Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Rob says: “The legal way for this debate to have proceeded would have been to have permitted honest posting going back to 1981. ”
Uhm, Rob…….the internet did not exist in 1981. Not only that, it was a long time until there were financial discussion boards after the start up of the internet.
No, the internet didn’t exist. But the same tactics were being employed in the pre-internet days.
Shiller has made several comments suggesting that intimidation tactics have been directed at him. When the prison sentences are announced, all sorts of things are going to come out. I bet that Shiller could write an entire book about the intimidation tactics directed at him.
Rob Arnott posted here about two academic researchers who showed an interest in doing research showing the benefits of Valuation-Informed Indexing and were taken aside and told that their careers would be destroyed if they dared to “cross” the Wall Street Con Men by doing honest work.
And of course I reported here on discussions I had with Ravic Sethie at Columbia. He wants to do honest work. He is afraid to go there. Gee, I wonder why.
You can go back to the morning of May 13, 2002, and look at the responses we saw from my famous post pointing out the errors in the Greaney study. There were two types of reactions. All the people who were on the level (both Valuation-Informed Indexers and Buy-and-Holders) were saying how this was the most exciting discussion we ever had at the Retire Early board. And then there were the Goons threatening to kill family members of posters who posted their honest views. Huh?
I didn’t know about the financial fraud stuff on the morning of May 13, 2002, Pink. I was just telling people about the errors in the Greaney retirement study. I assumed that the errors would be fixed and that that would be the end of it. You Goons obviously knew about the errors before I posted or you wouldn’t have gone so nuts. You freaked out because you knew all along that Greaney was vulnerable if someone worked up the courage to post honestly. You were insanely defensive and there had to be a reason for that.
There are lots and lots of other examples of what I am talking about here. This site documents what happened from May 13, 2002, forward. I wasn’t personally involved in this matter before then. But it is clear that people knew about the problems with Buy-and-Hold long before I came on the scene and were keeping their mouths shut because it had become widespread knowledge that speaking honestly about Buy-and-Hold meant career death.
There is no intellectual controversy here. There never has been, at least not since 1981. All of the evidence is on one side and there is zero evidence on the other side. So what is there to discuss?
What we have is a power imbalance. The Wall Street Con Men have more power and money and connections than the rest of us and they have demonstrated a ruthless willingness to destroy anyone who exposes their con. That’s the deal. This is about power, not research. I believe Fama is real. He is a top-notch researcher. But Fama never even looked at long-term timing. So the idea that his research showed some legitimate grounds on which to conclude that price discipline might not be needed when buying stocks is pure fraud. Some believe it. I guess you could say it’s a mistake with those people. But it’s fraud for those using death threats and threats of career destruction to keep those who show an interest in exposing the con in line.
The significance of the internet is that it made it impossible for the Wall Street Con Men to keep the massive act of financial fraud going. The millions of middle-class investors whose lives were in the process of being destroyed now had a way to share what the research says and thereby protect themselves from the con. That’s where the Internet Goon Squads came into the picture.
This is why I focus on the prison sentences today. Lots of people want to make nice with the Wall Street Con Men. I tried doing it that way myself. But people who have been participating in a massive act of financial fraud are primarily concerned with going to prison. Showing them that they can help millions of readers or clients is not going to have much effect on them. The only way to change things is to get the prison sentences announced so that we can put the ugly side of this behind us and move on to all the exciting insights that have been opened to us by the last 34 years of peer-reviewed research.
The Wall Street Con Men should have jumped at the chance to come clean that I inadvertently presented them with my May 13, 2002, post. They cannot keep the con going indefinitely. So it is in their best interests to get everything out in the open and behind them. I don’t think there would have been prison sentences had they come clean in May 2002. Not too many people had been hurt in a serious way at that time and there’s a lot of genuine confusion re the content side of this. Had Motley Fool shut down Greaney, we would all be in a very different place today.
But we cannot change any of that now. Now there is too much stuff on the record for us to avoid prison sentences. I believe that even the Wall Street Con Men and you Goons would play it differently if we could go back in time. But it’s too late for that. Given where we stand, it’s best for every single person involved that everyone come clean by the close of business tomorrow. But the Goon brain doesn’t see things that way.
Anyway, it’s been going on for 34 years, going back to long before the internet became a factor. The benefit of the internet is that we have time-stamped posts to document the con from May 13, 2002, forward. Those time-stamped posts will be a huge help in all the trials. This story shows the tremendous power of the internet to do good as it achieves its potential as a new communications medium. That’s a very exciting aspect of the story, in my assessment.
Come clean tomorrow, Goon!
I know you won’t. But it doesn’t hurt to ask every now and again.
Take care, man.