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:
Wade said point blank that he was not threatened. He clearly stated the reasons for cutting you off, and they make perfect sense. Tons of other people have cut you off, for the same reasons. But Wade is the one you just can’t ever let go. Why is that?
I don’t say that Wade is different from everyone else. I say that Wade is exactly the same as everyone else.
Wade is a hero in my eyes. Wade was the first person in this 15-year saga who worked up the courage to write to the authors of the Trinity study and ask that they correct their study. Someone should have done that years before Wade came along. Every last one of us would have been in a better place had someone done that years before Wade did it. The authors of the Trinity study are great people and they made an amazing contribution. Had they corrected their study years ago, all of the focus today would be on their great contribution. Instead they are at the center of this mess where we see cover-up piled on top of cover-up piled on top of cover-up.
What I have said going back to the first day is that Greaney should have corrected his study within 24 hours of the moment that he learned about the errors he made in it. People use retirement studies to plan retirements. So it is very important not to get the numbers wildly wrong. If we were talking about this in the abstract, there would not be one person disagreeing that it is critical to correct a retirement study within 24 hours of the time that an important error is discovered in it.
The problem that we are having is that on May 13, 2002, the day that I put forward my famous post pointing out the errors in Greaney’s retirement study, we already had “known” (intellectually, but not emotionally) about the errors in that study for 21 years. We knew about the errors in the Greaney study for years before Greaney even posted the study!
How do we handle something like that as a society? If the New York Times wrote about the errors in the Buy-and-Hold retirement studies back in May of 2002, there were going to be civil lawsuits brought against the people who were still claiming that Buy-and-Hold is a research-based strategy 21 years after those who follow the peer-reviewed research learned that this is not so. Others would not be sued but would see their reputations damaged in the eyes of the millions of investors who were misled. Our decision as a society in 2002 was to keep the cover-up going. The thought was that the alternative of coming clean 21 years too late was just too horrible to contemplate.
The problem with continuing the cover-up is that, so long as we do not point out the dangers of Buy-and-Hold, we cannot give accurate and honest and effective investing advice. The Buy-and-Holders say that there is no need to take valuations into consideration when making investing decisions. The last 36 years of peer-reviewed research shows that valuations are BY FAR the biggest factor in long-term success or failure, a bigger factor by itself than all other factors combined. Pretend that Buy-and-Hold is a reasonable approach and it becomes impossible to say anything intelligent and helpful about the subject of stock investing.
The cover-up cannot continue indefinitely, Dan. The continued promotion of Buy-and-Hold for decades after it was 100 percent discredited has already caused the second biggest economic crisis in U.S. history. And prices are still so high that, in the event that stocks continue to perform in the future anything at all as they always have in the past, we will be seeing another crash bigger than the one we experienced in 2008, one that may bring on the Second Great Depression. We are already seeing serious political frictions as a result of the first nine years of the economic crisis. Having the crisis worsen is obviously going to exacerbate those political frictions.
We are in a situation where there are lots of powerful and wealthy and influential people who have zero willingness to tolerate honest posting on the last 36 years of peer-reviewed research but in which permitting honest posting re the last 36 years of peer-reviewed research is the only way out of an economic and political crisis threatening to do great damage to each and every one of us. What to do, what to do?
What does Wade Pfau want to do about all this? He wants to help. In a big way. Nothing could be more clear. Wade Pfau is a patriot. I love the guy. And of course I feel pretty much the same way re all of my Buy-and-Hold friends and even to a considerable extent re most of my Goon friends. The problem is not Wade Pfau and the problem is not Jack Bogle and the problem is not Robert Shiller and the problem is not even Mel Lindaurer.
The problem is the fix in which we find ourselves today. We all know deep inside what we need to do. We are all in the same boat. We all want to the same things. We all want to learn how to invest effectively in the real world. But how do we get from the unfortunate place where we live today to the positively wonderful place where we could all reside tomorrow if a small number of us could just work up the courage to stand up to you Goons and thereby get the good side of this show on the road?
We have to just do it. It’s like jumping into a pool when you are not sure whether the water is going to feel cold or not. You can think about it and think about it and think about it and nothing changes. Ultimately, you either walk away from the pool (which would likely mean the collapse of our economic system and possibly of our political system as well) or you just take a leap into the darn pool and find out for real how things are going to play out.
I have put forward little suggestions as to how we might smooth the transition. We could have Congress adopt some form of amnesty to let people off the hook re criminal prosecutions and perhaps even civil prosecutions. We could put forward explanations of the behavior that we have seen emphasizing the reality of the cognitive dissonance phenomenon. We could focus on the positive side of Shiller’s revolutionary research findings, which I think it would be fair to say would put millions of people in a far better and less angry mood. We could tell the story of how the new internet communications medium played a big role in bringing about all this life-affirming stuff. We could show gratitude for all the wonderful advances achieved by our Buy-and-Hold friends and make clear that the only people who never make mistakes are people who never stick their necks out and that we should be happy that our Buy-and-Hold friends were willing to stick their necks out a bit for us. There are lots of things that we can do on the positive side once we get down to business of deciding that we all want to work together to take this in a positive direction.
I told Wade that I thought he was “insane” to sign up with you Goons after all the amazing work he had done helping out his country. Wade and I were talking about the possibility of him being awarded a Nobel prize for the peer-reviewed research that we co-authored. And that Nobel prize would have been a well-merited one. I wish that he had taken a more life-affirming path in that moment of personal crisis. I think that working together Wade and I could have gotten this story written up on the front page of the New York Times a number of years back and that we all would be living in very, very different economic and political circumstances today. It’s true that I found a little bit of fault with my good friend Wade re that particular call.
But you know what? Wade had two small children to provide for at the time you Goons threatened to destroy his career. He had knowledge of your smear tactics and how effective they had been in destroying the lives of people you had turned on before he became your Goon Enemy #1. He did stand up to Mel Lindauer for a time. But when he saw that Jack Bogle knew about Linduaer and was not doing anything about the situation, he lost heart, he gave up his confidence that good people can still do good things in this wonderful country of ours. Bogle is a powerful person. Wade is like most fathers; he loves his children dearly. Can any of us say with absolute confidence that we would not have done the same in similar circumstances?
My job is to tell the story. I love Wade. I want him to be able to do honest work again. I love you Goons. I want your prison sentences to be as short as possible given the circumstances that apply. To make these little dreams of mine a reality, I have insisted for 15 years now on recognition of my right to post honestly re safe withdrawal rates and scores of other critically important investment-related topics. I think it is all going to work out for each and every one of us in ways far better than any of us are capable of even imagining today. In fact, I am 100 percent sure that that is what will happen when we all pull together, as I am sure we will in the days following the next price crash.
But you Goons still cling to the hope that it won’t play out that way, right? I cannot change that, I do not have magical powers to make you do the right thing (tolerate honest posting re the last 36 years of peer-reviewed research in this field) that you have refused to do for 15 years running now. So I am resigned today to the sad reality that we are all just going to have to wait to see how things play out in the days following the next price crash.
Does all of that not sound at least roughly right, my long-time Goon friend?