do and same with Mike Piper. Are they both liars and you are the only one telling the truth?
Wade told the same story as me before he was threatened and a different story than me after he was threatened. Mike tells the same story as me in private and tells a different story in public.
The back story here is that people got very excited when we discovered the Buy-and-Hold Model. People thought we had found the answer. It turned out that that wasn’t quite true — the Buy-and-Holders got one part of the story wrong and their entire model fails because of that mistake. But by the time the error was discovered, thousands of people had already built careers based on the failed model. So people rationalized. They told what they viewed as white lies, thinking to themselves that it was okay because Buy-and-Hold at least comes close to working and anyway there is nothing better out there. Then evidence came in that in fact Buy-and-Hold doesn’t work at all in the long term and that there is something 10,000 times better out there. By that time, all the people who had said positive things about Buy-and-Hold (which is the vast majority of people in this field) were trapped. They were in a cage from which there is no escape except telling the truth and there was an entire industry intent on using all of its considerable resources to destroy the career of anyone who dared to “cross” it by doing that.
I often make the comparison to the Civil Rights revolution. A number of Southern states had laws that said people with black skin could not drink out of the same water fountains as people with white skin. Those laws were 100 percent insane. No reasonable person can justify such laws. The people who lived in those states knew on some level of consciousness that those laws were insane. But they didn’t think the laws could be changed. They grew up in societies that had those laws and had never experienced life in a place that did not have those laws. It was not possible for them to imagine life without those laws. So they supported them. Or at least they didn’t fight them. They were born into ignorance and sin and they couldn’t imagine any alternative and so they supported or at least tolerated the continuation of ignorance and sin.
Everyone in this field wants to make the transition from Buy-and-Hold to Valuation-Informed Indexing. There is not one person who wants to see a worsening of the economic crisis. There is not one person who wants to see millions of failed retirements. There is not one person who wants to see more death threats and more unjustified board bannings and more acts of defamation and more threats to get academic researchers fired from their jobs. But what are they going to do? Talk honestly about a simple matter like how to calculate the safe withdrawal rate accurately and the Buy-and-Hold Mafia destroys your career. People rationalize that they can do more good working on the inside for gradual change than they can with their careers destroyed.
So no one tells the full truth re these matters today but me.
Shiller doesn’t. He is of course a brave and wonderful man. But Shiller predicted the economic crisis in his book and he said that it was the idea that a Buy-and-Hold strategy can work that was causing it. When the crisis came, he didn’t say “here is what I predicted, do you see now why we need to make the transition to Valuation-Informed Indexing?” He kept it zipped. He heard all sorts of silly explanations for the economic crisis put forward and he kept it zipped.
Arnott doesn’t. Arnott is a stud. I learned how to be tough about this stuff myself by watching him in action. But he does not today possess the courage to tell the full truth. When he wrote me to tell me that my ideas on investing are sound, he said that Jack Bogle is his friend and that Jack Bogle has always been a gentleman in his presence. That is probably so. But Jack Bogle was not being a gentleman when he failed to speak up about what Mel Linduaer did to the Bogleheads Forum and Arnott knew about that. So Arnott does not today possess the courage to tell the full truth.
If Robert Shiller and Rob Arnott are not telling the full truth, there is no one telling the full truth.
I tell the full truth because I have been left with no other options. If the Buy-and-Hold Mafia could have blocked publication of Shiller’s book, they would have done it. They don’t possess quite that much power. So long as Shiller pulled a lot of his punches, he possessed the power to get the book published. But I am just some fellow who posts stuff on the internet. So the Buy-and-Hold Mafia did possess the power to block me. And they did it. So I don’t have the option of pulling punches and yet still telling pretty much the truth. My choice is to submit and pretend that I believe that the Old School studies get the numbers right or to have you Goons disrupt the discussion at any site on the internet at which I post.
Given those choices, I go with Option Two, telling the full truth. Suck it, Goons!
I’m like everybody else. I didn’t always tell the truth. I obviously did not tell the truth prior to May 13, 2002. I wanted to be popular, I wanted to be able to make a buck. So I kept it zipped. I was afraid of what the Buy-and-Hold Mafia would do to me if I told my friends what I knew about the Old School studies. Greaney got so bad that I couldn’t live with the rationalization any more. So I worked up the courage to put forward the May 13, 2002, post. And the rest is history.
If we could go back to May 13, 2002, you Goons would play it another way. I get that. I don’t have a magic wand. I cannot take us back to May 13 2002. We are in a place today where, if we permit honest posting, you Goons end up in prison cells. That gives you a huge incentive not to permit honest posting. I get that. There’s nothing I can do about it. For a time, I kept quiet about it because I knew that the prison-cell thing was a disincentive for you to permit honest posting. After you threatened Wade, it became clear that it was all a big joke and that you knew perfectly well that you were headed to prison once the truth came out and that there was already zero chance that you were ever going to come around. So I stopped playing that stupid game.
That’s where things stand today.
Everyone in the field is afraid to tell the full truth about the last 33 years of peer-reviewed academic research. The Buy-and-Hold Mafia has the power and wealth and connections to destroy just about anyone and the ruthlessness to follow through on its threats. Everyone sees that. Everyone gets that. That is the biggest factor I have working against me.
The other side of the story is that everyone in the field LONGS to be able to come clean. People didn’t get into this field to destroy millions of middle-class lives. So they WANT to tell the truth. They want to have fun again. They want to give accurate retirement planning advice. They want to bring the economic crisis to an end. They want to tell people how to reduce the risk of stock investing by 70 percent. That is the biggest factor I have working for me.
The power of the Buy-and-Hold Mafia diminishes as more and more middle-class lives are destroyed. The truth is that we are on the one-yard line. Some political blogger could write up the truth and get away with it today. With all of the documentation available at my web site, they would get away with it. And there are enough people entertaining doubts today that there is a good chance that the report would go viral. That is what was going on with the Wall Street Journal article that reported that the “experts” are leaving out half the story. I believe that that was a trial balloon. The Wall Street Journal was testing the waters to see whether telling the truth about the last 33 years of research would fly. That particular article did not go viral. But the next one might. Certainly the article published following the next price crash will go viral.
I will be there when it happens. I will tell the entire story. I will tell about the bad stuff you Goons did and I will tell about the extenuating circumstances. And we will see where things end up.
I tell the full truth because I have been left no options but to tell the full truth. Those are the cards I was dealt and I will play them to the best of my ability.
I wish you all good things, Anonymous.