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:
You probably thought you could be the next William Bernstein or Jack Bogle, but ended up being Bozo The Clown.
How is that $500 million windfall plan working out for you?
I think it is working well, Sammy. It’s certainly not working in the way that I wanted it to work or in the way that I expected it to work. But I think it is working very well indeed in a long-term sense.
I was a Buy-and-Holder once. I know the appeal. I gave up on Buy-and-Hold when I saw a large discussion-board community express a great deal of interest in learning more about what the last 36 years of peer-reviewed research teaches us about how stock investing works and a small number of Buy-and-Holders jump in and disrupt the conversations people were trying to have using the most brutally abusive tactics imaginable. The vast majority of Buy-and-Holders did not join in with the ugly stuff. But the vast majority did tolerate the bad behavior. That’s how we got to where we are today.
That’s Buy-and-Hold, Sammy. It’s all emotion. There’s great stuff in the Buy-and-Hold Model. Tons of it. But all the good stuff gets sidetracked by the core idea that there is no need to exercise price discipline when buying stocks. That one terribly and obviously wrong element ruins the entire project. It makes Buy-and-Holders too emotional because they are trying to believe that their bull market gains are real but their common sense is telling them that it is not so. They are always at war with their own minds and of course with the minds of others who dare to “cross” them by reporting what the research says plainly and non-apologetically and boldly.
This is the biggest story in personal finance today. We all should be talking about the emotion we see on the Buy-and-Hold side of the table. There’s huge leverage in doing that. Each time one more person works up the courage to do it, there are ten others who have their own takes on what is being said and we learn more and more and more. It’s been very, very hard to get the ball rolling. I’ll give you that one. But the potential here is just off-the-charts amazing. I am humbled to be a part of the effort to get things moving in a positive direction.
We get closer to mining all the good stuff with every passing day. You don’t see it that way. I sure do. On the content side, I am 10,000 times happier about how things have gone than I possibly could have imagined ever being back on the morning of May 13, 2002. On the process side, I am despondent. The process side has been a 100 percent catastrophe, I’ll give you that one. But it’s the content side that matters most in the long run. Our entire system of government, the idea that news ideas replace old ones once the old ones are discredited because we let everyone have his or her say, is set up to insure that the content side is what matters in the end.
You look at all my process-side setbacks as losses. I do not. I see the tactics used to keep the word about the last 36 years of peer-reviewed research from spreading as tactics that hold lots of people back from competing with me to do this good work. I want competitors! I want people offering takes that are different and better than my own! But I sure don’t see it as a financial negative that you Goons and all the normal Buy-and-Holders who tolerate your abusiveness have been intimidating my potential competitors for fighting for their piece of the pie for 15 years now. In a long-term sense, that’s a huge financial plus for me. Thanks, man!
I don’t like any of the negative stuff. But I just don’t see it as something that can continue following the next price crash. I view your tactics as desperation tactics. And seeing the desperation reassures me that we really do need to get about the business of opening every discussion board and blog to honest posting re safe withdrawal rates and scores of other critically important investment-related topics.
We interpret developments differently. As the Buy-and-Holders become increasingly abusive, you say “Oh, that proves that no one will ever be able to promote true research-based strategies, we will always crush them!” I say “Wow, the Buy-and-Holders are really feeling bad about themselves, they just keep sinking lower and lower.” And I figure that, if even the Buy-and-Holders cannot think of any legitimate ways to defend their strategy, what does that say about its capacity to remain influential in the future?
Every abusive post that you put forward makes me more confident of where this train is headed in the long run. Your posts are the sort of posts you see when a strategy has been discredited by 36 years of peer-reviewed research. Valuation-Informed Indexing is the future, Buy-and-Hold is the past.
That’s my sincere take, in any event. I could be wrong. I have been wrong many times in the past, and, if it were happening again, I would no doubt be the last to know. But that is my sincere take. And for someone with that take these are truly exciting days. We are as a nation on the threshold of achieving the most exciting advances in the history of personal finance. We all will be living richer lives once the next price crash opens the entire internet to honest posting on safe withdrawal rates and other stuff. That’s pretty darn cool stuff.
We live in an amazing country. Flawed, to be sure. But amazing all the same. Because of how the internet works, we are getting to see how the process plays out in great detail. THAT’S amazing too. We have a tiger by the tale re this one. I am 100 percent sure.
Again — my take only.
I wish you all good things.