Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Are you really willing to continue the downward spiral until some magical 80% stock market crash somehow (???) ‘saves’ you? Wade long ago challenged you to illustrate how even such a cataclysmic event somehow bails out your personal situation, and you failed to give any sort of answer.
Even if you don’t answer here, at least ask yourself: “What are my REAL best-chance prospects from here, and how would I attain them?” Here’s a hint: World financial collapse, followed by some group spontaneously anointing you fiscal savior plus a $500 million gratuity check, is not going to be very high up the list of reasonable expectations, Rob. And if it is the only item on your list, then you maybe want to sharpen up your pencil and do some serious re-figuring.
I hope we will not see an 80 percent drop in prices, Yogi. The research says we should be expecting a 65 percent drop. That’s bad enough.
I’ll try to illustrate my thinking re my personal financial circumstances by pointing to someone who plays it differently than me and who has experienced a whole big bunch more success than me as of today. I spoke with Todd Tresidder at the Financial Mentor site several times during the recent FinCon14 blogger’s conference. Todd over and over again impresses me with his intelligence. I think there may come a time when he will have the most successful site on the internet. He does just about everything right, in my assessment.
Am I envious of his success?
I am to some degree. I would love to have what he has. It hurts not to have people comment here. So your post is not totally out to lunch.
But here’s the problem.
Say that Todd’s site continues to climb but that we do have the financial collapse you refer to and that we go into the Second Great Depression. Say that going into a depression eventually leads to a World War, as it did the first time we went through one. Say that because we now live in an era of nuclear weapons that we all get blown up. What the heck good is it going to do Todd to have this amazingly successful site if we all get blown up in a nuclear war?
Do you see?
I want success, Yogi. And I get it that you Goons don’t want me to have it if I continue to tell the truth about what the last 33 years of peer-reviewed research tells us about how stock investing works. And I get it that the Wall Street Con Men support your efforts. And I get it that they have lots of wealth and power and connections. I essentially have billions of dollars in marketing money being directed to bringing me down (by promoting Buy-and-Hold and thereby making it even harder for everyday investors to see how dangerous Buy-and-Hold is in the long run). I get all of that. Loud and clear.
But I also get the other side of the story.
If Bogle and all the others were 100 percent corrupt people, you would be right that I could never win. They would now and forever more use their power and wealth and connections to bury me. BUT THAT IS NOT THE CASE!
I learned about the errors in the Old School SWR studies by reading Bogle’s freakin’ book. Chapter Two of Bernstein’s book is the best short description of why Valuation-Informed Indexing works that I have read. Burns’ first reaction to my stuff was not to say that I am “catastrophically unproductive” but to say “you’re right” and to ask for my phone number so that he could do an interview with me.
These people are not 100 percent corrupt. They are 100 percent trapped.
They want to tell the truth. But they feel that, if they tell the truth on a single important topic, the entire Buy-and-Hold house of cards will come crashing down. And they see that as being the end of their careers. And the end of their friends’ careers. And they cannot bring themselves to do it.
Here’s what should have happened.
Bogle learned in 1981 about Shiller’s “revolutionary” (Shiller’s word) research. Bogle should have immediately walked to the front of a big room and said the words “I am not so sure anymore.” I believe that he still believed in Buy-and-Hold. So he should have said that. But he also obviously had begun to have doubts. Shller’s research undermines the premise of the Buy-and-Hold Model. So it is impossible that someone as smart as Bogle did not begin to entertain some doubts. He should have said that. He should have said “I am now only 80 percent confident that Buy-and-Hold will work.” Or 70 percent. Or 60 percent. Or whatever it was.
Had he done that, his speech would have launched a national debate. Hundreds of researchers would have researched all the questions that needed to be researched. And by now we would all know with a good deal of confidence what works. Knowledge would have advanced because people would have felt safe asking questions that undermine the Buy-and-Hold dogmas.
That didn’t happen. We are not perfect people. Humans are flawed creatures. So we have held off on enjoying the benefits of Shiller’s revolutionary findings for 33 years.
But we are not going to continue to deny ourselves the enjoyment of those benefits forever! We can’t continue down this dark road. We will all be ruined if we do. So we won’t. We are going to have that national debate. It’s just a question of time.
How will I profit?
It’s impossible even to count the ways, Yogi. Think this through. Millions of people invest in the stock market. I am the co-author of research that shows them how to reduce stock risk by 70 percent while greatly increasing returns. If you tell me that you cannot figure out how I will profit by that reality, then I am going to respond that you are lying. Perhaps you are lying first to yourself and then to me. But you are not thinking clearly if you do not see the profit potential in that. I am going to be one of the richest people in the United States when this saga comes to a happy ending. I mean, come on.
Wade of course gets that too. That is part of the reason why he was so excited when his research showed him that Valuation-Informed Indexing works. Part of it was the intellectual breakthrough. He cares about that side of things too or else he never would have become a researcher in the first place. But he quite naturally and understandably also cares about providing for his family as well. And so part of his excitement was that he saw himself becoming very famous and very rich as a result of the research he did with me. When he later said as a result of the threats you made to destroy his career that he no longer saw great profit potential in this, he was telling a little white lie. Naughty, naughty, Wade!
If Bogle could do it over, he would go back to 1981 and give that speech. I am 100 percent sure. He wishes that he were not in the place he is in today. ALL of the Wall Street Con Men do. ALL of you Goons do too.
The question is — How do we pull that off?
How do we get to the place where we all want to be without some of us getting sent to prison for a long time?
If you have any bright ideas, please share them with me, Yogi.
My best idea is to keep doing what I am doing.
I love my Buy-and-Hold friends. I will continue to sing their praises. I will continue to show them respect and affection and gratitude for the many wonderful insights I have picked up from them.
I will also continue to post honestly on safe withdrawal rates and scores of other critically important investment-related topics.
Because I want to hurt the feelings of my many Buy-and-Hold friends?
Because I care about my Buy-and-Hold friends (AND about the millions of middle-class investors whose lives are in the process of being destroyed) and I want to see them find their way to a better place than the dark place they reside in today.
There’s HUGE leverage in this. Down the road a piece, it will not be just Rob Bennett posting honestly. Jack Bogle will be posting honestly. Bill Bernstein will be posting honestly. Scott Burns will be posting honestly. Todd Tresidder will be posting honestly. Wade Pfau will be posting honestly. Robert Shiller will be posting honestly. Heaven help us all, but Mel Linduaer and John Greaney may well be posting honestly.
We all will benefit from that. We all will end up winners here.
We can’t get there so long as everyone lives in fear. We all have to stand up to you Goons and your intimidation tactics. That’s the only way it can be done. That’s the answer.
There’s plenty of money to be made here, Yogi. The problem is the Trap. We all need to find our way out of the Trap.
I am 100 percent happy to do anything that I can do.
Except commit acts that constitute felonies under the laws of the United States.
For obvious reasons.
I hope that helps a bit.
My best and warmest wishes to you, my long-time Goon friend.