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:
As for another example of how Rob lies, here is an article that discusses Rob’s post from May 2002.
First, Wade does a great job pointing out Rob’s mistake. Secondly, if you read the thread that is linked in Wade’s post (the actual thread from 2002), you will see how Rob is given an education and then admits he was wrong at the very end of the thread. Rob has been embarrassed by this since 2002, so he tries to cover it up with his stories about John Greaney. Further, you will see that his thread is not really “famous”, as Rob puts it. Instead, it was the beginning of Rob’s humiliation.
I did apologize at the end of the thread. I think we all could learn a lot about why our deeper understanding of how stock investing works has been delayed for so many years by thinking through what caused me to apologize.
I loved the Retire Early community; I had made lots of friends there and enjoyed talking things over with the people who congregated there and learning about both saving and investing by trading ideas. My post of the morning of May 13, 2002 (it is VERY famous in the Retire Early and Indexing communities — I had many people come up to me at Financial Blogger Conferences and say “Oh, so YOU are that guy!”) pointed out that the Buy-and-Hold retirement studies lack an adjustment for the valuation level that applies on the day the retirement begins and thus get the numbers wildly wrong. Shiller showed in 1981 that valuations affect long-term returns, so it is obviously not possible that any study not showing the effect of valuations could get the numbers even close to right at times of insanely high valuations.
The reaction to the post was mixed. There were a large number of community members who loved, loved, loved it. Dozen of people were calling the discussion that followed the best discussion that was ever held at that board community. I of course was gratified by that reaction and didn’t want to let those people down. But there was another, larger group that desperately wanted to stop the discussion and made clear that it would engage in any form of abusiveness needed to crush any community member who offered constructive comments. I did not understand the issues nearly as well then as I do now. But I was strongly committed to sticking with the discussion and encouraging others to do so with the aim of helping us all to enjoy a solid learning experience.
On the night that I made that apology, there was a fellow (I believe that it was “Prometheus”) who made a point that I believed at the time I might have been wrong about. I was not sure and I believe today that I was not wrong. But I felt that the friction might cause lasting damage to the board community and that was the last thing in the world that I wanted to see. So I felt that, if there was even a chance that I was wrong, I should apologize. I also felt that I should not offer a niggling apology. If I was going to apologize, I wanted to say clearly that I was just wrong and not limit the apology by saying that I was wrong only about a few aspects of the question. So I wrote it that way.
Following the apology, the Goons became even MORE abusive. I then realized that they were not willing to try to work things out in any reasonable way, they intended to use intimidation tactics to silence any community members who offered thoughts not in accord with their own. So I re-entered the debate. The rest of course is history.
I did not think that I was 100 percent wrong at the time I made the apology. I said that I did think that. But I do not think that I was being dishonest. I stated things in the best way that I could given the circumstances that applied. My reasoning mind told me one thing (that it is not possible to calculate the safe withdrawal rate without considering valuations if valuations affect the result) and my emotional mind told me something different (that people whom I respect and like believe that a valuations adjustment is not required). For a day or so, my emotional/social brain had the upper hand and I disassociated myself from what my reasoning brain told me was true. Then I returned to making my rational brain the primary one.
This is what we are all going through. Jack Bogle is as smart as smart can be. And I believe that he is a good man — the last thing in the world that he would want to do is to cause millions of failed retirements. But Bogle has let his emotional/social brain achieve primacy over his reasoning brain. His reasoning brain of course understands that it is not possible to calculate the safe withdrawal rate accurately without taking valuations into account (Bogle has said that “Reversion to the Mean is an Iron Law of stock investing ” — it was this statement of Bogle’s that convinced me that the numbers in the Buy-and-Hold studies must be wrong).
But Bogle has invested decades of work into developing the Buy-and-Hold strategy and to acknowledge that valuation adjustments are required in all calculations is to acknowledge that the Buy-and-Holders have been getting important questions terribly wrong for many years now. It’s too much for him to accept, just as it was too much for me to accept that my post might cause the Retire Early community to self-destruct. Bogle is suffering from cognitive dissonance. He “knows” that Buy-and-Hold is gravely flawed and yet he also “knows” that that is impossible.
So he rationalizes. He tells himself that things will work out somehow even if the investing community does not explore these issues. That’s like somebody who suspects he has cancer telling himself that there is no need to see a doctor because he probably is just fine. No! If there is even a tiny chance that the Buy-and-Hold retirement studies got the numbers even a tiny bit wrong, we should be discussing that possibility at every discussion board and blog on the internet. If we see millions of failed retirements in days to come because we failed to grant the wishes of the thousands of community members (including some of the biggest-name experts in the field) that a debate be permitted, we will all live through one of the worst social catastrophes in our nation’s history.
I think we need to permit the debate to go forward. That is in everyone’s best interest. There is not one person who will not benefit from such a debate. In the event that the Valuation-Informed Indexers are right, we of course need to learn that and to get the word out to everyone. In the event that the Buy-and-Holders are right, we need to learn that and, in the event that they are right, the result of the debate will be to show that to be the case.
I was wrong to apologize. I am a little embarrassed by it. How could I get something so simple so wrong?
The explanation is that I am one of those darn humans. We humans are influenced by social pressures and the social pressures to believe that Buy-and-Hold is at least largely on the right track are INTENSE. If Buy-and-Hold is wrong in the way that Shiller’s research shows it to be wrong, it was the promotion of Buy-and-Hold strategies that was the primary cause of our economic crisis (Shiller actually predicted the crisis years in advance in his book –How did he do that if he is such a fool?). This is no small matter. This is a big deal.
In our nation, we talk over big-deal matters. That’s how over time we bring them to successful resolutions. In an ideal world, this debate would have started in 1981, when Shiller first published his “revolutionary” (his word) research. That didn’t happen. I am 100 percent certain that Bogle would play if differently if he could travel in a time machine back to 1981. But of course Bogle does not have access to a time machine and none of us can provide him one. The only thing that we can do at this point in the proceedings is to launch the debate TODAY and do the best we can with what we learn as a result of holding it.
These are my sincere thoughts re this terribly important matter in any event.
I naturally wish you the best of luck in all your future life endeavors, Sammy. Please take good care, my old friend.
Rob
Anonymous says
Interesting link. Wade’s post is easily the most attention you’ve ever received from someone who actually is somebody. Far more than that one line acknowledgement in his paper.
On the other hand, that attention is 100% beat-down negative. (Not to mention he calls you Hocus instead of Rob.)
Mixed feelings? Is Wade headed to prison? You’ve condemned many others for doing far less.
Rob says
I think Wade is a super guy, Anonymous. He was the first person who had the courage to write to the authors of the Trinity study and ask that they correct their safe withdrawal rate study before it did more harm. That makes him a hero to the middle-class investor in my eyes. So I certainly wish him all the best (as I wish you Goons all the best).
But I obviously am going to continue posting honestly re his flip to the dark side when you Goons threatened to destroy his career and when Bogle signaled that he was okay with that. I told Wade at the time that I thought he was “insane” to make that call and I still believe that today. I believe with 100 percent certainty that, working together, Wade and I could have gotten this story featured on the front page of the New York Times by now. We would have thereby brought all the nasty stuff to a full and complete stop and he would have been awarded a much deserved Nobel prize and as a society we would have all pulled together to bring this economic crisis to an end. So I think he made a very bad call, a call that I have never even considered making and a call that I cannot imagine ever considering.
Will he go to prison in the days following the next price crash as a result of the story that I tell to the American people?
Who knows, you know?
I see it as my job to place his story in the best possible light while also being honest in the telling of it. A jury will make the decision. I believe in our system of justice, which means that I believe in juries. Which means that I am just going to have to accept whatever decision the jury comes to. It’s not my call. I have no choice but to say that Greaney “forgot” to include a valuations adjustment in his retirement study. But it is not my place to determine what happens to Wade and so, as long as I tell his story with both honesty and charity, it is okay for me just to let it go and let the members of his jury decide his fate.
If I were on his jury, would I convict? I think that I would not. I think that I would look at all the good he did and conclude that that gave me cause for enough reasonable doubt re his guilt to permit me not to vote to convict. Perhaps it would be different if I actually served on a jury formed following the crash and I had seen with my own eyes all the human misery he had caused with his bad call. I am not going to judge any jury member that votes to convict Wade Pfau of the crime of financial fraud. He was placed in circumstances where he could help millions of people avoid suffering failed retirements and he elected to put his own need to provide for his two small children above the needs of those millions of innocent people. I cannot judge a jury member who votes to convict in those circumstances. But I believe that my personal call would be to vote not to convict. Wade did more to help those people than just about anyone else alive on the planet and it is hard for me to ignore that reality.
We are just going to have to wait to see how it plays out, Anonymous.
I am going to argue for mercy. That’s where I am coming from re this matter. I think we all need to pull together. I think that lots of people got in over their heads.
But I respect that others have different perspectives and that others may call for a greater measure of justice. The reason why we do not have juries of one is that we appreciate that different people have different perspectives and that we need to take a variety of different perspectives into account when making decisions as important as whether particular individuals should be sent to spend the rest of their lives in prison cells or not.
I have my perspective. Others have other perspectives. I will do my best to argue for my perspective while also trying very hard always to show respect for the perspectives of others. That’s what I intend to do re the Wade Pfau and that’s what I intend to do re all other aspects of the question.
I hope that works for you, my long-term Goon friend.
Rob
Anonymous says
Two items from the long thread which contains your famous May 2002 apology. First:
“I can’t say the exact date that I’ve been out of the stock market without checking some records. But I recall it being about six months before Greenspan’s irrational exhurberance speech. I believe that the DOW at the time was at about 5600.”
The Dow hasn’t been at 5600 since 1992. Six months before Greenspan’s speech would have been June 1996, when the Dow was above 8800. Numbers just aren’t your thing, are they?
And a comment at the very end of the thread:
“My feeling overall with what you have posted in the last week is that you take it all far too seriously. You become emotionally involved with the board as if it is a living breathing thing, complaining that you are not being heard and suggesting you will go off to consider your own unheard ideas (read: sulk).”
You spent the next 15 years proving him right.
Rob says
Numbers are definitely not my thing, Anonymous. I remember the day when I made the changes in my portfolio as being a summery kind of day. My guess is that it was June 1996 or something thereabouts. I cannot speak to your Dow 5600 comment. It may have been a typo or there may be something that I could figure out from the content that would help me figure it out if I went back and studied the thread. But this issue hardly seems important enough to go to the trouble. I do remember already having been out of stocks when I read about Greenspan’s speech. So the date had to be at least a few months prior to Greenspan’s speech. And it certainly wasn’t 1992 or anything close to that. I didn’t have hardly any money saved at that time. So I didn’t have money in stocks or anything else at the time. It was in early 1992 that I started saving like crazy (in response to a job loss that I suffered in late 1991). All of the early savings went to paying off my mortgage. So it had to be several years later when I took my money out of stocks. June 1996 sounds roughly right.
I recall the comment about me taking things seriously and about being emotionally involved with the board “as it it was a living, breathing thing.” I couldn’t relate to it at the time and I don’t relate to it now. I take retirement planning VERY seriously. I have certainly never tried to suggest otherwise. It is a deadly serious business. Get retirement planning numbers wrong and you ruin people’s lives. I have always wanted to be sure not to get those numbers wrong. And, as you note, I am not exactly a big numbers guy. So I have always taken this stuff very, very seriously. I joke around about tangential elements of the story. But I consider it a very big deal to get the numbers right. And I sure don’t apologize for doing so. A failed retirement is a serious life setback. Are we really debating whether I am right or wrong to take getting the numbers right in retirement studies as a serious matter?
And,yes, a board community is “a living, breathing thing.” Boards are comprised of people. Boards are communities. A city is a living, breathing thing, is it not? If your city were under attack, would you not want to protect it? You Goons attacked a community that I loved with your death threats and your other garbage tactics. So I defended that community. Again — no apologies whatsoever. The Motley Fool board provided people with information about planning early retirements that was not available in the largest personal finance libraries in the world. I consider the work that I did building that community into the #1 board at the Motley Fool site as one ofb the most important accomplishments of my life. I was emotionally involved with that board then and I am emotionally involved with that board today. One of my goals is to see that all of the suffering that you caused for the thousands of good people who comprised that board will end up having served a good purpose — opening the entire internet to honest posting re safe withdrawal rates and scores of other critically important investment-related topics.
The fellow who wrote that comment has it pegged when he said that I became emotionally involved with the board as if it were a living, breathing thing. There’s mo question about that one. The disconnect is that there seems to be some sort of suggestion in his comment that he does not think that is a good thing. I sure do not agree. I wish that we had had THOUSANDS of people who loved that board community as much as I did. If we had, we wouldn’t be in the spot we are in today, you know? I wish that I had loved that board enough to have pointed out Greaney’s error back in May 1999. I think that what happened is that the love grew so that I didn’t work up the courage to put up the famous post until 2002.
I sure take it seriously. I sure think of it a a living, breathing thing. I sure am emotionally involved. There’s zero question re any of that. Please feel free to put that comment on my tombstone. I would be 100 percent happy to have that stand as my legacy. That’s what I am. That’s what I stand for. I care about the people who comprise the boards. It’s my love of those people that drives me. The numbers really are secondary. The numbers are tools to help the people, nothing more and nothing less. It’s the people who matter. That’s all that I have thought about for the 15 years, the people and their stories. That’s always been the driver. For me to report retirement planning numbers inaccurately is to betray friends of mine. And that I cannot do.
Rob
Anonymous says
“A city is a living, breathing thing, is it not? If your city were under attack, would you not want to protect it?”
People live in their city. They don’t (or shouldn’t) live on a message board. Only a tiny part of the population spends any time at all on boards, and those who do are less emotionally involved with them than you are. By a factor of about a million. And though you will never admit it, that emotional involvement has caused you far more harm than good.
Rob says
Most people who participate on boards are less emotionally involved than me. It would be hard to argue that one given what we have seen.
But I don’t apologize for it. The internet discussion board is an important communications medium of the future. The thing that makes it special is the emotional connections that form between board members. It’s a different sort of experience from reading a book, where the information flow is in one direction. On a discussion board, you can ask questions and you can get responses in real time and you are getting responses from someone you know well, so you are far better able to assess credibility than you are when you get information from a book. We don’t learn just by taking in information bits. A lot of the learning experience requires talking things over on a day to day basis with people we trust. We can do that on discussion boards in a way that we cannot do it by reading a book or listening to a lecture or watching a video or whatever. The emotional attachments that form in a discussion board community are a big part of what makes this new communications medium so special and important and exciting.
We are seeing how it works, Anonymous. The peer-reviewed paper that I co-authored with Wade Pfau is the most important piece of research published in this field in the past three decades. I never could have ended up co-authoring a major peer-reviewed paper without the introduction of the internet discussion board as an important new communications medium. Wade learned things he never learned in graduate school by listening in to discussions that we all were having on the Bogleheads board. Then he hooked up with the fellow who was leading the learning effort and asked the questions he needed to ask to figure out how to go about writing that amazing paper. Forming those emotional attachments did me no harm whatsoever. It did every single person involved a huge amount of good.
You SEE it as having done you harm because you cannot bear the thoughts of saying the word “I” and “Was” and “Wrong.” But that’s just part of the process. All learning begins with an inner acknowledgment that you might not already know everything. People who are incapable of acknowledging that they might not know every single thing that will ever be known about a subject render themselves incapable of ever again enjoying a learning experience by going down that dark path. You have traveled far down a dark path over the past 15 years. That is on you. No one asked you to go down that dark path. Certainly not me. Certainly not our fellow community members. You were not even permitted to enter any of our communities until you click a box in which you agreed that you would never engage in any of the dirty tactics that you have engaged in to stop us from having the discussions that all of the non-Goons among us very much want to have.
Honest posting hurts absolutely no one. It is a win, win, win. win. win. It is not even possible to imagine any potential downside to permitting every single community member to post his or her sincerely held views. The “idea” that some harm might come from opening up every investing discussion board and blog on the internet to honest posting re safe withdrawal rates and scores of other critically important investment-related topics is 100 percent absurd.
I am sure.
Rob