I’ve posted Entry #416 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called It’s a Mistake to Try to Identify Stock Bubbles.
Juicy Excerpt: There are cases in which drinking three beers will get you in an accident and there are cases in which it will not. What conclusions can we draw from that? I worry that, in the stock investing realm, the conclusion that is drawn when high prices do not produce a crash is that high prices are not so terribly dangerous. I see that as an unfortunate conclusion. The results that follow from being involved in either a car crash or a stock crash can be devastating. The aim should be to avoid these experiences. The fact that we cannot say with precision what sorts of inputs (cans of beer or levels of P/E10) will bring them on does not justify daredevil behavior (driving after consuming several cans of beer or investing heavily in stocks when prices are very high). Unfortunately, it seems to be human nature to conclude that, if doing dangerous things does not produce a wipeout on one or two occasions, it thereby becomes safe to take the chance a second or third time.
Thanks for making the case for buy, hold and rebalance once again.
I’ve learned a lot of important stuff from my Buy-and-Hold friends, Anonymous. I certainly don’t say different.
Understanding that short-term timing doesn’t work is huge. But jumping to the false conclusion that therefore long-term timing isn’t required is a terrible mistake. If an investor fails to engage in either form of timing, he is not practicing price discipline. Huh? What the f? You’ve got to choose one or the other and, given that short-term timing really doesn’t work, the sensible thing to do is to always practice long-term timing.
Shiller has described the intellectual leap from the finding that short-term price changes are unpredictable to the Buy-and-Hold belief that the market sets prices properly as “one of the most remarkable errors in the history of economics.” Do you really want the fate of your retirement savings to be riding on “one of the most remarkable errors in the history of economics”? Not this boy.
Error-Free (Or So He Tells Himself!) Rob
You haven’t seemed to have learned much. Also, I wouldn’t want to risk the fate of my retirement on a timing scheme that has no record of success.
Okay, Anonymous.
I do wish you all good things, in any event. Maybe you’re right and I’m wrong. Stranger things have happened in this mixed-up world of ours, right?
Take care, man.
Slow-Learning and Non-Successful (But Humble!) Rob
“Maybe you’re right and I’m wrong. ”
Maybe? You are the one with the failed retirement program.
That proves it!
Take good care, man.
DEFINITELY Wrongo Rob
Hey Rob, I saw a pretty good segment on PBS about early retirement. Check it out!
https://www.youtube.com/watch?v=RyF40JydVNU&feature=youtu.be
I’m not sure what your motive is in putting the link here. The Retire Early movement is of course dear to my heart. Seeing this stuff discussed in mainstream places (I saw articles on Mr. Money Mustache in the New York Times and in the New Yorker not too long ago) brings to mind those exciting days at the Motley Fool board where there were fewer people who knew about this stuff. It’s very exciting stuff. You certainly won’t hear different from me.
We need to be honest about it. You can’t get away from that, Sensible. There’s no way. If you are not honest, you are not helping people, you are hurting them. If you are dishonest, you will ultimately make the entire Retire Early movement look bad. The whole thing falls apart if it is rooted in dishonesty.
I was kinda, sorta dishonest for a long time — three years. I loved helping people on the saving side and people loved me in turn because all of this Retire Early stuff is very exciting and I was helping them with that. I never talked about investing in those days. Greaney would push his safe withdrawal rate study every day and people loved it and I would keep my mouth shut about the errors that I knew were in it. I was a snake, no? That’s pretty darn low behavior. I was making friends with these people and encouraging them to hand in resignations from high-paying jobs long before they were in circumstances that would permit them to do so safely and I didn’t say anything. Huh? What the f?
I had to rationalize my behavior, of course. I wouldn’t have been able to live with myself if I didn’t do that. That rationalization that I came up with was a pretty darn good one. Before Greaney’s study came along, lots of people were using the 7 percent withdrawal rate that was recommended by Peter Lynch. Greaney’s study was a CONSERVATIVE study in the eyes of many stock investors of the time. He was not telling people that the safe withdrawal rate was higher than other people were saying, he was telling people that it was LOWER. That’s a fact. I don’t think that Greaney would deny that one. The true safe withdrawal rate was somewhere between 2 percent and 3 percent during most of this time-period. So the number in Greaney’s study was a lot closer to reality than most other information sources available to people at the time. I told myself that the net effect of the study was a positive. I persuaded myself that it was okay to keep my mouth shut.
Was I right? Today, I don’t think so. It is a betrayal of the Retire Early movement to know that the numbers that people are using to plan their retirements are wrong and to not say anything about it. Mr. Money Mustache is a leader of the movement today. I had dinner with him at one of the Financial Blogger Conferences and we talked about all this stuff. He doesn’t disagree with me re safe withdrawal rates. His response to all that I told him was to say something along the lines of “no good deed goes unpunished” (that’s a paraphrase, I don’t have certain recall of the precise words he used).
If Mr. Money Mustache thought that he could get away with telling people the truth about safe withdrawal rates, he would do it. He’s like Wade Pfau and Bill Bernstein and Scott Burns and Michael Kitces and Jack Bogle and lots and lots and lots of others. He knows that as a general rule it is better to be honest when talking about financial matters. But he also knows that telling the truth about what the last 37 years of peer-reviewed research teaches us about stock investing is very, very, very dicey stuff at a time when prices are where they are today. So he keeps his mouth shut for now.
How about after the next crash? There are going to be lots of early retirees facing very dire financial futures in the days after the next price crash. Will that mean that the idea of early retirement was always fantasy stuff, as its critics have always maintained? It won’t mean that, in my view. It will just mean that we should have permitted honest posting at all of our boards. Turning our boards into corrupt enterprises was a mistake. If you are going to permit discussion of safe withdrawal rates, you should permit HONEST discussion of safe withdrawal rates. Otherwise, the entire thing becomes a scam.
The Retire Early movement is a scam today. Not by intention. But I am 100 percent confident that, after large numbers of the people who have retired early in recent years suffer failed retirements because of the lies that they were told re safe withdrawal rates, there will be many people saying that the entire movement was a scam from the first day. And most people who hear about it and don’t bother to study the matter in depth will be inclined to agree with them. If it weren’t a scam, you wouldn’t have seen the death threats and the treats of career destruction and all the rest.
I believe in the Retire Early movement. I would like to see everyone alive exposed to the ideas that drive the movement. Financial freedom is a wonderful thing. It is great to live at a time when the prospect of financial freedom is available to most middle-class people. It’s an amazing movement and it thrills me that more people are discovering it.
But I very much think that it has to be rooted in honesty. I think that we are hurting people in very, very, very serious ways with the dishonest, fraudulent side of the project. I don’t think there’s a place for that. If we were all thinking clearly about these matters, I think we would have universal agreement re that one. I think that one of the reasons why we see such violent reactions from the Buy-and-Holders when we try to talk about the last 37 years of peer-reviewed research is that they appreciate themselves how important is it to be honest when calculating the numbers used to plan a retirement.
I went crazy on the day when I discovered Greaney’s web site. It was one of the best days of my life. i had been hoping to find such a resource for a long time. One of the things that excited me about it was that he put a lot of focus on the calculation of the safe withdrawal rate. I think he did that because he knew how important it was to be rational rather than emotional when planning an early retirement. Greaney and I have a lot more common ground than most people (including Greaney himself, to be sure) realize.
Those are my thoughts, Sensible. I couldn’t love the movement more. If I were to agree to post dishonestly re safe withdrawal rates, that would ruin it for me. I would feel that I was destroying people’s lives rather than helping them. That changes it, you know? That changes things in a fundamental way. I wish everybody in the movement the best of luck. I hope they make it through. But for me to put up posts, I would need to be permitted to do so honestly. I think that has to be a bottom-line condition. Again, I think that every single person in the movement would agree with that if he or she were capable of thinking clearly re these matters. The Get Rich Quick impulse messes with our brains. The Get Rich Quick impulse is the enemy of Retire Early dreams, is my assessment.
My best wishes to you, in any event.
Retire Early Advocate (From Way, Way Back!) Rob
I’ll add one more thought. I don’t recall Greaney criticizing Lynch for getting the numbers wrong. It may be that he did so, I just don’t recall it. But I do remember him criticizing community members who tried to argue for withdrawal rates a lot higher than 4 percent. I remember that happening on several occasion. So I think it would be fair to say that there is at least a piece of Grraney’s brain that accepts the idea that prudence is called for when putting together a Retire Early plan. He warned people of the dangers when OTHERS got the numbers wrong, he just wasn’t able to turn that critical eye to his own study. His pride of authorship blinded him to the human misery he was causing by relentlessly pushing numbers that are wildly off the mark according to the last 37 years of peer-reviewed research in this field.
So Greaney is not all bad. He is a mix of good and bad, like most of us, His focus on safe withdrawal rates was right on and his methodology was a big improvement over the one used by Peter Lynch just a few years before. But his Campaign of Terror against the thousands of us who expressed a desire to post honestly re these matters was truly bad stuff. I don’t think that anyone has ever done more long-term harm to the Retire Early movement than John Greaney. We all played a role in what happened because we all tolerated his behavior to some degree or another (that includes me). But I think it would be fair to say that there is no human being who ever walked Planet Earth who caused even a tiny fraction of the number of failed retirements as did our friend John Greaney. And I think that that’s a very, very, very sad reality that we all need to come to terms with. I am ashamed of the role that I played in making that reality a reality. If I had it to do over, I would have begun posting honestly on the first day.
Brings back memories!
Ashamed (But Committed to Doing Better in the Future) Rob
If a 4% withdrawal rate has worked in every previous 30 year period, what is different about today versus previous timeframes?
Having something barely work on a tiny number of occasions does not render it safe. If you drive drunk on three occasions and end up in the hospital but not dead, it is not reasonable to conclude that you will not end up dead the next time you try it. You should have concluded from your hospitalizations that driving drunk is dangerous, not safe.
The historical return data shows that a 9 percent withdrawal is safe for someone who retires when valuations are where they were in 1982 while nothing above 1.6 percent is safe for someone who retires when valuations are where they were in 2000. The odds of a retirement beginning in 2000 and calling for a 4 percent withdrawal surviving 30 years are one in three. Not safe. Not a close call.
A failed retirement is a serious life setback. Greaney should have corrected his study within 24 hours of the moment when he learned of the error he made in the calculation. Financial fraud is a crime, a felony. That means prison time.
Not this boy.
Non-Prison-Bound Rob
“Having something barely work on a tiny number of occasions does not render it safe”
Yet, you base your assumptions on the same time period.
There are a lot of years in the historical record in which valuations were not sky high. Starting from those sorts of years, using a 4 percent withdrawal did not bring you within a whisker of suffering a failed retirement. When we are at valuation levels that have always left retirees who took a 4 percent withdrawal with plenty of slack, 4 percent is of course safe. But when we are at valuation levels higher than those that have always caused those taking a 4 percent withdrawal to come within a whisker of suffering a failed retirement, a retirement calling for a 4 percent withdrawal is an extreme high risk retirement, not a safe one.
It’s a question of honesty.
Safe-Means-Safe Rob
We are all to believe that MMM, Wade Pfau, Jack Bogle, William Bernstein, John Greaney, Michael Kitces and Scott Burns are all scared to tell the whole story. They are all part of a mass cover up. Only Rob Bennett has been the one to tell the whole truth.
All of the evidence is available to you, Anonymous.
Bill Bernstein said in a book published in 2002 that the 4 percent number was off by 2 percentage points when stocks were priced at their highs. But he didn’t say that the studies that said that the safe withdrawal rate is always 4 percent needed to be corrected. Huh?
Wade Pfau said that the Buy-and-Hold retirement studies are “dangerous.” But he hasn’t insisted that they be corrected either. Huh?
Jack Bogle endorsed Valuation-Informed Indexing in one interview. He said: “Big moves out of stocks should not be done at all. But strategic asset allocation can be done at very rare times, maybe six times in an investor’s lifetime, three times when the market is stupidly high and three times when stupidly low.” That’s what I say. But he only said it one time. Most of the time he says that timing doesn’t work and fails to distinguish short-term timing from long-term timing. Huh?
Greaney said that people should not overstate the safe withdrawal rate, that they should not give wrong numbers. But when he learned that the numbers in his own study are wildly off the mark, he didn’t correct them. Huh?
Kitces said that low valuations can bring the safe withdrawal rate up higher than 4 percent but that high valuations do not bring it down lower than 4 percent. Huh?
Burns wrote about my work on safe withdrawal rates in his column but failed to name me. He referred to those of us who believe that the safe withdrawal rate changes when valuations change as a “New School” but then criticized me for using that term. Huh?
Lots of people have told different bits of the truth. Much of what I have done is just to report what other people have discovered. The difference is that those other people flip back and forth from positions that make sense today to positions that no longer make sense now that Shiller has published his “revolutionary” (his word) research findings. I try to remain consistent. I don’t flip back and forth. That makes people who do flip back and forth look bad. So I am disappeared.
Shiller’s 1981 research findings did not bring on a small change in our understanding of how stock investing works. He discredited the foundation stone on which the entire Buy-and-Hold Model was built. So he changed everything. As a society we have not yet come to terms with what he did. We need to come to terms with it. We have to stop pretending that we can duck the hundreds of questions that his research brought to the table. We have to talk about where our knowledge of how stock investing works stands today. We need to engage in serious and honest and frank interactions re hundreds of questions that we once thought were settled but no longer are. This stuff is important. We need to get it right.
I don’t know it all. I don’t say that I do. My stuff is just the product of a person who believes that Shiller’s research is legitimate research and who explores every question that comes up with that belief in mind. I need to hear feedback from all the people you mention and from lots of other people so that I can do better work. And all those others need the same. We all need to stop pretending that we know it all and get about the business of trying to learn as much as we can as quickly as we can.
All of the people who you refer to would LOVE to give their honest take on every question. Read your own comments at this blog if you want to know why they don’t do it today. You point out over and over and over again that I can not make a living in this field because I posted honestly re the safe withdrawal rate issue. That’s why other people don’t so the same. Other people want to be able to make a living. Stop punishing honest work and you will get more of it. There’s no mystery re that particular aspect of the question. Stop punishing people who are trying to help you and more people will try to help you.
The difference between Buy-and-Hold and Valuation-Informed Indexing is that Fama says that stock price changes are caused by economic developments and Shiller says that they are caused by investor emotion. That makes all the difference in the world. Stock prices went up by 126 percent from 1996 through 1999. If Fama was right, that huge jump was amazingly good news. If it was economic developments that caused that huge price jump, our economy must have been going gangbusters at that time and that is obviously a good thing. If Shiller is right that only a small portion of those gains came from economic growth and the vast majority just came from a temporary emotional flight of fancy, then we hurt ourselves very seriously in those years. We told people that those gains were real and they made plans for the future based on their belief that that was so when it was not. People cannot engage in effective financial planning if they have no idea how much they have in savings.
Shiller changed the world. And the world has not yet caught up. That’s the story here. I was still a Buy-and-Holder on the morning of May 13, 2002. All that I was concerned about at that time was the safe withdrawal rate. But when I saw the insanely emotional reaction to my safe withdrawal rate post, I knew that Shiller was right. So I stopped writing about Buy-and-Hold and from that point forward I wrote only things rooted in a belief that valuations affect long-term returns. Since I have been doing that for 16 years now, I have explored things that no one else had explored. It’s not that I am smarter. It’s that I have been doing it longer.
We did not know everything that there is to know about how stock investing works in 1981. Part of the scientific process is learning new things and then correcting your old understandings as new information comes in. That learning process was cut off. I think it is because this is so important an issue that the people who unintentionally got things wrong couldn’t bear to acknowledge it even to themselves. The conditions were perfect for cognitive dissonance. But they are aware on some level of consciousness that Shiller’s work is saying something important and new and so they have become insanely defensive about these matters. So the learning process that should have been going on for 37 years has been proceeding very slowly.
We all want the same things, Anonymous. We all want to know the truth about how stock investing works.
We know how to handle things. We need to handle things in the investing advice realm in the same manner as we handle things in every other field of human endeavor. We need to let people say what they believe and not punish them if they say something new. New can be good. We should be skeptical of new ideas to be sure. Skepticism is good. But we should not go to the point of threatening to kill people just because they advance new ideas that are rooted in peer-reviewed research that was awarded a Nobel prize. Those ideas have enough behind them that we should permit discussion of them.
As the new ideas are discussed, they will come to seem less strange. We will over time come to accept the new paradigm. Some of the new ideas will probably be rejected. That’s of course fine. But some of them will also probably be accepted. That’s also of course fine. We will only be able to separate the good stuff from the bad stuff once we permit honest posting by every single person willing to contribute in a positive way to our discussions, Buy-and-Holders and Valuation-Informed Indexers alike.
That’s my sincere take, in any event.
My best wishes.
Whole Truth (I Hope!) Rob
In short, they are all liars and onlyRob Bennett is the one person in this world that is telling the truth. Got it.
It certainly is true that there have been a lot of lies that have been told on the Buy-and-Hold side. And it certainly is true that I have put a lot of effort into the project of telling the truth re these matters. I believe that a failed retirement is a serious life setback. And I have formed friendships with a lot of the people in our communities. So I do feel an obligation to be honest with them re these matters. I haven’t lived up to that 100 percent. From May 1999 through May 2002, I didn’t point out the error in Greaney’s study. I wasn’t dishonest in a direct way. But I wouldn’t call that completely honest behavior. I held back on something that I knew people needed to know about. I don’t say that I am some perfect person. But I definitely say that I have made a major effort to be honest re these matters under very difficult circumstances.
And I think that in fairness we should note that a lot of the “liars” have made efforts from time to time get the truth out. I mentioned above that Bernstein pointed out that the Buy-and-Hold studies were off by two full percentage points at the top of the bubble. I think it would be fair to say that that was his conscience talking. He would LIKE to be more honest. And Pfau said that the Buy-and-Hold retirement studies were “dangerous.” Again, that was his conscience talking. Even today, after he was threatened and flipped, we see Pfau trying to be honest. He was asked at his Reddit Ask Me Anything session whether he thought that a 4 percent withdrawal was safe for a retirement starting today. He said “no.” He didn’t go into detail. He didn’t say that he thought that the studies that get the numbers wildly wrong should be corrected. He didn’t argue that we should open every discussion board and blog on the internet to honest posting, as I often do. So he wasn’t being entirely honest. But he certainly wasn’t being entirely dishonest either. I think it would be fair to say that this is a case where we have to take the good with the bad.
How much honesty do you think we would see in other fields of human endeavors if we made the penalty for being honest as high as we make it in the investment advice field? Do you think that the tobacco companies ever would have come up with the idea on their own to put cancer warnings on their packages if they hadn’t been required to by people outside their industry that demanded it? I don’t. I think that, if we had left it entirely to the industry to police itself, the tobacco industry would still be running advertisements telling people that one of the benefits of smoking is that it leads to good health — it relaxes you, you know? All people that work in a field want to make money by doing that work. That’s just a reality of human life. Sometimes, we need to have an outsider put some pressure on us to do the right thing. I bet that a lot of people who work in the tobacco field are happy that they are required by law to warn people buying their product that it may give them cancer. Most people want to do the right thing. But when there are huge financial rewards for doing the wrong thing, most of us are capable of being compromised. We need to work as a society to create conditions where people at least feel comfortable being somewhat honest re the most important stuff despite the pressures to turn a quick buck that otherwise might cause them not to live up to the standards that they would prefer to live up to.
I think that people in this field are like people in most other fields. They would LIKE to be honest. But this is a money field. And, where there is money involved, there are going to be pressures to be dishonest. That’s just the way it is. We have published rules at every site protecting those of us who want to do honest work from the sorts of individuals who have posted in “defense” of Mel Lindauer and John Greaney, do we not? That’s an indication that we would like to see honesty. We all had to check the “I Agree” button re those rules, right? So we all at one time expressed a desire to permit honesty. Even Lindauer and Greaney at one time expressed that desire. We have laws making financial fraud a felony. Shiller was able to get his book published. Shiller was awarded a Nobel prize. I have had thousands of my fellow community members express a desire that I and all others be permitted to post honestly re these matters. There are lots and lots and lots of indicators that as a society we would like to see more honesty in evidence in discussions of safe withdrawal rates and scores of other critically important investment-related topics.
When you make the price of honesty high enough, you get less of it, Again, that’s just a reality. Wade should not have been placed in circumstances in which he would have to give up his livelihood as his price for being honest. Lindauer and Greaney and those who posted in “defense” of them should have been removed from our communities when they first went off the rails. And of course that should have been done for the benefit of Lindauer and Greaney as well as for the benefit of all the rest of us. If we had banned Lindauer and Greaney, they wouldn’t be looking ahead to prison terms today. Was it not an act of dishonesty for the site administrators to fail to remove them when they first were asked to do so? It sure seems to me that it was. They chose not to act honestly because there were a few dollars to be made by letting these popular posters continue to engage in their acts of intimidation. That certainly wasn’t honest. But the fact that we have rules at every board prohibiting their behavior shows that we at least as a people DESIRE honesty.
Bull markets are liar’s markets, you know? That’s what it all comes down to. That’s what Shiller really showed with his Nobel-prize-winning research. Stocks are today priced at two times their fair value. Is it not a lie to price stocks at two times their fair value? It sure seems so to me. The honest thing to do would be to price stocks at their proper value. Buy as a society we have elected to price them at two times fair value. Because there is a temporary benefit to be had by doing so. We all get to pretend that we are closer to retirement than we would be if we priced stocks properly. So we tell ourselves a lie that makes us happy for a time. That’s the entire story here.
If you want to look at the dark side, you could say that we are bigger liars than any group of investors who ever came before us because we have kept prices higher longer than than any earlier group of investors. We are the biggest liars that ever walked Planet Earth!
That’s one way of looking at it. Another way of looking at it is that we are the people (through Shiller) who discovered The Big Lie of stock investing, that whatever price we assign to stocks is the right price merely because we assigned it and we are a perfectly rational people incapable of telling lies to ourselves. We are the people who awarded Shiller a Nobel prize, are we not? So maybe we are not the worst liars who ever lived, we are the people who celebrated a man for exposing The Big Lie of stock investing and for helping us all to protect ourselves from its negative effects. Both things are true, you know? Humans are liars and humans often engage in efforts to stop lying. We have both pro-lying and anti-lying instincts within us. There has never been a group of humans who told no lies and there has never been a group of humans who did not make any efforts to restrain lies.
The claim that the safe withdrawal rate is always 4 percent is a lie, Anonymous. I am sure of that much. If you want to say that at one time it was more a mistake than a lie, I am fine with that. That’s what I think. But it is more than a mistake today. People who are making honest mistakes do not advance death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs. I think that Greaney knew on some level of consciousness that there were problems with his study before I even advanced my famous post of the morning of May 13, 2002. That’s why he was so defensive. That’s why he immediately went into freak-out mode. And that’s why a lot of his friends did the same. And that’s why a lot of people who didn’t even think of themselves as friends of Greaney but merely as people who believed that Buy-and-Hold is a good strategy did the same. Lots of people sensed the lie at the root of all this before it was even exposed.
The good news is that as a society we are on our way to exposing the lie. I wish that the process had been completed a lot more quickly. But I guess that it takes whatever time it takes. After the next crash, we are all going to be feeling the pain brought on by our participation in this Big Lie in a very deep and intense way. Are we going to decide to give up the lie at that time? I think we are. And I will be happy to do whatever I can to help us come to terms with what we have done to ourselves by buying into this horrible Get Rich Quick lie that has over the years caused so much human misery. When we see lies told on our boards and blogs, we are seeing why stock prices are so high today. Do you get that? I am trying to tell the truth about stock investing and a lot of people are telling lies about me because they don’t want the truth about stock investing being told. They want those high prices to remain in place! They like thinking that they are closer to retirement than they really are!
It’s a circle. Tell the truth about safe withdrawal rates and people can plan their retirements more effectively. But do people even want that? If people really wanted that, they never would have priced stocks at two times fair value in the first place! People LIKE lies about stock investing, just as people once liked being told lies about how smoking is the key to good health because it relaxes you. A lot of lies survive for a long time because people like them. That’s the story here.
The smoking lie has been reined in a good bit over recent decades. I think that’s because of the research that was done showing that smoking causes cancer. The industry tried to stop the story of that research being told but they ultimately failed because there was just too much good to be done for too many people by the truth getting out. I think that’s what we are going to see in the investing advice field. The lie that the stock price is always right has survived for a long time. Shiller called it “one of the most remarkable errors in the history of economics.” It think it would be fair to refer to it as one of the most remarkable LIES in the history of economics. It’s a lie that we like to tell ourselves because it satisfies the Get Rich Quick urge that resides within us all. We believe this stuff because we like to believe this stuff. We are weak and imperfect humans.
But humans are not only weakness and imperfection. We are capable of engaging in research projects that expose the lies that we tell ourselves. We now have 37 years of research exposing the lie at the core of the Buy-and-Hold project. And I think that, when we see in flesh-and-blood terms what the Buy-and-Hold Lie has done to us all, we are going to begin taking that 37 years of peer-reviewed research seriously at all of our boards and blogs. We are as a society in the process of taking down The Great Buy-and-Hold Lie and we are today very, very close. We are one stock crash away, in my assessment.
I could be wrong. I would be lying to you if I told you otherwise, But that’s what all of the evidence that has appeared before me over the past 16 years tell me. The lie at the core of the Buy-and-Hold project (the lie that investors are purely rational and always price stocks properly) is well on its way to being exposed. But it survives today. And so everyone who works in this field feels pressure to pretend that he or she believes in it, at least to a small degree. Show no respect for The Big Lie and you threaten all of the powerful and wealthy and well-connected people who make a good living telling it to millions.
That’s my take, Anonymous All Get Rich Quick thinking is a lie. The Buy-and-Hold Lie is hurting us terribly. We are in the process of exposing it but we are not quite there yet. Until we get there, those who work in this field feel pressured to tell lies that they would prefer not to tell. Once they see The Big Lie is going down, things will change quickly. That will probably be in the days following the next price crash, when it will no longer be 37 years of peer-reviewed research telling us that Buy-and-Hold is a Big Lie but flesh-and-blood realities being reported in the newspaper every morning. Even Bogle will not be able to live with the results of The Big Lie when he sees them with his own eyes. And, when Bogle flips, everybody flips.
Not this boy, you know? I was once a Buy-and-Holder. I once told myself lies (we all do that, everyday) and so I didn’t know what I know today. I know today that I don’t want to be part of it. I am grateful for all the good that the Buy-and-Holders have done and I love them as people, But I cannot tell lies to my friends about the numbers that they are using to plan their retirements. That’s not me.
I believe that there will come a say when you will declare that it is not you either. But we will just have to wait to see how it all plays out to know for sure.
I naturally wish you all the best that this life has to offer a person, in any event.
Liar Rob (I’d Be Telling Yet Another Lie If I Said Otherwise, No?)