Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Yes, they all love you. They’re just too frightened to show it. ALL of them. 100% terrified of the Goons. This is just SO much more likely than any other possibility. Such as the ridiculous notion that they find you vacuous, narcissistic, irritating and/or just plain nuts.
Yes, that is the problem, Miasma.
There is of course a lot of misunderstanding as well. The vast majority of people who recommend Buy-and-Hold strategies (I think it may be ALL of them) BELIEVE that Buy-and-Hold can work. Many have doubts. But those with doubts generally believe that, even with its flaws, Buy-and-Hold is the most responsible option. They might not think it works perfectly but they sincerely believe that it works well enough.
Valuation-Informed Indexing is the new thing. There have been hundreds of BILLIONS of dollars directed to the promotion of Buy-and-Hold. Money magazine has promoted Buy-and-Hold strategies in every monthly issue going back to the mid-1970s. Many people are afraid of stocks. So it gives them comfort to go with a strategy that has been around for a long time and that has been endorsed by numerous experts. Buy-and-Hold is the safe choice in a field where safety is prized. Valuation-Informed Indexing is something new and different and strange. So it starts out at a big disadvantage.
But thousands and thousands of people have expressed a desire to learn more about the new strategy over the course of the past 12 years. Including some of the biggest names in the field. And, yes, you Goons have made them afraid to participate in the discussions they want to participate in, afraid to learn the things they want to learn, afraid to ask the questions they feel they need to ask to become more comfortable with the new strategy.
Fear won’t work anymore once the entire world knows about Valuation-Informed Indexing and about the trickery that you Buy-and-Hold Goons have employed to keep millions in the dark for 12 years now. There will come a day when your Goon tactics will become 100 percent ineffective. But that is not where things stand today. As of today, intimidation works because, as much as people want to learn about the new ideas, they are unsure of their own knowledge and don’t at all like the idea of being confronted with the brutal abusiveness that those posting in “defense” of Mel Linduaer and John Greaney have been employing for 12 years now.
All of us are terrified by the tactics that have been employed by you Goons. That’s why we have published rules prohibiting such tactics at every discussion board and blog. That’s why we have made your tactics felonies under the laws of the United States. We wouldn’t be sending people to prison for behaving as you Goons do if we didn’t believe as a society that the behavior that you have engaged in is very, very, very bad stuff.
Most of us do not today understand how stock investing works. Investing was not even studied in a systematic and serious way until the 1960s. And we didn’t as a society know it all at the time when Buy-and-Hold was being developed. So we got off on a wrong track and for 33 years now have needed to set things straight again. People have become more open to the research-based approach as Buy-and-Hold has caused more and more financial devastation. But, yes, our knowledge base is still not strong enough for the learning project to go forward in the face of your abusiveness.
We will overcome you. The people of the United States will learn what they need to learn and you Goons will be sent off to long prison terms. We will collectively work up the courage to take you on and to free ourselves as a society from the ignorance in which we have suffered for the past 33 years.
People who want to learn are afraid of you Goons and of the Wall Street Con Men who pretend that they see nothing wrong with your behavior. But as you destroy more and more middle-class lives, we will work up the courage to stand up to you and to transform Buy-and-Hold into what it was intended to be in its early days by removing the Get Rich Quick element of the first-draft version and offering people for the first time in history a true research-based investing strategy.
I wish you all good things, Miasma.
Rob
Life for you must be miserable when you have to resort to daily rants of hate and lies.
I see it as exciting to be living in the future rather than in the past, Anonymous.
The only thing that will someday make it even better if to have all of my many Buy-and-Hold friends working WITH me instead of against me.
When that happens, things are going to go from exciting to amazing.
Hang in there, man.
Rob
Not a word about FinCon?
I always enjoy FinCon. I think it is an extremely well-done conference.
There were three highlights:
1) My Ignite presentation on “Predicting Stock Returns for Fun and Profit.”
I was very happy with myself for being able to get the entire story down to five minutes. That’s hard to do and I thought the talk turned out very well.
There was a technical mix-up. For some reason that no one can identify (one theory is that I am taller than most), the mike started giving out huge amounts of feedback when I started my presentation. It got bad enough that I was about to put the mike down, figuring that they would fix the problem and I would start over. They told me to roll with it. I did that and the remainder of the talk went well. I am glad that I did not freak out.
Four people came up to me when the talks ended and told me that they were thrilled with the presentation. One of them said that he wished that I had been the only one talking and that he would have listened to me talk on that theme all night. However, another one of the four said that it was his guess that my talk “sailed over the heads” of 90 percent of the people listening. I believe that that’s probably right.
2) The community-building session I headed up for investing and retirement bloggers.
We had 60 people come. I was surprised that we attracted that many. We put 12 people at each of five tables and had them discuss two topics: (1) Valuation-Informed Indexing vs. Buy-and-Hold; and (2) The New Retirement. Then one person from each table reported to the entire room on insights and observations developed at their table.
There were three financial planners at my table. They were less than crazy about some of the things I said about Buy-and-Hold in a hand-out that I placed at each place at the tables. I asked one of them to report on those observations. When it came time to give the report, the woman said “we had mixed feelings about Valuation-Informed Indexing.” I said “we did not — there was a consensus at our table that it stinks! You are being too kind!” I obviously did not want that to be the case — but it WAS the case! I thought that was funny. It’s the difference between a financial planner’s approach and a journalist’s approach.
3) A lunch meeting that I had with a consultant that I am considering hiring for help getting the word out on VII to other bloggers.
I was telling her about you Goons and she had her mouth wide open as if she could not believe what I was saying. But she had brought a friend along and the friend then reported that very similar things had happened to her. There were tears in this woman’s eyes as she told her story. So the consultant could not very well deny that the Goon problem is real.
She advised me to take stuff dealing with you Goons off my site and to stop engaging with you. I do not think that that is the right way to go and I tried to explain why. She did not buy what I was saying. We are going to talk again. But my guess is that we will not be able to work together. I think she can do the job well. But we would have to agree on a strategy and we are not there at this time.
I hope that helps a bit, X.
Rob
I was telling her about you Goons and she had her mouth wide open as if she could not believe what I was saying.
Well, I’m sure once you provider her (and the rest of us) with evidence of your assertions, she (and the rest of us) will come around.
They were less than crazy about some of the things I said about Buy-and-Hold
I think that’s the problem – they were less than crazy.
She advised me to take stuff dealing with you Goons off my site and to stop engaging with you. I do not think that that is the right way to go and I tried to explain why.
If you took the stuff dealing with Goons off your site there would be nothing left for you to blog about each day.
It is a long time since you created any new content.
Well, I’m sure once you provider her (and the rest of us) with evidence of your assertions, she (and the rest of us) will come around.
She came around. She accepts that you Goons did everything that I said you did. But she doesn’t agree with my strategy for dealing with the problem.
She says that I should ignore you. LOTS of people tell me that. My wife tells me that. So I understand where she is coming from.
However, I don’t think you Goons are the entire problem. I would say that you Goons are 50 percent of the problem. The other 50 percent is that most people, even big-name experts, possess a greatly limited understanding of the implications of Shiller’s “revolutionary” (his word) finding that valuations affect long-term returns. Most people are not Goons. But most people do not possess a strong understanding of the realities because the realities that have been discovered over the past 33 years have not been widely discussed. This widespread lack of understanding is the other 50 percent of the problem.
If you Goons did not exist, I could help people with their questions and get the general level of understanding up to a level at which we would see a big move to Valuation-Informed Indexing. So you Goons do real harm with your acts of disruption and intimidation and deception.
But the other side of the story is that you Goons could not hold us all back if knowledge of the implications of Shiller’s findings were strong enough and widespread enough that responsible people would take actions to rein you in. Motley Fool would LOVE to have a newsletter on Valuation-Informed Indexing. There are MILLIONS of people who have an interest in finding a truly smart and truly simple and truly safe way to invest. They sided with you Goons even though their published rules prohibit your tactics because they do not understand the issues well enough. That’s a SECOND issue.
People need to know about the Goon phenomenon to make sense of why so few understand these issues today. There was a poster at the Bogleheads Forum who told me that “everything you say about investing makes perfect sense but this is my retirement money and I need to go with what the experts are saying and the experts are not saying what you are saying.” People need to understand why the experts don’t say what I say. It is because of you Goons. Not just the few of you who post here. It is because we ALL have gooninshness within us and our inner goon makes us hate research-based strategies. I need to talk about goonishness to explain to people why we achieved this great advance in 1981 and as a society have not yet elected to take advantage of what we have learned.
Buy-and-Hold is goonishness. ALL Get Rich Quick strategies appeal to us because they please our Inner Goon. Most of the RISK of stock investing is the product of our darn goonishness. That’s why Wade and I were able to show people how to reduce risk by nearly 70 percent. Stock investing risk comes from believing that it is not necessary to exercise price discipline when buying stocks. That is obviously nonsense. But our Inner Goon is DRAWN to GRQ strategies and thinking that it might not be necessary to exercise price discipline is about as GRQ as it gets.
We are ALL Goons to some extent, Anonymous. That includes me. I was a Buy-and-Holder once myself. I am human like all the rest. We are ALL flawed creatures.
We cannot make sense of the investing story without discussing our inner goonishness. You Goons take it to extremes. Most of us don’t advance death threats and all that sort of thing. You Goons are cartoonish about it. But you are not unique in your attraction to GRQ strategies. Looking at your behavior helps us Normals learn about our own weaknesses and about what we need to do to avoid falling into the traps that destroy our investing hopes.
So it is a mistake not to tell people about you Goons and your behavior, in my assessment. People HATE hearing about it. It makes people feel ashamed because they haven’t done more about the Goons problem and embarrassed for you Goons and for all the “experts” who have not spoken up about the problem. So talking about you Goons DOES present obstacles for me. The consultant is right about that aspect of the thing. But I believe that the Goon phenomenon is a critical part of this story and that the story cannot be told in the way it needs to be told without me addressing that part of it.
I believe that you Goons are humans underneath your Goon exterior. I believe that you would like to reduce risk dramatically and that you would like to receive much higher returns and become able to retire many years sooner. But you would like to do these things in the way that an alcoholic would like to stop drinking. You are addicted. GRQ strategies are highly addictive.
People who have been following Buy-and-Hold strategies for a good amount of time are embarrassed to be reminded of their failings and react negatively when told what the research says. It is not only you Goons who feel that way. Responsible people like Bogle and Bernstein and Swedroe feel that way. They are not true Goons; they don’t advance death threats when questioned about the merits of their strategies. But they feel SYMPATHY for you Goons. They don’t speak out in opposition to the use of death threats as a tactic for intimidating people into not posting honestly. They LIKE you Goons. They exhibit Goon Light behavior.
The experts who exhibit Goon Light behavior cause a bigger problem than you true Goons. They are respected and educated people. Normals have a hard time accepting that they could get so much so wrong. The explanation is that, as smart and experienced as these people are, they are subject to the same human weaknesses as all the rest of us.
This is an essential part of the story. I don’t feel that I can take a pass on telling this part of the story even if it would make me more popular in the short term to do so.
The mistake that the Buy-and-Holders made was to ignore investor emotion. You Goons are ALL emotion in your analysis of how stock investing works. We need as a society to come to understand that investor emotion is 80 percent of the stock investing story. We can draw lessons by looking at Goon behavior and analyzing where it comes from and what it signifies. So I do not feel comfortable trying to bypass that part of the story.
I can go along with not FOCUSING on that part of the story. Most of my guest blog entries and columns focus on non-Goon, substantive stuff. But I don’t believe that Valuation-Informed Indexing will entirely supplant Buy-and-Hold until we all come to appreciate the emotional side of the investing story and you Goons exemplify the emotional side of the story better than anything else available to us. Instead of me agreeing not to talk about the Goon phenomenon we need to get everyone else to take up talking about it. Your behavior shows that you lack confidence in Buy-and-Hold. A strategy must inspire confidence to work in the long run. Your Goon behavior is a substantive issue that all in this field should be exploring.
I hope that helps a bit, Anonymous.
Rob
I think that’s the problem – they were less than crazy.
Yeah, yeah.
Rob
If you took the stuff dealing with Goons off your site there would be nothing left for you to blog about each day.
It is a long time since you created any new content.
That’s not so.
The weekly column that I write at the Value Walk site rarely deals with the Goon phenomenon. 90 percent of those columns relate to matters of substance.
Plus, overcoming the Goon problem will bring in THOUSANDS of people who will be addressing substantive issues in an honest way for the first time. We all benefit from seeing honest posting by thousands of people rather than just from me. There is HUGE leverage in dealing with the Goon problem, Evidence.
I would rather write about substantive stuff. But it is not possible to make progress on substantive matters so long as so many of our fellow community members are afraid of what will happen to them if they post their sincere views. There are reasons why as a society we have adopted laws making financial fraud a felony. It is because we know how much such behavior hurts us all.
Rob
At a conference held specifically for people who own and operate blogs about Financial Matters, Rob claims: “one of the four said that it was his guess that my talk “sailed over the heads” of 90 percent of the people listening. I believe that that’s probably right.”
The only thing almost as bad as your mental illness is your hubris.
The hubris is on the other side, Yogi.
The Buy-and-Hold Model is rooted in a belief that changes in stock prices play out in the pattern of a random walk.
They do not.
They play out in the pattern of a random walk in the short term. They do NOT play out in the pattern of a random walk or anything even remotely close to it in the long term.
We have known this for 33 years. ALL of the peer-reviewed research shows this. There has never been one tiny sliver of peer-reviewed research supporting the core premise of the Buy-and-Hold Model (that price discipline is not as necessary when buying stocks as it is when buying anything else).
Eugene Fama made a mistake.
He didn’t check long-term timing because long-term timing was not a viable option for most investors at the time he did his research. Index funds were not widely available at the time. Now they are. Long-term timing became important in the mid-1970s and Shiller showed in 1981 that long-term timing ALWAYS works and is ALWAYS 100 percent required for investors hoping to have some realistic hope of long-term investing success.
We are the luckiest generation of investors ever to walk Planet Earth. As a result of Shiller’s “revolutionary”(his word) finding, we are the first generation of investors that can reduce the risk of stock investing by 70 percent while also increasing our returns by enough to permit us to retire five to ten years sooner than ever before imagined possible.
The Buy-and-Hold Mafia has for 12 years (it’s 33 years if you go back to the day when Shiller published his peer-reivewed research showing that there is precisely zero chance that a Buy-and-Hold strategy can ever work for a single long-term investor) blocked millions of investors from learning about the errors in the Buy-and-Hold Model. It is those who advance death threats to keep millions of middle-class investors from learning what they need to learn who are guilty of hubris. It is those who demand unjustified board bannings who are guilty of hubris. It is those who are guilty of tens of thousands of acts of defamation who are guilty of hubris. It is those who threaten to get academic researchers fired from their jobs who are guilty of hubris.
Fortunately, we have laws against financial fraud in this country. And there is every reason to believe that those laws will be enforced followed the next price crash.
It is probably true that my talk sailed over the heads of 90 percent of the people listening to it (while thrilling those with enough knowledge of the findings of the last 33 years of peer-reviewed research to grasp its importance). But I doubt very much that that will continue to be the case following the next price crash. Those people will be losing a good portion of their life savings in the next price crash. The will be angry. They will be motivated to find out what happened. This site provides a wealth of materials on the actions of the Wall Street Con Men and their Internet Goon Squads.
So things will work out in the end.
I wish we could have all pulled together on the afternoon of May 13, 2002, and done amazing things starting at that time. It was not my hubris that caused the 12-year delay. It was yours. There are Post Archives.
I naturally wish you all the best that this life has to offer a person regardless of what investing strategies you elect to pursue.
Rob
But the other side of the story is that you Goons could not hold us all back if knowledge of the implications of Shiller’s findings were strong enough and widespread enough that responsible people would take actions to rein you in. Motley Fool would LOVE to have a newsletter…
Sounds like you’re living in a world of “woulds” and “coulds” while the other dads are out providing for their families in the real world. No?
Rob, who were some of the blogger friends you had a chance to catch up with in Fincon?
Sounds like you’re living in a world of “woulds” and “coulds” while the other dads are out providing for their families in the real world. No?
That’s certainly not the way I see it. But I understand the point you are making. I don’t think that’s an entirely unreasonable way of putting it.
Back before we had kids, my wife and I used to go to a bed and breakfast for two nights on the weekend closest to New Year’s Day and write out our budget for the new year. On some categories, we would just carry over what we had from the year before. On some, we would add money. And on some we would subtract money. We obviously favored different categories (because different people have different interests). So we went through a process in which we held negotiations/discussions over what to do.
I remember one year where we were close to having all the numbers add up but we were still a little short. I think she wanted a little more money for the furniture category or something like that. She offered to give up that addition because we didn’t have enough money to make the numbers work out. I didn’t like that answer because I feel that she has a tendency to be willing to give things up for the sake of the budget and I believe that handling things in that way can make the budget-writing process seem like a chore to be avoided rather than a fun thing where you plan new life adventures. So I set my mind to trying to think up some other means of funding an addition in the furniture category.
She would have been willing to give up something in the vacation category. I didn’t want to do that because I think vacations are important. I was reluctant to give up anything in the savings category because I was counting the days until I would be able to leave my high-paying job. For a time we were stumped as to how to proceed.
Then it hit me. The income number we used in the budget was the combination of her salary and my salary. The reality was that I received a big raise every year in October (that was the beginning of the new fiscal year for Ernst & Young). I didn’t know exactly how big the raise was going to be. But I knew the range of possibilities. So I took the smallest amount of money that we would be receiving in those three months from the raise and suggested that we add it to our income for the upcoming calendar year and apply it to the monthly furniture category.
My wife did not like the idea of going along with that. In her mind it was “cheating.” She doesn’t count things as real unless she can hold them in her hand. The dollars that we were talking about were not yet in our hands. So for her that was out. But I pushed and eventually she went along with using those dollars before they were in our hands. My argument was that this was just an application of the accrual accounting concept. If we had had a debt we had had to pay in October, we certainly would have counted that in the negative column. This was money that was certainly going to be coming in. It was proper to count it in the positive column.
I’m living in a world in which the same ethical standards that apply in every other field of human endeavor apply in the investing advice field as well, Anonymous. That’s the world we are headed to in the not-too-distant future. I know that because I know that we simply have no choice. If we don’t make the move to that world, we all go down together. We are not a stupid people. When enough of us see that this crazy Ban on Honest Posting is taking us all down, enough of us to make a difference are going to work up the courage to speak out. My brain is not capable of imagining any other way it could play out.
It’s not me who is doing something odd here. It is you. And Linduaer. And Greaney. And Bogle. And even Shiller to an extent. It’s you guys who are holding back from talking about this huge breakthrough that we have achieved over the past 33 years. The normal thing would be to take advantage of peer-reviewed research that shows us all how to reduce the risk of stock investing by 70 percent. You are temporarily under a weird spell in which you see it as a bad thing to do that. I am doing what in normal circumstances would come natural to each and every one of us.
You should be asking yourself why so many good and smart people are doing this weird thing of denying themselves the benefits of the biggest advance in our understanding of how stock investing works ever achieved in our history. That’s the mystery here. That’s the big story.
They are doing this not because they think investing doesn’t matter. They are doing this because investing matters too much.
You believe in Buy-and-Hold, Anonymous. That part is not a lie. That part is not fraud. You truly believe (as do Bogle and all the others). If you were to say that you believe in Valuation-Informed Indexing, that would be as bad as me saying that I believe in Buy-and-Hold. That would be totally wrong and irresponsible. That is 100 percent out. You MUST say that you believe in Buy-and-Hold so long as that remains the case.
Where does that leave us?
It’s 90 percent of the population that believes in Buy-and-Hold today. So, if we were to do what Rob says and permit those who believe in Valuation-Informed Indexing to post honestly at every board and blog on the internet, what would happen? We would have 90 percent of the population saying one thing about how stock investing works and the other 10 percent of the population saying something entirely different.
In ordinary circumstances, this would not be a big deal. If I had some small difference with you, we would both accept that the other party had a different belief and that the other party was in all other respects a good guy and we would be friends and that would be that. The problem in this particular case is that the difference is over something HUGE. Someone who believed firmly in Buy-and-Hold would be recommending a 75 percent stock allocation today (Greaney’s study shows that 74 percent is the “optimal” stock allocation at all times). A firm Valuation-Informed Indexer would recommend 25 percent (20 percent for those with low risk tolerance and 30 percent for those with high risk tolerance). THAT’S A DIFFERENCE OF 50 PERCENTAGE POINTS OF STOCK ALLOCATION.
We’re not talking about who is going to win the World Series. We are talking about whether people are going to have enough to retire on or not. You (and Bogle and all the others) understand that it sounds really, really bad for the “experts” in this field to be saying “Oh, there is one school of academic thought that you should be at 75 percent stocks but please understand that there is another school of thought that says it should be 25 percent — You decide!”
That’s the core problem, Anonymous. The people who recommend Buy-and-Hold are not bad people and they are not dumb people. They are people caught in a trap brought about by the strange circumstances of our day. The Buy-and-Holders did an amazingly wonderful thing when they proposed that we all begin rooting our investment advice in the peer-reviewed research. They began a process in which investing advice will no longer be subjective but will become to a large extent objective. This is huge. This is the future. This is something that BOTH of us believe in.
The problem that the Buy-and-Hold Pioneers ran into is that they are human. The humans did not know it all back in the 1960s. When we are in the early days of building a new science (or quasi-science — that may be the best that we can ever do in this field), we are going to make mistakes. That’s what I believe happened here. The Buy-and-Holders felt very good about what they had come up with. They thought that they had figured this stuff out. And so they built careers around promotion of the model they had built. And then this Shiller fellow came along and messed everything up by proposing and showing support for a very different sort of model.
If all of this were of academic interest only, no one would care. There would be a Fama camp and a Shiller camp and there would be friendly arguments between the two camps but no real nastiness. There is nastiness in this case because the stakes are so high. If Fama is wrong, the people promoting Buy-and-Hold caused an economic crisis. Inadvertently. It wasn’t their INTENT to cause an economic crisis. But that’s what happened. And if Shiller is wrong, the people advocating Valuation-Informed Indexing are keeping people who listen to them out of a great asset class at a time when they should be heavily invested in that asset class and are thereby causing millions of failed retirements in a different sort of way.
I don’t want to destroy the lives of the people who read my stuff. That’s why I am so adamant on the point that I MUST post honestly. I might still destroy some lives because of my stupidity. But at least I will be able to say that I was HONEST. That’s something. That’s unfortunately the best that I can do in these circumstances.
You need to say what you believe too. The problem that we have is that Buy-and-Hold came first and so most people see that as the default position. People think: “If we are not sure, we should go with Buy-and-Hold because all the textbooks recommend Buy-and-Hold and 90 percent of the experts believe in Buy-and-Hold.”
That’s not entirely crazy.
But I have a big problem with what follows from that.
The big problem is that the new idea can never catch on if we all agree never to talk about it because it makes our readers feel uncomfortable to see that we are not sure of anything in these early days of our efforts to figure out how stock investing really works. So long as we all go along with the default and permit those on the Buy-and-Hold side to crush anyone who raises a dissenting voice, the popularity of Valuation-Informed Indexing can never grow.
I am a journalist. So the idea of permitting free speech is deep in my blood. I see censorship of new ideas as the ultimate tragedy. I cannot go along with the idea of using brutal intimidation tactics to stop a new idea (an idea put on the map by a guy who won a Nobel prize for his work!) from growing into a more popular idea.
I cannot go along with that, Anonymous. It can never be. It is not in me. You cannot make a dog meow and you cannot make a cat bark and you cannot make Rob Bennett post dishonestly on the numbers that his friends use to plan their retirements. That will never happen.
There are many things that I CAN go along with.
I can say that Jack Bogle is one of the giants in this field and always will be regardless of anything we come to learn in the future. I see that statement as being true. So I have zero problem making it.
I can say that Buy-and-Hold was a huge intellectual advance over what came before. I believe that and so I can say it.
I can say that the Buy-and-Holders are all smart people. I believe that and so I can say that.
I can say that the Buy-and-Holders are all good people. I believe that and so I can say that.
I can say that it is possible that I am wrong, that I have made mistakes in the past and that it is possible that that is happening again and that I would probably be the last to know if that were the case. I believe that and so I can say that.
I can’t say that the safe withdrawal rate is a constant number. I don’t believe that. I believe that it is a variable number, that the SWR depends on the valuation level that applies on the day the retirement begins. That’s what I believe. With people’s retirements at stake, that is what I have to say.
Yes, there is a sense in which I am living in a world of “woulds” and “coulds” and “shoulds.” I believe that we should be applying U.S. law and the rules of all of our boards and blogs to our discussions. Under U.S. law and under the rules of all of our boards and blogs, I am permitted to post my sincere views. I am acting as if that will someday really be the case even though that obviously is not the case today.
I love my country. Anonymous. In my country, that is the way it works.
It is the investing field that is out of whack here, not me.
I believe that the people of this country will pull the investing field into line with the norms of this great country following the next price crash, when everyone sees how much human misery has been brought on by our failure to apply the basic norms of life in the United States to this one field of human endeavor.
If you don’t believe that, you don’t believe that.
I believe that.
I have to play it the way that makes sense given my belief re this matter.
So there is nothing that we can do here except wait to see how it plays out following the crash.
You do not seem able to give and I do not seem able to give. I like you and, if you want to continue to offer comments here, you are warmly encouraged to do so. But I cannot change the human being that I am because you advance more intimidation tactics. I cannot wake up in the morning and be a different person than I have been for the first 57 years of my life on this planet.
I am the person I am. The person I am believes that Shiller’s work is true and important. I am a Valuation-Informed Indexer. I am not ashamed of it, I am proud of it. It is my intent to show that pride in this new model for understanding how stock investing works in every post I ever put forward. I have never given two seconds consideration to playing it any other way, Goon intimidation tactics be damned. It is impossible for me to imagine any circumstances (including the death penalty) in which I would give consideration to playing it some other way. They had a tag line for the Braveheart movie saying that: Everybody dies — Only a small number of us every truly live.” That line sums up how I feel re this matter. I would rather die than betray my readers and my family and my country. No can do.
Yes, I believe that we all will be Valuation-Informed Indexers at some point in the not-too-distant future. If you want to call that a “would” or a “could” or a “should,” I guess that’s fair. I cannot live any other way. I love my country and I need to act according to the norms that apply in that country to every field of human endeavor with the exception of stock investing.
I hope that helps a tiny bit, my old friend.
Rob
Rob, who were some of the blogger friends you had a chance to catch up with in Fincon?
1) I had several brief conversations with Phil Taylor, the guy who runs the conference. We didn’t talk about investing. We talked about how the conference was going and about the future of blogging.
2) I had several conversations with J.D. Roth and we have exchanged several e-mails since we got back. We did not talk about investing (except one time in a joking reference to my “troubles”). We talked about the Myers-Briggs personality assessment tool and whether J.D. is a Thinker or a Feeler.
3) Miranda Marquit interviewed me briefly for a podcast she was putting together. Non-investing question.
4) I spoke with Tom Drake. He has asked me to do something with my author profile at the “Out of Your Rut” site where they have about 100 entries for the “Beyond Buy-and-Hold” column I wrote there. I apologized for not having gotten around yet to the update he asked me to do. He also told me that the woman who started the Balance Junkie blog (Tom now owns it) is no longer making contributions to the blog. Her blog was my all-time favorite. So that made me sad. But Tom said that she and her husband are doing well in their new pursuits.
5) I had several conversations with Todd Tresidder about the changes he made in his recent site redesign.
6) J. Money said at the Ignite presentation that he doesn’t get P/E10.
7) I had a long conversation with the guy who writes Lazy Man and Money about our mutual friend, the woman who used to write Digarati Life.He told me that she has gotten out of blogging. That made me sad. But he said that she is happy with how things are going for her. That of course made me happy.
8) I spoke with Larry Ludwig at Investor Junkie about writing another Guest Blog Entry for his blog. He ran the interview that Miranda did with me some time back. His first reaction was that he had already posted something on Valuation-Informed Indexing. I said that I could write thousands of articles on the topic. He expressed an openness to considering another article but did not evidence a lot of enthusiasm re the idea.
9) I had dinner with a financial planner who is starting a blog. She talked about how she is limited in what she can say because of requirements placed on some financial planners to submit articles for review to their credentialing board. We talked about VII but also about her daughters and about the 60s (a subject that I am always trying to make sense out of).
10) I of course talked with the three financial planners sitting at my table at the investor community session. I didn’t get their names but I need to mention them because I profited from their feedback. I also profited from the feedback of the people who reported on what their tables came up with re VII.
11) I spoke with Ryan at Cash Money Life. I wrote a Guest Blog Entry for him a good number of years back. I spoke with him about him and me partnering to promote the VII concept at his blog. He was polite but not interested in pursuing this idea.
12) I spoke with Rob at Dough Roller about being interviewed on his podcast. He said that, if we did this, he would play the role of devil’s advocate. I of course said that that sounded fine.
13) I obviously spent some time talking with the four guys who came up to me following my Ignite presentation. One of them I is a financial freedom guy I had spoken to at a dinner session last year. Another was a new blogger. He asked for my card and said that he plans to be in touch with me.
14) I spoke with Crystal Stemberger (the spelling is probably wrong on that name), who puts together the Bootcamp sessions. We mostly talked about community interaction at her frugality site.
15) I talked with a woman for whom I wrote a Guest Blog Entry a number of years back. She has an app on paying off debt. We mostly talked about that.
16) I had a long conversation with a guy named Alan who is starting a new social media site for financial bloggers. I obviously wished him luck with it. I told him that I would certainly submit at least one article.
17) I made plans to meet for dinner with a guy who was involved in producing a film called “Broken Eggs” (about retirement). He got called away and could not make it. So we agreed to get together at FinCon15.
18) I talked with Joe Taxpayer. I asked him what field of engineering he would recommend that my boy Timothy pursue. He said electrical. He said that he likes his new job even though it pays less than the one he had before.
19) I had a super nice talk with a high school student who gave an Ignite presentation last year and came back to see the new presentations. She was nominated for a Plutus award for best blog for young people. I thought it took a lot of guts for her to do that presentation last year when she was only a junior in high school. It made me very happy to talk with her. I spoke with her mother a bit too.
20) I spoke with four or five of the other people who gave Ignite presentations about the process of putting together their talks.
I have no doubt left out a few conversations. But those are the ones that come to mind. I think I have hit most of the more important ones.
I hope that helps a bit.
Rob
A firm Valuation-Informed Indexer would recommend 25 percent (20 percent for those with low risk tolerance and 30 percent for those with high risk tolerance).
And as the world’s leading/only VII proponent, are you actually doing this? What’s your stock allocation?
And as the world’s leading/only VII proponent, are you actually doing this? What’s your stock allocation?
My stock allocation is zero, as you know, Anonymous.
You also know that my circumstances are different from those that apply for most investors.
My family is living on the earnings from our investments. In those circumstances, you have to go with an allocation at least 25 percent less stocks than the typical investor. Subtract 25 from 25 and you get zero. So that’s where I am.
Bogle agrees that those in my sorts of circumstances should be at a lower stock allocation than those in the accumulation stage. Do you say Bogle is a hypocrite when he says that?
Why do you bring this point up over and over again when you have known the answer to your question for 12 years now?
Does the fact that you feel a need to engage in such trickery not show that you lack confidence in your strategy?
It sure seems so to me. If you possessed inner confidence (not the fake, arrogant, bragging kind), you would never dream of engaging in such trickery. You do so because you are desperate. You want to defend Buy-and-Hold and you have not been able to find any peer-reviewed research supporting your position and so you engage in this sort of trickery.
EVERYONE should be talking about this. It is this sort of self-deception that makes Get Rich Quick strategies so addictive. Buy-and-Hold not only empties your portfolio. It rots your soul.
That’s my sincere take re these terribly important matters, in any event.
I naturally wish you all the best that this life has to offer a person.
Rob
My stock allocation is zero, as you know, Anonymous.
You also know that my circumstances are different from those that apply for most investors.
You seem to think there are “most investors” who have to stick to strict VII allocations…and then there’s you, who’s free to choose an allocation based on your unique circumstances and preferences.
In reality, everyone’s situation is unique, and different from “most investors”. Some folks can go with 0% stock allocations. Some can go with 100%.
What I say is that Buy-and-Hold (ignoring valuations when setting your stock allocation) NEVER works.
Exercising price discipline (tuning out the Get Rich Quickers who advocates Buy-and-Hold strategies) is the key to long-term success.
You always, always, always want to exercise price discipline.
You never, never, never want to follow a Buy-and-Hold strategy.
To fail to exercise price discipline dramatically INCREASES RISK while also dramatically DIMINISHING RETURNS.
Huh?
I’d rather aim to obtain good results.
I respect the Get Rich Quickers. But I certainly do not agree with them.
That’s my sincere take re these terribly important matters, in any event.
Rob
What I say is that Buy-and-Hold (ignoring valuations when setting your stock allocation) NEVER works.
Well of course the historical data, and the fact that millions of retirees report personally that buy and hold has worked for them, prove otherwise.
Exercising price discipline (tuning out the Get Rich Quickers who advocates Buy-and-Hold strategies) is the key to long-term success.
But holding a fixed 100% bond allocation has worked for you personally over the past almost 20 years, correct? Never making a single change due to valuations, correct?
Well of course the historical data, and the fact that millions of retirees report personally that buy and hold has worked for them, prove otherwise.
There is no data that supports the idea of failing to exercise price discipline when buying stocks, Anonymous. Wade Pfau researched this question carefully and he found that there is precisely zero data supporting this idea. He was so surprised that he checked by going to the Bogleheads Forum to see if anyone there knew of any data showing this. No one did. Not Jack Bogle. Not Bill Bernstein. Not Larry Swedroe. Not Rich Ferri. No one. No such data exists.
You are right that there are retirees who would SAY that Buy-and-Hold has worked for them. But it’s not so. Those people have never run the numbers.
An easy way to run the numbers is to use The Investor’s Scenario Surfer. I have run it hundreds and hundreds of times. It does NOT support what you are saying.
Buy-and-Hold ALWAYS dramatically reduces returns over 30-year time-periods. The VII portfolio usually ends up hundreds of thousands of dollars ahead. There are some cases in which the VII portfolio ended up being DOUBLE the size of any of the Buy-and-Hold portfolios. That’s unusual. But I have seen cases where that was so.
Please note that in about 10 cases of the runs you do with the calculator one of the Buy-and-Hold portfolios (usually it’s the 80 percent stocks portfolio) will beat VII. That DOES happen. But the risk associated with following a strategy that only produces good numbers in one out of ten possible scenarios is obviously much higher than the risk associated with a strategy that produces better numbers in nine out of ten possible scenarios. So it is fair to say that the VII strategy ALWAYS wins on a RISK-ADJUSTED basis.
Wade checked the calculator and also did tests of his own not using the calculator. He confirmed everything I am saying here.
You Goons responded by threatening to send defamatory e-mails to Wade’s employer in an effort to get him fired from his job if he continued doing honest research. That shows how concerned you Goons are about learning the truth re these matters.
I have sent three e-mails to Jack Bogle letting him know about the actions of you Goons and asking his help with the matter. Jack has not responded. That shows how concerned Jack Bogle is about learning the truth re these matters.
Buy-and-Hold NEVER works. It has never worked once in 140 years. Yet the Wall Street Con Men push it down people’s throats relentlessly. GRQ strategies never work. But they sure do sell. Most of the Wall Street Con Men are very. very rich men. But millions of middle-class workers are unemployed because of the economic crisis they brought on with their lies. And millions more are on their way to suffering failed retirements.
Not this boy.
Please try to find somebody else.
Rob
But holding a fixed 100% bond allocation has worked for you personally over the past almost 20 years, correct? Never making a single change due to valuations, correct?
VII has worked well for me for 18 years.
I have never made an allocation change in that time.
I am ahead today. I will go much farther ahead following the next price crash. And then of course I will enjoy compounding returns on the differential for decades to come. All signs are that I will end up many thousands of dollars ahead at the end of my investing lifetime.
That’s how Valuation-Informed Indexing works, Anonymous. It’s for long-term investors only. It often puts you BEHIND Buy-and-Holders for 10 years or even longer. But it ALWAYS puts you ahead on a risk-adjusted basis in the long-term. ALWAYS.
Practicing price discipline when buying stocks is a win/win/win/win/win. It is not even possible for the rational human mind to imagine any possible downside.
That’s for the investor.
For the person giving investing advice, there is a HUGE downside. Those pushing Get Rich Quick strategies (the Buy-and-Holders) HATE those telling people what the last 33 years of peer-reviewed research says. They hate them with a burning passion and will use their considerable money and power and influence to destroy their careers.
You know what?
I tell the truth anyway.
One reason is that I care about the millions of middle-class investors who are in the process of seeing their lives destroyed. The other is that I feel great affection and respect for my many Buy-and-Hold friends. I know that most of them (all of them?) would like to join me in telling the truth about what the last 33 years of peer-reviewed research says and feel trapped by the lies and mistakes of the past.
Buy-and-Hold is dead. It has been dead intellectually for 33 years now. You do no one (least of all yourself) any favors by pretending otherwise.
That’s my sincere take re these terribly important matters, in any event.
I naturally wish you the best of luck in all your future life endeavors.
Rob
There is no data that supports the idea of failing to exercise price discipline when buying stocks, Anonymous.
Well, do you agree that an investor with a 100% US stock allocation and no changes for valuations has received about a 10% annual return – enough for anyone’s investment plan to “work” – since 1926? Simple question.
The question is not as simple as you are making it out to be, Anonymous.
I certainly agree that the market has delivered that return.
If I am forced to give a one-word answer to your question, it is “yes.”
But, if you cared about learning and teaching how to invest effectively, you would not demand a one-word answer.
Here’s my “simple”question to you: Do you agree that the risk of investing in the stock market increases with increases in valuations and that therefore it is impossible to maintain the proper risk profile if you are unwilling to change your stock allocation in response to big shifts in valuation levels? Yes or no?
Stock investing is too important a matter for us to be reducing each other to giving one-word answers to “simple” questions.
The Buy-and-Holders made great contributions. Amazing contributions.
Why ruin it with lies that destroy millions of people’s lives?
Do any of you really believe that that is a good idea?
You are trapped. I am trying to help you out of your trap.
What a mean, mean man I am!
Rob