Set forth below is the text of an e-mail sent to me on October 15, 2014, by Crystal, owner of the Budgeting in the Fun Stuff blog, followed by my response:
Intensity can be concise. 😉
There’s caring behind the intensity. The matters we are discussing here affect millions of people in very serious ways. I want to get things right. I have found from years of experience that people jump to conclusions if I am not clear about what I am saying and what I am not saying. So I try to take things step
by step and help people understand as much of the background as possible. In this particular case, intensity (caring) translates into long comments.
In an earlier e-mail, you referred to the Goons as “assholes.” That’s fair. They do behave like assholes. But the biggest asshole of them all, the lead Goon, is John Greaney. He’s the guy who got the numbers wrong in the safe-withdrawal- rate study published at his site. John was a friend of mine for a good number of years. We joked around together on a daily basis for years. Is not part of this story why this man now hates me with such a burning hate?
He hates me because he cares about accuracy too. He was EMBARRASSED to have people learn that he got those calculations wrong. He is an engineer. He made his living (before he retired) getting numbers right and he was ashamed to have been publicly exposed as having gotten them wrong. That’s the driver
here. Greaney just copied the methodology he used for his study from other retirement studies. He ASSUMED that some earlier person had checked the matter out and gotten things right. When he found out that that was not the case, he became enraged. Not at the person who originally got the methodology
wrong, but at me. I was the one who in a direct sense made him look foolish, so he got angry at me rather than the person who made the mistake.
That’s the entire story here. Greaney is not alone. ALL of the Buy-and-Holders are good and smart people. They thought they were helping people by promoting this strategy. The entire academic world made a mistake back in the mid-1960s, when the Buy-and-Hold strategy was developed. When the error was uncovered in 1981, the entire academic world went into cover-up mode. They could not emotionally
accept that they had made such a huge mistake. So they suffered cognitive dissonance. They have been covering up this mistake for 33 years now. They caused the economic crisis by covering it up.
This isn’t just a story of research vs. research. It is a story of why large numbers of good and smart people elected to ignore or cover up critically important research for so many years. I have had people tell me that: “everything you say makes perfect sense but I cannot go along with it because that is not what the experts say.” That is a perfectly reasonable take. But those people are in the process of losing their life savings. We all should want to help them. We can help them only by telling the whole story, both the content-based part that we all would prefer to be talking about and the process-based part where we explain why the research that gets it right has been ignored for 33 years. The process-based part of the story must be told for the content-based part of the story to make sense.
I have the greatest respect and affection for the Buy-and-Holders that it would be possible to have. Valuation-Informed Indexing would not exist but for their many important contributions. The aim is not to make these people feel bad. But the reality is that they know on one level of consciousness that the strategy that they have been pushing for years is gravely flawed and they are ashamed for people to learn this. This is a reality that must be faced. It is a delicate reality and we all should be doing everything in our power to face up to this reality in a kind and charitable and loving way. But we cannot just pretend that this elephant is not standing in our living room. None of the rest of this story makes even a tiny bit of sense unless we deal with the human element.
New research does not replace old research by some magical process. The human beings who devoted their lives to promoting the old research have to come out publicly and say the words “I” and “Was” and “Wrong” for the new research to become dominant. That’s what has not happened yet. We need to create an environment in which people on both sides of the debate feel safe making their points in a civil and reasoned way. Then all the bad stuff goes away and all the good stuff that follows from use of such a
process becomes evident.
There is not one person alive who would be hurt by this. It would help everyone alive on the planet today. There is no cost associated with this. Learning experiences enhance human lives for free. We are bloggers. This is a HUGE opportunity for bloggers. I know from the percentage of people exposed to this who expressed enthusiasm for hearing the full story that the market for this in in the MILLIONS of people. All the textbooks need to be rewritten. All existing calculators need to be reformulated. Thousands of new books need to be written to reflect the 33 years of research that has been treated as taboo for so long. This isn’t about making one person a millionaire. It is about making thousands of people millionaires. And all by helping millions of people. It’s a win/win/win/win/win.
If it were easy, it would have been done a long, long time ago. The reason why this opportunity exists is because of this delicate part where we need to keep the feelings of the people who made the mistake in mind when telling people what the last 30 years of research says. I am 100 percent in favor of keeping those people’s feelings in mind at all times. What I say is that we are hurting them more by stretching out their pain and keeping the cover-up in place. And that we cannot end the cover-up without telling people
that for a long time there has been a cover-up in place and why that has been so.
If Shiller has published his research last week, we wouldn’t have to talk about the Goons/Assholes and the pain they are in. But that’s not the reality here. You can’t have something covered up for 33 years and not mention that fact. The pain of the Goons/Assholes is real and is a part of the story. We need to deal with it with charity. But we cannot get the job done without dealing with it in some way.
Those are my sincere thoughts, in any event. My response is long because I need to be careful in how I say things to get it right. And I need to get it right because there are big matters at stake, including the feelings of lots of good and smart and hard-working people who happened to make a mistake about something important a good number of years back. I didn’t cause any of this. I just found myself in a position where I think it would be fair to say that I was elected to be the one to tell the world about it. I am doing the best that I can do and I almost always elect to use more words than I would ordinarily use rather than take the chance of planting wrong impressions in the minds of the people reading my words because I left something out that would have helped them understand the full reality.