Set forth below is the text of an e-mail that I sent to Jaime Tardy, owner of the EventualMillionaire.com site, on November 7, 2013:
Thanks for being honest. That is 100 percent appropriate and helpful.
Thanks also for the report on what the millionaires said. What I told my family when I
got back from the conference is that “I wish I knew what people who heard the talk
were thinking after they heard it.” Your group isn’t everyone. But my guess is that
their views are widely held. So you have told me something valuable.
I agree 100 percent that letting the haters into the story turns the story into a negative one.
LOTS of people I respect have told me what you are telling me. I still respect them.
I believe that they are right about the general rule. I don’t believe that the general rule
applies in this case.
I DON’T think the talk was filled with bitterness. I intentionally chose images that were
playful to avoid giving the talk a bitter feel. But I know from the reactions I get that
the millionaires are giving voice to what they truly feel. People HEAR bitterness.
But I am going out of my way not to project it (while still reporting on the essential
elements of the story that must be told).
I agree 100 percent that the haters will join my side somewhere down the road.
I ALWAYS work to get us all to that place. I PRAISE the haters to the skies.
I say that Jack Bogle is my hero. He is. I say that the Buy-and-Hold Pioneers
have been responsible for huge advances in our understanding. They have been.
I say that I want to work with these people. I do. I say that I consider these people
my friends. I do.
The hate comes all from one side, Jaime.
I REPORT on the hate. I certainly don’t dispute that part. But reporting on hate
is not the same thing as ENGAGING in hate. I report on the hate with the aim of
bringing the hate to an end. In ordinary circumstances, we ALL would be united
in saying that the hate should be brought to an end. Every board and blog on
the internet has rules for dealing with this sort of problem. This is the only case
I know of where a large number of the people participating at the boards and blogs
have elected not to seek enforcement of those rules.
Please understand that Shiller did not publish his findings last week. He published
them 32 YEARS ago.
Is it not an amazing fact that the findings were published 32 years ago and
Wade Pfau, who holds a Ph.D. in Economics from Princeton, had never thought
through a number of fairly obvious IMPLICATIONS of those findings? I worked with
Wade for 16 months. He told me over and over again how AMAZED he was when
he found that the 140 years of data available to us backs up everything I have been
saying for 11 years now. He couldn’t get over it. He kept asking himself: “Am I missing
something? Why wasn’t the research that Rob and I are doing today done many years
Now he knows.
The reason why research on the implications of Shiller’s findings hasn’t been done
for 32 years is that the researchers who see why it needs to be done are AFRAID
to do it. If they publish the research we all need to see, they will be hated as much as
I am. And, if they ask that something be done about the torrent of hate directed at
them for publishing accurate and honest research, they will be called haters themselves
for having called attention to the hate directed at them by others.
To understand this, you need to go outside the world of investing and see how the
same general phenomenon has played out in other areas.
I was watching an old episode of “Mad Men” a few weeks ago and I laughed when
I saw the phenomenon play out on that show. The heads of a tobacco company were
talking about how to respond to an article in Reader’s Digest that reported on research
showing that smoking causes cancer. The conclusion was — We don’t need to respond
with any logic, our customers already WANT to smoke, all we need to do is to provide
them some silly excuse to continue doing what they want to do and they will do it.
So they came up with this slogan saying “Luckies — They’re Toasted!” ALL cigarettes
are toasted. The slogan is meaningless. But the fellow who wants to smoke and whose
conscience is bothering him because he suspects that the research is getting at something
real now feels better. HIS brand is toasted! So he is okay.
The killer is that the executives who were coming up with the trickery were smoking
while they were doing it! They weren’t just killing millions of others. They were killing
themselves at the same time! They believed their own marketing garbage.
That’s the story here.
People hate me because I am holding a mirror up to them and urging them to face
the fears that they carry around inside their heads. I don’t use force. I am 100 percent
friendly. But I don’t go along with the b.s. either. I insist on recognition of my rights.
I afford the Buy-and-Holders no easy way out, no way to pretend that there is not 32 years
of research showing that their “strategy” never works in the long run.
Valuation-Informed Indexing is the future. Buy-and-Hold is the past. You have to believe
that and to understand why it is the case to be able to help me. Watering down the message
is not the answer. The message has to be potent to prevail over the powerful forces lined
up against its transmission.
There are changes in the way I transmit the message that could be made. I am obviously
not perfect. It could be that different ways of saying things would be more effective.
But I cannot ever apologize for telling people the truth (according to 32 years of peer-reviewed
research) about stock investing. And I have to have some answer to the obvious
question. If there really is 32 years of research showing that Valuation-Informed Indexing
is so wonderful, why doesn’t everyone know about it already?
Few know about it because no one prior to me was willing to take on the haters.
If this is every going to go mainstream, someone needs to do that. If we are going
to persuade people to quit smoking, we need to say clearly that it causes cancer
and that cancer is bad, bad stuff. We beat cancer by saying it is awful and that smoking
causes it. We beat Get Rich Quick investing by saying it is awful and that believing in
Buy-and-Hold principles causes it. There is no other way to get from the horrible place
where we all are today to the wonderful place where deep in our hearts we all want to be tomorrow.
The fact that following Buy-and-Hold strategies makes people so intensely emotional is the reason why it doesn’t ever work. I am saying that the primary goal of investment advice should be to make people
LESS emotional. Buy-and-Hold makes people more emotional than any other strategy. That
aspect of the question MUST be addressed. Avoiding emotion to the extent possible is the key
to long-term success, according to the last three decades of research.
I definitely respect you and I definitely like you. I am obviously not happy to hear what those
millionaires said. But I NEED to hear what you told me. I need to win them over. I believe that
their views will change following the next price crash. I believe that I will be in an amazing spot
then because I will have the only site on the internet that explores all the stuff that today
is being called “hate” but that I believe in the future will be called “the stuff you need to look at to avoid
the #1 pitfall in investing — becoming so emotional about pretend gains that you become
defensive when people report on what the research says.”
I FULLY understand if you do not care to go forward. I don’t regret exploring the possibility
because I have learned from our interactions.
You may have run into Joe Taxpayer at the conference. We have been having one of
those insane discussions (insanely great and insanely awful in about equal portions)
at his blog for the last day or two. My guess is that both “sides”
read the words and draw opposite conclusions as to where the hate is coming from.
Thank you again for being blunt about things. That’s what is great about you. I wish you
every possible success and will take joy in hearing about them (as I know I will).