Set forth below is the text of a comment that I recently posted to another blog entry at this site:
How will you be rich? You already told us that our significant net worth’s are all “cotton-candy nothingness” and that it will go away in the next crash. If your fantasy is correct, how will you collect money from anyone if they don’t have anything left?
It is your goonishness that is causing all the problems you have understanding what the research says, Anonymous. You exaggerate all the time. You state things more strongly than I said them. You take things to extremes. Please try to calm down.
We are a very rich country. That’s actually a big part of the problem here. We have been following gravely flawed investing strategies going back to the beginning. Not because we are dumb. Because mankind was not put on Earth knowing everything and because we had not yet figured everything out. We have suffered because of this lack of knowledge in the past. But as we become richer, we have more wealth invested in stocks and the suffering grows ever greater. Fortunately, we now know what we need to know to stop the suffering. Unfortunately, we have not yet as a society worked up the courage to stand up to those who have refused for 33 years now to acknowledge that we had it wrong before.
We are heading to a stock crash of roughly 65 percent. Some of that is a real loss (the portion that gets us down to a fair-value P/E10 of 15) and some of it is the product of the irrational depression that follows whenever we realize our mistake in having pumped prices up so much (the portion that takes us from from 15 to 8).
We will perceive ourselves to be far less wealthy following the crash. Stock prices will no longer be pumped up, they will be pumped down. So the perception will be that things are very bad. But the perception will be an exaggeration (undervaluation is every bit as goonish and foolish and non-research-based as overvaluation). Things will look bad. There will be lots of scary articles in the newspapers. But the deep reality will remain that we are a rich people. It will be a struggle to get people to acknowledge that (just as it is a struggle today to get people to acknowledge that at times of insane overpricing their portfolio statements do not reflect their real wealth). But responsible people will do what they can to get the message heard and understood.
Now –
There IS a risk that the risk will cause a complete economic collapse. It happens. Since it happens, it is obviously theoretically possible that it could happen to us.
If we have a complete collapse, then what you are suggesting here is so. We will all go down together and I will NOT be a very rich man, I will be a very poor man. So will everyone else. That would break my heart, Anonymous. I don’t want to see it happen. I acknowledge that it is a possibility. I do not believe that it will happen. But I acknowledge that it is a possibility.
The other possibility is that the hearts of the Buy-and-Holders will melt and we will all move together to the far better world that awaits us on the other side of The Big Black Mountain. Shiller’s breakthrough is the biggest breakthrough in the history of economics. If we move forward, we are ALL going to be richer people. Even you will be richer. You will be in prison for a time. But prison sentences eventually come to an end. When you are released, you will be released into a country of even greater wealth than it possesses today. You will be part of that. Good for you.
This is a win/win/win/win/win, Anonymous. Everyone benefits. That’s what is so cool about it. This debate is not like the debate over the budget deficit, where going with what one side wants means taking something from the other side. This is a debate where everyone wins at the same time. Huge advances in understanding of important subjects are like that.
The problem we have today is that one side THINKS it loses if we permit discussion of the peer-reviewed research of the past 33 years. Some people have their egos tied up in Buy-and-Hold and they cannot bear the thought of acknowledging that they made a mistake. But that is foolishness. Time moves forward, humankind learns things that it did not know in the past, and we all end up better off. That is a core principle on which our nation was built.
By behaving in ways that land you in a prison cell, you are GIVING UP many of the benefits that you would otherwise obtain with the advance. That’s an amazingly stupid thing to do. But that’s the path you have chosen. You have let a phony pride count for more than your own desire to live a better and richer life. Yuck! You know? Yuck and Double Yuck!
I have played it the other way. I have generated hundreds of amazing insights into the realities of stock investing over the past 12 years. Those insights will make me one of the richest people in the United States following the crash. I don’t like all the nasty stuff I had to endure. I don’t like it one little bit that things played out that way. But I think it would be fair to say that it is largely because of the nasty stuff that I was able to do this. If things hadn’t been so nasty, there are thousands of smart and good people who would have developed these insights long before I came on the scene. Your nasty stuff cleared the field of competitors and left it to me to pick up all the prizes. Um — Thanks, man!
We will be a very rich people following the crash. There will be plenty of money remaining to make me a very, very wealthy man. If we mess up and we continue the Ban on Honest Posting following the crash, we will all go down together. It is my opinion that Jack Bogle’s heart will melt following the next crash and we will all achieve some wonderful advances together. My personal guess is that Jack will be the lead figure in seeing that the check for $500 million is promptly delivered to me. I will say “thanks, man” and tell everyone how I learned about the errors in Greaney’s study by reading Jack’s book and how there wouldn’t be any Valuation-Informed Indexing if not for the hugely important efforts of the Buy-and-Hold Pioneers. And we will all live happily ever after.
Until the next time the humans mess up and find themselves in a pot of burning troubles!
I hope that helps a bit, my old friend.
Rob
Anonymous says
The financial samurai is a proponent of buy, hold and rebalance. See his latest post:
http://www.financialsamurai.com/10-financial-and-helpful-moves-to-make-every-year/
Is he also going to prison?
Rob says
We will have to wait and see, Anonymous.
The peer-reviewed research showing that there is precisely zero chance that Buy-and-Hold could ever work for even a single long-term investor was published in 1981. Anyone commenting on investing strategies today has had 33 years to learn about that research. In ordinary circumstances, it would certainly be fraud for someone to ignore three decades of peer-reviewed research when giving advice on stock investing.
These are not ordinary circumstances. The Wall Street Con Men have spent hundreds of millions of dollars promoting the Buy-and-Hold strategy over those 33 years. The unfortunate reality is that there are many smart and good people who truly believe in the Buy-and-Hold strategy to this day. I believed in Buy-and-Hold until the evening of August 27, 2002. So did John Walter Russell. So did Wade Pfau.
I believe that Jack Bogle and most of the other Wall Street Con Men believe to this day. Not 100 percent. Perhaps 70 percent. But 70 percent is greater than 50 percent. So they believe more than they don’t believe. They are telling lies when they suggest that the merit of Buy-and-Hold has been proven or is beyond dispute or any such nonsense. But all signs are that they follow the strategy themselves. That’s certainly one important indication of a belief in a strategy. So it is not right to say that these people are advocating something in which they have zero belief.
We are in a mixed-up place, Anonymous. The research is as clear as clear can be. I really don’t think it could be any more clear. ALL of the research shows that valuations affect long-term returns. Buy-and-Hold is rooted in the opposite premise — that the market is efficient and that therefore all discussion of valuations is pointless because risk is stable. We know intellectually today that Buy-and-Hold has been discredited by three decades of peer-reviewed research. But have we accepted that intellectual knowledge emotionally? The vast majority of us have not. And most of those who have are afraid to speak publicly about what they know.
Does that answer your question?
I very much doubt that anyone who makes an honest mistake by advocating Buy-and-Hold strategies is going to go to prison for the nominal act of financial fraud committed. I certainly would not advocate that anyone making an honest mistake be penalized in any way.
But what of you Goons and what of the Wall Street Con Men?
We need as a society to move forward. Buy-and-Hold is killing us. It caused the economic crisis that we are all suffering through today. It has put millions of middle-class people on a path to seeing their retirements fail in their old age. It has caused tens of thousands of businesses to collapse. It has caused millions of workers to be thrown out of their jobs.
I think it would be fair to say that getting the truth out about what the last 33 years of peer-reviewed research says is our most important public policy initiative today. People are going to be very angry when they lose much of their accumulated life savings in the next price crash. We need as a society to be responsive to that anger if we are to maintain confidence not only in our economic system but in our political system.
Fortunately, we have the means to get the word out built into our system. Anyone who cares to know the realities can read Shiller’s book and learn what he needs to learn. Then he can spread the word on internet discussion boards and blogs. Then the Wall Street Con Men and their Internet Goon Squads will be forced to acknowledge the realities or at the very bare minimum to acknowledge their own fallibility and tolerate promotion of the research-based strategy at the same boards and blogs at which they push their smelly Buy-and-Hold garbage.
People want to learn how to invest in a safe and smart and simple way. We have seen this in the reaction that my posts have received at every large board and blog at which I have posted. There are Nobel prizes to be won by academic researchers doing work on Valuation-Informed Indexing. There are millions and millions of dollars to be won by the investment advisors who are first to explore the ins and outs of the new model. The millions of investors aching to know about the first true research-based model will obviously reward the journalists and bloggers who are first with the true story.
So all is good, right?
Not quite, obviously.
You Goons have for 12 years now engaged in the most abusive tactics known to mortal man to stop millions of middle-class investors from learning what they need to know. You have violated the published rules of every site to which you post and you have violated the criminal code of the United States. Financial fraud is a felony. That means prison time.
What the Wall Street Con Men have done is arguably far worse. When Bogle permits his name to be used at a site that permits participation by the sorts of individuals who have put up posts in “defense” of Mel Lindauer and John Greaney, he is lending his personal support to the most massive act of financial fraud in U.S. history. Again, financial fraud. Again, a felony. Again, prison time.
Those who made honest mistakes will not be going to prison. Those who in some way supported or failed to speak up against the death threats or the demands for unjustified board bannings or the tens of thousands of acts of defamation or the threats to get academic researchers fired from their jobs will be going to prison.
That’s my take, in any event. I am not God. You are free to have a different take, Anonymous. I am sharing with you my sincere belief. That is all that anyone is able to do re such a matter.
Sam engaged in some word games during the time that I posted at his blog. If I am asked to testify at his trial, I will submit my copies of those posts and his jury will decide whether he is to go to prison and what the length of his prison sentence will be. My job is to tell the story in a complete and fair way. That’s what I intend to do. Others will make the call as to whether he goes to prison or not and for how long. That’s how our system works. I think it is an outstanding system.
Does that help?
Rob
Anonymous says
Have you told Sam that he might be going to prison?
Rob says
I told him that he was wrong to play the games that he has been playing.
I am not required to say the words “prison” to him. He knows the law. He knows that playing games with people’s retirement accounts is wrong.
There is no one else who has been as open and blunt about these matters as I have been. If I use the word “prison” to every blogger I meet, I run the risk of having fewer opportunities to post at blogs and of thereby getting the word out to the millions of middle-class people who lives are in the process of being destroyed.
Sam certainly knows about me. I posted a good bit at his blog at one time and I have run into him several times at the Financial Bloggers Conferences. All of the top bloggers know about me and talk about my efforts to get the Ban on Honest Posting lifted and about me standing up to the Wall Street Con Men and their Internet Goon Squads. So Sam certainly knows what he needs to know.
He may not go to prison. I don’t see it as being a slam dunk in his case (I DO see it as being a slam dunk in your case, Anonymous). It probably depends on how angry people are when this all gets out. If this all gets out prior to the crash, I think Sam will be okay. If it gets out only after the next crash, he will probably be at some risk. I certainly wouldn’t trade places with him for all the money in the world. But I also think it would be fair to say that there are a lot of people at far greater risk than Sam. I would put his odds of going to prison at less than 50 percent.
That said, he could be making a whole big bunch of money by being one of the lead promoters of Valuation-Informed Indexing. Why miss out on that opportunity? He is obviously afraid of you Goons and of the Wall Street Con Men. I don’t think he should be. He has lots of blogger friends. If ten of us stick together, there is not a thing that any of you Goons can do to us.
Perhaps I will be working with Sam in coming days. Perhaps when I meet up with him at FinCon15, he will be ready to turn his blog into a multi-million-dollar enterprise. I am certainly game if Sam is game.
I am not going to say that Sam doesn’t need to worry about going to prison because lying about these matters makes me complicit in this massive act of financial fraud and puts me at risk of going to prison myself. Um — No thanks.
I am happy to work with him to achieve positive goals. If the price that I must pay for answering your question honestly (by saying that Sam has foolishly put himself at risk of going to prison by engaging in word games on these important questions) is that I don’t get to work with him, that makes me sad. But not as sad as it would make me to put MYSELF at risk of going to prison.
I hope that all that makes good sense to you, Anonynous.
Rob
grandpop says
So he’s just *kinda* fraudulent, and you’ll give him a pass on prison if he turns his blog over to your mania full-time. Nice.
Rob says
LOTS of us have been kinda fraudulent re these matters, Grandpop. I was kinda fraudulent myself in the days prior to May 13, 2002. I was afraid, just as Sam is today.
It’s not for me to give him a pass re prison or not to give him a pass re prison. It’s for the millions of middle-class investors who suffer losses as a result of his willingness to play word games to keep this massive act of financial fraud going to make that call. My job is to tell the story in a fair and complete way so that those people know what they need to know to make the right call.
Strategies rooted in the peer-reviewed research of the past 33 years are not mania. Research-based strategies are the future. The smelly Buy-and-Hold garbage is the past.
I hope that helps a bit.
Rob
Anonymous says
I will send a link over to Sam so that he can see what you really think about him.
Rob says
I don’t object, Anonymous.
I hope Sam thinks this over and decides to work with me to open every board and blog on the internet to honest posting re the last 33 years of peer-reviewed research in this field.
Rob
Anonymous says
All of the top bloggers know about me and talk about my efforts to get the Ban on Honest Posting lifted and about me standing up to the Wall Street Con Men and their Internet Goon Squads
And, what’s their opinion of you, after all this knowing and talking?
Anonymous says
“I hope Sam thinks this over and decides to work with me to open every board and blog on the internet to honest posting re the last 33 years of peer-reviewed research in this field.”
It doesn’t look like any blogger out there wants to jump on the Rob Bennett Train. I think that speaks volumes and not in the way the way that you have stated.
Rob says
My sense is that most bloggers would love to see me succeed and would love to work with me. But they are afraid to speak publicly. Only a few have directly told me this. But many have indicated in various ways that they would like to see the truth come out.
People have seen how the Buy-and-Hold Mafia reacts when someone posts honestly about the last 33 years of peer-reviewed research. I was afraid myself prior to May 13, 2002. So I know how it feels.
The question is — Will people work up the courage to speak out following the next price crash? I believe they will.
I believe that John Bogle himself will speak out following the next price crash. I am confident that, if Bogle could turn back the clock, he would go back to 1981 and this time give his “I Was Wrong” speech as soon as he heard about Shiller’s research. That doesn’t mean that Bogle is 100 percent convinced that Valuation-Informed Indexing is the future. It means that he is enough convinced that he believes that honest posting from both sides should be permitted. But he doesn’t want to go to prison and he doesn’t want the other Wall Street Con me to go to prison because they stuck by him and he cannot figure out a way to explain the 33-year cover-up. Following the next crash, he is going to be so pained by the massive amount of human misery that he has caused that his heart is going to melt and he is going to come clean.
Then it’s over. Then we all pull together to recover from the economic crisis and to launch the greatest period of economic growth ever seen in our history. I very much look forward to working with Old Saint Jack and all of my many other Buy-and-Hold friends.
My aim today is to do all that I can to reduce the prison sentences of those who will be going to prison at that time. We are all on the same side. We all want the same things. We all should be working together.
My take.
Rob
Sensible Investor says
Merry Christmas to you, Mary, and your children.
Rob says
Merry Christmas to you (and to all my Goon friends), Sensible.
Rob