Set forth below is the text of a comment that I recently posted to another blog entry at this site:
“…desperate characters… a lot of money… a lot of power… a lot of connections… people who don’t play nice… brutally abusive and ruthlessly vicious people. That’s the story.”
And yet you somehow think these tantalizing and ‘sexy’ factors would PREVENT a legitimate reporter* from wanting to grab this as perhaps an exclusive?
Sorry, Rob. That kind of grist for the mill rarely appears even given a whole lifetime of specifically looking for it, for an investigative reporter. If there were one scintilla of evidence of what you claim, then more than one investigative team would have been all over such a story.
It’s a huge story, Anonymous. It’s a Pulitzer-prize winning story. And there are obviously lots of reporters who would like to win Pulitzers. But this is scary stuff too.
There are at least four big negatives.
One, only a small number of reporters know the background well enough to understand what is going on. The case for Valuation-Informed Indexing is rock-solid. But VII represents a complete breaking of the old paradigm. Consider what the Bennett/Pfau research shows. It shows that we can reduce the risk of stock investing by 70 percent. I told you the story about how I was once talking to my wife about this stuff and she said “you sound like one of those infomercial guys.” It’s all true, it all checks out. But it is also too much to be believable. Reporters don’t want to get something wrong. Getting something this big wrong is a career-killer. And the initial reaction of most reporters is similar to the initial reaction of my wife. They think “this CANNOT be so” and “If this were so, someone else would have reported it.” The guy or gal who breaks the story is going to be someone well-versed in behavioral economics and there are only a limited number of that type out there in positions of influence.
Two, the investment advice industry has great power. Editors worry about losing advertising and the investing advice industry supplies most of the advertising that appears in the investing sections of newspapers. The potential upside here is huge. But there is a big potential downside here too. There is great risk in taking on this story.
Three, the majority of readers of the investing sections of newspapers are Buy-and-Holders and are thus strongly biased against this story. After the crash, I don’t think that will be so. But as of today most investors are over-invested in stocks (we couldn’t have the P/E10 we have today if that were not so). A newspaper that runs this story is performing a huge public service but is also alienating a large percentage of its readership. Not every paper is jumping at the chance to do that.
Four, even if you find a reporter who is 100 percent knowledgeable and 100 percent independent and 100 percent brave, he wants to understand all the elements of the story before he puts his name on it. The usual rule you follow when you make a pitch is to keep it simple. You want to say “Person X accepted a bribe of Y amount on Date Z and here are the pieces of paper proving this.” Then it clicks. We are talking here about an entire model of how stock investing works being brought down. There are about 10 different huge insights that ALL have to be true for the entire story here to be true. You can’t boil this down to 10 words. That just means that the story is bigger than it would be if you could do that. But it makes it harder for the pitch to succeed. The reporter is not going to take the time to check everything out until he is at least reasonably sure that there is a big story here. And he cannot be made reasonably sure that there is a big story here until he has checked everything out. It is much, much harder to get the word out on huge stories than it is to get the word out on small stories.
This is not the first time that something like this has happened.
Watergate was possibly the biggest story of all time. That story MADE the Washington Post. The Post was a relatively small paper before it broke the Watergate story. It then became the second most influential paper in the nation. You would think that every paper in the country would have been competing with the Post to break that huge story. But that’s not the way it was. The Post was the ONLY paper pursuing that story for a long time. It was a huge opportunity but it was a risky thing and no other papers were willing to employ the resources it took to break the story and get it right.
The Lance Armstrong story was huge and just about every reporter who covered bicycle racing knew that he was using illegal drugs for a long time before that story broke. Armstrong had connections and power and money. There are people who told the truth about his fraud and then were sued or rendered unemployable because they did so. Lots of reporters HINTED at what they knew (and many today hint that Buy-and-Hold has been discredited). But it took a long time before the story broke in an official way. People committing fraud employ intimidation tactics because intimidation tactics work. At least in the short term.
The Joe Paterno case, where child sexual molestation was being covered up at Penn State, could have been reported MUCH earlier if reporters had not been afraid that their careers would have been destroyed by the powerful people trying to keep the cover-up going. There was a woman at another department of Penn State who lost her job in that matter because she told the truth about things that came to her attention.
Cover-ups are the order of the day in cases where there are people with huge amounts of money and power who want to keep a story suppressed. That’s just a reality of our world.
We have a wonderful system of government and I believe that this cover-up will end with lots of people going to prison and with lots of people paying huge amounts of civil damages. But your idea that it doesn’t take a lot of courage to go up against people like Jack Bogle and the other Wall Street Con Men is a sick joke. This is hard work. It is very, very, very important work. But it is also very, very, very hard work.
I will have earned every penny of that $500 million when this story breaks in the national press, Anonymous. There are thousands of academic researchers who will be freed to do honest work again when this story breaks. There are millions of middle-class workers who will be able to plan their retirements effectively for the first time in their lives when this story breaks. We will as a nation be able to avoid future economic crises after this story breaks. I am humbled to be playing the lead role in getting this matter out before the public.
But I’ve got scars all over my body from the hits that I have taken over the past 12 years from the Wall Street Con Men and from their Internet Goon Squads. That’s part of the story. Lots of academic researchers want the story to be told. And lots of investing experts (including most of my Buy-and-Hold friends) want the story to be told. And the vast majority of middle-class investors obviously want the story to be told. But there are reasons why so many of us have been afraid to take the steps needed to get this out before the public.
I was scared too. I know how my fellow reporters feel.
And I am scared today, to tell the full truth.
It’s just that I am more scared of what happens to our country if this does not get out than I am scared of what happens to me if I continue my efforts to get it out.
I say clearly that everyone who loves his or her country should be helping in the effort to get this story out and to change the world for the better in about 500 different ways. But I also say clearly that I have sympathy for those who have for 12 years been too afraid of the Wall Street Con Men and their Internet Goon Squads to do what they know to be right.
People who know that they are on their way to prison are like cornered rats, Anonymous. As you well know. We will beat you in the end and we will never look back. But I will always be willing to take the time it takes to tell the story of why it was so hard to get a nation of good people to take action re this matter. Even good and smart humans are intimidated by threats of physical violence to their loved ones and to threats of career destruction supported by some of the wealthiest and most powerful people in our society.
Wade Pfau loved being able to work with me on the peer-reviewed research that he knew would win him a Nobel prize when it got written up on the front page of the New York Times. But he has two small children to think about. Wade did a very, very, very wrong thing when he agreed to commit financial fraud to get you Goons to stop your attacks. But the threats that were made against him were real and his jury needs to know that and appreciate that when determining the length of his prison sentence.
Or so Rob Bennett sincerely believes, in any event.
My best wishes and warmest wishes to you and yours, Anonymous. Dom’t let the bad guys get you down, my old abusive-posting friend.