Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Nothing will happen for you following the next price crash Rob. You might actually get into the market this time around same as everyone else who is using buy, hold, and rebalance. But who knows maybe you will be too scared or not follow your own system again. I can’t imagine you have much of a nest egg left after 18 years of 3% returns and no income unless you got an inheritance of some sort.
Meanwhile, the rest of us, who have experienced triple digit returns in the last few years will continue locking in large portions of that run up by rebalancing and making our portfolios more conservative as we age. After all you have been calling for a crash for years and it hasn’t happened so who’s to say we won’t experience a few more years of great returns and locked in profit via rebalancing before the inevitable crash.
What makes you think this time around will be any different from the last crash? Your position as nothing more than a complete laughing stock in the realm of the financial world will remain. There are plenty of other people calling for a crash without your conspiracy theory lunacy.
Why are other people calling for a crash if the “science” of Buy-and-Hold is settled, Anonymous?
Buy-and-Hold says that price changes are random. If price changes are random, you can’t predict crashes. Are these people you refer to who are saying these things doing so in defiance of the “science”?
The Buy-and-Holders had a wonderful idea of rooting investing advice in peer-reviewed research. That’s what I love about them. That’s why I was a Buy-and-Holder myself until Greaney threatened to kill my wife and children and 200 people who had long considered themselves friends of mine endorsed his post. A strategy that causes people to do things like that ain’t science. So I gave it up on that day and the rest is history.
The Buy-and-Holders were right in the early days when they were serious about the idea of using research to support their advice. They betrayed their own vision when Shiller published his “revolutionary” (his word) research and they failed to incorporate his findings into their model (That’s what Valuation-Informed Indexing is — Buy-and-Hold updated to reflect the peer-reviewed research of the past 33 years as well as what came before it). I have just taken the vision of the Buy-and-Holders to the next step. Valuation-Informed Indexing is an updated version of Buy-and-Hold, one that actually works in the real world.
There are two reasons why the Wall Street Con Men have not adopted the necessary changes. One is a phony pride. They are Big Shots and they don’t like the idea of saying the words “I” and “Was” and “Wrong.” The other is money. Al of us humans possess a weak human nature that is drawn to Get Rich Quick strategies. Buy-and-Hold is (inadvertently, not intentionally — but still) the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind. So it is possesses an amazing short-term appeal and has brought in billions of dollars of profits to the Wall Street Con Men while destroying the lives of millions of middle-class investors and taking us down a path that ends with our economic system reduced to a smoking ruin.
I want no part of any of that. No part whatsoever. My dream is to become known all over the internet as the most severe critic of Buy-and-Hold who ever walked Planet Earth. I think I’ve got a pretty darn good start on success re that particular project. No?
That makes me unpopular today. So be it, you know? A field in which honesty about what the peer-reviewed research says is banned as the first order of business is a field re which I prefer to be on the outside looking in for the time being.
People lose interest in Get Rich Quick schemes when they lose most of their accumulated life savings as a result off being tricked into following them. Look at what happened with investors in the Madoff fund. They sang the guy’s praises until they lost all their money. Then they demanded that he be imprisoned for his acts of financial fraud. I think it would be fair to say that our mutual friend Jack Bogle is Bernie Madoff times 5,000 when you consider the number of human lives he has destroyed with his support for Mel Lindauer and John Greany and the individuals who have seen fit to post in “defense” of these two.
There will be hundreds of thousands of lawsuits filed following the next price crash when people learn about the trickery that was employed to separate them from their money. There will be thousands of people being led off to prison cells. I will put in a word for you. I will point out the pressures that people like Wade Pfau and Bill Bernstein and my good friend Jack Bogle faced. I will make every effort in the world to be fair and then something even a bit more than just fair.
But I ain’t interested in going to prison along with you. No friggin’ way. Find someone else, you know? It’s not on my bucket list.
I’ll help the people bringing lawsuits against you and I’ll help you too. I have sympathies on both sides and so I will put forward what words I can to help both sides. That’s how I have been playing it for 12 years now and that’s how I will continue to play it for the next 12 billion. That’s me. But I would have to change my entire personality to be able to join you in this massive act of financial fraud. That’s a change that I am not capable of considering much less implementing. Please count me out re that smelly pile of garbage, old friend.
If you really were confident that you were not going to land in a prison cell, you would not be posting here on a daily basis. You know that, I know that, and anyone with half a grain of sense in his or her head who reads these pages now or at some later date knows that or will know that.
Keep posting if you like.
Or stop if you like.
Do whatever works for you.
Please just know that I don’t do financial fraud. One of my aims today is to have thousands and thousands of posts in the files making that point so that there is precisely zero confusion re this point in the minds of every single person who comes here to check the matter out.
I wish you well, man. But that’s where things stand.
Why will the next crash be worse than the last? Because people had excess funds when the last one hit. They felt that they could get through it by tightening their belts. Now people are fatigued by the economic crisis and they feel that they have already taken all the financial pain that they can take. This one will hurt much more. That’s why the P/E10 level will drop so much lower. That’s why you and all the other Buy-and-Holders will be selling this time. It’s only when the Buy-and-Hold zealots sell that a secular bear market hits bottom and that we finally gain the ability to start turning things in a positive direction.
It’s about psychology, man. The psychology and the economics go together. Bad psychology brings a bad economy and bad economics brings a bad psychology. It all feeds on itself. In the background is the Buy-and-Hold/Get Rich Quick garbage, which starts off all the bad stuff by persuading people to believe in fantasy worlds for which there are zero support in the peer-reviewed research of the past 33 years. When a society borrows trillions of dollars from its future, it causes a big heap of pain for a big bunch of people. All of the debt taken out on all the credit cards owned in this country doesn’t match the debt we incurred as a result of the lies about the peer-reviewed research told to us by the “experts” touting the Buy-and-Hold garbage.
Please let it be noted that I do not say that you INTENDED to cause this economic crisis. I don’t believe that. I believe that on one level of consciousness you really believe in Buy-and-Hold. But you have doubts. You lack confidence. That’s why my reports of what the last 33 years of peer-reviewed research says drive you crazy.
And the same is of course true of Bogle and Burns and Bernstein and all the others. I don’t believe that Bogle is the Frank Underwood of Personal Finance. That’s why I believe so strongly that his heart will melt following the next crash. Once Jack’s heart melts, I will be working with him to set things right. And you have my pledge that I will do everything in my power to get your (and his!) prison sentence reduced to the extent possible even then.
That’s the best offer that I can make to you, my old friend. The financial fraud stuff is just not my particular cup of tea.
I hope that all helps at least a tiny bit.
My best wishes to you and yours.