Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
No, that is the third line, plus you need to follow the conversation as such:
You said “They are all ashamed of their behavior.”
which was responded to as follows: “How do you know this? Do you read minds?”
and then you said “I observe behavior. People don’t put forward death threats when they believe that there is peer-reviewed research supporting what they are saying.”
It’s the third line.
The second line –“People don’t put forward death threats when they believe that there is peer-reviewed research supporting what they are saying” — doesn’t translate into what you said either. Jack Bogle and Wade Pfau did not personally put forward death threats. But Wade Pfau would be doing honest research work today if he did not see others putting forward death threats and also see Jack Bogle not speaking up about it. So Wade’s behavior has certainly been influenced by the death threats put forward by others.
And Bogle’s behavior has been influenced too. Bogle would be speaking up in opposition to your death threats in the same way that I have if he didn’t think that you Goons would lose your minds if he responded to your death threats in a responsible way. Bogle knows that he created a monster when he failed to come clean in 1981. Bogle rationalized not coming clean in 1981 because he never imagined that valuations would ever again rise to fair-value levels (remember, valuations were at one-half fair value in 1981). Then, when we got to fair-value levels, he rationalized not speaking up on grounds that valuations would probably not go too much higher and thus no real harm would be done. Then, when we got to two times fair value, he rationalized that that was the highest we had ever gone and that surely valuations would soon begin heading downward even if he failed to speak up. Then, when we got to three times fair value, he rationalized that coming clean re what the peer-reviewed research shows would have caused an economic crisis and who wants an economic crisis?
It’s always something, you know?
Get Rich Quick schemes are addictive, Anonymous. Do you think that Bernie Madoff knew on the day he created a fake fund where it was going to lead? I doubt it very much. If he knew he was going to end up in prison, he would have pursued a different way of turning a buck. He got into the Get Rich Quick stuff because he saw that it was an easy way to turn a buck and then things got out of hand. I am sure that that’s what happened with Bogle. He did not intend to cause an economic crisis. In fact, I am highly confident that he tells himself to this day that Buy-and-Hold was not the primary cause of the economic crisis. But here we are, you know?
Do you think he will continue to get away with promoting Buy-and-Hold as a research-based strategy following the next price crash, when the economic crisis caused by Buy-and-Hold will have destroyed many more lives than it has thus far? Somehow, I have my doubts.
All the humans are prone to rationalizations. The biggest reason why I was once a proud Buy-and-Holder myself is that I heard that it was rooted in the findings of the peer-reviewed research and I believed that rooting a strategy in the peer-reviewed research was a great way to avoid all the rationalizing that has been killing stock market investors every since the first market was formed. I think it would be fair to say that the joke was on me re that one! Rooting Buy-and-Hold in the peer-reviewed research WOULD be a great way to avoid rationalizations if only there really were peer-reviewed research supporting the idea that it is not necessary for investors to exercise price discipline when buying stocks. As we know from what Wade Pfau told us when he researched this question with great care, there is precisely zero peer-reviewed research supporting that core Buy-and-Hold claim.
It’s a lie. And it has been for 36 years now. The last 36 years of peer-reviewed research show just the opposite of what the Buy-and-Holders claim it shows. The last 36 years of peer-reviewed research show that stock investors must ALWAYS practice price discipline when buying stocks, not that there is some mystical, magical world where it might work out okay for them to fail to practice it. Science is funny how it often tells you things other than what you expected it to tell you or what you wanted it to tell you, isn’t it?
I don’t see what point you are making in the part of your comment where you go through the statements that you made and my responses to them. Yes, I said that I know that the Buy-and-Holders are ashamed of their behavior not by reading minds but by watching behavior. I suppose that you are suggesting that because I used “People don’t put forward death threats” as one example of the abusive behavior we have seen from Buy-and-Holders that I was saying that every Buy-and-Holder has personally put forward death threats. I obviously don’t believe that.
But TOLERATING death threats put forward by others comes pretty darn close to putting forward death threats yourself, does it not? It’s in the same general neighborhood. It certainly is not behavior that we see commonly evidence itself in any field of human endeavor other than in the investing analysis field. Why do we only see this behavior in this one field? Why is it that every board at which I have ever posted has rules prohibiting the intimidation tactics employed by you Goons and yet not at one of them has those rules been enforced?
It’s because every Buy-and-Holder is ashamed. Every Buy-and-Holder possesses common sense and common sense rules out the possibility that it could ever be a good idea to fail to exercise price discipline when buying something. And yet the “experts” (in marketing perhaps) say that it is of critical that investors not exercise price discipline when buying stocks. Huh? Mel Lindauer actually went so far as to say that it would be “dangerous” for people to use the last 36 years of peer-reviewed research as guidance re this question. What the h? And Bogle permits his name to be used at a discussion board at which Lindauer participates on a daily basis. Um — That makes good sense, Anonymous.
Again — it is a serious life setback to suffer a failed retirement. This is not a big joke. Not to the millions of middle-class investors whose lives are in the process of being destroyed.
My sincere take.