Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Intimidation? You mean like when someone threatens you with prison because they don’t do what you want?
I’m not threatening you with prison, Anonymous. I am offering to do whatever is in my power to help get your prison sentence reduced. There’s a big difference.
You have to take a step back and look at the history to understand what is going on here.
I am opposed to Buy-and-Hold, right? I have two problems getting Valuation-Informed Indexing on the map. One is that the Buy-and-Holders don’t believe in it. That’s a problem but not an insurmountable one. In theory, the way to overcome that problem is to convince enough people of the merits of Valuation-Informed Indexing to take on the Buy-and-Holders at every board and blog on the internet. Eventually, the better ideas would prevail. Right?
One big problem with the usual approach is that the Buy-and-Holders are so ruthlessly abusive. They will do ANYTHING to stop people from learning about the implications of the past 34 years of peer-reviewed research. That makes my job a lot harder. But even that does not make my job impossible.
There’s a way in which the Ban on Honest Posting cuts in my favor. It creates a huge OPPORTUNITY for those who jump on the VII bandwagon first. Bogle is famous today because he was one of the first to push Buy-and-Hold. You would think that someone like Wade Pfau would want to become as famous as Bogle and so would lead the VII cause today. Why doesn’t he?
A big problem here is cynicism. People see things in black and white. Either Bogle is the greatest genius who ever lived and is incapable of ever making a mistake. Or else he is the Frank Underwood of Personal Finance, the most corrupt person who ever lived. The Buy-and-Holders believe he is the former. Those who lose confidence in Buy-and-Hold usually fall into the trap of believing the latter. They adopt the cynical view that Bogle (and the other Wall Street Con Men) are 100 percent corrupt. Thus, they conclude that it is just too risky to take them on. They satisfy themselves with including BITS of honesty in their work. They don’t tell the full truth known to them but they tell more truth than most others and are able to live with themselves by rationalizing that that is the best that can be done given the circumstances that prevail.
I DO NOT SHARE THIS CYNICAL VIEW.
I believe that Bogle really believes what he says about stock investing on one level of consciousness. He knows that Shiller’s research is a threat. He would have to be a moron not to see that. But he tells himself that Buy-and-Hold is as close to what works that we are ever going to get and that that is good enough. He compares it to other stuff out there and rationalizes that he is helping people by advocating Buy-and-Hold.
Why do I believe in this non-cynical interpretation of events? I have had a front-row seat to all of this for 13 years now. I have been able to see up close and personal how people develop their various rationalizations. No one else has the level of experience with this aspect of the question. I am truly the world’s #1 expert on this side of things.
Greaney’s study was an advance. He said that the safe withdrawal rate was 4 percent when a lot of people were still saying that it was 7 percent. Heck! There was one guy at Motley Fool who once said that it was 15 percent! Greaney believed that his study served a good purpose by showing why people making such claims are wrong. He is the leader of the Campaign of Terror and he believes in his heart (on one layer of consciousness) that he is going good.
If Greaney believes that, why should anyone conclude that Bogle thinks anything less? Bogle is not The Frank Underwood of Personal Finance. He is a good and smart and hard-working person who happened to make a mistake, fell victim to cognitive dissonance and thereby found himself in a trap that he cannot figure out how to escape.
I had many conversations with Mike Piper before he banned me from his site. Mike told me that he believes that Valuation-Informed Indexing can work. I reported on my conversation in a blog entry from a number of years back. Mike does not follow VII himself. He is a Buy-and-Holder. So he properly advocates Buy-and-Hold at his site. But he does not permit discussion of the last 34 years of peer-reviewed research at his site. That’s a strange reality. We need to solve that puzzle.
I figured out the answer to that one when you Goons threatened Wade and got him to flip. You had committed felonies long before that. I hadn’t mentioned prison sentences before that because I believed that it would just inflame things all the more. But I saw when you threatened Wade that, once you committed the felonies, you reached A Point of No Return. Once you passed that point, you felt that you would go to prison no matter what you did. So it didn’t much matter anymore what you did.
You now felt compelled to do things that you never would have dreamed of doing in the early days. In the early days, you fought because you cared about what was right and you thought Buy-and-Hold was right. Once you committed felonies, all concern about what was right went out the window. Now it was about staying out of prison. Even research showing how we all can reduce the risk of stock investing by 70 percent was not going to cause you to come clean once coming clean meant going to prison.
There is no way out of the trap you are in today. If you come clean, you still go to prison! Not for as long, obviously. But prison is not appealing for even one day. So you are not interested in coming clean. I want you to come clean. But seeing that it means prison for you, I can’t say that I don’t see at least a tiny bit of logic in your position.
Given that you cannot come clean, it doesn’t make much sense for me to hold back from talking about the felonies. It doesn’t matter how much I inflame you anymore. You are not open to coming clean no matter what I say.
The next step down the logic chain was to realize that it is the same for Jack Bogle and all the other Wall Street Con Men. Jack would come clean in two seconds if it were a question of going back to 1981 and playing it straight this time. The problem is that he does not have that option available to him.
If Jack comes clean, people are going to ask why he didn’t come clean in 1981. They are going to ask why he caused an economic crisis. They are going to ask why he caused millions of middle-class retirements to fail. They are going to ask why he did nothing when he learned that Mel Linduaer uses threats of physical violence to keep people in line at the Bogleheads Forum. What is he going to say? What good answers are there to such questions?
You Goons are in a trap. And Bogle is in a trap. And Mike Piper is in a trap. And the Wall Street Jourmal is in a trap. And every academic researcher is in a trap. And Princeton University is in a trap. Wade Pfau received a doctorate in Economics at Princeton. He sure should not have had to come to me to learn how to calculate the safe withdrawal rate. His Princeton teachers should have taught him that. But they can’t. Because they are in the same trap that holds Bogle and Piper and you Goons and everybody else.
Our entire freakin’ society is in a trap!
The question is — What are we going to do about it? How do we get OUT of the trap?
We are not going to get out of it by people like me being mean to people like you, Anonymous. So I am happy to do absolutely anything in my power to help you out Anything. And you don’t have to do anything in return to persuade me to do it. I ask for nothing. I just want to help you. And I want to do it for free.
There’s only one hitch.
I want to get us all out of this trap.
If I don’t get us all out of the trap, you end up in prison. So that’s not helping, is it?
And if I don’t get us all out of the trap, Bogle never gets credit for the amazing work he has done, does he? Bogle never intended to cause the biggest economic crisis in our nation’s history. But unless we get out of this trap, that’s what he will be known for for decades to come. I love the guy. So I need to get him out of this trap as much as I need to get you Goons out of this trap.
And of course I need to get Wade out of the trap. And I need to get the Wall Street Journal out of the trap. And on and on and on and on and on.
We are not arguing intellectual points anymore. Intellectual points are a secondary consideration for everyone on “the other side.” Their first concern is staying out of prison and avoiding legal liabilities. What the heck am I supposed to do about that? How am I supposed to persuade people in those circumstances?
One possibility is that we could adopt an amnesty. I have no problem with that. My aim is to be able to tell millions of middle-class people about the first true research-based investing strategy, a smart and simple and safe way to invest in stocks. If adopting an amnesty gets us there, why would I object? I am fine with that.
But I cannot adopt an amnesty on my own, can I?
When there are enough powerful people working together to get an amnesty adopted, I will help out. I cannot do it on my own. I have to wait for some others to step forward. That’s where things stand.
For now, it would be cruel of me not to mention the prison sentences. Because the lengths of the prison sentences increase each day. I want the prison sentences to be as short as possible for all sorts of reasons. So I am bound in conscience to continue mentioning them. Even though I do not personally believe that it is going to make much difference. I think that the game-changer is going to be the next price crash. When the crash comes, I want to be able to show people that I at least mentioned the prison sentences on hundreds of occasions. I want to be able to show people that I at least tried.
If you have any bright ideas, please feel free to share them, Anonymous.
Otherwise (and I know that the reality is otherwise — I have been wracking my brain for a long time to come up with any ideas that help us all out of this mess in which we find ourselves), we just have to wait until the crash comes and see how people react to it. Then I believe the chances are good that constructive and helpful and life-affirming things will begin to happen.
My best and warmest wishes to you and yours, my long-time Goon friend.