Set forth below is the text of a comment that I posted recently to another blog entry at this site:
Most people do not obsess over things that horrify them. Especially things that have not happened and almost certainly never will happen. Goodness, what a tragic way to go through life.
That’s assuming of course that you aren’t simply saying “horrifying” when you mean “extremely appealing”. Either way it’s tragic, just for different reasons.
I find it horrifying, X.
I had lots of good times with John Greaney. He put up a notice for newcomers to the Retire Early board saying that the first thing they should do is to read all of my posts because they were the best stuff he had ever seen on the subject of early retirement. That was an exceedingly kind thing to do. That meant a lot to me. There was a poster who attacked me when I published my Secrets of Retiring Early report. John came to my defense. On the day that I discovered John’s site, I copied every article on it and put the copies in a binder so that I could refer to those articles again and again and learn from them. When my wife picked me up at work that day, I spent the entire ride back going on and on about this exciting site that I had discovered. When I first began work on my Passion Saving book, I wrote an e-mail to John asking him to co-author it with me (he sent an e-mail back saying that it wouldn’t work out because every person who knew him well considered him a cosmic “asshole” — that’s John’s word).
Are you saying that I shouldn’t care about how this individual has destroyed his life? I never even imagined that such a thing were possible back at the time when I first began posting on the internet. It’s horrifying. The word fits.
And of course we are not just talking about John. It is horrifying what has happened to Jack Bogle, who is a hero of mine. It is horrifying what has happened to Bill Bernstein and Scott Burns and Larry Swedroe and Wade Pfau. It is horrifying what has happened to J.D. Roth and Carl Richards and Mike Piper and on and on and on. It’s horrifying what has happened to you. Absolutely 100 percent horrifying.
And it is of course absolutely 100 percent horrifying what has happened to the millions of middle-class investors whose lives have been destroyed because we have spent 12 years of our life energies debating whether honest posting should be permitted rather than making use of honest posting to learn things that would make our lives richer in about 100 different ways.
The most horrifying aspect of all of this is the opportunities we have pissed away. We are the luckiest generation of investors ever to walk Planet Earth. We are the first generation of investors who knows what it takes to reduce the risks of stock investing by 70 percent while increasing returns DRAMATICALLY. And we instead tolerate 12 years of insanely abusive behavior that puts us in the Second Great Depression while causing the people engaging in the abusive behavior to spend the last few decades of their lives in prison cells. If that ain’t absolutely 100 percent horrifying, what the heck would you say fits the bill?
You know how horrifying this is? It’s up there with the mounds of dead bodies you see in the Ken Burns’ documentary on the Civil War. We are talking about so vast an amount of human suffering BROUGHT ON FOR NO SANE REASON WHATSOEVER that the human mind can barely contemplate that such a thing might ever happen much less that it has in fact been playing out before all of our eyes for 12 years now WHILE MOST OF US KEPT IT ZIPPED AND THEREBY INSURED THAT THE HUMAN SUFFERING WOULD GROW AND GROW AND GROW AND GROW.
Horrifying it is. Please spread the word all over the internet that is my sincere take re this one. I stand by the word “horrifying” 100 percent.
As for the idea that I find any of this ugliness even a tiny bit “appealing,” why the f have I spent 12 years of my life trying to bring an end to it if I find any of it even a tiny bit appealing? Who is the one who put forward a post on November 23, 2002 urging Greaney’s removal from our community? Were you one of the 25 community members who endorsed that post? If not, why the f not? Motley Fool wanted to see that the entire community supported his removal. You could have helped us all bring it to an end nearly 12 years ago. Did you do your part? Or did you lack what it takes even to push the freakin’ recommendation button (something Greaney would not even know about because recommendations are anonymous)?
Is your personal cowardice “horrifying” enough, X.? Ya think? Do you think you are going to feel good about yourself for the rest of your day because you couldn’t work up the courage to push a recommendation button when the fates conspired to make that the minimum responsibility you owed to your fellow community members, who had given so freely to you of their knowledge and experience and love?
I don’t “obsess” over it, X.
My job is to solve the problem. I do not have a magic wand that can take us back to the morning of May 13, 2002. If I did, I would wave that sucker in the air like crazy. Yes, I get it that you Goons would play it differently the second time if that opportunity presented itself. We don’t have that opportunity. It’s fantasy thinking to contemplate it. We live in a world where time moves only forwards and never backwards. Responsible people accept reality and cope with it. To accept reality and cope with it is not to “obsess.”
The most compelling thing that I could possibly do on the substance side is to co-author research that shows millions of middle-class people how to reduce the risk of stock investing by 70 percent and to have that research published in a peer-reviewd journal. I have already done that. Years ago. And, yes, surely enough, the response of a good number of long-confirmed Buy-and-Holders was to tell me that this research was causing them to open their minds to new ideas, this research was what they needed to give Valuation-Informed Indexing a fair hearing for the first times in their lives.
The response of you Goons was to threaten to destroy the career of my co-author in the event that he continued publishing honest research or continued posting honestly on the internet about the honest research already published under his name. So I think it is fair to say that further explanations of the substantive realities is not going to swing this thing. You go to prison if millions of middle-class investors learn the realities and that’s all you care about at this point. For you, it’s in for a dime with felonies, in for a dollar with felonies. You will commit any felony you have to commit to ensure that millions of your fellow citizens never learn what they need to learn if we are to as a society bring this economic crisis to an end.
I have a PATRIOTIC DUTY to overcome The Buy-and-Hold Mafia. All of us who are aware of what has been done to us as a nation of people over the past 12 years have that patriotic duty.
How do we get people who know they are going to prison if the truth comes out to understand that they must permit the truth to come out all the same?
We extend the hand of kindness to them. We let them know that we will do anything in our power to help them get those prisons sentences shortened to whatever extent it is possible to get them shortened given the circumstances that apply today.
What other options are open to me, X? If you have a better idea, let’s hear it. If not, please stuff your foul-smelling “obsess” garbage where it belongs, in that big, fat bottom of yours where you keep all your “defenses” of the Old School safe withdrawal rate studies.
Not this boy. Find someone else. It’s not my particular cup of tea. I can’t go for that. No can do.
I post honestly or I post not. Non-negotiable.
That policy works just fine in every field of human endeavor other than stock investing. There is going to come a day in the not-too-distant future when it is going to work just fine in the field of stock investing as well. I intend to see to it, long Goon prison sentences or no long Goon prison sentences.
I naturally wish you the best of luck in all your future endeavors in any event.
Rob, the Determined and Loving and Honest and Optimistic One
And of course we are not just talking about John. It is horrifying what has happened to Jack Bogle, who is a hero of mine. It is horrifying what has happened to Bill Bernstein and Scott Burns and Larry Swedroe and Wade Pfau. It is horrifying what has happened to J.D. Roth and Carl Richards and Mike Piper and on and on and on.
Isn’t is strange how dark conspiratorial forces began to swirl from around the US all at once Rob?
That’s the day you should have sought psychiatric help.
What other options are open to me, X?
See above. There’s still time.
NO SANE REASON WHATSOEVER
Bingo.
For you, it’s in for a dime with felonies, in for a dollar with felonies. You will commit any felony
Complete and total insanity.
I post honestly or I post not. Non-negotiable.
You’ll post respectfully and sanely or you’ll post not. The (sane) community will enforce that. Non-negotiable. Sorry.
Isn’t is strange how dark conspiratorial forces began to swirl from around the US all at once Rob?
The way that I see it is that ignorance existed re an important element of how stock investing works (the critical importance of all investors always exercising price discipline when deciding on their stock allocations) for a long, long time and was then overcome in an intellectual sense in 1981. The “dark conspiratorial forces” that you refer to are people who built their careers around promotion of the now-discredited model for understanding how stock investing works and are trying to stop the rest of us from learning what we need to learn to move forward.
This is akin to buggy-whip manufacturers intimidating people trying to start companies that make cars. It is people acting in their self-interest in a way that destroys millions of middle-class lives. But it is not people who needed to meet in a smoke-filled room to decide on a set of plans. The Buy-and-Holders all see the threat clearly enough without needing to meet in a smoke-filled room. There is now 33 years of peer-reviewed research showing that Valuation-Informed Indexing is so far superior to Buy-and-Hold that they realize that Buy-and-Hold cannot survive six months following the day that one large web site declares that it will be permitting honest posting on the peer-reviewed research in this field on a going-forward basis.
Call it what you want, it is certainly the greatest act of financial fraud in U.S. history. I certainly do not want my name associated with it in any way, shape or form (except as the person leading the effort to overcome the Wall Street Con Men and their Internet Goon Squads and to bring the economic crisis they caused to a full and complete stop as soon as is humanly possible).
My best wishes to you, Anonymous.
Rob
Bingo.
We’re in agreement re this one, Anonymous.
The Valuation-Informed Indexers have all the research on their side.
But the Buy-and-Holders have a mountain of emotion on their side.
Those whose thinking is rooted in reason and those whose thinking is rooted in emotion are speaking different languages.
We will ultimately need to decide as a society which path we want to take.
Rob
Complete and total insanity.
Backatcha, my old friend.
Rob
You’ll post respectfully and sanely or you’ll post not.
Got it.
The (sane) community will enforce that.
Ditto.
Non-negotiable.
That’s clear.
Sorry.
Me too.
Rob
Given the vast conspiracy of silence regarding valuations, isn’t it incredible such articles in the New York Times could occur Rob?
http://www.nytimes.com/2014/05/06/upshot/time-to-worry-about-stock-market-bubbles.html?hp&_r=0
and are trying to stop the rest of us from learning what we need to learn to move forward.
I guess they aren’t doing a very good job, given the NYT article I just posted….
Given the vast conspiracy of silence regarding valuations, isn’t it incredible such articles in the New York Times could occur Rob?
Do you think that the entire world went from believing that the sun revolves around the earth to believing that the earth revolves around the sun five minutes after the discovery was made, Anonymous?
Truth prevails over ignorance in time, but not instantly. It is a PROCESS.
We are living today mid-way through that process. Jack Bogle is the biggest advocate of Buy-and-Hold alive on Planet Earth. And even Jack includes research-based stuff in his books and speeches ALL THE TIME. I learned about the errors in the Old School safe-withdrawal-rate studies by reading Jack’s book. Jack gave a speech to the Vanguard Diehards back at the time when I was posting there that contained paragraph after paragraph of legitimate, helpful stuff. Then it concluded with gibberish, saying “so just be sure to Stay the Course” without pointing out that to Stay the Course in a meaningful way you must be CERTAIN to lower your stock allocation when prices reach insanely dangerous levels. Huh?
The NYT article you linked to would have been a good article to publish in 1985 or 1990. We should be a good ways past that today.
Where is the New York Times article reporting on the 12-year cover-up of the errors in the Old School SWR studies and on the felonies that have been employed to keep millions of middle-class investors from learning about those errors?
Where is the New York Times article reporting on the Bennett/Pfau research showing millions of middle-class investors how to reduce the risk of stock investing by 70 percent while letting them retire five to ten years sooner than they imagined possible in the Buy-and-Hold days?
Where is the New York Times article reporting on how Bogle hasn’t changed his investing advice one iota in the 33 years since Shiller’s research showed that there is precisely zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor?
Where is the New York Times article reporting on how Bogle continues to associate with the sorts of individuals who have put up posts in “defense” of Mel Linduaer and John Greaney after hearing hundreds of community members at the Bogleheads Forum express a desire that honest posting be permitted?
Where is the New York Times article reporting that it was the continued promotion of Buy-and-Hold strategies for 33 years after they were discredited by the peer-reviewed research in this field that was the primary cause of the economic crisis?
THOSE are the sorts of articles we need to be seeing today, Anonymous. This is not 1981 or even 1991. This is 2014. It is time to MOVE FORWARD.
Moving forward means telling people what Shiller’s findings means in practical, how-to investing terms. It means explaining to people the DANGERS of Buy-and-Hold strategies.
There is no magic in saying the words “Valuations Matter.” That’s a starting point. But the magic comes when we tell people in clear and firm and bold language WHAT THAT MEANS. What it mean is that valuations must be taken into consideration in EVERY STRATEGIC CHOICE MADE BY AN INVESTOR.
The Buy-and-Holders are still arguing the opposite to this day. The Buy-and-Holders are still arguing that long-term timing is not absolutely required for all investors, or heaven help us all, in some cases might not even be a good thing.
That’s not good, Anonymous. That needs to change. To make it change, we all need to make it a practice to call the Buy-and-Holders out on their b.s. when we see them engage in it.
The article does not go nearly far enough in making the case for Valuation-Informed Indexing over Buy-and-Hold. It is not a close call.
Rob
I guess they aren’t doing a very good job, given the NYT article I just posted….
The Wall Street Con Men and their Internet Goon Squads get weaker by the day.
That’s a stone cold fact and an encouraging one.
The other side of the story is that the thing that is making them weaker by the day is that their “strategies” cause more financial ruin for more people by the day. That’s a discouraging reality.
So you can see the glass half full or half empty.
My job as a reporter is to report both sides. The Buy-and-Holders have caused a mountain of human misery. There is no idea in the history of personal finance that has caused as much human misery as the “idea” that there is some magical, mystical world in which it is not 100 percent necessary for investors to change their stock allocations in response to big price swings in an effort to keep their risk profiles roughly constant. But, yes, the Con Men grow weaker by the day. That much really is so and that much is very much cause for us all to feel better about our future than we can realistically feel about this dark place that the Con Men have brought us to with their millions of acts of intimidation and deception.
Rob
I can’t address your fantasy world, Rob. But I can address reality. In reality, articles like the one I linked are appearing on the front page of the NYT, and are being discussed daily by thousands of people (see: Bogleheads).
Moving forward means telling people what Shiller’s findings means in practical, how-to investing terms.
And you’re welcome do so. But if you can’t behave socially, you’ll have to do it alone.
What it mean is that valuations must be taken into consideration in EVERY STRATEGIC CHOICE MADE BY AN INVESTOR.
Rob, you don’t get to tell everyone what they must do. I can consider valuations, you can maintain a 100% bond portfolio for 20 years. I earned my money, you earned yours, so we each get to decide.
The Buy-and-Holders are still arguing that long-term timing is not absolutely required for all investors,
See above. If I earn the money, I get to choose how to invest it. “Requiring” me to invest my money using your method is simply being an “asshole” (Scott Adams’ word). It’s like requiring your neighbor to plant your favorite flowers in his yard.
In reality, articles like the one I linked are appearing on the front page of the NYT
Then why have the Old School SWR studies not been corrected in the 12 years since the errors in them became public information?
and are being discussed daily by thousands of people (see: Bogleheads).
But honest discussion is not permitted. Anyone who “crosses” Mel Linduaer by saying that the Old School SWR studies should have been corrected within 24 hours of the time the errors in them became public knowledge is removed from the board. So the entire board is a corrupt enterprise.
It is a bunch of people pretending to believe what Lindauer (and, by extension, Bogle) believes. We cannot say what people there truly believe until we put an end to the intimidation tactics and make them feel safe to express their sincere views on SWRs and scores of other critical investment-related topics.
you’ll have to do it alone.
I don’t like doing it alone, Anonymous. But I find that preferable to participating in the 12-year cover-up. Financial fraud is a felony. That means prison time down the road a piece. Um — No thanks. Call me madcap.
Requiring” me to invest my money using your method is simply being an “asshole” (Scott Adams’ word).
Am I an asshole if I say that the moon is not made of green cheese? Or if I say that the earth revolves around the sun instead of the other way around? Or if I say that the earth is round and not flat?
It’s the last 33 years of peer-reviewed research that is the asshole here, not me. I am just a mild-mannered reporter who reports what it says.
It’s like requiring your neighbor to plant your favorite flowers in his yard.
It’s those who who engage in intimidation tactics who are forcing people to dance to their tune or pay the consequences. I am fine with you investing however you please. But don’t demand that I put my name to the Get Rich Quick garbage that you promote. If you do, I will call you out on your b.s.
I’ve been doing it for 12 years now. And I will continue to do it for the next 12 billion years if the opportunity presents itself.
My best and warmest wishes to you and yours, Anonymous.
Rob
anyone who “crosses” Mel Linduaer by saying that the Old School SWR studies should have been corrected within 24 hours of the time the errors in them became public knowledge is removed from the board.
We are in complete agreement there, Rob. If you make such bullying statements, you will be removed from civilized discussion. You can offer your opinion respectfully. That’s it.
We cannot say what people there truly believe until we put an end to the intimidation tactics and make them feel safe to express their sincere views on SWRs and scores of other critical investment-related topics.
I can create an anonymous login tomorrow and post whatever I want regarding valuations on Bogleheads. I’m not intimidated at all. What intimidation tactics?
I don’t like doing it alone, Anonymous. But I find that preferable to participating in the 12-year cover-up. Financial fraud is a felony. That means prison time down the road a piece. Um — No thanks. Call me madcap.
Ok, that’s of course your right. I’d take off the “-cap” though.
Am I an asshole if I say that the moon is not made of green cheese?
Nope, these are historical facts, not opinions about a unknowable future. Be sure you can back them up with links (in this case you can, in your case you never seem to be able to).
As an analogy, you can say “Valuations affect 40% of the variation in out of sample returns historically in the US between 1926 and 2012” (fact). You can’t say, “Everyone should be required to invest based on valuations for the future” (opinion turned into bullying demand).
I am fine with you investing however you please. But don’t demand that I put my name to the Get Rich Quick garbage that you promote.
I don’t demand or require that another person do anything. That would indeed be being an asshole. I don’t think adding the name of an unemployed nobody to an investing style would interest anyone anyway.
We are in complete agreement there, Rob. If you make such bullying statements, you will be removed from civilized discussion. You can offer your opinion respectfully. That’s it.
Thank you for talking straight re this matter, Anonymous.
I will continue making these “bullying” and “disrespectful” statements. But it makes me happy to be able to say that, so long as you continue to talk straight re this matter, I don’t also feel compelled to say that you are being dishonest about what is going on.
I want to see LOTS of people making the sorts of statements that you describe as “bullying” and “disrespectful.” I don’t help matters in any way, shape or form by giving in to the intimidation tactics. People need to hear about the dangers of Buy-and-Hold. ALL Valuation-Informed Indexers contribute to the problem when they give in to the intimidation tactics, in my assessment. So it is my intent to soldier on.
I wish you the best of luck in all your future life endeavors, in any event.
Rob
Nope, these are historical facts, not opinions about a unknowable future.
It’s an historical fact that a Nobel-Prize-Winning Economist published peer-reviewed research in 1981 showing that valuations affect long-term returns. It logically follows that there is precisely zero chance that any retirement study that ignores what the valuation level is on the day the retirement begins can possibly get the numbers even roughly right.
I make no claims about what will happen in the future. It is theoretically possible that all of the rules that have governed stock investing for 140 years now will suddenly be turned on their heads and that a Buy-and-Hold strategy will end up working well for one or two long-term investors for the first time in history.
But the peer-reviewed research shows that that is not even remotely possible in the event that the stock market continues to perform in the future anything at all in the way it has ALWAYS performed in the past.
I am going to continue posting honestly about what the peer-reviewed research says regardless of what intimidation tactics are employed by the Wall Street Con Men and their Internet Goon Squads.
Don’t let the bad guys get you down, man.
Rob
You can’t say, “Everyone should be required to invest based on valuations for the future” (opinion turned into bullying demand).
The people who published the peer-reviewed research and the people who report on its findings did not create the realities revealed by it, Anonymous.
Can I say that, if you jump off of the roof of a building, the laws of gravity will require you to go “splat” when you hit the ground?
The case showing that valuations affect long-term returns is every bit as strong as the case that gravity will pull you to the ground if you jump off the roof of a building.
You are free to invest as you please. You are not free to get good results if you ignore the last 33 years of peer-reviwed research, in my assessment.
So I tell people to avoid Buy-and-Hold and all other pure Get Rich Quick strategies in favor of the research-supported stuff.
Sue me.
Rob
an unemployed nobody
An HONEST unemployed nobody.
Let’s be fair.
Rob
Can I say that, if you jump off of the roof of a building, the laws of gravity will require you to go “splat” when you hit the ground?
Clearly, if the “laws” of finance worked like the laws of physics, investors could only demand a risk free rate of return from stocks. It’s the unknowable uncertainty that gives them higher expected returns.
Clearly, if the “laws” of finance worked like the laws of physics, investors could only demand a risk free rate of return from stocks. It’s the unknowable uncertainty that gives them higher expected returns.
So you and the other Buy-and-Holders say, Anonymous.
Have you ever been wrong about anything? Do you think it might be happening again?
The Buy-and-Holders were wrong about safe withdrawal rates.
The Buy-and-Holders were wrong about the market being efficient.
The Buy-and-Holders were wrong about return being something that is delivered to investors in exchange for their willingness to take on risk.
What else are they wrong about?
I think they are wrong to say that the high returns paid by stocks are because of an “unknowable future.” I believe that stock returns are compensation for the willingness of investors to give up use of their money to profit-seeking businesses.
Can you prove me wrong? Do you have any peer-reviewed research to cite supporting your viewpoint on this matter?
That’s a rhetorical question. If the Buy-and-Holders had any peer-reviewed research backing their claims, they never would have advanced a single death threat in “defense” of their views.
The laws of finance are not today as solid as the laws of physics. But I think it would be fair to say that we have travelled thousands of miles in that direction in the past 33 years. We sure are intellectually nowhere close to where we were in the Dark Ages when there were serious people who imagined a world in which it was not necessary for investors to adjust their stock allocations in response to big changes in valuations. And I sure am glad that we have moved past those days of ignorance re this important subject matter.
Stocks ARE a virtually risk-free asset class today for investors who are willing to abandon the Buy-and-Hold nonsense and invest in research-supported ways. There is of course no such thing as a “risk-free rate of return.” That another of the many Buy-and-Hold myths. The long-term average return on stocks has for 140 years been 6.5 percent real and there is every reason to believe that the long-term average return will continue to be something in that general neighborhood on a going forward basis.
You can invest pursuant to the last 33 years of research and get that return or perhaps something a good bit better. Or you can invest in a pure Get Rich Quick manner and obtain a return a good bit less than that. That’s your call. It is not “unknowable uncertainty” that is causing you your problems. It is phony pride. It is an inability to say the words “I” and “Was” and “Wrong” that is holding you back.
That’s my sincere take re these terribly important matters, in any event.
Rob
I don’t like doing it alone, Anonymous.
How many unique visitors does your site get per day, Rob?
Because I think you are doomed by your own faults to a lifetime of doing “it” (whatever “it” is) pretty much alone, Rob.
You always manage to quickly drive away anyone who would LIKE to agree with you.
It’s a strange pathology.
I don’t know the number of unique visitors, X. It’s certainly not a big number.
It’s certainly not my intent to drive anyone away.
I acknowledge that the material at this site is strong stuff for many people. I have posted Guest Blog Entries at sites with many more visitors and have had people tell me that they do not feel comfortable with some of the things I say. Those people indicated that there were things that I said that they agreed with. So I don’t say that you are entirely wrong to say that I drive some people away.
If stating my views honestly drives people away, then stating my views honestly drives people away. That makes me sad. But it’s not like I can do anything about it. I am open to changing my views if I am convinced that they are wrong. But I am not open to posting dishonestly re the views that I hold.
You suggest that the “pathology” is on my end. I couldn’t possibly disagree more. I have never had anyone try to intimidate me into changing my views on baseball or music or politics. Why is it so important to a good number of people that I change my investing views? That’s the most interesting question re this 12-year saga, in my assessment.
I think that many people see that the idea of not exercising price discipline when buying stocks makes zero sense. So what I say possesses appeal to many, many people. But people have a hard time accepting that we have done so much damage to ourselves by refusing to move on from Buy-and-Hold in the 33 years since it was discredited by the peer-reviewed research. So people cannot bear to hear the realities.
I cannot change that by myself. I am going to need help.
I have done all that I can do. I have contacted tens of thousands of people with e-mails re the Wade Pfau matter. I have constructed five unique calculators. I have recorded over 200 RobCasts. I have co-authored the most important research published in this field in the past three decades.
I am just going to continue doing that sort of thing. I love my country and I love our economic system and I believe that there are millions of others who love both as much as I do and that those people will be helping out following the next crash. Why wouldn’t they? I believe that even my good friend Jack Bogle will be helping out after the next crash. Call me madcap if you must but that is what I sincerely believe.
When Bogle and all the others are ready, I will be here.
I won’t post dishonestly re the many acts of financial fraud that we have seen on the part of the Wall Street Con Men and their Internet Goon Squads. But I will do what I can to explain the environment in which those acts of financial fraud took place. I think that may help a little bit. I sure hope so.
My sense is that you want something from me. I’ll be darned if I can figure out what it is (and it is in my nature to have a theory re just about everything).
I hate to think that there is one person in the world whom I have ever driven away. My sense is that there has been a whole big bunch more than one. But that’s not really because of anything I have done. People sense that there is financial fraud being practiced here and that it is the biggest case of financial fraud and it makes them scared and causes them to want to avoid being involved.
I would like to not be involved too if that were possible!
But I cannot post dishonestly re the numbers that my friends use to plan their retirements, Anonymous. It is not in me. You cannot teach a dog to meow and you cannot teach a cat to bark and you cannot teach Rob Bennett to post dishonestly re safe withdrawal rates.
So we will just have to wait to see how things play out after the next crash. I believe that things will be getting a lot better for ALL of us. You at least pretend that you believe otherwise. There’s only one way to find out for sure. That’s to have a little patience and just see what happens.
Can we agree on that much?
Does not at least that much of what I say make some sense?
Do you have any better ideas, given the realities that prevail here?
Rob
I think they are wrong to say that the high returns paid by stocks are because of an “unknowable future.” I believe that stock returns are compensation for the willingness of investors to give up use of their money to profit-seeking businesses.
If you’re saying investors demand the same return from giving up their money to hold, say, a CD vs stocks, then you’re clearly an idiot, as no rational investor would do that. Companies with both high and low valuations go out of business all the time.
If you want to prove that, just ask them. You’ll get the same answer from every single one.
If I am such an idiot, why is it that I was the one to discover the errors in the Old School SWR studies? How do you think this idiot managed to do that nearly 10 years before the Wall Street Journal was reporting on those errors?
Are you trying to tell a joke when you say “no rational investor would do that.” If investors were rational, everything the Buy-and-Holders say would be true. The entire problem here is that the Buy-and-Holders ignore the P/E10 metric, which is the metric that tells us how irrational investors are being at any given moment in time and thus tells us how much we need to adjust our stock allocations from we want them to be when investors are acting rationally.
What does the fact that “companies with both high and low valuations go out of business all the time” have to do with anything? When the P/E10 value for the entire market is insanely high, there is only one direction in which it can go — down. And, when the P/E10 for the entire market is insanely ow, there is only one direction in which it can go — up. Are you able to think of some reason why an investor would want to be going with the same stock allocation both in circumstances in which the going-forward return will be good and when it will be bad? I am not able to perform this magic trick.
Investors are emotional, Anonymous. That’s what Shiller showed in 1981. That’s the OPPOSITE of what the Buy-and-Holders assume. The Buy-and-Holders got EVERYTHING wrong. Not because they are stupid. Because they unwittingly ignored the most important part of the story.
Now we know.
The worst way to address the investor irrationality problem is to ignore it. That’s what we have done for the first 33 years since we learned of it. Ignoring it makes it grow worse and worse and worse over time.
The best way to address the investor irrationality problem is to take it into consideration in every strategic recommendation put forward. That’s Valuation-Informed Indexing. The magic of responding rationally to evidence of investor irrationality is that you thereby reduce the risk of stock investing by 70 percent.
Why is it possible to reduce the risk of stock investing by 70 percent by making a single change?
It’s possible because the thing being changed is so important. In the days of indexing, stock investing is simple so long as you are sure to consider valuations at all times. Ignore that factor and all of the simplicity does you no good. If you are getting 80 percent of the problem wrong, you cannot do well in the long term no matter how well you perform on the 20 percent of the problem you are willing to look at.
The “idea” that stock investing is 100 percent rational has caused more human misery than any other idea in the history of personal finance.
We need to fix this mistake.
The first step to fixing it is to TALK about it.
Yes, it hurts those who have thrown away huge amounts of money to talk about it.
You know what? You end up hurting them even more by not talking about it and causing them to throw away even more money. They are hurting because they have fallen behind in their retirement planning and, by telling them more tall tales, you cause them to fall even further behind. Not good.
For someone familiar with the last 33 years of peer-reviewed research in this field to fail to speak out about the dangers of Buy-and-Hold strategies is an act of cowardice, not an act of charity.
I don’t consider myself a particularly brave person, Anonymous. But I have seen too many lives destroyed to be able to live with myself if I keep my mouth shut about this matter. I love my country. That means that I need to be willing to do battle with forces out to destroy it. I think that it would be fair to say that you Goons represent the biggest threat to my country (I can’t help but wonder if you once thought of it as your country too) in many years. I will stop you. Failure is not an option re this matter.
And I naturally wish you the best of luck with whatever investing strategies you elect to pursue once I have completed the job and you have finished serving your prison term.
Rob
He concurrently claims (as he often does) that he must be right, because people are trying to convince him that he is wrong!
I don’t say that the defensiveness of the Buy-and-Holders is the only reason to doubt their claims, X. But I do believe that it is strong evidence against the credibility of their position.
I say that there are four reasons to doubt Buy-and-Hold:
1) Common sense tells us that price matters when we buy something. This is true for every good or service that is offered for sale. Why would anyone think that it might be different with stocks?;
2) There is now 33 years of peer-reviewed research (based on 140 years of historical data) showing that price ALWAYS matters when buying stocks. In contrast, we have not one study supporting the key Buy-and-Hold principle that exercising price discipline is not required for long-term success (there was a time when many good and smart people BELIEVED that there was research supporting this principle, but that research was discredited by Shiller’s “revolutionary” [his word] 1981 finding that the market is not efficient and that valuations affect long-term returns);
3) We have statements by almost all of the leading advocates of Buy-and-Hold showing that they understand on at least one level of consciousness that it is not logically possible that a Buy-and-Hold strategy could ever work for even a single long-term investor. For example, Bogle has said that Reversion to the Mean is an “Iron Law” of stock investing. It’s not Rob Bennett saying that. Its the king of Buy-and-Hold saying that; and
4) We have the behavior of the thousands of Buy-and-Holders that we have witnessed since the morning of May 13, 2002, the day when I put forward my famous post pointing out the errors in the Old School SWR studies. We have seen death threats. We have seen demands for unjustified board bannings. We have seen tens of thousands of acts of defamation. We have seen threats to get academic researchers fired from their jobs. We have not in 12 years seen one credible claim that the Old School studies contain a valuations adjustment or that there is any reason to believe that all the rules of stock investing that have applied since the first stock market was opened for business have been stood on their heads and that this is going to be the first time in history when it was possible to identify the safe withdrawal rate without taking into consideration the valuation level that applied on the day the retirement began.
The defensiveness of the Buy-and-Holders is an important reality. If the people who follow this strategy do not possess enough confidence in it to feel able to defend it in civil and reasoned debate, why should any of the rest of us believe in it? But I don’t say that that fact along makes the case. I say that that fact considered in conjunction with all the other facts known to us today makes a compelling case.
If Buy-and-Hold were a legitimate strategy, we never would have seen a single death threat. This is the sort of behavior one sees when people are working a con.
The odd element that applies in this case is that the people working a con on others are also working a con on themselves! But still….
Rob
” I have never had anyone try to intimidate me into changing my views on baseball or music or politics. ”
That is only because you haven’t gone onto baseball/music/political forums and behaved the way you do on investing forums.
No.
I post in exactly the same way when I post on subjects other than investing.
There is a long historical record showing this. I posted only on saving issues from May 1999 through April 2002. That’s three years. I was the most popular poster at the entire Motley Fool site in those days. My good friend John Greaney had a message installed at the Retire Early board telling newcomers that the first thing they should do on visiting the site is to read everything posted by Rob Bennett because his thinking on the subject was “seminal,” the best stuff on the board.
The difference is not with the guy writing the posts, the difference is with some of the people reading the posts.
A good number of the people reading my investing posts have loved them. Thousands of people have told me that my stuff is the first stuff that they ever saw that made true sense of stock investing. So there has never been an across-the-board problem.
But there IS a problem. The problem has evidenced itself at scores of different communities. So it is real. And it is an important matter that needs to be discussed and understood better than it is today.
The problem is that no one truly believes in Buy-and-Hold.
It is IMPOSSIBLE for anyone to believe in Buy-and-Hold.
It simply makes no sense.
Price matters when buying ANYTHING. How could it be that price doesn’t matter when buying stocks? The core Buy-and-Hold “idea” is a logical impossibility.
People are not stupid. People get this.
But people push that thought aside when prices are going up. People have a voice in their heads telling them that the bull-market gains are not real. But they silence that voice. They want to believe. And so they do believe. If they must force themselves to believe totally stupid stuff to continue believing in the phony bull-market gains, they do that. To believe, they must silence the voice of common sense. And so they do that.
To then hear someone citing 33 years of peer-reviewed research in support of common sense is a painful experience.
To silence your common sense is to betray yourself, Laugh. When I cite the peer-reviewed research, I am holding up a mirror to you and forcing you to see the extent of the harm you have done to yourself by falling for the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind.
It hurts. I don’t say it doesn’t hurt you when I say the things I say. It is not my INTENT to hurt you. My intent is to teach you things about how stock investing works that you very much need to know. But I acknowledge that it hurts you (and many others) when I say the things I do about what the last 33 years of peer-reviewed research shows us about how stock investing works in the real world.
I am a meanie in that respect. I am an unintentional meanie but a meanie all the same.
The question is — What is to be done about it?
You say that the meanie should be silenced, that there should be no more Rob Bennett Show. I say that we need lots and lots of meanies posting at all of our boards and blogs. I say that it is the JOB of an investing expert to tell people not what they want to hear but what they need to hear. I say that we should ALL become meanies.
The full reality, of course, is that once we all become meanies, none of us will be viewed as meanies anymore. Once we all start posting honestly, there is no more Rob Bennett Show. Nothing that I say will shock anyone anymore or hurt anyone anymore once it becomes the conventional wisdom (please pray that this happens soon!).
I don’t behave any differently when talking about investing than I do when talking about any other subject. The difference is with the subject matter, not me.
People have different opinions about politics and baseball and music. But differences of opinion manifest themselves in different ways in those fields than differences of opinion manifest themselves in the field of investing. If I said something about the Phillies that you didn’t agree with, it wouldn’t bother you so much because you would understand that I was saying what I said because I happened to grow up in a different city than you. If I said something about politics that you didn’t agree with, it might annoy you. But we would probably keep our distance from each other on the internet. I would post at sites where other people who agree with my views congregate and you would post at sites where other people who agree with your views congregate and we would thereby avoid getting on each other’s nerves.
We cannot do that when we have differences of opinion on investing because differing views on how investing works are time-based. EVERYONE loves Buy-and-Hold/Get Rich Quick strategies in bull markets. EVERYONE hates Buy-and-Hold/Get Rich Quick strategies in the depths of the economic crises brought on by the widespread popularity of such “strategies.” I cannot go to some board where honest posting is permitted (unless I want to limit myself to posting at niche sites like the Financial Mentor site) to avoid getting on the nerves of people following Buy-and-Hold/Get Rich Quick strategies. ALL of the major investing sites promote Buy-and-Hold/Get Rich Quick strategies. We wouldn’t have had a huge bull market in the late 1990s and we wouldn’t be in a huge economic crisis today if that weren’t so.
That will change following the next price crash. Or at least so I believe. Buy-and-Hold/Get Rich Quick caused the Great Depression. But you didn’t see people jumping up and down saying how wonderful Buy-and-Hold/Get Rich Quick was during the dust bowl days. Buy-and-Hold/Get Rich Quick didn’t come back into popularity again until decades later.
The popularity of Buy-and-Hold/Get Rich Quick is cyclical. It’s different from politics in that regard. And it is different from music or baseball (and more akin to politics) in that most people perceive it to be very important. Stock Investing is the only subject that I can think of that most people perceive as sufficiently important to get angry about hearing different viewpoints on it while also being a subject re which just about everyone holds the same viewpoint for long periods of time (we obviously cannot experience a bull market unless just about everyone gets on board the Buy-and-Hold/Get Rich Quick fantasy train for an extended period of time).
I think that’s all coming to an end, Laugh. I believe that we experienced a huge advance in our understanding of how stock investing works in 1981 and that what we have seen through the first 12 years of our discussions of the realities (and of whether we should be permitted to speak of them on the internet!) is our society’s stumbling, bumbling effort to come to terms with what it has learned. Once the message gets out (as I believe it will following the next price crash), there will be no more Buy-and-Hold/Get Rich Quick and we will all live happily ever after.
I am sure that there will still be differences of opinion. We couldn’t learn new things if there were not differences of opinion.
But I don’t think that we will ever again see this crazy situation where large numbers of people favor a Ban on Honest Posting because hearing the findings of the last 33 years of peer-reviewed research is just too painful to bear. This weird situation came about because Shiller just happened to supply us the missing piece to the stock investing puzzle just as we were about to experience the most out-of-control bull market in U.S. history. Once we are permitted to share knowledge of what really works, no one is ever going to go back to Buy-and-Hold.
In any event, I am the same person when I talk about baseball or music or politics or saving or investing. The difference is that investing is today the more sensitive subject matter by a factor of 5,000. That’s not my doing. That was so before I came on the scene (and I obviously had no idea what I was walking into when I ventured forward with that famous post of the morning of May 13, 2002!). It’s not a healthy situation. Those following Buy-and-Hold/Get Rich Quick strategies need to know about the dangers attached to them. They need to know very, very, very much.
The full truth here is that we have rules at every board and blog on the internet that permits us all to learn what we need to learn. Every board has rule prohibiting the tactics that you Goons use to polarize the discussions and to intimidate your fellow community members. Those rules will be enforced in days to come. When that happy day arrives, we will all get to learn what we all very much need to learn. Things will get better and better and better over time.
I am sure!
Take care, man.
Rob
“I post in exactly the same way when I post on subjects other than investing.
There is a long historical record showing this. I posted only on saving issues from May 1999 through April 2002.”
So..before you went insane you could post normally. Makes sense…?
I didn’t go insane, Laugh.
The Wall Street Journal (and lots of other top-name publications) ran an article a few years ago saying that I was right about the safe-withdrawal-rate issue all along. It took about 10 years from the time that I put forward The Post Heard ‘Round the Word for us to see it happen. But any thoughts that the reason why I said that the Old School studies got the numbers wildly wrong was because I was off my meds was put to rest with the publication of that article. The Wall Street Journal is a well-edited publication. It’s not even remotely possible that all of the editors that were responsible for the accuracy of that particular article just happened to be off their meds ON THE SAME DAY.
If you had wanted to know the truth of the matter, you didn’t need to wait for the publication of the Wall Street Journal article. Greaney’s study is available at his site. You could have gone to it and checked whether or not it contains an adjustment for the valuations level that applied on the day the retirement begins. If it does not (and it does not), then the numbers he reports cannot possibly be accurate. We have known for 33 years now (it was 21 years back when I advanced the fateful post) that valuations affect long-term returns. Fail to account for the most important factor affecting safe withdrawal rates and any “study” you do that aims to identify the safe withdrawal rate is going to get the numbers wildly wrong. Who’d a thunk it?
The Buy-and-Hold Pioneers did a wonderful thing when they proposed that we all start rooting our investment strategies in the findings of peer-reviewed research. They took investing analysis out of the subjective realm, where it has long been poisoned by lots of con games and brought it into the objective realm, where con games are not possible because numbers are numbers and people are going to see if you report the numbers inaccurately.
Or at least that’s what I THOUGHT they did back when I considered myself a Buy-and-Holder and was proud of it.
The first draft effort didn’t stick.
Buy-and-Hold is a con, just like most of the investing strategies that the Wall Street Con Men pushed on us in the days before Buy-and-Hold came along were cons. There’s a difference with this one, however. With this one there is a CLAIM that the recommendations are backed by peer-reviewed research. Millions of middle-class people BELIEVE that there is something to that claim. So they are being taken, just as many generations of investors who came before them were taken.
Only they are being taken by a far more dangerous con than any of the earlier ones. A con that people BELIEVE to be supported by peer-reviwed research is going to take valuations to even more insane levels that the cons for which there were not claims of support in the peer-reviewed research. Buy-and-Hold was ALMOST a step forward and would have been a step forward had the Wall Street Con Men corrected their mistake when they learned of it. Instead it became a new and even more powerful con, one that has brought on the worst economic crisis in U.S. history and one that threatens to bring on the Second Great Depression.
We’ll see what happens next.
I would like to see us return to the original idea of Buy-and-Hold. I would like to see my good friend Jack Bogle make an “I Was Wrong” speech and lead us all back to the original idea. If he makes that speech, that will be truly wonderful. I will be the first to salute him for it. I will cancel whatever blog entry I had planned for that day and I will run one saluting my good friend Jack for working up the courage to do what we have all known needed to be done for a long, long time now.
If he doesn’t make the speech, then we all go down together. I don’t like it that that remains a possibility. But we don’t always get what we want in this life, do we? If everyone else affected by this economic crisis elects to go that way, then we go that way regardless of anything Rob Bennett has to say about matters. I don’t like it but I accept it. It is what it is.
But I am as optimistic as I am stubborn. So I continue to say that we are going to turn it around. We’ll see. I’ll be here for you to laugh at if it doesn’t turn out that way. So you Goons have that to look forward to.
There are RESPONSIBILITIES that follow from going with a research-based approach to investing analysis. One is that you need to keep up with the new research. Another is that you must correct errors that you made because you did not have all the research that ever would be done on a topic available to you when you put forward your first, tentative, findings. Fail to honor those responsibilities and the idea of rooting your investing advice in research becomes a very, very dangerous thing.
Getting the numbers right matters. Putting out research that purports to be rooted in research but that in fact ignores decades of research and thereby gets the numbers that people use to plan their retirements wildly wrong is worse than anything that Bernie Madoff ever did. And it’s not a close call.
I wish all you Goons the best of luck in all your future endeavors.
Rob