Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Everyone else is lying and only you are telling the truth?
I am the only one telling the truth re the financial fraud aspect of this, Anonymous. You yourself have acknowledged this on many occasions.
Fama had good faith when he published his wonderful research in 1965.
Fama didn’t distinguish between short-term timing and long-term timing because long-term timing was at the time not a practical option. Bogle had not yet founded Vanguard. Long-term timing works only with index funds.
Shiller was the first to publish peer-reviewed research showing that long-term timing always works and is always 100 percent required. That was in 1981.
Bogle had a responsibility to walk to the front of a large room and to say the words “I Was Wrong” as soon as he learned of Shiller’s 1981 findings.
Bogle can be excused for not acting immediately. Shiller’s findings were truly “revolutionary” (his word). They turned everything we once thought we knew about how stock investing works on its head. It is a common phenomenon for humans to experience cognitive dissonance in such circumstances. This is almost certainly what happened to Bogle and the other Wall Street Con Men. They told themselves that people would figure all this stuff out over time. They noted that stock prices were at rock-bottom levels. It was hard to imagine at that time that prices would ever again be at fair-value levels much less at three times fair-value levels. The Wall Street Con Men rationalized that to hold off on declaring Buy-and-Hold 100 percent discredited for a few years would not do much harm.
The years passed and prices reached a point where telling the truth about what Shiller’s research showed would cause a recession. At that point, the Wall Street Con Men felt trapped. They worried that many would not understand why they held off on telling the truth for so long. They anticipated lawsuits and even prison sentences if the truth were to get out. They engaged in brutally abusive tactics aimed at scaring anyone who told the truth into holding back from doing so.
I came on the scene in May 2002. I pointed out that the Old School safe-withdrawal-rate studies got the numbers wildly wrong and needed to be corrected immediately. You Goons understood that permitting honest posting on the retirement planning question would cause the entire Buy-and-Hold Model to collapse. So you went into Campaign of Terror mode.
Bogle backed you up. Motley Fool backed you up. Morningstar backed you up. Index Universe backed you up. Everyone who had hopes of making a dime in this 100 percent corrupt field backed you up. Because everyone who has been paying attention knows that this field is today 100 percent corrupt and that those who talk about the implications of Shiller’s 1981 findings in places where con men are seeking to push their smelly Buy-and-Hold garbage see their careers destroyed.
Is everyone lying?
Nothing could be more clear.
Am I continuing to refuse to lie?
Were all the members of Nixon’s White House lying when he obstructed justice, Anonymous?
Were all the people who made a buck from Lance Armstrong’s mountain of deceptions lying when they helped him continue his massive cover-up of his use of performance enhancing drugs?
Were all the people in the Penn State football program lying when they covered up the child molestation going on that Joe Paterno did not want people to know about?
People lie when the cost of doing so becomes so great that their careers and the lives of their loved one are at risk if they dare to “cross” the powerful people demanding that they lie. This is not the first time that something like this has happened. It is the worst. There has never been a lie that caused as much human misery as the lie that there is some mystical, magical research somewhere showing that there might be an alternate universe in which Buy-and-Hold might work for one or two long-term investors.
I’m not lying today. But I am a weak human like all the others. I lied once upon a time. I wrote words of praise for Greaney’s study in my “Secrets of Retiring Early” report. The words were in a hyper-technical sense correct (as are the words of Shiller that you quote here) because I really do believe that his study represented a major advance. But I knew at the time I wrote those words that his study did not contain a valuations adjustment and I knew that that was required. So I lied. I committed financial fraud. Because I was scared of what would happen to me if I told the truth. Shiller and all the others are lying for the same reason today.
Following the next price crash, the lies will stop. The human misery will be too great for people to continue to rationalize their lies. So people will start telling the truth. Buy-and-Hold will collapse, as it should have 33 years ago. And we will figure out as a society what sort of prison sentences should be handed out to all the liars.
I will be arguing for mercy. You can count on me for that.
But I will be telling the story honestly, as it happened. The millions of middle-class investors whose lives have been destroyed by the 12 years (it’s 33 years if you go back to when Shiller published his study) of lies will decide on the length of your prison sentence. That’s how our system works.
I naturally wish you the best of luck in all your future life endeavors regardless of what investing strategies you elect to pursue.