Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Well, I’m sure once you provide her (and the rest of us) with evidence of your assertions, she (and the rest of us) will come around.
She came around. She accepts that you Goons did everything that I said you did. But she doesn’t agree with my strategy for dealing with the problem.
She says that I should ignore you. LOTS of people tell me that. My wife tells me that. So I understand where she is coming from.
However, I don’t think you Goons are the entire problem. I would say that you Goons are 50 percent of the problem. The other 50 percent is that most people, even big-name experts, possess a greatly limited understanding of the implications of Shiller’s “revolutionary” (his word) finding that valuations affect long-term returns. Most people are not Goons. But most people do not possess a strong understanding of the realities because the realities that have been discovered over the past 33 years have not been widely discussed. This widespread lack of understanding is the other 50 percent of the problem.
If you Goons did not exist, I could help people with their questions and get the general level of understanding up to a level at which we would see a big move to Valuation-Informed Indexing. So you Goons do real harm with your acts of disruption and intimidation and deception.
But the other side of the story is that you Goons could not hold us all back if knowledge of the implications of Shiller’s findings were strong enough and widespread enough that responsible people would take actions to rein you in. Motley Fool would LOVE to have a newsletter on Valuation-Informed Indexing. There are MILLIONS of people who have an interest in finding a truly smart and truly simple and truly safe way to invest. They sided with you Goons even though their published rules prohibit your tactics because they do not understand the issues well enough. That’s a SECOND issue.
People need to know about the Goon phenomenon to make sense of why so few understand these issues today. There was a poster at the Bogleheads Forum who told me that “everything you say about investing makes perfect sense but this is my retirement money and I need to go with what the experts are saying and the experts are not saying what you are saying.” People need to understand why the experts don’t say what I say. It is because of you Goons. Not just the few of you who post here. It is because we ALL have gooninshness within us and our inner goon makes us hate research-based strategies. I need to talk about goonishness to explain to people why we achieved this great advance in 1981 and as a society have not yet elected to take advantage of what we have learned.
Buy-and-Hold is goonishness. ALL Get Rich Quick strategies appeal to us because they please our Inner Goon. Most of the RISK of stock investing is the product of our darn goonishness. That’s why Wade and I were able to show people how to reduce risk by nearly 70 percent. Stock investing risk comes from believing that it is not necessary to exercise price discipline when buying stocks. That is obviously nonsense. But our Inner Goon is DRAWN to GRQ strategies and thinking that it might not be necessary to exercise price discipline is about as GRQ as it gets.
We are ALL Goons to some extent, Anonymous. That includes me. I was a Buy-and-Holder once myself. I am human like all the rest. We are ALL flawed creatures.
We cannot make sense of the investing story without discussing our inner goonishness. You Goons take it to extremes. Most of us don’t advance death threats and all that sort of thing. You Goons are cartoonish about it. But you are not unique in your attraction to GRQ strategies. Looking at your behavior helps us Normals learn about our own weaknesses and about what we need to do to avoid falling into the traps that destroy our investing hopes.
So it is a mistake not to tell people about you Goons and your behavior, in my assessment. People HATE hearing about it. It makes people feel ashamed because they haven’t done more about the Goons problem and embarrassed for you Goons and for all the “experts” who have not spoken up about the problem. So talking about you Goons DOES present obstacles for me. The consultant is right about that aspect of the thing. But I believe that the Goon phenomenon is a critical part of this story and that the story cannot be told in the way it needs to be told without me addressing that part of it.
I believe that you Goons are humans underneath your Goon exterior. I believe that you would like to reduce risk dramatically and that you would like to receive much higher returns and become able to retire many years sooner. But you would like to do these things in the way that an alcoholic would like to stop drinking. You are addicted. GRQ strategies are highly addictive.
People who have been following Buy-and-Hold strategies for a good amount of time are embarrassed to be reminded of their failings and react negatively when told what the research says. It is not only you Goons who feel that way. Responsible people like Bogle and Bernstein and Swedroe feel that way. They are not true Goons; they don’t advance death threats when questioned about the merits of their strategies. But they feel SYMPATHY for you Goons. They don’t speak out in opposition to the use of death threats as a tactic for intimidating people into not posting honestly. They LIKE you Goons. They exhibit Goon Light behavior.
The experts who exhibit Goon Light behavior cause a bigger problem than you true Goons. They are respected and educated people. Normals have a hard time accepting that they could get so much so wrong. The explanation is that, as smart and experienced as these people are, they are subject to the same human weaknesses as all the rest of us.
This is an essential part of the story. I don’t feel that I can take a pass on telling this part of the story even if it would make me more popular in the short term to do so.
The mistake that the Buy-and-Holders made was to ignore investor emotion. You Goons are ALL emotion in your analysis of how stock investing works. We need as a society to come to understand that investor emotion is 80 percent of the stock investing story. We can draw lessons by looking at Goon behavior and analyzing where it comes from and what it signifies. So I do not feel comfortable trying to bypass that part of the story.
I can go along with not FOCUSING on that part of the story. Most of my guest blog entries and columns focus on non-Goon, substantive stuff. But I don’t believe that Valuation-Informed Indexing will entirely supplant Buy-and-Hold until we all come to appreciate the emotional side of the investing story and you Goons exemplify the emotional side of the story better than anything else available to us. Instead of me agreeing not to talk about the Goon phenomenon we need to get everyone else to take up talking about it. Your behavior shows that you lack confidence in Buy-and-Hold. A strategy must inspire confidence to work in the long run. Your Goon behavior is a substantive issue that all in this field should be exploring.
I hope that helps a bit, Anonymous.