Set forth below is the text of a comment that I recently posted to another blog entry at this site:
You give no real consideration to anything that doesn’t fit your script.
That’s not an accident.
My script is the last 33 years of peer-reviewed research in this field, Anonymous.
I believe that it is better to follow the research than to follow your emotions. I see the benefit of following research as being that research is objective while emotions are subjective.
I don’t say that the Buy-and-Holders do not believe subjectively in what they say. My take is that they do believe. That is, they lie to themselves before they lie to others.
I don’t want to lie to myself OR others. So, yes, I follow the script of the peer-reviewed research in this field.
That’s the source of all the conflict. The Buy-and-Holders SAY that they follow research. But the claim is a lie.
There was once research that seemed to support Buy-and-Hold. But that research was discredited by subsequent research 33 years ago.
My work is rooted in TODAY’S research, not the research that was available to us 33 years ago.
The Buy-and-Holders want to continue to claim that their strategies are rooted in research. But they do not want the people who hear their message to know what the last 33 years of peer-reviewed research says.
I call b.s.
I call deception.
I call financial fraud.
I want no part of it. I intend to continuing following “the script.”
It is not a script set by me. It is a script set by the academic researchers in this field.
Show me the URL for a study showing that price discipline is not necessary and I will write a column about it.
You cannot do it. There is no such study. It doesn’t exist.
Buy-and-Hold is a lie, the biggest lie ever told in the history of personal finance.
It was not a lie in the beginning. It was a mistake. That’s something different.
But I think it is fair to refer to a mistake that has been covered up for 33 years as a lie.
I don’t tell lies about the numbers that people use to plan their retirements.
Please try to find someone else.
I can’t go for that.
No can do.
It’s not my particular cup of coffee.
I’ll stick with the script until I see some peer-reviewed research backing up the smelly Buy-and-Hold garbage.
The full truth is that I don’t at this point expect ever to see it.
My best wishes to you and yours.
Rob
Your use of the phrase “peer reviewed research” is misplaced, overused and misapplied. In the context of your various posts, you present it as the ultimate conclusion of the financial expert community, when that is not the case. Further, you present it in a comparative narrative to what you call “buy and hold” as if this is some sort of fixed point of measurement.
I am not able to make sense of the words you have put forward here, Anonymous.
Buy-and-Hold is based on the research of University of Chicago Economic Professor Eugene Fama. All reports show that Fama is a legitimate guy, a smart guy, a good guy. Fama was awarded a Nobel prize at the same time that Shiller was awarded a Nobel prize. Both Shiller and Fama have won for themselves the highest possible regard in their fields.
Fama made a mistake. He examined only short-term timing. He never even looked at long-term timing. So his conclusion that “timing doesn’t work” was obviously wildly off base. He obviously could not develop an informed conclusion re something that he never even looked at. There is zero reason to believe that there might be some mystical, magical alternate universe where long-term timing (price discipline) might not work on some occasions or might not be 100 percent required on all occasions. There is now a mountain of research showing that long-term timing is 80 percent of the stock investing story. It is always 100 percent required. The worst mistake than an investor can make is to fail to practice long-term timing (price discipline). To fail to do so increases risk DRAMATICALLY while also reducing return DRAMATICALLY.
Fama’s mistake was 100 percent understandable. Long-term timing only works with index funds and index funds were not available until Bogle founded Vanguard in 1974. Fama did his research in 1965. No one appreciated the importance of the distinction between short-term timing and long-term timing at that time. It is of course understandable that Fama was like everyone else limited in his understanding of things.
Shiller was the first to look at long-term timing. He naturally found that long-term timing always works and is always 100 percent required because the entire historical record shows this so clearly (there is not a single time in the 140-year historical record in which a Buy-and-Hold strategy ever worked on a risk-adjusted basis for a single long-term investor). Shiller published his research in 1981. So it was 34 years ago when the last important piece of the puzzle snapped into place. The peer-reviewed research that I co-authored with Wade Pfau shows that we now know what we need to know to reduce the risk of stock investing by 70 percent while increasing returns enough to permit us all to retire five to ten years sooner than we realized was possible in the Buy-and-Hold Era.
There are no problems with the peer-reviewed research. The peer-reviewd research all points in the same direction. ALL of the research supports Valuation-Informed Indexing. There is ZERO research supporting Buy-and-Hold. Wade spent a good deal of time looking into this question because he was amazed at what he found. He never was able to find a single study supporting the Buy-and-Hold concept (the idea that there might be some mystical, magical alternate universe where a long-term investor might do well by refusing to practice price discipline when buying stocks). He even went to the Bogleheads Forum to see if any of the many Buy-and-Holders who post there knew of a single study supporting the smelly Buy-and-Hold garbage. Bogle was not able to point to a single study,. Neither was Bernstein. Neither was Swedroe. Neither was Ferri. Neither was anyone else. I wonder why.
The economic crisis was not caused by any failing in the peer-reviewed research. The peer-reviewed research is as clear as anything could possibly be clear. The failing is in our unwillingness as a society to demand enforcement of the laws against financial fraud for 34 years running now. By the time that Shiller published his “revolutionary” (his word) research, the Buy-and-Holders had already built an entire industry around the promotion of the 100 percent discredited and 100 percent dangerous Buy-and-Hold “strategy.” They elected to cover up the error rather than to acknowledge it (it is my view that cognitive dissonance played a big role here, that the decision of the Buy-and-Holders to bring on the biggest economic crisis in U.S. history was not entirely an intentional one).
There of course were no problems until 1996. The peer-reviewed research shows that stock were either an amazing buy or at least a reasonable buy for those years. Problems began in 1996. At that point, stock prices had reached insanely dangerous levels. Shiller predicted the economic crisis in his book, published in March 2000. The Buy-and-Hold Mafia continued to destroy the careers of those dared to “cross” them by speakingh honestly about what the peer-reviewed research says. The crisis began in September 2008. Millions of middle-class people have lost their jobs as a result of the 34-year cover-up. Millions will see their retirements fail in days to come, in the event that stocks continue to perform in the future anything at all as they always have in the past.
There is no dispute about what the peer-reviewed research says. If there were any dispute, the Buy-and-Holders would never have advanced a single death threat or a single demand for a single unjustified board banning or a single act of defamation or a single threat to get a single academic researcher fired from a single job. People who are advancing legitimate investing strategies don’t behave in that manner. Not ever. No how. No way.
The issue here is the enforcement of the laws against financial fraud. There are thousands of experts in this field who would like to feel free today to tell their readers and clients the truth about what the last 34 years of peer-reviewed research says. Many of these people have families. They have been witnessing the brutal intimidation tactics of the Buy-and-Hold Mafia for many years now and feel that it is not safe to speak out. So the crisis continues and worsens day by day.
I believe that this will change following the next price crash. I learned about the errors in the Old School safe-withdrawal-rate studies by reading Bogle’s book. Bogle has spoken honesty about stock investing questions on many occasions. He has a conscience. When he sees the massive amount of human misery that he has caused by supporting you Goons, he is going to flip. When Bogle flips, everyone flips. Everyone will feel safe to talk about the last 34 years of peer-reviewed research once Bogle has said the words “I” and “Was” and “Wrong” and those words have been written up on the front page of the New York Times. All who have posted in “defense” of Mel Linduaer and John Greaney will be removed from our boards and in some cases be put in prison cells within days of when Bogle gives that speech.
That’s the story, Anonymous.
There is no debate about what the peer-reviewed research says. The only question that remains open is when we will begin enforcing the laws against financial fraud and put you Goons in prison cells. I believe that will happen shortly following the next price crash.
But we’ll see, you know? I am not God. I could be wrong. I have been wrong before and it is possible that it it happening again. If that is so, I will probably be the last to know.
Fair enough?
I naturally wish you all good things regardless of how you elect to invest your retirement money.
Rob
As further background, I am in the medical profession. We are taught how to read, comprehend and use “peer reviewed research”. That is all part of training. The same goes in the financial industry. In the context of your posts, you use the generic term of buy and hold as if it is some fixed and identifiable set of assets used by groups as a whole. Yet, in practical use, the vast majority of people with a underlying buy and hold mentality often have a varied portfolio that can differ substantially from person to person. Thus, we must consider the underlying portfolio. It is like saying that one antibiotic is better versus another, yet we have compared the patient base (age, weight, etc) dosage strength, length of therapy, etc.
We cannot compare the medical field and the investing advice field, Anonymous. The investing advice field is 100 percent corrupt today. That’s a big difference.
Buy-and-Hold is the “strategy” that posits that there might be some alternate universe where it is not 100 percent necessary to ALWAYS, ALWAYS, ALWAYS practice price discipline (long-term timing) when buying stocks. The Buy-and-Holders are the ones who say: “Oh, who really knows? It is theoretically possible that stocks might begin performing completely the opposite of how they have performed in the 140 years for which records exist. If we were to permit honest posting on the peer-reviewed research, we wouldn’t be able to trick anyone into following our Ponzi sheme. We naturally MUST make use of death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs. Otherwise, the entire con job comes crashing down to the ground.”
I don’t buy it, Anonymous. It’s not a close call. Peer-reviewed research plays a very, very different role in a field in which personal integrity is considered a positive rather than a disqualifying negative. I mean, come on.
Buy-and-Hold isn’t ONLY a huge con. The Buy-and-Holders produced a wealth of very powerful and genuine research-based insights on how stock investing works. Take away the huge con and the Buy-and-Holders are heroes to the middle-class.
Guess what? I incorporated EVERY ONE of those powerful and genuine insights into the Valuation-Informed Indexing concept. The only part I removed is the financial fraud part. I left out the one part of the Buy-and-Hold “strategy” that has been discredited by 34 years of peer-reviewed research. So this new version of Buy-and-Hold actually works in the real world. It allows people to retire sooner rather than destroying their lives.
Does the idea of recasting Buy-and-Hold so that it works in the real world not make good sense?
Rob
You are wrong. They are both data driven fields. If investment advice is 100 corrupt, than you must distrust all advice, including your own comments.
Show me one instance in the medical field in which someone of Bogle’s stature permitted his name to be used on a discussion board at which the sorts of individuals who have posted in “defense” of Mel Linduaer or John Greaney are permitted to participate. It has never happened. Give me a freakin’ break.
If the barber here in Purcellville found that the sorts of individuals who have posted in “defense” of Mel Linduaer and John Greaney were using his name, he would be on the phone in five minutes contacting the authorities and demanding that action be taken. Does Jack Bogle not have a telephone in his house, Anonymous? Why does he associate on a daily basis with people who have a long record of committing numerous acts of financial fraud if this field is not today 100 percent corrupt?
I don’t distrust all advice. There are lots of wonderful people who work in this field. Bogle is one of them. He is an absolute giant. I call him a Hero to the Middle Class. I don’t say that lightly. So, no, you are 100 percent wrong when you say that I distrust all advice in this 100 percent corrupt field.
The problem here is that price discipline is BY FAR the most important factor bearing on the long-term success of stock investors. It is 80 percent of the story. So Bogle can offer top-notch advice on 15 other topics (and he does) and still get it all horribly wrong by remaining unwilling to take a look at the 34 years of peer-reviewed research showing that long-term timing always works and is always 100 percent required.
I am NOT saying that the people who work in this field are bad people. And I am NOT saying that the people who work in this field are dumb people. I have never met a dumb Buy-and-Holder. And, while I certainly say that a good number of Buy-and-Holders are in an objective sense guilty of financial fraud, I also say that most of them are good and hard-working and entirely likable people. That might seem like a bit of a paradox on first hearing. But that is the reality here.
I go back to my civl right comparison. The way in which blacks were treated prior to the civil rights revolution was HORRIBLE. It was sinful. It was shameful. It was criminal. It’s almost impossible to imagine that not too long ago we lived in a country where people who had black skin were not permitted to drink from the same water fountains as people with white skin. Huh? That’s INSANE. How could even one person believe that that was the right way to go? That was 100 percent insane. There is not one reasonable person who today says different.
So our nation was 100 percent corrupt in the area of race relations in the early 1950s. Is that not fair to say?
Would you then say that everything we did was bad? I sure wouldn’t say that. If everything we did was bad, we never would have had a civil rights revolution. There must have been some good there for us ever to have taken that step. It was a very, very, very, very bad situation. But there was still a lot of good present in our country all the same. That’s the full reality.
That’s how it is in the investing advice field today. The field is 100 percent corrupt. Good and smart people like Wade Pfau publish amazing research that should be helping millions of middle-class people and Goons like you threaten to get him fired from his job for going to the trouble. And people like Jack Bogle SUPPORT you Goons and thereby empower you. So Wade has to be willing to let his two small children starve if he is to follow his dream by promoting the important research he has published and thereby winning the Nobel prize to which he is entitled.
I say “no.”
The field is 100 percent corrupt today. But it is only re one issue that we are 100 percent corrupt. We are 100 percent corrupt because of our unwillingness to acknowledge that there is precisely zero chance that any investor failing to exercise price discipline can ever achieve good long-term results. On the day that Bogle gives his “I Was Wrong” speech, we will achieve 34 years of advances in one day and we will instantly start to realize the benefits of being the luckiest generation of investors that ever lived, the first that is able by virtue of making use of the peer-revirewerd research (which the Buy-and-Holders once thought was a good way to go!) to reduce the risk of stock investing by 70 percent while obtaining FAR higher long-term returns.
Both things are so, Anonymous. We are 100 percent corrupt today. And we are also on the verge of the greatest advance in our knowledge of how stock investing works ever achieved in our history.
And it is not an accident that both things are so at the same time. It is BECAUSE we are on the verge of the greatest advance in knowledge ever achieved in the history of personal finance that the Buy-and-Holders are so insanely defensive about what the last 34 years of peer-reviewed research says. If the peer-reviwed research that I co-authored with Wade Pfau showed us all how to reduce the risk of stock investing by 5 percent, I would be the toast of the town. My web site would be the #1 site on the internet. I would have earned millions as a result of my discovery of the insights advanced in that paper. I would be on tour with Bogle at this moment. People would be writing books about me.
But I committed the terrible, terrible crime of co-authoring a peer-reviewed paper that shows us all how to reduce the risk of stock investing not by 5 percent but by 70 percent. That makes the Buy-and-Holders look bad. All the death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researcher fired from their jobs follow from that.
I didn’t put up the famous post from the morning of May 13, 2002, with the idea of making the Buy-and-Holders look bad, Anonymous. I was the leader at a board that the most abusive poster in the history of the internet had decided he was going to burn to the ground. I had a responsibility to step in and help out my many friends who had built that board into the #1 board at the Motley Fool site. So I did what I had to do.
It turned out that I had no idea how important that post was going to be. The reason why Greaney had gotten the numbers so wildly wrong in his study is that this field had become 100 percent corrupt long before Greaney or I ever came on the scene. Greaney saw that supposedly legitimate researchers were using that methodology and so he thought it would be okay to use it himself. Then he was embarrassed when I showed that the methodology was analytically invalid and when hundreds of our fellow community members agreed with me that his study was lacking a valuation adjustment.
Greaney is responsible for his own behavior. He has led the biggest act of financial fraud in the history of the United States and that calls for a long prison sentence under our statutes. I cannot take us back in a time machine and change that. If he wants me to help him out by pointing out that the entire industry is 100 percent corrupt today, I am 100 percent happy to do that. He doesn’t need to give me anything for me to do that. I will do it just because I think it is the right thing to do.
And the same goes for Bogle. And for Phau. And for Bernstein. And for Kitces. And for Tresidder. And for Piper. And for Swedroe. And on and on and on and on.
But I cannot commit financial fraud myself. Going to prison is not on my bucket list. I ain’t freakin’ interested.
I will work with anyone willing to agree to follow the most minimal standards of personal integrity that apply in every field other than stock investing. I have zero willingness even to CONSIDER working with anyone who says that he or she knows about some mystical, magical alternate universe where it might be a good idea for one or two long-term investors to fail to exercise long-term timing.
Find someone else, you know?
I naturally wish you the best of luck in all your future endeavors regardless of what investing strategies you elect to pursue, Anonymous.
Rob
If investment advice is 100 corrupt, than you must distrust all advice, including your own comments.
I reread this one this morning and realized that there is a point that I very much should have made that I failed to make yesterday.
I DO distrust all advice, including my own comments, to the extent that I believe strongly that challenges to that advice, including my own comments, should be permitted at every investing board and blog on the internet.
That’s our system. That’s the country I love.
My sincere take.
Rob
What if only some sites will reopen to you? Are you waiting for all site to open up or will you post on each site as they open up?
I will post at any site where I can help out, Anonymous.
I won’t post at a site owned by John Greaney because I would be contributing to a massive act of financial fraud by doing so. I am trying to shorten your prison sentences, not extend them.
Rob
You already posted at a site owned by John Greaney.
I did for a time, Anonymous.
I worked it hard. I posted there thousands and thousands of times.
The man is incapable of being honest re these matters.
I gave up when the Joe Taxpayer blogger said that posting should be permitted on Shiller’s research because Shiller won a Nobel Prize for it and Greaney banned me for reporting that at “his” site.
If we cannot mention that Shiller won the highest award in his field, we cannot work together to advance our understanding of how stock investing works. Greaney’s dishonesty made it 100 percent impossible to achieve good things at “his” site.
Greaney is a friend of mine from back in the days before I “crossed” him by posting honestly on safe withdrawal rates. So it makes me sad to report this. But I don’t feel comfortable posting at Greaney-owned sites any longer.
You are going to have to try to find someone else.
I wish you all good things.
Rob
What financial forums do allow you to post, Rob? Are there any?
There are none today, Anonymous.
There will be many some day in the future.
I believe that there will be a day in the not-too-distant future when every site on the internet will permit honest posting on safe withdrawal rates and on every other critically important investment-related topic.
Why wouldn’t that be the case?
We live in a great country.
We have laws against financial fraud in place to protect us from having this sort of thing happen to us.
So we will overcome the Buy-and-Hold Crisis in time.
Or so Rob Bennett sincerely believes, in any event.
We will all get to see how it plays out.
Is that much not fair to say?
Rob
I don’t know of anyone else banned on all the forums like you are. Certainly, you don’t think it is a vast conspiracy, do you?
There’s no one else who has been banned at as many places without ever putting forward a single abusive post. There’s no one in an even remotely close second place.
Buy-and-Hold has caused a vast amount of human misery. There’s no question about that one.
Some of the people who have suffered this pain have committed acts of financial fraud. Some have not. Some of those who committed financial fraud will go to prison. Some will not.
My job is to keep the number going to prison as small as possible and to see that the prison sentences of those going to prison are as short as possible.
That means opening every board and blog on the internet to honest posting on safe withdrawal rates and scores of other critically important issues.
The only pain here is the pain of regret. Had Shiller published his “revolutionary” (his word) research in 1961 rather than 1981, there never would have been any Buy-and-Hold and we would not be in an economic crisis today.
Many of the Buy-and-Holders have demonstrated by their public statements that they have consciences. That certainly includes my good friend Jack Bogle.When Jack sees that his reltenless promotion of the smelly Buy-and-Hold garbage has put us in the Second Great Depression, he will flip. When Jack flips, it is over for you Goons.
The good news here is 50 times more good than the bad news is bad.
I look forward to working with of my many Buy-and-Hold friends when we make it together to the other side of The Big Black Mountain.
Hang in there, Anonymous. It gets better. A LOT better.
I love my country. Because it always comes through for us in the end.
My best wishes to you and yours.
Rob
I don’t get the connection. Help me understand. Why would anyone go to prison just because you are banned on the boards. I see people banned everyday on various boards. It appears to be common practice.
The emotion is on the side of the Get Rich Quickers today because people want to believe that the numbers on their portfolio statements are real. People hate to see that they have even less in their retirement accounts than the numbers on their portfolio statements suggest.
The emotion will flip following the next price crash. At that point I will be doing all that I can to help people understand the pain you were in and the pressures you felt. I don’t believe that my efforts will be all that successful given the power of the emotions that will be felt by the millions of people whose lives you will have destroyed. But I will do what I am able to do.
We’re just going to have to wait and see how it goes, Anonymous.
I certainly wish you the best of luck in all your future endeavors regardless of what investing strategies you elect to pursue.
Rob
What I am reading in the news is that the top 1% holds most of the wealth and that the average American no longer has much in stock. Are you worried about the top 1%?
Yes, I am.
We all have life stories. I was born into the lower middle-class. There are lots of very, very good people in the top 1 percent. And, so, yes, I am worried about them. But I don’t have the same emotional connection with them that I have with people in the middle class.
My parents told me stories about the First Great Depression. One of those stories had the impact on me that 50 stories told by someone in the top 1 percent would have. Because they were my freakin’ parents, you know? That’s just the way it works.
The full truth here is that what hurts the top 1 percent ends up hurting all of us. There are thousands and thousands of entrepreneurs who have seen their businesses fail during the Buy-and-Hold Crisis. A lot of those people are in the top 1 percent. That doesn’t mean that they have it easy. People in the top 1 percent have bills to pay. They become accustomed to a more expensive lifestyle and they feel pressures to keep the money coming in. So they might be careful about starting a business. And they might feel a lot of pain to see that business fail.
We ALL suffer when those businesses fail. Middle-class people with good jobs at those businesses suffer. Minimum-wage employees suffer. EVERYONE suffers.
The advance from Buy-and-Hold to Valuation-Informed Indexing is a boon to each and every one of us. It means that the top 1 percent live richer lives and it means that the bottom 99 percent live richer lives. It is a win/win/win/win/win.
This isn’t like trying to address the budget deficit by making cuts that help one segment of society while taking from another. This is one where we all advance at the same time. It’s like the discovery of how electricity can be used to light houses. The top 1 percent have bigger houses. So it could be said that that was a bigger boon for them. But the bottom 99 percent benefit from having electricity in their houses too. An argument can be made that someone in the bottom 99 percent who lives at a time when houses can be lit through electricity lives better than someone in the top 1 percent who lives at a time when houses can only be lit with candles.
I have deeper feelings for the bottom 99 percent than I do for the top 1 percent because I was born in the bottom 99 percent and that’s where most of my friends were born. But I care about the top 1 percent too. And I am 100 percent happy to help them by sharing with them knowledge of how stock investing works. I don’t see the top 1 percent as my enemy. Not even a tiny bit. I am grateful for the good people in the top 1 percent who have enriched my life and the lives of all of my friends in many important ways.
I hope that helps a bit, Anonymous.
My best wishes to you and yours.
Rob
I didn’t see a response on one question, so I will ask again. Why don’t you just start your own forum?
My forum is the internet, Anonymous.
All of us who post honestly have that entire forum open to us.
That’s why as a people we adopted laws against financial fraud. We wanted to protect ourselves against you and people like you, the sorts of individuals who have put up posts in “defense” of Mel Linduaer and John Greaney and Jack Bogle.
Those laws are not self-enforcing. All of our lives begin getting better on the day we start demanding swift enforcement of those laws. I put up my first post suggesting enforcement of those laws on the morning of May 13, 2002.
Not enough of my fellow citizens have yet joined me for us to get the job done. But I am confident that we will have enough stepping forward following the next crash. I believe that we will have freakin’ Jack Bogle himself working with us following the next crash. So I sure am not giving any consideration today in joining you Goons in your massive act of financial fraud. Going to prison ain’t on my bucket list!
If you are able to find some alternate universe where the sorts of tactics that you have employed over the past 13 years to stop millions of people from learning about the errors in the Old School retirement studies, please feel free to post there. You are not welcomed on the internet already established on good old Planet Earth. This internet is taken.
I hope that helps a bit.
My best wishes to you and yours.
Rob
What fraud. There are no charges. Only your opinions
We’re all going to see how it plays out, Anonymous.
There were no charges in the Madoff case until his fund collapsed.
The appeal of Ponzi schemes is the Pretend Money. It is the loss of the Pretend Money that causes people to turn against them. When the objects of the con turn, they turn hard. People don’t like being tricked out of their retirement money. They are funny that way.
Don’t let the bad guys get you down, man.
Rob