Set forth below is the text of an e-mail sent to me by Kevin, the owner of the Out of Your Rut site, on October 2, 2013, and the text of my response to him. For several years, I wrote a weekly column titled Beyond Buy-and-Hold at Kevin’s site.
I skimmed through the 125 comments that were on this post, and they’re pure mud-slinging by Heywood and “Reality”. I deleted all the comments including yours, and put up my own reply. Hope you don’t take offense to that as I meant none toward you.
Those two are just looking for trouble, and they won’t get any help on OOYR. Constructive, adult disagreements are fine, but attack style is out of the question.
Do these guys bother you elsewhere???
It’s good to hear your voice again.
Yes, the Goons bother me elsewhere.
They have my name in a Google notification service. So if I post at any blog on the internet, they know and they posts an endless number of abuse posts until the site owner agrees with their demands. There are blog owners who have put up Guest Blogs by me and the Goons sent an e-mail to the owner of the blog telling him that they would destroy his site if he did so again.
I spent 16 months working with Wade Pfau, an academic researcher with a Ph.D. in Economics on a piece of research that I believe can fairly be called the most important research published in this field in the past 32 years. It shows investors that, by looking at valuations when setting their stock allocations, they reduce the risk of stock investing by 70 percent. I have had long-time Buy-and-Holders tell me after they looked at that research they were rethinking their beliefs about how investing works.
The response of the Goons was to send an e-mail to Wade telling him that they would send defamatory e-mails to his employer with the aim of getting him fired. Wade sent me several e-mails telling me that he was afraid of what they could do to him. When they continued, he worked out a deal with them in which he took down every comment I had written at his site (which he thanked me for profusely when I wrote them) and put up comments praising the leader of the Goons. Wade dropped plans to do follow-up
research on Valuation-Informed Indexing (he told me when we did the first research paper that “You ain’t seen nothing yet!” and that he expected eventually to get research on Valuation-Informed Indexing published in the Journal of Finance, the most respected journal in the field).
The 11-year cover-up of the errors in the Old School safe withdrawal rate studies is the greatest act of financial fraud in the history of the United States. We are going to see many people going to prison for this massive act of financial fraud following the next price crash.
It is my strongly held view that every blogger on the internet should be speaking out about this.
It is not entirely true that the Goons are “just looking for trouble.” They are looking to INTIMIDATE. For 11 years, that has worked. They are now not just covering up the errors in the retirement studies. They are now covering up the cover-up. Things get worse and worse and worse as they commit more felonies as as bloggers in this field and experts like Bogle and Swedroe and Ferri and Burns and Bernstein fail to speak up.
Rob Arnott (the former editor of the Financial Analysts Journal) wrote me an e-mail in which he told me that “your ideas are sound.” He described acts of intimidation by Buy-and-Holders that he has experienced himself. Two young researchers wanted to do research in this area. They were taken aside by an older Buy-and-Holder who told them that they would be hurting their careers if they were to do so. Rahiv Sethie, an Economics Professor at Columbia, told me that all of my ideas follow from Shiller’s findings and that he could see why Valuation-Informed Indexing would work. But he hasn’t published research showing this. Given these other events, I don’t think it is too hard to figure out why he holds back.
Arnott copied Bogle on his e-mail to me. So Bogle knows all about this.
This is not an economics story. It is primarily a POLITICAL story. The question on the table is whether citizens of the United States should be permitted to know what the last 32 years of peer-reviewed academic research in this field tells us about how stock investing works. Wall Street wants us to believe that Buy-and-Hold can work. There is now 32 years of peer-reviewed research showing otherwise. Investors MUST take price into consideration to have any chance of achieving long-term success.
I believe that things will change following the next crash (the research shows that we have another
crash of 65 percent coming up ahead). The problem with waiting for the crash is that another crash
of that magnitude will put us in the Second Great Depression. I am not sure that our political system
can sustain a Second Great Depression, one that will according to the research be far deeper and far longer-lasting than the depression we experienced in the 1930s.
This is not just about giving me a hard time. It is about keeping information from millions of middle-class people who very much need to hear it.
It’s important to understand that the Goons do not benefit from a Second Great Depression any more
than any of the rest of us. They are in emotional pain. The Buy-and-Hold advocates created a monster when they encouraged so many people to believe in this stuff. And of course the advocates too would
like to get out of the corner into which they have painted themselves.
The positive news here is 50 times more positive than the negative news is negative. The answer
is just to get a discussion started and then we see good things piled on top of good things piled on top of good things.
Do you know from your conversations with other bloggers what they are afraid of? It seems to be that
if there were 10 of us who stuck together, the Goons would be powerless to do harm to any of us. All of their power to destroy us comes from the fact that they can take us on one by one. I’ve spoken to financial advisors and academic who have been intimidated too. It seems to me that the logical step is for 10 people (a combination of financial bloggers, political bloggers, academics and financial advisors) to agree to meet at a discussion board set up at one site and to keep a record of the intimidation tactics. Then anyone being hassled could point to that site. I would think that would end the nasty stuff in no time.
Do you see merit in that idea? Please let me know if you have thoughts in reaction to all this.
And please take good care.