Set forth below is the text of a comment that I recently posted to another blog entry at this site:
Your constant references to ‘pain’, ‘love’, ‘wrath’, ‘prison’ ,’force’, etc. speak very much about your own psyche and inner landscape.
But, not so much about anything to do with financial planning.
Especially given that you are an self-admitted and publicly-evident innumerate.
Rob, I honestly (and I do mean honestly) believe that you are actually trying to fight out some inner unresolved conflict involving your Father, religion, and your own place in the world. If it were being effective, I would hold my tongue and let you do your required self-analytical work, disguised as oddly off-kilter topical retirement banter. Sadly, I think you are moving further and further away from reality the more you focus on this enormous strawman you keep trying to construct out of other people’s collective and/or personal choices and judgement. Your whole “love” “hate” “fear” pain” schtick, with you as the arbiter of all, is more in line with Reverend Harry Powell than anyone in their right mind. Seriously. Very very seriously.
This is the future of investing advice, Anonymous.
The only thing we disagree about is that I incorporate Shiller’s findings into my model and you do not. I very, very strongly believe that Shiller’s findings need to be incorporated and you very, very strongly believe that they must not be incorporated. What’s that all about? Why are feelings so strong?
P/E10 is a number.
But it is not just any old number.
It is a very, very, very special number.
It has more power to help us all invest effectively than all the other numbers used in investing analysis all put together.
P/E10 is the number that tells us how emotional we are being in our investing choices.
That’s huge. That’s 80 percent of the game. The peer-reviewed research that I co-authored with Wade Pfau shows that stock investing is a virtually risk-free endeavor for those investors who are willing to keep their risk profiles constant by taking the emotionalism of the market into account when setting their stock allocations.
P/E10 is the number that lets them do that.
When we add P/E10 to our discussions of investing, we are adding the effect of emotions to our discussions of stock investing. That’s where all the risk is.
People have thought for many years that stocks were a risky asset class. That belief has been proven to be a false one. The risk of stock investing is a self-inflicted risk. It is an optional risk. It is a risk that applies only for those who are not willing to look at the emotional part of the equation.
We have essentially eliminated risk from the stock investing story. There never has been an advance this big. There never will be another advance this big. This is very, very, very, very big news.
For you, it is scary news.
You like playing with your non-emotion numbers. You like trying to persuade yourself that investor emotion is like the boogyman, it goes away if you just close your eyes and pretend that you cannot see it.
That approach has failed. That approach put us in an economic crisis. Four times now. Millions of middle-class investors want to move on. And they are going to get what they want.
Pain. Love. Wrath. Prison. Force. Father. Religion. Place in the world.
Yes, I talk about those sorts of things.
And, no, that is not the usual way of addressing the formation of investing strategies.
The title of my book is Investing for Humans. The perfect title, no?
I am involved in a turf war with the Wall Street Con Men. They like to portray themselves as Big Shots. But “they leave out half of the story,” as the Wall Street Journal put it.
No more.
I will not permit it.
We are going to tell people the entire story.
Because to tell people half the story (the non-emotional half) is to tell people a lie. And to tell lies about how to invest is to engage in financial fraud. A crime. A felony. Prison time. Like that.
Not this boy, Anonymous. I am happy to have the Wall Street Con Men tell their half of their story. I am not innumerate, self-admitted or otherwise. But I don’t possess a strong enough skill set re the non-emotional side of things to feel that I have something significant to offer. But I know with absolute certainty that an investing strategy that can only be “defended” with 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 is an investing strategy not fit for the humans. I like the humans. So I am going to tell the other half of the story. I am going to tell millions of middle-class people the truth about what the peer-reviewed research says about what works and what doesn’t.
If the Big Shots were as knowledgeable as they pretend to be, they would be talking about the emotion you evidence in your every post here at every investing board and blog on the internet. Your emotionalism is the story. It is your emotionalism that makes stock investing risky. For you.
And not for those of us who use the magic P/E10 number to make ourselves aware of the emotionalism/risk all around us and of how to overcome it to achieve our retirement goals.
I am not asking you for your permission to tell the millions of middle-class investors what they need to know, Anonymous. I am telling you how it is going to be. I hope that I am being clear here. It would be cruel of me to evidence any vagueness over such an important question, a question that will be affecting how long your prison sentence will be in days to come.
I am not the arbiter of it all. We ALL have a say.
That includes the millions who want to know the truth about what the peer-reviewed research says. Not just the Wall Street Con Men seeking to protect their turf. And not just their Internet Goon Squads, so filled with rage over the idea of people hearing what the last 33 years of peer-reviewed research says that they engage in behavior that will be landing them in prison cells in days to come.
I love you, man.
But I won’t agree to commit felonies for you.
It’s not a close call.
I will continue to post honestly re safe withdrawal rates and scores of other critically important investment-related topics.
We will see how it all works out.
I naturally wish you all the best that this life has to offer a person regardless of what investing strategies you elect to pursue.
Love is the answer.
Oops! I did it again!
Rob
Anonymous says
Mike Piper just made an interesting comment about whom we can trust for investment advice:
“About the only way to get truly unbiased information is to get it from somebody who makes their living in a completely different field. For example, your neighbor who works as a software developer has little reason to convince you to make one investment decision as opposed to another. Of course, the problem is that, in most cases, such sources not only lack conflicts of interest, they also lack expertise.
As far as unbiased sources that are still knowledgable, something like the Bogleheads forum is about the closest you can get. Most people there do not work in the financial industry at all and therefore have nothing to gain from convincing you of one course of action over another. That said, even there it is important to be careful. Most people are anonymous, so it can be hard to know how much faith to put in any one person’s information or opinions. Also, some people there do actually have conflicts of interest (specifically, those of us who work in any of the types of positions mentioned above).”
Mike makes a good point. I guess this is not good news for you, Rob. You tries making a profit on your book and we can see your strategy is to sell your services as a way of getting a $500 million windfall. It seems we are better off getting our advice from the Bogleheads forum.
Rob says
I love making money. That much certainly is so.
And of course everyone else does too. So I agree with the thrust of the point that Mike is making.
And I agree that the Bogleheads Forum is at least theoretically a great place to go for guidance. It’s a big plus that most of the people participating there are doing so just because they want to participate in a learning experience. They want to learn themselves and they are willing to take time out of their days to help others learn as their way of paying the price for doing so. That is super cool.
I think that we will see that forum (and lots of others) realize their true potential as we work our way to the other side of The Big Black Mountain. The only thing lacking there today is integrity on the part of the owners. I’m working on it! I’m working on it!
The Wall Street Con Men don’t do what they do solely to make a buck, Anonymous. If Bogle could go back to 1981 and play it differently, he would elect to play it very, very differently. I am 100 percent sure. He finds himself in a trap today. We are all going to pull together to help our friend Jack out of the corner in which he has trapped himself. There is a process playing out here.
This is not primarily a money-driven thing. Money plays a role. I mention it because it truly is PART of the story and there is no way to make sense of the story without referring to this aspect of the story. But the primary issue here is that we are as a people overcoming an ignorance that held us back in earlier years.
The primary issue here is wounded pride. If investing were not so important, the Buy-and-Holders would have acknowledged their mistake when it was first uncovered. The biggest reason that this has gone on so long is that the Buy-and-Holders want to help people and they cannot bear to acknowledge that they have inadvertently hurt so many people. That realization caused them to go into cover-up mode and then things got harder and harder as more lives were destroyed.
The Buy-and-Holders are good people. Yes, they care about money. That doesn’t make them bad, it just makes them human. They need money. Welcome to the club, you know?
I believe that Bogle will flip following the next crash. Once Bogle flips, no one will be afraid to tell the truth. Then thousands will come forward. We will see 34 years of advances in about 34 days. It will be amazing.
I agree that the Bogleheads Forum is POTENTIALLY an amazing resource. We need to solve the integrity problem. Then there will be no stopping us.
My take.
Rob
Anonymous says
“The primary issue here is wounded pride”
Indeed.
Rob says
The words that I have put forward over the past 13 years and the words that you have put forward over the past 13 years will both be available to your jury, Anonymous.
I wish you the best of luck with it, my old friend.
Rob
Anonymous says
That wounded pride causes you to make unfounded statements about prison, death threats, etc.
Rob says
If everyone in this field had called out Bogle on his b.s. back in 1981, you wouldn’t be in the fix you are in today, Anonymous.
I’m the best friend you have in the world. You just don’t see it. I am the one trying to get your prison sentence SHORTENED.
Once you know that you are sooner or later going to have to come clean, the best thing to do is to come clean IMMEDIATELY. Each day of delay leaves you in a worse place than the place where you were the day before.
Not this boy.
Rob
Anonymous says
Rob,
People do not agree with you and your opinions about John Bogle. There is nothing to be “called out”.
Rob says
People did not agree with criticisms of the Bernie Madoff fund until his acts of fraud caused them to lose most of their lifetime savings, Anonymous. Those losses caused people to become very, very, very angry. That’s why Madoff lives in a prison cell today.
Let’s check in again re these matters following the next price crash.
Fair enough?
Rob