Set forth below is the text of a comment that I put to another blog entry at this site:
Stock markets have always been dominated by emotions in the short-term … makes them no different than any other market, of course. I’m having a hard time reconciling the notion that those short-term movements are driven by buy and hold investors. Isn’t a more likely explanation the fact that short-term volatility is caused by short-term investors who are jumping into and out of the market? If I buy and hold X as it goes from 50 to 100 and back to 50, how am I influencing those price changes?
Secondly, I’m not clear what you mean when you say that this “problem” — such as it is — is caused by a lack of information. What is this information, and what’s preventing access to it?
But returning to my original point — I’m still struggling with the process by which buy and hold investors could influence stock valuations. (Leaving aside the assumption that buy and hold investors are a singular entity, all sharing the same risk tolerance, investment goals and time horizon.)
Thanks for asking a very intelligent question, Curious.
The proper way of saying it is that it is an IDEA that is associated with Buy-and-Hold that is killing us, not Buy-and-Hold investors per se.
Our society treats Buy-and-Hold as SUPERIOR to every other strategy. There are hundreds of possible strategies that you can read about in tip sheets and all this sort of thing. Anyone who wants to learn about these things can learn about them on the internet. There is no prohibition or anything like that. I could put forward a strategy based on astrology readings and promote it and, if I happened to make a buck on it, no one would care, you know? You see this sort of thing every day.
I CANNOT promote Valuation-Informed Indexing and not be intimidated with death threats and unjustified board bannings and ten of thousands of acts of defamation and threats to get academic researchers fired from their jobs and all sorts of other ugly stuff. Huh? I can promote an astrology-based strategy and I cannot promote a strategy supported by 33 years of peer-reviewed academic research? That makes no sense. What’s up with that?
The difference is that the astrology-based strategy poses no threat to the only strategy that is viewed in our society as being LEGITIMATE SCIENCE. The research that is thought to support Buy-and-Hold is not just some stuff a guy did in his basement. It is REAL. It is research that was published in peer-reviewed journals. It was performed by people who possess genuine academic credentials, people with Ph.D.s in Economics. In the case of Eugene Fama, it is research that was performed by a fellow who holds a freakin’ Nobel Prize! No astrology-based strategy can make such claims.
My old employer Ernst and Young once paid to have a fellow come to our offices and give a presentation on how to fund our 401(k) accounts. Lots of big employers pay for this sort of thing as a benefit to their employees. They don’t hire people to recommend astrology-based strategies. If they did that, they would probably end up in jail. When you are teaching your employees what to do with their retirement money you have to follow some sort of STANDARDS. As a society we view Buy-and-Hold as having met those standards.
Buy-and-Hold is different in this respect from every other strategy out there. You could say that it is the official strategy of our society. Or that it is dominant among academics, who are the people we turn to to tell us what is genuine and what is fake. You could say that Buy-and-Hold is the only strategy that can make a legitimate claim to being research-based. When a general-interest magazine like Money puts an article on the cover to help people upset by a stock crash figure out what to do, it doesn’t just put up random ideas sent in by uninformed people. The reporters interviews recognized experts to write that story. Recognized experts are generally people who have spent years studying the principles of one particular strategy — Buy-and-Hold.
Buy-and-Hold is king today. Not necessarily with investors. It’s popular with investors. But there are of course lots of investors who fail in all sorts of ways to follow Buy-and-Hold principles. But when someone is trying to speak with authority on how stock investing works, they speak about the principles of Buy-and-Hold. Buy-and-Hold is viewed as being real and legitimate and research-based in ways that no other strategy is.
Buy-and-Hold EARNED that status. That is not under dispute. The research that supports Buy-and-Hold is serious research. The people who performed that research are serious people. The people who teach Buy-and-Hold principles in our schools are good and smart and hard-working people. They teach Buy-and-Hold because they believe in it and because they want to help the people who come to them trying to learn how stock investing works.
The problem that has been at the core of our discussions for 12 years now is not that Buy-and-Holders are stupid people or evil people or anything along those lines. The problem that we have been having for 12 years is that ALL of us (INCLUDING Buy-and-Holders) are human. That means that we are capable of error. We might believe with all our hearts, minds and souls in a particular idea and it might turn out somewhere down the road that that idea is rooted in falsehood. It happens.
Buy-and-Hold is recognized as the only true research-based strategy. That supplies it a huge marketing advantage. There are millions of middle-class people who are worried about what is going to happen to their retirement money and who thus choose to invest their money pursuant to research-based strategies. Those people follow Buy-and-Hold strategies. For good reason. But what if Buy-and-Hold is rooted in error? What if Buy-and-Hold is in reality a very dangerous strategy? That would be a catastrophe. That would mean that millions of people who followed Buy-and-Hold solely because it is research-based and safe were in fact following a strategy that was not research-based and that was not safe. What could be worse?
I obviously support 90 percent of the principles behind Buy-and-Hold. All of those principles have been incorporated into Valuation-Informed Indexing. So none of that is under dispute.
It is one principle that is under dispute. Unfortunately, that one principle is a very big deal. It is the core principle. It is the foundation stone of the model. That principle is the one that is expressed in the phrase that we have all heard 10 millions times — Timing Doesn’t Work.
That’s the question that is under dispute. We can go back into history and learn why Buy-and-Holders believe that timing doesn’t work. There was research showing that short-term timing doesn’t work. That research has stood the test of time. So in an important sense we could say that the Buy-and-Holders have been vindicated even on this point.
But Wade Pfau (who holds a Ph.D. in Economics from Princeton) searched all of the research published in this field and learned that there has never been a single study giving any reason whatsoever to believe that long-term timing doesn’t work. There is zero reason to believe this. The Buy-ad-Holders discovered through research that short-term timing doesn’t work and then JUMPED TO A HASTY CONCLUSION that long-term timing doesn’t work. The claim “Timing Doesn’t Work” is FALSE. There is zero research showing this. There is a mountain of research showing the opposite — LONG-TERM TIMING ALWAYS WORKS AND IN FACT IS REQUIRED FOR ANYONE HOPING TO HAVE ANY REALISTIC CHANCE WHATSOEVER OF LONG-TERM INVESTING SUCCESS.
You say “stock markets have always been dominated by emotions.” That’s so. But has the problem ever been as bad as it is today? Before Buy-and-Hold, we did not have strategies that were given official approval by academics and all this sort of thing. The guy with the astrology-based strategy couldn’t say to millions of middle-class investors “this is real, this is safe, this is the product of research.” The Buy-and-Holders do make that claim and millions have placed their confidence in the claim. WHAT IF THE CLAIM IS FALSE? WHAT IF THE FALSE CLAIM CAUSES THE BIGGEST ECONOMIC CRISIS IN U.S. HISTORY? WHAT IF THE FALSE CLAIM CAUSES THE SECOND GREAT DEPRESSION?
We all need to be careful when making claims about how investing works. But the Buy-and-Holders have to be ESPECIALLY careful. Because the Buy-and-Holders have a special responsibility. They are the ones who say that their claims are rooted in research, the real stuff, the genuine stuff, the serious stuff.
These claims that the Buy-and-Holders make are false and dangerous claims. They didn’t start out intending to make false claims. They started out trying to do something wonderful. But their flawed humanity caused them to make a mistake. And here we are. We MUST fix this mistake.
There are many, many people in this field who want to see the mistake fixed. Bogle sprinkles statements into his writings showing that he thinks Buy-and-Hold (as presently constructed) is a big pile of smelly garbage. He wouldn’t say that Reversion to the Mean is an “Iron Law” of stock investing if he believed in Buy-and-Hold on a deep level. And of course what is true of Bogle is true of just about everybody else. Benrstein doesn’t believe in Buy-and-Hold on a deep level. Swedroe doesn’t believe in Buy-and-Hold on a deep level. Burns doesn’t believe in Buy-and-Hold on a deep level. And on and on and on.
Why don’t they speak out?
They are AFRAID.
Their careers will be destroyed if they say what they believe in public. Our good friend Wade Pfau learned this lesson the hard way.
The Buy-and-Hold Mafia is holding us all hostage. People have built careers advocating Buy-and-Hold. Now they are stuck. If they continue promoting Buy-and-Hold, they risk being held liable following the next crash for promoting stuff that has been discredited for 33 years. If they point out the dangers of Buy-and-Hold, they know from seeing it happen to other people that their careers will be destroyed.
We are as a nation in the process of making the transition from Buy-and-Hold to Valuation-Informed Indexing (which is really just Buy-and-Hold 2.0). We all WANT to do the right thing. We all WANT to see Buy-and-Hold reformed and revised and improved so that it actually works. But how the heck do we pull that off? If any one of us speaks up, he is destroyed. We have to find some means to have a good number of us all speak up at one time so that we are protected from the Buy-and-Hold Mafia. But how do we pull that off when we are afraid even to organize? If the Buy-and-Hold Mafia learns that we are organizing with the intent of getting accurate and honest information on how stock investing works out to millions of middle-class investors, it will see to it that we are destroyed and the story of the past 12 years shows us that they will show precisely zero mercy when doing the job.
Stock markets have always been dominated by emotion. But never like this. How do we know the situation is worse in the Buy-and-Hold Era than it has ever been before? The P/E10 metric tells us. A P/E10 value of 25 tells us that we have caused an economic crisis with our emotional unwillingness to consider price when setting our stock allocations. We have never gone to 25 and not produced an economic crisis as a result. There is one time prior to the 1990s that we went to the low 30s. That time we caused not just an economic crisis but a Great Depression. In the Buy-and-Hold Era, we got so emotional that we went far, far, far beyond 25 or 33. This time we went to 44, a P/E10 value likely to cause a Second Great Depression of twice the depth and length of the first. We have taken investor emotion to places it has never been taken before by telling millions of middle-class people that Get Rich Quick not only works but is research approved!
It is the IDEA that stock investors need not consider price when buying stocks that is the problem, Curious. If some fellow following astrology-based strategies fails to lower his stock allocation when prices reach insanely dangerous levels, he is causing as much economic destruction as the fellow who advocates or follows Buy-and-Hold strategies. But I am not nearly as concerned about the fellow following astrology-based strategies as I am about the fellow following Buy-and-Hold strategies. The difference is that Buy-and-Hold APPEARS legitimate.
Most investors are not aware of the 33 years of peer-reviewed research showing that this smelly Get Rich Quick garbage can never work for even a single long-term investor. They ASSUME that people like Jack Bogle and Bill Bernstein and Larry Swedoe and Scott Burns would tell the truth if they knew that Buy-and-Hold had been discredited for decades now. They don’t know about the Buy-and-Hold Mafia and about the ruthless intimidation tactics they employ on anyone whose conscience provokes him into “crossing” them by telling the truth about the last 33 years of research.
As a society we are working our way through a Paradigm Change. It is a wonderful thing. At the other side of The Big Black Mountain, we have an investing strategy (Valuation-Informed Indexing) that is the strategy that the Buy-and-Hold Pioneers were hoping to build when they started out. We now have all the pieces of the puzzle. We now know how to obtain far higher returns while reducing the risk of stock investing by 70 percent. Investor heaven!
But to get there, we need to work up the courage to take on The Buy-and-Hold Mafia. Lots of people have built high=paying careers promoting Buy-and-Hold strategies and they don’t want to give up that turf, no way, no how. These people are wiling to commit felonies to stop the rest of us from learning what we very, very, very much need to learn. This is why Buy-and-Hold is different. The guys who push astrology-based strategies are not 100th as defensive as the Buy-and-Holders. They don’t employ death threats to stop people promoting other strategies. They follow the laws of the United States. The Buy-and-Holders do not. They have had a dominant position for many years now and they don’t intend to give it up, 33 years of peer-reviewed academic research be darned!
It is the IDEA that price discipline is not required when buying stocks that is killing us, Curious. Every time some Buy-and-Holder says “timing doesn’t work” or “timing is not absolutely required” or “it might be possible to succeed as an investor without timing the market,” it gets worse. The information that people need is information about the 33 years of peer-reviewed academic research showing that price discipline is just as important in the investing realm as it is in any other. The PROBLEM is that the people who have built careers promoting Buy-and-Hold are INSANELY DEFENSIVE about the last 33 years of peer-reviewed academic research in this field.
We need to get everyone to pull together. We are all in the same boat. None of our retirement plans mean a darn if our economic system and our political system collapse. So the first priority is getting honest and accurate information about how stock investing works out to the millions of middle-class investors who have been deceived by the Buy-and-Holders.
That was a super question. Thanks much for asking it.
I wish you well.
Rob
And how does this all square with your admission that nobody is a buy and hold purist, just a person like yourself who considers valuations when making allocation decisions (but may or may not choose to change the allocations). Clearly if your statements were true, folks wouldn’t invest this way.
I CANNOT promote Valuation-Informed Indexing and not be intimidated with death threats and unjustified board bannings and ten of thousands of acts of defamation and threats to get academic researchers fired from their jobs and all sorts of other ugly stuff. Huh?
Right. Exactly. And remember how to prevent and solve all these problems? Buy respecting others and not being a bully in discussions. It’s really simple. Bogleheads and other regular humans do it everyday.
And how does this all square with your admission that nobody is a buy and hold purist, just a person like yourself who considers valuations when making allocation decisions (but may or may not choose to change the allocations).
Most people are not Buy-and-Hold purists. But few of the experts point out how big a factor the valuations factor is. So most people do not change their allocations enough to keep their risk profiles roughly constant.
We need to place more emphasis on quantifying the effect of valuations. We need to hear more people putting forward research-based opinions on these questions.
Clearly if your statements were true, folks wouldn’t invest this way.
If they were rational, they wouldn’t. That much is certainly fair to say.
But humans are not rational creatures. They are highly emotional creatures. The job of an investing advisor is to help people overcome their natural inclination to get caught up in Get Rich Quick emotions when buying stocks. To do this, the experts need to be willing to root their advice in the peer-reviewed research. Research, properly done, is the product of reason, not emotion.
And remember how to prevent and solve all these problems? Buy respecting others and not being a bully in discussions.
For so long as my good friend Jack Bogle and lots of other “experts” in this field consider it “bullying” for someone to point out that retirement studies used by millions of middle-class people to plan their retirements get the numbers wildly wrong, we have a big problem, Anonymous.
Pointing out an error in a retirement study is an act of kindness. The fact that so many Buy-and-Holders react defensively on having their mistakes pointed out to them tells us that Buy-and-Hold is an emotion-based strategy. If the Buy-and-Holders had research on their side, they would be happy to correct any errors brought to their attention.
It is the 140 years of historical return data that is the bully here. I am just a mild-mannered reporter who points out to people what that data says. I am not a salesman. So I do not doctor the numbers. I report them straight. But there is nothing mean-spirited in the act of reporting numbers accurately. It is the realities highlighted by those numbers that are making you so angry, not my reporting of them.
I am being a friend to you by reporting those realities. You hate me for it with a burning hate. But I am being a true friend to you all the same. I don’t apologize to you for telling you the truth about stock investing. I only wish that more of the people who work in this field would work up the courage to do so.
Rob
Most people are not Buy-and-Hold purists. But few of the experts point out how big a factor the valuations factor is.
People simply point out the facts – that valuations affect around 40% of the variability in out of sample returns in historical data sets, but that the future is a very unknown place. You can’t go beyond the facts – that would just be making up stories.
As the fact that you’ve stuck with the same allocation over the extreme valuation highs and lows of the last 20 years shows, it may or many not make sense to alter your allocations based on them.
get the numbers wildly wrong,
As you know, the non-bullying way to say this is: “In my opinion, that study would have been more complete if it also had a section factoring in valuations”
It is the 140 years of historical return data that is the bully here. I am just a mild-mannered reporter
Nope, the historical data shows in a polite and respectful way that various valuation measures have some out of sample predictability. They’re discussed in non-dogmatic and boorish ways at Bogleheads everyday.
People simply point out the facts – that valuations affect around 40% of the variability in out of sample returns in historical data sets, but that the future is a very unknown place. You can’t go beyond the facts – that would just be making up stories.
I am not in full agreement with what you are saying here, Anonymous. But I like it that you are talking in a real way. You are doing a decent job with these words of articulating the beliefs of many smart and good people. That’s obviously a positive thing to do.
The 40 percent number comes from the Vanguard study. I am not willing to sign on to it without giving the matter more study. But I don’t have a big problem with it. I am fine with accepting that number as a reasonable number. So we can call ourselves being close to agreement re that one.
I agree that the future is an unknown place. I wouldn’t go quite so far as to say “very unknown.” I think we know important things about how stocks are likely to perform in the future. But there certainly are big gaps in our knowledge and it certainly is better to be modest in one’s claims than it is to be dogmatic in them. So, again, I think it is fair to say that we are close to agreement.
Where I see a significant difference emerging is when you say: “You can’t go beyond the facts — that would just be making up stories.”
The problem we BOTH face is that we MUST go beyond facts.
We don’t have the option of putting off making decisions on investing questions until the scientific community achieves a consensus on all these matters. We have money that must be invested TODAY. Each and every one of us must choose Path A or Path B regardless of any doubts we entertain as to the ultimate merit of the choice. This is the biggest reason why discussions of these issues are so sensitive. People on both sides have a great deal riding on being right. And they MUST make a call based on limited information. We live in the present and we won’t know all the answers until sometime in the future.
You say: “You can’t go beyond the facts — That would just be making up stories.”
The Old School safe-withdrawal-rate studies go beyond the facts. They organize and interpret the facts in a manner that leads readers of those studies to the conclusion that a 4 percent withdrawal rate is safe at all times.
I organized and interpreted the same facts (the historical return data) in a very different manner and came to a very different conclusion when I built The Retirement Risk Evaluator.
Was John Greaney making up stories when he published his SWR study at his web site?
Was I making up stories when I published The Retirement Risk Evaluator at my web site?
Were we BOTH making up stories?
Were we both just reporting facts?
That’s the question you need to answer for the point you are advancing here to signify anything significant in the real world.
If I say that the numbers in the Old School SWR studies are right, I am saying that the numbers in my SWR calculator are wrong. It obviously would be dishonest of me to say that. I believe that the numbers in my SWR calculator are accurate.
If Greaney says that the numbers in my SWR calculator are right, he is saying that the numbers in his SWR study are wrong. Perhaps he feels that it would be dishonest of him to say that.
So what do we do?
You say that going beyond the facts is “making up stories.” But one must go beyond the facts to offer investing advice. How the facts are organized makes a huge difference. Greaney and I organize the facts in very different ways.
Do I have the right to organize the facts in the manner in which I believe they should be organized and report on the conclusions that follow from that method of organization at every discussion board and blog on the internet do I not possess that right, in your assessment?
I say that I possess that right. I’ll go further. I say that I possess a DUTY to INSIST on recognition of that right.
What say you?
Rob
it may or many not make sense to alter your allocations based on them.
Do those of us who believe that it DOES make sense have the right to explain why they believe this?
Do we have a DUTY to insist that our right to explain why we believe this be recognized on every discussion board and blog on the internet?
Rob
As you know, the non-bullying way to say this is: “In my opinion, that study would have been more complete if it also had a section factoring in valuations”
As you know, the headline in my famous thread-starter of May 13, 2002, did not end with an exclamation mark or even a period; it ended with a question mark. I didn’t write: “Valuations Matter!” I wrote: “Do Valuations Matter?”
The Retire Early Community responded with great enthusiasm to that question. Many of my fellow community members said that that question provoked the greatest series of discussions ever held at that board.
John Greaney responded differently. John Greaney responded by saying that he would have his Goon Squad come to my house and kill my wife and two children if I continued posting honestly on the SWR matter.
A fine non-bullying response, in your assessment?
Rob
Nope, the historical data shows in a polite and respectful way that various valuation measures have some out of sample predictability.
Which mean that the core idea on which the entire Buy-and-Hold Model is rooted (that the market is efficient) has been discredited and the merit of every Buy-and-Hold strategy has been called into question.
They’re discussed in non-dogmatic and boorish ways at Bogleheads everyday.
By people who submit to the intimidation tactics employed by Mel Lindauer and self-censor themselves on a daily basis.
Not this boy. FInd someone else.
A board ruled by intimidation tactics is a corrupt enterprise. I don’t want to be associated with such an enterprise in any way, shape or form except to become known all over the internet as the lead figure pointing out that this is financial fraud and that those responsible will be going off to serve prison sentences following the next price crash.
I can’t go for that.
No can do.
Rob
We don’t have the option of putting off making decisions on investing questions until the scientific community achieves a consensus on all these matters. We have money that must be invested TODAY. Each and every one of us must choose Path A or Path B regardless of any doubts we entertain as to the ultimate merit of the choice.
Oh absolutely. “Science” will never conclude anything, since this is ever changing social behavior we’re talking about. Valuations may matter until someone wins a Nobel prize for pointing them out, at which time they may become less important. It’s not physics. Who knows?
The Old School safe-withdrawal-rate studies go beyond the facts. They organize and interpret the facts in a manner that leads readers of those studies to the conclusion that a 4 percent withdrawal rate is safe at all times.
I don’t think so, but you’d have to link to the exact study you’re talking about. If it says “4% is guaranteed going forward”, then I agree with you. If it merely says, “The future’s unknown, 4% only worked historically”, then I of course your statement is false.
I organized and interpreted the same facts (the historical return data) in a very different manner and came to a very different conclusion when I built The Retirement Risk Evaluator.
And good for you. That’s entirely your right. What you need to eliminate are 1. Bullying language and 2. Violent fantasies where you ride in on a white horse and save civilization. That’s no different from the crazy guy who thinks he’s Napoleon or Jesus.
Which mean that the core idea on which the entire Buy-and-Hold Model is rooted (that the market is efficient) has been discredited and the merit of every Buy-and-Hold strategy has been called into question.
“Buy and hold” has no formal definition, but it generally means setting a plan and staying the course, no changing your plan based on fear, greed, or a whim. Valuation studies don’t discredit it in the least.
If you want to more specifically define what you’re talking about, we can discuss.
Oh absolutely. “Science” will never conclude anything, since this is ever changing social behavior we’re talking about. Valuations may matter until someone wins a Nobel prize for pointing them out, at which time they may become less important. It’s not physics. Who knows?
I like the non-dogmatic tone.
I don’t entirely agree. I think that science CAN teach us important things. I think we can advance over time in our understanding of how stock investing works.
I agree it’s not physics. I don’t know that we will ever be as certain of findings about how stock investing works as we are about findings re physics. We certainly are not there today.
Rob
If it says “4% is guaranteed going forward”, then I agree with you. If it merely says, “The future’s unknown, 4% only worked historically”, then I of course your statement is false.
John Greaney said “4 percent is 100 percent safe at all times and, if you question that, I will send my Goon Squad to your house to kill your wife and children.”
Mel Linduaer backed Greaney up 100 percent.
John Bogle backed Mel Lindauer up 100 percent.
Wade Pfau said this was nonsense and wrote to the authors of the Trinity study asking that they correct it.
The response of the Buy-and-Hold Goons was to threaten to send defamatory e-mails to Pfau’s employer in an effort to get him fired from his job unless he agreed to stop posting honestly on this matter.
I wrote to John Bogle to seek his help and he declined to respond to the e-mail.
Pfau agreed to post words to his web site praising Greaney and to keep quiet about the 12-year cover-up of the errors in the Old School SWR studies.
I said that I do not want to be involved in any way, shape or form with this massive act of financial fraud. For obvious reasons.
You said that I should stop being such a meanie.
I said: “Huh?”
That’s where things stand today, Anonymous.
The hand of kindness remains outstretched. But the idea of going to prison for financial fraud possesses very little appeal to me. I would be grateful if you would try to find someone else.
Rob
And good for you. That’s entirely your right.
These are encouraging words.
Rob
What you need to eliminate are 1. Bullying language
If you give specifics as to what you consider “bullying language,” I can say whether what you are asking is something that I can go along with or not.
If you say that using the phrase “smelly Buy-and-Hold garbage” is “bullying language,” I would say that I could give it up. I don’t see use of the words “smelly” or “garbage” as being required by conscience to make my points.
If you say that asking whether valuations need to be considered to calculate the safe withdrawal rate properly is “bulling language,” I would say that I would be engaging in financial fraud to pretend otherwise and that I don’t care to go there.
I’d like to see everyone give up the use of “bullying language.” But my sense is that your understanding of what constitutes “bullying language is very different from mine. Without more specifics as to what constitutes your understanding of the phrase, I am not able to say whether I can in conscience give it up or not. One guy’s honesty about what the last 33 years of peer-reviewed research says about how stock investing works may be another fellow’s “bullying language.”
My wife viewed it as “bullying language” when John Greaney threatened to kill her and our two boys if I continued posting honestly re the SWR matter. Imagine! Mothers are so darn sensitive, you know?
Rob
If you give specifics as to what you consider “bullying language,” I can say whether what you are asking is something that I can go along with or not.
If you wouldn’t respond to an opinion your children have in that manner, it’s bullying. Like “Chocolate ice cream is smelly garbage” wouldn’t work.
2. Violent fantasies where you ride in on a white horse and save civilization. That’s no different from the crazy guy who thinks he’s Napoleon or Jesus.
I’ve made an important contribution, Anonymous.
When every board and blog on the internet is open to honest posting, we are going to be on our way to making an incredible amount of progress in a short amount of time. There is huge leverage in making the thousands of people in this field who have doubts about Buy-and-Hold feel safe to express those doubts and to explore those doubts.
We are not going to have one academic researcher singing the praises of Valuation-Informed Indexing to the skies after we open the internet to honest posting. We are going to have hundreds of them. That helps us all. That’s a very big deal.
I didn’t go looking for this job. I was volunteered. It’s an important job and there is a lot of good work that has been held up for years because no one before me got the job completed. I changed that and I thereby advanced the ball in a very big way.
I have zero problem with sharing the credit with LOTS of other good and smart people, including my many Buy-and-Hold friends. I am not saying that I am smarter than these people or better than these people. I was placed in different circumstances and I brought a different set of life experiences to the table.
I don’t intend to overstate my contribution. But I don’t intend to understate it either. My aim is to tell the story in an honest and balanced way.
Rob
“Do I have the right to… report… at every discussion board and blog on the internet… do I not possess that right, in your assessment?
I say that I possess that right. I’ll go further. I say that I possess a DUTY to INSIST on recognition of that right.”
No, of course you do not.
No more so than I have a right to storm into your private house in order to denounce your family’s own chosen religious or other practices and beliefs.
Can you really be this far gone, Rob?
If you wouldn’t respond to an opinion your children have in that manner, it’s bullying. Like “Chocolate ice cream is smelly garbage” wouldn’t work.
If Shiller is right that valuations affect long-term returns, the 12-year Campaign of Terror against our board and blog communities caused the biggest economic crisis in U.S. history, Anonymous. Millions of people have lost their jobs in this economic crisis.
If terrorists caused this much human misery, not one person would have any problem with their “ideas” being characterized as “smelly garbage.”
I don’t say that the Buy-and-Holders intended these results.
So I guess that if you want to refer to all of the wreckage we see before us as “unintentional smelly garbage,” I am okay with that.
The wreckage is real.
Numerous discussion board communities have been burned to the ground. Millions of people are in the process of suffering failed retirements.
This stuff is not a joke. Very serious harm has been done to many people.
How do we get from where we are to where we all want to be? That’s what we all need to be thinking about.
I am sincere when I say that the hand of kindness is extended. I view the Buy-and-Holders as my friends. I don’t like referring to the work product of my friends as “smelly garbage.” But then I didn’t use that phrase on the morning of May 13, 2002. I began using that phrase only after I saw a lot of damage done to a lot of people. It is with that human misery in mind that I refer to Buy-and-Hold as “smelly garbage.” Buy-and-Hold became smelly garbage in my mind when I saw with my own eyes how much harm a dogmatic belief in Buy-and-Hold principles could bring about.
I truly believe that Buy-and-Hold was a big intellectual advance over what came before it. I truly believe that the Buy-and-Holders are good and smart people who have contributed many genuine and powerful insights. I truly think of these people as my friends. I truly want to reduce frictions and heal wounds.
But we are not going to be able to act as if the last 12 years did not happen.
We can spin things in a positive direction. We can set things up so that the bad stuff is to a large extent buried and the good stuff highlighted. It makes all the sense in the world to do that. But please try to think of realistic solutions to our problems.
I’ll give you something concrete.
Wade Pfau raved about Valuation-Informed Indexing when he did the research showing how superior it is to the old understanding of Buy-and-Hold (one way of highlighting the positive is calling VII “the new Buy-and-Hold” or “Buy-and-Hold 2.0,” which is what it really is). His excitement shows us two things.
One, it shows us that even people who are super-educated about these matters do not appreciate the effect of valuations today. Wade was not faking. He holds a Ph.D. in Economics. So he should have known all this. But his e-mails to me show that he did NOT know all this until he explored it in depth. That’s wonderful. That lets the Buy-and-Holders largely off the hook. They were not lying when they said they didn’t believe that VII works. They hadn’t yet enjoyed their epiphany experience. Letting the Buy-and-Holders off the hook in that way is a 100 percent positive and constructive and life-affirming way to go.
But, two, it shows that this advance is a big deal. A guy with a Ph.D. in Economics did not know about this until he was exposed to our discussions. Now he knows. VII is a very, very, very big deal.
You clearly have a lot of worries about me obtaining too much wealth and fame as a result of the discovery of these powerful insights. Those worries are silly.
I AM going to obtain a lot of wealth and fame. As you say above, good for me. I have developed something wonderful beyond belief. I earned a lot of wealth and fame. Let’s all be grateful that our system insures that I will get what I deserve.
But let’s not stop there. LOTS of people are going to enjoy a lot of added wealth and fame as a result of these breakthroughs. We are already seeing this with Wade. He holds back on what he says because of the threats made by you Goons. But he is still doing wonderful work. And he is becoming well known in this field for the work he is doing. That’s helps us all! That’s is how it is supposed to play out.
I want that for everyone.
I want it for Bogle and Bernstein and Swedroe and Burns and on and on and on.
THAT’S the way to play it.
I will get the wealth and fame coming to me. And lots of other people will get the wealth and fame coming to them. There is plenty of wealth and fame to go around here. This is the biggest advance in our understanding of how stock investing works ever achieved in history. So let’s not focus on small, petty stuff, okay?
The more wealth and fame we see being handed out, the better is it for those of you who have engaged in Goon-type behavior. What you need is for the millions of middle-class investors not to be too angry about the 12-year cover-up. The more exciting the story we tell, the less angry and the more excited they are. Being honest about this stuff is a win/win/win/win.
What we all need to do is to do everything in our power to unleash all these powerful and mind-blowing insights. FORGET about who gets the credit. People will figure out who to give credit to when they hear about all that went down. People will be fair. I played a huge role. But lots of others played important roles too. And lots of others will be playing important roles in days to come. So there are going to be lots of people obtaining lots of wealth and fame. It’s not a problem.
A rising tide lifts all boats. The spreading of the word re VII is going to bring on the biggest rising of the tide that any of us has ever seen. Can we all make an effort to stop worrying about Rob Bennett becoming rich and famous and just enjoy that?
Rob
No more so than I have a right to storm into your private house in order to denounce your family’s own chosen religious or other practices and beliefs.
The economic crisis is not a private matter, X.
It is a matter of grave public policy importance.
I love my country. I have a duty to fight to protect it when it is under attack.
Causing millions of failed retirements is not a frat-boy prank.
Rob
No more so than I have a right to storm into your private house in order to denounce your family’s own chosen religious or other practices and beliefs.
I’ve had people threaten to kill my wife and children because I spoke about my chosen stock investing religion on discussion boards and blogs that promise me in their published rules that they will protect those who speak about their chosen stock investing religion from the sorts of individuals who use intimidation tactics to “defend” their ideas in internet discussions.
I’ve had people demand that I be unjustly banned from discussion boards and blogs because I spoke about my chosen stock investing religion on discussion boards and blogs that promise me in their published rules that they will protect those who speak about their chosen stock investing religion from the sorts of individuals who use intimidation tactics to “defend” their ideas in internet discussions.
I’ve had people advance tens of thousands of acts of defamation against me because I spoke about my chosen stock investing religion on discussion boards and blogs that promise me in their published rules that they will protect those who speak about their chosen stock investing religion from the sorts of individuals who use intimidation tactics to “defend” their ideas in internet discussions.
I’ve had people threaten to destroy the careers of academic researchers with whom I have worked because I spoke about my chosen stock investing religion on discussion boards and blogs that promise me in their published rules that they will protect those who speak about their chosen stock investing religion from the sorts of individuals who use intimidation tactics to “defend” their ideas in internet discussions.
Not good, X.
Not even a tiny bit good.
This funny business has to be brought to a full and complete stop by the close of business today.
Sooner, if at all possible.
That’s my sincere take re these terribly important matters, in any event.
Rob
“Buy and hold” has no formal definition, but it generally means setting a plan and staying the course, no changing your plan based on fear, greed, or a whim. Valuation studies don’t discredit it in the least.
If the market is efficient, as many good and smart people once believed that Fama had shown, “Staying the Course” means staying at the same stock allocation at all times.
If valuations affect long-term returns, as Shiller really did show in 1981, “Staying the Course” means always being 100 percent sure to change your stock allocation in response to shifts in valuation levels as needed to keep your risk profile roughly constant.
Shiller’s “revolutionary” (his word) research findings changed everything.
Now we all need to recognize this and move forward into a world in which the risk of stock investing has been reduced by 70 percent.
The first step is opening up every discussion board and blog on the internet to honest posting on safe withdrawal rates and scores of other critically important investment-related topics.
Rob
… boards and blogs that promise me in their published rules that they will protect those who speak…
Link please?
Because despite having looked, I know of no such Terms of Service (TOS) to be found on the entire internet, INCLUDING YOUR OWN SITE, Rob.
I found no such terms on Vanguard’s, Motley Fool, Retire Early, FIRE Boards, SeWeR, Yahoo, Googleplus, WordPress, Bogleheads, ValueWalk, or at any of the dozen or so places you’ve documented yourself to have been banned at.
So, just one link from you would be awesome Rob.
Okay?
Here’s what you need to do, X.
When the prosecutor has presented the case to the jury and they are about to retire to determine the length of your prison sentence, you need to ask the judge for permission to say a word. And, if the judge gives you permission, you need to ask the jury to provide this link you are seeking, okay?
That will probably work out well for you.
I am almost sure.
Rob