Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
I guess my Vanguard, Fidelity and Schwab statements must be full of lies.
That’s correct. And that’s a big deal.
People need to know the amount that they have put aside for retirement to be able to plan their financial futures. This is important stuff because it is so basic. If you get these basic numbers wrong, you get everything wrong.
We need to integrate what Shiller showed with what those who came before Shiller showed. Only then can we begin as a society getting the numbers right and bringing an end to these horrible economic crises that cause so much misery to millions.
The first step down the positive path is giving ourselves permission to talk about the far-reaching implications of Shiller’s amazing research. We cannot come over time to understand things that we never permit ourselves to discuss.
The reason why as a society we have for 35 years been reluctant to proceed down this positive path is that the positive path leads in a very different direction than the Buy-and-Hold path that we are on today. The words “I Was Wrong” or “I’m Not Sure” are magic words, like “Open Sesame.” When as a society we say those words, the world changes in a life-affirming way for all of us.
My job is to help us all to see this, to provide us the courage we today lack to leave behind the path that has failed us and to move to the path that offers so much promise.
The numbers on all of our portfolio statements are wrong. Not a little wrong. A lot wrong. We need to get that fixed. But a society cannot fix a problem until it acknowledges that it has a problem. We are stuck at the Should-We-Acknowledge-the-Problem stage.
A good number of us (about 20 percent of the population of most large internet discussion boards and blogs) see appeal in the idea of acknowledging the problem (the fact that Fama’s findings and Shiller’s findings cannot be reconciled reveals that there is a flaw in the core ideas that support the Buy-and-Hold Model). You Goons don’t like the idea of acknowledging that there is a problem. You don’t want to see effective challenges to Buy-and-Hold to appear on your computer screens. You want to shut that stuff down. That sort of thing makes you very angry.
I am working at cross purposes with you Goons. I want all this stuff to get out. I don’t think it is healthy to keep this stuff covered up. I believe that the 35-year cover-up has been an unmitigated disaster. It threatens to undo all the good work that those who came before Shiller did. If they correct the one error they made, all of their good work produces amazingly good fruit. If they fail to correct the one error they made, our economic system collapses and the collapse in on the heads of those who made the mistake that set the forces in motion that caused the collapse. This is a good thing how?
The next chapter of the saga arrives with the next price crash. The next drop will hit people with more force than the 2008 crash because people’s financial resources have already taken a big hit and thus there is less strength to weather hits at this time. The economic problems will worsen and the political frictions will worsen.
Then the people who see the problem and have long wanted to do something about it but who have held back out of fear of what you Goons would do to their reputations and their businesses if they spoke with full honesty about their views re how stock investing works will face a decision: Continue down the road that has now caused four economic crises in the past 145 years and that has in recent years caused political frictions threatening to tear our country apart or dare to “cross” you Goons by suggesting that we enforce the laws against financial fraud in a reasonable manner and permit people of integrity to do work in the investing advice field just as we permit people of integrity to do work in every field other than the investing advice field.
I believe that we are going to choose the positive path at that time. I cannot prove it. I don’t have the ability to see into the future. So I could be wrong. But that’s what I believe. Naturally every action that I take today is rooted in that belief. We all act pursuant to our beliefs. You Goons believe on one level of consciousness that we will not as a society work up the courage to send you Goons to prison. That’s why you Goons do what you do, work as hard as you can to stop me from doing what I am trying to do.
I am working at cross purposes with you. It doesn’t follow that I don’t like you. I once believed in Buy-and-Hold. I know how pissed I would have been if I continued down that path and then one day learned that it had all been a lie (that’s not entirely true, in the early days it was a mistake rather than a lie, but the emotional reaction that one has to learning that one has planned one’s entire life around a false premise is that one has been lied to). So I have sympathy for the Goon position. I don’t support the criminally abusive stuff, obviously. But I have sympathy for the flawed (like me!) human beings who have experienced so much pain in their travels through the Valley of Tears that they have come to feel a need to engage in such behavior.
Had circumstances been different, it could have been me. I think that’s the right way to think about it. We are all tempted at times to respond to bad behavior that we see play out in front of us by declaring to ourselves, “Oh, I am so much better than that, I could never go there.” The smart thing (in my view!) is to let God decide that one. None of us know ourselves well enough to know with certainty how we would react if we were placed in the same pressure cookers than caused others to behave in a way that we can safely conclude from our non-pressure-cooker-exposed selves is “bad.” My take.
Anyway, you are hitting on something important with this question, Anonymous. The numbers on all of our portfolio statements are wrong. Prior to 1981, those numbers were wrong because we lacked the knowledge needed to get them right. We truly believed that the market was efficient and that the market was capable without extensive discussions of investor emotion of getting the numbers right. In 1981 we “learned” (we learned this intellectually but we have not yet permitted ourselves the emotional freedom to integrate the new good knowledge with the good old knowledge while discarding the discredited old knowledge) that, to get the numbers right, we need to permit widespread discussion of the emotional realities of stock investing (discussions that we quite reasonably refrained from in our days of ignorance because discussions of investor emotions are nonsensical in a world of efficient markets).
We live in the worst of all worlds today. Our dominant model for understanding how stock investing works is a numbers-based model. Numbers are everything in this world. The success of every strategy that we pursue depends on getting the numbers right. But because of a mistake that we made in 1965 and that has remained uncorrected since it was discovered in 1981, we today are getting all the numbers wrong. Every article that is published on the topic of how to invest in stocks makes the economic crisis worse because it fills people’s heads with more garbage.
People are losing confidence in our institutions because they are seeing that things are getting worse and the “leaders” of our country are not taking effective action. But each time one of us dares to offer effective leadership, you Buy-and-Hold Goons go into action with your threats of physical violence and with your threats of career destruction. We have come a long way from the days when my good friend Jack Bogle was making the case that we all should consider what the peer-reviewed research shows when making investing decisions. Holy moly!
I love my country. I believe that there are millions of good and smart and hard-working people living in it. I believe that even some of you Goons could fairly be described as good and smart and hard-working people if you were dealing with some subject that caused you less distress than the message of the last 35 years of peer-reviewed research and what it says about the role you played in bringing on the worst economic crisis in our nation’s history. I believe that Jack Bogle himself deep down inside is a good and smart and hard-working person. I believe that when he sees with his own eyes the human misery that he has brought on by his association with you Goons that he will come clean and the words that he will offer at that time will give the needed reassurance to the thousands of experts who need to hear some reassuring words before they will be willing to put their necks on the line and speak the full truth re their beliefs on stock investing.
From that day forward, we will all be walking the positive path rather than the path that we are on today. We will be learning more and more and more about the first TRUE data-based strategy with each day that passes. We will not be destroying our country, we will be rebuilding it. We will not be celebrating Goons, we will be putting them in prison or, better yet, removing them from our discussion boards and blogs before things reach a point where they have done so much damage to so many good people that we have no other realistic options but to imprison them. We will be feeling better and better and better about ourselves with each day that passes rather than worse and worse and worse. We will be engaged in a huge Learning Together project rather than the Goon project of generating ever more hate and anger and envy and deception.
Love is the answer, Anonymous. That’s the short version.
We’re getting there. It’s a process. And we are getting there ever so slowly.
We all want to see accurate numbers on our portfolio statements. So that we can plan our financial futures effectively. We are all going to get what we want. We are on the one-yard line. The only thing holding us back today is that we need to work up the courage to announce prison terms for those who have elected to advance posts in “defense” of Mel Linduaer and John Greaney and Jack Bogle. One more price crash will get us where we need to be to change paths.
I am sure.
But not really, you know? No human can ever be 100 percent sure. We are imperfect creatures. We can never really know for certain even the things that we very much think we know for certain.
Or so Rob Bennett believes, in any event.
We will have to wait and watch together to see how it all plays out in the real world.
I naturally wish you all the best that this life has to offer a person.
Hang in there, old friend. It gets better. A LOT better.
Rob
Are your financial statements full of lies?
You expect to be friends with Jack? He is 87 years old. You better hope that crash comes very soon.
I don’t hold any stocks. So, no.
Stocks are different than other asset classes, Anonymous. Stocks are the only asset class that permits the owner of that asset class to vote themselves huge raises. You can’t do that with Certificates of Deposit. The owners of CDs carry the same Get Rich Quick urge within them that the owners of stocks carry within them. But CD owners can’t do anything to temporarily push the value of their asset class up to crazy and unsustainable levels. They would do it if they could. But the opportunity just isn’t there. The certificate says what the interest rate is that is paid and that’s the end of it.
You need to think through a bit who it is that sets the price of stocks. We say it is “the market.” Fine, but who comprises this “market.” The market is the people who own stocks! Not exactly an unbiased group, is it? Asking the owners of stocks to set the price of stocks is like asking Trump supporters who they think won the debate held last Monday. Gee, I wonder what they are going to say.
You’ve probably heard that the Trump people back up their claim that Trump won the debate by citing internet polls held at places like the Drudge Report. Do you find those claims convincing? I do not. Those polls are loony tunes. To get an accurate read of who won the debate, you need to use a scientific methodology.
It’s not enough to ask just Trump supporters and it is not even enough to ask both Trump and Clinton supporters. Most Clinton supporters are going to say that Clinton won regardless of what actually happened just as most Trump supporters are going to say that Trump won regardless of what actually happened. To obtain an accurate read, you need to be sure to survey some of the people in the middle, the people who are open to being persuaded either way.
It of course works the same way with stocks. My bias is different than yours. I am biased in favor of Treasury Inflation-Protected Securities (TIPS) in the same way that you are biased in favor of stocks because that is the asset class in which most of my money is invested. The difference is that investing experts don’t stand to make money by persuading people to buy TIPS while there is a ton of money to be made persuading people to buy stocks. So you don’t see any of these complicated, phony baloney arguments re how TIPS are always the best asset class no matter what. There’s not a mountain of money to be made telling lies about TIPS, so no one bothers telling such lies.
LOTS of people go to the trouble to tell lies about stocks. People become millionaires telling lies about stocks. That’s the Buy-and-Hold Story in a nutshell. The Wall Street Con Men are not our friends, they are people out to turn a quick buck and people who are able to rationalize the lies they need to tell to achieve “success” in this field.
It all changes once we open the internet to honest posting re safe withdrawal rates and scores of other critically important investment-related topics. The people who work in this field are like the people who work in all other fields. They WANT to be able to do honest work; nothing could be more clear. But, once they see that their careers will be destroyed if they dare to “cross” the Buy-and-Holders by doing so, they get real quiet real fast about what we have learned from the last 35 years of peer-reviewed research in this field. Once this story gets written up on the front page of the New York Times and your prison sentence is announced, people in this field are going to be running from any association with Buy-and-Hold as fast as they can run. We will then be able to put all the nasty stuff behind us.
Buy-and-Hold is rooted in an old way of understanding how stock investing works, Anonymous. We learned the realities in 1981 and the stock-selling industry had already adopted Buy-and-Hold as its model at that time and a decision was made not to rock the boat by telling people about the mistake that was made. The rationalization no doubt was that we were unlikely ever again to see fair-value prices in any event (stock were priced at one-half fair value at the time), so why make waves? And then, once you have told lies about something, it becomes harder and harder over time to come clean. 35 years later, here we are.
We could report stock prices accurately. There is no intellectual limitation stopping us from doing so. The obstacle is the corruption and the widespread knowledge that telling the truth re how stock investing works means that people like Jack Bogle will be going to prison. People who work in this field are afraid to say that. Bogle is a powerful guy. People who work in this field don’t want to cross him. It’s not so hard to understand once you think it through a bit.
How did Roger Ailes get away with what he did for years and years. How did Bill Cosby get away with what he did for years and years. How did all those Catholic priests get away with what they did for years and years.
To bring corruption to an end, we need to EXPOSE it. I exposed the Buy-and-Hold Con. As you never tire of pointing out, I have not been able to earn a dime in this field for 14 years running as a result. There is a price to be paid for exposing corruption this widespread. Most people in this field earn big incomes. They don’t want to pay that price. There’s the “conspiracy” that you never tire of asking about.
You could know the true value of your stock portfolio if you wanted to. It’s not hard to divide by two. You don’t want to know. You like the fantasy of believing that your portfolio is really worth double its fair value. It makes you feel smart to believe that you have done such a good job “saving” so much. So people who can rationalize exploiting your human weakness tell you the lies that you demand of people who make a claim to “expertise” (In what? Marketing?) in this field. And the beat goes on.
If you want to know the truth about stock investing, it’s there for you. It’s not hard to figure out. But you are not going to learn the truth about how stock investing works by listening to marketing experts. When you buy a car, do you believe everything that the dealer tells you about the car you are looking at? That’s what you are doing when you listen to someone like Bogle. He is in the business. He makes money when you buy stocks. He feels that it is his job to lie to you. That’s how he turns a buck. That’s how he makes a living.
A salesman is the LAST person you should turn to for advice re whether you should buy something or not. A salesman is too compromised. If you want to get anywhere, you need to listen to someone who possesses at least a tiny bit of independence.
All of these words will pass through one ear and out the other today. I get that. Perhaps you will revisit this page following the next price crash, when most of your life savings goes up in smoke. Perhaps you will be able to appreciate then who your true friends are and who your true enemies are. Whenever you find yourself opening to the message, these words will still be here. The good stuff that is housed at this site was written for your benefit as well as for the benefit of the other millions of middle-class investors who need access to some honest words re this subject.
I wish you all the best, man. Hang in there.
Rob
You expect to be friends with Jack? He is 87 years old. You better hope that crash comes very soon.
I love the man. I hope he lives forever.
In the event that he dies before I do, I will continue to praise him to the skies until I pass away as well.
When I die, I hope that someone from the next generation picks up the ball and continues to do what is right re my friend Jack.
If only it weren’t for his association with that Mel Linduaer fellow! Grrr…
Rob
Funny you should mention Jack and Mel. The two buddies were in Philadelphia this week at the annual Bogleheads conference.
https://www.thestreet.com/story/13772578/1/meet-the-ordinary-people-vanguard-s-jack-bogle-made-rich.html
Okay, Anonymous.
I love Jack Bogle for the good that he is done, which is huge. There would obviously be no Valuation-Informed Indexing without Jack’s many, many positive contributions.
I don’t feel as strongly about Mel and I do not follow his work. But I have heard positive things from enough people whom I respect that I am highly confident that Mel too has put forward valuable insights.
That’s the other side of the story.
I wish my two good friends the best of luck in all their future life endeavors.
Rob
You wish them good luck, but you also want them in prison?
I want their prison sentences to be as short as they possibly can be. So naturally I want them to come clean as soon as possible. Which obviously would put them in prison.
It’s not even a tiny bit hard to understand, Anonymous. I have a funny feeling that you get it to a far greater extent than you let on.
Once you see someone you care about commit a serious crime, you should take efforts to change the problematic behavior. It’s cowardice not to say anything. That’s the worst thing you could do for the person. It helps not at all and it hurts a great deal indeed. Had Bogle had a few friends who had the courage to call him out on his b.s. a good number of years ago, he wouldn’t be in the tight spot that he is in today.
I care about my friend Jack a whole big bunch more than you do and a whole big bunch more than Mel Lindauer does. And I am 100 percent that Jack himself will acknowledge that when we all make it together to the other side of The Big Black Mountain.
We are all in this together. Only some of us have prison sentences in our future. But we all are suffering from the effects of the 14-year cover-up (it’s 35 years if you count back to 1981). The laws against financial fraud make perfect sense. We should have been enforcing them all along. We all messed up in some way or another re this one.
Rob
I guess my paid off home and cars are all lies. My kids paid for college education is all a lie.
If you counted your stock portfolio as being worth its nominal value when making decisions as to how much to spend on the house and car and college education, you made poor decisions. It’s not possible to engage in effective financial planning when you start by following a long-discredited investing strategy that insures that you get all the numbers wrong.
The stock part of your story is a lie. And as a result the overall story is not good.
My take.
Rob
I guess you will be the only one in the United States with any money left and the rest of us will be flat broke.
That’s not right, Anonymous.
In an economic crisis, everyone suffers.
We’re all in the same boat.
If Bogle would listen to those who understand where he made a mistake, he would flip to Valuation-Informed Indexing tomorrow. The problem is, he will not listen. He cannot bear to let in the knowledge of how many people he has hurt.
How do you get somebody to listen when he is destroying himself by not listening? It’s not an easy job.
The answer is not to keep your mouth shut and let the man continue to destroy himself and others. That’s cowardice.
The answer is to keep trying. I praise Bogle to the skies for the good things he has done while also pointing out how he has messed up. I believe that that’s the most balanced approach to take to this problem.
You are wrong to see this as a game where there are winners and losers. We all win if we advance our understanding of how stock investing works. And we all lose if our economic system collapses. We all have a stake in overcoming this economic crisis.
Rob
So, unless Jack Bogle agrees with you on VII, the entire world economy will collapse.
He doesn’t have to agree with me or anyone else. He needs to show a willingness to follow the laws of the United States, the country in which he lives and which I am certain on some level of consciousness he loves.
I often make a comparison between the “revolutionary” (Shiller’s word) advances we have achieved over the past 35 years in the investing realm and the revolutionary advances we achieved in the 1960s in the Civil Rights realm. The race relations problem has been with us since the founding of our country. Where do you think we would be today had the people who opposed a change in our understanding of what constitutes civil rights for blacks succeeded in shutting down efforts that were engaged in to advance our understanding? I think we would be in a very bad place. Yes, it is possible that the Republic would have fallen by now had we taken that dark path. There are no guarantees that the republic will always stand if as a people we elect to follow a very dark path.
That’s how it is in the investing realm. Bogle was the main figure leading us to huge advances. Buy-and-Hold roots investing advice in a scientific process of scientific discovery. That is its primary appeal to millions of middle-class people. But we learned in 1981 that Buy-and-Hold can never work in the real world; for a research-based strategy to work, honest and accurate reports of what the research says must be permitted and the Buy-and-Holders have been engaging in criminally abusive behavior to block the spreading of knowledge re what the new peer-reviewed research says since 1981. We are now in an economic crisis that has cost millions of people their jobs and is in the process of causing millions of failed retirements as a result. Yes, the anger that people will feel when they see with their own eyes how much human misery has been caused by Bogle and the other Wall Street Con Men and by you Goons that the world economy might collapse and we may see huge political instability as well.
If you have any doubts re this, please just read up on what happened in the First Great Depression, one of the earlier economic crises caused by the widespread belief that it is not necessary to exercise price discipline when buying stocks. When millions of people become persuaded that it is a good idea to follow a pure Get Rich Quick approach, things always end badly. It is not even possible for the rational human mind to imagine a scenario in which large numbers of people would come to follow a pure Get Rich Quick approach and things would not end badly. Buy-and-Hold ALWAYS destroys the economic system in which it is tolerated for a time and it can never be any other way.
We have a huge edge this time that we did not possess in the late 1920s. This time we have 35 years of peer-reviewed research showing us how stock investing works in the real world. Once we spread the word re the implications of the last 35 years of peer-reviewed research, we can all realistically expect to see the biggest surge of economic growth ever experienced in our history. It’s no little deal to bring an end to bull markets and bear markets and economic crises and the boom/bust cycle that has made capitalism a dirty word in the minds of so many smart and good people.
I don’t think we are going to see a collapse in the world economy because I think we are as a people going to work up the courage to stand up to you Goons and to send you away to long prison sentences. We were smart enough to deal with this sort of problem before this particular manifestation of it appeared before our eyes. But we do need to work up the courage to take effective action. The 35 years of peer-reviewed research does us no good unless we all feel free to talk openly about it at every investing board and blog on the internet. Right now the huge advances we have achieved over the past 35 years are only intellectual. We need to give them practical significance. We do that by announcing long prison sentences for those who have posted in “defense” of Mel Linduaer, John Greaney and Jack Bogle. That’s the act that gets us over the one-yard line and brings on our second independence day.
Yes, we are at risk of a collapse in the world economic system if we don’t get off the dark path we are on today. We are already seeing the effects of poor choices we have made in recent years. Take a freakin’ look around you, Anonymous. Go to YouTube and play last week’s debate and tell me after hearing that exchange of words between between the two remaining candidates for President of this nation that you think everything is just hunky dory.
There are consequences that follow from committing huge acts of financial fraud. That’s why as a people we adopted laws making it a FELONY to do this foolish and destructive thing.
Rob
Is it your opinion that banning you from the boards is a felony and that it is the leading cause of the financial crisis?
I am not the only one who has been banned, Anonymous.
And there are a great number who have not been banned but who have been intimidated into silence or into self-censorship.
Wade Pfau spent many years in school earning his Ph.D. in Economics. He has every right in the world to post his honest views at every investing discussion board and blog on the internet. When you Goons threatened to destroy his career if he continued to do honest work, you committed an act of financial fraud that has done harm to millions of middle-class investors.
It was Wade’s intention and it was my intention to get the peer-reviewed research that we prepared together featured on the front page of the New York Times. We are still going to do that. We will do it shortly after your prison sentence is announced. That day will be known for generations to come as the Second American Independence Day.
There are millions of middle-class Americans who want to know the truth about what the last 35 years of peer-reviewed research says about how stock investing works in the real world. Those people are going to get what they need. I am going to see to it.
My best wishes to you.
Rob
If you weren’t banned, would we all be saved?
Not because I am so special.
But, if I were free to post honestly, everyone would be free to post honestly. The first thing I am going to do when I am re-admitted to every board at which I am banned, is to ask that everyone else that was banned be readmitted and to encourage all those who have engaged in self-censorhip to start telling us all exactly what they truly believe. Once that happens, the many smart people who make a living in this field are going to see that there are hundreds of millions of dollars to be made offering honest and accurate investing advice. And the thing will just grow and grow and grow.
What makes me special is that I was the first person to say that I will post honestly or I will post not and that there is zero room for negotiation re that point. Once one person is able to post with full honesty, there is nothing to stop hundreds of others from doing the same thing. I am in the process of opening up amazing opportunities for thousands of good and smart people. Those people will be helping ALL of us, Buy-and-Holders and Valuation-Informed Indexers alike.
The upside here is off the charts. You are right in a sense that, when my ban is lifted, it will set in force a long series of amazing advances that will help us all live far better lives for many, many years to come. But you are wrong re any suggestion that it will be my posts alone that will be saving us all. There will be thousands of people making positive contributions once one of us has won the freedom to post honestly. There is huge leverage to achieved with a lifting of the Ban on Honest Posting.
I hope that helps a bit.
Rob