Set forth below is the text of a comment that I recently put to another blog entry at this site:
Soooo….bottom line, Rob, is you are doing all this for the money….just like all the Buy-and-Holders.
In other words, you are just as greedy as they are, you are just trying to peddle a different shtick.
Buy-and-Holders are greedy and block Honest Posts.
Rob is greedy and blocks Honest Posts.
If you can’t beat ‘em…..
It’s not greedy to expect to be compensated for one’s good efforts. That’s normal and healthy and benefits the entire society as well as the individual receiving the payment. We need to provide incentives for people to do good work to be sure that the good work from which we all benefit gets done.
I don’t agree with you that my Buy-and-Hold friends have been primarily motivated by greed either. My Buy-and-Hold friends did what they did out of love, just as I do what I do out of love. They made a mistake. That happens. In ordinary circumstances, the mistake would have been promptly corrected and we would have all moved on to the better and richer lives we earned for ourselves by discovering the mistake.
We did not face ordinary circumstances. The mistake was not on the surface. It was a mistake concerning the fundamentals. So it affected hundreds of strategic questions in a big way. People had a hard time accepting that so big a mistake had been made. So many ignored it. Many more rationalized, they told themselves that the mistake wasn’t that big a deal. Others actively covered up the mistake in embarrassment.
A second out-of-the-ordinary event caused further delay in correction of the mistake. The mistake was discovered at a time when prices were very, very low, at a time when it was hard to believe that stocks would ever again be selling at fair prices much less insanely high prices. That’s one of the reasons why it was so easy to rationalize covering up the mistake rather than fixing it. Shortly after the mistake was discovered, we entered the biggest bull market in U.S. history. This made the mistaken understanding of how stock investing works seem appealing to millions.
The further delay in correction of the mistake meant that the mistaken understanding was spread to millions. It was written up in textbooks. It was passed along by investment advisors. There were studies issued and calculators developed. There were blogs created to spread the mistaken understanding. Hundreds of thousands of people built careers rooted in promotion of the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind, not knowing that that is what they were promoting. And millions came to believe in what was being promoted to them, seeing the numbers on their portfolio statements go up and up and up over the course of a good number of years. Those people shared what they thought they had learned about how stock investing works with their friends and neighbors and co-workers, making it that much harder for us as a society to acknowledge the mistake when the damage it had done to us had grown so great as to be no longer tolerable.
Making a mistake is not evidence of greed, Anonymous. John Greaney didn’t promote his SWR study to turn a buck, he did it because he thought it was a real and good thing and he wanted to share this real and good thing with others. It’s the same with Mel Linduaer and the book he wrote and the discussion board he built. Jack Bogle made money from Buy-and-Hold. But he could have made just as much money if not more promoting Valuation-Informed Indexing. There is zero reasons (that I am aware of) to believe that he would not have done just that had Robert Shiller published his “revolutionary” (Shiller’s word) research in 1961 rather than 1981.
The Buy-and-Holders got us started on a wonderful journey of discovery of the realities of stock investing. Because they are human, they made a mistake. It has happened to each and every one of us.
Their mistake became a national tragedy because it started machinery running in which lots of wealthy and powerful and well-connected people built their careers around promotion of a Get Rich Quick investing strategy that is in the process of destroying our economic system and generating frightening political stresses on both the left and the right. The mistake must be fixed, there’s no question whatsoever about that. And, yes, a pure and ugly and naked greed has played a big part in the cover-up of the mistake. But it wasn’t greed that started things off. There is no reason that I know of to believe that Buy-and-Holders are greedier than other people.
My personal sense is that it may be that Buy-and-Holders are a bit LESS greedy than most others. The board at Morningstar was called “Vanguard Diehards.” Diehards are people who believe in something so strongly that they cannot bear the thought of not sharing it with others. Greedheads are people who will do anything to make a buck. Diehards are True Believers, people who put their love of something AHEAD of the quest for the almighty dollar.
Buy-and-Holders have their strong points and their weak points. The best way to understand them is to read up on the “INFJ” personality type. They are planners. They are systems-builders. They are conceptual thinkers. They are masterminds.
And they are pig-headed, arrogant, pompous, full-of-themselves, pieces of shit.
It’s not me who says that! It’s those darn Myers-Briggs personality assessment sites you see all over the web.
Our INFJ friends have a very difficult time admitting mistakes. And you see that personality showing up a lot wherever Buy-and-Holders meet to discuss amongst themselves how great they are and how everyone who doesn’t believe every last thing they say about stock investing is a damn moron and a waste of space on this planet.
We should love our Buy-and-Hold friends.
Loving them does not mean enabling them in their acts of self-destruction.
Loving them means thanking them in all sincerity for their many important contributions while shaking them and then putting them down on a better path when they let the weaknesses of their MasterMind personality type get the best of them.
Greed is not the driver here. It is present in places, as it always will be when money matters are at issue. Greed is part of the reason why we have seen a lock-in effect, why it has taken so darn long to get simple mathematical calculations reported accurately. But greed is not the core problem.
There are two core problems.
One is that this is truly amazing stuff. It is hard for people to accept that we now know how to reduce the risk of stock investing by nearly 70 percent. That is by far the biggest advance in the history of personal finance and people have a hard time accepting that they were born into the luckiest generation of stock investors ever to walk Planet Earth.
The second core problem is that the mistake is such an obvious thing once you become aware of it. The price you pay for stocks affects the value proposition you obtain from them. Duh! Whoever would have thought it? Buy-and-Hold is so freakin’ DUMB that it makes people feel great pains of shame and embarrassment to remember that they once believed in it and encouraged others to believe in it. Buy-and-Hold EMBARRASSES us.
We need to get over our embarrassment and move forward. We need to begin getting those darn numbers right!
I’m ready when you are, my greedhead friend (a joke!).