Set forth below is the text of a comment that I recently put to another blog entry at this site:
Rob,
You know that most don’t agree with your comments, but let’s put that aside. Bottom line, what is it you want? Is it simply for people to suck it up and bear with your posts and allow you back on the boards?
The fact that the majority of today’s investors do not follow Valuation-Informed Indexing strategies does not have to be viewed as a bad thing. From one way of looking at it, it can even be viewed as a very, very good thing.
Valuation-Informed Indexing is the first true research-based strategy. It is backed by 33 years of peer-reviewed research. It reduces risk by 70 percent. It increases returns by enough to permit those investors who follow it to retire five to ten years sooner. It puts an end to the economic crises that are caused by the boom/bust cycle that inevitably follows from promotion of Buy-and-Hold strategies. So the transition from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance that we have seen in the history of personal finance. It will make us all much richer (in every sense of the word) people.
If there were only a few people who did not know about Valuation-Informed Indexing today, we would want to spread the word for the benefit of those few. But, given that most of today’s investors do NOT understand the implications of the peer-reviewed research of the past 33 years presents us with a huge opportunity. We will not be helping out 10 percent or 20 percent of the population when we open the internet to honest posting on SWRs and scores of other critically important investment-related topics. We will be helping out 80 percent or 90 percent of the population. The opportunity presented here is off-the-charts exciting.
There are some who will indeed have to “suck it up and bear with my posts,” as you put it. That’s certainly true of you Goons. It is also true of some others who feel pain when they see evidence presented that they have made mistakes in choosing their investing strategies. It’s a small percentage of the board population that feels that way, but there are indeed people in this category. Yes, those people have to suck it up. They agreed to tolerate the expression of a variety of viewpoints when they were granted the ability to post at our boards and blogs. They are going to have to honor the promises they made when they were granted posting privileges or find some other internet to which to direct their posts. We have rules on this one and we need to insist that those rules be respected.
The majority of community members are in a middle ground. They don’t fully understand or believe in Valuation-Informed Indexing. So they are not willing to fight for the right to hear about it. But they have zero problem with the idea of permitting people who want to hear about it to do so. The majority of our community members are NOT Goons. They are not Valuation-Informed Indexers. But they have no problem with the idea of others learning about it and in many cases they have a small interest in learning about it themselves so long as the threads in which they do so are moderated in a reasonable manner and they don’t see the death threats and the demands for unjustified board bannings and the tens of the thousands of acts of defamation and the threats to get academic researchers fired from their jobs that you Goons have been using to poison those threads for 12 years now.
Getting back on the boards with my right to post honestly re the last 33 years of peer-reviewed research respected is the first step on the path forward, not the last, Anonymous. Yes, of course I want that. And of course I demand that. And of course I insist on that. But please don’t think that that is the end goal. That is what we need to see for progress on all the other follow-up goals to be achieved.
I am happy to list follow-up goals if that helps. My guess is that you could imagine what they are. Or you could listen to the RobCast (#193 — My Vision) that I recorded on this topic:
http://www.passionsaving.com/personal-finance-podcasts-page-twenty-five.html
What I want is what I call “Normalcy.” I don’t want to see any invective from any poster, regardless of which “side” he or she is on. I put the word in quotes because I do not believe that there are any “sides” in a final, true sense. We all want the same thing — to learn how to invest effectively. The Buy-and-Holders need what the Valuation-Informed Indexers bring to the table and the Valuation-Informed Indexers need what the Buy-and-Holders bring to the table. We should be enjoying our good fortune in having been born the luckiest generation of stock investors ever to walk Planet Earth rather than quarreling over whether honest posting on what the peer-reviewed research says should be permitted on our boards or not. We should be going up, up, up, up, up rather than down, down, down, down, down.
What I most want to see is a change in attitude among the Buy-and-Holders. For the first 12 years, the attitude has been: “We have got to make the Valuation-Informed Indexer as uncomfortable as possible, we want them to leave the premises before they win converts and their new ideas begin to catch on in a big way.”
Yuck.
I WANT the new ideas to win converts. I WANT the new ideas to catch on. This is why I say that, for the first 12 years, you Goons and I have been working at cross purposes. I think that is unfortunate. I think it is unnecessary. And I don’t believe that we will have successful interactions until that basic attitude conflict changes.
Are you open to learning new things about how stock investing works?
If you are, I cannot imagine that we will not be able to work together to make everyone happy about the new arrangements.
If you are not, I cannot imagine that will will be able to work together to make everyone happy about the new arrangements.
We have to have that attitude change. We do NOT want anyone to say they believe in things they don’t really believe in. If you believe that the odds of a Valuation-Informed Indexing strategy producing good results are zero, you not only have a right to say so but a duty to say so. But even if you think the odds are zero, you should be happy that there are people in our community willing to argue the case for VII as effectively as they can. Those people add something important to the community discussions and those people must be respected and admired for their contributions. In the event that Buy-and-Hold really is the cat’s pajamas, those people help community members to see that by putting so much effort into making the case for the other side (and failing — which is what they will do in the event that Buy-and-Hold really is the cat’s pajamas and is not just imagined to be so by many of today’s investors).
My ultimate goals are very, very, very ambitious, Anonymous. I want to convert the entire world to Valuation-Informed Indexing. I want to get all the textbooks rewritten. I want to see a Nobel prize awarded to Wade Pfau and I want to see hundreds of academic researchers follow in his footsteps. I want to restore people’s confidence in our economic and political systems. I want to make Jack Bogle and Robert Shiller more famous and more loved and more wealthy than they have ever been before and make myself a good bit famous and loved and wealthy in the process.
But none of that is terribly important at this stage of the proceedings, in my assessment. What matters today is that I want to add to the value of every investing discussion board and blog on the internet in a big way by working WITH my Buy-and-Hold friends to enhance the world’s knowledge of how investing works.
Do you see?
I cannot contribute by arguing for Buy-and-Hold because I do not believe in Buy-and-Hold. If your idea of the purpose of the boards is to spread support for Buy-and-Hold, I don’t belong.
I don’t see that as the purpose. I see the purpose as spreading KNOWLEDGE whether the knowledge that is spread happens to count in favor of Buy-and-Hold or against it. Telling people about the implications of the last 33 years of peer-reviewed research obviously spreads knowledge in an important way. So that’s the direction to which I want to direct my energies.
I want to see us all Learning Together. That’s the short version of the story.
I believe that our wonderful Learning Together project will ultimately take us all to some amazing places. But talking about those places is better put off for later. Once we all see how wonderful the change is when we make the change we need to make, we will ALL be looking forward to our journeys to those amazing places. Today, we need to work up the courage to take the first magic step. The first magic step is adopting an ATTITUDE that is conducive to learning experiences.
That first step has proven difficult for us. The follow-up steps will prove a lot less so. I am sure.
I hope that helps a bit, old friend.
Rob
Anonymous says
What is some group of investors decided to go with VII or let’s say a couple mutual funds were set up with the VII strategy, yet you were not given and credit for it, had no game from it and made no money from it. Would you be okay with that?
Rob says
That’s a weird question, Anonymous. The suggestion is that this entire 12-year Campaign of Terror is an exercise in envy. You were taken in by the Buy-and-Hold mumbo jumbo and you will be darned if I am going to get credit for knowing things about how stock investing works that you did not know.
It’s not possible for me to imagine a reason why I wouldn’t be given credit in the scenario you describe. I have been the lead developer and the lead promoter of the Valuation-Informed Indexing concept for 12 years now. Why would I not get credit?
Say that there was some person who wanted to steal the credit and that that is why he would not give me credit. That would be a dumb move on his part, no? The materials at this site offer a mountain of support for the concept. By teaming up with me, this person gains instant credibility. He could point to the hundreds of people (some of them the biggest names in this field) who have already endorsed the VII concept and who have applauded my role in developing it. Why would he not want to take advantage of that?
Say that there is someone really dumb out there who would elect to play it that way regardless. Would that hurt me? It would not. Anyone who brings attention to what the last 33 years of peer-reviewed research says helps me. There are a lot of bloggers who are interested in writing more about the VII concept but who want to see others endorse it to have the confidence to go forward. If some new fellow pushes the idea, that is going to open the door for me at hundreds of places on the internet.
People are going to want calculators to help implement this new concept and I have them. People are going to want to know how the Wall Street Con Men kept the cover-up going for so long and I have the articles explaining what happened. People are going to want podcasts and I have them. People are going to want articles exploring every facet of the new model and I have hundreds and hundreds of them.
What I am “okay” with is getting the word out to millions of middle-class investors re how stock investing works in the real world. Anything that does that helps me. Anything that holds people back from learning about the last 33 years of peer-reviewed research helps me.
I am seeking the amount of credit to which I am entitled, nothing more and nothing less. That’s as it should be.
Guess what? It is my intent to give credit to lots of others because lots of others are also entitled to lots of credit re these breakthrough findings. Shiller has played a huge role. Bogle has played a huge role. John Walter Russell has played a huge role. Wade Pfau has played a huge role. Bernstein has played a big role. Burns has played a big role. The Trinity Study authors have played a big role.
Keep your hat on for this next one…
You Goons have played a positive role in a good number of respects. You obviously have hurt us all in a big way with your abusive stuff. But you also have made good points in a large number of your posts. That stuff helps. That is stuff for which I intend to give you CREDIT.
The transition from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance in this history of personal finance. There is a mountain of credit to go around. I am going to spread the credit around as widely as I possibly can. Because it is the right thing to do. Because it feels good to do that. Because the people who share credit for this wonderful advance are friends of mine. Because we are all on the same side and we are all working for the same things.
Does that work for you, Anonymous?
Rob
x says
Let’s say someone wanted to start a VII fund. Of course a fund has to disclose exactly what it holds and in what percentages. So when the fund manager asks you what to buy in this market, your answer will be?
Pretty sure it will include “consider the price”, “goons in prison”, “33 years of peer-reviewed research”, etc. but nothing remotely resembling an answer to his question.
Rob says
Saying that there will be one fund that will consider price when setting its stock allocation is like saying that there will be one car that will have an engine. Now that we have 33 years of peer-reviewed research showing that valuations affect long-term returns, why not have EVERY fund take this reality into consideration?
The problem that fund managers have doing this today is that valuation-informed strategies are long-term strategies. If there is only one fund manager following the research-based approach, there may well come a time when he will fall behind his peers for a few years and take a hit from a marketing perspective.
The problem is solved if we open the internet to honest posting. Then the fund manager can point to the research showing how much earlier those who follow research-based strategies can retire and the marketing edge shifts to HIM. Once the marketing edge shifts, EVERY fund manager will follow a research-based approach.
Say that you owned a restaurant in 1960 and you knew about research showing that smoking causes cancer and so you prohibited smoking in your restaurant. You might well have been put out of business. Why? Because all your competitors permitted smoking. The people who wanted to smoke would avoid your place. And the people who would have seen the benefit of avoiding smoke if the research showing the connection between smoking and cancer were well-promoted would not know about that research because it had not be publicized.
Today no restaurant owner worries about what will happen to him if he prohibits smoking. Everyone knows about the connection between smoking and cancer. The Tobacco Industry Con Men were not powerful enough to keep the millions of people who they were killing with their product from learning the realities.
Buy-and-Hold is now in the process of killing millions of middle-class portfolios. As the human misery spreads, more people will come to suspect that they are the suckers in this massive act of financial fraud. We will all join together to see that you Goons are sent to prison. Then we don’t have to worry about anyone pretending that there is some mystical, magical research supporting the Buy-and-Hold Lies. Who the heck is going to want to get involved in a con that is getting its promoters sent to prison?
Do you see?
Maybe you struggle to see an answer to your question in those words today, X. I have a funny feeling that your reading comprehension skills will shoot through the roof once your prison sentence is announced.
But we’ll see.
Fair enough?
Rob
x says
Just as expected, the father of VII can’t explain even generally how to construct a VII mutual fund. Which proves that VII is not a strategy at all. It’s nothing more than a vague nebulous concept, which somehow has fixated your attention lo these many years.
Rob says
I disagree, X.
It shows that it’s not a marketing gimmick.
One of the many important things that I learned about stock investing from my good friend Jack Bogle is that a lot of funds are just money-making things. That is, they make money for the fund manager, not for the middle-class people who invest in the fund.
Jack was as frequently ridiculed in his day as I am by you Goons today. He thought that index funds were a good idea. “How UnAmerican!” the Goons of his day exclaimed.
The test of investing advice is not whether the Wall Street Con Men can figure out how to turn a smelly buck from it or not. The test is whether the advice is backed by the peer-reviewed research.
Valuation-Informed Indexing is backed by the peer-reviewed research.
Hence the opposition of the Wall Street Con Men and their Internet Goon Squads.
Rob
Anonymous says
I agree with X, Rob. I don’t see an answer in your response. Maybe if the question was rephrased, that would help.
Let’s say that you are the manager of this fund. Let’s say someone today said, Rob, what are the currently holdings in your fund on a percentage basis. What percent would you have in stocks, bonds, cash, etc.?
Rob says
If I were the fund manager, I would be at 70 percent TIPS that would be paying 4.0 percent real because I would have purchased them when they were offering that return — in real life, I bought at 3.5 percent real but if I were a fund manager I think I would have had the resources I would have needed to pull the trigger sooner — and would have the remaining 30 percent in a broad U.S. index fund. This is the same as my personal allocation except that the equity portion is 30 percent higher because the typical investor has different life goals than I do and is facing different circumstances than I am.
I would have been at that 70/30 allocation going back to January 1996. TIPS paying 4 percent real were not available at that time. But five-year CDs paying 4 percent real were available. I would have gone with those until the TIPS paying 4 percent real became available. I hope this would be a low-load fund!
From January 1975 through January 1996, I would have been at 80 percent stocks, 20 percent long-term CDs (the aim would be at all times to obtain the highest low-risk real return available for the non-stock portion of the portfolio).
But there are many different VII strategies. Different fund managers would follow different strategies. VII is not a single strategy. It is a model for understanding how stock investing works. Many strategies can be developed and adopted under this model.
I would advise investors to avoid the fees associated with being in a fund. This is easy enough for investors to do themselves and it is important for investors to understand why they hold what they hold so that they will stick with the plan for the long run. As a general rule., I am not a fan of mutual funds (other than low-cost broad index funds). There are probably some that work well for sophisticated investors. But I don’t write for sophisticated investors. So I don’t follow that side of things.
That said, I don’t strongly oppose the idea of someone setting up a fund. I can imagine that there are some people who would only be willing to do this through a fund. If that’s the reality, that’s the reality. Having a fund could help from a marketing perspective.
Rob
x says
“If I were the fund manager, I would be at 70 percent TIPS that would be paying 4.0 percent real because I would have purchased them when they were offering that return”
So you’ll just hop in your time machine. Now there’s a serious answer. In that case Biff Tannen, you should just jump through the years and bet on all the Super Bowls.
Rob says
When TIPS became available at 4 percent real, I was very excited about the long-term investing opportunity being offered. I had numerous conversations about it with my friend Brian at Ernst and Young. The only thing that held me back for a time was that I didn’t see articles in every newspaper and investing magazine urging people to buy those TIPS before they were no longer available. Instead, they were pushing stocks! (stocks were at the most insanely overpriced selling points that they have ever been offered in U.S. history!). When the TIPS rate started to fall, I said “this is crazy” and went ahead and bought.
If I were a fund manager, I would have had lots of smart people to talk to about this sort of thing. I would have bought at 4.0 real.
Rob
Rob says
You could have had that opportunity available to you, X.
If the Wall Street Con Men permitted academic researchers to publish honest and accurate research, there would have been hundreds of studies available to you at the time that would have helped you rather than enticed you into betting your retirement money on a Get Rich Quick scheme.
Also, if the Wall Street Con Men permitted investing magazines to publish honest articles on what the peer-reviewed research says, you would have known all along what you needed to know long before you heard it from me.
It is the Wall Street Con Men and their Internet Goon Squads to whom you should be directing your anger, not me. I have been telling you the straight peer-reviewed story going back to Day One.
Rob
Anonymous says
By teaming up with me, this person gains instant credibility.
The self described “most hated person on the internet”, you mean. Yeah, I’m sure that would be great for business…
Rob says
The self described “most hated person on the internet”, you mean. Yeah, I’m sure that would be great for business…
Are there people who make a business helping people understand how to avoid credit-card debt, Anonymous?
There are.
People who work in the saving area do that all the time. There are con men who tell people how cool it would be to max out their credit cards and to enjoy all the stuff they could put in their closet by doing so. But there are also people who make a good living warning people of the DANGERS of ignoring the long-term effects of taking on insane amounts of debt.
So it can be on the investing side as well. There is a Get Rich Quick urge residing within all of us. Common sense ALSO resides within all of us. There is a market for investing advice that is honest and research-based and rooted in common sense.
I really was the most hated posted on the internet for a time. I am not quite that today. But I think it would be fair to say that I am not the most popular kid on the block even today. So, yes, there is a marketing negative associated with telling the truth about stock investing. There is an extent to which the point you make here is entirely true. And, yes, that is exactly what lots of people in this field are worried about. They don’t tell the full truth because they want to make a buck and they know that they will be hated or at least not liked all that much if they tell the full truth.
But it is not as simple as that. That’s not the entire story.
A person can be both hated and loved at the same time. I am hated. But I am also loved. Take a look at the hundreds of comments made in praise of my work that are set forth at the slider at the top of every page at this site. I never could have earned one-tenth of the praise that I have won by playing it safe and just regurgitating the same lies that all the “experts” in this field tell people. If I did that, I would be one in a million people all doing the same thing. People might like what they heard. But they wouldn’t be able to say that I had done anything special for them. So I wouldn’t be able to build a business around what I had done. Telling the truth makes me special. Those who love me love me a LOT. I CAN build a business around that.
And then there’s the question of how things will change when prices crash again. Every Buy-and-Holder knows somewhere deep in his heart that the investing strategy he is following is b.s. I can show this objectively. There is a Ban onHonest Posting on investing issues on the internet today. If there were even one Buy-and-Holder who possessed a high level of confidence in his investing strategy, that person would be speaking out in opposition to the ban. He would be embarrassed by it just as I would be embarrassed if I saw any Valuation-Informed Indexing advocates employ the abusive tactics that are employed by Buy-and-Holders on a daily basis.
Do you hear anyone other than me (and I sure ain’t a Buy-and-Holder!) speaking out? There’s no one who follows a Buy-and-Hold strategy who has enough confidence and self-respect to speak out. Is that not strange?
It’s strange as all get-out. Not all Buy-and-Holders are Goons like you. Most Buy-and-Holders are fair-minded people. Many of those quotes on that slider up above came from Buy-and-Holders. So there are Buy-and-Holders who kinda sorta try to kinda sorta speak out. Carl Richards said that my stuff was of huge importance before he banned me. Wade Pfau said that Valuation-Informed Indexing always works and is a huge advance and that I was the person who developed the concept to a greater extent than anyone who ever came before me. Mike Piper said that it looked to him like Valuation-Informed Indexing might be a winner. Todd Tresidder said that I was the person who discovered the errors in the Old School safe withdrawal rate studies.
So there are many good and smart people who see how important this is and how important my role has been. But still… You don’t see them posting at this site, right? You Goons point that out all the time. They are not here. They are not telling their readers about the Ban on Honest Posting. They are for the most part keeping it zipped.
That’s part of the story being told here. That’s part of human nature., There is a Social Taboo against telling the truth about stock investing once prices reach insanely dangerous levels. People don’t do it. Even kind people. Even smart people.
They want to. They try to. They make limited attempts to. We see that in all the people I have named above and in hundreds and hundreds that I did not name in this post. Jack Bogle makes efforts to tell the truth. All the time. Jack Bogle taught me what I needed to know to see the errors in the Old School safe withdrawal rate studies. Yet today he participates in the biggest act of financial fraud in the history of our nation to keep people from learning about those errors. Huh? That makes no sense.
It is hard to make sense of it. But it is the reality all the same. If we are going to advance in our understanding, we are going to have to come to terms with this strange truth.
It will be a painful experience to do this. It will mean rewriting every investing textbook. It will mean living through hundreds of thousands if not millions of lawsuits. It will mean seeing many of our friends hauled off to prison. It will mean acknowledging that we failed our friends and our families and out neighbors and our co-workers and our fellow community members and ourselves. Doing that will hurt, Anonymous. We all get that. It will hurt a lot.
But it will hurt even MORE to continue to hold back from doing it.
When the next crash comes, that will become so evident that we will work up the courage to take on that pain and thereby bring this economic crisis to an end and move on to the greatest period of economic growth in our history.
Who do you think is going to be one of the richest men in this country after we take that wonderful step? Old Farmer Hocus!
And there will be lots of smart and good people standing beside me. Lots of bloggers want to be millionaires. The opportunity is sitting there in front of them. The hard work has already been completed. All they need to do to earn millions by helping millions of people learn the realities of stock investing is to read the materials at this site and then use their brains to develop them a bit farther and then write up what they come up with. They won’t even need to live with being the most hated bloggers on the internet! Those days are over for the most past and will be totally over when we get to the other side of the next crash. It’s a win/win/win/win/win with no possible downside.
Being hated for a time can lead to being loved at a later time. That’s the lesson here. Steve Jobs was not always loved. He had to take some risks to get to that place. He had to have a vision and to pursue it with a ruthless courage. He had to tell off some employees who otherwise would have settled for creating products much like the products that all the other companies were developing. Jobs took it to the next step. And he was well-compensated for doing so. I have taken it to the next step. There is every reason in the world to believe that I will be well-compensated for doing so.
And anyone who wants to join the party will be well-compensated for doing so. It’s an option open to anyone who wants to become a multi-millionaire. I will help anyone who evidences a desire to help us all out.
It was possible for a time to make lots of money in this field by telling people Buy-and-Hold Lies. That’s become a less and less viable option every day. Get Rich Quick strategies sell like hotcakes during insanely out-of-control bull markets. They don’t sell so hot during the Great Depressions that are brought on by insanely out-of-control bull markets.
Time is on my side, Anonymous.
That’s the bottom line here.
There’s a payoff that comes from being hated for telling the truth before most others have worked up the courage to do so. I’ve lived through the phase where I was the most hated blogger on the internet. Next I get to live through the phase where I become the most loved blogger on the internet and the most popular blogger on the internet and the most financially successful blogger on the internet. I’m not about to flip to the Goon side before I receive that $500 million payday and all the rest that comes with it.
Things are in the process of flipping for both of us.. For you, things are flipping from a place where you could get away with insanely abusive behavior because the Wall Street Con Men have your back to a place where there will be 12 jury members deciding on the length of your prison sentence and reviewing the materials at this site to determine how long to put you away.
Get Rich Quick strategies lead to PHONY success, SHORT-TERM success, DISHONEST and FRAUDULENT success. This boy ain’t interested. I want the real thing.
I hope that helps a bit.
Rob