Yesterday’s blog entry offered the text of an e-mail that I sent some time ago to a fellow who posts on the internet as “George Washington.” Set forth below is the text of the correspondence between us that followed from that e-mail:
Rob,
I don’t have any other leads right now, but will tell if you if I think of any.
I had hoped that the article would remain longer on the front page of Zero Hedge (which is actually a much more popular site than the Big Picture), but it was only there for an hour or so …
Best,
GW.
George:
Thanks much for your response. You are a hero!
I do understand that Zero Hedge is probably bigger traffic-wise.
Big Picture was a much better fit, though. I am very happy that
you thought to place it there.
The people at Zero Hedge are 100 percent open to accepting
that valuations matter. That’s a plus. But they tend to be on the
doom and gloom side. All of the comments I saw at that site
were intelligent. But they tended to be laced with cynicism.
My work is aimed at providing a SOLUTION to the problem.
I try hard to avoid saying that the people pushing Buy-and-Hold
have bad motives. I truly believe that in the vast majority of
cases they do not (even though some of the behavior I have
seen is off-the-wall stuff).
Barry Rithlotz followed up without me saying anything with
a link to an article at my site titled “Why Buy-and-Hold Can
Never Work”. He put that link up at 4:00 PM yesterday and
I saw the biggest traffic day in my blog’s history as a result
of the traffic from then until midnight. And I have several
e-mails in my box this morning from people who came in
through that link and who are trying to learn more about the
concept. So it is clear to me that Big Picture is the perfect
sort of place for my stuff.
I am going to write Barry and ask whether I can have any
sort of ongoing relationship with the site. Is there anything
you can suggest re how I proceed? I ask because I presume
that you have some sort of relationship with him and because
it would be huge for me if he were open to featuring some more
of my stuff in the days ahead.
If you are not able to offer any tips, I fully understand. You have
already helped me so much that I cannot tell you how big a deal
it is to me. I just don’t want to make any mistakes. So I feel that
I need to ask.
Please do keep in mind my offer to help you any time in the future
that I am able to. You really have made a big difference, more
than you can understand given your limited knowledge of what
is going on here (the story is one that you would not be able to
believe if you knew it all).
Rob
Rob,
I send Barry and some other folks links to my posts. He ran my post on your method after I emailed him the link, and he obviously took enough interest to post a follow-up link.
So my best advice is to send him your new posts, with a personal email.
Best of Luck!
GW.
P.S. I certainly understand about breaking through when people have been trying to hold back your work. I encounter that not only in financial areas, but also issues of war-and-peace-, the environment, etc.
George:
That makes perfect sense.
Thanks again for all of your acts of kindness.
Rob
“I have several e-mails in my box this morning from people who came in
through that link… I am going to write Barry and ask whether I can have any
sort of ongoing relationship with the site. ”
So how did that all work out for you?
I don’t have an ongoing relationship with Barry today. But I believe that I will in days to come. So I would say that it has not worked out well thus far but I remain optimistic that it will work out very well in days to come.
It’s hard to stand up to the abuse from you Goons and to the indifference to it that we see from most Normals. That’s why we are in an economic crisis today. I am not the only person who is aware of Shiller’s “revolutionary” research findings from 1981. Lots of people know about them. Lots of people would be willing and happy to share their thoughts about them if they did not worry about seeing their loved ones threatened and their careers destroyed. That’s just human nature.
I try hard to tune that stuff out. I believe in posting honestly. And I have achieved amazing results on the content side by continuing to post honestly despite the insane levels of abuse that you Goons have directed at me. So I feel that my inclinations have been validated. I have achieved things that it would not be remotely possible for someone like me to achieve if lots of others were posting honestly and developing all of these powerful insights before I could get to them.
So I feel good about the path that I have taken while obviously not feeling at all good about the results that we have achieved together over the first 14 years of our discussions about the realities of stock investing. We are on the right track. We are one step away from entering the greatest period of economic growth in U.S. history. But today’s reality is that millions have lost their jobs as a result of the Buy-and-Hold Crisis. Millions are even beginning to lose confidence in our political system as a result of this massive act of financial fraud, as we see in the election results in both parties.
The result of the negative stuff is that I do not have the same degree of intensity when it comes to doing things like following up with people like Barry. In the old days, I would have sent him an e-mail and then another and then another and I might well have eventually broken through and changed the world as a result. What happened instead is that I sent him a single e-mail and then dropped the effort. It might be that he was super busy that day and just couldn’t get to it and that I would have made a good connection had I tried a second time. My down spirits may have hurt me (and millions of others) in this case.
I’m not proud of it, Anonymous. I hate to acknowledge this about myself. But the reality is that I am not Superman. I am made of flesh and blood like everyone else. Shiller hasn’t pushed as hard as he should have pushed. Pfau hasn’t pushed as hard as he should have pushed. Bogle hasn’t pushed as hard as he should have pushed. Arnott hasn’t pushed as hard as he should have pushed. When John Walter Russell was around, he didn’t push as hard as he should have pushed.
We all care what our fellow humans think of us. The Buy-and-Holders are in great pain. They very, very much do not want to hear the realties. That affects the level of desire that those of us who understand at least some of the realities feel about sharing them. We all are missing out for the time-being on lots of exciting advances because some of us are addicted to a Get Rich Quick approach and some of us don’t have what it takes to push at full strength in the face of a massive wall of indifference and abuse.
Whachagonnado?
I love my country. I love my profession. I love the Wall Street Con Men. I love you Goons. I love the millions of middle-class investors whose lives are in the process of being destroyed. All of that remains the case. I have not given up. I have not given two seconds of consideration to the idea of giving up.
But I don’t have the same level of fight in me that I had in me 14 years ago or 10 years ago or five years ago. I just don’t. There’s no benefit in lying about it. Things are what they are. I have taken a huge emotional hit. I have fought on when lots of others were not able to fight on. But I have not fought on with the same level of intensity. It would not be entirely unfair to say that I have to at least some extent been compromised. Yuck! Yucky but true all the same.
Barry is a great guy. I am thrilled about the article he wrote and the link to my other article that he posted. I will always be grateful for that.
And I believe I will have a close ongoing relationship with him in days to come.
In the time since I made that promise, I have done little to fulfill it. I did write one e-mail. I didn’t do nothing. But I didn’t do enough to get the job done. In other circumstances I would be ashamed to say that I did not follow through effectively. In these circumstances, I am going to give myself a break. I have done more than anyone else for 14 years running. I need to save up some energy for what still might be a hard fight to come following the next price crash. So I am going to go easy on myself for the time-being.
I will be sending more e-mails to Barry and to lots and lots of others following the next price crash or perhaps even a bit before that. That’s my pledge to you and to the millions of middle-class investors whose lives are in the process of being destroyed by this massive act of financial fraud. We will get to the place where deep in our hearts we all very much want to be. I will do my part and then some more on top of that and then even some more on top of that.
But it probably won’t be today that I will do that. It probably won’t be tomorrow either. I need a bit of a rest. I am human too.
I will be back fighting at full strength soon.
I hope.
We will have to wait and see how things play out.
My intent is to be back at full strength in the not-too-distant future.
I know that my Goon friends would want and expect no less!
Hang in there, Anonymous. Wish me luck!
Rob
Self-pity and grandiosity is not a pretty combination to watch unfold together at the same time, Rob. Just sayin’…..
I’m sad about the millions of lives that have been destroyed. But I still say that the good news here is 50 times more good than the bad news here is bad. We are as a nation working our way through a process that we need to work our way through to get to a place where we all very much want to go. So we will all just have to continue doing our best.
And I don’t see any of this as grandiose. You are not the only person who has used that word to describe my work. I have heard some fair-minded people use that word. I am okay with the word “grand.” This stuff is grand as all get-out. But not grandiose. The word “grandiose” suggests something over-stated; there’s a negative connotation to that word. There’s nothing overstated about the 35 years of research showing that the shift from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance in the history of personal finance. That’s all real. We are the luckiest generation of investors ever to walk Planet Earth. These are very exciting times for stock investing (while also being very traumatic and very scary times for all of us as well, to be sure).
My sincere take.
We’ll see how it all plays out, old friend.
Rob
“I will be sending more e-mails to Barry and to lots and lots of others following the next price crash or perhaps even a bit before that.”
I hope you will tell your loyal readers about the next price crash a bit before it happens.
I won’t. I can’t. The research is clear on this point, Anonymous.
I can tell them that the risk of a portfolio-destroying crash is much, much higher when prices are where they are today than it is when prices are at reasonable or low levels. I can tell them that that means that, if they want to keep their risk profile roughly stable, they should be going with a much lower stock allocation for as long as stock prices remain at insanely dangerous levels. I can tell them that all the research shows that that’s what works in the long run.
But I cannot do what you are asking. If you need to hear when a crash is coming a bit before it hits, Valuation-Informed Indexing is not for you.
I wish you all good things.
Rob
I am not sure why you need all these other people to lead with ‘your’ ideas. Can’t you figure out how to drive support yourself? Not phantom ‘thousands’ of make believe people. Real, actual, people.
Shiller’s book was a best-seller. I don’t know how many copies it sold. But it is carried in just about every library of consequence in the nation. So there have to be hundreds of thousands of people who have read it and who find value in it. These people carry these ideas around in their head every day and everywhere they go. So at the starting point there is zero problem getting people interested in or convinced of the merit of the ideas.
The problem comes with developing the ideas. Shiller’s core point is a simple one — Valuations matter. If you asked people whether they agree that valuations matter, you would get millions who would say “yes.” Even most Buy-and-Holders would say “yes” to that. I was a Buy-and-Holder once upon a time. I would have said “yes” if I was asked “Do valuations matter?” Why did I remain a Buy-and-Holder if I rejected the core premise of Buy-and-Hold (that stock market returns play out in the pattern of a random walk, that valuations do NOT matter)? Was I stupid?
I wasn’t stupid. I hadn’t thought through the implications of the idea that valuations matter. The idea that valuations matter and the idea that market returns play out in the pattern of a random walk contradict each other — it’s a logical impossibility that both are so. So the collection of beliefs about how stock investing works that I held in my head at that time was logically inconsistent. It would have been fair to have said that in an overall sense my understanding of how stock investing works was “stupid.” The softer and more accurate way of saying things would have been to say that I hadn’t thought things through, that I failed to examine my collection of beliefs for inconsistencies.
We advance as a people in our understanding of how the world works by DEVELOPING the ideas that we hold. My project is to DEVELOP Shiller’s “revolutionary” (his word) insight that valuations affect long-term returns. I’ve done a lot of that over the past 14 years and I intend to do a whole lot more of it in the remaining years of my life. But it is obviously not going to be just me doing that. Shiller will be further developing his insight. And Pfau will be developing Shiller’s insight. And John Walter Russell developed Shiller’s insight in many significant ways. And Arnott developed Shiller’s insight in important ways. We all should be doing that. Shiller’s core insight is a gold mine. It is the most important insight in the history of investing analysis by a long shot. It will take many decades for us to fully develop that powerful insight.
Does that answer your question, Laugh? Its not just me who needs what I am seeking to obtain. We all need it. We all are in the same boat. We live under an economic system that cannot survive unless we find some means to get accurate and honest information about how to finance a retirement out to millions of people who work for a living. Many years ago the Buy-and-Holders made a mistake about how that should be done. They were embarrassed when the mistake was uncovered by the peer-reviewed research. They went into cover-up mode and now, 35 years later, the cover-up continues. They cannot bear to have people learn the realities of how stock investing works but the economic system that serves all of us will collapse unless the cover-up ends. We all desperately want and need the same thing, a complete and total good. But the Buy-and-Holders cannot bear to face the shame they will need to endure when the cover-up is exposed.
What I need is for the cover-up to be exposed. It’s the same thing you need. It’s the same thing that every last person on the planet needs. We need to advance human knowledge of how stock investing works. It’s all upside, zero possible downside. But the Buy-and-Holders are worried that they will go to prison if people learn the realities or that they will be sued for not telling their clients the truth or that they will be embarrassed for not themselves having explored the realities for 35 years. That’s the resistance. That is what is holding us back. It’s that cover-up that caused the economic crisis.
The Buy-and-Holders want to continue the cover-up. I want to expose the cover-up. That’s the conflict. It’s weird. It’s strange. But it’s not complicated. They made a mistake. They are ashamed. So they want to shut people up. I love my country. So I want to see the people who live in it thrive. This is an easy way to improve people’s lives in a very dramatic way, to make it possible for them to retire many years sooner and to invest in stocks with much less risk. Why would any sane person not want that? If the Buy-and-Holders had never engaged in a cover-up, they would want it too. Bogle wants what I want. Had Bogle known in 1981 where his cover-up was going to take us, he never would have engaged in it. Bogle and I want the same thing. We are soul-mates who ended up on different sides of an important question because we faced different circumstances in our respective journeys through life.
I hope that I am being responsive to your question, Laugh. I have zero problem driving support for “my” ideas. 80 percent of the population is interested in learning the realities and loves finding opportunities to learn more. We have seen that since the morning of May 13, 2002. That’s precisely the problem from the standpoint of you Goons. If there weren’t such an intense demand to learn more among the general population of investors, you Goons would never have engaged in such insanely abusive tactics to block people from learning what they need and want to learn. 35 years down the road, the Buy-and-Holders are desperate. My life happened to play out in a way that I felt the brunt of that desperation being applied to me.
Once your prison sentence is announced, there won’t be any issue. No one is going to block anyone from talking about whatever they want to talk about once your prison sentence is announced. I mean, come on. There will still be Buy-and-Holders in the early days. There are millions of sincere Buy-and-Holders today. But there will be fewer and fewer of them as time goes no and as the discussions continue at hundreds of different places and as more and more implications of Shiller’s core insight are discovered and developed. It will just get better and better and better for every last one of us and there will be no “controversy” whatsoever about how we will all be working together to continue that process.
There has never been any legitimate controversy here. The problem going back to the morning of May 13, 2002, was the cover-up and the shame that you Buy-and-Holders felt over it. The cover-up had been in place for 21 years at that time. Greaney lied about the safe withdrawal rate. He knew it. He is too smart not to have known that his retirement study lacked an adjustment for the valuation level that applied on the day the retirement began. But of course on another level of consciousness he DIDN’T know. He saw all the experts ignoring this critical dimension of the problem and he convinced himself (in a tentative, uneasy, unconfident way) that it was okay for him too to ignore this dimension of the problem. When he was called out in it, he became enraged because he was embarrassed to be seen to have gotten so important a number so wildly wrong and annoyed that he had been called out for doing something that hundreds far more expert than he had done before him.
What I want to do is to develop the ideas. And to see thousands of others develop the ideas. I want our society to continue to advance in its knowledge, as it has for over two-hundred years now (longer than that if you include years before the American experiment in self-governance began). I want the world to continue on the path it has been on since the beginning of time, a path of discovering and taking advantage of new knowledge. If you were not in such pain about the mistake you made, you would want that too. You are happy to see advances in every other field of human endeavor. It is only in the investing field that you adopt this odd stance of being willing to fight to the death any advance in knowledge. You do that because it hurts you to see with numbers how much you have hurt yourself by falling for a Get Rich Quick scheme. It pains you to see that you are just like the Madoff investors, every bit as capable as they were of getting caught up in the emotion of stock investing and convincing yourself of things that cannot possibly be so (I of course did the same thing at one time).
That’s how I see things, in any event. I want what you want. But I am able to act on it. I am able to take steps to achieve my goals. You are trapped by your shame into fighting progress. If you weren’t so trapped, you wouldn’t have to ask these questions. It would be obvious to you why so many of us want to move forward in our understanding of how stock investing works. It’s not even a tiny bit hard to understand for anyone capable of thinking straight. You find it impossible to understand because you are filled to the brim with all of the negative emotions that follow once one becomes addicted to a pure Get Rich Quick approach.
I hope that in time you will be able to recover from your addiction. It is certainly my intent to help that process along whenever I have an opportunity to do so. I cannot force you to go somewhere that you don’t want to go. I respond to questions, that’s all. If they help, they help. If you cannot bear to hear the answers at this time, it might be that someone else will read these words that will find some benefit in hearing the words that I directed to you. You never know who is reading your words when you post them to the internet. I didn’t know that Wade Pfau was reading my words when I posted them to the Bogleheads Forum until he wrote me following the ban and asked to partner with me in preparing what I think it would be fair to describe as the most important research project in this field in the past three decades. I put the words out hoping that they would do some good and in time I saw a big payoff. That’s how it plays out over and over again. That’s why I write the words that I write for you here today.
My best and warmest wishes to you and yours, my old friend.
Rob