Set forth below is the text of a comment that I recently put to another blog entry at this site:
I am not able to produce anyone else who will say publicly that those who continue to promote Buy-and-Hold strategies today are guilty of financial fraud, X. You have me re that one.
There was a time when it was not possible to produce one doctor who would say publicly that bleeding patients was not an effective treatment.
The Buy-and-Holders are not bad people. They are frightened people. They want to help their clients and readers. They want to talk out these issues and thereby figure out what they got right and what they got wrong.
But we all know that investing is an important topic. Intuitively, you would think that would make us more cautious about what we say on this subject. In reality, it has done just the opposite. We know how terrible it would be to get something wrong. So we have become highly reluctant to acknowledge mistakes. We all know that Fama’s findings cannot be squared with Shiller’s findings. Most of the articles that reported on the awarding of the Nobel Prize to both of these men commented on the weird reality that they say opposite things about how stock investing works. But we pretend that we believe that it is okay that all investors hear is the model based on Fama’s research and that discussion of the implications of the model based on Shiller’s research has been suppressed for 33 years.
We need to move on. We need to open the internet up to honest posting re what the last 33 years of peer-reviewed research says re safe withdrawal rates and re scores of other critically important investment-related topics.
If you don’t think that you are going to prison, then you don’t think you are going to prison. Don’t worry, be happy, you know?
I think you are going to prison. I could be wrong. I’ve been wrong before. It could be that it is happening again. If it were, I probably would be the last to know. Feel free to believe that I am wrong, okay?
I care about you. I think of you as a friend. A true friend doesn’t want to see his friend land in prison. So I am going to continue to do what I can to persuade you to get off of this awful, dark path on which you now find yourself.
But please feel free to continue walking that path if that is what floats your boat. It’s your life, not mine. You have the responsibility of running it, not me. Fair enough?
I don’t want it on my head that I failed to speak up when I had a chance to do something to get your prison sentence shortened a bit. So I am going to continue playing it the way that I have long been playing it. I have the responsibility to run my life. And I don’t feel comfortable even thinking about playing it any other way. I hope that is okay by you.
You are correct that there is no one else saying today that continued promotion of Buy-and-Hold is financial fraud. I absolutely believe that. Fama made a mistake. Shiller revealed the mistake. Bogle should have walked to the front of a room and acknowledged the mistake within 24 hours of the time he first heard about Shiller’s findings.
He didn’t do that. I don’t fault him too much for not doing it in the first 24 hours. Shiler’s findings were universally perceived as shocking. In these sorts of circumstances, these sorts of things have been known to happen.
The tragedy is that it got harder for Bogle to say The Three Magic Words with every 24-hour time-period that passed him by. There is now a mountain of evidence supporting Valuation-Informed Indexing and zero evidence supporting Buy-and-Hold. Buy-and-Hold has now caused an economic crisis. So it is really, really, really important that Bogle say The Three Magic Words by the close of business today. But it is a harder step for him to take than it has ever been before.
I didn’t create that reality and you didn’t create that reality. Bogle created it. But even Bogle didn’t create it with full knowledge of what he was doing.
We cannot change any of that.
We all live in the same country. We all are suffering from the economic crisis that Bogle caused. We all very, very much need to figure out how to bring that economic crisis to an end.
I love my country. So I am doing what I can.
I don’t pretend to be able to force you to do anything. I urge you to come clean. But that’s as far as I can take it.
I will continue to say that I believe that you will be going to prison following the next crash and I will continue to say that Bogle is at risk of going to prison following the next crash. Because that’s what the laws of my country say. And I believe that we should be applying the laws of our country to help us with the problems we face. That’s why we enacted those laws in the first place.
If you end up not going to prison, you end up not going to prison. That follows, right?
So don’t worry about it so much.
If you ever start to worry that you might end up in prison, please just let me know and I will do anything in my power to help you out.
If you continue to feel confident that you won’t be going to prison, please just enjoy that warm feeling with my blessing, old friend.
Is all of that fair enough for you?
It sure sounds fair enough to my ears.
I hope that helps a bit.
I naturally wish you all the best things that this life has to offer a person regardless of what investing strategies you elect to pursue.