Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
You could help out Bogle and the goons by not filings charges and by not trying to after them for settlement payments. Then all would be well. What do you think about that? Consider it a Christmas gift.
I am going to post honestly about what the last 35 years of peer-reviewed research says. If I do anything else, I am committing financial fraud myself. So long as I do that, the word is going to get out about the 35-year cover-up. Probably not today or tomorrow. But following the next price crash. I am not the United States. When you commit a crime, you are committing the crime against the people of the United States. I don’t personally have much to do with it.
The criminal acts are detailed at my site, that’s pretty much the extent of my involvement re the criminal side of this. But even if my site did not exist, this would get out. Shiller’s book is still out there. The research that I co-authored with Wade Pfau is still out there. Shiller’s Nobel prize is still out there. The massive act of financial fraud is eventually going to be written up on the front page of the New York Times regardless of anything I do.
The full reality is that it is probably a plus that I have detailed the criminal acts at this site. I make an effort to put the criminal acts in the best possible light. I say that Bogle’s mistake was the product of cognitive dissonance. How many people do you think there will be saying that following the next price crash? I have said it on numerous occasions. And you can point to time-stamped posts in which I said it and you can say “this is a fellow who had no reason to be biased in favor of the Wall Street Con Men or the members of their various Goon Squads who was saying this.” So my posts have a high degree of credibility. And I think you can point to some of the things that you Goons said to show that there really was cognitive dissonance at play.
The cognitive dissonance play is the best play you have. And the materials at this site help you make that play. The materials at this site do not really hurt you. They reveal the truth. The truth has certain aspects that put you in a bad light. But the truth also has certain aspects that put you in a good light or at least in a not-so-bad light. You can use the materials at this site to develop a defense that I think might cause a good number of reasonable people to react in a moderate way. And I am 100 percent happy to encourage people to look at things in that sort of way, in a way that works to your favor.
Look at Wade Pfau. He is a very smart guy. He holds a Ph.D. in Economics. He was skeptical about a lot of things that I said in the early days. Even today I believe that he is skeptical about some things I say. You can point to someone like him and argue that, if that guy didn’t get it, how could we be expected to get it? You can point to John Walter Russell. John asked that we use phony numbers on the Risk Evaluator because he found the real numbers too shocking. John was as honest as the day is long. But he felt enough social pressure that he asked that we use phony numbers.
You can even look at my history. I was a proud Buy-and-Holder at one time. I once speculated that the SWR at the top of the bubble was probably somewhere around 3 percent. This stuff is not easy. It is easy in a way. It is intellectually easy. But it is very, very, very hard emotionally. That is your defense. You tell people that “we really did believe in it and we did not want to see people hurt and so we did some things that might seem wrong looking back but that seemed to make sense to a lot of us at the time we did them.” I am not saying that that gets you off 100 percent. But I believe that it is best you can do at this point in the proceedings. It is not a crazy position. And it is something that I can back you up on. If someone in my position feels okay backing you up, lots of people will feel okay backing you up.
We are looking at something very big here. It’s hardly possible for the human mind to let in how big this is. Again, look at Wade Pfau. He was AMAZED when this stuff started to click for him. This is like harnessing the power of the silicon chip. The goal is not to put people in prison. That’s petty. The goal is to get the word out, to improve everyone’s life in a very big way. Our problem is to figure out how we do that without having people go to prison for a long time. The answer is to focus on the good being done and thereby try to get the focus away from the 14-year delay, which is a big deal but perhaps is not as big a deal as it at first seems when you put things in perspective and consider how huge an advance it is we are looking at here.
Unlike the criminal actions, the civil suits are my thing. It is my aim to approach those in a generous spirit. I obviously expect to be paid for my work and this is very, very important work that caused me a lot of trouble for a long time. I am going to be paid very well. I don’t know how much Steve Jobs or Bill Gates ended up with but I am sure that we are talking about a numbers in the hundreds of millions. This is a lot bigger. So the $500 million figure that I have advanced is not at all out of line.
And I have offered to direct 10 percent of that to helping get the word out (by promoting my site and by funding blogs that would explore different aspects of the VII question). I can understand people not wanting to go to prison. I cannot understand the Wall Street Con Men being too worried about a payment of $500 million. These people have lots of money. Paying the $500 million will revitalize the entire industry. It helps everyone. And it puts them in a good light. I don’t see much of an issue there.
We cannot go back in time. If I could push a button and take us back in time, I would push the button. We have to deal with the world as it exists and make choices that work the best for every single person involved. That’s my aim. The good here is 50 times more good than the bad here is bad. So if we all approach this in the right spirit I am 100 percent confident that we will all end up in a very good place.
The entire thing is a Christmas gift. We need to start looking at it that way. Learning new things is wonderful. This is an advance. There is nothing even a tiny bit bad about it. We all just need to let that in.
Rob
Anonymous says
“I am going to post honestly about what the last 35 years of peer-reviewed research says.”
Is this the research that stated the stock market was going to drop 70% by the end of 2015, or was that your own erroneous conclusion?
Rob says
It wasn’t an erroneous conclusion. It was a reasonable expectation that did not play out.
If the tools that are used to predict the weather indicate that there is an 80 percent chance of rain and the weather man says in his report “you had better bring your umbrella to work today” and then it does not rain, was his statement an “erroneous conclusion”? I say no. I say that he provided valuable and accurate information even though things did not play out in the way that the best tools available to us indicated they were likely to play out.
It’s the same with stock investing. There has never in the history of the market been a secular bear market that ended without us going to a P/E10 value of 8 or lower. That’s a 65 percent drop from where we are today and was a 65 percent drop from where we were at the time I said those words. That was important information. We need as a society to be thinking through what we are going to do when we see millions more failed retirements and millions more people thrown out of work. I cannot say precisely when the crash will come. No one can. The research shows that and I said at the time I put forward those words that the research shows that. I put forward important information that needs to be considered by every citizen of this country and I did so in a responsible way, mentioning the caveat that it is not possible for anyone to predict precisely when the crash will come, only that one is almost certainly coming. It is Goon talk to refer to my statement as an “erroneous conclusion.”
Yes, it is the peer-reviewed research of the past 35 years that shows that stock prices are determined not by economic developments but by shifts in investor emotion. That’s why long-term returns are highly predictable. It is the market’s job to get prices right. So, when we humans push prices up to insanely dangerous levels, anyone familiar with the past 35 years of peer-reviewed research can say where prices are headed in the long term. Prices always move in the direction of fair value in the long run. And, the farther away from fair value they move for a time, the harder they pull back in the direction off fair value in the long run. That finding is what made Shiller’s Nobel-prize-winning research so “revolutionary” (his word).
I will continue to post honestly, Anonymous.
I naturally wish you all the best that this life has to offer a person.
Rob
Anonymous says
I really don’t know what good you think you are doing living in a dream world. In the end, it is your poor family that suffers.
Rob says
Everyone on the planet suffers for so long as the Campaign of Terror against our board and blog communities continues, Anonymous.
I am going to bring it to an end. Count it.
I am 100 percent confident that I will be extremely well-compensated for doing so. That will make my long-sufering wife happy!
It will all work out in the end. We live in a great country that was smart enough to put laws in place to cover these sorts of situations long before I even came on the scene.
Anyway, I do wish you all good things. While ALSO wanting the American people to win this one, you know?
Rob
Anonymous says
Clearly your responsibility to the world (as you see it) is equal or higher priority than your family responsibility. This is a point of view that we ordinary family guys just cannot grasp. If people in Syria are suffering, that’s a shame. But I can’t help them and it doesn’t directly affect me. If my wife is suffering (for an hour, let alone 15 years) that is my immediate top priority.
Could you try to explain your position in terms that we simpletons can understand?
Rob says
There’s no conflict between meeting my responsibilities to the world and meeting my responsibilities to my family. To be able to meet my responsibilities to my family, I need to do good work. To do good work, I need to be honest. When I am honest, I am meeting my responsibilities to the world.
The reason why people get paid for their work is that they are contributing something of value to the world. If I lie about the numbers that my friends are using to plan their retirements, I am subtracting rather than adding. I would not be earning any pay in that case and in all likelihood I would not earn much. It is by adding to the world’s knowledge that I earn what my family needs.
The stock investing world was turned upside when Shiller showed in 1981 that Buy-and-Hold cannot work and yet Bogle continued promoting the strategy, ignoring what Shiller had done. Today everyone working in this field faces a question — Do dishonest work and make a temporary killing with the possibility of going to prison at a later date or do honest work and see your career destroyed by Bogle’s various Goon squads. It would not help my family for me to go to prison. So I intend to avoid committing felonies. I have never even given the matter two seconds of my consideration.
I didn’t begin doing this work with the idea of saving the world. I expected that Greaney would be abusive when I put forward my May 13, 2002, post. But I also expected that the community would support me once they looked seriously at the historical return data and saw that I was right. No one could have anticipated what happened. Once it happened, I was stuck. I obviously cannot agree to commit felonies. And you Goons do not feel that you can permit me to post honestly because it would mean prison sentences for you for the word to get out re this massive act of financial fraud.
I have always offered to work out any deal with you Goons that does not involve me committing a felony under the laws of the United States. I continue to make that offer today. You Goons don’t feel that you can give an inch. And I think it would be fair to say that Jack Bogle and the other Wall Street Con Men feel that they cannot afford to give an inch either. Is that my doing? I am trying to help everyone out, to bring us all to a better place. But I obviously cannot do it by myself. I have always offered to do anything of a positive nature that I can possibly do. It’s not even a tiny bit reasonable to expect me to commit crimes that might well get me sent to prison in days to come.
I love my family and I want to do right by the people in my family. And I love my country and I want to do right by the people of this country. There should be no conflict in serving both goals. And there should be no conflict with Wade Pfau wanting to serve his country and his family or with Jack Bogle doing so or with Robert Shiller doing so or whoever. We ALL need to serve both our families AND our country. The fact that this has even become a controversy shows how messed up the investing realm has become in the Buy-and-Hold Era.
When I am free to serve both my family and my country, everyone else is too. When everyone else is free to serve his or her family and his or her country, I will be too. We need to apply the laws of the United States to the investing realm. That’s the only way to put the nasty stuff behind us and move on to better days.
I did not volunteer for this. It’s not like I said on the morning of May 13, 2002, “Oh, I know what I will do, I will start a revolution in our understanding of how stock investing works!” I pointed out that Greaney’s study does not contain a valuations adjustment and that perhaps the people in that community needed to consider what the SWR would be if valuations were considered. I received a very, very strong positive reaction from my fellow community members. Then you Goons stepped in and caused all the problems.
I am not seeking to be a hero. I believe that I will be perceived as a hero when we all make it together to the other side. Millions of people’s lives will be saved. That’s going to be viewed as hero stuff. But that’s not happening because I made a decision to sacrifice my family to make it happen. I put up a post relating to retirement planning at a retirement planning board and a bunch of Buy-and-Holders went freakin’nuts. I was faced with circumstances in which I had to either agree to commit financial fraud or develop the understanding of how stock investing works to the degree necessary for me to overcome you Goons. It turned out that doing that meant revolutionizing the field and me becoming a hero. I can live with that. But I certainly didn’t go into this with the intent of making that happen.
I believe that my wife will come through this just fine. But I wouldn’t agree to commit financial fraud even if someone could go into the future and tell me that me refusing to do so would cause her to not end up just fine. I cannot post dishonestly re the numbers that my friends use to plan their retirements. It is not in me. Asking me to do that is like asking me to flap my arms and fly over traffic jams. It’s an absurdity. It is something that can never happen.
If my wife gets hit by a meteor, I cannot do anything about it. I would’t like it. But there’s nothing I can do about it. If InvestoWorld has gotten so messed up that a man cannot post honestly on safe withdrawal rates without his wife being forced to pay some sort of penalty, that’s the equivalent of getting hit by a meteor. It is something that no one could expect or even understand. You are asking me to buy into something that cannot be understood. I don’t live my life that way. I try to stay rooted in the realities of life.
It is a reality of life that Shiller showed in 1981 that valuations affect long-term returns and that Greaney’s retirement study does not contain a valuations adjustment and that financial fraud is a felony publishable by a prison sentence. I of course acknowledge that some weird things have played out re this matter. But it is more than a little hard for me to believe that there is not going to be a day when the laws of this country are enforced and you Goons are placed in prison cells. On that day, I will be freed to help out the thousands of my fellow community members who have said that they want to be able to hear my message and the millions more like them out there in the real world who did not happen to participate at the discussion boards and blogs to which I have taken this matter over the first 15 years of our discussions. So I cannot imagine that this will not eventually be brought to a successful conclusion.
I love BOTH my family AND my country. I don’t see a need to choose one and sell the other out. I am working to serve both very effectively. And I have reason to believe that that plan will work out more than fine for all concerned. We know that there are millions of people who want access to a better way to invest, the first true research-backed approach. And we know that most of the people who work in this field are anxious to be able to do honest work again — those people are going to be thrilled when we make it to the other side and will be friends of mine for life. Even you Goons end up better off when I overcome you. The fewer lives you destroy, the shorter your prison sentences will be. Shorter prison sentences are better than longer prison sentences.
So I just don’t buy into your premise that there is some sort of conflict here between serving my family and serving my country. Doing good, honest work serves both. That’s my plan and that has been my plan going back to the first day.
I hope that helps a small bit.
Rob
Rob says
I’ll offer a somewhat briefer response coming at it from a somewhat different angle.
My mother grew up in the Great Depression, brought on by an earlier try at seeing whether doing the opposite of what the peer-reviewed research (which wasn’t available at the time) teaches us we should do. She had to leave school when she was in eighth grade so that she could work in a factory to put food on the family table. My mother loved school. That hurt her a great deal. She talked about that pain until the day she died.
Does that matter? Do the experiences of the millions of children who will have to be taken out of school in the Buy-and-Hold Crisis matter? What can of world will my wife be living in following the next price crash if it causes a Second Great Depression greater than the first one (the P/E10 level went much higher this time around). What sort of world will my boys and my grandchildren be living in if we do not find some way to provide access to accurate and honest reports on what the last 35 years of peer-reviewed research says to millions of people? What if our political system collapses as a result of this massive act of financial fraud? Does that change the calculus at all?
I don’t feel comfortable posting dishonestly about these matters. That’s the bottom line. I could write a book going through all the reasons why. The bottom line is that it feels wrong because it IS wrong. There is no justification for a ban on honest posting re a matter so important to so many. None whatsoever. Someone had to step up to the plate. I was elected. So I have given it my best shot.
I care about my wife. And I also care about my mother. And about my boys. And about my unborn grandkids. And about the millions of other wives and mothers and kids and grandkids. I care about all of it. The same force inside me that makes me care about my wife makes me care about all the others too. I wouldn’t want to have to walk past a burning building with kids inside it because I was too afraid that if I ran in to help I might get hurt and not be able to earn as much for my wife. There are things that you cannot do and the still be able to live with yourself afterwards. This is one of those things.
Rob
Anonymous says
And what if things don’t work out the way you want?
Rob says
Then things don’t work out the way I want.
Things didn’t work out the way I wanted when I was banned from Motley Fool. Things didn’t work out the way I wanted when I was banned from Early Retirement Forum. Things didn’t work out the way I wanted when the NoFeesBoar.com site was shut down. Things didn’t work out the way I wanted when I wasn’t permitted to attend the annual meeting of the Bogleheads and ask Bogle questions. Things didn’t work out the way I wanted when Bogle did not respond to my e-mails. Things did not work out the way I wanted when Wade Pfau stopped working with me. Things didn’t work out the way I wanted when John Walter Russell died. Things didn’t work out the way I wanted when I asked Rob Arnott for help with you Goons and he said that he is involved in too many controversies of his own to lend a hand. And on and on and on and on. There are HUNDREDS of things that haven’t worked out the way I wanted.
What do you want me to DO about it? Should I go up to my bedroom and cry big tears into my pillow? Do you think that would change things?
I don’t either. That’s why I do what I do instead. When things don’t go the way I want, I pick myself up, dust myself off and get back on the horse. Is there some magic alternative that no one has ever told me about?
My understanding is that you do that as many times as things don’t go the way you want and then eventually you die and it is someone else’s turn. Does that sound about right according to your understanding of things?
Rob
Anonymous says
What will your family do if things don’t work out?
Rob says
I hope that we will continue to count our blessings rather than to complain about any aspects of our lives that did not turn out as we might have hoped.
Does that not sound like a reasonable plan?
Rob
Anonymous says
“If the tools that are used to predict the weather indicate that there is an 80 percent chance of rain and the weather man says in his report “you had better bring your umbrella to work today” and then it does not rain, was his statement an “erroneous conclusion”?”
No but if he made a dramatic, highly unlikely and specific statement, like “within three years, a flood so great will occur that it will wash away all of humanity”, and in fact we had a drought, we might surmise he was a clueless nut, right?
Rob says
I reported accurately that there has never been a secular bear market that ended without the P/E10 level dropping to 8 or lower. That’s a 65 percent drop from where we are today.
Is that a scary event? Sure. But it is no more of an “out there” event than the insane bull market we experienced in the late 1990s. The farther we move away from pricing stocks reasonably, the more pain we experience on the other side. That’s the way it has been working for 145 years now.
The “out there” thing driving this is the Buy-and-Hold claim that there is no need for investors to practice price discipline when buying stocks. I OPPOSE that claim, Anonymous. That claim is not my doing. What I reported on is what naturally follows when that claim is repeated as often as it was in the late 1990s.
We should be permitting honest posting on the last 35 years of peer-reviewed research. People interested in knowing what works in stock investing need to hear about something other than the pure Get Rich Quick approach pushed so heavily by the Wall Street Con Men who by pure coincidence just happened to pull in millions pushing this smelly garbage so relentlessly.
It’s not the coming price drop that will have caused the ocean of human misery that will be experienced when it comes. It is the Buy-and-Hold claims that made the coming price drop inevitable that will have caused the ocean of human misery that will be experienced when it comes.
That’s my sincere take re these terribly important matters, in any event.
I naturally wish you all good things.
Rob
Anonymous says
What is YOUR definition of “honest posting”. Is there some measure as to the posting being truthful and, if not, it is to be banned?
Rob says
Honest posting takes place when the poster says what he believes.
You believe in Buy-and-Hold. So you should say “I follow Buy-and-Hold and I urge others to follow Buy-and-Hold.”
I believe in Valuation-Informed Indexing. So I should say “I follow Valuation-Informed Indexing and I urge others to follow Valuation-Informed Indexing.”
The only thing that should be banned are violations of the published posting rules.
Rob
Anonymous says
“The only thing that should be banned are violations of the published posting rules.”
Well then, it is easy to see why you have been banned from boards. Take Bogleheads, for example. It bans conspiracy theories.
Rob says
We’ll have to wait and see how things play out, Anonymous.
I naturally wish you all the best that this life has to offer a person.
Rob