Set forth below is the text of a comment recently posted by one of the Goons to another blog entry at this site:
All of your 30 redundant points can be answered by the simple fact that no one else sees one gimmicky PE10 metric as gospel for valuation. There are hundreds of technical metrics that can be used that perhaps have correlation with previous lows and highs but they don’t suggest causation and don’t ensure anything about the future value of stocks.
Even the people who came up with this metric (not you) don’t suggest using the metric to actually influence your exposure to stocks.
Your problem is you have become absolutely fixated on one metric, one bit of research, that you had an incredibly small part in like 15 years ago. The actual brains and true contributors to those things have long since moved on to further their research and careers yet you compulsively dwell on this tiny contribution you had to someone else’s long forgotten research. It is not a conspiracy to cover it up, it is just not as revolutionary as you believe and it is so bizarre that you are so attached to it since you are such an insignificant contributor.
Anonymous says
So everyone that doesn’t agree with is considered a goon and worthy of prison is the fantasyland of Rob Bennett.
Rob says
I would never put it that way, Anonymous. I obviously have strong, positive feelings for all of my Buy-and-Hold friends. I reserve the term “Goons” for those who have engaged in criminal acts. I cannot imagine using that term to refer to the vast majority of the millions of good and smart people who follow the Buy-and-Hold strategy today.
All that said, there is an important truth being suggested by your words. Goonishness is sin or ignorance or self-destructiveness. We all have a Get Rich Quick urge within us. Buy-and-Hold is the strategy that is the product of complete surrender to the Get Rich Quick urge. And giving in to the Get Rich Quick urge is self-destructiveness. So, yes, it would be fair to say that all humans have goonishness within them and, thus, all Buy-and-Holders obviously have goonishness within them.
I have goonishness within me. I believed in Buy-and-Hold for a time. So did John Walter Russell. So did Wade Pfau. Shiller obviously has an attraction to Get Rich Quick strategies. That comes through in all the comments in which he says that he believes that he will be able to avoid the crash that he believes is coming soon by looking at his “indicators” and getting out of stocks at just the right time. That’s Goonish thinking, just as much as it is Goonish thinking to believe that this is the first time in history that we are not going to go to a P/E10 of 8 by the time we reach the end of the secular bear market. We all have a Get Rich Quick urge within us and we all run the risk of destroying our hopes for a decent retirement by giving in to that urge and following Buy-and-Hold strategies.
Buy-and-Hold is risk. Goonishness is risk. Get Rich Quick is risk.
Buy-and-Hold is a marketing gimmick. Its appeal lies in the fact that it is PURE Get Rich Quick, the purest and most dangerous Get Rich Quick “strategy” ever concocted by the human mind. It has been a huge money-maker. The Wall Street Con Men love, love, love their Get Rich Quick garbage. And the investors who become addicted to the pure GRQ approach love it too until the day comes when it wipes out their retirement accounts.
Will they still love it after it has wiped out their retirement accounts? I don’t think so. But we are going to have to wait and see to find our for sure.
I believe that in the future we will turn to experts not to persuade us that we are living in the mystical, magical moment when Get Rich Quick strategies are going to work for the first time in history but to report to us accurately and honestly what the last 34 years of peer-reviewed research shows — that Get Rich Quick/Buy-and-Hold is a loser and always has been.
I like giving honest reports on what the peer-reviewed research says, Anonymous. I cannot even imagine playing it any other way. I believe that giving honest reports of what the peer-reviewed research says is the future of investing analysis. I look forward to the day when you Goons will be put in prison so that the rest of us can offer honest and accurate reports without having to worry about the abusive and criminal tactics that you will employ to stop our ability to do so.
I hope that helps a bit.
My best and warmest wishes to you and yours.
Rob
x says
“Goonishness is sin or ignorance or self-destructiveness.”
Wasting 15 years locked on one tiny investing metric would be mind-bogglingly stupid. But toiling for 15 years in the basic struggle of good versus evil is a noble sacrifice. Which is why you frame everything in terms of morality.
Anonymous says
How can you tell if a poster has committed a criminal act?
Rob says
Wasting 15 years locked on one tiny investing metric would be mind-bogglingly stupid. But toiling for 15 years in the basic struggle of good versus evil is a noble sacrifice. Which is why you frame everything in terms of morality.
For me, this is very simple, X.
I was a popular poster at the Motley Fool Retire Early board. I made lots of friends there. My aim was to help my friends. So naturally I posted honestly.
John Greaney was a Buy-and-Holder. He believed what the Wall Street Con Men told him. He was embarrassed when I pointed out the errors in his retirement study (which he made because he believed what the Wall Street Con Men told him). All the rest follows from that.
I don’t see this strictly as a matter of morality. There are moral issues, to be sure. It certainly would be immoral for me to say that I believe that Greaney included a valuations adjustment in his study. You are right that I don’t want to behave in an immoral way by doing that. But there is more here than just that.
If there were zero moral concerns at stake here, I still wouldn’t want to give bad investing advice. Leave aside all the moral stuff. I wouldn’t want to do it for INTELLECTUAL reasons. I like to get things right. It’s offensive to me intellectually as well as morally to give bad investing advice. And of course I think it is a bad idea legally to do that, that’s another concern. Probably the biggest factor of all for me is that it is just not kind to lie to people about the numbers that they are using to plan their retirements. That’s the biggest one for me.
I want to be a good friend to people I get to know and like on the internet. I want to be moral too. But in my personal hierarchy of concerns being a good friend is probably of greater importance than being moral. It may be that my priorities should be otherwise. But that’s the way it is for me. I cannot BEAR the thought of misleading my friends and seeing them suffer failed retirements as a result. It’s beyond even my comprehension that I could ever walk that dark path. I guess I would like to say that it is beyond my comprehension that I would ever behave immorally too. But I can’t say that that one is the one that comes first to mind when I think about this stuff. The one that comes first to mind for me is being a bad friend. For good or for ill, that’s me.
I of course don’t agree with you that P/E10 is “one tiny investing metric.” The peer-reviewed research that I co-authored with Wade Pfau shows that we can reduce the risk of stock investing by 70 percent by making use of that “one tiny investing metric.” Reducing investing risk by 70 percent is HUGE. It’s the biggest advance in the history of personal finance. There is nothing else even in a close second place. There is nothing else even in a somewhat distant second place. Whatever is in second place is VERY distant.
P/E10 is the price tag of stocks.
For someone to suggest that it might be okay to buy stocks without first looking at P/E10 would be like someone telling you that it might be okay to buy a car without first asking the salesman how much money he is going to take out of your account when you do so. You MUST know the price of a car before you buy it. And you MUST know the price of stocks before you decide on a stock allocation. Knowing the price is critical. Knowing the price is 80 percent of the game. Knowing the price is the difference between having virtually no chance of being successful in the long run and being virtually certain of long-term success.
Looking at P/E10 is the key to successful long-term stock investing, according to the last 34 years of peer-reviewed research in this field. It’s no “tiny investing metric” or anything even remotely close to it.
Is what I am doing a “noble sacrifice”? Yes and no.
I expect to get paid a $500 million settlement payment following the next crash, X. I don’t think that there are too many who are going to look on what I did as an act of self-denial after I cash that check. I do not think of myself as a pure altruist and I certainly did not start walking down this path as an act of self-denial.
But there obviously has been self-denial involved. You Goons point out all the time that I have not been able to make a living for 13 years and that few people come to this site because of the Campaign of Terror that you have led against me. I stood firm in the face of that fire. That involved making some sacrifices. So, yes, there has been sacrifice here even though I expect to be paid $500 million for my trouble. The payment of the $500 million has been long delayed and of course it is not a 100 percent certainty that I will be paid that amount. So there has been sacrifice.
This is a business for me. I do the work I do primarily for business reasons. I had no idea how corrupt this field was on the morning of May 13, 2002. I didn’t INTEND to spend the next 13 years exposing corruption when I put forward that post. But, faced with the choice of becoming corrupt myself or exposing the corruption so that we ALL can post honestly, I choice to expose the corruption. That was an act of self-denial, at least for a time.
So long as you put things in that context, I am happy to have this referred to as a huge sacrifice. It has become that. I just want to be clear that that was not the intent when I started out and that I do not think of myself as some supreme altruist. I think that a lot of people would have done what I have done if they had been placed in similar circumstances. For example, I think that my good friend Jack Bogle would have done what I have done had he been placed in similar circumstances. It’s possible that Mel Linduaer and John Greaney would have done so too. I don’t know for sure. But I think it’s within the realm of the possible and I would obviously prefer to think the best of them.
A lot of people have not engaged in this act of self-denial because they don’t understand the issues clearly enough to see why it is so important that someone do so. Either because I am a very lucky individual or because I am a very unlucky individual, I see these issues with a great clarity. My take is that my great clarity has been unlucky for me for 13 years now (at least in a financial sense) but will become very, very lucky for me in days to come. We’ll see, you know?
The bottom line is that I would not be able to live with myself if I played it differently. There’s zero chance. That one has been 100 percent clear to me going back to the first day.
I of course want to be friends with all the people who attack me. I have always tried to bend over backwards to show them that I want to be friends. But there is only so far I can bend. I cannot say that Greaney included a valuations adjustment in his retirement study, I cannot say that there is not 34 years of peer-reviewed research showing that a valuations adjustment is required and I cannot say that he corrected the study within 24 hours of learning of the error he made in it.
I cannot say any of those three things. It is beyond my imagining that things could ever change so that I could say any of those three things. All of the rest just follows from that, in my assessment Call it morality, call it caring about friends, call it intellectual integrity, call it fear of going to prison, call it whatever you want. For me, there’s just no give re those three claims. I don’t like being dishonest to my friends as a general rule. And I really, really, really, really don’t like being dishonest to my friends re important money matters.
That’s where I am coming from, in any event.
I wish you all the best that this life has to offer a person.
Rob
Anonymous says
Hey whatever gets the kids to Disneyland, Rob.
Rob says
How can you tell if a poster has committed a criminal act?
The test is whether the person has engaged in insanely abusive behavior for the purpose of blocking people who want to know the truth about stock investing from learning it. I refer all the time to the four major types of insanely abusive behavior that we have seen over the past 13 years: (1) Death theats; (2) Demands for unjustified board bannings; (3) Tens of thousands of acts of defamation aimed at silencing those seeking to tell the truth; and (4) Threats of career destruction aimed at academic researchers in this field.
There are millions of good and smart people who believe in Buy-and-Hold. I once believed. John Walter Russell once believed. Wade Pfau once believed. My guess is that Robert Shiller once believed. So I obviously don’t see any problem with that.
The insanely abusive acts are something different. The hardest thing to understand re all this is how the implications of Shiller’s “revolutionary” (his word) research have been covered up for 34 years. You Goons often suggest that the only possible explanation is that there is some sort of conspiracy playing out. But it is impossible for a reasonable person to believe that this is all the result of a conspiracy, at least not if that term is used to signify what it is usually used to signify.
I believed in Buy-and-Hold on the morning of May 13, 2002. Am I part of this massive conspiracy? I know with 100 percent certainty that I am not. I would not have put forward that famous post if I were part of a conspiracy. So the conspiracy idea just doesn’t fly.
How about Jack Bogle? He is the King of Buy-and-Hold. Surely if there is a conspiracy going on, Jack Bogle is part of it. But it was by reading Jack Bogle’s book that I learned about the errors in the Old School safe-withdrawal-rate studies. Why would Jack include those words in his book if he were part of the conspiracy? The conspiracy story does not hold water.
But there is obviously SOME sort of funny business going on here. Shiller published his “revolutionary” (his word) research in 1981. The cover-up of the implications of what he showed has been going on FOR 34 YEARS NOW. SOMETHING is up. There is not one web site on the internet other than this one that explores the implications of Shiller’s findings in any depth. We know that these ideas reduce the risk of stock investing by 70 percent. We know that they permit ordinary middle-class people to retire five to ten years sooner than they ever before imagined possible.
People could make BILLIONS providing all the tools needed to invest effectively pursuant to the last 34 years of peer-reviewed research. No one but me is providing these materials. People are passing up the opportunity to earn billions! Why? What the heck is going on?
I think that we should refer to this not as a “conspiracy” in the way that that term is usually employed but as a “Conspiracy of Ignorance.”
Stock investing was not the subject of systematic academic study until the 1960s. We knew some things. But our knowledge was greatly limited. Our knowledge started to advance in a big way in the 1960s, when the Buy-and-Hold Pioneers began doing their work.
We enjoyed a huge breakthrough in 1965, when Fama published the peer-reviewed research showing that short-term timing never works. That’s the second-most important peer-reviewed research ever published in this field. Fama’s research led to the creation of a new industry, the industry that promotes the Buy-and-Hold Model for understanding how stock investing works. This is a multi-billion dollar industry.
We enjoyed an even bigger breakthrough in 1981, when Shiller published his peer-reviewed research showing that long-term timing ALWAYS works and is ALWAYS 100 percent required. This is the most important piece of research ever published in this field. Unfortunately, Shiller’s research showed that all of those working in the huge Buy-and-Hold Industry got a very important question wrong — they had been telling investors that timing never works when in fact long-term timing (price discipline) ALWAYS works and is ALWAYS 100 percent REQUIRED. The Buy-and-Hold Mafia reacted with intense anger and has engaged in criminal acts to keep millions of middle-class investors from learning what they need to know to be able to invest their retirement money effectively. This is the biggest act of financial fraud in U.S. history.
Now what?
We cannot move ahead without criminal prosecutions. If the Buy-and-Holders come clean, a good number of them will be going to prison. So all Buy-and-Holders now have a huge interest in keeping investors from learning the truth. All Buy-and-Holders know that their careers will be destroyed if they tell the truth about the last 34 years of peer-reviewed research. So they don’t do it. And they don’t associate with those who do.
Most of us don’t want to see the Buy-and-Holders sent off to prison to serve long prison terms. But we sure want to see this economic crisis brought to an end and we sure want to see the United States enjoy the greatest period of economic growth in its history. So we have to figure out a way to insure that the prison sentences are soon announced while also doing what we can to see that the prison sentences are as short as possible given the circumstances that apply today.
The obvious answer is to be sure that the prison sentences begin as soon as possible. It is the millions of middle-class investors whose lives are in the process of being destroyed who will be serving on juries and setting the lengths of the prison sentences. The less financial damage these millions of people suffer, the shorter the prison sentences they will demand. So the responsible thing to do here is to demand that those prison sentences begin as quickly as possible and thereby are as short as they can possibly be given the circumstances that apply today.
Does all of that help, Anonymous?
Rob
Rob says
Hey whatever gets the kids to Disneyland, Rob.
Now you’re getting the idea!
Rob