Set forth below is the text of a comment that I recently put to another blog entry at this site:
Hi Rob,
Does anyone other than you believe that you have “develop[ed] a new model for understanding how investing works that will reduce risk by 70 percent”?
Surely you must have shared this with others whose opinions you respect. What did they think?
The committee that approved publication of the research paper in a peer-reviewed journal obviously thought well of it, Curious.My co-author Wade Pfau was very excited about it. He said that he was giving thought to submitting the paper to the Journal of Finance, the top journal in the field. Over and over he expressed amazement that no one had thought to examine the question we researched together (how much it reduces risk to exercise price discipline when buying stocks) before.
The scores of academic researchers who responded to my e-mail campaign thought well of it. Rob Arnott, the former editor of the Financial Analysts Journal, told me that my work in this field is “sound.” Carol Osler said that we are seeing a change in the paradigm for understanding how stock investing works and that I must be patient to see all the experts in the field come around (she expressed the thought that this would likely happen following the next price crash). Robert Savickas said that he will be teaching Valuation-Informed Indexing to his class at George Washington University. Barry Ritholtz linked from his hugely popular blog to my article on “Why Buy-and-Hold Investing Can Never Work.” Scores of others offered exceedingly kind comments. Not one of the 30,000 academic researchers to whom I sent a link identified any problems with the research paper. The Bogleheads Forum found that the paper was of huge importance. Fred Flintstone said that it challenged core principles of Buy-and-Hold. Many others expressed a desire that the Ban on Honest Posting be lifted so that they could engage in reasoned discussion of the findings of the paper. You Goons were obviously impressed by it or you would not have threatened to send defamatory e-mails to Wade Pfau’s employer in an effort to get him fired from his job. My good friend Jack Bogle was obviously not able to come up with any grounds for challenging the findings of the research in civil and reasoned debate or he would have done something about you Goons when he learned about the threats you made to silence Wade. The short version is that tens of thousands have seen the paper and most who expressed an opinion have either praised it to the skies or have been so threatened by what they saw (because they have staked their lives on a belief in Buy-and-Hold strategies) that they either engaged in or tolerated acts of financial fraud to keep more people from learning about it. I think it would be fair to say that there are few research papers that have ever been published that have had that sort of impact in the short amount of time that the Bennett/Pfau research paper has been available for people to review. Wade once told me that there is a saying among academic researchers that no paper ever wins a Nobel Prize without being hated by some (because the most important papers are seen as a threat to those who built their careers around the ideas that are being discredited by the advance in knowledge). I think it would be fair to say that the Bennett/Pfau paper showing how investors can reduce risk by 70 percent just by abandoning Buy-and-Hold strategies fits that pattern! My best wishes to you. Rob |
x says
Here’s another comment you made in that thread:
I am currently working on five long articles that I want to get posted before the next crash: (1) 101 Acts of Intimidation by Buy-and-Holders; (2) What 101 Experts Say re Valuation-Informed Indexing; (3) 101 Powerful Insights Developed Over the First 12 Years of Discussions; (4) A Q&A Article on the Ban on Honest Posting; and (5) An Article Pulling Together in One Place the Most Important Graphics Showing that Valuations Affect Long-Term Returns. My hope is that I can finish those by the first of May.
Since we’re several months past your self-imposed deadline, would you mind posting links to those articles?
Rob says
They are all scheduled to be published under the blogging software, X. As I complete items, I just enter them under the next available date. I now have items through March 31, 2015.
I hope that helps a bit.
Rob
laugh says
There is also nothing wrong with the other numerous research papers showing how a backtested/data mined strategy worked .
Rob says
There is nothing backktested or data-mined in the research that Wade and I produced.
Backtesting is when you are looking for a particular result and you make adjustments in your methodology until you get it. Neither one of us ever did anything like that. The idea that the price you pay for stocks affects the value proposition you pay for them is pure common sense. It HAS to work that way. All that Wade and I did was show that it actually DOES work that way.
Is the research supporting Buy-and-Hold backtested?
That’s a trick question.
The answer is — There is no research supporting Buy-and-Hold, backtested or not.
Wade’s most important finding is that nowhere in the literature does a single piece of research support the idea that price discipline is not needed when buying stocks. So there is NOTHING supporting Buy-and-Hold. Even if the research supporting VII were back-tested, it would be better than NOTHING.
But the research supporting VII is NOT backtested. Shiller published the first research supporting VII in 1981. That covered 111 years of stock-market history. Shiller’s model has continued to work for the 33 years since then. How the heck can that be backtesting? It’s been working on a going-forward basis for 33 years!
Buy-and-Hold defies common sense and has failed for 140 years running.
Valuation-Informed Indexing is supported by common sense and has worked for 140 years running.
Only Buy-and-Holders have employed death threats to intimidate people into not reporting honestly what the research says.
Only Buy-and-Holders have demanded unjustified board bannings to intimidate people into not reporting what the research says.
Only Buy-and-Holders have advanced tens of thousands of acts of defamation to intimidate people into not reporting what the research says.
Only Buy-and-Holders have threatened academic researchers to intimidate researchers who have dared to “cross” them by publishing honest research,
I wonder why.
Rob
Rob says
The Buy-and-Holders lost the intellectual battle in 1981 when Nobel Prize Winner Robert Shiller discredited the core premise of their model, the idea that the market is efficient and that therefore there is no need for investors to exercise price discipline when buying stocks.
The Buy-and-Holders lost their personal integrity on the evening of August 27, 2002, when John Greaney threatened to kill my wife and children if I continued to “cross” him by posting honestly on safe withdrawal rates and when 200 Buy-and-Holders endorsed the post.
When you’ve lost your personal integrity, you’ve lost it all.
The prison sentences have not yet been announced. But all that the announcement of the prison sentences will do for those who have been following the peer-reviewed academic research is confirm what they learned 33 years ago — There is zero intellectual support for this “strategy.” It is the purest and most dangerous Get Rich Quick scheme ever concocted by the mind of mortal man. The “idea” that it is not necessary to exercise price discipline when buying stocks has destroyed more middle-class lives than any other idea in the history of personal finance.
I hope to become known all over the internet as the strongest voice speaking out in OPPOSITION to further promotion of the smelly Buy-and-Hold garbage alive on Planet Earth today.
If there is anything that any of you Goons might be able to do to spread the word, I sure would be grateful.
Every little bit helps.
Rob
Evidence Based Investing says
Today is August 14th. Your blog entry today is simply a 5 month old comment you made to a previous blog entry dated March 14, 2014. That blog entry was reprinting a comment you made in a December 6, 2013 blog entry. The December 6th blog entry was a regurgitation of a comment you made on a September 24, 2013 blog entry. That one was republishing a comment you made to a July 12, 2013 blog entry. The July 12 2013 entry was reporting on a email exchange which had taken place some time previous to that.
That is a chain of five blog entries dating back over a year before you actually come to something that could be described as new material.
This is now true of the vast majority of the output of your blog. It is simply re-runs of re-runs.
No wonder the audience of your blog is so small.
Rob says
The 12-year cover-up of the errors in the Old School SWR studies is the biggest act of financial fraud in the history of the United States by a factor of 500, Evidence. If you added up the financial losses caused by every other act of financial fraud in U.S. history, the number wouldn’t come close to matching the financial losses caused by the 12-year cover-up.
There will in all likelihood be litigation being brought against individuals and web sites that have in some way supported or defended Mel Linduaer and John Greaney for decades to come. Following the next price crash, the total losses we will have suffered from the continued promotion of Buy-and-Hold strategies since the peer-reviewed research was published showing that there is precisely zero chance that such a strategy could ever work for even a single long-term investor will be in excess of $20 TRILLION. If stocks continue to perform in the future anything at all as they have always performed in the past, we are likely going to be going into a Second Great Depression in the not-too-distant future.
It’s kinda important that people know every aspect of the story. No?
For so long as I continue to report honestly, the Buy-and-Hold Mafia obviously cannot permit me to post at any site at which I would be able to win the support of the millions of middle-class people who need to and want to know about the material at this site. That’s the reason why the audience at this blog is so small, as you well know.
My alternative to posting honestly is to participate in the cover-up myself and thereby earn myself a prison cell next to yours. Um — No thanks. You’d be surprised how low going to prison is on my bucket list.
If you want to wait until the next price crash to see how things turn out, that’s your call. I think it’s a dumb call. But it’s your call and there is not a thing that I can do about it.
So chill out, man. All will be revealed in time.
I can live with the small blog audience for a time so long as it means a $500 million payoff somewhere down the road a piece.
The horror! The horror!
Hang in there, my long-time abusive-posting friend.
Rob
The Pink Unicorn says
No, your 12 history of non-stop lies is the biggest act of crappola in the financial blogging world.
Suck it, Rob.
Rob says
If anyone had told me on the evening of May 12, 2002, that there would come a time when there would be one person who would be pressuring me to commit financial fraud in a matter relating to the numbers that people use to plan their retirements, I would have said that that person was out of his or her mind.
It hasn’t been one person over these 12 years. It has been THOUSANDS. Including some of the biggest names in this field.
That’s a problem, Pink. A big problem. For all of us.
I will always remain open to doing anything in my power to make things turn out better for every single person affected by this matter (and that’s just about every person on the planet). That will never change.
I will never open even a tiny bit to the possibility of telling lies to my friends re the numbers that they use to plan their retirements. That cannot be the right answer.
You cannot teach a dog to meow and you cannot teach a cat to bark and you cannot teach Rob Bennett to post dishonestly re safe withdrawal rates. It’s not in me, Pink. For 12 years now, you have been trying to do something that just cannot be done. All of my life experiences tell me that that would be the wrong thing to do. All of the laws of the United States and all the rules of our boards and blogs tell me that that would be the wrong thing to do. All of the pain that I have seen expressed by you Goons on a daily basis for 12 years now tells me that that would be the wrong thing to do.
Ask me for something that doesn’t constitute a felony under the laws of the United States, and I am in. We were friends once upon a time. I would like to be friends again. I think of you Goons as friends today.
Please don’t ask again that I agree to post dishonestly re the numbers that my friends use to plan their retirements. Don’t ask me to say that Greaney’s study contained an adjustment for the valuation level that applies on the day the retirement begins. Don’t ask me to say that I am not aware of the 33 years of peer-reviewed research showing that such an adjustment is required in any study seeking to get the numbers even roughly right. And please don’t ask me to say that Greaney corrected his study within 24 hours of the time he learned of the errors contained in it.
For that sort of thing, I ain’t your guy.
For anything else, for anything constructive and positive and life-affirming, I am happy to knock myself out for you. But please don’t ask for anything along those lines.
I wish you all good things.
I look forward to getting together with you following the next price crash to compare notes re who has fell and who has been left behind.
Don’t let the bad guys get you down, man.
Rob
Honest Anonymous says
“The idea that the price you pay for stocks affects the value proposition you pay for them is pure common sense. It HAS to work that way. All that Wade and I did was show that it actually DOES work that way.”
Wait! Wait! Wait!!! OMG!!!!
Are you saying you and Wade showed that ‘Buy Low – Sell High’ actually works!
VII is truly ground-breaking and revolutionary!
Anonymous says
“I can live with the small blog audience for a time so long as it means a $500 million payoff somewhere down the road a piece.”
Soooo….bottom line, Rob, is you are doing all this for the money….just like all the Buy-and-Holders.
In other words, you are just as greedy as they are, you are just trying to peddle a different shtick.
Buy-and-Holders are greedy and block Honest Posts.
Rob is greedy and blocks Honest Posts.
If you can’t beat ’em…..
Rob says
Are you saying you and Wade showed that ‘Buy Low – Sell High’ actually works!
Yes, that’s right.
Buy Low/Sell High has been the investor’s dream since the first market opened for business.
Yale Economics Professor turned that dream into a reality for millions when he published his “revolutionary” findings in 1981. We all can now exercise price discipline when buying stocks just as we do when buying all other goods and services. We now have a tool (P/E10) that tells us when prices are too high for investors with our risk tolerance. We now can provide clear guidance IN ADVANCE OF A PURCHASE as to what prices are high ones and as to what prices are low ones. And we can quantify the benefits of following this common-sense and research-based approach.
That means that the stock market of the future will function as effectively as all other markets. No more bull markets. No more bear markets. No more economic crises. Investor heaven!
The only thing left is to get the word out, Honest.
There’s lots of rooms for more good people to get involved in this very important project. We could use your help, man.
Rob
Rob says
Soooo….bottom line, Rob, is you are doing all this for the money….just like all the Buy-and-Holders.
In other words, you are just as greedy as they are, you are just trying to peddle a different shtick.
No.
It’s not greedy to expect to be compensated for one’s good efforts. That’s normal and healthy and benefits the entire society as well as the individual receiving the payment. We need to provide incentives for people to do good work to be sure that the good work from which we all benefit gets done.
I don’t agree with you that my Buy-and-Hold friends have been primarily motivated by greed either. My Buy-and-Hold friends did what they did out of love, just as I do what I do out of love. They made a mistake. That happens. In ordinary circumstances, the mistake would have been promptly corrected and we would have all moved on to the better and richer lives we earned for ourselves by discovering the mistake.
We did not face ordinary circumstances. The mistake was not on the surface. It was a mistake concerning the fundamentals. So it affected hundreds of strategic questions in a big way. People had a hard time accepting that so big a mistake had been made. So many ignored it. Many more rationalized, they told themselves that the mistake wasn’t that big a deal. Others actively covered up the mistake in embarrassment.
A second out-of-the-ordinary event caused further delay in correction of the mistake. The mistake was discovered at a time when prices were very, very low, at a time when it was hard to believe that stocks would ever again be selling at fair prices much less insanely high prices. That’s one of the reasons why it was so easy to rationalize covering up the mistake rather than fixing it. Shortly after the mistake was discovered, we entered the biggest bull market in U.S. history. This made the mistaken understanding of how stock investing works seem appealing to millions.
The further delay in correction of the mistake meant that the mistaken understanding was spread to millions. It was written up in textbooks. It was passed along by investment advisors. There were studies issued and calculators developed. There were blogs created to spread the mistaken understanding. Hundreds of thousands of people built careers rooted in promotion of the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind, not knowing that that is what they were promoting. And millions came to believe in what was being promoted to them, seeing the numbers on their portfolio statements go up and up and up over the course of a good number of years. Those people shared what they thought they had learned about how stock investing works with their friends and neighbors and co-workers, making it that much harder for us as a society to acknowledge the mistake when the damage it had done to us had grown so great as to be no longer tolerable.
Making a mistake is not evidence of greed, Anonymous. John Greaney didn’t promote his SWR study to turn a buck, he did it because he thought it was a real and good thing and he wanted to share this real and good thing with others. It’s the same with Mel Linduaer and the book he wrote and the discussion board he built. Jack Bogle made money from Buy-and-Hold. But he could have made just as much money if not more promoting Valuation-Informed Indexing. There is zero reasons (that I am aware of) to believe that he would not have done just that had Robert Shiller published his “revolutionary” (Shiller’s word) research in 1961 rather than 1981.
The Buy-and-Holders got us started on a wonderful journey of discovery of the realities of stock investing. Because they are human, they made a mistake. It has happened to each and every one of us.
Their mistake became a national tragedy because it started machinery running in which lots of wealthy and powerful and well-connected people built their careers around promotion of a Get Rich Quick investing strategy that is in the process of destroying our economic system and generating frightening political stresses on both the left and the right. The mistake must be fixed, there’s no question whatsoever about that. And, yes, a pure and ugly and naked greed has played a big part in the cover-up of the mistake. But it wasn’t greed that started things off. There is no reason that I know of to believe that Buy-and-Holders are greedier than other people.
My personal sense is that it may be that Buy-and-Holders are a bit LESS greedy than most others. The board at Morningstar was called “Vanguard Diehards.” Diehards are people who believe in something so strongly that they cannot bear the thought of sharing it with others. Greedheads are people who will do anything to make a buck. Diehards are True Believers, people who put their love of something AHEAD of the quest for the almighty dollar.
Buy-and-Holders have their strong points and their weak points. The best way to understand them is to read up on the “INFJ” personality type. They are planners. They are systems-builders. They are conceptual thinkers. They are masterminds.
And they are pig-headed, arrogant, pompous, full-of-themselves, pieces of shit.
It’s not me who says that! It’s those darn Myers-Briggs personality assessment sites you see all over the web.
Our INFJ friends have a very difficult time admitting mistakes. And you see that personality showing up a lot wherever Buy-and-Holders meet to discuss amongst themselves how great they are and how everyone who doesn’t believe every last thing they say about stock investing is a damn moron and a waste of space on this planet.
We should love our Buy-and-Hold friends.
Loving them does not mean enabling them in their acts of self-destruction.
Loving them means thanking them in all sincerity for their many important contributions while shaking them and then putting them down on a better path when they let the weaknesses of their MasterMind personality type get the best of them.
Greed is not the driver here. It is present in places, as it always will be when money matters are at issue. Greed is part of the reason why we have seen a lock-in effect, why it has taken so darn long to get simple mathematical calculations reported accurately. But greed is not the core problem.
There are two core problems.
One is that this is truly amazing stuff. It is hard for people to accept that we now know how to reduce the risk of stock investing by nearly 70 percent. That is by far the biggest advance in the history of personal finance and people have a hard time accepting that they were born into the luckiest generation of stock investors ever to walk Planet Earth.
The second core problem is that the mistake is such an obvious thing once you become aware of it. The price you pay for stocks affects the value proposition you obtain from them. Duh! Whoever would have thought it? Buy-and-Hold is so freakin’ DUMB that it makes people feel great pains of shame and embarrassment to remember that they once believed in it and encouraged others to believe in it. Buy-and-Hold EMBARRASSES us.
We need to get over our embarrassment and move forward. We need to begin getting those darn numbers right!
I’m ready when you are, my greedhead friend (a joke!).
Greedy Rob