Set forth below is the text of a comment that I recently posted to another blog entry at this site:
You REALLY believe aaaallll those people paid for an education, studied hard, and went out and got jobs…because they just want to be liked??? You don’t have to be anything more than a two-bit pot dealer to be liked.
I’m betting ‘money’ ranks far, far above ‘will you be my friend?’ on their list of drivers.
And speaking of being honest and honest posting…whatever happened to all my Honest Posts you banned/deleted?
I don’t say that those people went to school to be liked. I certainly agree that part of it was to make a living. Another big part of it was to be able to do good in the world. The Buy-and-Holders are like everybody else. They act from a mix of motivations, some selfish, some altruistic, some in the middle.
But, yes, they do like to be liked. That’s one of the motivations that drives all of us.
If Shiller had published his “revolutionary” (his word) research in 1961 instead of 1981, there wouldn’t be one Buy-and-Holder alive on the planet today. Why would there be? We all want to reduce the risk of stock investing by 70 percent. We all want to be able to retire five to ten years sooner. So we naturally would all follow what the peer-reviewed research in this field says.
The problem is that Fama published his research before Shiller published his research and many good and smart people believed that Fama’s research was valid and they developed an investing model based on it. Then, when they learned that Fama got an important part of the story wrong, they resisted making the correction that needed to be made in part because they want to be liked and in part because the want to make money and in part (paradoxically enough) because they want to help people (the Buy-and-Holders don’t wake up in the morning seeking ways to crater the economy, they believe in Buy-and-Hold themselves, they have rationalized away the 33 years of peer-reviewed academic research showing that it can never work for even a single long-term investor).
Nothing that I say is even a tiny bit controversial in any objective sense. It is pure common sense. And it is backed by 33 years of peer-reviewed research, rooted in 140 years of historical return data. The guy who started Valuation-Informed Indexing won a Nobel Prize for his work. There is no intellectual dispute here. There is a mountain of evidence on one side and zero on the other.
THAT’S THE PROBLEM!
You would think that would help me. You would think that having every sliver of evidence available to us supporting my position would be a plus for me. But, no, that’s actually not the way it works.
The stronger my case is, the worse the Buy-and-Holders feel about the mistake they made. The more lives there are that will be ruined if the Buy-and-Holders don’t come clean today, the less likely they are to do so — because they cannot bear to acknowledge how many lives they have already destroyed with their reckless and relentless and ruthless promotion of their smelly Get Rich Quick garbage.
If this were some small mistake we were talking about, we would all agree that it should be promptly fixed and get about the business of fixing it. It’s no small mistake. The mistake that the Buy-and-Holders made is the biggest mistake ever made in the history of personal finance, a mistake that has caused so much human misery through the years that the Buy-and-Holders cannot permit people to talk about it on the internet. This mistake has caused four economic crises! This mistake has caused millions of failed retirements! This mistake has caused hundreds of thousands of business to fail! This mistake has caused millions of people to lose their jobs! This mistake has caused numerous discussion boards to be burned to the ground! This mistake is in the process of causing a good number of people who have put up posts in “defense” of Mel Linduaer and John Greaney to be sent off to serve prison terms for committing the most massive act of financial fraud in U.S. history.
The problem here is not that the Buy-and-Holders don’t get it that they have caused great human misery with their Buy-and-Hold lies. The problem is that they get it only too well and they cannot bear to acknowledge even to themselves what they have done. They lie to others, yes. But first they lie to themselves. It’s called “rationalization.” It’s called “cognitive dissonance.” It’s called “living in a fog.” The one thing that it should never, ever, ever be called is “science.” True scientists don’t threaten to kill the wives and children of people who question their findings. It just isn’t done.
The problem we have here is a human problem, Honest. The Buy-and-Holders are in great emotional pain. They have their lives riding on an idea for which there is not a sliver of support in the academic research and they see no way out of the trap in which they have placed themselves. There is a way out. The way out is through coming clean by the close of business today. But you try telling them that. That way lies their hope of getting their prison sentences reduced a bit. But they cannot bear the thought of serving any prison sentences at all! So whachagonnado?
My job is to help them (you!) work up their courage, swallow their medicine, and start to rebuild their lives (and the economic system of the United States!). I am doing all that I can think of to do. If you come up with an bright ideas, please pass them along. My take on this is that I have tried just about everything and the only thing that is really going to make a difference is the next price crash. After the crash, I don’t think I am even going to need to speak. My good friend Jack Bogle’s heart is going to melt when he sees that his marketing mumbo jumbo put us in the Second Great Depression and then he is going to give his “I Was Wrong” speech and then we are all off to the races bringing on the greatest period of economic growth in U.S. history.
The Buy-and-Holders are like all the rest of us. They have good in them, they have bad in them. They have smart in them, they have dumb in them. They have courage in them, they have fear in them. They feel trapped. All of us who care about them should be doing all we can to help them out of the trap in which they find themselves. I put my entire heart, mind and soul into that project on a daily basis. And I wish for the best. And that’s pretty much it. I can do no more and I can do no less.
I hope that helps a bit.
Please take good care.