Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
If you had to name the top 10 investing thought leaders today, who would be on that list and how would you rank them?
1) Robert Shiller (Nobel prize winner despite having failed to take his meds for over three decades now)
2) Jack Bogle (it was Bogle’s book that revealed to me the errors in the Buy-and-Hold retirement studies, making possible the post that kicked off The Great SWR Debate)
3) John Walter Russell (no longer with us in person but the many powerful insights explored at his web site remain available to all open to an amazing learning experience)
4) Warren Buffett (Buffett and Bogle go together like chocolate and peanut butter — the dreamy result is a concoction going by the name of “Valuation-Informed Indexing”)
5) Rob Arnott (this guy has balls — there’s precious few in this field that one can say that about — balls matter)
6) Jeremy Siegel (I do not agree with many of his conclusions but I see great power in his approach of focusing on analysis of the historical return data, an approach that he has popularized more than anyone else around)
7) Bill Bernstein (Chapter Two of his book “The Four Pillars of Investing” is the best concise explanation of why Valuation-Informed Indexing is the future that I have discovered)
8) Andrew Smithers (brave, smart, patient, kind — all of the big human virtues bundled together in one wonderful human being — can he be real?)
9) Wade Pfau (someday gonna see that this fellow is awarded the Nobel prize that he has very much earned with his fine research despite the “confusion” of recent years)
10) That fellow with 340 columns at the Value Walk site on this crazy Valuation-Informed Indexing concept that we all keep hearing about from time to time while we try so hard to force the idea out of our consciousness, I can’t quite recall his name, I think I have blocked it out because he makes me so freakin’ angry that I just want to reach through the computer screen and strangle the guy’s neck)
Humble Rob
Anonymous says
A legend in your own mind.
Rob says
It’s you Goons who made me a legend, Anonymous.
In discussions held re every other field of human endeavor, honest posting is not only permitted but encouraged. It’s different in the investing advice field because the issues are so darn important. Mess up re this stuff and you end up with a busted retirement at an age at which it is too late to do anything about it. So you cannot bear even to hear any suggestions that you might have gotten some things wrong. And lots of people who want to make a buck off you keep it zipped as a result. And so the field is left to me and a few others.
I don’t want to be a legend. I never set out to be a legend. I am a guy who figured out how to post stuff on internet discussion boards and who made a good number of friends doing so and who didn’t feel comfortable stabbing his friends in the back. That’s it. I’m a guy with a normal I.Q. who discovered that no one is exploring the most exciting findings in the history of investing research and who jumped on the opportunity. I don’t make claims to any legendary status that I haven’t earned. But I sure don’t offer one word of apology for trying to help people out by warning them of what may happen to their retirement money in the event that stocks continue to perform in the future anything at all as they always have in the past.
We all are put on the planet for a certain amount of time and we all make choices as to how we are going to make use of the talents and the time that we are given. I enjoy helping people achieve financial freedom early in life. So I do what I can do. That’s the entire purpose of the boards. We all should be doing what we can do. Things get twisted when some of us feel an urge not to build but to tear down and our friends encourage us to give in to those low feelings rather than to rein them in.
I’ve been encouraging you to rein in your low urges for a long time now. If that makes me a legend, then I’m a legend. If it doesn’t make me a legend, then I’m not a legend. It doesn’t matter to me. What matters to me is that I did not betray my friends. That’s how I assess my behavior. If I elected to betray my friends, I would have to live with that knowledge for a long time. So I don’t go there. Make whatever sarcastic comments you please, I am the one who has to live with the man in the mirror and so that’s the way I play it.
I wish you all good things. But you are not the only one for which I wish good things. Thousands of our fellow community members have expressed a desire to hear the side of the story that our Wall Street Con Men friends are not too happy to hear being told. Those people matter to me. So I do what I can, no more and no less.
I hope that works for you, my good friend.
Rob
Anonymous says
To be a legend, it means that other leaders in a field view you as a peer. I see no evidence of that in your case.
Rob says
There’s a mountain of evidence of it, Anonymous.
In the days following the crash, I will post an article listing 101 experts and how they have responded to me and to Valuation-Informed Indexing. Your jury will get to see that document in their deliberations. And one of the things they will be taking into consideration in deciding on the length of your prison sentence is how they feel about the intimidation tactics that you used to keep these people from continuing to say what they believe openly and clearly.
It will be interesting to see how things play out.
My best wishes to you.
Rob
Sensible Investor says
Honest question, Rob. If Anonymous is truly anonymous how could he be put on trial after the crash?
Rob says
If no one can figure out who he is, he will not be put on trial.
We can figure out who Mel Lindauer is, right? We can figure out who John Greaney is, right? We can figure out who Jack Bogle is, right?
We will start with the people we can easily identify and then we will go from there. What would you expect?
I don’t really see how it matters so much who is prosecuted. What matters is that we make a statement as a society that we will not tolerate financial fraud. Once that statement is made, all of the many people who have doubts about Buy-and-Hold will feel free to give voice to their honest views and then we all will be moving forward at a rapid pace. At that point we won’t be seeing anonymous posters singing the praises of Get Rich Quick strategies on the internet because we will all be sufficiently well-informed not to fall for their baloney. That’s the point. That’s where we all want to be.
We all need to be learning what the last 36 years of peer-reviewed research in this field has to teach us about how stock investing works in the real world. And we are going to pull together as a people and do what needs to be done for us all to get to where we all deep in our hearts want to be. Some of us are going to end up in prison cells as part of that process because that is how our system works. Some of us who perhaps deserve to end up in prison cells will not because as a society we will not have the information needed to prosecute them. What of it, you know?
That’s not what matters. We aren’t going to be sending people to prison because we enjoy sending people to prison. We are going to be sending people to prison because we need to get accurate and honest information about how stock investing works out to millions of people and the laws against financial fraud are there to protect us from the sorts of individuals who have posted in “defense” of Linduaer and Greaney and Bogle and so naturally we are going to make use of those laws.
If the laws can only take us so far, then the laws can only take us so far. All laws are limited in some ways. The important thing is that the laws help us get to where we need to go. And all signs are that our laws against financial fraud will be a big help for our entire nation in the days following the next price crash. We should be grateful that we have those laws working for us rather than be fretting that there might be a few Goons who escape justice. We need to keep our eyes on the prize here.
Does that help?
Rob
Anonymous says
What if all these goons are just average every day guys that hang out on financial boards. How do you go about to “easily identify them”?
Rob says
You Goons are getting hurt by the economic crisis as much as everyone else, Anonymous. When the economic crisis worsens, you Goons are going to want to solve the underlying problem as much as everyone else does. The underlying problem is that, prior to 1981, most of us did not see the need to exercise price discipline (long-term market timing!) when buying stocks. Following the next price crash, we are all going to be working together to update all of the textbooks and calculators and everything else to incorporate the last 36 years of peer-reviewed research in this field.
You like to set things up to suggest that there are different “sides” re this matter. We are all on the same side. We all want to invest effectively. To invest effectively, we need to openly and honestly discuss the peer-reviewed research. You have made it impossible for us to do that today because it pains you to look at what the peer-reviewed research says. There is a sense in which you really are “average everyday guys.” We really do all possess a Get Rich Quick urge. I was once a Buy-and-Holder myself. So I know what it is like to believe in Buy-and-Hold just as much as anyone else. You’re in good company when it comes to falling for a Get Rich Quick scheme when it comes to deciding how to invest your retirement money. Just about all of us have done that.
You went off the rails when you advanced 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. That’s out-there behavior. It’s criminal behavior under the laws of the United States. We will have to decide as a nation what to do about that. The feeling re what to do about that is going to be very, very, very different following the crash than it is today. People have a lot of tolerance for Get Rich Quick happy talk during the time when a Get Rich Quick scheme is producing good numbers (take a look at how much people loved Bernie Madoff in the days before his massive con was exposed). Then they become very angry at the people who pushed the Get Rich Quick scheme in the days after it is exposed (again, the Mafoff saga tells the tale). Just think of Buy-and-Hold as Bernie Madoff times 500 and you will get the general picture.
My job is to keep the prison sentences to a minimum. Any time we spend as a society on nasty stuff is time that we are not spending doing all the exciting stuff that we should be doing to make the transition from the purest Get Rich Quick scheme ever concocted by the human mind to the first true research-based approach. So you are are not going to have a problem with me focusing on the need for prison sentences. I have spent 15 years of my life trying to take things in the other direction and I intend to continue to use my life energies to take things to a positive place on the other side of The Big Black Mountain.
There will probably be some Goons that we will not be able to identify. So the heck what, you know? I can’t say that I have ever spent two seconds worrying about it. If we can’t identify them, we can’t identify them. We are going to have a million exciting things that we need to do as quickly as possible. I have a funny feeling that we will be focusing on those million things, not on identifying a few internet Goons so that we can send them to prison. I sure hope that that turns out to be the case.
But, human nature being the case, there are going to be people who have lost lots of money who are going to want to see prison sentences announced. You say that in the Madoff case, did you not? Well, the human misery here is going to be Madoff times 500 (assuming that stocks continue in the future to behave anything at all as they always have in the past). So we are going to have to deal with the matter whether we can identify all you Goons or not. My guess is that we will identify the ones we can identify and forget about the others. I don’t see what else there is to do. If you have any better ideas, please feel free to let me know about them.
I bring up the prison sentences from time to time because I want there to be as few prison sentences as possible and I want the prison sentences that we see to be as short as possible. I spoke out in favor of banning John Greaney way back in June of 2002. I wrote to the site administrator of Motley Fool asking that he take care of that. I got an e-mail in response thanking me for my “thoughtful” argument and telling me that it would be “ideal” if Greaney permitted honest posting on retirement planning at a retirement planning board. Yes, it would indeed be ideal, wouldn’t it? The problem is that the site administrator had a button that he could push to make Greaney go “Poof!” and I did not have access to that button. It was part of his job responsibility to push that button at appropriate times and he failed to carry out that job responsibility and so here we are 15 years later in the mess that we are in today.
I am not going to be pushing for the announcement of any prison sentences. I am going to be arguing for charity, for letting bygones be bygones and for moving on to the exciting substantive stuff that we need to explore to rebuild our broken economic system and for letting our memory of the ugly stuff that we have seen over the past 15 years fade into nothingness. So you have precisely zero to worry about from me. I have of course told you that on numerous earlier occasions.
The reality remains that not everyone in this mixed-up world of ours takes the puppy-dog-poster approach that I favor. Lots of us get mighty pissed-off when we see our retirement money disappear into thin air and we go looking for people to hang from a tree. Our laws do not permit hanging people from trees. But our laws do permit prosecutions for financial fraud when “average every day guys” engage in the kind of behavior that we have seen from you Goons over the past 15 years.
I expect that we are going to see prison sentences, in some times very long ones. I have zero intention of telling lies when I am asked what happened over the 15 years. I am going to testify honestly. Charitably, yes. I am going to do everything in my power to spin things in such a way as to keep your prison sentence as limited as possible. But that’s as far as I dare take it. When someone asks the simple question “Did John Greaney’s study contain a valuations adjustment or did it not?” I am going to answer “no.” When someone asks the simple question “is there 36 years of peer-reviewed research showing that a valuations adjustment is required or is there not?” I am going to answer “yes.” And I am going to let the people demanding long prison sentences take it from there. I would prefer that they keep charity in their hearts at all times but I know from life experience that people get mighty pissed off when they lose their life savings in a scam and I can’t say that I lack any sympathy for the feelings they experience when that happens.
You have human emotion on your side today because today the numbers on the portfolio statements are two times what they should be. Human emotion will be against you in the days following the crash. I am trying to rein in human emotion today and I will be trying to rein in human emotion in the days following the crash. You have seen how successful I have been in my efforts to put human reason first in the pre-crash era. I have a funny feeling that I may not be all that much more successful in the days following the crash. Human emotion may rule the day once again and your prison sentence may end up being a good bit longer than what Old Farmer Hocus would specify were he king of the world.
So be it, you know? We live in communities. I don’t decide these things by myself. And I don’t even think it would be a good thing if I did. None of us know it all. So I don’t think it would be a good thing if I were king. I am going to accept whatever the consensus opinion re prison sentences turns out to be. As I noted above, I am going to argue for shorter prison sentences. But I am under no illusions that my views are going to prevail across the board. Some people will listen to my pleas for charity. Some will not. Things will sort themselves out over time. We will as a society work toward some resolution that we can live with. We have no other realistic choice. So that we will do. Of that I am 100 percent certain.
If I could wave a magic wand in the air and do away with all the prisons sentences, I would do that in two seconds. I don’t have a magic wand. So all that I can think of to do is to say whatever words I can to get the prison sentences shortened to the greatest extent possible. So that’s what I am going to do, you know? We will have to wait a bit to see how it all works out.
You are probably correct that some Goons are going to slip through the cracks. Oh, the horror! We will all just have to bear up under the strains imposed on us by this terribly unfair world. That’s the way the cookies go crumble-wise from time to time.
My focus is elsewhere. My focus is on spreading the word re what the last 36 years of peer-reviewed research tells us about how stock investing works in the real world. That was my focus on the morning of May 13, 2002, and that is my focus today and that will be my focus 15 billion years from today. It’s spreading the word re what works in early retirement strategies that turns me on and I am going to try hard to keep my eyes on the prize and not worry too much about the oh-so-sad practical reality that a few of you Goons will no doubt slip through the cracks and live our your lives prison-free. Once again — oh, the horror! It’s like when Buddy Holly died. The music has truly died this time never, ever to be revived again.
I believe that the music will somehow be revived following the day when we all learn that a few of you Goons will escape the long arm of the law. Just another one of those crazy hunches that I have been known to experience from time to time.
I hope that helps a small bit, my soon-to-be-prison-dwelling (or not!) Goon friend.
Take care, man.
Rob
Anonymous says
I wrote one line and you replied with a book. Why are you so emotional? Why are you in such pain?
Rob says
I’m just another one of those darn humans, I guess, Anonymous.
Whachagonnado?
Rob
Anonymous says
“Whachagonnado?”
I don’t need to do anything. My retirement is fine. I don’t need to rely on a fantasy of getting a $500 million windfall.
Rob says
It sounds like you’re set.
I wish you the best of luck with it, my good friend.
Rob
Anonymous says
Don’t you wish you were “all set”?
Rob says
If I had done what it would have taken to win the approval of you Goons, I would be wishing that I wasn’t on my way to prison in the days following the next price crash, Anonymous.
I love my country. So I stay on the right side of the felony line. No regrets whatsoever.
Do I wish that we were all working together to enjoy the greatest learning experience in any of our lifetimes? Of course. Obviously.
But that’s something different. Given the cards that I was dealt, I played it the only way that I could play it.
I just hope that we all pull together quickly in the days following the next crash. I believe that we will.
It will be interesting to see how things play out.
My best wishes to you, good friend.
Rob
Long Time Hoco Researcher says
“You Goons are getting hurt by the economic crisis as much as everyone else…”
What economic crisis? The stock market has richly rewarded anyone who has stayed the course and stayed invested in the market since the downturn of 2009. Of course, that excludes the narcissistic, passive-aggressive, mentally ill internet troll and Habitual Liar Rob Hocus No Step 2 Bennett. Your family’s finances are in crisis due to your poor decisions and lack of understanding of investing. However you personal economic crisis doesn’t affect the greater population.
Rob says
We don’t measure success the same way, John. Your way of thinking is, if on x date you had a in your portfolio, and, if on a date y you had b in your portfolio, and if b is greater than a, then your investing choices were successful. My way of thinking is that temporary gains don’t count — they give you a short-term emotional fix but do nothing to help you pay your bills in the long term (which is what matters); in fact, temporary gains make it harder to pay your bills because they mislead you as to your true financial status and thus make effective financial planning impossible. We agree that b is greater than a for those who bought stocks at various points. We disagree as to the meaning of that reality.
What is remarkable is that the question is one that can be settled through statistical analysis. That is of course what Wade Pfau and I did in the peer-reviewed research that we co-authored. We showed that, for the entire history of the market, the valuation level that applied on the day the stock purchase was made had a DRAMATIC effect on how lasting any gains achieved from that purchase turned out to be, that it has ALWAYS been better to consider the price that applied on the day the purchase was being considered when deciding whether stocks were worth buying or not. We found that the price paid is BY FAR the biggest factor in determining long-term success, that valuations are 80 percent of the stock investing story.
You responded by threatening to get Wade fired from his job by sending defamatory e-mails to his employer unless he agreed to stop doing honest work in this field. Science!
You are too emotional re these matters to think about them clearly. You are not capable of applying reason to the subject.
I mean no person offence. But that’s the story here. You need the answer to be that Buy-and-Hold works. There is 147 years of stock market history showing that Buy-and-Hold ALWAYS hurts the investor using it in very serious ways. But you cannot bear for that to be the reality. So you lash out in wildly inappropriate and even in criminal ways at those who report the realities within your hearing distance.
Millions of middle-class investors need to hear these realities REGARDLESS of the pain that it causes you for them to hear them. So it is my intent to continue to report them. I am 100 percent sure that my ability to report them far and wide will be enhanced dramatically following the next price crash when you and those who have posted in “defense” of you will be placed in prison cells, where you belong, and that as a people we will at that time move on to better things.
All that said, I do wish you all good things. I was once a Buy-and-Holder myself. We all were born with a raging Get Rich Quick impulse residing within us. There are laws that govern the extent to which we are permitted to let that Get Rich Quick urge run wild and the extent to which we are required to rein it in a bit in our dealings with others. So I don’t say that the millions who have been hurt in very serious ways by your behavior of the past 15 years are not right to demand a long prison sentence for you. But I do sympathize with you for the pain you feel when a part of you gets excited about the phony gains you see reported on your portfolio statement and reaches out to suppress the part of you that in other circumstances would be capable of rational thought. You are not alone in facing the struggle that has ruined you.
That struggle is part of the human condition. That struggle is the story of stock investing. It is 80 percent of the effective investing adviser’s job to help his or her clients overcome his or her Get Rich Quick urge. In future days it will be widely understood that it is the JOB of the investment adviser to help people OVERCOME their natural inclination to be drawn to Buy-and-Hold strategies, not to endorse the pure Get Rich Quick approach as a means of turning a quick and easy buck.
That’s my sincere take re these terribly important matters in any event, old friend.
Rob
Anonymous says
So, what you are saying is that if Vanguard says I have $4 million in my account, they are lying to me and I am actually broke, right?
Rob says
I’m not saying that you are broke. I am saying that you need to divide by two to identify the true, lasting value of your portfolio at a time when the market is priced at two times its fair value. The real value of your account is roughly $2 million.
Is it a lie to say that the value of the account is $4 million? it is. We need to be careful here. It would also be bit untruthful to say flatly that the value of the account is $2 million. You could cash in the account today for $4 million. So the $4 million figure has significance. But the lasting value of the account (according to the last 36 years of peer-reviewed research, not just me) is $2 million. So that has to be noted.
The most truthful way to talk about the value of your account is to note both realities. The account has a short-term value of $4 million because it can be cashed in for that amount today. But it has a long-term value of $2 million because 36 years of peer-reviewed research shows that valuations affect long-term returns. You don’t have a $4 million account that will be earning a return of 6.5 percent real for as long as you hold it. You have a $4 million account that will be earning returns far below 6.5 percent real until the stated value of the account comes to reflect its real value (which is half of today’s stated value).
Does that help?
Rob
Anonymous says
So, you have seen what holdings I have in my Vanguard account to make such an assessment.
Rob says
It’s not as if you are better off if you have an account that is not representative of the market as a whole. If you have a non-representative portfolio, it is possible that your numbers are slightly better. But it is EQUALLY possible that your numbers are slightly WORSE. In other words, having e non-representative portfolio increases risk. Not generally considered a good thing,.
The biggie is whether you are taking the last 36 years of peer-reviewed research into consideration by dividing by two or whether you have been taken in by the smelly Buy-and-Hold garbage and are fooling yourself into thinking that your portfolio numbers offer a reasonably good assessment of the true and lasting value of your portfolio. If you have fallen for the smelly Buy-and-Hold garbage, you cannot engage in effective financial planning. To engage in effective financial planning, you need to get the numbers at least roughly right.
These are my sincere thoughts re these terribly important matters, Anonymous. Buy-and-Hold/Get Rich Quick is not my particular cup of tea. I am a peer-reviewed research/common sense kind of guy. Sue me, you know?
But I course wish you all the best that this life has to offer a person all the same, my good friend. I am 100 percent sure re that one.
Please take good care, man.
Rob
Long Time Hoco Researcher says
“We don’t measure success the same way, John.”
Rob, it’s a hoot you think I’m John Greaney. I don’t think John has paid any attention to you in forever. I guess it’s just a part of your overall mental illness that you fantasize that Mr. Greaney is wasting his time playing Poke-the-Troll with you at your Plop. Nope. It’s just me, Yipee-Ki-O. I didn’t want to soil my blogging name since I use it at other sites but since nobody visits the Plop I guess it’s ok to do a reveal. Sorry to burst your bubble. You no doubt were really excited to think that John Greaney had suddenly come out of nowhere after all these years to poke fun of his Rob Hocus No Step 2 Bennett in his native habitat. Nope. Like nearly all the old hocoresearchers he’s apparently lost interest in you and Bat$hit Crazy Hocomania. I should kick this habit too but I’m I’m still curious if you go out with a bang or a whimper. My bet is on whimper.
Rob says
Okay, John.
Please take good care in any event.
Rob
Anonymous says
Is there some reason why you have to believe it is John responding to you. Are you still suffering from hurt feelings after John embossed you all the way back in May of 2002?
Rob says
About two-thirds of your submitted comments get approved, Anonymous. There are some other Goons who post here. Their approved comment percentage is about the same. With John, the percentage is about 10 percent. Huh?
John is the only poster who I have come across in the 15 years that possesses a craziness quotient so high that he cannot get approved at anything even close to the rate at which you (a super Goon) get approved. If that’s not John, then there’s someone else on this planet as loco as John Greaney. I try to maintain a positive spirit. I don’t want to even contemplate that possibility.
If you ever achieve a 90 percent deleted comment percentage, I will start calling you “John” too, you know? I love the guy and everything. But come on.
Rob
Long Time Hoco Researcher says
Ok hocus. Suit yourself, call me John if it makes you happy. It’s just an itsy bitsy delusion lost in a sea of Bat$hit Crazy HocoDelusions! Just like the Orange Faced Vulgarian presently masquerading as President, it’s too much to expect of the narcissistic, passive-aggressive, mentally ill internet troll and Habitual Liar Rob Hocus No Step 2 Bennett to recognize reality!
Rob says
Um…
Okay, John.
Hang in there, man.
Rob