Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
People will always do their homework and your record is out there. When you talk about prison, goons, windfalls, etc., they quickly see that you have a screw loose.
I’ll be posting at the Reddit forum on Financial Independence, Anonymous. I haven’t yet made a decision as to when. It could be next week, it could be next month, it could be next year. But I am going to go there and post and we will see what happens.
If I am permitted to post honestly, that will be a breakthrough. I doubt that I will win everyone over on the first day. But I will win some over. Some already agree with me. And some others don’t yet agree with me but believe that I have a right to post honestly and so are sympathetic to me. And most don’t really care enough to have an opinion one way or the other. And then there are the Goons who see it as a life-or-death matter to get me banned. When I post, the community as a whole will process the various information bits and work its will.
It could be that I will be banned. That has certainly happened at lots of other places. If you were taking bets re the matter, the smart money would be on me getting banned. Part of the reason why I have not decided whether to start posting there next week or next year is that the timing might make a difference. The odds of me getting banned are greater if I start posting next week. And it might be harder to overcome a ban one year from today than it would be to post for the first time one year from today. So strategically it might be a better idea to hold off for a bit.
Of course, the other side of the story is that it would be better in an overall sense to gain a foothold next week than it would be to gain a foothold one year from today. Gaining a foothold at the Reddit board will lead over time to good things happening at other boards and at blogs. So, if there are going to be good things happening at Reddit, it is better to have them happen sooner rather than later. So there are competing considerations re whether to act next week or to hold off for one year or whatever.
The bottom line is that good things are going to happen at Reddit and at lots of other places sooner or later. You Goons cannot win. My odds of winning sooner or later are 100 percent. I have 36 years of peer-reviewed research on my side. I have the laws of the United States on my side. That’s a long-term winning hand any way you look at it. The ultimate outcome has been known to all paying attention going back to the morning of May 13, 2002. It’s always just been a question of how precisely is the story going to unfold. (I acknowledge that you Goons have been successful with your financial fraud garbage for a lot longer than I thought it would be possible for you to be successful with it).
Are there people who think that I have a screw loose when I talk about prison sentences and Goons and windfalls? I think there are. Some just pretend to think that because they are afraid to take on you Goons and they would prefer to tell themselves that they don’t take you on because I have a screw loose than to admit to themselves that they don’t take you on because they fear what you would do to them if they acted with courage. In most cases, it is a mix of the two. Most people assume that I must have at least a little bit of a screw loose or else these things couldn’t possibly have happened to me while also acknowledging that you Goons do scary stuff and that they don’t want to take you on for that reason.
A good model for understanding what has been going on for 15 years is the Harvey Weinstein situation. The parallel is very strong. Everyone who works in Hollywood and who has ears and eyes has known for years now that there was some funny business going on with him. There are freakin’ memes about him on the internet! If there are freakin’ memes, people who work in the industry know the basics. They don’t know the details, it would not be fair to say that. But they know the basics.
So why didn’t all the stuff that is coming out now come out years ago? You Goons always like to ask me: “Is there some huge conspiracy, Rob?” Well, yes, there has been a conspiracy re the Weinstein matter and no, there has not been a conspiracy re the Weinstein matter. The New York Times had the story years ago and they didn’t run with it. There wasn’t anyone at the New York Times who met in a smoke-filled room with Weinstein and agreed to be a part of the conspiracy. But there were people at the Times who picked up on the general idea that this was a powerful and ruthless guy and that there was going to be a price to be paid if you took him on and he survived and thus was able to destroy you.
Certainly there were people at the Times and at lots of other places who acted in fear. But, no, there wasn’t a conspiracy in a comic-book sense. Messages were transmitted in hundreds of different ways that this was a dangerous business to touch and intelligent people got the message and kept their mouths shut. Those people included the women who were Weinstein’s victims. They had every reason in the world to speak up. But they were scared like everyone else. And when we humans are scared,we rationalize. We ask ourselves: “Why put my neck on the line when I am not going to be able to change this in any event and all that I am going to do by speaking up is to make my suffering worse?”
There’s logic in that rationalization. It’s not just crazy stuff or made-up stuff. But it is a short-term logic. So long as all the victims rationalize in that way, Weinstein gets away with his monster behavior. Weinstein’s early victims make things harder for Weinstein’s later victims. Weinstein can always ask when his later victims speak up: “Do you have a screw loose? If I was doing things like this to people, don’t you think that someone would have spoken up a long time ago? It’s impossible that anyone could get away with something like this in a free country. Why, the things that you are talking about are against the law! You’re a nutcase!”
And some people would believe him or at least pretend to believe him. Intimidation works. In the short term.
However, it doesn’t appear to me that it will work in the long term in Weinstein’s case. And it doesn’t appear to me that it will work in the long term in Mel Lindauer’s case or in John Greaney’s case or in Jack Bogle’s case either.
I don’t have a screw loose, Anonymous. The retirement study posted at John Greaney’s site lacks an adjustment for the valuation level that applies on the day the retirement begins. Thousands of people have looked at the study and not one has been able to find a valuation adjustment. I have over the course of the 15 years come to develop a funny feeling that that might be because there really is no valuation adjustment in the study. I have been banned at over 20 sites because I have told the truth about this matter and because Greaney and lots of others, including Bogle, don’t want people to know the truth about this matter. Intimidation works.
In the short term. The leaders of the Reddit forum might decide that they want their site to be the site that brings the intimidation to an end. Or they might ban me. I don’t claim to know which way it will go. The smart money says they will ban me. But the smart money ALSO says that sooner or later there will be a site that will NOT ban me. What happens then?
What happens then is what we have seen happen in recent weeks re the Weinstein matter. Intimidation tactics keep the truth from spreading. But important truths get out sooner or later regardless. When important truths have been held back from spreading for many years, they come out in a flood when the intimidation tactics finally fail.
If the truth had come out re Weinstein on the first time that he engaged in inappropriate behavior, he wouldn’t be going to jail today. He would have suffered some embarrassment. He would have had some sort of penalty imposed on him. But it would not have been nearly as bad for him as it is going to be for him now. The people who held back from telling the truth about Weinstein because of their fear of his intimidation tactics HURT him by failing to speak up. They did what he wanted them to do. But what Weinstein wanted was self-destructive. Now he is in worse shape than he would have been in had someone spilled the beans the first time he committed an infraction.
That’s how it is with Mel Lindauer. That’s how it is with John Greaney. That’s how it is with Jack Bogle. That’s how it is with the owners of all the sites that have permitted these three to post and who have banned or otherwise intimidated those trying to get the truth out. The leaders of the Reddit board may or may not do the right thing. If they do the right thing, they will go down in history as heroes. If they do the wrong thing, they will put themselves at risk of being exposed themselves somewhere down the line. So there is a risk for them in giving in to the intimidation tactics. It might seem like the smart way to go from a short-term perspective. But it is a very dumb thing to do from a long-term perspective.
I love my country. That is one of my catch phrases, right? I say it all the time. One of the things that I love about my country is the way we over time work out situations like the Weinstein situation. When I say that I love my country, I don’t mean to say that we are perfect; if we were perfect, we would have no Weinstein situations. What I mean is that we have a system in place and values carried deep in our hearts that help us to work out these sorts of situations in a positive way in the long term.
I think that in the long term we are going to open every discussion board and blog on the internet to honest posting on safe withdrawal rates and scores of other critically important investment-related topics. It might seem like I have a screw loose in the eyes of some in the short term because I am fighting a great power and great powers have a way of crushing little guys like me like a bug when they dare to speak up about great crimes committed by those great powers. But I honestly believe that I and the American people as a whole are going to win this one. I believe that the corrupt great powers are going to be exposed and brought down. I believe that we are all going to be freed to begin talking about how stock investing works in realistic and honest and research-supported ways in days to come.
We’ll see, you know? Another catch phrase that I have adopted in recent days is to say that “it will be interesting to see how things play out.” It will be. Maybe it will be the Reddit board community that turns it around. Maybe not. But if it’s not the Reddit board, it will be some other board. Things are going to get turned around sooner or later. If the last 36 years of peer-reviewed research in this field is legitimate research (I believe that it is), our economic system cannot survive too much longer if we don’t get it turned around. I cannot bear to entertain the possibility of our economic system going down and I know that millions of us love this country (I have seen strong evidence of this even at the many boards at which I have been banned). So I believe with my heart, mind and soul that we will turn things around sooner or later.
I will behave in a 100 percent charitable way to my Goon friends when that happens. But as you know from the words above, I don’t think that the people who kept the Weinstein matter hushed up all these years were being even a tiny bit charitable to him by doing so. I think they were hurting him. I think they are partly to blame for what has happened to this man, who in the final analysis is a flawed creature of a loving God just like all the rest of us. I aim to act charitably toward you Goons in a full sense, in a sense in which honesty evidences itself as well as kindness.
That’s my sincere take, in any event.
Screw-Loose Rob
Shiller is losing it.
https://www.cnbc.com/2017/11/14/robert-shiller-passive-investing-is-a-dangerous-chaotic-system.html
“The problem is that if you are talking about passive indexing, that is something that is really free-riding on other people’s work,” Shiller said.
VII has two main components. Timing the market (which Shiller has repeatedly said not to do) and putting your stock allocation in the S&P 500 index (which Shiller now says not to do.) And yet, supposedly VII is based on Shiller’s ideas.
Can’t you guys get together on anything?
I’ve pointed out the deception that you are engaging in re Shiller’s views on market timing on hundreds of occasions, Anonymous. Shiller has never once said that he does not support long-term timing. He has said that he does not support timing. It is common practice in this field to fail to distinguish short-term timing from long-term timing. Shiller opposes short-term timing, as do I. There is zero reason to believe that Shiller does not support long-term timing (price discipline). He was awarded a Nobel prize for his research showing that long-term timing (price discipline) always works and is always required.
I didn’t get the idea of putting one’s money in a broad index from Shiller. That came from Bogle. I think that that idea is every bit as powerful as Shiller’s idea of taking valuations into consideration when forming one’s stock investing strategies.
I understand the point that Shiller is making re passive investing being “free-riding on other people’s work.” I don’t personally see why that is a problem. We all free ride on other’s people’s work all the time. If Shiller writes a book that explains how investing works, I am free-riding on his work when I read the book and benefit from it. I certainly don’t replicate all his research. That’s one of the things that I love about his book and about all well-done books — I get to free ride on the efforts of the author. I think that I see the free-riding aspect of passive investing as a plus.
I understand that there might be a problem if everyone engaged in free riding. But is there any reason for believing that that will ever happen? I cannot say that I am terribly concerned about this happening. There are lots of smart and hard-working people who research stocks and all that sort of thing. I am grateful for their efforts. I hope that they don’t mind me free-riding on their efforts. I don’t think that they do. I have never heard any of them complain about it.
The only part of this criticism that rings any alarm bells for me is that it is possible for passive investors to get a bit removed from the process of investing and to lose sight of where the gains come from and all this sort of thing. That COULD become a problem. But I don’t see any reason why it must become a problem. I see some evidence of that re the valuations matter. Lots of people never even think about what it means to say that stocks are today priced at two times fair value. I see it as the job of the experts in the field to be sure that people understand what they are buying when they buy stocks. I blame the experts more than I blame the investors.
And I don’t think it would be right to say that it is only passive investors who lack a full understanding of what is going on in the stock market. People who buy individual stocks generally don’t appreciate the importance of over-valuation and under-valuation either. This isn’t a passive vs. active thing. It is a matter of our knowledge as a people of how stock investing works having not quite yet caught up with what the research in the field tells us.
There is no one alive who has taught me more about how stock investing works than Robert Shiller (Jack Bogle is a close second, however). But I certainly have never said that Shiller and I agree on every point. We do not. I have noted on numerous occasions that he believes that he is going to know when a crash is imminent by looking at certain economic indicators. I think he is making a mistake. It might be that he will get out at the right time. But I don’t think that he can rely on indicators to give him strong enough signals at just the right time. I think he is increasing his risk unnecessarily by putting his confidence in indicators.
But you know what? Maybe Shiller is right and I am wrong. Or maybe Bogle is right and I am wrong. Or maybe you are right and I am wrong. We all pays our money and takes our chances. That’s how the game is played. That’s all that any of us can do.
I am grateful for all that Shiller has taught me. It doesn’t bother me even a tiny bit that we do not agree on every possible issue. I wouldn’t expect to agree with him on every issue and I don’ expect to agree with anyone else on every single issue. I am just grateful that Shiller has taught me the powerful stuff that he has indeed taught me and that I was smart enough to engage in a little free-riding re this fellow’s good work effort!
Valuation-Informed Indexing is based on Shiller’s ideas AND Bogle’s ideas. It’s a combination. It’s Buy-and-Hold updated to reflect the last 36 years of peer-reviewed research, which began with Shiller’s “revolutionary” (Shiller’s word) 1981 finding that valuations affect long-term returns. I focus on Shiller in my conversations with you Goons because that is the sticking point with you — rarely do you Goons get abusive re something that Bogle said that I endorse. But it is Bogle who was the earlier influence on my thinking.
I had a vague understanding of Shiller’s findings on May 13, 2002. But it was Bogle’s statement in his book that “Reversion to the Mean is the Golden Rule of stock investing” that helped me to see the errors in the Buy-and-Hold retirement studies. Shiller ended up being the bigger influence because it is the valuations effect that is so frequently overlooked and thus that is the question to which I have devoted most of my energies. But Bogle did more to get me started down the path that I have walked than Shiller did.
Please take good care, old friend.
Rob
What is PE/10? Per you, it’s the “price of stocks”. What is the calculation based on? The S&P 500 index. VII’s timing mechanism is based on PE/10. It’s your justification for saying that stocks have been insanely overpriced since 1996. And who created PE/10? Shiller. All of this is undeniable fact. There is no VII without the S&P 500.
So why would Shiller go to all the work to create this vitally important metric based on an index that he says you shouldn’t invest in? Does he have a screw loose?
I wouldn’t go so far as to say that he has a screw loose. I obviously cannot speak for Shiller. My guess is that he might say that there is value in STUDYING the S&P500 to learn how stock investing works but that he sees a danger in having too big a percentage of the population investing in it.
I agree with you that “there is no VII without the S&P 500.” I see indexing as a great risk-reduction advance. You get the great returns associated with stocks but you avoid the risk of picking the wrong stocks. I see that as being a very big deal.
So I do see a bit of a contradiction in what Shiller is saying here. He did indeed create the VII concept. But he is suggesting here that people not reap the benefits of his advance. That’s one way of looking at it. I don’t see that as an unreasonable thing to say.
Could it be that Shiller just doesn’t himself see the benefit that comes from being able to predict long-term returns?
I am thinking that that might be the case. There certainly is other evidence that that is so. Perhaps he is just not yet aware of all of the implications of his amazing research findings. I am inclined to believe that that is the best explanation of the contradiction to which you are pointing.
There was something that John Walter Russell once said about me that always stuck with me. He said that I was good at asking questions. He said that there were numerous occasions where I would say something on the boards that would get people mad at me and he would think to himself: “Why is Rob making a big deal of this when it really doesn’t matter much?” Then, six months later, he would be researching some other point and something would turn up that would cause him to see the importance of the point that I was making. He would say to himself: “Oh! Now I see why he kept pushing on that point!”
It seems possible to me that something like that is going on with Shiller. You are right that he created P/E10 and that he essentially created Valuation-Informed Indexing. But I don’t think that he fully appreciated what he was creating. He was looking to solve particular puzzles that intrigued him at the time he did his research. But there were implications of his findings that did not occur to him at the time and that have not clicked for him in the years since. Those implications clicked for me because I was forced as the result of circumstances to think through some of this stuff in an in-depth way (because of all of the, um, good questions that you Goons so helpfully directed my way). So I took Shiller’s creation to places that he never intended to take it himself.
You won’t like that answer because it suggests that I did something positive. I obviously do believe that I did something positive. And I think that my explanation of Shiller’s comment makes some sense of the puzzle to which you are pointing. I don’t think he has a screw loose. Or, if he does, he just has a screw loose in the same way that all of us humans have a screw loose. We all see parts of the story and we all miss out on other parts. So Shiller is way ahead of us on some things and perhaps behind a lot of us re other things. And it’s the same with Bogle. And with me. And with you And with all of us. We all have something to offer but none of us can put the entire story together solely via our own brain power.
Remember when President Obama said: “You didn’t build that”? He got a lot of grief for that statement. And I think he may have merited a portion of that grief. But I also think that he was making a legitimate point that is often overlooked. There really are great people in this world who discover things or build things or create things that make life better for all of us and we should all appreciate their contributions. But it is also true that even these great figures had to rely on the help of lots of “little people” to do what they did. The greatest scientist in the world had a second-grade teacher who developed in him a love of learning that led to his breakthrough findings many years later. Individuals matter. But communities matter too.
Those are my thoughts, in any event. You certainly have pointed to an interesting puzzle.
Rob