Set forth below is the text of a comment that I recently posted to another blog entry at this site:
And, if we just look empirically. There are less than 5 posters out of hundreds of thousands who actually care when/after you are banned. I don’t read anything on any message board bemoaning the loss of Rob Bennett’s contribution.
And I have a feeling its not because they are ‘scared’ of being banned from an Internet message board – LOL!
It’s exactly that.
If someone participates at a discussion board and enjoys it, why would he not want to avoid getting banned at that board? It’s common sense that he would avoid behavior (posting honestly) that he knows will make you Goons demand that he be banned.
This all began when I put forward my famous post pointing out the errors in the Old School safe-withdrawal-rate studies. John Greaney was embarrassed to have people learn about his mistake.
That’s understandable. What’s not so understandable is the manner in which he dealt with that embarrassment. He lashed out at the person who brought the error to his attention.
Huh?
I didn’t cause Greaney’s embarrassment. His embarrassment was caused by the fact that he got an important number wrong in a retirement study. He got the number wrong because he used the same methodology that was used in the Trinity study, a peer-reviewed study. He ASSUMED that the methodology employed in the Trinity study was analytically valid. But of course it wasn’t. The Trinity authors should have corrected their study a long time ago. If they had, Greaney never would have been embarrassed. His gripe is with the authors of the Trinity study, not with me.
Of course we can take it back even a step farther. Why didn’t the Trinity authors correct their study a long time ago?
The Trinity authors didn’t get called out on their b.s. for many years any more than Greaney did. They too would be embarrassed to acknowledge their error today, after it has caused millions of failed retirements. The Trinity authors are pretty much in the same situation as Greaney.
And of course we can take it back even farther than that. Bogle knew about Shiller’s 1981 findings when they came out. Why didn’t he make a statement then acknowledging that there was now peer-reviewed research showing that there is precisely zero chance that Buy-and-Hold could ever work for even a single long-term investor?
If men were angels, he would have done that. Men are not angels. Bogle did not acknowledge his mistake at the time when the peer-reviewed research in the field first showed it to be a mistake. He ignored the new research. He went into cover-up mode. And, now 33 years later, here we are. Bogle’s unwillingness to acknowledge his mistake has now brought on the biggest economic crisis in U.S. history. Whachagonnado?
Our understanding of how stock investing works is still in its primitive stage, Laugh. That’s the bottom line here. We like to think we know all there is to know. But we don’t. Not even close.
So the most important quality that anyone working in this field needs to possess is an ability to say the words “I” and “Was” and “Wrong.” Mel Lindauer lacks that ability. John Greaney lacks that ability. Jack Bogle lacks that ability. That’s why we are in this economic crisis. That’s why we are in the process of seeing millions of middle-class people suffer failed retirements. That’s why you will be spending a big stretch of years in a prison cell. That’s why we are in this big mess.
Yes, people are scared to be banned from discussion boards. And yes, people are scared to have you Goons threaten to kill their loved ones. And yes, people are scared to have tens of thousands of acts of defamation directed at them. And yes, academic researchers are scared to have internet Goons threaten to send defamatory e-mails to their employers in an effort to get them fired from their jobs and to see leading figures in the field like Jack Bogle raise not a finger to deal with the problem when they learn about it.
And of course you understand full well that intimidation tactics work when trying to silence people on the internet. If you didn’t know that intimidation tactics worked so well, you wouldn’t employ them so frequently.
I am not engaging in intimidation tactics when I note that you have committed the biggest act of financial fraud in U.S. history and that you are now on your way to serving a long stretch of time in a prison cell. All that I am doing is letting you know how the people of the United States elected to protect themselves from Goons like you.
But the announcement of your prison sentence WILL serve a similar end as your intimidation tactics. People respond to incentives. During the Buy-and-Hold Era, lots of people got filthy rich pushing the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind. Those who posted honestly re the last 33 years of peer-reviewed research saw their careers destroyed by the Buy-and-Hold Mafia. Huge incentives were provided for pushing smelly garbage and huge disincentives were provided for letting people know what the peer-reviewed research in this field really says.
That is in the process of changing.
When your prison sentence is announced, people are going to be running away from statements in “defense” of Buy-and-Hold at the speed of light. When my settlement check for $500 million is mailed to me, we are going to see HUNDREDS of blogs opened that will be exploring the implications of the past 33 years of peer-reviewed research in great depth.
The usual rule is that research-based strategies are what work and that Get Rich Quick/Buy-and-Hold strategies are what sell.
But the relentless promotion of the Get Rich Quick garbage ALWAYS causes an economic collapse.
And, following the economic collapse, Get Rich Quick doesn’t sell so hot anymore. Following the next price crash, the phrase “Buy-and-Hold” will be spit out of people’s mouths like an obscenity.
I will have 12 years of articles and podcasts and calculators at my site showing that I have done everything in my power to see you Goons shut down.
What will you have?
You will have a few kind words from me arguing that as a society we should act with charity toward those of our Buy-and-Hold friends who have put up posts in “defense” of Mel Linduaer and John Greaney.
What else?
And how much will that hold back the millions of people who will have seen their financial futures destroyed by your death threats and your deceptions and your word games?
Even then I will wish you all the best that this life has to offer a person.
That much will not change.
How much will it help you at that point?
I don’t think it will help too much at that point.
But I’m not God. I don’t know for sure. We will just have to wait and see how things play out.
Hang in there, my long-time abusive-posting friend.
Rob
Anonymous says
“How is it that a lame man does not annoy us while a lame mind does? Because a lame man recognizes that we are walking straight, while a lame mind says that it is we who are limping.”
Human Happiness
By Blaise Pascal
Rob says
Okay.
I wouldn’t say that the Buy-and-Holders have lame minds. I have never met a dumb Buy-and-Holder. So I feel that I would be delivering an inappropriate insult to my many Buy-and-Hold friends if I were to say that.
I believe that my Buy-and-Hold friends are weak in the emotional department. They agree with me that it is investor emotion that causes most investing mistakes. So we start out on the same track. But there are different personality types in this world. The ones that are strongest in the logic department are often not super-strong in the emotion department. It is the Buy-and-Holders’ greatest strength (their intelligence and ability to apply logic to an analysis) that makes them weak in their understanding of some of the most important investment questions, the ones that require a strong grasp of emotional realities to understand fully.
That’s where I come down, Anonymous. I DO think you are limping in your understanding of how stock investing works. I see that it annoys you to no end that I think that and say that. But that is what I sincerely believe. If I don’t say what I sincerely believe, I am no good to you or to anyone else. If I don’t say what I sincerely believe, I do not have a right to call you “friend.” And I do call you “friend.”
There is not one word that I have ever put forward that was put forward with the intent of hurting your feelings or of hurting the feelings of any Buy-and-Holder. Not one.
I have hurt you. I know that that much is so. I can’t deny this given all the evidence that I have seen.
I think the Buy-and-Holders are trying to do good. I don’t doubt the good intent. I don’t doubt that they follow the strategies that they urge others to follow. So there is a measure of sincerity in what they say.
I can sign on to all that.
But I cannot say that I share your beliefs about how stock investing works. I do not.
I have learned many important things from the Buy-and-Holders. I can say that in two seconds. And I can go on and on about all that I have learned from my Buy-and-Hold friends.
But I cannot say that I share your beliefs about how stock investing works. That can never happen (except in the exceedingly unlikely event that I someday change my mind about the valuations matter).
That’s it.
You are saying that it annoys you that I say that I believe you are wrong about something important.
Okay.
It annoys you.
Now what?
What do we do about it?
What I am going to do is to continue to post my honest beliefs. Re safe withdrawal rates. Re risk management. Re asset allocation. Re retirement planning. And on and on and on.
I am physically incapable of playing it any other way. I mean no offense. But I am physically incapable of playing it any other way. So I am going to continue to post my honest beliefs.
I hope the day comes when you are not so hurt to hear what I have to say.
I care about you. I have zero desire to hurt you. But I cannot be what you need for me to be for you to not feel pain when I post. So we are where we are.
I naturally wish you the best of luck in all your future life endeavors regardless of what investing strategies you elect to pursue, old friend.
Rob
Anonymous says
I thought that buy and hold could never work for a single investor? I am confused. Can you explain how this happened?
http://finance.yahoo.com/news/heres-janitor-amassed-8m-fortune-234459317.html
Rob says
If he had exercised price discipline, he would have achieved a higher risk-adjusted return. That’s been so for 140 years now. There has never been a single exception to the rule.
If someone died with a portfolio of $100 following a Buy-and-Hold strategy, he could have done better following a Valuation-Informed Indexing strategy.
It’s the same with someone who died with a portfolio of $100 million.
Exercising price discipline always adds. It is a logical impossibility that it could ever subtract.
Rob
Rob says
He was successful with stocks. He wasn’t successful with Buy-and-Hold.
He was “successful” because he lowered his risk-adjusted return?
Huh?
It’s a logical impossibility, Anonymous. Price discipline is always a plus. ALL of the peer-reviewed research shows that. The entire historical record shows that.
If there were even a sliver of support for Buy-and-Hold in the peer-reviewed research, we never would have seen a single death threat or a single threat to get a single academic researcher fired from a single job.
I mean, come on.
Rob
x says
“Exercising price discipline always adds.”
So you’re into moral victories. Everyone else just checks the scoreboard.
Rob says
The difference between you and me is that I check the long-term scoreboard and you check the short-term scoreboard, X.
Buy-and-Hold and Valuation-Informed Indexing performed equally well from 1981 through the end of 1995.
Valuation-Informed Indexing trounced Buy-and-Hold from 2000 forward until today (4 percent real for VII, 2 percent real for Buy-and-Hold at much higher risk).
Buy-and-Hold trounced Valuation-Informed Indexing from January 1996 through December 1999. No argument there.
The trouncing that Buy-and-Hold administered to Valuation-Informed Indexing from 1996 through 2000 counters the trouncing that Valuation-Informed Indexing administered to Buy-and-Hold from 2000 forward. The two strategies are roughly even today.
But stocks are priced for a 65 percent price drop today. That’s going to kill the Buy-and-Holders. The different between the two strategies will be huge after that crash takes place. And it will grow and grow and grow through the magic of compounding returns for many years to come.
That’s the way it always works. That’s the way it has been working for 140 years now. Try some runs with the Scenario Surfer and you will see that this is so.
If you live for the excitement of those 1996 through 1999 time-periods, Buy-and-Hold is for you.
If you want to get the highest possible return for the long term while taking on the lowest possible risk, Valuation-Informed Indexing is for you. And it’s not a close call.
Buy-and-Hold has a marketing edge at the present moment because most humans are inclined to focus on the short term. But I believe that that marketing edge will disappear with the next price crash.
And Buy-and-Hold will never come back. It has come back before. But on those earlier occasions we did not have 34 years of peer-reviewed research showing that a strategy that does not focus on the need for investors to exercise price discipline at all times has precisely zero chance of every delivering good long-term results. Now we have that. So, once Buy-and-Hold goes down, it goes down forever.
I am not God. I could be wrong.
But that’s what I believe. That belief obviously influences every decision I make.
So it seems to me that we are just going to have to wait to see how things play out.
I believe that the shift from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance in the history of personal finance. I believe that I would be betraying myself AND my family AND my profession (journalism) AND my friends AND my country if I were to agree to post dishonestly re safe withdrawal rates. So I obviously am not going to go there. It’s not a close call.
I naturally wish you the best of luck in all your future endeavors regardless of what investing strategies you elect to pursue.
Rob
Rob says
Everyone else just checks the scoreboard.
My scoreboard is the peer-reviewed research.
The others stuff can fool you. The benefit that I see in the peer-reviewed research is that it cuts through the b.s. that dominates marketing brochures. The peer-reviewed research is the real deal, in my assessment.
Show me a URL to peer-reviewed research showing that there is some alternate universe where a Buy-and-Hold “strategy” might work for one or two long-term investors and you will get my attention.
Short of that, I am going to continue to insist on my right to post honestly re what the last 34 years of peer-reviewed research says at every board and blog on the internet. I believe that every investor alive needs to know the accurate and true story.
I have nothing against the idea of making a buck. I expect to make 500 million of the little buggers myself. But there are lines that I don’t think any of us should cross in the quest for the almighty dollar. One of those lines The Felony Line.
I don’t cross that one. Not to make Mel Linduaer happy. Not to make John Greaney happy. Not to make Jack Bogle happy. Not to make anyone happy.
Find someone else.
Not this boy.
It’s not my particular cup of tea.
No can do.
I can’t go for that.
Rob