Set forth below is the text of a comment that I recently posted to another blog entry at this site:
I see we’ve inflated up to five wins. Each new “win” strengthens your argument – is that how it works?
There are five real wins:
1) When I take over the Bogleheads Forum, all posters (both Valuation-Informed Indexers and Buy-and-Holders) will feel safe posting their honest views. That provides a great learning experience for every one of us;
2) Once we open up the internet to honest posting, we can bring the economic crisis to an end. A 65 percent price crash is going to hurt a lot. But that 65 percent crash is optional. It is crazy for investors to value stocks at one-half of their fair value. We should tell people the truth about what the last 33 years of peer-reviewed research says. Then it would be impossible for the P/E10 level ever to drop much below 15. We would still suffer a price drop. But not anything near as devastating as what we will see if the Ban on Honest Posting remains in place;
3) The prison sentences for those who have put up posts in “defense” of Mel Linduaer and John Greaney are obviously going to be shorter if they come clean prior to the crash. It is the extent of the anger felt by the millions of middle-class people who are seeing their financial futures destroyed that will determine the length of the prison sentences. People are obviously going to be a lot less angry if we avoid a big price crash;
4) The Wall Street Con Men make out a LOT better if we permit honest posting. They want to sell stocks. That’s how they make money. The last 33 years of peer-reviewed research is the biggest boon to those trying to sell stocks ever seen. We can now tell people how to reduce the risk of stock investing by nearly 70 percent. The biggest objection people have to buying stocks is the risk and we can pretty much eliminate it! That’s huge.
5) Bloggers benefit big time if we open the internet to honest posting. There are huge opportunities to write articles on the 33 years of research that we so far have not been permitted to discuss and to develop accurate calculators and on and on and on. We will be seeing many millionaires made because of these huge advances. That’s a good thing, no?
It’s a win/win/win/win/win.
If anything, I undersold it. If I spent some time on this, I am confident that I could ADD some wins to the count. Perhaps it is an 8-win thing or a 12-win thing. It’s a five-win thing at a minimum!
This is truly good stuff, truly exciting stuff.
That’s my sincere take, in any event.
Rob
Anonymous says
I would like to be able to fly like superman, have more money than Bill Gates and be able to look like I am 25 for the rest of my life, but we all can’t expect our fantasies to be reality, right?
Rob says
This comment goes to what I mean when I say in response to all of your intimidation tactics that I am going to continue posting honestly because I love my country.
We clicked in the last piece of the puzzle re how stock investing works in 1981. Computer technology was around in 1981 but was not nearly as advanced as it is today. The most advanced game at the time was probably that Pong thing that bounced a ball from one end of the screen to another.
If you had told people that in 34 years we would be able to talk to our cell phones while we walked to the street and ask them to tell us the location of a restaurant that we wanted to eat it, people would have said what you say here: “I would like to be able to fly like Superman, have more money than Bill Gates and be able to look like I am 25 for the rest of my life but we can’t all expect our fantasies to be reality.”
We need to be cautious re outsized claims. I go along with that one 100 percent. I say that we can reduce the risk of stock investing by 70 percent anytime we choose to open the internet up to honest posting. That is very much an outsized claim. So I have zero problem with the idea of subjecting it to the greatest scrutiny possible. Our system calls for that. So that is 100 percent okay in my book.
That’s not what you Goons have done. You have not subjected the last 34 years of peer-reviewed research to scrutiny. You have flat-out banned discussion of it. You have made clear for 13 years now that anyone who discusses the implications of the last 34 years of peer-reviewed research will see his career destroyed for having done so. Everyone gets a choice. He can silence himself Or he can see his career destroyed. No other options.
That’s not necessary scrutiny or appropriate skepticism. That’s financial fraud. That’s a felony. That’s prison time.
And for good reason.
The computer technology industry is different in an important way from the investing advice industry. The computer technology field was wide open in 1981. Steve Jobs could design a great computer or a great cell phone and sell millions of them and become very rich and change the world.
That’s not the way it works in the investing advice field. If there had never been an industry built around the promotion of Buy-and-Hold strategies, the two situations would be comparable. Had Shiller published his “revolutionary” (his word) research findings in 1961 instead of 1981, we would have seen the same growth in the investing advice field in the following 34 years that we have seen in the computer technology field from 1981 through today. That’s not the way the cards were dealt. The research that for a time appeared to support Buy-and-Hold was published in 1965 and an entire industry was quickly built around it and so when Shiller published his “revolutionary” research in 1981 there was an entire industry of “experts” already in place to tell him to take his revolutionary insights and go pound sand with them.
I don’t buy it, Anonymous.
Valuation-Informed Indexing is a dream come true. It is Investor Heaven. It is what Jack Bogle was trying to put together when he put together Buy-and-Hold. VII is JACK BOGLE’S DREAM COME TRUE.
There is 34 years of peer-reviewed research showing that. There are 13 years of internet discussion-board conversations showing that. There are HUNDREDS of experts (take a look at the slider at the top of every page of this web site) saying that. It’s all 100 percent amazing and 100 percent fantasy and 100 percent unbelievable and 100 percent true.
Our economic system is built around the idea of fantasies coming true every now and again and making all of us richer as a result. That’s the entire freakin’ point of our system!
Most fantasies do not come true. You’ve got me re that one. But some do. Letting the ones that can come true actually come true is important stuff. It is by permitting such fantasies to come true that we have been achieving that 6.5 percent real return for 140 years now. Keep everything the way it always has been, never permit a new idea to develop before our eyes, and you lose that 6.5 percent annual growth that permits us all to retire and live off our savings some day. Take away the possibility of fantasies coming true and nothing in this society works.
If you want to add a line to the bottom of my posts saying “This guy believes in ideas that offer such amazing benefits to every single person alive on Planet Earth today that it is hard for many of us to believe that these ideas are anything more than fantasies,” I have no problem with it. These ideas are so “revolutionary” (you know whose word that is) that I freely acknowledge that they strike many people as nothing more than fantasies.
We are on the same page up to that point.
Where we get on different pages is when you block people from learning about the ideas through the 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. If the ideas lack merit, they will be shot down in the court of public opinion without any need for the use of any such intimidation and deception tactics. if the ideas possess merit, widespread discussion of them will take us to a place where everyone in the field will be endorsing them in time and then working together with all the rest of us to promote them. That include my good friend Jack Bogle. And Bill Bernstein. And Larry Swedroe. And Mike Piper. And Bill Shultheis. And on and on and on and on and on.
The advance we are talking about is so huge that it appears to be a fantasy.
But our nation is built on the idea that fantasies come true on a regular basis so long as we all follow the laws that we have enacted as a society to govern out interactions with each other. Putting a man on the moon was a fantasy. Until it wasn’t. Electing a black man President of the United States was a fantasy until it wasn’t. Curing polio was a fantasy until it wasn’t.
I like to see fantasies come true. Sue me.
Our system permits us all to do work helping fantasies to come true.
It’s hard work. We have to overcome a good deal of natural skepticism to make it happen.
That’s understood. That’s the way it works.
We do NOT have to overcome death threats. We do NOT have to overcome threats of unjustified board bannings. We do NOT have to overcome tens of thousands of acts of defamation. We do NOT have to overcome threats to get academic researchers fired from their jobs.
We have laws in place to protect us when Goons like you employ tactics aimed at stopping millions of us from enjoying the fantasy come true that took place before our eyes when Shiller published his “revolutionary” (his word again!) research showing us how to reduce the risk of stock investing by 70 percent.
I am driving the History Train and you Goons are lying in the tracks trying to block it from going forward. You will end up getting run over/sent to prison because this train isn’t stopping.
It can’t stop. There are millions of middle-class people investing in stocks to finance their old-age retirements. If this train stops, all of those people are thrown out in the cold without any money in their old age. That’s not an acceptable result. The train will continue on down the track.
Slowly as all get-out, it would seem! I hate that part!
But it will continue down the track all the same. We will make fantasies come true. As we have been doing in this country for 240 years now.
That’s the deal.
I love you all. I will do anything I can to help you starting the minute you agree to be bound by the laws of the country in which you live.
But I will not post dishonestly re the numbers that my friends use to plan their retirements. Going to prison is not on my bucket list. So you are going to have to find someone else re that one.
I naturally wish you all the best that this life has to offer a person regardless of what investing strategies you elect to follow.
Rob
Anonymous says
Intimidation? You mean like when someone threatens you with prison because they don’t do what you want?
Rob says
I’m not threatening you with prison, Anonymous. I am offering to do whatever is in my power to help get your prison sentence reduced. There’s a big difference.
You have to take a step back and look at the history to understand what is going on here.
I am opposed to Buy-and-Hold, right? I have two problems getting Valuation-Informed Indexing on the map. One is that the Buy-and-Holders don’t believe in it. That’s a problem but not an insurmountable one. In theory, the way to overcome that problem is to convince enough people of the merits of Valuation-Informed Indexing to take on the Buy-and-Holders at every board and blog on the internet. Eventually, the better ideas would prevail. Right?
One big problem with the usual approach is that the Buy-and-Holders are so ruthlessly abusive. They will do ANYTHING to stop people from learning about the implications of the past 34 years of peer-reviewed research. That makes my job a lot harder. But even that does not make my job impossible.
There’s a way in which the Ban on Honest Posting cuts in my favor. It creates a huge OPPORTUNITY for those who jump on the VII bandwagon first. Bogle is famous today because he was one of the first to push Buy-and-Hold. You would think that someone like Wade Pfau would want to become as famous as Bogle and so would lead the VII cause today. Why doesn’t he?
A big problem here is cynicism. People see things in black and white. Either Bogle is the greatest genius who ever lived and incapable of ever making a mistake. Or else he is the Frank Underwood of Personal Finance, the most corrupt person who ever lived. The Buy-and-Holders believe he is the former. Those who lose confidence in Buy-and-Hold usually fall into the trap of believing the latter. They adopt the cynical view that Bogle (and the other Wall Street Con Men) are 100 percent corrupt. Thus, they conclude that it is just too risky to take them on. They satisfy themselves with including BITS of honesty in their work. They don’t tell the full truth known to them but they tell more truth than most others and are able to live with themselves by rationalizing that that is the best that can be done given the circumstances that prevail.
I DO NOT SHARE THIS CYNICAL VIEW.
I believe that Bogle really believes what he says about stock investing on one level of consciousness. He knows that Shiller’s research is a threat. He would have to be a moron not to see that. But he tells himself that Buy-and-Hold is as close to what works that we are ever going to get and that that is good enough. He compares it to other stuff out there and rationalizes that he is helping people by advocating Buy-and-Hold.
Why do I believe in this non-cynical interpretation of events? I have had a front-row seat to all of this for 13 years now. I have been able to see up close and personal how people develop their various rationalizations. No one else has the level of experience with this aspect of the question. I am truly the world’s #1 expert on this side of things.
Greaney’s study was an advance. He said that the safe withdrawal rate was 4 percent when a lot of people were still saying that it was 7 percent. Heck! There was one guy at Motley Fool who once said that it was 15 percent! Greaney believed that his study served a good purpose by showing why people making such claims are wrong. He is the leader of the Campaign of Terror and he believes in his heart (on one layer of consciousness) that he is going good.
If Greaney believes that, why should anyone conclude that Bogle thinks anything less? Bogle is not The Frank Underwood of Personal Finance. He is a good and smart and hard-working person who happened to make a mistake, fell victim to cognitive dissonance and thereby found himself in a trap that he cannot figure out how to escape.
I had many conversations with Mike Piper before he banned me from his site. Mike told me that he believes that Valuation-Informed Indexing can work. I reported on my conversation in a blog entry from a number of years back. Mike does not follow VII himself. He is a Buy-and-Holder. So he properly advocates Buy-and-Hold at his site. But he does not permit discussion of the last 34 years of peer-reviewed research at his site. That’s a strange reality. We need to solve that puzzle.
I figured out the answer to that one when you Goons threatened Wade and got him to flip. You had committed felonies long before that. I hadn’t mentioned prison sentences before that because I believed that it would just inflame things all the more. But I saw when you threatened Wade that, once you committed the felonies, you reached A Point of No Return. Once you passed that point, you felt that you would go to prison no matter what you did. So it didn’t much matter anymore what you did.
You now felt compelled to do things that you never would have dreamed of doing in the early days. In the early days, you fought because you cared what was right and you thought Buy-and-Hold was right. Once you committed felonies, all concern about what was right went out the window. Now it was about staying out of prison. Even research showing how we all can reduce the risk of stock investing by 70 percent was not going to cause you to come clean once coming clean meant going to prison.
There is no way out of the trap you are in today. If you come clean, you still go to prison! Not for as long, obviously. But prison is not appealing for even one day. So you are not interested in coming clean. I want you to come clean. But seeing that it means prison for you, I can’t say that I don’t see at least a tiny bit of logic in your position.
Given that you cannot come clean, it doesn’t make much sense for me to hold back from talking about the felonies. It doesn’t matter how much I inflame you anymore. You are not open to coming clean no matter what I say.
The next step down the logic chain was to realize that it is the same for Jack Bogle and all the other Wall Street Con Men. Jack would come clean in two seconds if it were a question of going back to 1981 and playing it straight this time. The problem is that he does not have that option available to him.
If Jack comes clean, people are going to ask why he didn’t come clean in 1981. They are going to ask why he caused an economic crisis. They are going to ask why he caused millions of middle-class retirements to fail. They are going to ask why he did nothing when he learned that Mel Linduaer uses threats of physical violence to keep people in line at the Bogleheads Forum. What is he going to say? What good answers are there to such questions?
You Goons are in a trap. And Bogle is in a trap. And Mike Piper is in a trap. And the Wall Street Jourmal is in a trap. And every academic researcher is in a trap. And Princeton University is in a trap. Wade Pfau received a doctorate in Economics at Princeton. He sure should not have had to come to me to learn how to calculate the safe withdrawal rate. His Princeton teachers should have taught him that. But they can’t. Because they are in the same trap that holds Bogle and Piper and you Goons and everybody else.
Our entire freakin’ society is in a trap!
Now —
The question is — What are we going to do about it? How do we get OUT of the trap?
We are not going to get out of it by people like me being mean to people like you, Anonymous. So I am happy to do absolutely anything in my power to help you out Anything. And you don’t have to do anything in return to persuade me to do it. I ask for nothing. I just want to help you. And I want to do it for free.
There’s only one hitch.
I want to get us all out of this trap.
If I don’t get us all out of the trap, you end up in prison. So that’s not helping, is it?
And if I don’t get us all out of the trap, Bogle never gets credit for the amazing work he has done does he? Bogle never intended to cause the biggest economic crisis in our nation’s history. But unless we get out of this trap, that’s what he will be known for for decades to come. I love the guy. So I need to get him out of this trap as much as I need to get you Goons out of this trap.
And of course I need to get Wade out of the trap. And I need to get the Wall Street Journal out of the trap. And on and on and on and on and on.
We are not arguing intellectual points anymore. Intellectual points are a secondary consideration for everyone on “the other side”. Their first concern is staying out of prison and avoiding legal liabilities. What the heck am I supposed to do about that? How am I supposed to persuade people in those circumstances?
One possibility is that we could adopt an amnesty. I have no problem with that. My aim is to be able to tell millions of middle-class people about the first true research-based investing strategy, a smart and simple and safe way to invest in stocks. If adopting an amnesty gets us there, why would I object. I am fine with that.
But I cannot adopt an amnesty on my own, can I.
When there are enough powerful people working together to get an amnesty adopted, I will help out. I cannot do it on my own. I have to wait for some others to step forward. That’s where things stand.
For now, it would be cruel of me not to mention the prison sentences. Because the lengths of the prison sentences increase each day. I want the prison sentences to be as short as possible for all sorts of reasons. So I am bound in conscience to continue mentioning them. Even though I do not personally believe that it is going to make much difference. I think that the game-changer is going to be the next price crash. When the crash comes, I want to be able to show people that I at least mentioned the prison sentences on hundreds of occasions. I want to be able to show people that I at least tried.
If you have any bright idea, please feel free to share them, Anonymous.
Otherwise (and I know that the reality is otherwise — I have been wracking my brain for a long time to come up with any ideas that help us all out of this mess in which we find ourselves), we just have to wait until the crash comes and see how people react to it. Then I believe the chances are good that constructive and helpful and life-affirming things will begin to happen.
My best and warmest wishes to you and yours, my long-time Goon friend.
Rob