Set forth below is the text of an e-mail that I sent to Jaime Tardy, owner of the EventualMillionaire.com site, on October 30, 2013:
It’s good to hear about the cast. When the crutches are gone, there will be a few days when ordinary walking will be exciting!
I of course understand that my story is “out there.” That’s why I think I am going to win in the end. It’s so crazy that it just cannot continue. The other side of the story is that I have been saying that for 11 years now.
I am always trying to come up with analogies to help people understand the craziness at the heart of this. The best that I have come up with is shocking but I think it helps point to the core realities. Prior to the 1960s, people with black skin could not drink out of the same water fountains as people with white skin in many Southern towns. Taken in isolation, that’s a pretty darn hard-to-believe reality, is it not? But it really is true. How did this happen? Were all the people who lived in Southern towns racist? They were not. LOTS of people opposed the reality of the time. The reality had been in place so long that they didn’t think it could be changed. So the practical thing was to keep your mouth shut. That of course made the problem worse! A society cannot fix a problem until there are a large number willing to say out loud that it is indeed a problem.
That’s the issue here. The entire financial industry was built around the research that was once thought to support the Buy-and-Hold concept. Thousands of books are rooted in these ideas. Thousands of careers have been built around these ideas. The idea of changing the core idea on which all investing knowledge has been built is unthinkable to most people. Yet the evidence that that core idea is wrong
is now a mountain. If we challenge the idea, it will fall quickly. That would be a wonderful thing. The ideas that work would make us all a much richer and freer people. But we cannot get from where we are to where we all want to be without saying that lots of powerful and wealthy and smart and good and hard-working people got an important point wrong. So we have adopted a Social Stigma against speaking
such truths out loud. I have violated that Social Stigma. Many, many times. For good or for ill, that’s the Rob Bennett story. I violate the Social Stigma WITHOUT APOLOGY.
The haters don’t have legitimate grounds to sue. But the bottom-line reality is that anyone can sue anyone for anything and the person with more money often wins. The haters of course have zero power on their own. But they are supported by people with LOTS of money and power and influence. The fear that the site owner has is that he will be sued and his business will be destroyed even though he is
in the right. These fears are not entirely off base. When the haters vowed to get me banned from the Motley Fool site, I thought there was zero chance they could pull that off. The owner of the site had written one of the blurbs that is on the back cover of my book on saving strategies. But they pulled if off. It took a year. But ultimately I was banned. And the editors at Motley Fool nominated the fellow who threatened to kill my wife and children for their Poster of the Year award.
You’re asking a great question about women and data. That question gets to the heart of things. There’s a quote from Shiller in which he says something to the effect of: “Lots of people in this field don’t take behavioral finance seriously because it is rooted in subjective stuff that they consider embarrassing and not worthy of consideration by serious professionals.” I agree with the Buy-and-Holders on every point but one. I say valuations matter, they say they don’t. Mispricing (overvaluation and undervaluation) is ALWAYS the produce of emotion. Fama (the researcher who started Buy-and-Hold) says that investors always act in their best interest. This is 100 percent logical. It is also 100 percent false. Investors always act in their best interest SO LONG AS THEY ARE NOT INFLUENCED BY EMOTION.
Shiller created a metric (P/E10) that tells us how emotional the market is at any given moment in time. It is emotion (overvaluation) that makes stock investing risky. So Shiller gave us a tool to eliminate investing risk. This is the most important advance ever. The problem is that all knowledge in this field outside of Shiller is built on a premise that investors are ALWAYS 100 percent rational in their investing choices. To let in the good stuff, you would have to admit that everything else is rooted in error. They cannot bear to do it. They see the contradictions. They rationalize them. They have too much invested in the old ideas to even discuss whether Shiller might be right.
They DO acknowledge Shiller’s greatness. No one disputes that. But they patronize his ideas. They say “oh, that’s good stuff” and then go right back to urging strategies that are in total conflict with what Shiller says. My idea was to explore the IMPLICATIONS of Shiller’s ideas. I go one small step beyond what Shiller says in actual words. No one else has ever done that. Even Shiller doesn’t do this. Shiller makes it a point to bury his most amazing findings. He hints at them. But he presents them in a way that permits most readers to miss the most important point. Shiller tries to stay out of trouble. I SEEK OUT trouble. Not in any negative way. But I am always trying to point to new implications of Shiller’s work because I want knowledge to expand and I believe that we can add to our knowledge only by talking these things over.
Women investors like safety more than men investors. Men are more into taking the chances necessary to prove themselves. So my stuff should have great appeal to women. There are search terms like “safe investing” that get huge traffic. I should own those words. I am offering a simple and safe approach that is supported by academic research. It is a dream come true for millions of investors. But the sorts of people who are looking for safety do not want to take investing advice from some guy on the internet. They want to see that the experts endorse my work. They want to see that lots of other people see value in my work. This is why the Goons want to cut me off from all sources of authority. Their standard response to me is: “We will leave you alone if you agree to post only at your own site.” So long as I post only at my
own site, I get nowhere. As soon as I go off my site, I pose a threat to them.
Todd is taking a middle ground. He agrees with me on the substantive points. He of course doesn’t post only at his own site. But he does avoid saying things that pose a threat to those promoting Buy-and-Hold strategies. He appeals to sophisticated investors who don’t take Buy-and-Hold seriously. I do not write for sophisticated investors. I write for average middle-class people. Buy-and-Hold is all they have ever heard. I am saying that those people have a right to the same good advice that is available to people with more money and sophistication. I am aiming for a much larger readership than Todd’s but one that is harder to win because they don’t have the knowledge base to see the merit of my points quickly. If I were permitted to post at large boards unmolested, I would win all these people over in time as they got to know me and to see how the different points fit together. This is why I represent such a big threat. I am destroying the marketing claim that the Buy-and-Holders have used to great advantage for a long time (that their strategy is rooted in the findings of peer-reviewed academic research).
I agree that most women are not driven by data. But they ARE driven by a desire for safety and for following common-sense ideas. My stuff IS backed by data. But is it backed by ALL the data, including the data rooted in non-emotional factors AND the data rooted in emotional factors (P/E10). My approach is holistic. It COMBINES the two types of data. The Buy-and-Holders HATE emotion. I too
am saying that is is a bad idea to let emotion control you. Our approaches to the problem are very different. They say that emotion is so awful that we must never discuss it. I say that this leads to ruin in time. Ignoring emotion makes it stronger. I say that the way to cope with negative investing emotions is to CONFRONT them, to get things out in the open. Considering the P/E10 factor lets us get emotions under control so they don’t hurt us. By talking about emotion we make it inconsequential. Women understand this point better than men as a rule.
The main goal is not to generate revenue. That is an important secondary goal. The main goal is to remove the Social Stigma that stops people from talking about the implications of Shiller’s findings. I will know that I have won when I can wake up in the morning and post at any site on the internet with no fear that I will be attacked for anything I say about investing that I truly believe. I of course don’t want that just for me, I want it for everyone. When we get there, the money will naturally follow because there
is a huge market for these ideas (I know this from the reactions I have generated for 11 years now) and my site explores these ideas in far more depth than any other site on the internet.
I don’t object to rebranding and I don’t get too excited about it. I am not good at marketing. So I have zero doubt that I have done things wrong in that department. That said, I was AMAZINGLY popular in the days when I wrote about saving strategies. So I was able to be successful despite any marketing weaknesses. Better marketing may well be part of the answer. But the Social Stigma is my paramount concern.
Dealing with a Social Stigma could be viewed as a marketing concern. But it is a uniquely difficult and complicated one. I am trying to sell people something that they very much want but cannot just yet
acknowledge that they want. There should be Google search terms like “What’s Wrong with Buy-and-Hold?” I should rule those terms. But most of the people who are my potential customers are today searching for excessively vague terms like “safe investing” or “how to invest” or something like that. People don’t know what they don’t know. They don’t know that the people who seem to be trying to help them are really hurting them. And the people who are hurting them don’t know that they are hurting them either. This is an idea that is close to taking off that has not quite taken off yet.
I am all for doing video. Anything that forms an emotional connection is good. I want to have articles as my support for the step-by=step exploration of the ideas. But I don’t believe that too many people care about words anymore. So I am 100 percent okay with focusing on audio or video or Twitter or whatever to get the ideas out. I personally love words. But I don’t think they always get the job done in today’s world.
Thanks for asking intelligent questions. I regret that the answers are so long.
Here’s a Guest Post that I did at the Free From Broke Site:
There are no Goon posts on this thread. They must have been sleeping in that day! (or perhaps Glen took care of them). The questions and comments are intelligent. I think these comments show the potential of the idea.
No one really ran with it as a result of this Guest Blog Entry. But I think that we would see people running with it if a number of threads as intelligent as this appeared in the Blogosphere. The comments that appear here suggest that there are people who think this is worth talking about.
This is the article that I wrote about how the Goons compromised an academic researcher who spent 16
months working with me on research that we had published in a peer-reviewed journal:
I have had a number of long-time Buy-and-Holders tell me that this research caused them to question their beliefs. So I believe that getting this research written up in the New York Times or the Wall Street Journal is the key to making things happen. The Goons wanted to silence Wade so that that would not happen. Wade has more pull with the New York Times because he has a Ph.D. in Economics from Princeton and because he makes his living writing research in this field and because he has won awards and all this sort of thing.
Please look at the quotes from Wade at the bottom. He says “Yes, Virginia, Valuation-Informed Indexing works!” and “the market timer enjoys a far less risky strategy!” and “the findings for market timing are so robust that it hardly matters how we do it!!” Those are amazing comments for something with a Ph.D. in Economics from Princeton to be putting forward. Wade should have been taught this stuff as part of his Ph.D. program. He obviously wasn’t. That reality points both to the huge potential (we are changing the history of investing analysis) and to the huge threat that this represents to those promoting the old ideas.
This is the text of my correspondence with Rob Arnott, who is one of the biggest names in the field:
Former Financial Analysts Journal Editor Rob Arnott to Rob Bennett: “I’ve Had Similar Experiences to Those You Describe. My Work Has Often Triggered Overt Hostility from the Guardians of the Status Quo. I’ve Also Had Difficulties Getting Some of My More Controversial Ideas Published. And the Journals That Published Some of My More Controversial Papers Did Get Hate Mail.”
Rob Bennett to Former Financial Analysts Journal Editor Rob Arnott: “The Illustrations You Offer of the Problem of Buy-and-Hold Dogmatism Are Shocking. I Know From My Discussions With Financial Planners and Bloggers That Many Others Have Had Similar Experiences. This Must Stop. I Feel More of a Sense of Urgency re This Matter. My Focus Is On the Public Policy Implications. We Are Living Through A Public Tragedy of Epic Proportions.”
Former Financial Analysts Journal Editor Rob Arnott to Rob Bennett: “I’m Too Embroiled in My Own Controversies to Magnify Them Further With Collaboration. Your Ideas [About Valuation-Informed Indexing] Are Sound.”
Arnott says that he has experienced “hostility” from “guardians of the status quo.” People who were doing research on his ideas were told that they would be doing harm to their careers to do this sort of work. The difference between Arnott and me is that I do my work on the internet and the internet is so new a medium that there is no police force. The same basic phenomenon applies both in the real world and on the internet. If things reach a point where honest discussion is permitted on the internet, that will create the pressure we need to see for honest posting to be permitted in the real world as well. Then it’s over. Then we (all — including the Buy-and-Holders!) win!
Thanks much for your kind interest in this strange (but compelling!) saga.