Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
he is overtly claiming that not only was HE silenced by death threats, but that the 95% of people who agree with Shiller, are all doing so only because they either got death threats themselves, or else are afraid because of Rob’s death threats.
This post raises an important point.
Yes, I am saying that everyone who works in this field has been intimidated into not challenging Buy-and-Hold to the extent they would if they felt free to post their sincere beliefs. Please mark me down as saying precisely that.
I certainly don’t say that everyone knows about my case.
And I certainly don’t say that everyone has had death threats directed at them.
I am saying that everyone who works in this field feels INTIMIDATED.
I knew about the errors in Greaney’s retirement study in May 1999, when I put my first post to the Motley Fool board, Anonymous. I didn’t put forward my famous post pointing out the errors in that study until May 2002. Why the delay? What was that about?
I was intimidated.
I rationalized, of course. I told myself that it was okay not to point out the errors in the study because the study was an advance over the retirement studies that had been available to us in earlier days. That was so. Peter Lynch not all that long ago was saying that the safe withdrawal rate was 7 percent. At the top of the bubble, it was 1.6 percent. Greaney said it was 3 percent. Greaney was a lot closer to the mark than Lynch. Greaney’s study represented a big advance. I told myself that there was no need to point out the error because the study was more good than bad.
It really was good that the study advanced our understanding. So what I was telling myself was not crazy stuff. But my position did not make logical sense all the same. The fact that a study represents an advance is no reason not to point out errors in it and thereby to show people the way to yet another advance. We all want to plan our retirements effectively. In ordinary circumstances, Greaney would have been thrilled to improve his study. In ordinary circumstances, he would have thanked me for pointing out the error and would have promptly corrected it.
I didn’t point out the error for three years because I sensed that I was going to get an extremely negative reaction if I did. I wanted to be liked by my fellow community members. So I praised the study for the good things that it did (which was a legitimate thing to do) and didn’t mention the errors in it.
That’s a polite way of describing what I did. A blunt way of saying it is to say that — I lied.
I knew that the study was in error. I knew that my friends were using it to plan their retirements. I knew that suffering a failed retirement is a terrible life sentence. I knew that I was going to suffer a lot of hits if I was 100 percent honest about the subject. So I kept it zipped. And I put the retirements of my friends in jeopardy by doing so. I was a coward. I was a bad friend. I was a creep.
That’s the reality. I dish it out to others. I need to dish it out to myself from time to time as well. That’s the reality.
No, it doesn’t go to the White House. I have compared the Buy-and-Hold Crisis to what we saw in the area of race relations in the days before the Civil Rights Revolution. People with black skin could not drink from the same water fountains as people with white skin. Did that one go all the way to the White House, Anonymous? No one directed people to treat people with black skin as inferior to people with white skin. No one was so stupid that they couldn’t see the wrong in this. So why did the wrong continue for so many years?
It continued because the racist laws were part of the fabric of our society. Changing those laws meant tearing up the fabric of our society. It was a very, very necessary business. But it was also a very, very difficult business. Eventually, we couldn’t duck the matter any longer and we did the right thing. But we ducked that difficult business for a long, long time.
So it has been with the crazy idea that it might be okay not to practice price discipline when buying stocks.
There is not even a sliver of evidence supporting this crazy idea. 100 percent of the evidence available to us says that long-term timing is always required, 0 percent of the evidence says that long-term timing is not always required. So why do the “experts” in this field pretend that this investing stuff is oh-so-hard to understand and that maybe there is some alternate universe where Buy-and-Hold might really produce good results for one or two long-term investors?
Because that crazy idea has become part of the fabric of our society. We have been telling people that Buy-and-Hold might work for 50 years now. We have destroyed millions of lives by doing so. We have caused an economic crisis. We have hurt our friends and neighbors and co-workers in very serious ways We are ashamed. We know we need to fix the problem. But we cannot bear to face up to it.
It’s going to be painful coming clean, Anonymous. In other circumstances, I might be inclined to duck this one myself. I don’t like causing people pain. Why not just let it go?
I don’t let it go because I am causing people even more pain by ducking it. We have to get this matter behind us. We are the luckiest generation of investors ever to walk Planet Earth. And we are living through an economic crisis caused by our unwillingness to tell people about the implications of the last 34 years of peer-reviewed research in this field. Huh? That makes no sense. Really.
We need to get past this. We need to open every investing discussion board and blog on the internet to honest posting re the last 34 years of peer-reviewed research. This is not elective. This is imperative.
You wouldn’t be going to prison if someone had done this before you came along, Anonymous. Each day that as a society we elect not to come clean, more lives are destroyed. Each day that more lives are destroyed, your prison sentence grows longer and more people are put in circumstances in which they will likely go to prison. This is a good thing how? It’s not a good thing. It’s a CATASTROPHE. We need to turn this around. We need to do this by the close of business today.
That’s my sincere take re this terribly important matter, in any event.
We now know how stock investing works in the real world. It was Jack Bogle’s dream to learn that. For the past 34 years he has had all the pieces to the puzzle. But he doesn’t make use of them because in an earlier day he didn’t have all the pieces of the puzzle and he thus got some stuff wrong and now he is too ashamed of the pain that he has caused millions of people to come clean. If you don’t find that sad, I would hate to know what you think of as sad.
Short-term timing never works. Long-term timing (price discipline) always works. That’s the story. That’s how it works. I am sure.
The only reason why everyone in this field does not shoot straight with their clients and readers re how it really works is that they are afraid to do so. Millions of investors have been misled by the Buy-and-Holders into making imprudent investment choices. It is too late for them to get all their money back and all along they have sensed that they were being sold a bill of goods (because it defies common sense to believe that price discipline is required in every market but the stock market but that through some magical process exercising price discipline when buying stocks is actually a bad thing). These people are going to explode when they learn the truth. They are going to be angry as hornets. So most of us keep it at least partially zipped.
It’s a national tragedy. I want no part of it. Find someone else.
Shiller doesn’t know half of what he would know about this subject had honest posting been permitted all along. The same is true of Bogle. And of Pfau. And of me. In ordinary circumstances, we all would be learning from each other. We all have been held back by the Ban on Honest Posting. There’s huge leverage in lifting the ban. When the ban is lifted, we all will give ourselves permission to tap into hundreds of insights that we have denied ourselves for three decades and then those insights will be used to formulate hundreds of additional insights. And on and on and on.
I don’t want to be intimidated when I post to an investing board. I can’t do good work when I am intimidated. To do good work, I need to be permitted to put forward honest work.
It’s the same with Shiller. And with Bogle. And with Pfau. And with every last one of us.
The intimidation has to stop.
That’s why we made financial fraud a felony. The announcement of prison sentences brings this ugliness to an end. The announcement of prison sentences brings on the Second Independence Day for the American people.
I can’t wait.
I naturally wish you all the best that this life has to offer a person, my old friend.