Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:
No, Rob. You are the emotional one. Your emotions are driven by your failure in retirement and your failure with investing. This has caused you to emotionally respond by calling people goons, frauds, liars, etc. I don’t see anyone else making these kinds of emotionally driven comments.
On the substantive side, everything that I have said is also said by THOUSANDS of other people, including some of the biggest names in the field. Robert Shiller won a Nobel prize for his “revolutionary” (his word) findings of 1981. The stuff that I say on the substantive side is 100 percent mainstream stuff. You can’t get more “establishment” (to use a word we hear a lot nowadays) than to be a tenured professor at Yale and to have won a Nobel prize. So there is nothing even a tiny bit emotional about anything that I have said on the substantive side.
That said, you are right about things that I have said on the process side. I am the ONLY one saying that Buy-and-Hold has been shown to be a Get Rich Quick scheme, that the ongoing cover-up of what we learned about how stock investing works 34 years ago is the biggest act of financial fraud in U.S. history. There are a small number of people who have hinted that these things are so. For example, there was a group of economists who came out at the beginning of the economic crisis with a statement saying that the same ethical standards that apply in all other fields of human endeavor should also apply in the economics realm where long-discredited ideas are still promoted as if they were legitimate and that these ideas have in recent times caused great human suffering because most people don’t know that they have been discredited. That sort of thing happens from time to time. But that sort of thing is rare. I say that sort of thing ALL THE TIME.
It is not me who is being emotional re the process-side questions. These things need to come out. I pointed out the errors in the Old School retirement studies in a post that I put to a Motley Fool discussion board on the morning of May 13, 2002. If those studies really do not contain an adjustment for the valuation level that applies on the day the retirement begins, those studies should have been corrected within 24 hours of the moment when I put forward that post. They haven’t been corrected to this day. Every major publication in this field has run an article in recent years pointing out that the 4 percent rule, which comes from those studies, is in error, that you need to consider valuations to get the numbers right. But not one of the retirement studies has been corrected and we have not had a national debate on the question of how those errors remained in place for so long. That’s a scandal, Sammy. Something like that should never happen in a free country.
Emotion is indeed a factor here. But it is not a factor among the Valuation-Informed Indexers. It is a factor among the Buy-and-Holders. The Buy-and-Holders should have come clean when Shiller published his “revolutionary” (Shiller’s word) findings in 1981. Had that happened, we would not be in an economic crisis today. It hasn’t happened. Bogle hasn’t made one change to his Buy-and-Hold strategy in the 34 years since Shiller showed that the core assumption behind it is false. The Buy-and-Holders are in great pain as a result. They have destroyed millions of lives. More lives are destroyed every day that the cover-up continues. Continuing the cover-up for another day helps absolutely no one. I am the one trying to bring the cover-up to an end. That’s the rational course of action, not the emotional one.
You are the emotional one, Sammy. You do follow Buy-and-Hold yourself. In that sense, you are being truthful when you tell people that you think it works. But you have conned yourself. You so much need to believe in it that you cannot bear to consider what the last 34 years of peer-reviewed research shows and you cannot bear to see millions of others learn what the last 34 years of peer-reviewed research shows. You are causing great pain to millions of people. You are hurting people in a very serious way and that is making you an emotional basket case.
The only way we get out of this as a society is by coming clean re what has happened. We have laws that say we MUST come clean. Financial fraud is a felony in the United States. So people are going to learn what has been done to them down the road a bit. It would be better if they learned today. The longer we put this off, the greater the number of people who get hurt.
The cover-up is rooted in emotion, Sammy. The death threats come from an emotional place. The unjustified bans on honest posting that have been adopted at 20 different sites come from an emotional place. The tens of thousands of acts of defamation that have been directed at me and at others come from an emotional place. The threats to get academic researchers fired from their jobs come from an emotional place. That is all that Buy-and-Hold is today — emotion. It once was a real thing. Then the error was discovered by Robert Shiller. And now, after 34 years of cover-up, all that is left is a mountain of seething emotion.
We need to hear everyone in this field saying these things. We need to have the 34-year cover-up written up on the front page of the New York Times. That’s how we come to a successful resolution of this matter. We need to credit the Buy-and-Holders with their many amazing and genuine and powerful and life-affirming contributions. And we need to be clear and firm and bold in out statements about how they messed up re the valuations matter and re the tactics they have employed for 34 years now to cover up their mistake and re the pain they have caused to millions by doing so. It’s the only way out. Sunshine is a disinfectant. It is by coming clean that we all get to walk in the sun again and that we all get to feel good about ourselves again and that we all get to have fun on a going forward basis again.
I am your friend, Sammy. You don’t see it. But I am. If you were thinking clearly, you would see that, even if I am 100 percent wrong in everything that I say about stock investing, I am helping you by advancing a different point of view and thereby forcing you to sharpen your own arguments and thereby gain confidence in your strategy. You don’t see it that way. You hate me because I cite the 34 years of peer-reviewed research showing that you made a terrible mistake when you bought into the Buy-and-Hold strategy. I don’t hate you. The hate moves in only one direction. If you were thinking clearly, that would tell you something.
It is all going to come out. The sooner it comes out, the better off we all are. So I work as hard as I can to see that it all comes out as quickly as possible. I can do no more and I can do no less.
I care about you, Sammy. And I care about my good friend Jack Bogle. And I care about all of my other Buy-and-Hold friends. You cannot stand to hear me say that. It enrages you when I say that. But that’s the way it is. I speak out because I care and because I see the pain you are in and because I want to bring that pain to an end. Everyone in this field should be doing all that they can to bring this matter to a successful resolution. Life is better for all of us on the other side of the big black mountain blocking our forward progress today.
That’s my sincere take re these terribly important matters in any event.
And I really do wish you all the best things that this life has to offer a person regardless of the fact that you and I came to believe different things about how stock investing works in the real world.
My best wishes to you and yours, old friend.