Set forth below is the text of a comment that I recently posted to another blog entry at this site:
I like how every post is now about yourself. And I am sure you have a 20-30 paragraph explanation for it and it all makes sense.
The posts that write today are intended for viewing after the next crash, Laugh.
We need to help people understand what happened to them. We don’t just want to say “oh, people messed up, sorry!” We need to go into as much detail as possible. Not because we want to linger over bad stuff. Because we want to AVOID bad stuff in the future. We have to make a complete case as to why it is important that investors focus on valuations ALL THE TIME and why it is critical that they make whatever adjustments in their portfolio allocations AS SOON AS THEY ARE CALLED FOR because, if they wait, it will get harder and harder to make those adjustments.
Buy-and-Hold is a trap. It does seem to work for periods of time. But the more people there are who come to believe in it, the higher valuations go. The higher valuations go, the more frightened people become that everything is going to collapse. And the more frightened people become that everything is going to collapse, the more people suppress any honest, research-based comments. Each aspect of the thing feeds into all the others.
And the more you struggle to get out of the trap, the tighter it pulls in on you. I believe that you Goons would permit honest posting on SWRs today if we could do it over. But to come clean today would require more than that. You would have to own up to the threats made to silence Wade Pfau and lots of other stuff. If you didn’t want to own up to the errors in the Old School SWR studies, you REALLY don’t want to own up to threatening academic researchers. The evidence that the numbers in the Old School SWR studies are wrong is now a mountain. But the trap is harder to get out of than ever before.
Not all of the posts are about me. But a lot of them are. My story is a compelling illustration of how things work when a large number of investors come to believe that Buy-and-Hold strategies might work. I should pose no threat to anyone. I possess no expertise in this field and I don’t claim to possess any. So why would my words pose a threat to the Buy-and-Holders? Why would they care enough to threaten to kill my wife and children if I continued posting honestly?
The threat exists because long before I came on the scene lots of other good and smart people tried to tell us all the truth about stock investing and were suppressed. By the time I came along the Buy-and-Holders were already insanely defensive. I didn’t know it. My sense is that a lot of them didn’t really know it. But they sensed that Shiller’s work was dangerous stuff and that anyone trying to discuss it had to be silenced pronto. So Buy-and-Holders started lashing out at me within five minutes of my famous post of the morning of May 13, 2002.
This is not an intellectual debate. There are important points of an intellectual nature in play. But all the evidence re the intellectual matters are on one side. So that part is easy. The reason why things have played out as they have is that the emotion is 50 times more intense on the Buy-and-Hold side than it is on the Valuation-Informed Indexing side, which has not yet won the strong loyalty even of those who generally believe in it.
My story illustrates well all the points that most need to be heard.
Other stories do too. Wade’s story obviously makes very important points.
And even the stories of you Goons make important points.
All of those stories are more important today than the substantive, intellectual points. The substantive, intellectual points are the good stuff. That’s the stuff we want to work up to. But we need to clear out the emotional stuff to get to the place where we all deep in our hearts want to go.
I wish you well, Laugh.