Set forth below is the text of a comment that I recently posted to another blog entry at this site:
The person named Laugh is correct.
I half agree with both you and with Laugh, Reality.
I posted Laugh’s comment as a blog entry because I think he is making an important point. Shiller’s book was a best-seller. It is available in most public libraries. He was awarded a Nobel prize for his “revolutionary” (his word) research. Shiller’s findings have been covered-up in an important sense — there is not one site on the internet other than this one that explores the implications of those findings in depth. So the cover-up is real. Yet it is a very strange sort of cover-up in which the findings win a Nobel prize and in which a book reporting on the findings is a best-seller and is added to the collections of most public libraries.
We agree on the basic facts. The general public will have to decide for itself whether those facts constitute a “cover-up” or not. I say that it is a cover-up but a highly unusual one. I don’t think the Buy-and-Holders had bad intent when they started out. And I believe that they follow Buy-and-Hold strategies themselves to this day. It is not their intent to hurt people. They think they are giving good advice. I can sign onto any statement saying that.
But death threats? Demands for unjustified board bannings? Tens of thousands of acts of defamation? Threats to get academic researchers fired from their jobs?
That stuff sure sounds like the sort of stuff you see only in a massive cover-up, Reality. I cannot say different re this aspect of things.
What I believe is that there was good intent starting out. Then Shiller published research throwing doubt on the entire Buy-and-Hold project. The Buy-and-Holders suffered cognitive dissonance. They could not accept that the model that they had developed was wrong. So they ignored Shiller. They went on with their business thinking that they had done nothing wrong. And they hadn’t done any serious wrong at that point. They were wrong about how stock investing works, in my assessment. But they were sincere. And they had put forward many genuine insights. So it was a mix. Which is what you would expect in the early days of a project to take the speculation out of investing analysis and make it more of a science.
But as time passed the Buy-and-Holders became more and more embarrassed about how they had not tried to respond to Shiller’s findings. In science, we discover mistakes as new research is published and we move forward. That hasn’t happened in the investing field and it is because of the efforts of the Buy-and-Holders that it hasn’t happened. So over time it became a thing not where they were just ignoring Shiller themselves but where they were also engaging in intimidation tactics to block people from explaining to others how they had ignored him and how they had thereby caused an economic crisis.
That’s where the financial fraud comes in, in my assessment.
I think it is fraud if you run a blog and you advocate Buy-and-Hold and a fellow comes on and points out that there is 34 years of peer-reviewed research showing that Buy-and-Hold is dangerous and your readers tell you that the fellow is upsetting them and you ban him because you want to make a buck and you can’t do it so long as this guy keeps posting stuff in accord with the last 34 years of peer-reviewed research. I say that that is fraud. I say that you can go to prison for that.
You say otherwise. And Laugh says otherwise.
What do you want me to do about it?
I’m not going to join in on this massive act of fraud. I have not done that in 13 years. And I am not going to do it in 13 billion years. For obvious reasons.
I suppose that we will find out what the rest of the community of investors believes following the next crash. At that point people will have no emotional reason to continue to believe in Buy-and-Hold. They will be angry at the “experts” who caused them to lose their retirement money. They will be looking for people to hang from a tree. The Buy-and-Holders will be the obvious candidates. Especially the ones who engaged in insanely abusive intimidation tactics.
Do you know what I will be doing then? I will be arguing for mercy. I will be saying that we need to pull our country together and that going after the Buy-and-Holders and even you Goons will to a large extent be counter-productive. So I will be on your side. I am on your side now. But it will take more friendship for me to be on your side then, when I will have lots of people calling for your hanging. But, if I am true to myself, I will remain on your side even then. It’s the right way t go. I am sure.
That doesn’t mean that I will say that there should be no prison sentences. I think there should be some. And we will not be able to calm down the millions who will have seen their retirement plans collapse without mixing in a little justice with the all-important mercy. We sent Bernie Madoff to prison. You Goons have caused 10,000 times the human misery that Bernie Madoff caused. I am not able to see how we could fail to send at least a small number of people to prison following the next crash.
Maybe it won’t happen. I am not God. I could be wrong. I certainly am not going to demand prison sentences if most others don’t see a need for them. I am going to post honestly. I am going to tell the story of why millions of middle-class people will have lost their retirement money. If people demand prison sentences, I will ask for a show of mercy given the unusual circumstances re the lengths of those prison sentences. If most people do not demand prison sentences of any length, I will go about my business of helping people to understand how stock investing works in the real world, according to the last 34 years of peer-reviewed research in this field. It’s not going to bother me one tiny bit if you don’t get sent to prison, Reality. I have much, much bigger fish to fry.
We’ll see what happens, okay?
I believe that deep in your heart you want to know how stock investing works in the real world, just like everybody else. So I believe that deep in your heart you are on the same side that I am on. That’s why I chalk your behavior up to emotional pain and am able to bring myself to say that your prison sentence should be shorter than it would be in other circumstances. I believe that you will flip following the next crash. Maybe you will call for a prison sentence for your old self at that time! That’s a strange thing to say. But it’s no stranger than a lot of other stuff we have seen during the first 13 years of our Debate About Having a Debate.
I am going to continue to post honestly. That’s in stone. That can never change.
I love my Buy-and-Hold friends and am going to show as much charity to them as it is possible for me to show them without crossing the line and becoming guilty of financial fraud myself. That’s also in stone. That also can never change, no matter what you Goons say or do.
We are all going to just have to evidence a little patience and wait to see how it plays out. We don’t have any other options available to us. It’s not just that I will not post dishonestly re safe withdrawal rates. It’s that I CANNOT post dishonestly re safe withdrawal rates. It’s not in me. If something is not in a person, that something is not in that person. That’s the way it is. I mean, come on.
I will be as honest as I can possibly be without crossing the line and becoming uncharitable while also being as charitable as I can possibly be without crossing the line and becoming dishonest. And we will all see how that strategy plays out following the next price crash.
I believe that it is going to play out very, very well indeed.
Because I love my country. I believe in it. I think we have the capacity to work through these sorts of things in time.
But we’ll see.
I naturally wish you the best of luck in all your future life endeavors, Reality.
Take good care, man.