Set forth below is the text of a comment that I recently posted to another blog entry at this site:
You are wrong. They are both data driven fields. If investment advice is 100 corrupt, than you must distrust all advice, including your own comments.
Show me one instance in the medical field in which someone of Bogle’s stature permitted his name to be used on a discussion board at which the sorts of individuals who have posted in “defense” of Mel Linduaer or John Greaney are permitted to participate. It has never happened. Give me a freakin’ break.
If the barber here in Purcellville found that the sorts of individuals who have posted in “defense” of Mel Linduaer and John Greaney were using his name, he would be on the phone in five minutes contacting the authorities and demanding that action be taken. Does Jack Bogle not have a telephone in his house, Anonymous? Why does he associate on a daily basis with people who have a long record of committing numerous acts of financial fraud if this field is not today 100 percent corrupt?
I don’t distrust all advice. There are lots of wonderful people who work in this field. Bogle is one of them. He is an absolute giant. I call him a Hero to the Middle Class. I don’t say that lightly. So, no, you are 100 percent wrong when you say that I distrust all advice in this 100 percent corrupt field.
The problem here is that price discipline is BY FAR the most important factor bearing on the long-term success of stock investors. It is 80 percent of the story. So Bogle can offer top-notch advice on 15 other topics (and he does) and still get it all horribly wrong by remaining unwilling to take a look at the 34 years of peer-reviewed research showing that long-term timing always works and is always 100 percent required.
I am NOT saying that the people who work in this field are bad people. And I am NOT saying that the people who work in this field are dumb people. I have never met a dumb Buy-and-Holder. And, while I certainly say that a good number of Buy-and-Holders are in an objective sense guilty of financial fraud, I also say that most of them are good and hard-working and entirely likable people. That might seem like a bit of a paradox on first hearing. But that is the reality here.
I go back to my civl right comparison. The way in which blacks were treated prior to the civil rights revolution was HORRIBLE. It was sinful. It was shameful. It was criminal. It’s almost impossible to imagine that not too long ago we lived in a country where people who had black skin were not permitted to drink from the same water fountains as people with white skin. Huh? That’s INSANE. How could even one person believe that that was the right way to go? That was 100 percent insane. There is not one reasonable person who today says different.
So our nation was 100 percent corrupt in the area of race relations in the early 1950s. Is that not fair to say?
Would you then say that everything we did was bad? I sure wouldn’t say that. If everything we did was bad, we never would have had a civil rights revolution. There must have been some good there for us ever to have taken that step. It was a very, very, very, very bad situation. But there was still a lot of good present in our country all the same. That’s the full reality.
That’s how it is in the investing advice field today. The field is 100 percent corrupt. Good and smart people like Wade Pfau publish amazing research that should be helping millions of middle-class people and Goons like you threaten to get him fired from his job for going to the trouble. And people like Jack Bogle SUPPORT you Goons and thereby empower you. So Wade has to be willing to let his two small children starve if he is to follow his dream by promoting the important research he has published and thereby winning the Nobel prize to which he is entitled.
I say “no.”
The field is 100 percent corrupt today. But it is only re one issue that we are 100 percent corrupt. We are 100 percent corrupt because of our unwillingness to acknowledge that there is precisely zero chance that any investor failing to exercise price discipline can ever achieve good long-term results. On the day that Bogle gives his “I Was Wrong” speech, we will achieve 34 years of advances in one day and we will instantly start to realize the benefits of being the luckiest generation of investors that ever lived, the first that is able by virtue of making use of the peer-revirewerd research (which the Buy-and-Holders once thought was a good way to go!) to reduce the risk of stock investing by 70 percent while obtaining FAR higher long-term returns.
Both things are so, Anonymous. We are 100 percent corrupt today. And we are also on the verge of the greatest advance in our knowledge of how stock investing works ever achieved in our history.
And it is not an accident that both things are so at the same time. It is BECAUSE we are on the verge of the greatest advance in knowledge ever achieved in the history of personal finance that the Buy-and-Holders are so insanely defensive about what the last 34 years of peer-reviewed research says. If the peer-reviwed research that I co-authored with Wade Pfau showed us all how to reduce the risk of stock investing by 5 percent, I would be the toast of the town. My web site would be the #1 site on the internet. I would have earned millions as a result of my discovery of the insights advanced in that paper. I would be on tour with Bogle at this moment. People would be writing books about me.
But I committed the terrible, terrible crime of co-authoring a peer-reviewed paper that shows us all how to reduce the risk of stock investing not by 5 percent but by 70 percent. That makes the Buy-and-Holders look bad. All the death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researcher fired from their jobs follow from that.
I didn’t put up the famous post from the morning of May 13, 2002, with the idea of making the Buy-and-Holders look bad, Anonymous. I was the leader at a board that the most abusive poster in the history of the internet had decided he was going to burn to the ground. I had a responsibility to step in and help out my many friends who had built that board into the #1 board at the Motley Fool site. So I did what I had to do.
It turned out that I had no idea how important that post was going to be. The reason why Greaney had gotten the numbers so wildly wrong in his study is that this field had become 100 percent corrupt long before Greaney or I ever came on the scene. Greaney saw that supposedly legitimate researchers were using that methodology and so he thought it would be okay to use it himself. Then he was embarrassed when I showed that the methodology was analytically invalid and when hundreds of our fellow community members agreed with me that his study was lacking a valuation adjustment.
Greaney is responsible for his own behavior. He has led the biggest act of financial fraud in the history of the United States and that calls for a long prison sentence under our statutes. I cannot take us back in a time machine and change that. If he wants me to help him out by pointing out that the entire industry is 100 percent corrupt today, I am 100 percent happy to do that. He doesn’t need to give me anything for me to do that. I will do it just because I think it is the right thing to do.
And the same goes for Bogle. And for Phau. And for Bernstein. And for Kitces. And for Tresidder. And for Piper. And for Swedroe. And on and on and on and on.
But I cannot commit financial fraud myself. Going to prison is not on my bucket list. I ain’t freakin’ interested.
I will work with anyone willing to agree to follow the most minimal standards of personal integrity that apply in every field other than stock investing. I have zero willingness even to CONSIDER working with anyone who says that he or she knows about some mystical, magical alternate universe where it might be a good idea for one or two long-term investors to fail to exercise long-term timing.
Find someone else, you know?
I naturally wish you the best of luck in all your future endeavors regardless of what investing strategies you elect to pursue, Anonymous.