Set forth below is the text of a comment that I recently posted to another blog entry at this site:
“If stocks have worms in them, the Wall Street Con Men threaten to destroy the careers of all who dare to post honestly.”
Challenge: Post an actual real world documented example of this ever occurring, OTHER than something involving yourself.
That’s the entire site, Anonymous.
I used to believe in the Buy-and-Hold garbage. I know how it feels to be tricked re this stuff.
Wade Pfau searched and searched and searched trying to find one peer-reviewed study even suggesting that there might be some alternate universe where price discipline is not 100 percent required in the stock market just as it is in every other market that has ever existed.
It’s all a Big Lie. You have been conned.
Johnny Rotten asked the fans attending the last Sex Pistols concert: “Have you ever had the feeling that you have been taken?” That’s you.
That was once me too. I am not saying that I am any smarter than you. I realized on the evening of August 27, 2002, that it was all a massive con. I’ve never looked back since. Legitimate strategies can be defended without death threats. When you find yourself making use of death threats, you need to ask yourself where you made a wrong turn. Because that ain’t the way.
When you want my help, I’ll be here for you. That’s not a time-sensitive offer. Ask anytime you please, even after the crash if it comes to that.
But please stop embarrassing yourself by asking me to participate in the biggest con ever worked on the people of the United States. I worked at a job I hated for nine years while I planned my early retirement. I spent every night and every weekend assembling the materials in my 40 binders. If I hadn’t worked it that hard, I could easily have been taken in myself. And I don’t find that idea one bit funny. I earned my retirement money. I expect to be able to find honest and accurate reports re what the peer-reviewed research in this field says about how to invest it.
I deserve that. We all do. We all should demand it.
I am your best friend in the world. You don’t know it. But I am.
I’m happy to help you. Not by joining in the con. That wouldn’t help at all. Once I joined the con, nothing I said would count anymore. I wouldn’t be able to help you at that point.
You have been taken. You will get it after you lose most of your life savings in the next crash. Please don’t say that no one tried to warn you. I tried. And thousands of your fellow community members expressed a desire that honest posting be permitted.
You let your Get Rich Quick urge run wild. That’s how the con men reel you in. They know your weakness and they profit by exploiting it. You gave them power over you. That was a terrible mistake.
Or so Rob Bennett sincerely believes in any event.
We’ll see how things go in coming days.
Hang in there, man.
Rob
Here is a nice article on the Bogleheads forum, Jack and Taylor:
http://m.kiplinger.com/article/investing/T030-C009-S002-investing-lessons-from-vanguard-s-bogleheads.html
Why has this site been so successful, while you can’t get enough interest in starting up your own board if we are to believe that VII is superior?
Research-based works.
Get Rich Quick sells.
That’s the story, Anonymous.
The beauty of Buy-and-Hold from the standpoint of those who believe in it (please recall that I was once a believer) is that the gains are spread over a long period of time. In contrast, the losses come only at the end of a long bull/bear cycle. The losses are big enough to wipe out all the gains. But they are ignored until they have been experienced in the practical realm (it is only in the theoretical realm that they can be anticipated). By the time the losses are experienced, it’s too late to do anything about them.
So the strategy is aces for so long as there are steps that the investors can take to avoid a bad outcome, and, then, when the downside of the strategy is evident, it’s too late to do anything about it. This is a marketer’s dream — to have his marks see all the upside but none of the downside of the thing he is selling until its too late for them to do anything about it anyway.
Buy-and-Hold is a marketing phenomenon. There is no support in the research for the “idea” of not practicing price discipline when buying stocks. The evidence available to us is 100 percent in favor of Valuation-Informed Indexing and 0 percent in favor of Buy-and-Hold. But people don’t become Buy-and-Holders for rational reasons. They become Buy-and-Holders because of the emotional appeal. We all have a Get Rich Quick urge lurking within us.
Those who fall for Get Rich Quick schemes NEVER are aware of the case against them until they have lost their money. If it were possible for most people to see the dangers associated with a Get Rich Quick scheme, Get Rich Quick schemes would not exist. That’s by definition. Do you think that the people who lost their money in the Madoff fund knew all along that they were being taken? They didn’t know. It’s not because they were dumb. Many of those people were very smart in all other life endeavors in which they were involved. They were taken because their emotions blinded them from what their reason would have revealed had they not been blinded. No one knows in advance that he is being taken. You know when your money is gone.
The Bogleheads Forum is “successful” because every human being possesses a Get Rich Quick urge and because the forum promotes a “strategy” that is the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind. You are using the word “successful” as a synonym for “popular.” I wouldn’t call the board “successful” for so long as honest posting on the peer-reviewed research in the field is prohibited. It’s popular as all get-out. To be successful in a true sense, it would have to also possess intellectual integrity. The board gave up its intellectual integrity when honest posting was banned. The board is popular (as was the Madoff fund), not “successful” in the way that I use the word.
This site is “successful” in the way that I use the word. This site is not popular. But it is real. I post honestly here. I permit and encourage others to do so. In my eyes, that’s a critical element of “success.” I am unbending on the honesty question because I believe that the entire project fails once that element is lost. I want to be popular too and this site is not today popular. But I would rather give up popularity than intellectual integrity. Given the cards that I was dealt, this is the best that I can achieve at this moment in time.
We won’t always be living at a time when the edge given to Get Rich Quick over research-based will be so strong. These times are extraordinary. We have seen P/E10 levels in recent years never before experienced in history. Get Rich Quick is at the highest point it has ever achieved. So we should expect to see corrupt enterprises like the Bogleheads Forum enjoying a greater popularity today than they will ever achieve at any other time and we should expect sites evidencing intellectual integrity seeing lower levels of popularity than they would see at more normal times.
These things move in cycles. Times when Get Rich Quick strategies enjoy insane levels of popularity are followed by times when research-based strategies come back into vogue. Buy-and-Hold is in its dying days. All of the behavior of you Goons show this, There was a day when Buy-and-Holders would have been ashamed to behave in the way you do or to be associated with people who behave in the way you do. There was a day when Buy-and-Holders really thought they were onto something and possessed too much self respect to tolerate the sort of behavior we have seen from you Goons for 13 years running now. Buy-and-Holders tolerate you Goons today because they have become so cynical as a result of their efforts to hold onto their belief that Buy-and-Hold can work despite the mountain of peer-reviewed research showing otherwise that they don’t feel that they can afford to honor ethical standards anymore. Too sad.
I am not popular for the best possible reasons. And I will reap the rewards of doing the right thing and standing up for the right principles as the pain that goes with following a pure Get Rich Quick strategy become evident to all.
The bottom line? People don’t always act in their self-interest. People sometimes cannot even see what is in their self-interest. The true “expert” is the person who tells people what they need to hear rather than what they want to hear. Making a sale is not all that matters. Considered in isolation, it’s certainly a plus. But when things reach a point where you find that you need to commit felonies to continue making the sale, you need to stop and ask yourself how you ever wandered onto such a dark path. That ain’t the way. There’s no sale worth going to prison over. Being popular sometimes comes at a price and there are prices too high for a truly smart person to be willing to pay.
That’s my sincere take re these terribly important matters in any event. I am not God. I could be wrong. It has certainly happened before. If it were happening again, I would likely be the last to know.
I naturally wish you the best of luck in all your future endeavors, my dear Goon friend.
Rob
A quick question. If you do not get some type of “settlement” payment, will your current portfolio still cover your retirement needs?
It will not.
Rob
“It will not.”
Rob,
Seriously, I take no delight in that. I don’t way to see you or anyone else fail in retirement as it is the family that suffers.
Is there a backup plan?
Plan A is not to do anything that would get me sent to prison.
Plan B is not to do anything that would get me sent to prison.
Plan C is not to do anything that would get me sent to prison.
All of the many back-up plans include that core element.
It’s non-negotiable.
I hope that helps a bit, my Goon friend.
Rob
Rob,
Drop the prison stuff. Let’s have a “normal” discussion.
It’s not discussing the prison stuff that is abnormal, Anonymous.
Financial fraud is a felony. That means prison.
The Buy-and-Holders are great people. They advanced the ball in a major way.
They made one mistake. Ordinarily, no biggie. We have only been studying how stock investing works in a serious way for about 50 years. We should all expect to make mistakes.
The Buy-and-Holders didn’t correct the mistake when it was uncovered by the peer-reviewed research in 1981. Presumably they were suffering from cognitive dissonance. They really believed that they had figured this stuff out. They weren’t expecting Shiller to show what he did. So, instead of correcting the mistake, they ignored his findings and just kept pushing the same old stuff, once apparently supported by the peer-reviewed research and now 100 percent discredited by it.
That’s fraud, Anonymous. That’s a felony. That’s prison time.
And it is of course 100 times harder for them to come clean today than it would have been 34 years ago. It’s not the mistake that is so hard to acknowledge today. It’s the 34-year cover-up. How do you explain something like that? Nothing like this has ever happened before.
So it goes on. Everybody who follows the peer-reviewed research knows at least intellectually that Buy-and-Hold is a big pile of smelly garbage. But everyone who knows keeps his or her mouth shut because it is career death to say so. The Buy-and-Holders have to make sure that no one comes clean because if even one major site tells the truth, they go to prison. And they don’t want to go to prison. Surprise! Surprise!
I can’t change that.
If I had a time machine, I would take us back to 1981 and Bogle could play it differently this time and we could all live richer lives than we ever before imagined possible.
I don’t have a time machine.
Neither do you.
So I would think it would be fair to say that we are all pretty much stuck at the moment.
I aint going to prison. I am not interested.
So saying that Greaney’s retirement study contains an adjustment for the valuation level that applies on the day the retirement begins is 100 percent out. Non-negotiable.
I am open to anything else. But not that.
That’s where we stand today. That’s where we stood on the morning of May 13, 2002. And that’s where we will stand 13 billion years from today.
Unless —
Some responsible people take action following the next price crash.
Which is what I think is going to happen.
I believe that Jack Bogle himself will be with us.
That’ll do it.
If you come up with any bright ideas that work from your end and that don’t require me to commit a felony under the laws of the United States, please let me know.
The felony thing ain’t gonna happen. I would think that you would have caught on to that by now.
If not, then not.
Keep trying.
But as a friend I am telling you the way it is.
Everything is on the table but that. I will never say that Greaney’s study contains an adjustment for the valuation level that applies on the day the retirement begins.
I naturally wish you the best of luck in all your future endeavors, old friend.
Rob
No, Rob, your posts are abnormal.
The world changed in 1981, Anonymous.
Going by what we knew about stock investing in 1980, my posts are certainly abnormal. Shiller’s 1981 finding that valuations affect long-term returns is the OPPOSITE of Fama’s 1965 finding that the market is efficient (that is, properly priced). It is not possible that both of these men are right; one of them is right and one of them is wrong. It is very important to everyone living on these planet that we all work together to find out which one is right.
We can’t achieve that purpose by limiting our discussions to what we thought we knew to be the reality prior to 1981. We need to incorporate the new findings into EVERY conversation. And those giving voice to the new understanding of how the stock market works need to be treated with the same respect and affection as those giving voice to the earlier understanding. We all want the same things. We all should be friends.
That’s it.
I insist on my right to speak honestly because I believe that it is best for every person on the planet for that right to be respected. New ideas do not have the power to become more popular on their own. New ideas become popular as the result of efforts of those who come to believe in them to spread knowledge of them far and wide. I do not believe that the market is efficient. I believe that valuations affect long-term returns. Every post that I write reflects that belief.
That must always remain the case. And I must never apologize for posting my honest beliefs about how stock investing works in the real world. And I must insist that my willingness to participate in discussions in a constructive and positive and life-affirming manner be given the respect that is merited. We all must insist on that. It is a founding principle of the nation in which we live. Honest posting should not only be permitted, it should be ENCOURAGED.
That of course goes two ways. I have always shown respect and affection to my Buy-and-Hold friends and I have always acknowledged their huge contributions. If I am to remain true to myself, I must continue to do so. I must demand respect for the voicing of the new ideas and I must show respect for the voicing of the older ideas. That’s the balance that works. That’s the balance that our nation has always employed to bring such conflicts to a successful resolution. That’s the balance reflected in the laws of our nation, which permit people to hold differing viewpoints on how stock investing works but which do not permit abusive behavior that rises to the level of financial fraud employed to block millions from learning about new research that they very much need to know about.
I will continue to play it that way. I believe that things will work out well for all. I could be wrong. We will have to wait and see.
Honest posting is the norm in this country. In every field of life endeavor other than the investing advice field. The investing advice field needs to change in a dramatic way so that it is possible once again for people of integrity to make a living doing good work in this field. That is not optional. That is imperative. That is not a nice idea. That is the law.
That’s my sincere take re these terribly important matters, in any event. Death threats are abnormal. Demands for unjustified board bannings are abnormal. Tens of thousands of acts of defamation are abnormal. Threats to get academic researchers fired from their jobs are abnormal. Honest posting on the last 34 years of peer-reviewed research in this field is wonderful and beautiful and intelligent and kind and loving.
I love you. And I love all of other fellow community members. So I will continue to post my sincere thoughts. Whether you threaten to kill my wife and children as my “punishment” for doing so or not. The very fact that you would make such threats shows that there is a part of you that is desperate to hear honest words on this subject. You possess a Get Rich Quick urge, like all of the humans. But the non-Goon side of you is just as real; you possess common sense as well (also like all of the rest of us). It is the conflict between what you hear from your Get Rich Quick urge and what you hear from your common sense that causes you to feel such pain when you read my words. You need to see that conflict resolved if you are to find peace.
It is only by posting honest words that I can help you to resolve that conflict. That’s the job.
I pledge to you to do my best to do this important job. I will aim to be as honest as I can be up to the point at which I am becoming uncharitable while also being as charitable as I can be up to the point at which I am becoming dishonest. I will continue to struggle as I have for 13 years now to combine the two great virtues of charity and honesty in all of the work that I do in this field. I believe that there will come a day when you will be able to see why it was so important that I do that. That will be one glorious day in this history of this nation indeed.
My best and warmest wishes to you and yours.
Hang in there, old friend. It gets better.
I am sure.
Rob
You don’t need to worry about me. Instead, you need to worry about you and how you are going to support your family. Waiting for a $500 million windfall is not a plan.
Backatcha, Anonymous.
You don’t have to worry about me.
I am going to do what I am going to do. And you are going to do what you are going to do. And I wish you all the best of luck in your efforts.
And that’s it, old friend.
Rob
I already have my funding in place Rob. You indicated above that you don’t. Further, I have back up plans. You don’t. Get the difference?
I have a web site worth well in excess of $500 million. The $500 million is the amount that I have indicated that I will accept in settlement of the legal actions that I will be bringing following the next price crash. I will then of course be earning many millions on top of that as the first true research-based strategy is adopted by millions of investors.
You are headed to prison. Financial fraud is a crime, a felony.
I wouldn’t trade places with you for anything.
Yes, I see a big difference. But I don’t feel even a tiny bit of desire to sign up with your side.
I mean, come on.
I’ll do anything in my power to help you. But that’s as far as it goes. I ain’t going to prison and I ain’t giving up the $500 million. No way, no how. Find somebody else, you know?
Not this boy. That sort of thing ain’t my particular cup of tea. No can do.
I naturally wish you all the best things that this life has to offer a person.
Rob
If you can’t monetize it, then it is not worth $500 million.
The prison thing is pure lunacy.
We obviously hold different views re both the $500 settlement payment and re the prison sentences.
It seems to me that we are just going to have to wait and see how things play out.
I hope that works for you, Anonymous.
My best wishes.
Rob
“It will not.”
The three most honest words you’ve uttered in years. Credit to you for acknowledging that painful reality.
Okay, X.
Please take good care.
Rob
Rob,
Is your wife aware that your retirement plan depends on the $500 million settlement? If so, how does she feel about that?
I’ve talked about my wife’s views and feelings here before. I don’t think that there’s too much that I can add.
She would like to have money coming in. There’s no question about that. So would I, of course.
She is certainly not as confident as I am about what will happen following the next crash or even that there will be a next crash. I would say that she has a mental block about it. She doesn’t dispute anything that I say. She doesn’t give any reasons for feeling skepticism. I think about this a lot and, if I could give a clear description of whatever it is that holds her back from seeing things the way that I do, I would tell you. I can’t figure it out myself. That bothers me. I want to figure it out. But I don’t feel that I have the problem solved as of today.
She is certainly not the only one who feels this way. You Goons of course have extreme versions of the same basic feelings. And I have detected similar feelings in my two brothers and in my mother before she died. And of course lots of our fellow community members expressed such feelings. My personal belief is that Bogle probably has feelings not entirely dissimilar to those felt by my wife. Even John Walter Russell had similar feelings to a small extent at some times. In the last few years before he died, we were totally in sync. But that was not always so. There were times when he didn’t appreciate important points for reasons that I could not fathom.
The phrase that I use to describe these feelings is “Cognitive dissonance.” The change from Buy-and-Hold to Valuation-Informed Indexing is a very big change. It’s a very simple change; there is nothing intellectually hard about this stuff. But it doesn’t click for many people, even people who have every reason to be sympathetic to me. I of course want to understand this phenomenon better. But I can only tell you what I know. This aspect of the question is very hard to understand, even for me.
This is why I use the comparison to race relations. If you think back to how the entire society treated blacks prior to the Civil Rights revolution, it is just amazing. There were really days when people with black skin could not drink from the same water fountains as people with white skin? Really? It seems impossible. It seems like all that must have just been a bad dream. People are not that wicked.
But that stuff really happened. It wasn’t a dream. There is nothing intellectually difficult to understanding that people with black skin should be able to drink from the same water fountains as people with white skin. The problem there was not intellectual in nature any more than the problems with what we tell people about how stock investing works is intellectual in nature.
These problems are SOCIAL in nature.
We are social creatures. We want to get along with others. We want people to like us. People who helped fuel the out-of-control bull market are on one level of consciousness ashamed of the harm they did to themselves and to others. They can’t stand to hear the realities discussed. They desperately NEED to hear the realities discussed just as America in the 1950s desperately needed to solve its racial problems. But the subject is just too hot. It is just too tangled a mess for people to address in a forthright manner. We can’t stand to acknowledge our mistakes and to call out the experts in this field on their b.s.
If you would have asked me on the evening of May 12, 2002, whether the things we have seen happen over the past 13 years could possibly happen, I would have said that these things could not possibly happen. But they happened. So all that I can do is to explain them to the best of my
ability. I try to dig deeper and deeper and deeper. But I don’t claim to possess a perfect understanding, even 13 years down the road.
Greaney’s retirement study does not contain an adjustment for the valuation level that applies on the day the retirement begins. That’s a stone cold fact.
There is 34 years of peer-reviewed research showing that a valuation adjustment is required to get the numbers right. That’s another stone cold fact.
Greaney has not corrected the study in the 13 years since he learned of the error he made in it. That’s yet another stone cold fact.
There are millions of middle-class people who will be suffering failed retirements in days to come as a result of Greaney’s failure to correct his study and as a result of the failure of “experts” like Jack Bogle to insist that he do so. That’s yet one more stone cold fact.
And Greaney has not been prosecuted for this massive act of financial fraud. That even one more stone cold fact.
My wife is like the rest of us (including me prior to the evening of August 27, 2002). She gets parts of it. But she doesn’t get all of it. She cannot integrate it all in her mind at this tie. If those studies are in error (they are), why the heck haven’t they been corrected? My sense is that she has a hard time getting her head around that one.
I believe that it will click for millions of people following the next crash and that emotions will turn hard against the Buy-and-Holders at that time, harder than I want to see them go. But I don’t have a crystal ball. I am just telling you what I expect to see happen.
People are trying not to understand because the crime is so big that they cannot bear to accept that such a crime has been committed in a nation that they think of as basically good. That’s what I think is going on. When it hits people how they have been betrayed by people who pretend to be “experts,” they will explode. I don’t want to see it happen. Thinking about it scares me. But that’s my sense of what will happen emotionally. People are holding back their understanding because the reality of what has been done to them is too horrible for them to contemplate. But when they finally do let in what has been done to them — Yikes!
I hope that helps a bit, Anonymous.
My view is that we are all in this together and that we all should be working together to defuse a very dangerous situation. The Buy-and-Holders are playing with dynamite, in my assessment. But they don’t listen to me. That much is certainly more than fair to say.
Rob
“You Goons of course have extreme versions of the same basic feelings.”
You think it is an extreme view to think that you will not be getting a settlement payment as you describe?
It’s extreme to commit crimes, Anonymous. That is flat-out insane.
And the killer is that my stuff helps you. It helps everyone. It is good stuff piled on top of good stuff piled on top of good stuff.
And you are willing to go to prison to stop people who want to hear it from hearing it.
That’s where we are 13 years down the road.
Beat that.
When we get to the other side, no one will be able to understand what took us so long.
And, yes, it is extreme to think that I will not get a huge settlement payment. Who could possibly object? I am going to have Bogle on my side following the next crash. When I’ve got Bogle, who the heck is going to object? This is going to be done by unanimous vote.
Even most of you Goons will want to know why Buy-and-Hold didn’t work after you lose most of your retirement money. People don’t like losing most of their retirement money. People don’t like being taken for fools.
Just another one of those funny feelings that I have been known to experience from time to time.
Rob
It is beyond extreme to believe anything you say.
So you say.
But I reported on the morning of May 13, 2002, that Greaney got the numbers wrong in his retirement study.
Ten years later, the Wall Street Journal and about 20 other highly respected publications were saying the same thing.
Millions of middle-class lives were destroyed as a result of that 10-year delay.
That’s going to come out following the next crash, Anonymous. And you are going to have to explain your behavior of the past 10 years. I wouldn’t want to be in your shoes when the members of your jury look at your posts.
You do your thing and I’ll do mine. I wish you luck with it. But there ain’t no way in God’s green earth than I am ever going to come over to your side.
Using the peer-reviewed research as a guide to how the stock market may perform in the future is an extremely sound idea. I picked that one up from a fellow named “Jack Bogle.” Perhaps you’ve heard of him. Nice fellow. Smart too.
We’ll see how it goes for both of us when we all get to the other side.
Rob
So you need the $500 million settlement for your retirement plan. At what is it critical for you to receive that?
The question doesn’t make any sense, Anonymous.
It is critical to all of us that we bring the economic crisis to an end as quickly as possible. I am in the same boat with everyone else.
I don’t need $500 million to live. I earned that amount and I expect to collect it. But it is obviously not “critical.”
There will never come a time when I will be willing to go to prison just to earn a few bucks. That’s obviously an absurd idea.
I will for the remainder of my life continue doing what I can to expose the Buy-and-Hold Con to the millions of middle-class people who have been done harm by it. It is possible that someday in the future (not anytime at all soon) I will need to take up employment. But I will obviously use my nights and weekends to promote Valuation-Informed Indexing. So nothing of consequence will change re the matters affecting you Goons.
In the event that I die, I have arranged for others to take over the site. So even my death will not change things in any terribly significant way.
Does that tell you what you are trying to figure out?
Rob