Set forth below is the text of a comment that I recently posted to another blog entry at this site:
“No, the internet didn’t exist. But the same tactics were being employed in the pre-internet days.”
Can you please supply even one piece of evidence that supports this fantasy?
The most obvious piece of evidence is that most investment advisors were not warning people of the dangers of Buy-and-Hold in those days, Laugh.
Buy-and-Hold was a legitimate belief once upon a time just as once upon a time there was a legitimate belief that the earth was flat. If you don’t know any better, the idea that the earth is flat seems to make sense. You look around you and, as far as you can tell, the earth is flat. But at some point in the history of humankind, we learned that, no, what appears to be so is not indeed so — the earth is actually round.
Do you think that everyone switched from believing that the earth is round to believing that the earth is flat in one day? I do not. I wasn’t there. But my strong hunch is that it took a good number of years for this exciting news to “take” with most people. People who had learned the truth spoke up at the dinner table and said: “You know, it now appears that the earth is actually flat, not round.” And the people eating with them said “sure it is” or “huh?” or “that can’t be!” or “you must have forgotten to take your meds” or “who do you think you are, challenging what all the experts on this subject know to be true?” or “what a perfectly dangerous idea!” and on and on and on and on.
People don’t accept changes in fundamental beliefs in one day or one week or one year. It takes a long time for powerful new ideas to sink in. The finding that being willing to exercise price discipline when buying stocks is 80 percent of the investing project is the most important finding in the history of investing analysis. So no one should have been surprised that Shiller’s “revolutionary” (his word) finding was not universally accepted within 24 hours of the time his peer-reviewed research was published.
But 34 years? Huh?
What do you think happened, Laugh?
I don’t know what date you want to use as the date that the internet started. If you go from the date in 1981 that Shiller published his research showing that there is zero chance that a Buy-and-Hold strategy could ever work for a single long-term investor, it’s a lot less than 34 years. But it’s a good amount of time. How do you explain why Valuation-Informed Indexing did not take over the world in that amount of time?
Have you stopped to think how much money there is to be made by being one of the first to promote the first true research-based investing strategy? The $500 million that will be coming to me in my settlement is just the beginning. There will be hundreds of people who will become multi-millionaires by being the first to show millions of middle-class investors how to retire many years sooner while reducing the risk of stock investing by 70 percent. There were many millionaires made during the early years of computers and the internet. These advances in the investing realm are 100 times more important. Stock investing is how people achieve financial freedom — you can’t get more important than that in a capitalist society. We are going to have hundreds if not thousands of new Bill Gateses and Steve Jobses once we open the internet to honest posting on the implications of Shiller’s findings. What is your explanation for why we have not had thousands of people step forward to claim that money?
It’s not only the intimidation tactics of the Buy-and-Holders that have caused the delay. There is real cognitive dissonance in play here too. The Post Archives show that. But it is not only cognitive dissonance causing the problem. We have seen at board after board after board that most people LOVE learning the realities of stock investing. We have seen that going back to the first day. So there is no way that this could have been hushed up in all those pre-internet years without a lot of funny business going on. There were threats of career destruction then too. It’s human nature for people making lots of money (and the Buy-and-Holders have made HUGE amounts of money!) to protect the turf that permits them to make that money. To argue that there wasn’t funny business going on in the pre-internet days is silly.
It doesn’t matter all that much. If the Buy-and-Holders want to say that the corrupt stuff started on the morning of May 13, 2002, they can say that. My strong hunch is that Shiller will be coming out with a book-length description of the intimidation tactics that were directed at him in those days once he feels safe in telling the true and full story. But if we never find out about all the ugly stuff that went on in pre-internet days, does it really matter? We sure don’t have to look hard to find out what happened in post-internet days. We have hundreds of thousands of time-stamped posts explaining in great detail and in great depth precisely how the Buy-and-Holders used their wealth and power to crush those who tried to do honest work in this field. So we know what the story is. There’s zero reason to believe that things were proceeding on an entirely different track in the days before the internet was around. I mean, come on.
Humans are humans, Laugh. Humans go on the attack when they feel threatened. Valuation-Informed Indexing is a huge advance. So it constitutes a huge threat to those pushing the opposite strategy, the purest and most dangerous Get Rich Quick strategy ever concocted by the human mind (that’s obviously in contrast to VII, which is the first true research-based strategy). So the Buy-and-Holders responded with felonious behavior when they saw that their cash cow was about to go down. Gee, what a surprise! Whoever would have thought that humans could respond in such a way to losing their livelihoods? Has anything like this ever happened before? Some of this stuff is so darn hard to figure out!
There’s a reason why as a society we adopted laws making financial fraud a felony, a crime calling for the imposition of prison sentences. The behavior we have seen over the past 13 years is behavior that has been going on since the beginning of time. This is the worst example of it. The promotion of Buy-and-Hold in the 34 years since the peer-reviewed research showed that there is precisely zero chance that it could ever work for a single long-term investor has caused more human misery that any earlier finance-related crime in the history of humankind. But the basic story here is not a new one. We have seen this general story play out over and over and over and over again. That’s why we enacted laws to protect ourselves from the sorts of individuals who have put up posts in “defense” of Mel Linduaer and John Greaney and Jack Bogle. D’oh!
Do you know why this particular act of financial fraud has been so massive in scope?
It’s because the advance is so massive and life-affirming!
The stronger the appeal of the challenge to the conventional thinking is, the more brutal are the intimidation tactics that will be used to silence those seeking to spread the word re the new idea. VII is the biggest advance we have ever seen in this field by a factor of 500. So the brutality we have coming from the other side has been off the charts, worse than anything we have ever seen before in this country by a factor of 500.
The good news is that things end up in the same place — we put some in prison, we bring civil actions against a much larger number, those who lead the opposition to the discredited idea become wealthy beyond their wildest dreams and the entire society forges forward in a very, very big way, We all live better lives for many years to come. Good for us!
There was funny business going on prior to the introduction of the internet on the scene, Laugh. I am sure of it. I can’t document much of it because I was not around. But I can document everything that has happened since the morning of May 13, 2002, in great detail. That’s the documentation we need to tell this story in a full and clear and understandable way to the millions of middle-class investors who need to come to terms with why they are in the process of losing most of their life savings. The Post Archives available to us today get the job that needs to be done here done well. So we are set.
I wish you all the best that this life has to offer a person.