Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
So, is Michael lying in this article?
The words that appear in the article are accurate.
But he is obviously not being 100 percent honest.
He knows that the Old School safe withdrawal rate studies do not contain adjustments for the valuation level that applies on the day the retirement begins and he is not saying anything about it. That issue is 5,000 times more important than the issue he does address. So it is exceedingly odd that he does not address it. And this is of course not an isolated case. Michael does not EVER address the financial fraud matter in clear and firm and simple and bold language.
That’s why the financial fraud problem has remained a problem for 14 years running now. It’s not just Michael who tiptoes around the most important issue in the personal finance realm. Everyone in the field tiptoes around it. Freakin’ Robert Shiller tiptoes around it! No one wants to use the words “financial fraud” or the words “prison sentence” or the words “got the numbers wrong” or the words “caused the economic crisis.”
I use those words.
I will continue to use those words.
Because it is only by using those words that we can bring this madness to an end.
And don’t give me any of the b.s. about me being “mean” to my Buy-and-Hold friends by using those words, Anonymous. You wouldn’t be on your way to spending the remainder of your life in a prison cell if someone who came along before you came on the scene had posted about the mistake that the Buy-and-Holders made that was discovered 35 years ago at any time between 1981 and the day you came on the scene. You are going to prison because thousands of people exhibited the same cowardice that Micheal Kitces showed in that article, thereby leading you to believe that you could “get away” with all of the garbage that you have pumped out over the past 14 years.
I’m not doing it.
It doesn’t matter how many death threats you direct at me. It doesn’t matter how many demands for unjustified board bannings you direct at me. It doesn’t matter how many acts of defamation you direct at me. It doesn’t matter how many threats of career destruction you direct at me.
I enjoy all of that smelly garbage just as much as Michael Kitces and everyone else in this field enjoys that smelly garbage. Not at all. But I cannot bear to think of what we have as a society done to the financial futures of millions of middle-class Americans by continuing to tell these lies about how stock investing works. Many of the people who posted at the Retire Early board were my friends. They matter to me. I don’t go there. No in 14 years. Not in 14 million years. It doesn’t happen.
I believe that I will one day become one of the richest men in the United States as a result of my working up the courage to be the one to take on this massive act of financial fraud. But maybe not, you know? No one can say anything for certain. Maybe we will all go down in flames following the next price crash. Maybe this act of financial fraud has grown so big that it has gone beyond the point at which we can as a society ever make it right. Maybe we will all go down in flames and I will end up with a big fat nothing for my efforts, no better off than you and no worse off than you.
If that happens, then so be it, you know?
I did what I could. I couldn’t live with myself if I didn’t do what I could. This way I can live with myself until the day that it all goes down in flames.
I don’t personally believe that it is going to go down in flames. I think we are going to work up the courage we need to turn things around and to bring this Buy-and-Hold Crisis to a full and complete stop. I believe that we are on the one-yard line. I believe that Michael Kitces is so close to flipping and going with a fully honest approach that he can taste it.
But either way I feel better about playing it the way that I have played it than I would feel if I had played it the way Michael has played it. I don’t say that I am better than him. I was afraid to speak up for three years. And I certainly think it would be fair to say that I am the world’s leading authority on just how brutally abusive the Buy-and-Holders become when challenged by honest reports of what the last 35 years of peer-reviewed research in this field says. So I am fully sympathetic to Michael’s situation. I am grateful that he has offered as much help as he has (he has offered a great deal of help).
But I cannot play it the way that Michael has played it. Not after what I have seen. Too many people have lost their jobs in the economic crisis brought on by the sick promotion of Buy-and-Hold “strategies” for 35 years after they were 100 percent discredited by the peer-reviewed research. Too many people are facing failed retirements as a result of the failure of people in this field to speak up about the mountain of Buy-and-Hold Lies. Too many early retirement dreams have been destroyed. Too many of you Goons are going to prison for long stretches of time. Too many discussion boards and blogs have been burned to the ground. Too many people have seen their faith in their fellow humans undermined by exposure to the poison that you Goons pump out so relentlessly. We have seen too much political unrest surface as a result of the destruction of middle-class lives that inevitably follows any time-period in which the Wall Street Con Men are able to persuade large numbers of people that there might be some merit in their Buy-and-Hold marketing pitch.
It’s not for me, Anonymous.
You go do whatever in your mind seems right for you.
These horrors are not for me. I OPPOSE the 14-year cover up of the errors in the Old School safe-withdrawal-rate studies.
Please mark it down. Please tell all your friends. Please get the word out all over the internet. Please bring lawsuits against me if you think that would help publicize the matter.
But just please for your own sake stop believing that there is ever going to come a day when I am going to join Michael in tiptoeing around this matter. I love Michael. I admire him. I respect him. I value our friendship. I am grateful for his many fine contributions. But I also love my country. My country is under attack and needs my help urgently. I am not able to tiptoe around the matter causing so much human misery.
It’s not freakin’ in me.
I hope that helps a bit.
I wish you all good things.
Rob
How many people do you think believe your comments on prison and actually believe that it will actually happen?
Your question is a good one, Anonymous. I like the way you worded this one in a non-inflammatory way.
There are two ways to answer it that yield very different responses.
The straightforward way is to say that I have never received a single endorsement of my position. If you go by that, you would conclude that I am the only one who believes that those who have posted in “defense” of Mel Lindauer, John Greaney and Jack Bogle are at serious risk of being found guilty of financial fraud following the next price crash.
The more psychologically astute (in my view!) way is to say that no one engages in discussion of the realities that are behind my claim. It is a simple objective fact that Greaney did not include an adjustment for valuations in the retirement study posted at his web site. And it is a simple objective fact that Nobel-prize-winning economist Robert Shiller showed in peer-reviewed research published in 1981 that a valuations adjustment is required in all investing calculations. So the fact that a massive act of financial fraud has been committed is no secret. It has been conducted out in the open and is well-documented. Bernie Madoff was sent to prison for a much smaller act of financial fraud. So it is more than a little hard for the rational human mind (for mine, in any event!) to imagine why there would not be many people sent to prison over this.
When no one engages, there is something holding them back. There are many people who I have spoken to and whose statements I have documented here who are aware of the problem. There are academic researchers who have told me that the historical data supports my positions on investing. There are university professors who have told me that they have incorporated things that they learned from reading my work into their classes on stock investing. There are thousands of ordinary investors who have told me that they love my stuff and who have begged you Goons to permit honest posting so that they could learn more. There are bloggers who have told me that they think that my site is the best investing site on the internet and that the only reason why they have banned me from their blogs is that their readers get so upset to learn how they have been misled by the Buy-and-Holders that they threaten to stop visiting those sites unless I am banned from them. This is strange stuff. The same basic story has played out thousands of times at hundreds of different sites over 14 years. There is obviously something odd going on here.
The name used in the psychological literature for that something odd is “cognitive dissonance.” You can learn all about it by running a Google search. It is a 100 percent real phenomenon. Probably the best way to describe its power in a concise way is to refer to the Asche research from the 1950s in which study participants were not able to properly identify the longer of two lines when they first saw other study participants who were plants get the question wrong. Humans are social creatures. When everybody around is telling us that “these bull market prices are real,” we believe it regardless of what the peer-reviewed research says.
Cognitive dissonance is hard to overcome. There was another study where researchers joined a cult to see what would happen when a cult leader who took all of these peoples’ money via a claim that the earth was going to be invaded by space aliens was discovered to be a fraud. The researchers were shocked when the con man told the cult members that he had persuaded the space aliens to let the world continue a bit longer because of their belief in them and the marks fell for it! We don’t like to be played for fools. So our inclination is to remain fools for a longer time period rather than to acknowledge that we have been played.
But the investors in the Madoff fund turned on him when his fund collapsed. I think that is what is going to happen when the retirement accounts of the millions who have been taken in by the smelly Buy-and-Hold garbage collapse. You are of course free to believe otherwise. You won’t upset me if you tell me that you believe otherwise. But I feel compelled to post honestly re these matters. I think people are going to be pissed off that so many Buy-and-Holders told so many lies to cover up a mistake that was revealed by the peer-reviewed research 35 years ago. I think that a good percentage of the millions whose lives have been destroyed are going to demand prison sentences in cases in which insanely abusive acts like death threats and threats to get academic researchers fired from their jobs are in evidence.
If you think about it a bit, you will see that it couldn’t be any other way. This is a huge crime, the biggest crime of a financial nature in our nation’s history. And it is extremely well-documented. You wouldn’t need more than a small number of people talking about it on the internet to get it written up on the front page of the New York Times. Once it is written up, you will be in prison and not in any position to ask questions of me at this blog. So the very fact that you are able to ask the question shows that the cognitive dissonance has not been broken as of today.
But what happens when it IS broken?
That’s what matters, Anonymous. You pretend that you cannot imagine that day ever coming. I am confident that to some extent you have persuaded yourself that that day is not ever coming. If you fully let in to your consciousness your fear that that day is indeed coming, you wouldn’t be able to sleep at night. So it seems evident to me that you have at least partially persuaded yourself.
I wish you luck with it, you know? I certainly am not going to do anything to cause your prison sentence to extend longer than what it absolutely must be given the circumstances that prevail today. It is my intent to do just the opposite. I don’t see how I could possibly bend any further in a pro-Goon position than to work my butt off trying to get your prison sentence reduced a bit. And I of course have already been doing that for years. So I truly do not know what it is that you want from me.
I believe that you are going to prison, Anonymous. I like you. But I don’t want to go to prison myself and I don’t want your prison sentence to extend any longer than it has to and I don’t want anyone who is thinking of becoming a Goon today to think that there will not be serious consequences that will follow from that. So I say what I believe. I don’t see that I have any other realistic option.
What do you think will happen? Do you think that everyone who lost most of their life savings is just going to say “oopsie, what a shame!” I do not think that it is going to play out that way. But I suppose that anything is theoretically possible. That one just doesn’t persuade me for some crazy reason.
Please remember that this is the first Buy-and-Hold Crisis for which there was peer-reviewed research going back to the first day of the bull/bear cycle showing that Buy-and-Hold cannot work. The Great Depression was a horrifying event and I am certain that many, many people would have gone to prison had there been a 35-year cover-up of research that could have been used to avoid that life destroying event. But Shiller didn’t publish his “revolutionary” (his word) research until 1981. So of course that didn’t happen. But Shiller’s research is publicly available today. It has been publicly available for a long time. Lots of people have heard of Shiller. He won a Nobel prize in Economics.
I suspect that lots of people have thoughts similar to my own who are not willing to go public with them. We have seen a mountain of evidence that people are afraid to speak out on these issues going back to the first day of our discussions. People are afraid because the tactics employed by the Buy-and-Hold Goon Squads are so insanely abusive. I had never seen anything like these tactics prior to the morning of May 13, 2002. I know that, had the pre-May 13, 2002, version of myself been called to serve on a jury and saw evidence of what I have seen in the past 14 years, I would certainly convict those who played the Goon role in the story to long prison sentences. I believe that most people are like the pre-May 13, 2002, version of myself. Most people love their country. Most people hate the tactics that you Goons employ. Why would we even have laws against the use of them if we did not as a nation feel strongly about these sorts of matters?
I wish that everyone were speaking out publicly about the prison sentences, Anonymous. I obviously wish that. But if you think about it a bit, you will see that that’s a logical impossibility in a world in which the crash has not yet hit. Had people spoken out one year ago, you Goons would be in prison today and there would be honest posting at every site and prices would today be at fair-market-value levels. We are not at anything close to fair-market-value price levels. Knowing that, you know the answer to your question. People OBVIOUSLY have not been speaking up. The P/E10 value tells us that.
I think that people will speak up when the P/E10 level goes down. I don’t want to go to prison when that happens. So I am speaking up today. I don’t want your prison sentence to be one day longer than it must be. That’s another reason why I am speaking up today. I love my country. I want the losses to be as small as possible given the circumstances that apply today. That’s another reason why I am speaking up today.
Did you think that the market price was going to remain insanely inflated FOREVER? Really?
It doesn’t work that way. Obviously. Buy-and-Hold always ends in tears. There is no other possibility that the rational mind can process. There weren’t prison sentences in earlier times because we didn’t have peer-reviewed research proving how this all works in those days. But now we do. Now we are going to see prison sentences for those who destroyed the millions of lives as well as the destruction of the millions of lives. No? It sure seems so to me. It seems to me that one follows naturally from the other. Isn’t it often the destruction of human lives that leads to prisons sentences in many other realms?
The bottom line is that we are all just going to have to wait to see how it all plays out. Having a policeman come to your house and take you away in handcuffs is the only thing that is going to get through to you at this point. I am very close to 100 percent sure re that one. Fair enough?
I hope that helps a bit.
I naturally wish you all the best things that this life has to offer a person in any event.
Hang in there, my old friend.
Rob
“The straightforward way is to say that I have never received a single endorsement of my position.”
That is the only true sentence that I have seen on your website to date. Too bad the rest of what you wrote is typical hocomania ranting.
Okay, Anonymous.
Hang in there, man.
Rob