“Bernstein’s Lie Is Almost a Charming One. He Is Pretty Much Holding Up a Sign When He Tells It That Says ‘Don’t Believe a Word I Say!’ You Are Capable of Seeing Every Lie That I See. YOU JUST DON’T WANT TO SEE THEM.”

Set forth below is the text of a comment that I recently put to another blog entry at this site:

You always seem to read everyone’s mind since you know what they are thinking and when they are lying. Perhaps you should have a second career as a mind reader .

Do you not know when politicians are lying to you, Anonymous?

We all do. Give me a break.

Ataloss sent Bill Bernstein an e-mail asking him if he agreed with me that the methodology used in the Old School retirement studies is analytically invalid or not. Bernstein said that “of course” the methodology was valid but that anyone who used the numbers generated by those studies to plan a real retirement would have to be out of his or her mind. Does that sound like straight shooting to you?

Bernstein’s lie is almost a charming one. He is pretty much holding up a sign when he tells it that says “Don’t believe a word I say!” I mean, come on.

The lie is easy enough to see. A child could see it. BUT ONLY IF HE CARED TO SEE IT.

You are capable of seeing every lie that I see. YOU JUST DON”T WANT TO SEE THEM.

You have a large percentage of the accumulated wealth of a lifetime rising on Buy-and-Hold. YOU ARE COMPROMISED. I could show you a mountain of lies told by the Buy-and-Holders and you would shrug your shoulders. You want it all to be true. So for you it is true.

The question is — How are you going to feel about all those lies after the next price crash. Suddenly, the lies will all become visible to you. Suddenly, this massive act of financial fraud won’t seem like such a big joke to you anymore.

The lies that Bernie Madoff told were obvious. Some very smart people lost money by investing in his fund. How did this happen? Being smart doesn’t make you immune from Get Rich Quick pitches. If anything, it makes you better skilled at rationalizing away the lies that would otherwise serve as warning signs.

You WANT to be tricked, Anonymous. There is nothing difficult in tricking somone who wants to be tricked.

I notice when people are lying by comparing what they say in different circumstances and checking whether the stories match up. Jack Bogle says that investors should use the historical data as a guide to how to invest. The data says that a 60 percent reduction in one’s stock allocation is needed when prices go from where they were in 1982 to where they were in 2000. But Bogle says that a reduction in stock allocation of 15 percentage points is plenty. Huh?

It doesn’t take any superhuman power to see that the people who advocate Buy-and-Hold strategies are telling lies (often to themselves as well as to others). I don’t need to be a mind reader to pick up on lies that obvious. But I do need to know what the last 33 years of peer-reviewed research tells us about how stock investing works.

That’s why the Buy-and-Holders feel such a burning hate toward anyone who reports on what the peer-reviewed research says. The story told by the peer-reviewed research and the story told by the Buy-and-Hold advocates do not match. It’s not a close call. The two stories are OPPOSITE stories. One says that price always matters when buying stocks. The other says that it is okay to ignore price when buying stocks. Huh?

I hope that helps a bit.

Rob