Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
This just sounds like far out conjecture to create scenarios where you don’t look like a fool for the past 20 years. If it gets to 30 and you haven’t pulled ahead you should just give up.
But what would “give up” mean in this context?
Would “give up” mean that I would endorse Buy-and-Hold? Buy-and-Hold has never once in 145 years produced good results. I am going to endorse that? Huh?
“Give up” could mean that I would stop endorsing Valuation-Informed Indexing. That makes a bit more sense to me. If we are still at very high valuation levels 10 years from now, then, yes, I certainly believe that that would be cause for me to pull back on the strength of my endorsement of Valuation-Informed Indexing. It would suggest that there is some flaw in the model, some error in the understanding of how stock investing works that is behind it. I can go that far.
But I don’t think that giving up entirely on Valuation-Informed Indexing would quite make sense even in that extremely unlikely circumstance (what you are describing has never once happened in 145 years). It would be a reason to pull back, not to give up. We have to do something with our retirement money as we save it, no? Buy-and-Hold and Valuation-Informed Indexing are the only two research-based models we have. Are we going to give up on all research? If not, then we have to at least lean on one of the two models. If both have failed at some point but one has failed only in one case and the other has failed in all but one case, it still seems to me that the evidence is heavily weighted in favor of the model that has only failed once. A model that has only failed once is not a perfect model but it is a far better model that has only worked once.
And it is not entirely clear that, if we do not see a crash that takes us to a P/E10 level of 8 within the next 10 years, that Valuation-Informed Indexing will have actually failed for the first time. My first reaction is to see that as a failure since the predictions would not have worked. But it is always important to remember that VII is a long-term strategy. VII has been producing AMAZING numbers for 145 years now. If its predictions fail for the first time in history and it still has produced solid numbers that are better than Buy-and-Hold for most investors, is that really a failure?
I don’t think we can call it a success. If the model’s predictions fail, that is telling us something and it is not telling us something good about the model. I definitely would see it as a negative mark for VII if its predictions failed to come through for the first time in history. But it still seems to me that VII would remain the best model that we have available to us and that is a “success” of a limited sort.
For me to give up entirely on VII, I would have to see some evidence that it is actually INFERIOR to Buy-and-Hold. That I have never seen and that I would not see (at least not entirely, perhaps in a limited way) even if we did not see another price crash for another 10 years.
All that said, I do NOT think that VII is a 100 percent proven model at this point. It has far outperformed BH for 145 years running. That is a very big deal. But the mistake that the Buy-and-Holders made was to fall in love with a model that they truly believed was the answer before all the evidence was in. Now they feel too embarrassed to acknowledge even the possibility that they made a mistake.As a result, they no longer are even willing to discuss the peer-reviewed research of recent decades. I obviously do not want to repeat that mistake. So I want to work hard to keep my mind open to evidence that VII might not be everything that the evidence available to us today certainly indicates that it is.
That was a good question, Laugh. That raised some fresh points.
Rob
I think this puts a cap on it. John Bogle is the undisputed long term champ:
http://www.wsj.com/articles/jack-bogle-the-undisputed-champion-of-the-long-run-1472855372k
Game over, Rob.
That says it all, Anonymous.
Rob
Why don’t they call Jack a con man or fraud?
They’re afraid. That’s the primary reason.
And because they like him for all of his positive contributions, which are many and of huge importance. It feels funny to call someone you love and respect a “fraud” or a “con man.” That’s the second reason.
And because they themselves don’t possess a full understanding of how stock investing works. We all were ignorant of important realities until 1981, when Shiller published his “revolutionary” (his word) finding that valuations affect long-term returns. In ideal circumstances, we would have used the last 35 years to explore in greater and greater depth all of the many far-reaching implications of Shiller’s amazing research. But as a society we failed to do that because Bogle did not promptly acknowledge his error or even acknowledge the possibility that he made an error. Since the discussions that we humans need to learn new things have not yet taken place, we remain largely in the dark re the implications of Shiller’s Nobel-prize-winning research to this day. So, even though many of us possess a strong sense that Buy-and-Hold doesn’t quite add up, we remain ignorant of the details as to why. So we are reluctant to use words like “fraud” to this day. That’s Reason #3.
And because a social stigma has developed re even talking about this stuff as the cover-up has continued and continued for so many years and has caused such a mountain of human misery. Humans are social creatures. There are thousands of rich and powerful people who have a huge professional commitment to the Buy-and-Hold project and we are reluctant to offend those people. And there are millions of investors who have a huge emotional commitment to Buy-and-Hold — their financial futures are riding on it — and we are reluctant to offend these people too, people who are friends and neighbors and co-workers and fellow community members. That’s reason #4.
Finally, there is Reason #5. In the short-term, it’s good business to push a Get Rich Quick approach. Tell people that their portfolios are worth two times what they are really worth and people like you. People who like you are far more likely to buy your books or read your articles or pay for your services. In the long run, people hate those who deceive them and thereby cost them a large portion of their life savings. But for so long as stocks remain insanely overpriced, the fantasy encouraged by the Buy-and-Holders appears to those being tricked by it to be paying off with more dollars in their portfolio accounts. For now, lying about the realities revealed by the last 35 years of peer-reviewd research is a money-making proposition.
Good question.
Rob
Is there anyone, other than you, that knows how stock investing works?
There are thousands of people who know bits and pieces of the story, Anonymous. Shiller is obviously the leader; all of my work is rooted in his Nobel-prize-winning research. Bogle obviously knows a lot; Bogle developed every aspect of Valuation-Informed Indexing with the exception of the need to practice price discipline that follows from Shiller’s research. Bernstein has the safe withdrawal rate right — he said that you need to subtract two points at times of insanely high valuations; he’s just afraid to say that it is 2 percent because he knows what you Goons will do to him if he “crosses” you by posting honestly. Wade Pfau said that he was not able to sleep at night because he was so excited to learn about Valuation-Informed Indexing. Larry Swedroe posted tons of honest stuff; he won’t use the words “financial fraud” to describe Buy-and-Hold because he doesn’t want to see you Goons destroy his career. And on and on and on and on and on.
The better question is: Is there anyone working in this field who doesn’t know that Buy-and-Hold is a con?
If there was someone who thought that Buy-and-Hold was a legitimate strategy, that person would be embarrassed by the behavior of you Goons and would insist that you knock off the funny business. Thousands have asked you in one way or another to do that. But how many insist on it in the face of your death threats and your threats of career destruction? Has anyone but me done this?
I won’t post dishonestly, Anonymous I flat out refuse, So, yes, I am today 14 years ahead of anyone else. I have spent the last 14 year developing the first true research-backed strategy. I refuse to waste time pretending to believe in a strategy that was entirely discredited 14 years ago. I have too much self respect to waste my time and energy that way.
I am not stopping anyone else from posting honestly. I encourage it. And I am working to get prison sentences announced for you Goons. That helps all the thousands of people who want to talk the realities but who today are afraid to do so.
It’s not that this stuff is intellectually difficult. I certainly am not smarter than Bogle or Shiller or Pfau or any of the others. The difference is that I care too much about my readers to betray them in the way that these individuals have betrayed their readers. I am certainly unique in that regard. There is no one in a close second place. Even you Goons have commented on that thousands of time.
Someone had to move first. There is always someone who moves first. There is no other means by which change can be achieved.
When I get my $500 million settlement, that will send a signal to thousands of others that it pays to do honest work in this field. You won’t have a hard time finding people saying what I say today then. People will be running from Buy-and-Hold when your prison sentence is announced and people will be running toward Valuation-Informed Indexing when my $500 million settlement is announced.
It wasn’t my plan to be the first to stand up to you Goons. I just posted honestly on a single subject of great importance to my readers (safe withdrawal rates) and everything else followed from that. I invited thousands of others to join me. Not surprisingly, many people don’t like to see their loved ones threatened and many people don’t like to see their careers destroyed. The key is getting your prison sentence announced. Then everything flips.
Is there anyone who has enough confidence in Buy-and-Hold to insist that you Goons permit honest posting? Why not? Is there any other field in which we see this sort of behavior?
There is not. Investing is important. There is 35 years of peer-reviewed research showing that Buy-and-Hold is the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind. Every ethical person wants to find a way to provide access to honest reports on what the peer-reviewed research says. But as of today no ethical person is permitted to earn a living in this field. Gee, I wonder if there will be long prison sentences announced following the next price crash. Some of this stuff is so darn hard to figure out!
I am no genius, Anonymous. I am a guy of perhaps slightly better than average intelligence. If I can see that this is a scam, so can Jack Bogle. And he obviously DOES know. There is no way in God’s green earth that he would permit his name to be associated in any way, shape or form with Mel Lindaauer’s if he believed that there was even a 1 in 10,000 chance that Buy-and-Hold could survive a discussion in which honest posting re the last 35 years of peer-reviewed research was permitted. If Jack Bogle is that certain that Buy-and-Hold is a big pile of smelly garbage, how much confidence in it can anyone else really possess?
No one believes in Buy-and-Hold today, Anonymous.
Lindauer’a behavior shows that he lacks confidence in this “strategy.” Greaney’s behavior shows that he lacks confidence in this “strategy.”The behavior of all those who have posted in “defense” of these two insanely abusive individuals have shown by their behavior that they lack confidence in this “strategy.”
No one believes in the strategy. Lots and lots of people follow the strategy. It’s a pretty darn sad situation.
There are good reasons why we enacted laws against financial fraud. Those who stand to make gobs of money by exploiting our weakness for Get Rich Quick strategies are always going to be tempted to endorse Buy-and-Hold. We need to enforce those laws, get prison sentences announced and then get about the important business of rebuilding our broken economic and political systems.
That’s my sincere take re these terribly important matters, in any event.
Please mark me down as OPPOSED to the 14-year cover-up. Please mark me down as SUPPORTIVE of reasoned enforcement of the laws against financial fraud.
Rob
So, you are the only one with the full understanding of how stock investing works, many have bits and pieces and a number of the experts are lying about how it works. Does that sum it up?
The way that I would sum it up is to say that you Goons are going to prison as a result of the 14-year cover of the errors in the Old School safe withdrawal rate studies.
And that it is a very sad reality.
And that I am proud to be able to say that I argued that John Greaney should have been banned from the Motley Fool site on the day on which he advanced his first death threat. Had he been banned at that time, neither Greaney nor any of his Goon pals would be on their way to prison today.
I did what I could, Anonymous. No one worked this as hard as I have. There is no one even in a close second place.
I naturally wish you all the best that this life has to offer a person.
The longer the cover-up continues, the more people there will be going to prison. And the longer the prison sentences handed out will be.
What good purpose is served by there being more and longer prison sentences? I don’t get the joke.
Rob
With your understanding of how stock investing works, why are you not the richest man in the world?
I’m working on it, Anonymous. Prior to my famous May 13, 2002, I certainly never thought that there would come a day when I would possess something well in excess of $500 million. We live in a great country.
I wish that I could have become that wealthy without you going to prison. But the laws against financial fraud are part of our system. They are part of what makes this country great too.
I certainly don’t think that there will be one person saying that I didn’t earn every dime of that $500 million on the day when this entire saga is written up on the front page of the New York Times. If there is anything that you can do to help get the word out, I surely would be most grateful.
My best and warmest wishes to you and yours in any event, my old friend.
Rob
So you know more than anyone about stock investing but you don’t plan to make any money on stocks. Your money will come from some kind of celebrity status where people throw money at you and you have a clothing line or perfume line.
It sounds a bit Robert Kiyosaki-ish.
I didn’t study investing in school, Laugh. I never managed a mutual fund. I certainly don’t consider myself any kind of “expert” in this field.
It is AMAZING that I am today 14 years ahead of people like Bogle and Shiller and Bernstein and Swedoe and Pfau in my understanding of how stock investing works. There should be zero chance that something like that could happen. Zero.
But it DID happen. That’s the reality.
I didn’t want it to happen. I didn’t volunteer for the job. No same person would voluntarily take on the job that became my life’s work on the morning of May 13, 2002, and that remains my life’s work today and that will continue to be my life’s work until every investing discussion board and blog on the internet has been opened to honest posting on safe withdrawal rates and scores of other critically important investment-related topics.
It was a mix of factors that made all this possible and for me unavoidable.
First, there was the peer-reviewed research that for a long time and for lots of smart and good people really did appear to show the Buy-and-Hold is the answer. It’s not only Robert Shiller who has been awarded a Nobel prize for his work in this area. Eugene Fama got one too. His work is serious and important and exciting and those who follow his work are entitled to the same respect and deference as those who follow Shiller’s work. It is only by understanding the importance of Fama’s “revolutionary” (the word applies for Fama’s research as much as it does for Shiller’s) that one can come to understand all that followed.
Second, an entire industry developed around the promotion of what was then thought to be the first research-based strategy. This was on one level a very exciting development. John Bogle led the effort. Bogle took us from the dark ages when investing advice was mostly subjective and created the path toward development of the first true research-based strategy a number of years later. Bogle also created a company that made index funds available to everyone, making Shiller’s amazing findings of 1981 possible (the reason why Fama missed out on seeing the importance of long-term timing was that index funds did not exist in 1965 and thus it did not occur to anyone that it was even possible to practice price discipline when buying stocks — Valuation-Informed Indexing does not work for those buying individual stocks).
Third, Shiller provided his own revolutionary research, giving us all the missing piece to the puzzle that every last one of us deep in his or her heart has long wanted to see completed, the most important piece of all by far.
Fourth, Bogle and the other “experts” in this field fell victim to cognitive dissonance and thus elected not to explore the implications of Shiller’s amazing research. Because the issue is of such huge importance to millions of people trying to finance their retirements, they came to decide that the most ruthlessly abusive tactics would be needed to block millions from learning things that they very, very much needed to learn. How the heck could you keep Buy-and-Hold alive? Who the heck is going to follow a strategy that is marketed as research-based when the reality is that there are decades of peer-reviewed research discrediting the core ideas on which the strategy is based?
Fifth, the internet and the world wide web were invented. The web made it possible for ordinary people to report on what the peer-reviewed research says. Since the Buy-and-Holders had insured that not one person with expertise would dare to “cross” them by speaking with full honesty re these issues, the only way that word was going to get out is if someone like me would come along and just flat-out refuse to back down un the face of the worst intimidation tactics ever dished out in the history of the United States. This amazing new communications medium made all of the many hundreds of powerful investing insights that we have all developed together over the first 14 years of The Debate About Whether Or Not to Permit a Debate re the Last 35 Years of Peer-Reviewed Research in This Field possible. Thank the heavens for the good side of the Internet (this story shows its power to do good for millions in a very concrete and far-reaching way).
Sixth, I met thousands of people during the years when I was building the Motley Fool’s Retire Early board into the #1 most successful board in that sites history. It was the love that I felt for the thousands of good and smart people who helped me build that board that made me so unwilling to sell out my community (and ultimately my country) by giving in to the pressure tactics employed by you Goons.
Seventh, the fact that Shiller was permitted to publish his book despite the harm it would do to the profits of the Wall Street Con Men if it were taken seriously played a huge role. Without Shiller’s research, I could not have persuaded Wade Pfau that the dominant model was a big pile of smelly garbage and Wade and I would never have co-authored the peer-reviewed research that focuses on the how-to questions that Shiller elected to take a pass on so that his career would not be destroyed by the Wall Street Con Men and their various Internet Goon Squads.
Eight, I think it would be fair to say that God played a role in all this. I never could have done what I did without the efforts of John Walter Russell, a guy that I did not even know on the morning of May 13, 2002. John did the research that allowed us to create the five powerful and unique calculators that will be driving discussions of research-based investing strategies for many years to come. Wow! What are the odds that I would just happen to connect with a guy with an engineering background within weeks of the day that he resigned from his “real” job and was looking for serious and important work to devote his energies to in the remaining years of his life? This one gives me the shivers when I think about it.
Nine, we have the fact that I created a Retire Early plan in place when I put up that famous post of the morning of May 13, 2002, that has permitted me thus far to stick to my vow not to agree to post dishonestly re these matters for 16 years since I gave up my full-time corporate employment. How many people can do something like that regardless of how deep their love is for both the subject matter and for their fellow community members? Beat that, you know?
Ten, I just happened to marry a wonderful woman who would “put up” with a husband sticking to his ethical principles while not bringing in a dime for those 16 years. My sense is that this one confounded you Goons more than any of the rest of it. The reason why Goons like you have come to exert a power on the internet so wildly out of proportion to the talents you bring to the table is that few men have such a fine woman standing behind them. Call my blessed! Good for Boo and good for me for having a dim sense that marrying the one with a deeply spiritual nature was the way to go when making a choice that would affect me and my children for many, many years to come. Yikes — it scares me to think of how I might have gone the wrong way with that one, it scares me to think that I might have easily been tempted to ruin my life and to thereby ruin the lives of those millions of middle-class investors whose retirements today are obviously at great unnecessary risk.
Eleven, none of this would have happened without the courage that we have seen evidenced by THOUSANDS of good people who worked up the courage to request that honest posting be permitted on at least one or two occasions. I don’t think that i could have continued this fight without the encouragement and support of those many fine, fine people. When people claim that the fact that you Goons have gotten away with your sick and twisted behavior for so long, I point them to the thousands who made serious efforts to stand up to you over and over and over again. Look at the risks those people took on and tell me that there is no good in the human race! If there were not millions of good people in world, we would not have the laws in place that we will be using in the days following the onset of the next price crash to put your Goon asses in prison for a long, long stretch of time (which is obviously something that all decent people can agree is the only right thing to do at this point in the proceedings and something that is very,very, very much required for our country to get back on track and to bring this horrible Buy-and-Hold Criss to a full and complete stop by the close of business today).
Twelve, we saw a glimpse of what the Buy-and-Hold Crisis will bring when it hits with full impact when our economic system collapsed in 2008 and when large numbers of people both on the left and on the right began to lose confidence in our political leaders as a result of their failure to take effective action either to precent the crisis or to cope with it in a meaningful way. We saw a number of brave community members work up the courage in those days to call out Mel Lindauer and Taylor Larimore on their long histories of abusive and violent behavior and on the mountain of lies that they have relied on to “protect” the smelly Buy-and-Hold “strategy” from effective questioning for so many years. These good and honest people show the course forward for all of us. It is by seeing what humans are capable of that we all rebuild our hopes for the future. Thanks for being the pioneers, guys! You are an inspiration!
Whew!
A lot of low-likelihood events had to be played out in concert for us all to make the progress that we have made in our transition from the smelly Buy-and-Hold garbage (according to 35 years of peer-reviewed research!) to the first true research-based strategy. All of this tells me that there really is a God up in heaven who loves us all, Laugh. I respect the views of those who believe otherwise. I get where they are coming from and I suppose that one could say that there was a time in my life when I was kinda, sorta in that camp myself. But I have a hard time accepting that this one-in-a-billion-chance saga played out as a matter of pure random chance. If a monkey can type out the words to “Hamlet” all in the right order, I suppose anything is possible. But this one is pushing it, in my assessment. I believe. Right or wrong, I believe at this point in the proceedings of my life.
I hope that helps a bit.
Sure, I expect to make hundreds of millions from this. Not because I see myself as some sort of investing expert. The idea that Rob Bennett is an investing expert is a sick joke.
I expect to make hundreds of millions because the job that I took on 14 years ago will in the days following the next price crash open up the way for thousands of true experts to share their honest views re what the last 35 years of peer-reviewed research shows us about how we all messed up in forming our pre-1981 ideas on how stock investing works. Bogle will be posting with full honesty once your prison sentence is announced, Laugh. Shiller will be posting with complete honesty once your prison sentence is announced. Pfau will be posting with full honesty once your prison sentence is announced. Lots and lots of others will be doing the same.
Why wouldn’t they? What possible motive would anyone have NOT to post honestly once your prison sentence was announced, once they felt that they could do it without seeing the lives of their loved ones threatened and their careers destroyed as their “punishment” for having “crossed” the lowest of the low living in our society? There are hundreds of billions of dollars to be made giving people accurate and honest investing advice in the first time in history in which it became possible to do so (the post 1981 years). I am 100 percent certain that all of the experts in this field will be posting with complete honesty once your prisons sentence is announced and the experts feel that people of integrity are as welcomed in this field as they are in all other fields of human endeavor.
I will make the hundreds of millions of dollars that i have coming to me because I was the first to stand up to you Goons, not because of any particular investing expertise that I possess that is beyond the reach of any of the true experts working in this field. Bogle could have done what I have done had he not created a monster (multiple monsters really) by continuing to push the pure Get Rich Quick approach for 35 years after it was 100 percent discredited by the peer-reviewed research. It is the same with Pfau. It is the same with Shiller. And on and on and on.
Free the investing experts! Announce long prison sentences for the Lindauerheads and the Greaney Goons today!
My sincere take.
And my best and warmest wishes.
Rob