Set forth below is the text of an e-mail sent to me by Kevin, the owner of the Out of Your Rut site, on October 2, 2013, and the text of my response to him. For several years, I wrote a weekly column titled Beyond Buy-and-Hold at Kevin’s site.
Hi Rob,
I skimmed through the 125 comments that were on this post, and they’re pure mud-slinging by Heywood and “Reality”. I deleted all the comments including yours, and put up my own reply. Hope you don’t take offense to that as I meant none toward you.
Those two are just looking for trouble, and they won’t get any help on OOYR. Constructive, adult disagreements are fine, but attack style is out of the question.
Do these guys bother you elsewhere???
Thanks,
Kevin
Kevin:
It’s good to hear your voice again.
Yes, the Goons bother me elsewhere.
They have my name in a Google notification service. So if I post at any blog on the internet, they know and they posts an endless number of abuse posts until the site owner agrees with their demands. There are blog owners who have put up Guest Blogs by me and the Goons sent an e-mail to the owner of the blog telling him that they would destroy his site if he did so again.
I spent 16 months working with Wade Pfau, an academic researcher with a Ph.D. in Economics on a piece of research that I believe can fairly be called the most important research published in this field in the past 32 years. It shows investors that, by looking at valuations when setting their stock allocations, they reduce the risk of stock investing by 70 percent. I have had long-time Buy-and-Holders tell me after they looked at that research they were rethinking their beliefs about how investing works.
The response of the Goons was to send an e-mail to Wade telling him that they would send defamatory e-mails to his employer with the aim of getting him fired. Wade sent me several e-mails telling me that he was afraid of what they could do to him. When they continued, he worked out a deal with them in which he took down every comment I had written at his site (which he thanked me for profusely when I wrote them) and put up comments praising the leader of the Goons. Wade dropped plans to do follow-up
research on Valuation-Informed Indexing (he told me when we did the first research paper that “You ain’t seen nothing yet!” and that he expected eventually to get research on Valuation-Informed Indexing published in the Journal of Finance, the most respected journal in the field).
The 11-year cover-up of the errors in the Old School safe withdrawal rate studies is the greatest act of financial fraud in the history of the United States. We are going to see many people going to prison for this massive act of financial fraud following the next price crash.
It is my strongly held view that every blogger on the internet should be speaking out about this.
It is not entirely true that the Goons are “just looking for trouble.” They are looking to INTIMIDATE. For 11 years, that has worked. They are now not just covering up the errors in the retirement studies. They are now covering up the cover-up. Things get worse and worse and worse as they commit more felonies as as bloggers in this field and experts like Bogle and Swedroe and Ferri and Burns and Bernstein fail to speak up.
Rob Arnott (the former editor of the Financial Analysts Journal) wrote me an e-mail in which he told me that “your ideas are sound.” He described acts of intimidation by Buy-and-Holders that he has experienced himself. Two young researchers wanted to do research in this area. They were taken aside by an older Buy-and-Holder who told them that they would be hurting their careers if they were to do so. Rahiv Sethie, an Economics Professor at Columbia, told me that all of my ideas follow from Shiller’s findings and that he could see why Valuation-Informed Indexing would work. But he hasn’t published research showing this. Given these other events, I don’t think it is too hard to figure out why he holds back.
Arnott copied Bogle on his e-mail to me. So Bogle knows all about this.
This is not an economics story. It is primarily a POLITICAL story. The question on the table is whether citizens of the United States should be permitted to know what the last 32 years of peer-reviewed academic research in this field tells us about how stock investing works. Wall Street wants us to believe that Buy-and-Hold can work. There is now 32 years of peer-reviewed research showing otherwise. Investors MUST take price into consideration to have any chance of achieving long-term success.
I believe that things will change following the next crash (the research shows that we have another
crash of 65 percent coming up ahead). The problem with waiting for the crash is that another crash
of that magnitude will put us in the Second Great Depression. I am not sure that our political system
can sustain a Second Great Depression, one that will according to the research be far deeper and far longer-lasting than the depression we experienced in the 1930s.
This is not just about giving me a hard time. It is about keeping information from millions of middle-class people who very much need to hear it.
It’s important to understand that the Goons do not benefit from a Second Great Depression any more
than any of the rest of us. They are in emotional pain. The Buy-and-Hold advocates created a monster when they encouraged so many people to believe in this stuff. And of course the advocates too would
like to get out of the corner into which they have painted themselves.
The positive news here is 50 times more positive than the negative news is negative. The answer
is just to get a discussion started and then we see good things piled on top of good things piled on top of good things.
Do you know from your conversations with other bloggers what they are afraid of? It seems to be that
if there were 10 of us who stuck together, the Goons would be powerless to do harm to any of us. All of their power to destroy us comes from the fact that they can take us on one by one. I’ve spoken to financial advisors and academic who have been intimidated too. It seems to me that the logical step is for 10 people (a combination of financial bloggers, political bloggers, academics and financial advisors) to agree to meet at a discussion board set up at one site and to keep a record of the intimidation tactics. Then anyone being hassled could point to that site. I would think that would end the nasty stuff in no time.
Do you see merit in that idea? Please let me know if you have thoughts in reaction to all this.
And please take good care.
Rob
You’ve been looking for 10 apostles for years. How many do you have so far?
Actually I withdraw that question. Here’s my question: Are you still in contact with Kevin?
In fact, “how’s that going?” will be a logical question for any of these old email posts. Not sure you’ve thought this through.
If it weren’t for the criminally abusive behavior of you Goons, I would have MILLIONS of supporters today, Anonymous. Once people feel safe to challenge the smelly Buy-and-Hold garbage, there are going to be more and more and more challenges. Buy-and-Hold is the past. Valuation-Informed Indexing is the future. I got started on the next big thing 14 years before anyone else. Not exactly a bad thing.
If Buy-and-Hold could survive indefinitely, you could argue that it was a bad thing in a practical sense to go with the superior strategy. But it can’t. The promotion of Buy-and-Hold “strategies” ALWAYS causes an economic crisis. We are living through one today. If stocks continue to perform in the future at least somewhat as they have always performed in the past, the economic crisis will be getting a lot worse before it gets better. It will end when we open every investing discussion board and blog to honest posting re the last 35 years of peer-reviewed research. My site goes to the top when we do that. And we MUST do that or else watch helplessly while the entire economic system goes down. There’s no other way out of this but to provide honest and accurate information on how stock investing works to the millions of middle-class investors who need it and want it.
Jack Bogle loves his country, Anonymous. That’s the part of this story that you continue to ignore. The man loves his country. So there is going to come a time when he comes clean. And then we are all off to the races. I obviously wish that he had come clean on the morning of May 13, 2002, or, better yet, back in 1981, when Shiller published his revolutionary research. He didn’t. That makes me sad. But Jack is going to come clean one of these days. And I have a 14-year head start over him and everyone else in my efforts to explore the implications of Shiller’s Nobel-prize-winning research. Not bad!
I don’t communicate with Kevin on a regular basis. He loves my stuff. He feels that it is too dangerous for him to post honestly re how stock investing works today. He is waiting for after the crash when he will be rewarded for doing so rather than punished for doing so. I cannot do it that way. I care about my readers. I feel compelled to be honest when writing about this stuff. I will certainly be back in regular communication with Kevin when Bogle comes clean and when Kevin feels safe about posting honestly himself. And I will certainly also be in regular communication with lots and lots of other smart people at that time — Bogle and Pfau and Shiller and Arnott and on and on and on and on and on.
I don’t see the benefits of waiting. I of course don’t like the intimidation tactics and all that garbage. In that sense I see the benefit. But, if I am going to spend the remaining years of my life giving honest investing advice, I don’t want to wait until we are in the Second Great Depression to start learning how things work. I started learning on the morning of May 13, 2002. I know a lot more today as a result of that decision than Kevin knows or that Bogle knows or that even Shiller knows. So I sure don’t regret making that call.
I am going to continue to work it. I love my Buy-and-Hold friends and I look forward to the day when we are all working together to HELP investors rather than to destroy their lives. Bogle and all the others WANT to be freed to help people once again. Nothing could be more obvious. I am trying to help them get what they want and I will continue to do so. Because I LEARN from them when they are honest. And I LIKE learning from them. We all should like that. We all should be helping out our Buy-and-Hold friends, in my assessment.
I’ve thought it all through. I guess that I have come to different conclusions than you. But I definitely have spent lots of time thinking it through. It is my strongly held belief that the good stuff here is 50 times more good than the bad stuff here is bad.
I naturally wish you all good things.
Rob
I have seen many of your posts as to blog owners that won’t talk to you. Are there any big owners that DO talk to you?
I go to the personal finance bloggers conference every year, Anonymous. Every reaction that I can recall has been positive, some effusive. Everybody says they love my stuff, everybody says they want to know more about Valuation-Informed Indexing, everybody says they want to write about VII themselves and on and on and on.
That’s 100 percent consistent with the reaction I get when I post at discussion boards and blogs. Starting on the morning of May 13, 2002, I have received insanely positive reactions over and over and over again. I have an article at the site where I provide 101 quotes from people going on and on and on about how much they love my stuff, how they think the debate that I started is the most important debate they have ever seen on the internet, how they wish you Goons would follow the rules of the sites and permit honest posting, how they wish the site administrators would enforce the published rules, and on and on.
It’s always the same thing that causes problems, Anonymous. Death threats cause problems. Demands for unjustified board bannings cause problems. Tens of thousands of acts of defamation cause problems. Threats to get academic researchers fired from their jobs cause problems. People hate that stuff. People have never seen such ugliness at any earlier time of their lives. People expect to be protected from that stuff. People will not tolerate that stuff. People get quiet when they see that sort of stuff.
We have to bring criminal proceedings against those who have posted in “defense” of Mel Lindauer and John Greaney and Jack Bogle. Bringing criminal proceedings says something about what we are as a society. It says that we are a civilized people, that we have certain minimal standards that we will not ignore even when those violating those standards are rich or powerful or well-connected. That we are humans and not Goons ourselves.
That’s it, Anonymous. We are going to see criminal proceedings against you Goons following the next price crash. Then the long national nightmare will come to a full and complete stop. My expectation is that we will still see people advocating Buy-and-Hold strategies at that time. Millions of people sincerely believe in Buy-and-Hold today. And those people help us all by making their points. But we are not going to see any more death threats following the announcement of prison sentences. And we are not going to see any more demands for unjustified board bannings. And we are not going to see anymore acts of defamation. And we are not going to see any more threats to get academic researchers fired from their jobs. I mean, come on.
People will be earning hundreds of millions of dollars giving honest investing advice once they feel free to do so. There are lots of people who like the idea of earning hundreds of millions of dollars. So all our problems go away with the announcement of prison sentences. It’s a good thing that we adopted the laws against financial fraud long before Mel Lindauer and John Greaney and Jack Bogle showed up on the scene. Now we just need to take one additional step and begin ENFORCING those laws in a reasonable manner. That’s what will make all the magic happen for each and every one of us (including the Wall Street Con Men and you Goons).
We may go into the Second Great Depression following the next price crash. We may see lots of people lose confidence in a political system that permitted such a thing to happen. But we will recover. We will rebuild. I am sure. I love my country and for good reason. The same country that has tolerated you Goons for 14 years developed the insights that represent the future of investing advice. The same country that has thus fair failed to enforce the laws against financial fraud adopted those laws in the first place. The same country that has permitted Jack Bogle to continue pushing his smelly Buy-and-Hold garbage for 35 years after the peer-reviewed research in this field showed that there is precisely zero chance that it could ever work for a single long-term investor in this solar system or in any other, far distant, one put Bernie Madoff in a prison cell when his massive con was exposed.
We are close, Anonymous. Hang in there. It gets better. A LOT better.
That’s my sincere take re this terribly important matter, in any event.
We’ll find out together how it all plays out.
I naturally wish you all the best that this life has to person spending the remaining days of his life in a cold prison cell.
Take care, my long-time Goon friend.
Rob