Set forth below is the text of a comment that I recently posted to another blog entry at this site:
You say there’s a mafia intimidating thousands of people. This can’t be ignorance. It has to be people doing something somewhere.
It’s mostly ignorance. There are people doing things to perpetuate the ignorance, that much is fair to say. But ignorance is the driver here. The people who are engaging in corrupt and fraudulent acts do not appreciate the full extent of the harm they are doing. They are ignorant of how much harm they are causing.
We did not possess full knowledge of how stock investing works until Shiller published his breakthrough research in 1981. Had the Stock-Selling Industry not already spent millions of dollars promoting Buy-and-Hold strategies, that research would today be universally regarded as the biggest advance ever achieved in personal finance. But that’s not the way it played out. The industry HAD already spent millions promoting Buy-and-Hold, the OPPOSITE of what works, according to Shiller’s breakthrough research. Thousands of people in this field felt that keeping their high-paying jobs meant keeping millions of middle-class investors in the dark about how stock investing really works. If word got out re what the research says, they would not be viewed as “experts” since they have gotten it wrong for a long, long time.
We have lots of multi-millionaire “experts” putting their self-interest above the needs of their clients and readers. Is it really so hard to believe what has happened? Humans are weak. Tempt a plumber with a million dollars for selling out his clients and he might take that dark path as well. Lots of us would engage in corrupt acts if we could get away with it.
The difference in this field is that there is so much money in it. The Wall Street Con Men have lots of money and lots of power and lots of connections. They can get away with things that people in no other field can get away with, and for far longer time-periods.Many of these people have consciences. They WANT to tell the truth. They would LOVE to be able to tell the truth. They HINT at the truth all the time. But they don’t dare to tell the truth in plain and simple and blunt language. They have seen what has happened to other people who have tried to do this and they want no part of “the treatment” that the Buy-and-Hold Mafia visits on people who “cross” them by putting their clients or readers first and the cover-up of the massive corruption in this field second.
People engage in corrupt acts every day of the week. So, yes, there are “people doing something.” It doesn’t necessarily follow that they possess a full knowledge of what they are doing.
The Wall Street Con Men and the members of their Internet Goon Squads are not convinced that Buy-and-Hold cannot work. They see the holes in the concept. They become insanely defensive when challenged as to their claims that Buy-and-Hold is supported by research. But they have never spent much time exploring the principles of Valuation-Informed Indexing. They prefer to remain in the dark; it makes it easier for them to live with themselves if they don’t know just how dangerous Buy-and-Hold strategies are. So they don’t know.
They tell themselves that maybe Buy-and-Hold is not perfect but that it may work all the same. They tell themselves that, despite whatever flaws there may be in the Buy-and-Hold concept, it may work well enough. They tell themselves there is nothing better (while making sure to keep themselves in the dark re the research-based strategies that really are far superior).
Is that a conspiracy?
It’s not like a conspiracy in which the people responsible for the conspiracy are stealing a million dollars from someone. In that sort of conspiracy, the ones engaging in the conspiracy know precisely what they are stealing and precisely from whom they are stealing it. In this case, the people engaging in trickery do not know how much financial ruin they are causing because they do not want to know. And they are causing financial ruin to themselves as well as to millions of others. The Buy-and-Hold advocates follow Buy-and-Hold strategies themselves. They are ruining themselves while they ruin their clients and readers and million of middle-class investors who need to know how stock investing really works to be able to finance their retirements effectively.
This is a Conspiracy of Ignorance. We learned something very important when Shiller published his “revolutionary” (his word) 1981 research. But we haven’t as a society benefitted from that learning experience because the Wall Street Con Men and their Internet Goon Squads have made sure that the penalty for telling the truth about what the last 33 years of peer-reviewed research in this field tells us about how stock investing works is so great that no one making a living in the field will dare to tell the truth in the simple and plain and clear language that millions of middle-class investors need to hear to make sense of things.
Many, many people in this field long to tell the truth.
But we are going to have to decide as a society that we will stop threatening to kill their loved ones before they will work up the courage to use their talents to help us understand what we all need to understand rather than to keep shoving the long-discredited but oh-so-profitable Buy-and-Hold garbage down all our throats. I say that we should give all these smart and good and hard-working and generous people — and ourselves! — a break and open up every investing board and blog on the internet to honest posting on the last 33 years of peer-reviewed research.
That’s my sincere take re these terribly important matters, in any event.