Set forth below is the text of a comment that I recently posted to another blog entry at this site:
If any newspaper ran a story, as you say, you and they would both be in court defending yourselves against a lawsuits for false accusations.
The accusations aren’t false. So we need have no concerns on that score.
But you are pointing to something real and important, Anonymous. Lots of newspapers and bloggers who would love to tell this story are afraid to do so. The Wall Street Con Men have lots of power and lots of wealth and lots of connections. So, yes, there is risk attached to telling the story of this massive act of corruption. I held back from telling the full story for a long time myself. I didn’t use terms like “financial fraud” for a long, long time.
What do you propose we do, Anonymous? Not tell the story?
If we don’t tell the story, we end up in the Second Great Depression. I think it would be fair to say that not one of us, including our Wall Street Con Men friends, wants to see us end up in that dark place. So what do we do?
I think we have to tell the story. I think we have no choice.
Once you accept that the story must be told, it makes sense to tell it as soon as possible. The sooner the story is told, the fewer people go to prison. And the sooner the story is told, the shorter the prison terms are for those who do go to prison. And of course everyone not going to prison benefits in a huge way. So the responsible thing for all of us to do is to do everything in our power to get this story told as soon as possible.
I have worries about what the Wall Street Con Men will do to me. The main thing that I do to address those worries is to try hard always to tell the story in the most charitable way possible. I don’t think this started as an act of fraud, I think that until 1981 Buy-and-Hold was a real thing. That’s a kind thing to say. But I feel free to say it because I have seen a lot of evidence that that is indeed the case. So I believe that the way that I tell the story helps the Wall Street Con Men in a big way.
Even after 1981 I believe that the Wall Street Con Men suffered cognitive dissonance. It is not financial fraud to get something wrong because you suffer from cognitive dissonance. So, again, I tell the story in the way that is most charitable to the Wall Street Con Men while also always being 100 percent honest.
I don’t think that abusive acts — death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs — can be excused by cognitive dissonance. So I do believe that there will be prison sentences. But I believe that the reality of the cognitive dissonance phenomenon will get the vast majority of people who advocate Buy-and-Hold off the hook.
Another point that you may be missing is that the transition to Valuation-Informed Indexing will be a huge boon to the investing advice industry. The primary reason why many people are afraid to buy stocks is that they are concerned about risking their money. Going with a VII strategy reduces risk by 70 percent. So this will be a boon to the industry. Lots of people on “the other side” are aware of this and would love to find some way to make the transition. The only thing holding them back are concerns re the prison sentences and re civil lawsuits for damages. That’s why I work so hard to do all that I can to minimize those factors to the greatest extent possible.
The Wall Street Con Men are not bad people. Ironically, their downfall has been their huge wealth and the power edge that it provides them. No other industry could get away with something like this because people outside their industry would call them on their b.s. Everyone is afraid to call out the Wall Street Con Men because they have so much darn money and so much darn power. I am not saying that that makes them angels. I am pointing out another mitigating factor that should be taken into consideration when people try to assess their level of guilt for what has happened.
You don’t want to go forward. The reason why you don’t want to go forward is that you have convinced ourself that things will not really be so bad, that we will all get through this somehow. I encourage you to spend more time working the numbers. I have spent a lot of time on this and I do not believe that our economic system can survive a drop to a P/E10 of 8 that remains in place for a good number of years. It is going to be a devastating hit to millions. People are even going to lose confidence in our political system. We saw some of that in the wake of the 2008 crash.
I am not anti-Wall Street Con Men. I like the Wall Street Con Men. I have learned many important things from them. I have hopes of working with them in the future. I consider the Wall Street Con Men my friends. I do what I do to help the millions of middle-class workers whose lives are in the process of being destroyed by the Wall Street Con Men AND the Wall Street Con Men themselves as well. It is my strong belief that we are all in this thing together. I think it is a terrible mistake to believe that there are two different “sides.”
I am always going to do everything in my power to praise the Wall Street Con Men to the skies, to make the transition as easy for them as possible. If all that I do is not enough to keep them from coming after me, then all that I do is not enough to keep them from coming after me. I cannot betray my country. That’s 100 percent out. I have been offered no alternative but to bust through The Big Black Mountain. So busting through The Big Black Mountain I will go. But always with kindness. Always with the greatest amount of kindness that I am able to advance without crossing the line and engaging in dishonesty myself. That cannot possibly be the right way to go.
Will some newspaper or some financial or political blogger work up the courage to tell the story following the next crash? I believe that that will happen. I don’t have a crystal ball. But I believe that will happen. I love my country and one of the things that I love about it is that we have always figured a way to get out of these sorts of situations once it became painfully clear to everyone that that was what we had to do. I think it will become painfully clear to everyone following the next crash. I sure hope so.
I am like everyone else, Anonymous. I am scared. But I continue to believe that we can take this to a good place. I continue to believe that the good news here is 50 times more good than the bad news here is bad.
I don’t believe that the Wall Street Con Men intended to bring on the Second Great Depression. I think they started down a road that they saw as being only somewhat dark and then things got carried away and now they feel like they have painted themselves into a corner. Bogle ignores my e-mails. But I believe that following the crash he may see that I have been his best friend in the world all along. And then he will work with me. And then we will get this thing turned around in no time.
I have spent a lot of time thinking about this matter from ever possible angle. I sincerely see no better way to proceed.
So we will see what happens.
I hope that helps you understand where I am coming from a bit more clearly.
My best and warmest wishes to you and yours.