Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Calling someone a goon speaks more about you instead of the person you have targeted.
It says that I do my job, Anonymous. I am a journalist. Journalists tell people what is going on in the world. The 12-year cover-up of the errors in the Old School safe-withdrawal-rate studies is the biggest economic and political story of our time. Pointing to the behavior of you Goons is part of the job of telling this story. Things could not have played out as they have played out without a heavy helping of Goonishness. The story doesn’t make even a tiny bit of sense if the Goonishness is ignored.
One big reason why the Behavioral Finance School of personal finance has not achieved more in the practical realm despite the many powerful insights it has advanced is that too many people in this school are afraid to describe and document the Goonishness we all see taking place all around us every day from those who believe and follow the conventional (Buy-and-Hold) investing advice. Goonihsness is the story. Goonishness is the thing we need to combat if we are to become effective investors. We will not as a society become able to combat Goonishness until we first work up the courage to at least talk about it.
I am the fellow who doesn’t hold back from noticing and talking about and exploring and commenting on and trying to rein in Goonishness. That’s why I am today 12 years ahead in my understanding of how stock investing works of people like my good friend Jack Bogle. Jack shies away from this topic. It has its ugly side. I certainly don’t say different. But you know what? A doctor who wants to cut out cancerous tissue has to draw blood to do so. There are times when a person seeking to do something good has to engage in some awful task to get the job done.
Jack Bogle has more I.Q. points than I possess and he has more training in this field and he has more experience. But he has held himself back because of his fear of talking about the ugly Goonishness that has come to dominant this field in the Buy-and-Hold Era. I care about what happens to the people who read my words. And so I cannot go there. I talk about non-Goon stuff all the time and I enjoy being able to do that when it is an option. But when the Goon stuff stares me in the face and demands to be reported, I make an effort to work up the courage to do that. I work it hard and I think it would be fair to say that I have gone to places that no one else in this field has ever gone to before. I pray that I will continue to push when called on by realities taking place before me to do so.
Had Shiller published his “revolutionary” research in 1961 instead of 1981, there never would have been any Buy-and-Hold. The Buy-and-Holders don’t want to destroy our economic system. They don’t want to invest ineffectively themselves. Valuation-Informed Indexing has been shown to be so far superior to Buy-and-Hold in every test that has been done that it is silly to suggest that there is any intellectual debate here. There’s a mountain of evidence on the Valuation-Informed Indexing side and zero evidence on the Buy-and-Hold side. Zero evidence combined with a huge amount of Goonishness. Which has been enough to block the intellectual debate for 12 years now (it’s 33 years if you date things back to when Shiller published his revolutionary research). It will soon become 34 years if we don’t as a society work up the courage to face the Goonishness this year. It will soon become 35 years of we don’t as a society work up the courage to face the Goonishness either this year or next year. And so on.
The reason why we are in an economic crisis today instead of enjoying the greatest period of economic growth in our history is that we are not all Vulcans who pursue our self-interest in a purely rational manner. Eugene Fama is responsible for some major advances. We all owe him a debt of gratitude for the good he has done. But he also made one huge mistake that has caused a huge amount of human misery. And he doesn’t want to acknowledge it. He feels ashamed. He wants that mistake covered up. The mistake has destroyed millions of middle-class lives. So as a society we cannot permit the error to be covered up any longer.
And of course it is not just Fama. LOTS of people want the realities of what we know about how stock investing works in the year 2014 covered up. And that cannot be. These realities cannot be covered up any longer. We all want to be enjoying life on the other side of the river. But the only way to the other side is struggling through the hard stuff. The only way to the other side is exposing the Goonishness and talking about it and punishing it (both through civil and criminal actions) and then forgiving it and then putting it all behind us and moving on to all the good stuff.
It’s not an accident that we have gone 33 years since Robert Shiller proved that there is precisely zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor without every expert in this field declaring that to be the case. There’s money in Get Rich Quick investing strategies. A LOT of money. And so a lot of smart and otherwise good people have been attracted to the wrong side of the ethical lines out of a desire to be popular and make lots of bucks while the Get Rich Quick garbage is still paying out its huge payouts to those who put obtaining huge personal payouts above helping their clients and readers learn how to invest effectively for the log run.
Those people very, very, very, very, very much don’t want the truth getting out. And the only hope they have with 33 years of peer-reviewed research behind them showing that they are talking garbage when they say that there is no need for investors to practice price discipline when buying stocks is engaging in and tolerating and encouraging Goonishness. That’s where things stand. I didn’t create the reality. I report on it. I care deeply about my many Buy-and-Hold friends and I want to help them. But I know that I am not helping them by causing them to travel even farther down the dark path that they have elected to travel.
I will continue to report on the behavior of you Goons and on the behavior of the Wall Street Con Men that makes possible the existence of you Goons in a society that has adopted laws protecting us from this sort of behavior. I can do no more and I can do no less.
I wish you all good things, Anonymous.