Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Rob,
If you continue this pattern of hate and anger, you will spend your remaining years in misery. Instead, find something of real value to do with you life versus this fantasy you have with “goons”.
I obviously feel otherwise, Anonymous.
We are the luckiest generation of investors ever to walk Planet Earth. No earlier generation has had 33 years of peer-reviewed research available to them showing them how to reduce the risk of stock investing by 70 percent while also increasing their returns enough to permit them to retire five to ten years sooner. That’s exciting stuff.
You Goons are the only thing standing in our way.
Wade Pfau is not the only academic researcher who would like to be free to do honest work. There are THOUSANDS of academic researchers who would like to be spending their life energies helping us all out. That was their dream when they began their Ph.D. work. That was the driver behind their years of hard study. When ONE academic researcher is freed to do honest work, ALL academic researchers are freed to do honest work. I cannot wait to see what these guys and gals come up with!
It’s the same story with the Wall Street Con Men. They would LOVE to be doing real, honest, important work.
Why the heck do you think Jack Bogle included language in his book showing me that the numbers in the Old School safe-withdrawal-rate studies are wildly off the mark?
Why the heck do you think Bill Bernstein devoted an entire chapter of his book to honest reporting on what the last 33 years of peer-reviewed research tells us while obviously being very, very aware of just how ruthlessly he would be attacked by his peers if he was perceived as having gone “too far” by including an entire chapter of honest reporting rather than just a few paragraphs here and there, as is the usual custom among the “experts” of today?
Why the heck do you think Larry Swedroe was honest enough in his postings at the Bogleheads Forum to bring on Mel Lindauer’s ire and get himself banned from the forum for a time?
Why the heck do you think that the Wall Street Journal took the risk of publishing an honest column pointing out that the Buy-and-Holders have been “telling only half the story” for all these years and telling sick and twisted Get Rich Quick lies about the other half?
We have learned something important during the Buy-and-Hold years, Anonymous. We have learned that millions of middle-class investors are VERY interested in knowing what the peer-reviewed research says. It’s the claim that the Buy-and-Holders make (falsely, but still…) that their strategy is rooted in peer-reviwed research that made it so popular in the first place. All that I am saying is that we now need to take it to the next step. I think it would be fair to say that lying about what the research says has not been working out so great in recent years. Why not take the idea of rooting one’s strategies in the peer-reviewed research to the next step? Why not permit HONEST AND ACCURATE reporting of what the research says? I think that would make a big difference. I think that would be a big positive.
We have seen that 80 percent of all of our communities like the idea of permitting honest posting. Why not give them what they want? It would not only help the millions of middle-class investors whose lives have been destroyed by the reckless and relentless and ruthless promotion of the Buy-and-Hold garbage. it would allow us to recover from this economic crisis and thereby put millions of middle-class people in a mood in which they might be willing to reduce the prison sentences assigned to you Goons a bit. Is that not so? Is that idea not more than a little bit appealing to you, Anonymous? Tell the truth.
We need to overcome you Goons.
There’s not getting around it.
We have the tools that we need available to us. Every site has rules prohibiting the tactics that you have employed to block millions of people from learning what the peer-reviewed research says. We have adopted laws making financial fraud a felony, which means prison time for those found guilty of it. Why not enforce those site rules and U.S. laws for the benefit of everyone involved? My feeble brain is not even able to imagine any downside. Has your far superior Goon brain ever been able to come up with anything?
I believe that it is all going to flip following the next crash, Anonymous. If you want to experience a taste of what that is going to mean for you Goons, I urge you to enter the word “Phillies” into a search engine and then what the fans say about the general manager of the club today compared to what they were saying a few years back. It’s a thin line between love and hate, my old friend. Pushing Get Rich Quick garbage makes you the toast of the town for so long as the Get Rich Quick garbage appears to be paying off. When the debt comes due, it’s a very, very, very different story.
We are as a nation of the verge of the biggest breakthrough in our understanding of how stock investing works ever attained in our history. I view that as a super cool reality. I am proud to be playing a big part in bringing it about.
I wish you all the best things that this life has to offer a person, my long-time abusive posting friend.
Rob
“We need to overcome you Goons.”
That’s easy. Just delete 100% of the Goon comments (a small increase from your current 90+%.) Since you post nowhere else anymore, the Goons can no longer reach you. Problem solved. Then watch as your fans slowly crawl out from under their beds and start posting honestly here.
If you fail to take this simple step, one has to wonder what your goal for this site is. Or if you even have one.
I delete a lot of Goon comments, X. That much is so.
But I do not see how any good purpose would be served by deleting all of them.
You Goons make a lot of good points.
You have put up a lot of posts pointing out that few investors follow pure Buy-and-Hold strategies and few follow pure Valuation-Informed Indexing strategies. Most follow Strategy C (a non-dogmatic approach to Buy-and-Hold) or Strategy D (a non-dogmatic approach to VII). Those posts helped me understand this aspect of the question better than I did before. I think they were good stuff.
You put up a number of posts arguing that part of the reason why Buy-and-Hold advocates ignore the effect of valuations is because they put a heavy emphasis on keeping their investing advice simple. I believe that there is good deal of truth to those observations. I think those comments were helpful.
Our recent discussions re the Efficient Market Theory were helpful. I obviously do not agree with the Goon position re this one. But there are many, many good and smart people who believe that the market is efficient. I like having that point of view represented here. It is possible that I will change my mind over time. I sure ain’t going to change it if I never hear the other side of the story. Again, I am grateful for your contributions.
There have been lots of other cases in which you Goons have made positive contributions. The ultimate case is Greaney’s SWR study. That study has caused thousands of failed retirements. But it also represents a big advance over what we had in days before the Old School studies were published. Peter Lynch was once saying that the SWR is 7 percent! You don’t hear anyone saying that today. We have advanced in our understanding of retirement planning and you Goons have played a role in that.
I could go on and on.
I don’t like the nasty stuff that you Goons put forward. But the full reality is that we ALL have some goonishness inside us. I was a Buy-and-Holder for a number of years. How can I explain that given my intense opposition to the Buy-and-Hold concept today other than to acknowledge that I possess Goonish tendencies just like everyone else? You Goons have humanity inside you. You are capable of good and you have indeed done good on numerous occasions.
I DO delete a lot of your posts. I will continue to do so. That’s my job as site moderator.
But I do not feel comfortable banning any of you. Not Lindauer. Not Greaney. Not Bogle. Not anyone. The lifetime ban concept has never made sense to me. We learn from talking to people who have different perspectives. There is no group of people who Planet Earth who have more of a different perspective than me on how stock investing works than you Goons. I like you. I consider you friends. I have learned from you. I want to continue learning from you. I must delete some of your posts to avoid turning this site into a corrupt enterprise. But I do not feel comfortable in adopting any outright bans of PERSONS. So I do not expect to go down that dark path.
If you Goons do not want to reach me anymore, you are free not to do so. I cannot force you to post here. But you are welcomed to do so for so long as you are willing to take time out of your days to share your thoughts with us. I will continue to delete the truly ugly and even criminal stuff. But I will also continue to engage you on the stuff that you put forward that has some value. And it is not true that I delete 90 percent of your posts. I think it is probably 50 percent or less. So I see the value proposition as being a good bit stronger than what you are suggesting with your words here.
I would VERY much like to see my fans crawl out from under their beds and start posting regularly here. That would turn everything around. That would be wonderful. It hasn’t happened as of today. So I can’t say that I expect to see it happen anytime real soon. I have hopes that it will happen following the next price crash. But I of course am not able to look into the future. So we will just have to wait and see. I would be grateful if you would keep your fingers crossed.
My aim for the site is to make it the #1 personal finance site on the internet. I have hopes of working with Jack Bogle and all of my other Buy-and-Hold friends to spread their word about Valuation-Informed Indexing all over the internet. I believe that Jack is a giant. I believe that he is a good man. I believe that he is going to flip following the next crash. As you know. If he does, I see things getting better and better and better for each and every last one of us. If he doesn’t, that would be very, very, very bad. I would rather focus on the good that I think we are likely to achieve here than on any possible negative outcomes. Does that not make good sense?
I hope that helps a bit.
I hope that you continue to contribute. I hope that you contribute in a more positive way in the future than you have in the past.
It would not surprise me if you elected not to continue posting here. I certainly would understand such a decision.
If you elect to take your leave of us, please understand that I will always have warm feelings towards you and that I will always wish the best for you regardless of what investing strategies you elect to follow. Thanks for all the fish, man!
Rob
One more thought that hit me when I read back your comment and the quote from me to which you were responding.
I favor banning Goons when they engage in insanely abusive behavior, as you know.
However, I don’t believe that we truly “overcome” you Goons by banning you.
I wrote to Motley Fool in June 2002 asking that they ban John Greaney. Had they done so, I would have gone before the community six months later and asked that he be reinstated. I believe that the community would have gone along with that. I also believe that Greaney would have posted in accord with the published rules of the site from that point forward.
We would have had the best of both worlds from that point forward. There wouldn’t be any more abusiveness, so all the community members who had doubts about Buy-and-Hold would have felt comfortable posting their sincere thoughts. But we also would have enjoyed the positive contributions of my good friend John Greaney and of all the many community members who felt a friendship for him. Pretty sweet deal, eh?
I do not support the abusive behavior of you Goons. It’s not a close call. I believe that every board and blog community should insist that you honor the published posting rules. And the laws of the United States too! I believe all that very strongly.
But I do NOT believe that you Goons are the sole source of our economic problems.
Goons show up at all sorts of internet sites. On non-investing sites, the problem is generally taken care of by enforcement of the published posting rules. That what I believed in the early days would happen in this case. I was shocked when Greaney threatened to kill my wife and children if I continued to “cross” him by posting honestly re safe withdrawal rates. But I was ever MORE shocked that Motley Fool did not ban him when they learned about the death threats.
Greaney’s behavior is a big problem. But, if anything, the owners of the Motley Fool site are guilty of WORSE behavior. Motley Fool has a responsibility to enforce its published rules in a reasonable way. When they don’t, they send a very, very bad signal both to you Goons and to the Normals who in ordinary circumstances are not willing to tolerate the behavior that you have employed to block people from learning about the implications of the last 33 years of peer-reviewed research in this field. You are guilty of financial fraud. But so is Motley Fool and all the other sites that have failed to take effective action to rein in your abusiveness. That’s my sincere take re this terribly important matter, in any event.
My point here is that “overcoming” you Goons means doing more than simply banning you. You SHOULD be banned when you put forward death threats. Obviously. But there is Goonishness in a lot of comments advanced by people who never in a million years would advance death threats. Jack Bogle is being Goonish when he says that the most that anyone ever needs to lower his stock allocation is by 15 percentage points. Jack Bogle pulled that number out of his backside. I am sure. The peer-reviewed research says it is 60 percent. Jack is not even close. He hurts millions of people in very serious ways when he puts forward such insanely dangerous and irresponsible statements.
Greaney never would have advanced his death threats had Bogle behaved more responsibly. Greaney was embarrassed for people to see that he got all the numbers wildly wrong in his retirement study. It was Greaney’s embarrassment that caused everything to go off the rails. Greaney never would have made his mistake had people like Bogle been more forthright about the decades of peer-reviewed research showing that a Buy-and-Hold strategy can never work for even a single long-term investor.
Banning any one individual Goon or even all of those who have behaved in an insanely Goonish manner is not going to solve our problems. The ultimate goal is to overcome the Goonishness that resides within ALL of us. When we root out our Goonish desire to develop confidence in Get Rich Quick strategies, we reduce the risk of stock investing by 70 percent. Banning a small number of abusive posters from our sites is not going to get us where we want to go. We are going to have to acknowledge as a society that the reason why we have tolerated you Goons for so long is that you are using your abusive posting tactics to achieve goals that a lot of us want to see achieved.
Do you see?
You Goons are cartoon versions of the inner selves of MILLIONS of middle-class investors. We cannot have reasoned and productive and life-affirming discussions until we remove posters who are putting forward death threats. But that is only our FIRST step toward becoming far more effective investors, certainly not the last.
Jack Bogle is going to need to look inside and ask himself what sort of investment advisor he wants to be in the future. It’s the same with Bill Bernstein. And with Larry Swedroe. And with Carl Richards. And with Scott Burns,. And with Michael Kitces. And with Wade Pfau. And with Mike Piper. And with Todd Tresidder. And with Rob Bennett. And on and on and on and on and on.
I hope that makes some sense to you, Anonymous.
I wish you the best of luck in all your future life endeavors.
Rob
Then watch as your fans slowly crawl out from under their beds and start posting honestly here.
Re this one, I feel compelled to say that I have always admired the fighting spirit of you Goons.
The Normals have everything on their side. Common sense. 33 years of peer-reviewed research. A Nobel prize. The published rules of every investing site on the internet. The laws of the United States. This great new internet communications medium. Intelligence. Caring. We’ve got it all!
Except for that fighting spirit evidenced by you Goons! And that one edge has kept you Goons in the running for 12 years now! Holy moly! Fighting spirit matters! Big time!
I sometimes wish that we were on the same side. If it didn’t mean seeing the country I love falling into the Second Great Depression, I might have to give some thought to the idea of flipping.
Yikes!
Forget I said that!
Rob
Goons are not just rude people. According to you, they are felons. You abet the Goons by letting their felonious comments stand. You may find this a surprise, but Normals tend to avoid criminal hangouts.
There was peer-reviewed research published in 1965 that appeared to show that Buy-and-Hold strategies can work. An industry was built up promoting those strategies.
Follow-up research published in 1981 showed that there is zero chance that Buy-and-Hold strategies could ever work in the long term. So in an objective sense it has been a felony (finacial fraud) to promote Buy-and-Hold for 33 years now.
But that’s not so in a real sense. There is no crime if you do not know that what you are saying is false. Shiller’s findings were “revolutionary” (his word). It takes time for revolutionary advances to be understood and accepted. So, for example, I was not engaging in financial fraud when I advocated Buy-and-Hold prior to August 27, 2002. I didn’t know then what I know now.
If I advocated Buy-and-Hold today, I WOULD be guilty of the crime of financial fraud. On August 27, 2002, John Greaney threatened to kill my wife and children if I continued to “cross” him by posting honestly on the SWR issue. 200 of my fellow community members endorsed his post. I think it would be fair to say that that was pretty darn strong evidence that Buy-and-Hold is 100 percent emotion and 0 percent research. So I stopped believing in it and I stopped promoting it. Now I promote Valuation-Informed Indexing, which is Buy-and-Hold with the Get Rich Quick element removed.
Millions of good and smart people are today where I was prior to August 27, 2002. They like the idea of promoting a research-based strategy. Buy-and-Hold advocates claim that Buy-and-Hold is research-based. So lots of good and smart people are drawn to it. It’s unfortunate. But it is understandable. A society does not make the shift from BH to VII in a day or a week or even a year. It takes time. We need a national debate to educate people before we can achieve this wonderful advance.
You Goons believe in Buy-and-Hold in an important sense. You follow it yourselves. That’s not fraud. That’s just like what I did prior to August 27, 2002. You believe. You are trying to help people. I think you are wrong. But I certainly don’t feel that you are doing anything wrong in promoting a strategy that you believe is solid.
But how about the death threats? How about the demands for unjustified board bannings? How about the tens of thousands of acts of defamation? How about the threats to get academic researchers fired from their jobs?
Those acts are advanced as part of a cover-up. You believe in Buy-and-Hold in one part of your consciousness (the part that determines how you invest your own money). But there is another part of your consciousness that sees that it is impossible to defend Buy-and-Hold in civil and reasoned discussions because of the 33 years of peer-reviewed research showing that there is precisely zero chance that it could ever work for even a single long-term investor. These intimidation and deception tactics are being employed to block the national debate that we all need to have to overcome our economic crisis. That stuff is financial fraud. That stuff is criminal behavior. That stuff will land you in a prison cell following the next price crash.
If I permitted you to employ those tactics to deceive people visiting this site, you are right that I would be abetting the cover-up and thereby committing financial fraud myself. But I don’t do that! I call you Goons out on your b.s. all the time! I do it on a daily basis! I am doing it in this post!
In an ideal world, Greaney would have been banned from Motley Fool when he advanced his first death threat. Then he would have agreed to follow the rules of the site and permitted back on. And there would have been no further trouble.
That’s not what happened, as you know. The cover-up of the errors in the Buy-and-Hold Model has been going on for 33 years now. The Wall Street Con Men believe that, if millions of middle-class people find out how they have been deceived, they will go to prison or be sued. They don’t want that. So they continue the cover-up. They punish people who expose the cover-up. So lots of smart and good people who in other circumstances would be telling what they know keep it zipped.
My job is to expose the massive cover-up. Not just by saying “there has been a massive cover-up.” This is an exceedingly strange situation. We have never before seen anything like this in U.S. history. So I need to show people HOW so many good and smart people came to participate in this massive cover-up. One way to do that is to show people how you Goons think about the matter. I do that by permitting you to post here and by commenting on your posts.
It is not my intent to make you look bad. Your posts DO make you look bad. But that’s your doing, not mine. I am 100 percent happy to publish posts making you look GOOD. I far prefer that. When you put forward a post making you look good, I feature it as a separate blog entry. I want people to know both sides of the story. I want people to see how your abusiveness caused the biggest economic crisis in our nation’s history. But I ALSO want people to see the pressures that you feel, the confusions that hold you back, the lack of help that you have received from a lot of the big shots in this field. I want people to know what happened, both the good AND the bad.
Because that is how we leave the nasty side of this behind us. I don’t know precisely what we are going to do as a society to make the transition from BH to VII. Perhaps we will have the Congress enact some sort of amnesty so that lots of good and smart people whose help we very much need will not be going to prison. I certainly don’t have any objection to that idea. I think the idea makes a good bit of sense.
But I obviously cannot adopt an amnesty on my own. We need to have the entire country working together on this matter. My job today is to collect the materials that we will be using in future days to determine whether an amnesty makes sense or whether there need to be some prison sentences and how long those prison sentences should be and all that sort of thing. I am a journalist. It is my job to tell the story. No more and no less.
You Goons are part of the story. You are essentially cartoon versions of the dark side of the rest of us. We all make stock investing far more risky than it needs to be by giving in to the Get Rich Quick impulse that resides within us. You Goons take that to the extreme. You do things that none of the Normals would ever, ever do. But you are haunted by the same demons as all the other humans. By looking at your behavior, we can gain a better understanding of the mistakes that all the rest of us make to transform stock investing from the virtually risk-free choice that it should be today given what we have learned intellectually from the last 33 years of peer-reviewed research into the insanely risky choice that it has become in the Buy-and-Hold Era.
You are right that Normals tens to avoid criminal hangouts. They don’t like this stuff. They don’t like it when I use words and phrases like “Goons” and “Financial Fraud” and “Death Threats” and “Prison Terms.” They HATE it when I do that sort of thing. They would prefer that I tell the positive side of the story. They advise me all the time to focus on what works, not on what doesn’t.
It’s not possible to do that. The Wall Street Con Men have spent hundreds of millions of dollars spreading the word that there is some mystical, magical research somewhere indicating that it might not be 100 percent required for stock investors to exercise price discipline. That is of course a 100 percent false claim. Price discipline is every bit as important when buying stocks as it is when buying any other good or service. There is now 33 years of peer-reviewed research based on 140 years of stock market history showing this to be so.
I need to do more than just tell people what works. I also need to show people why giants like Jack Bogle are still telling people the OPPOSITE of what works rather than what works. That’s the thing that people are struggling with. Bogle could be the biggest hero in the history of personal finance if he would just correct the one mistake he made. All the rest of his ideas work once the mistake is corrected. Bogle could get credit for being the person who taught us all how to reduce the risk of stock investing by 70 percent. Why the heck doesn’t he do it?
He doesn’t do it because he feels that he is trapped. He doesn’t want to go to prison. He doesn’t want his friends to go to prison. He doesn’t want you Goons to go to prison. He knows about Shiller. He knows about my May 13, 2002, post. He knows about the research that I co-authored with Wade Pfau. He just can’t figure out how to get out of the trap in which he find himself.
My job is to show my good friend Jack (and all of my other Buy-and-Hold friends) the way out of the trap. The way out is through public pressure. Lots of people love Jack Bogle. They all should be imploring him to disassociate from you Goons in every possible way. They all should be urging him to give the “I Was Wrong” speech that is now 33 years overdue. The sooner Bogle gives that speech, the sooner we have the national debate that we need to have to free ourselves from the Buy-and-Hold Cancer that is killing us all today. The sooner that Jack gives that long-delayed speech, the shorter will be the prison sentences and the fewer will be the number of people going to prison.
This is not a criminal hangout. This is a place devoted to EXPOSURE of this massive act of financial fraud with the aim of bringing the economic crisis to an end and bringing on the greatest period of economic growth in U.S. history.
Unfortunately, most Normals are too afraid of the Buy-and-Hold Mafia to speak their minds publicly today. I believe that will change following the next price crash. Lots of people are capable of amazingly courageous acts when the future of their country is at stake. I think we are going to see a lot of good and smart people step up to the plate in days to come. Heck, I think that we are going to see Old Saint Jack himself step up to the plate in days to come.
I hope that helps a bit, X.
Don’t let the bad guys get you down, man.
Rob
“I call you Goons out on your b.s. all the time!”
Allowing the BS in the first place is pointless. No serious blog allows known felons to participate. Since you allow it, you are enabling the negative tone which scares people away. But hey, it’s your site. If you like it as it is, then just keep doing what you’re doing, and I wish you luck.
I agree with you about the negative tone, X. People hate that stuff with a burning passion. I get feedback along those lines ALL THE TIME. I get feedback along those lines from my freakin’ WIFE, you know? “The headlines in your blog entries are too long.” I’m never going to let her forget that one!
I don’t agree that permitting the b.s. is pointless. The risk of stock investing is self-deception. B.S. is self-deception. We can’t help people avoid risk without showing them how to avoid self-deception. And we can’t help people avoid self-deception without talking about the subject and providing illustrations of the mind games that investors get involved in that lead to their downfall.
I don’t know of any other investing blogs that focus on this aspect of the question as much as mine does. Part of the reason for that is that VII is something new. This is behavioral finance. It is not numbers-based stuff (except for the magic P/E10 number, which is a number that reveals emotional realities). It is emotions-based stuff. I see that as the future of investing analysis. I have never been one just to present insights developed by others. I like to do original work. I see more long-term value in it. I feel that I am making more of a contribution this way and that I will see greater personal rewards (like a a $500 million settlement check!) as a result.
I wouldn’t say that I like things are they are. That is far from the truth! I would say that I am not able to play it any other way. I care about my readers. I cannot lie to them. Not for any amount of money. It is just not in me. You can’t teach a cat to bark and you can’t teach a dog to meow and you can’t teach Rob Bennett to lie to his friends about the numbers they are using to plan their retirements. I try to do the best I can with the cards that are dealt me and hope that it all works out well in the end.
I am grateful for your good wishes. I can sure use them!
Rob
Unfortunately, most Normals are too afraid of the Buy-and-Hold Mafia to speak their minds publicly today.
They can speak their minds on internet forums and post here anonymously anytime, with no fears of anything. But they don’t. What does that tell you?
Rob,
You have an excuse or explanation for everything, yet you avoid the obvious conclusions.
They can speak their minds on internet forums and post here anonymously anytime, with no fears of anything. But they don’t. What does that tell you?
That’s a 100 percent fair and 100 percent important question, Anonymous. It is the question around which everything turns. I have spent time thinking about that question on every day of the past 12 years.
I have some answers and I have posted about them in hundreds of posts and articles and Rob\Casts already on the site. As I discover new answers, I write those up too. That’s pretty much all I can do.
If I was asked to give one short response to your question, I would say: “It’s because it is all so big.” People don’t want to take on the responsibility of saying something that requires that all the textbooks be rewritten. So even when they understand the arguments, they tell themselves “Let some others say this and then, when it is a commonly voiced view, I will agree that it makes sense.” We are not all independent thinkers. We are social creatures. We don’t like to tell our friends and neighbors and co-workers that they are wrong about something important. And this stuff is SO important. Most of us just cannot work up the courage to do it.
I sometimes report on my wife’s reactions here. I do that because I am trying to be fair. I call you guys “Goons” and thereby plant the suggestion that you say what you do because you are biased against me. My wife is obviously not biased against me. She has every reason to agree with me on every point. But she does not. I think that the fair thing to do given that reality is to report it so that anyone trying to make sense of this have that information available to them.
My wife doesn’t support the Goon tactics. But she doesn’t understand Valuation-Informed Indexing on a deep level. It’s not because of a lack of intelligence. She is more than intelligent enough to get all this. We sometimes go on walks and I try to bring the subject up. She will listen for a bit but her patience is limited. The other day I made another plea for her to go through the entire thing with me step by step. She said that it would be painful for her to do that.
I have had similar experiences with MANY good and smart people.
John Walter Russel was my right-hand man. There is no one on the planet who showed more support for me. John and I had a knock-down, drag-out fight in the days before we released the Retirement Risk Evaluator. His research showed that the SWR at the top of the bubble was 1.6 percent. He didn’t feel comfortable saying that because it is such an extreme change from the old findings. So he wanted to report the withdrawal rate that is most likely (the one for which there is a 50 percent chance that the real-world result will be higher and a 50-percent chance that the real-world result will be lower) as the “safe” rate. I told him that I could not put my name to that. A day or two later, he came around. But this was my freakin’ partner, the guy who had done all the research! There never should have been any disagreement.
I had similar experiences with both of my brothers.
Richard and I had a discussion about it one Thanksgiving over the dinner table. He asked me about my income situation and I explained that I felt that I was in “The Perfect Trap.” I said that the work I was doing was so important that I couldn’t possibly give it up. Then I added that the work that I was doing was so important that people on the other side felt that they could not possibly recognize it and so I couldn’t make a dime from it. He asked me to explain the investing ideas. He never crossed the line into being hostile but I would describe every comment he made as being highly skeptical. We didn’t want to get into an argument so we both dropped it. But my brother Steven told me that Richard spoke to him later and told him that he thought that the explanations that I put forward were impressive. Why couldn’t he say that to ME?
My brother Steven had a lump sum to invest sometime back before the 2008 crash,. He knew that I had a calculator on the internet so, without telling me, he checked it out before deciding how much to put in stocks. Then, after the crash, he told me that he wished he had paid more attention to my ideas. He looked at the calculator. It said that the most likely 10-year return on stocks was something in the neighborhood of 3 percent real. The return on super-safe investments was less than that, so he went with stocks. That’s NOT what the calculator was trying to tell him! The rule that I use is that you should get an extra return of 2 percent real for taking on the risk of stocks. The super-safe investment classes were offering a better value proposition at the time (they were paying something slightly in excess of 2 percent real, I believe). But he felt funny not going with the conventional advice. So he rationalized a belief that the Return Predictor SUPPORTED the conventional advice.
My boy Timothy has the best understanding of VII of people who are close to me. We talked about it all late into the night one night and he asked the kind of penetrating questions that tell me that someone gets it. This past Thanksgiving we were at my brother’s house and there was a NASA engineer there to whom I was telling the story. On the ride home I asked Timothy to describe the guy’s reaction to what I said. “Blank face,” he said without missing a beat. That’s exactly it! Goon reactions are rare outside the internet. But Blank Face is common. It’s not that people are not capable of understanding. It’s that people don’t WANT to understand.
Go through all of the reports of the e-mails that I exchanged with Wade Pfau and you will come to understand better what is going on. Wade was obviously intrigued or he would not have contacted me. But at the start he had serious reservations about foundational points. We talked those out. The ice started to melt a bit. And then one day he was writing to me with huge enthusiasm about how this was going to change the world. It clicked! Wade changed his stock allocation because of what he learned. That’s not just talk, that’s action. He never got it 100 percent. But something important clicked for him. That’s the process that people need to go through. But it doesn’t happen with one exposure. You have to be exposed to the new ideas on multiple occasions and hear answers to lots of questions before your mind can take it all in. It’s a paradigm shift. It takes time.
I could go on and on.
None of the people on the other side are bad people. They sincerely believe what they say. They follow Buy-and-Hold themselves. They are trying to help others by sharing what they know with them.
But there is another level of consciousness in which they have doubts. That makes them defensive. That makes it painful for them to hear about the new ideas.
All of that is fine. We NEED to be skeptical of new ideas. This stuff affects people’s lives in serious ways and the responsible thing is to respond to new ideas with a great deal of skepticism. I have no problem with any of it up to that point.
But there have to be lines that you don’t cross. Most people are not willing to put enough time and energy into learning about investing to study these things for themselves. Most people look to two things in forming their opinions: (1) the credentials of the people putting forward the ideas; and (2) the number of times that they hear the ideas endorsed. Buy-and-Hold has a HUGE edge in both departments because it has been around so long. Valuation-Informed Indexing cannot rise unless it can be freely discussed and people can gradually come to see merit in it and hear lots of different people endorsing it at lots of different places.
We are in a Catch-22. People don’t believe in Valuation-Informed Indexing because they don’t hear about it enough. And people don’t hear about it enough because most people don’t believe in it.
The only way to change that is to open every board and blog on the internet to discussion of the implications of Shiller’s ideas. If people felt safe talking about these ideas, they would do so. We have seen that is so at every board and blog at which discussion has been permitted for a time. People LOVE the discussions so long as the ugliness is kept to a minimum. Every board and blog permits discussion of ideas put forward by Nobel prize winners. And the laws of the United States prohibit the tactics that have been employed to block discussions of these ideas. So we are as close as close can be to having some amazingly good stuff happen.
The problem is the defensiveness of the Buy-and-Holders. It is not possible just to tell people what works without criticizing Buy-and-Hold because what works is price discipline and price discipline is long-term timing and the key idea in the Buy-and-Hold Model is that timing never works. When you tell people that the path to effective long-term stock investing is to always, always, always practice long-term timing, the Buy-and-Holders go nuts.
That’s the problem. There is a Social Taboo on saying that timing is required. The Buy-and-Holders have said so many times that timing doesn’t work that people feel that saying timing is required is like saying the earth is flat. People are social animals and they don’t feel comfortable going against such a widely held belief.
But the reality is that there is zero support in the peer-reviewed literature for this belief. Wade Pfau checked that and he has a Ph.D. in Economics. Buy-and-Hold was built on a false premise.
We need to get the word out. Once we do, we will all be on the same page. We all want the same things.
But how do we do that?
The Buy-and-Holders want absolute proof that Valuation-Informed Indexing is perfect in every possible way before they will permit open discussion at even a single site. We cannot persuade people that Valuation-Informed Indexing is perfect in every possible way without having discussions. And we cannot persuade people to participate in open discussions until they feel safe that they will not be attacked for doing so.
We need Jack Bogle to stand up on a stage and make a speech. Then we need that speech reported on on the front page of the New York Times. That will make everyone who has doubts about Buy-and-Hold feel comfortable about expressing those doubts publicly. And that will make the Buy-and-Holders understand that they need to take the abusive stuff down about 6,000 notches.
The reason why people don’t participate is not that they are so confident in Buy-and-Hold, Anonymous. People don’t participate because the Buy-and-Holders are so defensive that they engage in behavior that scares people into not participating. The Buy-and-Holders should be INVITING challenges to their ideas as a learning experience. When they start doing that, I guaranty you that we will have zero problem getting a national debate launched. We have been seeing since the morning of May 13, 2002, how much interest there is in having a national debate in which all feel safe saying what they truly believe.
I hope that helps a bit.
My best and warmest wishes to you and yours.
Rob
You have an excuse or explanation for everything, yet you avoid the obvious conclusions.
Backatcha, my fellow human.
We all see things from our point of view and experience difficulty seeing things from the other fellow’s point of view.
That’s the story of the human race. That’s been going on since the days before the first stock market was opened for business.
I sometimes cannot see things that my old self believed. I once thought that “Revolution” should have been the A side and that “Hey, Jude” should have been the flip. Now I have a hard time understanding how anyone could see it that way.
This is one of the reasons why they call this place “The Valley of Tears.”
It’s our job to work this sort of thing out.
My take.
Rob
You have an excuse or explanation for everything, yet you avoid the obvious conclusions.
That’s another way of saying that I hold different beliefs than you about how stock investing works.
I plead “Guilty!”
And yet I call you “friend.”
Who’d a thunk that such a thing could be possible?
Rob
“I made another plea for her to go through the entire thing with me step by step. She said that it would be painful for her to do that.”
I can well imagine. IMHO, Rob, it is well-past time for all the names you listed in that post to be called together around a big table, plus at least one clinical health care professional, and then let YOU shut your mouth, and just listen for a while. It’s called : “An Intervention.” Let’s schedule it soon, shall we?
Backatcha, Anonymous. My take is that we need an intervention in the other direction.
I am 100 percent happy to shut my mouth and listen until any Buy-and-Holder who cares to tell me what he thinks has his complete and full say.
But then I will respond with my take.
I love my country. That’s the way our system works.
It will hurt for you to hear some of what I say. You are free not to listen. That’s your call.
But those who WANT to hear the other side of the story are going to hear it. That’s my pledge to my fellow community members.
I naturally wish you all the best that this life has to offer a person.
Rob