Set forth below is the text of a comment that I recently posted to another blog entry at this site:
http://www.bloomberg.com/news/articles/2015-06-08/u-s-stocks-on-wrong-side-of-history-with-rate-increase-in-sight?cmpid=yhoo
So the next stock market drop will be blamed on higher interest rates and not on goons or buy and hold.
I guess we won’t see anyone going to prison and you will have to do without your $500 million. Better cancel your order for the new Porsche.
You are accurately describing the game that the Buy-and-Holders have been playing for a long time now, Anonymous. They take credit for anything that happens that is good and they blame others for anything that happens that is bad. When Taylor Larimore is able to buy a house with the Pretend Money he gets from following a Buy-and-Hold strategy, he calls it “The House that Jack Built.” But when we see the economic crisis that inevitably follows from the widespread promotion of this strategy, he does not refer to it as “The Economic Crisis That Jack Built.” Heads, the Buy-and-Holders win. Tails, everybody but the Buy-and-Holders lose.
Your suggestion is that everyone will continue to permit the Buy-and-Holders to get away with such nonsense. I don’t buy it.
My personal belief is that even the Buy-and-Holders won’t permit themselves to get away with such nonsense following the next crash. The Buy-and-Holders are not bad people. They did not INTEND to cause an economic criss. They did. It happened. There is 34 years of peer-reviewed research showing why we always experience an economic crisis when large numbers of people are persuaded that Buy-and-Hold strategies can work in the real world. So the Buy-and-Holders messed up big time. But I have not seen any evidence that they INTENDED all this bad stuff. I have been studying this stuff for a long time and it is my strong impression that the Buy-and-Holders did NOT intend all this bad stuff and that they are on one level of consciousness horrified to see it playing out.
Do you see?
We are not on different sides. We are on the same side. Even you Goons did not intend all this bad stuff. So even you Goons are going to want to set things right following the next crash. Then of course we all have no problem. From that point forward, it is good stuff piled on top of good stuff piled on top of good stuff. For ALL of us. Valuation-Inforrmed Indexers and Buy-and-Holders alike.
Humans respond to incentives. If you want people to perform good acts, you reward them for them. If you want people to avoid performing bad acts, you penalize them. That’s how we do it in every field of human endeavor other than investing analysis. With investing analysis we encourage advisors to perform bad acts (to say that price discipline is not always 100 percent required) and we discourage advisors from performing good acts (to always point out that it is essential to exercise price discipline). Why the heck do we do that? Why are all the rules that apply in every other field of human endeavor turned on their heads in the investing advice field? That’s the question that we all need to come to terms with to be able to bring this economic crisis to an end and move on to the greatest period of economic growth in our history.
It’s not because getting investment advice right doesn’t matter. It’s because getting investment advice right matters so darn much. If investing advice didn’t matter that much, the Buy-and-Holders would have corrected their error when it was discovered in 1981. They would have said “sorry” and moved on to giving better advice and no one would have been upset and that would have been the end of it.
The reason why it didn’t happen that way is because it is a very big deal when someone gives bad advice on how to finance a retirement plan. People cannot fix their retirement plans when they go bust. They are too old to start over and earn all the money they need for retirement a second time. So it is very, very, very hard for the Buy-and-Holders to acknowledge their mistake. The mistake has had devastating consequences. We all need to keep that in mind when we are trying to persuade them to come clean.
And we need to keep in mind that this was so in a smaller way way back in 1981. The Buy-and-Holders were excited about their own discoveries, which they believed were taking us all to a very good place. Shiller’s 1981 research discredited the corner-stone on which the entire Buy-and-Hold strategy was built. The Buy-and-Holders were horrified to think that they had been giving dangerous advice. They became defensive. They went into cover-up mode. Not because they are bad or stupid. Because they care about their readers and clients and possess a sincere desire to help them and because they could not bear to think that they were hurting the people they thought they were helping.
Do you see, Anonymous?
This didn’t start out as financial fraud. It started out as a sincere effort to do wonderful things. And, indeed, many of the things the Buy-and-Holders did really were wonderful. Part of the answer here is making that point over and over and over again. The more we make the Buy-and-Holders feel good about all of their very real and important contributions, the less defensive they feel and the more willing they become to come clean about the issue (valuations) re which they messed up.
You are suggesting that they will never come clean, that the Buy-and-Holders are 100 percent corrupt and that they will continue to use their power and wealth and connections to destroy anyone who dares to “cross” them by posting honestly re any important investment-related question. I don’t see it. I believe that you are wrong. I believe that the Buy-and-Holders are going to come clean and that we all are going to make it safely to the other side of the big black mountain and that in coming days we all will be achieving financial freedom many years sooner than we ever imagined possible back in the days when we were collectively ignorant of the realities of stock investing.
The Buy-and-Holders have blocked the learning process that we all need to see take place for far, far longer than I imagined possible. I will give you that one. It is my job to figure out WHY that is so. I do not believe that it is because the Buy-and-Holders are corrupt through and through. It would take a long time for me to put forward all the reasons why I am convinced that that is not so. If you ask for me details, I will give them. But I cannot spell it all out in a single post. What I will say here is that I am personally persuaded that the Buy-and-Holders started out with good intent and generally possess good intent right up to the current day. That’s an important part of the story.
The people who now run the Bogleheads Forum used to refer to themselves as “Vanguard Diehards” back when their board was run from the Morningstar site. Does that mean that they were evil? It does not. It means that they really, really, really believed in what they were saying. Being a “diehard” is a bad thing when it means that you are arrogant and not willing to listen to other points of view. Being diehards has gotten these people in a lot of trouble and caused millions of people to suffer serious financial harm. But the feeling that caused these people to become “diehards” was a positive one. THE BUY-AND-HOLDERS WANT TO HELP PEOPLE! Good! That’s wonderful!
We need to take this positive energy and turn it to positive purposes.
Do you see?
The Buy-and-Holders want to help people. They know all about the laws of the United States. We need to persuade them that they need to FOLLOW those laws. You can’t commit felonies just because you are a “diehard.” That’s 100 percent unacceptable. So they need to rein in this impulse they have to lash out at anyone who talks about the implications of the last 34 years of peer-reviewed research in this field. The financial fraud stuff is 100 percent unacceptable. But the other stuff is great. The fact that the Buy-and-Holders want to help people is great. They fact that they care so much is great. The fact that they have so much energy and determination is great.
You are suggesting that the energy that the Buy-and-Holders have been putting to negative purposes for 13 years now can never be put to positive purposes. I just don’t buy it. If the Buy-and-Holders were bad people, I might buy it. But they aren’t! They are good people. They are smart people. They want to help. They are determined. That’s good. That’s what we want. So long as they don’t take the diehard part so far that they are committing felonies under the laws of the freakin’ United States.
I don’t buy into any of your negative scenarios, Anonymous. That’s all just garbage Goon talk.
I of course get it that bad stuff has happened. But the root realities here are 50 times more good than they are bad. We are going to get things on the right track. It might well take another price crash to get us there. But I am firmly convinced that we are going to get things to a positive place. I am sure.
Do you know who taught me what I needed to know to see that Greaney’s retirement study got the numbers wildly wrong?
It was John Freakin’ Bogle! It was by reading Bogle’s book that I figured out what I needed to know to take Greaney on.
What a terrible, terrible person that Jack Bogle is! How horrible that he helped us all learn how to calculate safe withdrawal rates properly and by doing so opened the door to hundreds of additional powerful insights that we have developed together over the course of the past 13 years!
You see things though a Goon perspective. I do not. You see only negative stuff. I see tons and tons and tons of positive stuff, enough positive stuff to make us the luckiest generation of stock investors ever to walk Planet Earth.
We are headed to a good place. Bogle is going to come clean. So are all the rest of the Wall Street Con Men. So are you Goons.
I am sure.
Hang in there, man. It gets better. A LOT better.
Rob
Anonymous says
You missed the point, Rob. The poster was pointing out that you will never get your $500 million because any crash would be blamed on some economic issue.
Better get a new plan.
Rob says
The $500 million settlement payment is not coming to me as the result of a “plan” on my end, Anonymous. My plan was to build a personal finance site and enjoy whatever profits came in as a result.
I certainly was not expecting my earnings from the site to be anything even remotely in the neighborhood of $500. Please recall that, when I started doing this work, I was a Buy-and-Holder myself. I certainly was not aware of any cover-up or scam or con. I learned about that as a result of my efforts to share with my fellow community members what the last 34 years of peer-reviewed research tells us about how stock investing works in the real world. The reaction of the Buy-and-Holders to my efforts to spread the word about the implications of Shiller’s “revolutionary” (his word) findings told the tale.
Legal actions are how people placed in the circumstances in which I was placed recover their damages. This thing is huge. Shiller’s 1981 finding turns our old understanding of how stock investing works on its head. It’s not just that pure Get Rich Quick/Buy-and-Hold isn’t the best strategy; we now know that pure Get Rich Quick/Buy-and-Hold is the WORST strategy. The peer-reviewed research that I co-authored with Wade Pfau shows that investors can reduce the risk of stock investing by taking the single step of giving up their belief in Buy-and-Hold and instead using the 145 years of stock-return history available to us today as their guide to how the market may perform in the future. The shift from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance in the history of personal finance. And it’s not a close call.
I obviously would have earned far more than $500 million had you Goons not engaged in insanely abusive and criminal behavior and if big-name “experts” like Jack Bogle had not failed to act when informed of your behavior. I have offered to settle for $500 million because it makes sense for every single person involved for us to put the nasty stuff behind us and get about the business of spreading the word about the first true research-based strategy and thereby bringing on the greatest period of economic growth in our nation’s history.
But none of this was “planned” on my end. I spoke out AGAINST the Campaign of Terror against our board and blog communities going back to the first day (May 13, 2002). No one has spoken out against your criminal acts as forcefully or as frequently as I have. No one is in a close second place.
I accept that the payment of $500 million to me as a settlement is how our system works. But this way of going about things was not the “plan.” No way, no how. I HATE how things have played out. I believe strongly that we are the luckiest generation of investors ever to walk Planet Earth. I would have preferred to see us all begin taking advantage of these amazing blessings back on the morning of May 13, 2002, and to have avoided this Buy-and-Hold Crisis altogether as a result.
I disagree with you that the next price crash will be blamed on “some economic issue.”
I acknowledge that that is what happened following the three earlier economic crises caused by the heavy promotion of Buy-and-Hold “strategies.” So I can see where you are coming from re this one.
But there’s an important distinction that applies re this fourth Buy-and-Hold Crisis. This is the first economic crises caused by the promotion of Buy-and-Hold strategies re which we have 34 years of peer-reviewed research showing why we are in a crisis. That’s a big deal. That changes things in a fundamental way.
MILLIONS of people will want to know why their retirement plans have failed following the next crash. We are living in a time when information re thousands of topics is shared widely and immediately via the internet. It’s more than a little hard for me to imagine that those millions won’t find a way to find out what they need to file lawsuits to recover at least a portion of their damages once they have become highly motivated to do so by experiencing those losses not just in theory but in a painfully concrete way by seeing the numbers on their portfolio statements change dramatically.
Please don’t forget that the people who lead the effort to getting the truth out about this massive act of financial will be earning millions or even billions for doing so. Do you really think that people are going to pass up the chance to earn that kind of money once Buy-and-Hold has been exposed as the scam that those who keep up with the peer-reviewed research have known it to be for 34 years now? I don’t think that too many are going to pass up the chance to earn that kind of money by doing so much good for so many middle-class people. I think the entire Buy-and-Hold house of cards will come tumbling down quickly following the next price crash.
But I don’t know for sure. I am not God. I am obviously biased re this matter. I’ve been wrong before. If it were happening again, I would probably be the last to know. Is that not so?
We are just going to have to wait for the next price crash, when we will all find out together how things will be playing out in the real world. Fair enough?
My best and warmest wishes to you and yours, my long-time abusive-posting friend.
Rob