Set forth below is the text of a comment that I recently put to another blog entry at this site:
We cannot ignore the Goons, Pink. The Goons are a big part of the story.
When the book “A Random Walk Down Wall Street” was published in 1974, Buy-and-Hold was the state-of-the-art strategy. People truly believed in those days. There was genuine peer-reviewed academic research that at least appeared to support the Buy-and-Hold strategy.
Buy-and-Hold was discredited in 1981, when Shiller published his research showing that valuations affect long-term returns.
Most of us didn’t immediately see the implications. This was a shock. Our minds were wrapped around the old paradigm. We minimized the importance of the breakthrough. We rationalized. We suffered cognitive dissonance.
There were obviously exceptions, however. There were people trying to lead us in the right direction — Shiller, Grantham, Arnott, Smithers, Hussman, and on and on.
Why wasn’t the study that Wade and I did together done by someone else in all those years?
I wasn’t around. So I cannot say with certainty or precision. But I can sure offer a general guess.
It was made clear that any researcher who published research showing the huge implications of Shiller’s breakthrough finding would find his or her career ruined by The Buy-and-Hold Mafia. Signals were sent. Signals were received.
We need to hear about all that. Books need to be written about the intimidation tactics that were employed in those years to keep millions of middle-class investors from learning how to reduce the risk of stock investing by 70 percent.
But I wasn’t part of the story then. I entered the story on the morning of May 13, 2002.
What did I represent?
I represented a new kind of threat to The Buy-and-Hold Mafia.
I was some guy whose primary expertise in this field was that I had figured out how to post junk on the internet. You couldn’t threaten to destroy my investing advice career because I didn’t have an investing advice career. You couldn’t threaten to destroy my career as an academic researcher because I didn’t have a career as an academic researcher.
What to do, what to do?
The Linduaerheads and the Greaney Goons.
Did Jack Bogle and other powerful people in this field lend direct encouragement and support to the Goons? We don’t know for certain. We don’t know details. But all that will come out in the congressional hearings and in the criminal and civil trials. People will be asked questions under oath and we will hear very different answers than the nonsense gibberish we have been hearing on discussion boards for 11 years now.
The Goons are part of the story. The Ban on Honest Posting could not be extended in the age of the internet without the “work” of you Goons. So the smelly garbage that those who have posted in “defense” of Mel Lindauer and John Greaney have brought to the table is part of the story.
It is obviously not the main event. The main event is the finding that we can reduce the risk of stock investing for millions of middle-class people by 70 percent just by opening the internet to honest posting on safe withdrawal rates and other critically important investment-related topics.
But the Goon story is a big part of the story of how our gangbusters economy happened to be cratered and how millions of people happened to find themselves out of work.
So I will continue to report on that story.
While also reporting on the more important story — the breakthrough substantive findings that have been the product of the first 11 years of our discussions of the realities of stock investing.
I naturally wish you all the best things that this life has to offer a person, Pink.
Rob the Substance Guy (Who Understands That It Would Not Be Responsible to Ignore the Smelly Goon Stuff All the Same)