Set forth below is the text of a comment that I recently put to another blog entry at this site:
Rob is definitely going into some kind of demented death spiral. He can’t write more than 2-3 sentences without talking about all his enemies going to prison.
That’s the only issue that remains, Laugh.
We know that there are many academic researchers who long to be doing honest work in this field.
We know that there are many bloggers and journalists who long to be doing honest work in this field.
We know that there are many investment advisors who long to be doing honest work in this field.
Even Jack Bogle, the King of Buy-and-Hold himself, has advanced MANY signs that he longs to be doing honest work.
And I think it would be fair to say that you Goons are none too happy with the status quo at this point in the proceedings.
So we’re got everybody on board.
Now we need to figure out how to make the transition.
We saw way back in the Motley Fool days that there is a HUGE interest among ordinary investors in learning about how stock investing really works. Going by what we saw at that community of a few thousand people, the number in the general population that has an interest in learning the realities has to be in the many millions.
And we have seen that it is rare for someone to make the switch to Valuation-Informed Indexing as the result of a single exposure to the concept. People need to gradually come to an ever-more-enhanced understanding of the new paradigm. They need to be able to have their questions answered. They need to see how everything connects. They need to see how their friends react to the new ideas. One day they experience an epiphany. It is rarely the first day on which that happens.
What does all that add up to, do you think?
It adds up to a conclusion that it is absolutely imperative that we open up every investing board and blog on the internet to honest posting on the last 33 years of peer-reviewed academic research. There is no reasonable argument going the other way. That one is settled and has been settled going back to the morning of May 13, 2002. I even asked on a thread at the Motley Fool board whether the community there felt that honest posting should be permitted and the respone was virtually unanimous.
We ALL want every board and blog opened up to honest posting. We don’t all say so out loud. But we all want the same thing. It is silly to argue otherwise. People like Jack Bogle and Bill Bernstein and Wade Pfau would not be mixing in honest stuff along with the Buy-and-Hold garbage they also often promote if they didn’t have a desire deep inside to see the Ban on Honest Posting lifted.
So far so good. We are the luckiest generation of investors ever to walk Planet Earth. We know what it takes to reduce the risk of stock investing by 70 percent while also dramatically increasing returns AND bringing the boom/bust cycle that causes economic crises to an end. Pretty darn exciting. But we have experienced a certain amount of friction re these matters over the first 12 years of our discussions. Something is holding us back from realizing our dream. Whatever could it be?
The problem is that these matters are too darn important. That’s an irony. You would think that we would move quicker on matters that are particularly important. But it has worked out just the other way. Because these matters are of high importance and affect so many people, those who advocated Buy-and-Hold in good faith in earlier times don’t want to acknowledge having made a mistake. They feel embarrassment. They feel shame. They worry that they will be held financially liable for poor investing advice they offered at earlier times. In the case of you Goons, they worry about going to prison for having committed the greatest act of financial fraud in the history of the United States.
That’s the problem, Anonymous.
There’s nothing else to talk about. The intellectual case is settled. It’s not just the Valuation-Informed Indexers who believe that. The Buy-and-Holders believe it. They don’t believe it on every level of their consciousness. They really do follow Buy-and-Hold strategies. That’s evidence of a sincere belief. But they don’t feel confident enough of the strategy to believe that it can be defended in civil and reasoned discussion. So there clearly is another level of consciousness on which they do not believe at all. It’s a mix. You could say that they believe but that they almost entirely lack confidence. If the Buy-and-Holders themselves don’t feel that the intellectual case for Buy-and-Hold is strong enough to support a confidence that it can survive challenges raised in civil and reasoned discussions, there really is no one who truly believes in this stuff in the sense that that word signifies in most cases in which it is employed.
We all want to know how to invest. We are entirely united re that one. Some of us are scared to death that the strategies we continue to follow are not going to work and so it pains us to hear academic research showing otherwise even discussed. So progress has been blocked for a long, long, long time.
What do you propose we do?
It is an imperative public policy initiative that we spread the word re Valuation-Informed Indexing. But spreading the word causes intense emotional pain for the Buy-and-Holders. No one wants the Buy-and-Holders to experience pain. But no one wants to see the Second Great Depression either. We ALL share an interest in working this one out.
What do you propose we do?
I propose the announcement of prison sentences. Or an “I Was Wrong” speech by my hero Jack Bogle. Either one of those would break the logjam. Either one of those would cause enough people to learn about the issues that we would see a national debate launched that ultimately would take us to one of two places. Either Valuation-Informed Indexing would not stand up to scrutiny and we would be back where we were on the evening of May 12, 2002. Or Buy-and-Hold would not stand up to scrutiny and we would move on to a brave new world that I of course expect to turn out to be pretty darn wonderful for all concerned.
But even if you don’t believe that today, you should want to go to that brave new world if you truly believe in following research-based strategies, as all the evidence available to us indicates you do. The Buy-and-Holders will obviously have a chance to make their case in the national debate. If they cannot make it, it is to your benefit to make the shift. You don’t see it today. But of course we have not had the debate yet. So you simply do not know whether you will end up seeing it or not after the debate has taken place. If you become convinced as a result of the debate, you won’t be complaining that we had the debate. You will be thrilled that you were carried to it kicking and screaming.
We need to have that national debate, Laugh. There is no other way out of this mess. Many commenters noted how odd it was that the Nobel Prize in Economics was awarded to two men with opposite views on how stock investing works. That happened because we haven’t yet had this national debate. The purpose of a debate is to resolve the matter. Who is right, Fama or Shiller? That is the most important economic and political question before the people of the United States today. We obviously cannot answer the question without first giving ourselves permission to talk about it.
So the debate happens. The question that remains is — How do we get there?
I say that we get there through the announcement of prison sentences for you Goons. The announcement of the prison sentences goes viral and then lots of people turn to examination of the substantive issues to figure out what the heck is going on. There’s your kick-off to a national debate!
My sense is that that is how this is going to play out. So, yes, I am focused today on your prison sentence. I obviously will return to a focus on the substantive issues after the debate gets underway. But the goal today is not to win the substantive debate, the goal today is to get the darn substantive debate off the ground. The aim is to bring The Debate About Having a Debate to an end and to commence with the debate proper, the real thing, the question of whether Fama or Shiller (or some combination of the two — which is what I believe is the reality) is right about how stock investing works.
Do you have any ideas other than the announcement of prison sentences for how we can as a society move on to the national debate we all very much need to see begin by the close of business today? If you have ideas, please advance them. That would be a constructive and positive and life-affirming thing to do.
If you don’t have any ideas for how to solve the obvious problem that confronts us, then I will keep pressing on the prison sentence idea. Not because I enjoy the idea of seeing you go to prison. Because that’s the way our system is set up. We adopted the laws against financial fraud for a reason. We knew as a people that we didn’t want situations like this to develop. I love my country and I support our system for addressing matters of this sort. So my inclination is to go with the procedures that are already part of the system. The laws against financial fraud are part of our system and they serve an important purpose and that purpose needs to be served in this case.
Do you have some other idea that solves the problem that needs to be solved?
I don’t think you do.
If you do, I am of course happy to hear about it.
But if you do not, yes, I am going to return again and again to the solution that already exists on the statute books, imprisonment of those who have participated in the 12-year cover-up of the errors in the Old School safe-withdrawal-rate studies, the greatest act of financial fraud in the history of the United States by a long shot.
I will win. Maybe not by the close of business today, as I would like to be the case. But following the next price crash. The emotion that counts in your favor today turns against you when millions of people lose most of the money they were counting on to finance their retirements. That shift in the emotions of millions of ordinary investors changes everything.
You will come back with something stupid. I know that. But I also know you are worried about that prison sentence. Otherwise, you wouldn’t be posting here on a daily basis.
If you have an idea for solving the problem better than mine, put it forward.
If you don’t, I’ll stick with the idea that the people of the United States enacted as part of their system of laws to protect us from this kind of situation.
In any event, I naturally wish you good luck with whatever investing strategy you elect to pursue.