Set forth below is the text of a comment that I recently posted to another blog entry at this site:
You don’t get to force people to change studies they may have done, even if you feel a variable could be included that wasn’t.
That’s not how it works in any field of endeavor other than stock investing, Anonymous.
If the tobacco companies tried putting out a study showing that smoking four packs of cigarettes a day adds ten years to life expectancy, you would see an uproar that would force them to acknowledge that the study is pure b.s.
In future days, that’s how it will work in the investing advice field too. Humans possess a deep need to evidence ethical behavior. That’s true of people working in this field as much as it is of people working in other fields.
In fact, I believe that one of the reasons why the reactions we have seen from you Goons are so intense is that it causes you pain NOT to act ethically. You don’t want to abandon Buy-and-Hold. And you have no effective response to the 33 years of peer-reviewed research showing that there is zero chance that it could ever work for even a single investor. So you feel that you have no choice but to behave unethically. But you don’t like the idea of people seeing that. So you demand that honest posting on the last three decades of research be banned. I obviously don’t approve of this “solution” to your problem. But I think in fairness it should be said that it shows that there is a desire somewhere deep within you to be seen as ethical. That reality will help us all bring this to a resolution somewhere down the road a bit.
I cannot force anybody to do anything, Anonymous. We certainly agree on that limited point. But I can expose the corruption in a field in which errors in retirement studies become public knowledge and those studies remain uncorrected for 12 years, no? That’s not me, Rob Bennett, forcing something by myself. It is an entire society taking action to demand that one field of human endeavor — the investing advice field — adhere to the same ethical standards as every other field in our society.
That’s a big deal. Once we have investing advisors adhering to the same ethical standards as people who work in every other field, Buy-and-Hold is finished. It’s been hanging on only because the Wall Street Con Men have had enough money and power and influence to make this field an exception to the usual rules for a time. I think it would be fair to say that those days are coming to an end. The house of cards is in the process of toppling to the ground. We are going to see reasonable ethical standards apply in this field.
And you know what? It’s going to be people WITHIN the field who are going to end up leading the effort. I have seen LOTS of evidence of that during the first 12 years. MOST people in this field want to feel free to honor minimal ethical standards. And so that’s how it is going to be.
I hope that, when as a society we bring about that change, you won’t feel that you are being “forced” to correct those darn Old School SWR studies.
And you’ve already agreed with my statement that most folks are just like you – informed about Valuations, and making personal decisions about whether or not to modify their allocations based on them.
I don’t AT ALL agree that people are adequately informed. For people to become informed, we need to permit honest posting on every board and blog on the internet.
I agree that people accept that valuations matter.
The problem today is that the Buy-and-Holders will not permit the effect of valuations to be quantified. Most people have NO IDEA how big the valuations effect is.
The perfect illustration of this is Bogle’s claim that there is no need for investors to lower their stock allocations by more than 15 percentage points even when valuations are insanely high. That’s not even close to being right. There’s never been a more dangerous statement put forward in the history of personal finance. That statement is in the process of causing MILLIONS of people to suffer failed retirements. It has caused a mountain of human misery.
Why don’t journalists call out Old Saint Jack on that statement on a daily basis?
Why don’t policymakers give speeches demanding that he either offer research-based support for a statement that is destroying our economic system or stop making the foolish and irresponsible statement?
Why don’t academic researchers declare their freedom from the dictates of the Buy-and-Hold Mafia by publishing peer-reviewed study after peer-reviewed study showing the reality that a percentage change of 60 percent is needed when prices reach insanely dangerous levels?
They are all afraid.
And they are ashamed of being afraid.
So they tell themselves that this is not such a big deal, that we will somehow struggle along with Big Shots like Bogle offering loony tune numbers that he pulled out of his backside.
But we won’t. Bogle HURTS people by offering loony tune numbers that he pulled out of his backside.
And he hurts HIMSELF too.
We will work up the courage to react appropriately to such dangerous claims. Because as a society we have no other realistic options.
And then you will see Rob Bennett doing everything in his power to help people understand WHY my good friend Jack behaved so poorly for so long a time. Because we must have healing to get to all the exciting stuff on the other side of The Big Black Mountain.
Before the healing comes the truth telling. That’s the priority today. But healing will be a priority in Stage Two of this process.
At any rate, people are NOT informed. People are afraid. People are ashamed. And they are afraid and ashamed because they are NOT informed. Their common sense tells them that valuations MUST matter. But they have for 33 years not been able to bring their intellects into alignment with their common sense because the Buy-and-Holders have been so brutal in their use of intimidation tactics to keep the findings of the last 33 years of peer-reviewed research covered up.
People WILL become informed. That’s my “agenda,” as you call it.
It’s going to happen. It is well on its way to happening. We have done amazing things over the first 12 years of our discussions. But it is not time to declare victory just yet. Not every battle has been won as of this morning.
Give it time.
My best wishes to you, old friend.