Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Just wondering, do you have any “friends” who are NOT going to prison? If so, they don’t seem to get any shout-outs here. You’ve even criticized Joe Taxpayer for not doing enough, and he’s the only blogger who has welcomed you in recent months (for one post, which you’ve been flogging for content for weeks now.)
We have to work it out as a society, Bizarro.
We are the luckiest generation of investors ever to walk the planet. And we are messing it up because we have not been able to work up the courage to face our emotional pain. It’s a sad reality. But it is also a very exciting one.
Joe could do more. Absolutely. He’s done more than just about anybody else. In relative terms, he gets an A+. In objective terms — Perhaps a C.
Joe could put up a post saying “I had Rob and the Goons posting at a thread at my site and it is really amazing to see how much pain these Goons are in. This tells me that Buy-and-Hold is truly bad stuff. Anything that causes people to act like this is truly bad stuff.” Then he could send a link to that article to everyone he knows from the Financial Bloggers Conferences and ask them to comment on it, to offer their own views based on what they have seen with their own eyes.
That’s how we break through. You Goons aren’t the first people who ever acted in unacceptable ways when you experienced emotional pain. We ALL have this within us. Most of us don’t act out in these ways. What makes the investing situation so different?
People are afraid. They are afraid that the Wall Street Con Men will use their power and wealth and connections to destroy them. They are afraid that you Goons will defame them and ruin their sites with your endless abusive comments. They are afraid that they will lose readers because most investors today believe in Buy-and-Hold. Finally, they are afraid of their own weaknesses. People wonder “Do I really know enough about investing to challenge the experts?” They don’t want to steer people wrong and so they hold back, even when they see the sick stuff put forward by you Goons.
There are grounds for the fears. But the reality is that support for Buy-and-Hold has been weakening for some time and that one big push is all it would take to bring it down at this point. You Goons made threats that the Wall Street Con Men would sue me if I continued posting honestly. That was years ago. The Con Men are a paper tiger. You Goons are not anything close to as strong as you were 12 years ago. People don’t call you out as they should. But people don’t put nearly as much credence in your b.s. today as they did in the old days. I was there. I know.
The toughest one is the fear that people who speak out will lose readers. They will. That one is real. But the opportunity to win ten times the number of readers lost after the next crash makes that one not so big a deal. After the crash, everyone is going to be getting on the Valuation-Informed Indexing bandwagon. People will trust the ones who got aboard early, prior to the crash. So the upside here is huge and the downside, while real, is not really that big in comparison.
The way to get over a fear that you don’t know it all is just to tell people that. Bogle doesn’t know it all. He shows that in all his comments on investing. Shiller doesn’t know it all. I don’t know it all. None of us do. So a new voice should not be expected to know it all. You Goons will make it sound like anyone who speaks needs to know it all. People should just respond with honesty. Our knowledge of how stock investing works is primitive. None of us know it all. At least some of us openly acknowledge that rather than adopting the arrogant pose of the Buy-and-Holders who claim that they got it all right on the first try and are not capable of ever making a mistake.
Yes, I would like to see Joe do more. But I am proud of him for what he has done.
I would like to see Shiller do more. But I am proud of him for what he has done.
I would like to see Pfau do more. But I am proud of him for what he has done.
I would like to see Bogle do more. But I am proud of him for what he has done.
I consider everyone who has provided me with a learning experience a friend, Bizarro. So, yes, I have lots of friends. I give them shout-outs all the time. I consider John Greaney a friend. I give him shout-outs. And of course there are hundreds of others.
I think Greaney is probably going to prison. But I think that is true of only a small percentage of my friends. Bogle is the one I am most concerned about. I see him as being on the borderline. I don’t know which way that one is going to go. I’ll tell you this. I will be singing his praises until the day I die. He has done some truly bad stuff. But he has also done some truly wonderful stuff. The genuine accomplishments don’t get wiped off the slate when he does bad stuff. He has done enough good stuff to rank second on my list of the best investing analysts of all time. Is that a big enough shout-out to satisfy you?
I have lots of friends (both Buy-and-Holders and Valuation-Informed Indexers) who will not be going to prison. But I also have some who will be. You know what? It horrifies me that there is even one. If you told me on the morning of May 13, 2002, that my famous post was going to generate reactions that would lead to even one of my friends going to prison somewhere down the line, I would have said that you were off your rocker, that the odds of such a thing happening were one million to one. Yet here we are, you know? Crazy things happen in this mixed-up world of ours.
I am going to continue trying to get those prison sentences reduced and I am going to continue trying to see that there are as small a number of prison sentences as there can possibly be given the circumstances that confront us today. That’s all any human being can do here. I hope that I can persuade some others to get involved. Because that is how we make good things happen.
I’ll ask Joe at FinCon14 to get more involved. Maybe he will say “yes” and maybe he will say “no.” There’s certainly no harm in asking, right?
And I’ll ask lots of others. I’ll ask scores of people. It only takes one if that one is brave enough and has a big enough blog.
Maybe none of this will work. Maybe we will all go over a cliff. I hate even to acknowledge the possibility. But after 12 years of this, I feel that I need to do so. But, if that happens, it was going to happen anyway, right? It’s not as if my efforts to steer things in a positive direction caused the problem. Sometimes the best-intended efforts don’t produce good fruit. It’s a sad reality but a reality all the same.
The key for me is that I always act in a spirit of love. If we win, we will all be able to look back and say that it was love that pulled us through. That will be very cool. If we lose, we will be able to look back and say that we put forward a loving spirit at every stage of the proceedings. There’s honor in that, right? So I think that’s the way to play it.
I naturally wish you the best of luck with whatever investing strategies you elect to pursue, my old soon-to-be-prison-dwelling friend.
Rob
No one owes you a thing.
We disagree, Anonymous.
I say that you owe me honesty in the comments you put forward.
I believe that you also owe that to every other community member who reads your words.
I believe that you owe that even to yourself. When you post dishonestly, it makes you feel bad about yourself. That’s why you evidence so much anger and hate and shame in the comments you post here.
That’s my sincere take re this terribly important matter, in any event.
My best wishes to you and yours.
Rob
Rob, what will your topic be this year at fincon for the 5 minute slide show thing? I assume there can be no more important subject than the 65%+ stock crash that’s just around the corner.
My plan is to do one called “Predicting Stock Returns for Fun and Profit.”
Given the complaint that my talk last year came across to some as “bitter,” I might want to downplay the 65 percent price crash thing just a wee bit this time.
I’ve sold out!
Rob
Uh Oh, Rob. Bad news for you and your market timing schemes.
According to Professor Aswath Damodaran (Stern School of Business at NYU) your little scheme and claims of an overpriced market mean that your are misinformed/wrong. In fact, he had to say this:
“One of the biggest perils of using the level of PE ratios as an indicator of stock market pricing, as we have in the last section, is that it ignores the level of interest rates. If interest rates are lower, PE ratios should be higher and ignoring that relationship will lead us to conclude far too frequently (and erroneously) that stocks are over priced in low-interest rate environments.”
Here is the rest of the article:
http://aswathdamodaran.blogspot.dk/2014/06/bubble-bubble-toil-and-trouble-costs.html
Since we really can’t predict the market, it seems buy and hold is the best way to go. The author seems to conclude the same thing as he states:
“Doing nothing is often the best response to a bubble: The most rational response to a bubble is to often not change the way you invest. If you believe, as I do, that it is difficult to diagnose when you are in a bubble and if you are in one, to figure when and how it will dissipate, the most sensible response to the fear of a bubble is to not change your asset allocation or investment philosophy. Conversely, if you feel certain about both the existence of a bubble and how it will burst, you may want to see if your certitude is warranted given your metric.”
I am sure you will want to tell the good professor, just like you tell all the other more qualified experts, that they are all wrong and only you are right.
Unfortunately, reality gets in your way all the time.
He’s not God anymore than I am, Pink.
He helps us by sharing his views with us. But all of the many smart and good people who disagree with him help us too.
Please write to him and ask whether he thinks there is a place in investing discussions for death threats and board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs.
You are not going to prison because you believe that a Buy-and-Hold strategy can work.
You are going to prison because you have engaged in financial fraud, which is a crime under the laws of the United States.
After your prison sentence is announced, there will be people discussing these issues HONESTLY at every discussion board and blog on the internet. I believe that as a result of those discussions we will win Damodaran over to the Valuation-Informed Indexing side. My guess is that he believes that those discussions will win me over to the Buy-and-Hold side. We will have to see.
The key is the announcement of the prison sentences announced for you Goons. We have seen that Jack Bogle is afraid to post honestly today. And that Bill Bernstein is afraid to post honestly today. And that Wade Pfau is afraid to post honestly today. And that Larry Swedroe is afraid to post honestly today, And that Carl Richards is afraid to post honestly today. And that Mike Piper is afraid to post honestly today. And that Michael Kitces is afraid to post honestly today. And that Larry Evans is afraid to post honestly today. And that J.D. Roth is afraid to post honestly today. And that Rick Ferri is afraid to post honestly today. And that Scott Burns is afraid to post honestly today.
That needs to change. These are some of the biggest names in the field. We need to hear their SINCERE input.
And we will once you and your Goon pals are placed safely away in prison cells.
That’s the way the system works. It’s a great system.
I wish you all good things.
Rob
Rob, I would be honored if you mentioned me in your Fincon presentation.
I won’t be talking about you in a direct sense in the presentation, Sensible. I will be talking about you in an indirect sense. I will be explaining that the reason why we are able to predict long-term returns is that investor emotionalism sends things off track and that the market cannot continue function unless things are put back on track, so we can know what the future holds by comparing where prices are at a given moment in time to where they would be if investors were acting rationally. Your name will not be mentioned. But the emotionalism that you evidence in 95 percent of your comments here will be a focus of the presentation.
I will talk about you and the other Goons directly in conversations that I have with other conference participants, as I always do.
And it may be that no one will take effective action again. Or it may be that they will. We will just have to wait and see re that one.
Hang in there, old friend.
Rob
“I won’t be talking about you in a direct sense in the presentation, Sensible.”
What is funny is that we talk about you. We use you as an example of what not to do. I used you as an example with my two college aged boys this afternoon. We discussed your stupid move in retiring too early without sufficient savings and a plan that was not well thought out. We spoke about how you waste all your time trolling the internet, when you should be providing for your family. We spoke about how your investment returns have failed in comparison to a simple buy, hold and rebalance strategy.
That’s right, Rob. We decided to REALLY have a HONEST discussion.
You know what??? Your example has been helpful. You gave us a clear picture of things that can lead to failure.
That’s emotion, Pink. That’s the problem.
The Buy-and-Holders came up with two amazingly great ideas when they said to focus on the long term and to root your strategies in the findings of the peer-reviewed research.
They blew it when they made it their priority to sell, which meant exploiting the emotional weaknesses of the investors to whom they were making their pitch.
I believe that we will be able to turn it around following the next crash. I sure hope so!
Rob
Unfortunately, your only hope resides in the following quote you left us with:
“I believe that we will be able to turn it around following the next crash. I sure hope so!”
We’re just going to have to evidence some patience while this thing plays itself out, Pink.
I hope that we can all remain friends while it does so.
Fair enough?
Rob