Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Why is it that you are the only one banned at so many of these sites? The problem seems to be you.
You are asking a great question, Anonymous. But the correct answer is the opposite of the one you have suggested.
I have insisted on recognition of my right to post honestly re what the peer-reviewed research tells us about how stock investing works. Honest interaction is the norm in every other field of human endeavor. Honesty in communication is an entirely good thing, there is nothing bad about it whatsoever. It is the condemnation of honesty that is considered a negative in every other field of human endeavor. It is not my demand that my right to post honestly be recognized that is the problem. It is the demand of Buy-and-Holders that honest posting re the peer-reviewed research be banned at every site that is the source of all our problems (the economic crisis, the difficulty that many feel about being able to finance safe retirements, the destruction of so many board communities, your prison sentence, and on and on).
I was a Buy-and-Holder on the morning of May 13, 2002. I obviously don’t have any bias against the strategy, right? I rank Jack Bogle as the second most important investment advisor in history. I certainly did not start out with any negative feelings re the man, right? Yet today I describe Buy-and-Hold as “smelly Get Rich Quick garbage” and say that Bogle is guilty of an act of financial fraud 500 times worse than that committed by Bernie Madoff. What the heck happened to bring about such a change in assessments? Is that not a good question?
The short answer is that John Greaney threatened to kill my wife and two children if I continued to post honestly re the errors he made in his retirement study. It was on the day that he put forward his first death threats (August 27, 2002) that I stopped believing in Buy-and-Hold. Everything else followed from that. Once I stopped believing in Buy-and-Hold, I naturally needed to figure out what really works. Every article and podcast and calculator that I have produced in the time since was rooted in that determination that Buy-and-Hold was a dead end.
It wasn’t just what Greaney did that caused me to give up my belief in this strategy. By itself, Greaney’s bad behavior was not so shocking a thing. There have always been people who behaved poorly. What was shocking was how many Buy-and-Holders endorsed Greaney’s behavior. There were about 50 members of the Motley Fool community who said they could not tolerate threats of physical violence. None of those 50 ended up doing much to show that their opposition to those acts was serious. They said that they were going to start notifying Motley Fool of all abusive posts and perhaps they did so for a day or two and then they went right back to engaging in normal interactions with you Goons. And over 200 community members endorsed one of Greaney’s posts bragging about the threats of physical violence. Huh?
There is nothing rational in the support for Buy-and-Hold. This is what I learned.
Buy-and-Hold started in rationality. Eugene Fama is a highly respected researcher. He is real and Buy-and-Hold started in his research. But something went haywire somewhere. The Greaney study is not real. The means by which Buy-and-Holders have supported that study are not real. What happened? How do we explain how something so real became so corrupted?
It was all a mistake, Anonymous.
Fama showed something important. He showed that short-term timing does not work. That is huge. It is the second most important finding in the history of personal finance.
The mistake was in how Fama reported his finding. He didn’t say: “Short-term timing doesn’t work.” He said: “Timing doesn’t work.” That is false. Fama never even looked at long-term timing. Shiller was the first researcher to look at long-term timing. He found that it always works and that it is always 100 percent required. Long-term timing is price discipline. All markets run on price discipline. Without price discipline, a market will become dysfunctional. We MUST have price discipline in the stock market, we must encourage all investors to practice price discipline at all times. Because of Fama’s mistake, we started DISCOURAGING the exercise of price discipline. We took our amazing good fortune and transformed it in amazing bad fortune by misunderstanding in a tragic and epic way what Fama had discovered.
I didn’t know any of this on the morning of May 13, 2002. It was the reaction to my famous post (which of course was 100 percent correct — Greaney’s study really does not contain an adjustment for the valuation level that applies on the day the retirement begins) that showed me that there was something very, very messed up about Buy-and-Hold. I continued to interact with you Goons and with lots of Normals too to figure out what that something was. Now I know. The problem with Buy-and-Hold is that it is rooted in a terrible mistake. The entire historical record shows that price discipline is the key to long-term investing success and the Buy-and-Holders have staked their lives on the opposite belief, that long-term timing might not always be 100 percent required or even that long-term timing might in some circumstances be a bad thing.
In ordinary circumstances, everyone would rejoice at my discovery. We all want to become effective investors. The Buy-and-Holders are good and smart people. So they corrected all of their books and calculators and podcasts when I reported the realities to them and they thanked me profusely for helping them to get back on the right track, right?
It didn’t play out that way!
Investing is no small thing. It is of huge importance to millions of people.
So when mistakes are made in this field, the people who made them become insanely defensive. They cannot bear to think that they have hurt so many human beings in such serious ways. And of course they don’t like the idea of being sued either. So the Buy-and-Holders went into cover-up mode when Shiller discovered Fama’s error in 1981. More and more evidence came in that Buy-and-Hold was rooted in error and the Buy-and-Holders became more and more abusive. And then they became insanely abusive and even started engaging in criminal behavior to keep the millions of middle-class investors from learning about the peer-reviewed research showing their mistake.
When I came on the scene in 2002, all this had already being going on for 21 years. I didn’t know. And you Goons didn’t really know either. I knew that we all needed to learn how stock investing works. And you knew that the Buy-and-Hold strategy you followed and advocated was deeply flawed and that permitting honest discussion of its flaws was likely going to lead to great embarrassment for you. The internet is a highly open communications medium. So you didn’t have many options when it came to keeping the cover-up going. And of course I showed precisely zero willingness to stop talking when you dropped hints that you would destroy me if I didn’t shut up. So you came back with death threats and defamation and board bannings and all the rest.
Everything that has happened for the past 13 years is out of line for the United States of America, Anonymous. We are a free country and we are a country that owes its economic success to a love of progress. Shiller’s finding (combined with the findings of the Buy-and-Holders that have stood the test of time) represents the biggest advance in the history of personal finance. The research that I co-authored with Wade Pfau shows us all how to reduce the risk of stock investing by 70 percent while permitting us all to retire five to ten years sooner than we ever before imagined possible. We are on the verge of seeing the greatest economic advance in our history. All of the comments that Wade put forward when he discovered these realities with me are rooted in a solid appreciation that we are part of the luckiest generation of investors who ever walked Planet Earth.
There’s only one problem.
If this were 1964, there would be a universal celebration of our good fortune. We would all be working together to spread the word about Valuation-Informed Indexing to every investor on the planet.
But it’s not 1964. In the past 50 years, hundreds of thousands of financial advisors have built businesses rooted in a belief in Buy-and-Hold, the opposite in every way to what works. Those people don’t want millions learning what works. They have a very strong personal interest in blocking people from learning what works.
What to do, what to do?
We have to move forward. Buy-and-Hold is pure poison. It has caused an economic crisis on every occasion in history in which it has become popular. The stock market is bigger now than it has ever been before. So we are looking at a bigger economic crisis than the three earlier ones caused by the promotion of Buy-and-Hold strategies. We are looking at something worse than the First Great Depression. That’s not good.
Or we are looking at the greatest surge of economic growth that we have ever seen in our history. That’s very good indeed.
Those are the two choices that stand before us today.
No, I am not the problem. Honest posting about the last 34 years of peer-reviewed research is not the problem.
The problem is the criminal acts of the Buy-and-Holders.
Were the Buy-and-Holders not looking at prison sentences, they would be happy to help me spread the word re what works. There are huge amounts of money to be made here. And of course the Buy-and-Holders are good people who want to help other people. So this should be so easy.
What makes it so hard is that the Buy-and-Holders have been suffering from cognitive dissonance for many years now and they cannot bear to come clean re their big mistake. They do not want people talking about the mistake. It causes them great emotional pain for such conversations to take place.
They cannot overcome their cognitive dissonance re these matters without participating in a national debate re the implications of the past 34 years of peer-reviewed research. There is nothing that I can say that by itself will convince you. You need to hear Bogle speak honestly re his beliefs re these matters. And Shiller. And Pfau. And on and on and on and on and on. That’s the only thing that will work.
But none of these people want to be sued or to be embarrassed or to go to prison. So there is great opposition to the launching of the debate that would do us all so much good.
That’s the rub.
If I had the power to release you all of your prison terms and your civil-suit liabilities and your various embarrassments, I would do it in two seconds in exchange for your willingness to permit the national debate that thousands of our fellow community members have evidenced a desire to see proceed. But I obviously do not have that power.
So I have to go about things though other means. I need to make you and others aware of the crimes that you are committing on a daily basis. And, when I have 10 people who have the courage to stand up to your insane abusiveness, I need to persuade them to attack the problem in a balanced way. The balanced way is described in the motto that guides my every post — To be as honest as possible without crossing the line and becoming uncharitable while also being as charitable as possible without crossing the line and becoming dishonest.
I am trying to help you. I am trying to solve the problem. I have zero desire to hurt you in any way. But we MUST have this debate. This is not optional. It is 100 percent imperative.
That’s the story.
I am not the problem. I am trying to SOLVE a problem that had developed unbeknownst to me long before I even came on the scene.
I hope that helps a bit.