Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“Michael is a super-smart guy and a super-nice guy ”
So, is Michael Kitces going to jail, Rob?
I don’t think that Michael will be going to jail.
But it’s not me who decides the matter, Anonymous. It’s the millions of middle-class investors whose lives are in the process of being destroyed who will decide the matter.
If I were in Michael’s shoes, I would not play it in the way that he has played it. I would speak out a lot straighter and a lot stronger. Those millions of people are going to be very angry when they realize how they have been lied to. I wouldn’t be taking any chances. I would be calling the Buy-and-Holders out on their b.s. if I were in Michael’s shows.
Michael wants to tell the truth. That’s as clear as clear can be. He says a lot of things that others don’t say. I have a quote from him at the slider at the top of every page of this site. In that quote, he says; “There are time-periods where stocks are a terrible addition to that portfolio. Yet inexplicably we as planners STILL tend to suggest that it is risky not to own stocks when in reality the only risk is to our business.” That’s a pretty darn clear statement. It’s to Michael’s great credit that he has been willing to state things that clearly. Few in this field are willing to do so. In relative terms, Michael is an amazing straight-shooter.
To anyone paying attention, that statement does the job of warning people about the dangers of Buy-and-Hold. But you and I and Michael and Bogle and Shiller and everyone else know that for most of us, that doesn’t do the job. We all have a Get Rich Quick urge residing within us. We all want to live in a fantasy world where this might be the first time in history when a Buy-and-Hold strategy actually worked for one or two long-term investors in a galaxy far, far away from this one.
The phenomenon that Michael is pointing to in his statement is not so inexplicable as he suggests. There is a mountain of money to be made in this field by anyone willing to tell the Buy-and-Hold lies. Michael has seen lots of others raking in that easy money and naturally he wants to grab some of it himself. But he has a conscience. What to do, what to do? He shoots straight with that wonderful comment and thereby satisfies his conscience. And then he rationalizes not calling out Bogle and the other Wall Street Con Men on all the other lies that they put out on daily basis. So he makes good money and still is able to live with himself.
Not this boy, you know?
I don’t want to tell the Buy-and-Hold Lies. I don’t want to destroy the lives of the people who listen to what I have to say about stock investing. I don’t think I should have to. I don’t think Michael should have to either. Nor do I think that Shiller should have to do that. Or Bogle. Or you. Or anyone.
We are on the one-yard line, Anonymous. We have 34 years of peer-reviewed research showing that Buy-and-Hold is the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind. I think that Michael Kitces could get away with being more honest than he has been a lot more often than he has been even somewhat honest. He could do more. If Michael Kitces tried being fully honest, I would back him up. And if Michael and I were both fully honest, Wade Pfau would join us. And then Rob Arnott would sign up. Then Shiller. Then Bogle. And on and on and on. There’s safety in numbers. And there will be even more money to be made promoting Valuation-Informed Indexing as there is promoting Buy-and-Hold today once this massive act of financial fraud has been widely exposed. All of us who long to do honest work in this field need to stick together to make our little dream come true.
I am going to tell people after the next crash that Michael tried very hard to be honest. I am going to explain how he was willing to put his neck on the line to help out millions of middle-class investors like them. And I am going to tell them that Michael had good reason to be hesitant to be fully honest, that his fears that you Goons would destroy his career if he dared to take it one step further than he has were well-founded, that he had every reason to believe that you would follow through on your threats and that you have demonstrated in real life over and over again that you will stop at nothing to block people from learning the truth about this massive act of financial fraud. And that Bogle and lots of other big names in this field have made clear that they are 100 percent behind you in every criminal act in which you engage.
Will that get Michael off the hook?
I think so. Probably.
But also possibly not. I don’t know for certain. There has never before in U.S. history been an act of financial fraud this big. We are in uncharted territory.
It’s possible that some people will say that Michael is more to blame for this economic crisis than you Goons. He hasn’t done the evil things that you Goons have done. But you Goons are just internet Goons. People don’t expect much of you. Michael does this for a living. People have a right to expect more from him. His small and subtle dishonesties are arguably more damaging than your big and obvious ones. I am going to make a case for him. I am going to work it hard. I love Michael. But I cannot say with absolute certainty how things are going to go for him. It’s not for me to say. We are talking about a massive case of financial fraud here. There are going to be millions of people who are going to be very, very angry.
I am not Michael’s keeper. He is a grown-up. He is a professional. He has to take care of himself. I have urged him not to engage in any dishonesties whatsoever. He has elected to play it this other way. I am sure as heck not ever going to play it the way he has elected to play it. No way, no how. No can do. I can’t go for that. But Michael is his own person and he gets to decide how he plays it. That is as it should be, in my assessment.
Do you want to know what my bottom line on this is?
My bottom line is that Michael has been a fool to put himself in circumstances where these sorts of questions even need to be asked.
No one will be looking at any of Rob Bennett’s statements following the crash and wondering whether he will end up in a prison cell or not. I have been very clear how I feel about the massive act of financial fraud. I have THOUSANDS of statements in opposition to the criminal acts in the Post Archives. I hope to have lots more in the record before the crash comes. I am covered, Anonymous. If only one person on Planet Earth is covered, it’s me.
Good for me, you know?
I hope that Michael ends up being sufficiently covered. He’s a great guy, he’s a smart guy, he tries to be honest, I have learned a lot from him. I love the guy. But I can’t say that I don’t think that he had made a mistake by leaving himself at least somewhat open to charges that he participated in this massive act of financial fraud. I don’t think that will get him sent to prison. I am certain that it will do harm to his reputation.
Was it worth it?
In my mind, it wasn’t worth it. When I started writing about investing, I considered it 100 percent impossible that I would ever engage in deliberate deception on a matter relating to people’s retirements. I am 100 percent certain that the same was once true of Michael Kitces and Wade Pfau and Robert Shiller and Jack Bogle. Yet here we are. They let themselves be sucked in and here we are asking whether Michael Kitces — a great guy and a smart guy — will be going to prison following the next crash.
I sure hope not, you know? But it sure makes me sad that we even have to discuss the matter. And it sure makes me think that Micheal messed up in a big way somewhere down the line when he got on a pat that over time led him to being in circumstances where I cannot honestly give a definitive answer to the question.
We’ll see how it all turns out, Anonymous. I will be doing everything in my power to insure that as few of my Buy-and-Hold friends as possible end up in prison cells and that the prison terms of those who do are as short as possible given the circumstances that apply. Re that you have my pledge.
The rest is out of my hands.
My best and warmest wishes to you and yours, my old Goon friend.