Set forth below is the text of a comment that I recently posted to another blog entry at this site:
There was a time when you took your “career” seriously, from the vanity book on down. You seem to have admitted defeat at this point.
I take the work I do very seriously and I have not admitted defeat, Anonymous.
I have come to realize that circumstances are not as I thought they were on the morning of May 13, 2002. That much would be fair to say.
I believe today that every person involved in this matter wants to come clean and move forward. Jack Bogle wants that. Wade Pfau wants that. Robert Shiller wants that. You know all the names. They all want that. You want that. Lindauer wants that. Greaney wants that.
There is no intellectual debate. There can be no debate when all the evidence is on one side and there is zero evidence on the other side.
What there is is a trap that we have as a society fallen into.
I believe that the Buy-and-Hold Pioneers had good intent. There are cynics who will say otherwise. I believe that the cynics are wrong. I believe that back in 1965 we didn’t know all there is to know about this subject and so some perfectly smart people made some perfectly understandable mistakes. In 1981 the research was published that identified the mistakes and that permitted us to move on to something far better.
The trouble is that during those 16 years lots of people built careers based on Buy-and-Hold and so they were not too excited about the idea of acknowledging that that had gotten some things terribly wrong and would need to admit their mistake before they would be able to begin offering sound investing advice. Their pride was hurt. They were ashamed. They felt that people would think they were stupid to have made such a mistake (any people who thought that would have been wrong but I believe that the Buy-and-Holders felt this way all the same). They elected to cover up the mistake rather than acknowledge it. That put us on a bad track.
At the time the mistake was discovered, valuations were at such low levels that it was possible for people to rationalize not admitting the mistake. The thought was that valuations would probably never again be at fair-value levels much less higher and thus this was not a big deal.
Years later, it had become a very big deal indeed. But by that time the lie at the root of the Buy-and-Hold concept had produced a huge bull market and telling millions of people that all that money was Pretend Money had become a very difficult thing to do. What had started as a soft cover-up became a hard cover-up. We entered a stage where careers were destroyed when honest people dared to tell the truth about these matters. That of course made the already hard cover-up an even harder cover-up. We cycled down, down, down.
I of course knew very little of this when I put forward my famous May 13, 2002, post. I knew that the story didn’t add up. I loved the Buy-and-Holders. I knew of no cover-ups. So I got myself involved in something ten thousand times bigger than anything I would have dared get involved in had I known all the realities. Twelve years later, here we are.
The corruption in the investing advice field is more extensive than any person who has not worked this matter for 12 years running can imagine. I learned how extensive the corruption is during these 12 years. That’s an important story and I need to report it to the millions of middle-class investors who need to know about it.
The upside potential is beyond description. Our system works. The idea that the Buy-and-Holders put forward of rooting one’s investing strategies in the peer-reviewed research has produced results beyond anything that they possibly could have anticipated. We possess today the ability to reduce the risk of stock investing by 70 percent. We are on the threshold of the greatest economic surge in our history. That’s very exciting stuff.
My job is to expose the corruption in such a way as to not undermine our hopes of enjoying the benefits of the huge economic surge.
It’s not an easy job, Anonymous.
There are many people who have committed acts of financial fraud and are looking at possible prison sentences. There are even more who are likely going to see lawsuits for the recovery of damages filed against them. There are millions who are going to be angry about the lies that have been told to them for so many years now when we experience the next price crash and they wake up to see that their retirement portfolios have been wiped out.
I love my country, Anonymous. I do not want to see it torn apart because of this. My concern that playing this the wrong way could cause my country to be torn apart informs every step I take. That’s been so going back to the morning of May 13, 2002. But as I have learned how deep the corruption goes, the concern has obviously grown greater and greater.
I of course want us all to realize the benefits of being the luckiest generation of investors ever to walk Planet Earth. I want the Valuation-Informed Indexers to enjoy those benefits. I want the Buy-and-Holders to enjoy those benefits. I want the Wall Street Con Men to enjoy those benefits. I want you Goons to enjoy those benefits. The positive side of this story is 50 times bigger than the negative, as big as the negative is. My job is to see that we all enjoy as much of the positive as possible while avoiding as much of the negative as possible.
It’s a big job for a fellow whose only expertise in the field of investing advice is that he figured out how to get his words to show up on internet posts. But someone has to take it on, you know? I think it would be fair to say that I have been elected by my fellow community members (including you Goons).
I haven’t given up, Anonymous. I have never given one second’s consideration to the idea of giving up. It’s the farthest thing from my mind. I think about how to take things in a positive direction from the time I wake up in the morning until the time I go to bed at night.
The tactics that I employ naturally change as I learn new realities.
There was a time when people were saying “Oh, you need peer-reviewed research showing that Valuation-Informed Indexing is always far superior to Buy-and-Hold, that would really make a difference!” I didn’t think that was so at the time people said it. We all obviously know that it is not so today. There was never any peer-reviewed research showing that Buy-and-Hold could work for even a single investor, so there was never any need to publish peer-reviewed research showing that it cannot work. It’s good that we have such research. The Bennett/Pfau research is of huge importance and is going to take us all to some amazing places in days to come. But the sticking point was always the embarrassment that the Buy-and-Holders feel about admitting their mistake and publishing research showing how costly the mistake has been was never going to mitigate that embarrassment. So publishing more research is not the answer.
Getting more supporters isn’t the answer. I already have hundreds. Again, it’s great to have that base covered. But getting hundreds more is not going to change things. We need the hundreds we already have to work up the courage to speak out, to expose the cover-up and the fraud and the corruption. If I were to get thousands more supporters in coming days, it wouldn’t make a difference for so long as they were all afraid to speak up about the corruption. And, if the supporters I have today felt safe in speaking up, they would be more than enough to get the job done. So getting more supporters is not the answer either.
What’s the answer?
We need as a society to care enough about moving forward that we are willing to take on the risks of standing up to you Goons. Once we reach that point, all the magic starts happening.
We are not there today. People see how wonderful it would be to be creating all the books and articles and calculators that millions need to become able to invest effectively. People love the idea of bringing the economic crisis to an end. People love progress. That’s what our country is all about. So that side of this thing is covered. Lots and lots and lots of people want to explore the positive side of this thing. That has been so since the morning of May 13, 2002, and is even more true today.
The only thing that stops us is the Goon factor. People don’t want to see their reputations destroyed. People don’t want to see the lives of their loved ones threatened. People can see how it would benefit us as a society to overcome you Goons. But people have their own lives and they do not want to sacrifice their lives to achieve this great advance in public policy. So for the time being we are stuck.
I believe that the next price crash is going to change things, Anonymous. I saw what the first one did. It opened doors that had long been closed. I would say that the door opened about 30 percent with that crash. Another push forward of 30 percent will create enough momentum for the thing to swing open all the way. I believe that that’s the answer.
I am not God. I could be wrong. Please feel free to believe what you want. But your question is about what I am doing today and what I am doing today is determined by what I believe will happen following the crash. So preparing to take things in a positive direction following the next crash is my focus today.
That means building a record. People need to know about the corruption. Obviously. All of the ugly stuff needs to be exposed. Because it is by exposing the ugly stuff that we bring it to an end and make it impossible for it ever to come back. So it is obviously part of my agenda to prepare for the exposure of all the ugly stuff.
But we certainly don’t want to break people’s sprits with the exposure of all this ugly stuff. We want to present the positive story that counters the ugly stuff too. We need to show people all the wonderful stuff that the Buy-and-Holders really did add to the mix. And we need to help people understand that the mistakes made by the Buy-and-Holders were perfectly understandable when considered in context and that even the corruption can be understood (I don’t say entirely excused, just understood) when considered in context. It’s just as important that the extenuating circumstances that apply here be revealed as it is that the corruption that has been holding us back for so long be exposed.
I tell those two parts of the story in every post I advance here, Anonymous. That’s the deal. That’ the job.
There are two ways we can go. We can elect to continue the cover-up following the next crash. In that event, we all go down together. The numbers show that. It makes me as sad as sad can be. But if that is the choice that we are going to make as a society, there is obviously not a thing that I can do about it. I don’t think that that is going to happen, so, no, I have not given up. But, if an angel came down from heaven and told me that that WAS what was going to happen, then I would indeed give up. I don’t see any way out for any of us if that happens.
If that does not happen, which is what I believe will be the case, we are going to need to find a way to tell this story in such a way that everything comes out and we achieve a cleansing effect but also in a way that does not tear us apart as a country.
You know what Lincoln had to do after the Civil War? That’s what we are looking at here. We are not going to go backwards. Lincoln didn’t reinstate slavery to make the South feel better about being in the Union. But he did reach out the hand of kindness and make efforts to achieve healing with people who had in earlier days been perceived as the enemy.
The Buy-and-Holders are our friends. They have achieved great things. They are part of our future even though the discredited Buy-and-Hold strategy is not. So we need to work very hard to make peace with them.
That’s my job. That’s what I think about every day. That’s what I prepare for with all the work that I produce here at the blog and elsewhere.
Does that help?
I haven’t given up. I haven’t even considered giving up. My energies are today pointed in a different direction. Because circumstances have changed. We don’t have to prove the Valuation-Informed Indexing case today. The case is as strong as any case could ever be. There’s nothing to do on that side of things. And we don’t need to show that it is only corruption keeping Buy-and-Hold alive today. There is now a mountain of evidence of the corruption. Anyone who is open to learning about the corruption is already 100 percent convinced. And anyone who is not open to being convinced obviously would not be convinced by more evidence.
The job today is to prepare for all that happens following the next price crash. The job today is to figure out how as a nation we achieve healing and move forward together.
My best wishes to you and yours.