Set forth below is the text of a comment that I recently posted to another blog entry at this site:
who exactly is in the buy and hold mafia and how did they get so much power? do you have any real names of people who wield this type of influence over the universe?
Jack Bogle.
Bill Bernstein.
Larry Swedroe.
Scott Burns.
The owners of the Motley Fool site.
The owners of the Index Universe site.
The owners of the Morningstar.com site.
The owners of the Bogleheads.com site.
And on and on and on and on.
They got their power legitimately. There really was peer-reviewed research published in 1965 that appeared to many good and smart people to support the Buy-and-Hold concept. That wasn’t fraud. That was good stuff. I can go a step farther than that. I can say that that was heroic stuff. The Buy-and-Hold Pioneers took us out of the dark ages re our understanding of how stock investing works. Their huge insight — that short-term timing never works — is the second most powerful insight ever developed in the history of investing analysis. We all owe a great debt of gratitude to the Buy-and-Hold Pioneers.
It became fraud sometime between 1981, when Yale Economics Professor Robert Shiller published his “revolutionary” (his word) research showing that, while it is indeed so that short-term timing never works, long-term timing (price discipline) ALWAYS works and is ALWAYS 100 percent required for investors hoping to have any realistic hope of long-term success, and the morning of May 13, 2002. On the morning of my famous post pointing out the errors in the Old School SWR studies, the Buy-and-Holders responded with an insane level of defensiveness. So they obviously were aware on at least one level of consciousness that the research showed that Buy-and-Hold could never work. I have seen no evidence that they were aware of that in 1981. It appears to me that their confidence that Buy-and-Hold could be defended in civil and reasonable debate gradually declined over those 21 years until things got to the point where they stood on the morning of May 13, 2002. I can obviously only give personal testimony as to events that took place after that date.
They keep their power through the use of brutal intimidation tactics. The most obvious case is where they threatened to get Academic Researcher Wade Pfau fired from his job if he continued to publish and promote honest research. There are thousands of researchers who would love to be doing honest research today. But, like Wade, many of them have families and, thus, do not dare to “cross” my good friend Jack Bogle and the other Wall Street Con Men trying to keep the Buy-and-Hold fantasy alive another week, another month, another year.
The con men want to come clean. It was an honest passage in Bogle’s book that taught me that the Old School SWR studies were in error. Bernstein gave a partly honest response when one of you Goons sent him an e-mail asking if the methodology used in the Old School studies is analytically invalid. Swedroe stood up to Linduaer once and got himself banned from the Bogleheads Forum. Pfau wrote to the authors of the Trinity study and asked them to correct the errors in their study. And on and on and on.
The problem is that the Wall Street Con Men know that, if they come clean, they go to prison. Bogle should have acknowledged his mistake when Shiller first published the research discrediting the Buy-and-Hold Model. He rationalized not doing so. I presume that he told himself that it would all somehow work out. And now that 33 years has passed, it is 1,000 times harder for Old Saint Jack to work up the courage to say the Three Magic Words.
Everybody who works in this field knows that his career will be destroyed if he tells the full truth re these matters. So everyone keeps it zipped.
But keeping it zipped re financial fraud only causes the financial fraud to spread. Financial fraud is a cancer. The longer it continues, the more lives are ruined. The more lives that are ruined, the longer are the prison sentences that are ultimately assigned to those participating in the massive act of fraud.
My job is to bring it to an end and get us back to the original Buy-and-Hold idea — rooting one’s strategies in the peer-reviewed research.
I hope that helps a bit, Laugh.
Rob
Anonymous says
These “thousands of researchers” could easily post anonymously here or at discussion forums all over the internet about The Big Rob Conspiracy. In fact, anonymous posting is the norm in most places. So, where are they?
Rob says
These “thousands of researchers” could easily post anonymously here or at discussion forums all over the internet about The Big Rob Conspiracy. In fact, anonymous posting is the norm in most places. So, where are they?
I’ve answered this question numerous times, Anonymous. Do a search of the earlier responses if you want a complete response. For here, I will keep it short.
They are afraid. All humans respond to social pressures. When Wade Pfau became 100 percent convinced that Valuation-Informed Indexing is FAR superior to Buy-and-Hold, he said so at the Bogleheads Forum and he was attacked by you Goons for supporting long-term timing (price discipline). He said (I am paraphrasing): “You think I am selling snake oil when I say that long-term timing always works. I don’t want to be viewed as a snake oil salesmen.”
Neither does anyone else. There has never been a sliver of evidence that long-tern timing does not always work. The Buy-and-Holders got that one wrong. When the mistake was uncovered, they went into cover-up mode. Now they are 100 times more embarrassed by the 34-year cover-up (including numerous criminal acts) than they are by the initial mistake, which was understandable. Now they are more determined than ever to continue the cover-up. Each day the cover-up continues, the Buy-and-Holders become more determined to block the millions of middle-class investors from learning the truth about what the last 34 years of peer-reviewed research tells us about how stock investing works.
Knock off the felonies and you will soon see THOUSANDS of people telling the truth about stock investing. The economic crisis will come to an end and we will enter the greatest period of economic growth ever seen in our history.
The Wall Street Con Men have lots of money and lots of power and lots of influence and they have zero desire to let the millions of middle-class investors learn what they very much need to learn. They intend to continue to use the most brutal tactics imaginable to continue the biggest act of financial fraud in the history of our nation.
But what happens when we experience another price crash and when we are heading to the Second Great Depression because of this massive cover-up? Do they continue with the brutal abusiveness even then?
I say “no.”
Jack Bogle and all the other con men have been including honest passages in their writings along with the smelly Buy-and-Hold garbage for years now. The only possible explanation is that Bogle possesses a conscience and that the other con men do too. So what do you think they are going to do following the crash? I think they are going to come clean.
Not good news for you Goons, eh?
We’ll see.
And the reason why academic researchers don’t post anonymously is that they are ashamed of themselves for not posting honestly using their real names. To post anonymously is to acknowledge that they have sold out themselves and their families and their profession and their country. It doesn’t feel good to do that. So they wait for someone else to step forward and be the one to have his head cut off.
The reality is that there’s no one here but us chickens!
When the thought of continuing the human destruction achieved by the continued promotion of the long-discredited “idea” that there is no need to practice price discipline when buying stocks becomes too great to bear, THOUSANDS will step forward. You Goons will be sent to prison cells and the rest of us will be freed to have the discussions that we should have begun having back in 1981.
I wish you all good things.
But I love my country.
Rob
Anonymous says
If they are anonymous, they have no need to be afraid.
Rob says
If they are anonymous, they have no need to be afraid.
I answered this above, Anonymous.
They are ASHAMED.
Wade Pfau spent years studying economics. He was awarded a Ph.D. He went on to co-author the most important research published in this field in three decades. He was looking forward to being awarded the Nobel Prize.
Then some Internet Goons threatened to get him fired from his job. Jack Bogle indicated that he and the other Wall Street Con Men were going to support the Goons. Wade has two small children for whom he provides financial support. He loves them. So he folded. He agreed to betray himself and his family and his profession and his country.
Do you not see how that makes him feel ashamed of himself?
He could post anonymously. You are right about that.
He doesn’t want to think about what he has done. He sold out. He sold out his country.
Now he rationalizes. He says: “Oh, maybe things won’t go so bad, maybe stocks will perform in ways in which never before in history have they performed and I won’t end up being responsible for the destruction of millions of middle-class lives. You never really can tell with 100 percent certainty, can you?”
Wade is in pain. Just like you Goons are in pain. Just like Bogle is in pain. Just like all Buy-and-Holders are in pain 34 years after the peer-reviewed research showed that there is precisely zero chance that this smelly Get Rich Quick garbage could ever work for even a single long-term investor in this or any other solar system.
People who have sold out themselves and their profession and their country do not like to be reminded of it. They are not interested in posting anonymously at web sites. They try to forget what they have done to the millions of middle-class investors whose lives they have destroyed.
Each time another person sells out his country, we all go down another step into the darkness.
I love my country.
It is my intent NOT to sell out.
We will see what happens.
My best and warmest wishes to you and yours.
Rob
Anonymous says
So even if your load of BS regarding Wade is true what about the thousands of other researchers you referenced?
Rob says
Many of the researchers still believe in Buy-and-Hold, Anonymous. Wade believed in Buy-and-Hold before we did our work together. John Walter Russell also believed in Buy-and-Hold before we did our work together. And I believed in Buy-and-Hold myself before Greaney threatened to kill my wife and children if I continued to post honestly on safe withdrawal rates and 200 of my fellow community members endorsed his post.
Believing in Buy-and-Hold is easy. Believing in Buy-and-Hold today is like what it was to believe that the earth was flat in the days before mankind learned that the earth is actually round. The earth sure appears to be flat. It’s not at all hard to understand why most people once believed that. Buy-and-Hold sure appears to produce good results for significant periods of time. Those who followed Buy-and-Hold strategies did gangbusters from 1981 through 1999. What’s not to believe?
The purpose of research is to go beyond surface appearances. It appears that stock price changes are determined by economic developments. That’s why the Buy-and-Holders jumped to that unfortunate conclusion. Shiller’s 1981 research went beyond surface appearances and showed us that that is zero chance that it is economic developments that cause stock price changes.
If it were, stock prices would fall in the pattern of a random walk. In the long term, they never do. That means that it is something else — investor emotion — that determines stock price changes. Economic developments can have an indirect effect because economic developments influence investor emotion. But investor emotion is the dominant influence. Economic developments must pass through the filter of investor emotion before they have their effect on stock prices.
That changes everything.
Most academic researchers understand that there are holes in the Buy-and-Hold Model. But most do not yet buy into the Valuation-Informed Indexing Model. For that to happen, we need to permit them to do honest research and to talk over their research findings with all of their peers. We need to have all of the experts in this field talking over all of the exciting discoveries that we have made over the past 34 years. When that happens, knowledge will grow and grow and grow and grow.
We cannot wait until there is a 100 percent consensus that Valuation-Informed Indexing is the answer before permitting honest discussion of the findings of the last 34 years of peer-reviewed research. If we demand a 100 percent consensus before permitting the first honest post, we will never get to where we all very much want to go.
We have 34 years of peer-reviewed research showing what works. That’s enough to justify opening up every board and blog on the internet to honest posting. Once we do that, it’s all downhill sledding. We all want the same things. There are hundreds of billions of dollars to be made getting these ideas out before people. If we permit honest posting at just one large board, we will see good stuff piled on top of good stuff piled on top of good stuff piled on top of good stuff. We will end up experiencing the greatest period of economic growth ever seen in the history of our nation.
But we do need to start. For so long as all of the researchers fear that their careers will be destroyed if they publish just one honest research paper or post one honest comment, we cannot get the ball rolling. For us to see THOUSANDS of honest and accurate reports of what the last 34 years of peer-reviewed research shows us, we need to start with ONE honest and accurate report. The rest just follows from that.
The problem is that the cover-up has been going on for 34 years. The Wall Street Con Men are worried that they will be going to prison if they come clean today.
I cannot change that by myself.
If people want to talk about some sort of amnesty, I am fine with that. But I cannot adopt an amnesty by myself.
I hope that all makes good sense to you.
My best wishes to you and yours.
Rob