Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
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.