Set forth below is the text of a comment that I recently put to the discussion thread for another blog entry at this site:
“You are right to suggest that I wasn’t persuaded by the advice that she offered. ”
I don’t recall you ever being persuaded by anyone’s advice.
That’s not even close to being so, Anonymous.
Just to cite the most obvious case, I was HUGELY influenced by the book that I read by Jack Bogle in the Spring of 1996. It was by reading Bogle’s book that I came to see the errors in the Old School retirement studies. Bogle wrote that: “Reversion to the Mean in an ‘Iron Law’ of stock investing.” If that’s so, then risk must be variable, not static. If risk is variable, then John Greaney’s retirement study, which says that the safe withdrawal rate is always the same number (4 percent) cannot possibly be right. It was by reading and thinking about Jack Bogle’s words that I came to construct and advance my famous post of the morning of May 13, 2002.
All of the “problems” that we have experienced over the past 14 years came about as a result of the way in which Bogle’s words persuaded me. I was very, very, very much persuaded by the obvious (at least to me) truth of this man’s words.
Bogle is only one case that I can cite. I was also persuaded by many of Shiller’s words. And I was persuaded by many of Bernstein’s words. And I was persuaded by many of Buffett’s words. And I was persuaded by many of Russell’s words. And I was persuaded by many of Arnott’s words. And I was persuaded by many of Smithers’ words. And I was persuaded by many of Pfau’s words. And, believe it or not, I was persuaded by many of Lindauer’s words and by many of Greaney’s words. Heaven help us all but I have been persuaded by many of YOUR words, Anonymous.
We are living in a day when two of the brightest lights in the field, Eugene Fama and Robert Shiller, who both have been awarded Nobel prizes for their work, have come to 100 percent opposite conclusions re the foundational question involved in figuring out how stock investing works. Fama says that the market is efficient. Shiller says that valuations affect long-term returns. One of these men is right and one of these men is wrong. It is not possible for the rational human mind to come to any other conclusion.
Fama got published first. These matters are of huge importance. If we were as a society to come to promote the wrong view of how stock investing works, we would see an economic crisis develop, possibly one worse that the First Great Depression. So we have been reluctant to acknowledge the mistake that Fama made in 1965 that did not become public knowledge until 1981. We have as a society been covering up that mistake for 35 years now, to the great misery of millions.
I have been persuaded by many people on both “sides.” I think Fama has made huge contributions and I think Shiller has made huge contributions. I have iINTEGRATED the huge advances achieved by both men into the Valuation-Informed Indexing model. VII is the first true research-based investing strategy. It is the first strategy that reflects not only the pre-1981 research but the post-1981 research as well.
You Goons hate me not because I do not permit myself to be persuaded by others. You hate me because I permit myself to be persuaded by those who have done research AFTER 1981 as well as by those who did research BEFORE 1981. You want to shut down discussion of the post-1981 research so that you never have to acknowledge having made a mistake by thinking that there could never be new insights developed once the Buy-and-Hold Model was introduced. I see science as a continuing process, not as something that is done once and that generates findings that are set in stone and never questioned from that point forward.
I am persuaded by MORE people than you, not by fewer. I love Eugune Fama. I love Jack Bogle. I also love Robert Shiller and Warren Buffett. I allow myself to be persuaded by figures working on both “sides” (I put the word in quotation marks because I find it silly to think of people engaged in a scientific endeavor together as being on different “sides” — we are all seeking to learn from each other or at least we all should be).
You hate those who offer new insights with a burning hate. You threaten to kill their loved ones as a way of shutting them up. You want to be persuaded only by one “side.” I love hearing the contributions of those on both sides. I am far, far, far more open to persuasion by others than you are. That’s why I have never stooped to advancing a single death threat or a single threat of career destruction. I know that issuing threats of that nature will limit the number of voices that I am exposed to in the future and I cannot bear to limit what I learn in that way.
What makes you a Goon is your hatred of learning new things. We all become defensive when our long-held beliefs are challenged. That’s human nature. But the laws of this country reflect our belief as a people that we need to resist the human weaknesses that tempt us to strike out in anger against those who challenge us and thereby help us learn. The reason why you are going to prison is because you have permitted your hate to get so out of control that you have blocked millions of middle-class people from being persuaded by the peer-reviewed research of the past 35 years.
My sincere take.