Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Yes, I agree. People should end the hate and stop calling people goons and telling them they are going to prison. That is smelly rotten garbage.
It’s not, Anonymous.
The sooner we get the word out about Valuation-Informed Indexing, the shorter your prison sentence will be.
We cannot go back in time. So eliminating your prison sentence altogether is not in the cards.
But it is the millions of middle-class people whose lives you have destroyed who will be demanding that prosecutors bring cases against you Goons. And it is 12 of the people whose lives you have destroyed who will be sitting on your jury. Do you not see that helping those people out helps you out too? The more we help those people out, the less angry they will be. The less angry they are, the shorter your prison sentence. Does that not follow?
If we don’t open the internet to honest posting, we will be seeing a price crash of 65 percent within the next two years. If we DO permit honest posting, it will become impossible for the P/E10 value to drop below 15 (the fair-value level). That means that the price crash will be less damaging and we will not go into the Second Great Depression. Do you not see how that helps you?
You have one big card to play — the fact that we are the luckiest generation of investors ever to walk Planet Earth. You should be playing that card. You can’t play it without coming clean. So I think you should be coming clean. Perhaps I shouldn’t be giving strategy tips to Goons. But I think of you as a friend. And that’s my sincere take re this one.
I want to focus on the substantive stuff. That’s what people care about. That’s where the real action is. They key to getting to the substantive stuff is getting your prison sentences announced. Once your prison sentence is announced, there won’t be one person advocating the smelly Buy-and-Hold garbage. So we will all be freed to post honestly re the last 33 years of peer-reviewed research. Do you see?
I am your best friend in the world. You don’t see it today, but that’s so. I am going to try to argue that you have been suffering from cognitive dissonance. That’s your best defense. There is tons of material at this site supporting that claim. So I am better positioned to help you out of your jam than anyone else alive on Planet Earth today.
If I agree to commit financial fraud myself, that hurts my credibility. That means that you lose out on the help that I can provide you. Huh? That makes sense from your standpoint how exactly?
You may have seen the story in the Washington Post today showing that the woman who claimed rape at UVA was lying about a lot of the claims she made. Stories like that travel fast on the internet. Say that we really do experience a 65 percent crash sometime over the next two years. And say that lots of people get angry about the losses they have experienced when they are too old to make the money back. And then say that a big paper like the New York Times runs a story about what you did to Wade Pfau.
How many web sites do you think will pick up that story? How many links do you think there will be to my site then? How much credibility do you think Jack Bogle will have then? How many lawyers do you think will be setting up shop to spend the rest of their lives bringing legal actions on behalf of the millions of people whose lives you have destroyed?
Guess who will still be speaking up on your behalf on that day? Old Farmer Hocus will be. No one else.
But how much effect will my words have at that time? I’ll do what I can do. But I will not be able to do then even a small percentage of what I can do today. People will be too angry to listen to my words in defense of you. Do you see how this works? To win people’s sympathies, you have to come clean BEFORE the next crash. I am sure.
I don’t tell the truth about these matters solely because I want to see your prison sentence reduced. I want to bring the economic crisis to an end. I don’t want to see us fall into the Second Great Depression. I want to get that $500 million check into my grubby hands and take my family on a trip to DisneyWorld. There are lots of reasons. But ONE of my reasons for telling the truth is that it helps you Goons, whom I have always thought of as friends and whom I have always treated as friends.
The hand of kindness is outstretched, Anonymous. I am open to anything that does not involve me committing a felony under the laws of the United States. I won’t post dishonestly on the numbers my friends use to plan their retirements. Not in 12 years. Not in 12 billion years. For obvious reasons. Outside of that crazy insane idea, I am open to pretty much anything you can name.
I hope that all makes good sense to you.
I naturally wish you all the best in your future life endeavors regardless of what investing strategies you elect to pursue.
Rob
Anonymous says
If any newspaper ran a story, as you say, you and they would both be in court defending yourselves against a lawsuits for false accusations.
Rob says
The accusations aren’t false. So we need have no concerns on that score.
But you are pointing to something real and important, Anonymous. Lots of newspapers and bloggers who would love to tell this story are afraid to do so. The Wall Street Con Men have lots of power and lots of wealth and lots of connections. So, yes, there is risk attached to telling the story of this massive act of corruption. I held back from telling the full story for a long time myself. I didn’t use terms like “financial fraud” for a long, long time.
What do you propose we do, Anonymous? Not tell the story?
If we don’t tell the story, we end up in the Second Great Depression. I think it would be fair to say that not one of us, including our Wall Street Con Men friends, wants to see us end up in that dark place. So what do we do?
I think we have to tell the story. I think we have no choice.
Once you accept that the story must be told, it makes sense to tell it as soon as possible. The sooner the story is told, the fewer people go to prison. And the sooner the story is told, the shorter the prison terms are for those who do go to prison. And of course everyone not going to prison benefits in a huge way. So the responsible thing for all of us to do is to do everything in our power to get this story told as soon as possible.
I have worries about what the Wall Street Con Men will do to me. The main thing that I do to address those worries is to try hard always to tell the story in the most charitable way possible. I don’t think this started as an act of fraud, I think that until 1981 Buy-and-Hold was a real thing. That’s a kind thing to say. But I feel free to say it because I have seen a lot of evidence that that is indeed the case. So I believe that I am able in good conscience to tell the story in a way that helps the Wall Street Con Men in a big way.
Even after 1981 I believe that the Wall Street Con Men suffered cognitive dissonance. It is not financial fraud to get something wrong because you suffer from cognitive dissonance. So, again, I am able to tell the story in a way that is charitable to the Wall Street Con Men while also always being 100 percent honest.
I don’t think that abusive acts — death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs — can be excused by cognitive dissonance. So I do believe that there will be prison sentences. But I believe that the reality of the cognitive dissonance phenomenon will get the vast majority of people who advocate Buy-and-Hold off the hook.
Another point that you may be missing is that the transition to Valuation-Informed Indexing will be a huge boon to the investing advice industry. The primary reason why many people are afraid to buy stocks is that they are concerned about risking their money. Going with a VII strategy reduces risk by 70 percent. So this will be a boon to the industry. Lots of people on “the other side” are aware of this and would love to find some way to make the transition. The only thing holding them back are concerns re the prison sentences and re civil lawsuits for damages. That’s why I work so hard to do all that I can to minimize those factors to the greatest extent possible.
The Wall Street Con Men are not bad people. Ironically, their downfall has been their huge wealth and the power edge that it provides them. No other industry could get away with something like this because people outside their industry would call them on their b.s. Everyone is afraid to call out the Wall Street Con Men because they have so much darn money and so much darn power. I am not saying that that makes them angels. I am pointing out another mitigating factor that should be taken into consideration when people try to assess their level of guilt for what has happened. They have the same human weakness that we all do to be exploit a situation for short-term profit. But they can get away with it to a greater extent than the rest of us. And so they give in to that weakness to a greater extent than most of us.
You don’t want to go forward, you don’t want to learn about the huge advances that we have achieved together over the past 34 years. The reason why you don’t want to go forward is that you have convinced ourself that things will not really be so bad, that we will all get through this somehow. I encourage you to spend more time working the numbers. I have spent a lot of time on this and I do not believe that our economic system can survive a drop to a P/E10 of 8 that remains in place for a good number of years. It is going to be a devastating hit to millions. People are even going to lose confidence in our political system. We saw some of that in the wake of the 2008 crash.
I am not anti-Wall Street Con Men. I like the Wall Street Con Men. I have learned many important things from them. I have hopes of working with them in the future. I consider the Wall Street Con Men my friends. I do what I do to help the millions of middle-class workers whose lives are in the process of being destroyed by the Wall Street Con Men AND the Wall Street Con Men themselves as well. It is my strong belief that we are all in this thing together. I think that it is a terrible mistake to believe that there are two different “sides.”
I am always going to do everything in my power to praise the Wall Street Con Men to the skies, to make the transition as easy for them as possible. If all that I do is not enough to keep them from coming after me, then all that I do is not enough to keep them from coming after me. I cannot betray my country. That’s 100 percent out. I have been offered no alternative but to bust through The Big Black Mountain. So busting through The Big Black Mountain I will go. But always with kindness. Always with the greatest amount of kindness that I am able to advance without crossing the line and engaging in dishonesty myself. That cannot possibly be the right way to go. The fact that so many people feel intimidated into dishonesty is the problem. I don’t want to be part of the problem.
Will some newspaper or some financial or political blogger work up the courage to tell the story following the next crash? I believe that that will happen. I don’t have a crystal ball. But I believe that will happen. I love my country and one of the things that I love about it is that we have always figured a way to get out of these sorts of situations once it became painfully clear to everyone that that was what we had to do. I think it will become painfully clear to everyone following the next crash. I sure hope so.
I am like everyone else, Anonymous. I am scared. But I continue to believe that we can take this to a good place. I continue to believe that the good news here is 50 times more good than the bad news here is bad.
I don’t believe that the Wall Street Con Men intended to bring on the Second Great Depression. I think they started down a road that they saw as being only somewhat dark and then things got carried away and now they feel like they have painted themselves into a corner. Bogle ignores my e-mails. But I believe that following the crash he may see that I have been his best friend in the world all along. And then he will work with me. And then we will get this thing turned around in no time.
I have spent a lot of time thinking about this matter from every possible angle. I sincerely see no better way to proceed.
So we will see what happens.
I hope that helps you understand where I am coming from a bit more clearly.
My best and warmest wishes to you and yours.
Rob