I’ve posted Entry #361 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Investing Is In Some Important Ways a Community Act Rather Than an Individual Act.
Juicy Excerpt: There’s a funny scene in an episode of Mad Men that reminds me of an unfortunate phenomenon that applies among the stock investors of today. Don Draper and his wife and two kids are enjoying a picnic at a public park. When it is time to get back in the car and drive home, they pick up the things they want to bring back home and then pull up the blanket on which they and the food had been sitting, causing papers and napkins and boxes and other trash to get tossed onto the grass. They all smile as they walk back to the car, not one of them showing any concern that they have spoiled the environment with an act that all those watching through today’s eyes view as careless and lazy and selfish.
People did things like that in the 1960s. Environmentalism wasn’t a thing. People smoked in elevators and people told racist jokes in public and people (both men and women) assumed that a woman whom they had never met was more interested in finding a husband than in career advancement. Our ideas of how to interact with others in the community change over time. Things that at one time we think of as personal matters (“it’s my trash, I’ll do what I want with it”) come to be perceived as matters of community concern.
I think that we are going to see that change in perception take place in regard to our views on stock investing sometime over the next decade.
Hey Rob. Are you going to FinCon this year?
I am not.
Rob
Why not?
I attended the first five FinCon events. I did not attend last year. There was a mini-Fin Con event in New York City in May (a one-night event). I attended that.
I attended a number of the events because there is huge potential power in meeting people in person rather than just writing guest blog entries or commenting at a blog. The leaders at the FinCon events could turn our story around in a day. If one of the leaders writes about the 36-year cover-up of Shiller’s “revolutionary” (his word) findings, that changes everything. Other bloggers would follow the lead set by one of the leaders and we would all learn more and more and more. All the bad stuff would be behind us. My job of persuading these leaders to get involved is much more likely to bear fruit when I meet them in person and they get to ask me questions one-on-one and all that sort of thing. So there are very good reasons to attend the events.
The reason why I didn’t attend last year and will not attend this year is that these efforts have not paid off in the way that they need to pay off to get Valuation-Informed Indexing discussed at every discussion board and blog on the internet. There is a Social Taboo against speaking out on the mistakes made by the Buy-and-Holders. It sounds horrible to say “the Buy-and-Holders got the numbers wildly wrong in their retirement studies and there are likely going to be millions of failed retirements as a result.” We all have friends who are Buy-and-Holders. Bloggers have friends who recommend Buy-and-Hold at their sites. None of us like to make our friends look bad. There is no way to talk in an in-depth way about what the last 36 years of peer-reviewed research in this field teaches us about how stock investing works in the real world without making our Buy-and-Hold blogger friends look very, very bad. So most of the leading bloggers in this field are highly reluctant to do this.
The best example of the phenomenon was when Carl Richards gave the keynote address to the last FinCon event that I attended (other than the mini one in New York). Carl was speaking to perhaps 2,000 people. He loves my site. He told me that the work that I am doing has “huge value” in his eyes. If Carl recommended my site during his talk, I would be king of the personal finance blogger world the next morning. But I knew darn well that he was not going to recommend me. He banned me from his freakin’ site! He said that his Buy-and-Hold readers got upset when I posted there and threatened to abandon his site if he did not ban me. So what SHOULD have happened did NOT happen.
The same story repeats over and over and over again. Buy-and-Hold is wrong but it is perceived as a safe thing to endorse. Hundreds of bloggers endorse Buy-and-Hold, right? What’s one more? Valuation-Informed Indexing is right but is perceived as a dangerous thing to endorse. People who endorse Valuation-Informed Indexing get ostracized from the community and can’t get links and can’t make money. Most bloggers want to make money. So most keep quiet about doubts they have re Buy-and-Hold and re any enthusiasms they have re Valuation-Informed Indexing. That’s the reality in October 2017.
I think things will change following the next price crash. I think those who have doubts about Buy-and-Hold will speak up about them more after they see the millions of lives that have been destroyed by it. And I think that lots of Buy-and-Holders will start entertaining doubts themselves when they lose most of their life savings and see the same thing happen to many of their friends. So they will become more open to giving serious consideration to the 36 years of peer-reviewed research showing that there is precisely zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor. I believe that everything will change following the crash and that I will myself be the keynote speaker at one of the FinCon events held following the crash.
I don’t believe that there is a good chance that I will achieve the breakout that I am seeking if I attend this year’s FinCon event. I might. If the cost were zero, I would give it a chance. But it costs me several thousand dollars to attend a FinCon event and it takes me away from my family for four days or so and it is stressful to try to push a message that many of the people who I am speaking to very much do not want to hear. So I reached a point last year where I decided that I just don’t want to go through that anymore until I see a change in the odds that I will achieve the breakout that I am seeking. I expect that we will see that change with the arrival of the next crash but not before that.
Does that help?
Rob
If what you are doing is not working, perhaps you should try a different path.
I am not capable of posting dishonestly re the numbers that my friends are using to plan their retirements, Anonymous. It’s just not in me.
For good or for ill, I think it would be fair to say that I am stuck for life on the path that I walked onto on the morning of May 13, 2002.
Please don’t think that I am complaining. I believe that the opportunities that have become available to me by walking this path are enormous, just breath-taking. I believe that I have opportunities that I will be cashing in on in days to come that will make me one of the richest people in the world. I obviously don’t want to appear to be whining about that.
My point is that I would be stuck on this path even if I knew with certainty that it would never put a dollar in my wallet. I cannot post dishonestly re this stuff. When I was planning my early retirement, I worked it hard. I wanted to get the numbers right. That was very important to me. So it is just impossible for me to imagine how I could ever deliberately post dishonestly re the numbers being used by others. I could make mistakes. We all are capable of making mistakes. Even that scares me. But the thought of DELIBERATELY putting forward retirement-planning numbers that I know with certainty are wrong just doesn’t compute for me. It is not even possible for me to imagine circumstances where that could ever change.
I once told a friend of mine that I would die for Valuation-Informed Indexing if it came to that. He laughed. He said “That’s the kind of investing strategy that I need to learn more about — the kind that the guy who came up with it is willing to die for.” I thought that was funny. I got the joke. And I don’t mean to be morbid by talking about dying. I certainly don’t believe that I am going to have to die over this stuff. The point is just that there is no circumstance in which I could ever post dishonestly re safe withdrawal rates. If it came to it, I would prefer death to doing that. So obviously I am going to accept any other penalty that is imposed on me for my unwillingness to engage in fraud re these matters.
Say that you got hit by a car and were stuck in a wheelchair for the rest of your life. That would be very bad news, right? That’s not something that you are expecting to see happen and it would be a major setback. But life would still be worth living, right? There are people who can only get around in wheelchairs who live very rich lives. They are not happy to be in wheelchairs but they are thrilled to be alive and they make the most of it.
That’s how I look at the situation that I am in. It is my sincere belief that I will be making millions on the other side of the Big Black Mountain. I am just waiting for the first person to come up to me and exclaim “You are so lucky to have been the person to discover this!” I am going to punch that person in the nose, you know? I swear. But I do believe that, when people look back at these days, they will be thinking how lucky I was to get there first and to have so few competitors and all that sort of thing. What good fortune!
But if it doesn’t happen that way, at least I gave it my best shot. At least I never sold out my fellow community members. If I never earn a dime, you could compare that to me being trapped in a wheel-chair for the rest of my life. It’s not something that I want to see happen. But I would still be thrilled to be alive even if I never earned another dime, you know? Worse things have happened to people in this big old goofy world of ours. If people have lived through worse and maintained their good cheer, it seems to me that I should be able to do the same with this smaller bit of bad fortune. And of course if I receive that $500 million settlement check, all the better, right? If I can hold up to never earning another dime, I can surely hold up to having to figure out how to invest $500 million without it causing me to go into too high a tax bracket.
If you come up with any ideas that put me on a different path and that don’t require me to cross to the wrong side of the felony line, please let me know. I am very much in the market for those sorts of ideas! But nothing on the wrong side of the felony line gets two seconds consideration from this boy. That’s just not the way that I am wired, Anonymous. I am a non-felony-committing fool any way you look at it. I am not offering any apologies. I am happy that I am a non-felony-committing fool. I like it that I am that, $500 million settlement payment or no $500 million settlement payment. But that is certainly what I am in any event. I have certainly never sensed even the slightest inclination in me to reverse myself on that particular call.
I hope that helps a small bit. I love all my FinCon friends and I 100 percent believe that we will all be able to form tighter bonds in the days following the next price crash, when all the resistance to talking over the far-reaching implications of the last 36 years of peer-reviewed research will melt away into nothingness. But we are just going to have to wait a bit to see how things play out following the crash to know for absolutely certain.
My best and warmest wishes to you, my long-time Buy-and-Hold friend.
Rob
I have never asked you to post dishonestly. To the opposite, I have asked you to start posting honestly and am still waiting.
Okay, Anonymous.
I wish you all good things, in any event.
Rob