Set forth below is the text of a comment that I recently put to the discussion thread for another blog entry at this site:
Why does getting a news article published depend on someone going to jail ?
Because people won’t publish the article until they feel safe doing so, Laugh.
I am not the first person who noticed that what Shiller says about stock investing does not square with what Bogle says about stock investing. It does not take an I.Q. of 140 to figure out that the two are saying opposite things. As you Goons never tire of pointing out, there should be thousands of people promoting Valuation-Informed Indexing if Shiller’s 1981 findings really are as important as I say they are. It appears as if there is some sort of conspiracy stopping people from speaking out about all of the many exciting implications of Shiller’s 1981 findings.
The “conspiracy” is that every human being who ever lived wants to be liked by his fellow humans. Shiller wants that. Bogle wants that. I want that. Pfau wants that. Everyone wants that. We are social creatures. We don’t act only to uncover the truth or only to make money or whatever. We like to uncover truth and we like to make money but most of all we like to be liked. It is our desire to be liked that has been holding us back from learning how stock investing works for 35 years now.
The editors of the New York Times want to be liked. They are of course capable of understanding that Shiller says something about how stock investing works that is very different from what Bogle says about how stock investing works. So in ordinary circumstances they would be jumping on this story. Telling this story tells people why we are in an economic crisis today. Telling this story tells people why we are seeing so much political unrest today. This is the biggest finance-related story of my lifetime. The New York Times should be all over it. So should every web site on the internet. But my web site is the only one covering it on a daily basis in any great detail.
That’s because the owners of these other web sites want to be liked. If you tell this story, people hate you with a burning hate. That’s why you Goons get away with what you do. People don’t like your intimidation tactics. That’s why as a society we have adopted laws against the use of them. But people like my truth-telling even less. People rationalize tolerance of your intimidation tactics on grounds that at least you are using them to make that damn Rob Bennett fellow shut up about what the last 35 years of peer-reviewed research says. In this one case they can see why such intimidation tactics might be called for and so they let it slide.
The big question is — What happens following the next price crash? At that point, the Buy-and-Hold fantasy no longer holds any appeal. What good does a Get Rich Quick scheme do you when you are poor? People loved Bernie Madoff right up to the day when his act of financial fraud was exposed and then they hated him with a burning hate. People love Jack Bogle today because of the big numbers they see on their portfolio statements, which they attribute to his advice. They are not going to love him when those numbers disappear and are replaced with much smaller numbers. Then they are going to hate him in the way that the Madoff investors today hate Madoff.
That’s when you see prison sentences announced. That’s when the spell is broken. That’s when no one sees any point in holding back on telling what the last 35 years of peer-reviewed research says. That’s when the benefit is in telling the truth about stock investing and not in repeating the Buy-and-Hold lies. At that point, an article on the front page of the New York Times detailing the entire 35-year cover-up will be Pulitzer Prize material. This story will be bigger than Watergate when it is told. Unfortunately, it appears that it cannot be told until the spell is broken, until we see not just with research that Buy-and-Hold is a con but with a mountain of flesh-and-blood human misery. Seeing what Buy-and-Hold does to real live human beings changes everything.
Cover-ups usually end badly, Laugh. The ordinary thing would be that Bogle would have given a speech back in 1981 noting that he still believed in Buy-and-Hold (presuming that he did still believe, which is what I believe was the case) but noting that this Shiller fellow had raised important questions that would have to be examined in a national debate. Then we would have seen new research published every year and thousands of articles and podcasts and all this sort of thing and over time confidence in Buy-and-Hold would have diminished and confidence in Valuation-Informed Indexing would have strengthened. That’s the way it is supposed to work.
What threw things off track is that this issue of how stock investing works is so important. It is similar to this thing where you hear people say that certain banks are too big to fail. Shiller’s 1981 finding is the research finding too revolutionary to examine in any depth. The opportunity to make millions exploring the implications of Shiller’s research findings has been there for any reasonably smart person to take advantage of for three decades now. But the longer the cover-up has continued, the more protective of their turf the Buy-and-Holders have become. Today, it is career death to talk about these matters in a clear and simple and honest and understandable way. People want to help their fellow humans. But they don’t want to see their careers destroyed as their reward for doing so. So most of us (not this boy!) have learned to keep our mouths shut.
When the cover-up is exposed, we won’t see the beginning of the process that we would have seen had Bogle come clean back in 1981. The whole Buy-and-Hold empire will collapse in a short amount of time. Everyone will be coming clean at once, everyone will be adopting new positions at once. We will see a “crash” in confidence in Get Rich Quick investing strategies rather than a gradual discovery of their weaknesses. The article on the front page of the New York Times and the announcement of the prison sentences and our recovery from the economic crisis and the opening of every web site to honest posting on safe withdrawal rates will all happen at more or less the same time, when the humans realize that we have no choice as a society but to tell the truth about these matters and so we just go ahead and do all the right things we have long known we need to do at the same time.
No one advocates investment in the Madoff fund today. Because it has all come out. The entire thing was a scam. Before he was exposed, there were people who said that it was pointless to talk about the Madoff scam because his fund was just too popular to fail. Those people were wrong. It was talking about the scam that caused the fund to become unpopular. So it will be with Buy-and-Hold. Once people see others talking about the Buy-and-Hold scam, they will realize that it is safe to do so and they will join in. Then there will be an avalanche.
I am not God. I am not all-knowing. I am telling you what I believe will happen, nothing more and nothing less.
I naturally wish you all the best things that this life has to offer a person, my long-time Goon friend.