Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:
Please take care????
No, I am fine.
Instead………..
Please stop lying. Please stop defaming Wade Pfau, Jack Bogle, Robert Shiller, Rick Ferri, Mel Lindauer, John Greany and all the others you continue to bash. Please go get a job and provide for your family.
If you can’t a way to do the above, please get help from a mental health professional because you have a serious problem.
Fama and Shiller were awarded Nobel prizes on the same day. Numerous articles reporting on this noted how odd it was that two people saying opposite things about how stock investing works were both awarded the highest honor. One of the two has to be wrong and the error made by the one who is wrong has done serious harm to all investors who came to believe that the one who is wrong was in fact right.
We need to figure out who is wrong and who is right. To do that, we need to have a national debate. I have great respect for all the people you named above. But each of those people has engaged in behavior that has caused a delay in the launching of that national debate. It’s a terrible thing.
All of those people want to do the right thing and yet all of them are afraid to do so because they fear that what you Goons have done to me you will do to them if they come clean. The only way to get to the other side of the mountain is to go through the mountain. If all of those people stuck together, you Goons couldn’t do a thing to any of us. So long as we let you intimidate us, you have the power. We need to stick together. We all need to assert our right to post honestly re that last 35 years of peer-reviewed research in this field and not yield to any of the intimidation tactics that you Goons dish out.
That’s my sincere take re these terribly important matters in any event. For so long as loving my country constitutes a serious problem for me, I do indeed have a serious problem. It’s not a serious problem that I want to solve. I believe that it will all flip following the next price crash, that at that time it will be you Goons who will have a serious problem. But we will see what happens as it all plays out before us, you know.
I hope that works for you, my old friend.
Rob
Uh oh, Rob. Mike Piper said that market timing, like VII, doesn’t work. Does that mean he is a goon and part of the conspiracy? Is he guilty of fraud? You better set him straight.
http://www.obliviousinvestor.com/the-problem-with-market-timing-research/
I like that article a lot, Anonymous. Thanks much for pointing it out.
I have the topic that Mike explores in that article on my list of “Possible Ideas for Future Columns.” Now that I have seen the article, I may try to use Mike’s article as the jumping-off point for the column.
As you know, I like Buy-and-Holders a lot. They are almost universally smart. And the vast majority are good people aiming to help people by spreading the word about their Buy-and-Hold strategy. And I think it would be fair for me to describe myself as the most severe critic of Buy-and-Hold alive on the planet today. So I frequently find myself trying to figure out why Buy-and-Holders are so reluctant to consider Valuation-Informed Indexing strategies. There’s a puzzle there.
I think that Mike does a decent job of answering that question in this article. He makes a rational case for sticking with Buy-and-Hold despite the research pointing toward Valuation-Informed Indexing. There are obviously lots of people who have chosen to stick with BH. I think Mike does as good a job as I have seen explaining why that is the case.
I am not persuaded by his two arguments.
I reject Argument One because the Buy-and-Holders have never explained why BH should be the default choice. He is saying that we don’t have enough years available for testing to be certain that VII works. That’s fair. But the same shortage of years for examination affects the case for BH too. Given that we don’t have enough years to completely prove the case for either strategy, the logical thing is to go with the one that meets the common-sense test. Price matters in every market that exists other than the stock market. So why assume that things work out in just the opposite way in only this one market? In the absence of the 145 years of historical data available to us for review (a lot but not nearly as much as we would like to have available), VII prevails over BH (in my view!).
Argument Two is that you can’t choose the alternative strategy (VII) and still realize the benefits of the dominant strategy (BH), it’s an either-or choice. I think this is the primary reason why so many are reluctant to switch to VII. People see the logic. But Mike is right that an investor has to choose one or the other without knowing for certain which is the right choice and then is stuck with the results he obtains with no hope of a do-over if he happens to guess wrong. Most people feel safer going with the more popular strategy. I do not. I have to feel comfortable with the logic supporting a strategy to go with it. The history of the development of these ideas tells me that VII has the stronger logical case behind it (BH became dominant only because index funds were not available in 1965 and thus there was no way to test whether long-term timing is required) and the behavior of the Buy-and-Holders over the past 14 years tells me that even those who follow the dominant strategy feel grave doubts over their choice, doubts that they cannot acknowledge to themselves because they are too scary for them to entertain.
I like it that Mike made the case he made. I used to “set him straight”, as you put it, on a regular basis. I used to post comments at his blog two or three times a week. Mike loved those comments. He told me so. He eventually threatened to ban me because my comments were so powerful they were frightening his readers (who wanted to hear only rah-rah comments re Buy-and-Hold). That’s one of the things that worries me so much about this strategy. If it is wrong, the relentless promotion of it is going to cause millions of lives to be destroyed. To hold off on a debate re such a matter is scandalously irresponsible. We should be having that debate. If the Buy-and-Holders cannot bear it, they should be looking for another strategy. The very fact that such discussions cause Buy-and-Holders to experience such pain tells me that the primary appeal of BH is emotional, not intellectual.
Mike is helping with this article by articulating some points that I believe really do drive the behavior of those who follow BH strategies. It really is true that investors need to choose one strategy or the other and that we don’t have as much data as would be ideal. These are legitimate points that all investors need to consider. So I am grateful that Mike wrote the article and that you brought it to my attention.
Hang in there, old friend.
Rob
Mike must be a goon if he threatened to ban you.
He did some good things and he did some bad things.
I have a category devoted to him here at the blog. So I have provided lots of articles for people who want to know how to characterize him to use to do so.
That’s my job, Anonymous. I am a reporter. I report. If some want to call him a Goon, they can look at the articles for arguments for the case. If some others want to deny that he is a Goon, they too can look at the articles for arguments to make the case. So long as I do my job well, I am happy. That’s the only part of this that I control.
I like the guy. I acknowledge that there were things he did that fall on the Goonish side. But personally I feel more sympathetic than critical.
But I am not going to offer any guarantees as to how others are going to feel. I knew that Buy-and-Hold was a scam a long time ago. A lot of people don’t know this even today. If I lost most of my retirement money because of a scam and then I learned that a fellow named “Mike Piper” played a significant role in keeping that scam covered up, I might both call him a Goon and demand a prison sentence for him. If that’s how it plays out, that’s how it plays out. I am certainly not going to tell the guy who feels that way that “Mike is really a nice guy!”
He’s a nice enough guy — but holy moly! A failed retirement is a serious life setback. Financial fraud is a felony. Going to prison is not on my bucket list. I don’t touch that one with a 10 billion foot poll. You can find comments in which I tell the tale of how Mike is a nice guy (which he is) and you can find comments in which I tell the tale of how Mike aided the massive cover-up (which he did). I am covered either way. That’s how I like it. That’s the long-term advantage of playing it straight going back to the first day.
I hope that helps a bit, Goon friend.
Rob
If I asked Mike Piper why he considered banning you, do you think he would tell me the truth?
I do not.
Most likely he would mix partial truths with partial falsehoods.
I’ve seen a lot of that sort of thing over the past 14 years, both from Mike and from others.
To get full truths from the flawed humans, you need to impose negative consequences on those who advance either full falsehoods or partial falsehoods. That’s the norm in the vast majority of life endeavors. We all frequently experience temptations to advance either full or partial falsehoods but the vast majority of us generally resist those temptations because we know about the negative consequences that follow from giving in to them.
It doesn’t work that way in the investing advice field during out-of-control bull markets. Bull Markets are Liars Market. The two terms are synonymous. If stock prices are going up by the amount justified by economic growth (6.5 percent real per year), we don’t call that market a bull market. It’s only when we are collectively telling ourselves big lies about the size of our portfolios that we push stock prices up enough to support the use of the term “bull market.” The P/E10 metric shows the extent of overvaluations present in the market at any given time. Another way of saying it is that the P/E10 metric shows the extent of dishonesty present among market participants at any given point in time.
It is the humans who make markets. It is the humans who tell the lies that support bull markets. Who else could it be? When we are in a bull market, the investing experts are telling lies. So are the investing journalists. So are the investing bloggers. So are the economists. So are the policymakers. So are the researchers. So are the authors. So are the professors.
All humans are tempted to lie from time to time. During bull markets, the payoff for telling lies is huge and the penalty for being caught in lies is small or non-existent. The bigger the bull market, the bigger the lies. We are today living through the tail end of the biggest bull market in U.S. history.
The more lies that are told about how stock investing works, the more human misery there is that is experienced by the humans affected (which includes even non-investors living in the nation of people permitting the bull market to continue.
We are all subject to the pressure to lie during a bull market. And we all suffer the results of those lies. Those two realities cause me to feel sympathy for those who promote or tolerate the promotion of Buy-and-Hold strategies.
The human misery caused by the Buy-and-Hold Crisis has grown very large indeed. That reality strengthens my resolve to open up the possibility for those of us who care about our readers or clients to speak honestly about the implications of the last 35 years of peer-reviewed research in this field.
Buy-and-Hold is a lie. I don’t approve.
Mike Piper promotes Buy-and-Hold. It follows that Mike Piper is a liar. I don’t approve.
Mike Piper has caused huge amounts of human misery with his lies. I don’t approve.
Mike Piper lied to himself about Buy-and-Hold before he lied to anyone else about Buy-and-Hold. That’s a mitigating factor that needs to be taken into consideration by anyone assessing how bad a fellow Mike Piper really is.
Mike Piper is in very good company with his promotion of Buy-and-Hold. The smartest and best people in the field do the same. That’s another mitigating factor.
Mike Piper cares about his readers. He is in all other respects a good guy. That’s another mitigating factor.
Mike Piper would not be able to make a living in this field if he told the truth about what the last 35 years of peer-reviewed research says. That’s a well-estbablished, well-documented fact. That’s another mitigating factor.
There are lots of mitigating factors to consider when assessing how good or bad a fellow Mike Piper is.
That’s my sincere take re these terribly important matters in any event, my good friend.
I naturally wish you all good things.
Rob
“Mike Piper promotes Buy-and-Hold. It follows that Mike Piper is a liar.”
Wow! Glad to see you are still able to rock the Major League Mania, there, Hocus!
Okay, Mr. X.
Robert Shiller is the one who published peer-reviewed research in 1981 showing that valuations affect long-term returns. If Shiller’s research is legitimate (he was awarded a Nobel prize), then the market is not efficient and Buy-and-Hold (which is rooted in a belief in an efficient market) is indeed a lie.
Shiller doesn’t say it that way. Lots of people who believe that Shiller’s research is important don’t say it that way. I wish that they would. The clearer statement is always the better statement, in my view. If there is some reason to believe that Buy-and-Hold is not a lie, I want to have someone bring that evidence to my attention and it is far more likely that that will happen if I advance the clear statement. If Buy-and-Hold really is a lie, I want to get the word out to everyone who invests so that we can work together to build a model for understanding how stock investing works that is real and that helps people. I don’t see how anyone benefits from all of the beating around the bush that we see in this field.
I love the Buy-and-Holders. They made many amazing contributions to our understanding of how stock investing works. There would be no Valuation-Informed Indexing but for those many amazing contributions. But, if Shiller’s research is legitimate, Buy-and-Hold is indeed a lie. And we need to hear everyone who understands this saying it in clear and firm and unapologetic and uncompromising terms.
That’s my sincere take re this terribly important matter, in any event.
Please feel free to spread the word everywhere on the internet that Rob Bennett believes that Buy-and-Hold is a lie. To be fair, you should say that I believe that prior to 1981 it was a mistake. But 36 years after the mistake was uncovered by the publication of peer-reviewed research, I think it would be more than fair to say that the mistake has been transformed into a lie, a lie that I don’t want to be associated with in any way, shape or form. You would be doing me a favor by letting people know that this is my sincere position.
My best and warmest wishes to you.
Rob
Do you think that Valuation-Informed Indexing is a lie, Mr. X?
Rob