Set forth below is the text of a comment that I recently posted to another blog entry at this site:
“Others still accept the call to serve their country when their country is in greater immediate need of their services.”
But I thought you just wrote that:
” So I have pulled back on my activities a good bit over the past few years.”
So what do you do everyday? Wake up and hope for a market crash so you can ‘get back to work’? Seems very sad.
I do lots of things, Laugh. Some are public. Some are not.
There’s a new blog entry here every day. Most of them are pulled from my conversations with you Goons. Most people think that it’s crazy that I even speak with you Goons, much less write blog entries about our conversations. I don’t agree with those people. I think that that belief is rooted in a belief in the Buy-and-Hold Model for understanding how stock investing works, which was discredited by Shiller’s “revolutionary” (his word) finding that valuations affect long-term returns. I don’t agree with their premise that the market is efficient and that investors are rational. I believe that investors are human and thus highly emotional. That changes everything.
I often call you Goons “Goons.” Most people don’t approve of my decision to do that. They say: “oh, it serves no purpose to do that, calling people names is never a good ida.” I certainly agree that “Goon” is a name and as a general principle I certainly agree that calling people names is not a good idea. But I believe that the circumstances that apply in this particular case are unusual and that that reality needs to be taken into account when someone writing in this field is debating whether to call someone a “Goon” or not. It is my sincere belief at this point in time (I hope that I remain open to other ways of thinking re this matter and indeed re all matters) that calling you Goons “Goons” is indeed a good and necessary thing. I do not believe that I can achieve my goals, which I believe are important and to a large extent unselfish goals, without referring to your Goonish behavior as “Goonish behavior.”
Goonishness is sin. The two concepts are essentially synonymous. When we commit sins, we are messing ourselves up. That’s why God doesn’t want us to commit sins. He loves us and he doesn’t want us to cause ourselves misery. We are tempted to sin because we are imperfect creatures not fully capable of appreciating what is in our best interest. God sees things that we do not see and advises us to avoid the dumb stuff that hurts us. He labels self-destructive behavior “sin.” He direct us to knock off the funny business when he sees us messing up our lives by committing sins.
The Get Rich Quick urge is a sinful inclination possessed by every human and therefore by every stock investor. Shiller showed that we can come close to making stock investing risk disappear by avoiding the sin of thinking that there might be some mystical, magical alternate universe where it is not required of us always to practice price discipline when buying stocks.
The entire history of the stock market supports Shiller’s finding. There is zero evidence going the other way. But there IS this sinful inclination to adopt Get Rich Quick investing strategies and there is of course a mountain of money to be made promoting Buy-and-Hold and so stock investing in reality has always been a high-risk approach to investing. That ended in 1981 when Shiller published his Nobel-Prize-winning research showing that risk is variable and that investors seeking to keep their risk profiles roughly constant over time need to always, always, always take price into consideration when buying stocks.
The peer-reviewed research that I co-authored with Wade Pfau shows that taking the one step of considering valuations when setting one’s stock allocation reduces risk by 70 percent. Everyone wants to reduce risk. So our research would in a purely rational world have been featured on the front page of the New York Times within one week of its publication in a peer-reviewed journal.
It hasn’t happened.
As you Goons well know.
It hasn’t happened because the reporters and editors who work at the New York Times are sinners!
That’s a funny way of putting it. I of course get that. But when you boil away all the verbiage, that’s what it comes down to. The reporters and editors at the New York Times are sinners. They are Goons. They are drawn to Get Rich Quick strategies. They think that Buy-and-Hold is the cat’s pajamas. They think that Rob Bennett fellow who keeps talking about those darn errors in those darn Old School safe-withdrawal-rate studies should just give it a rest already and get with the program. What does he think, that he is better than all the rest of us?
I don’t think that I am better than all the sinners, Laugh. I am a sinner myself. I believed in Buy-and-Hold at one point in my life. I possess a Get Rich Quick urge. I had my money in stocks prior to the Summer of 1996 and I got excited one year when I counted all my winnings and pondered what a smart fellow I was for following a Buy-and-Hold strategy and for counting the “gains” that I had “earned” as being a good bit greater than 6.5 percent real.
I am not better than everyone else. But I have been placed in circumstances in which I have become better able than anyone else to see with clarity how our Get Rich Quick sinfulness hurts us all and I have thereby been given the opportunity to help millions of middle-class investors as well as myself by writing in great depth about this terrible sin that has caused so much human misery for so long a time now.
That’s it. It’s my job to point out this sin and to steer people away from it. I don’t call it “sin” because that sort of language would turn people off even more than the term that I do employ — Goonishness. But that’s what it comes to.
Doctors tell people not to smoke. They do this because smoking is self-destructive; it causes human misery and doctors know this to an extent even more than most of the rest of us know it. It could be said that they are calling the executives at the tobacco companies names when they point out that smoking causes cancer, they certainly are not approving of the promotion of smoking when they tell their tale of how smoking causes an early death. But they soldier on. They see it as their jobs to help people maintain their health and they know from looking at the evidence that smoking is not the way and so they say what they say even though it probably does indeed hurt the feelings of tobacco company executives for them to say it.
It is my job to warn people of the dangers of Get Rich Quick investing strategies. Buy-and-Hold is the purest and most dangerous Get Rich Quick investing strategy ever concocted by the human mind. ALL of the peer-reviewed research in this field shows that the worst mistake that an investor an make is to fail to exercise price discipline when buying stocks and the Buy-and-Holders say that there might be some alternate universe where that is not necessary, that we should just take their word for it even though 100 percent of the evidence as well as common sense points in the opposite direction. And of course they make millions as a result of these lies they shove down our throats on a daily basis.
I don’t buy it, Laugh. I think that people need to hear the truth about what the peer-reviewed research shows. I see it as my job to tell that truth. So I do that.
I don’t spend my hours wishing for a price crash. I spend my hours thinking up more effective ways to tell these truths. People don’t like it when I use the word “Goons” and yet I need to point out the dangers of the pure Get Rich Quick mindset to be able to do my job effectively and so I need to call cancer “cancer” I spend my hours trying to come up with better ways of getting the job done.
That’s why I engage in conversations with you Goons. You are like all the rest of us in that you possess a Get Rich Quick urge that causes you to be attracted to the Buy-and-Hold Lies pushed so relentlessly by the Wall Street Con Men for profit. There’s something different about you, though. You don’t smoke a cigarette now and again, like some. You smoke four packs a day. You are the freakin’ addicts. You take the Get Rich Quick concept to places that it has never been taken before. You are willing to go to prison over it. Get Rich Quick/Buy-and-Hold is your life, your religion. You are strident about it. You are obsessed over it.
It is my job to try to understand better the roots of that obsession. I need to come to understand on a deeper and deeper level where the Get Rich Quick urge comes from and how it manifests itself and how the humans can go about the business of getting it under control. The behavior of you Goons can provide us all with clues as to the answers to those questions if only we go to the trouble to mine the insights.
It’s hard work. It’s emotionally draining. But it is the work that a loving God has directed me to do. So I work it as hard as I can. And then I let it go.
It doesn’t take me all day to craft the responses to your questions and comments that I post as daily blog entries here. But the writing of the words is only a small part of the job. There’s a lot more to it than happens behind the scenes.
I need to read books on investing and on psychology and on philosophy and even on religion to get the bottom of what is going on. Sometimes I need to go on walks to sort through things in my mind. Sometimes I need to talk things over with others. Sometimes I need to play songs that have something to say about these matters, sometimes several times before the insights that I am seeking kick in. It’s hard work.
That’s what I spend my time on. I aim to go deeper and deeper and deeper.
The results of these efforts are here for all to see. No charge. This is the wonder of the internet. I am not being sarcastic. I view this as a magical reality. I love the internet. Not the hate that you Goons bring to the table. But I am greatly excited about the power to do good that this new communications medium brings to the world.
Shiller showed that human emotion is 80 percent of the investing story. Before he came along, people thought that it was perhaps 10 percent of the story. Shiller opened up a new continent of insights for us all to mine together.
No one who came before me attempted to mine these insights to the full. Even Shiller only hinted at the possibilities. I have for 14 years now attempted to take Shiller’s “revolutionary” finding as far as it can be taken by the human mind. I build one insight on top of another, over and over and over again.
This requires looking at things that no one in this field has ever looked at before. Most investment advisors don’t bother to spend much time studying psychology texts or listening to songs. They think that I am a fool to do that. I think that they are fools not to do so. I see that stuff as being where the action is today. All of the non-emotional stuff has been studied in great depth. There are not many new insights to be developed looking at that stuff. But the emotional side of the investing equation is little studied. There is a wealth of insights to be mined looking at how investing truly works according to the last 35 years of peer-reviewed research in this field.
I spend my time going deeper and deeper re all the stuff that matter greatly but that has been ignored until now. You see the work product in my daily blog entries and in my weekly columns. But it takes a lot more time than what it takes to write the words to develop the insights advanced in the blog entries and in the weekly columns.
I hope that that all meets with your approval, my Goon friend.
Of course I am going to continue walking this wonderful path that I have found for myself whether it happens to meet with your approval or not. I like you. But I don’t aim to please you. I aim to please myself and the loving God who put me here and I of course aim to help the millions of middle-class workers whom that loving God also put here. It would make me happy to see you advance words of approval because it would make both of our lives go easier if you were to do so. But I don’t intend to let your decision as to whether or not to advance words of approval to influence my decision re what path to follow in any way, shape or form.
I wish you the best of luck in all your future life endeavors regardless of what path YOU choose to follow, my fellow traveller in this journey through the Valley of Tears.