Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:
Rob,
Here is the difference between you and everyone else. The investment community reads the words Shiller says and believe that those are his opinions. You read what he says and then interpret it to fit your agenda.
My agenda is to open every investing site on the internet to honest posting re the last 36 years of peer-reviewed research in this field, Sammy. The Buy-and-Holders are good people and smart people. They came up with an investing strategy that they believe in and millions are grateful for their efforts. We have all learned many important things by listening to our Buy-and-Hold friends. All that is good.
Things turn sour when some Buy-and-Holders (not all, some) engage in abusive posting practices to block those of us who do not believe in Buy-and-Hold but instead believe in the 36 years of peer-reviewed research showing that valuations affect long-term returns from sharing on the internet our honest thoughts on how stock investing works. I have thoughts and I want to share them. I have had thousands of my fe llow community members express a desire to hear them. My views have been endorsed by some of the biggest names in the field. What’s the problem here?
We don’t agree. That’s the problem from your end. If I am permitted to post my honest views, some people who now agree with you are going to lose confidence in Buy-and-Hold. I get that and I agree. But you know what? It could be that Buy-and-Hold will prevail if we permit people on both sides to post honestly. That will make Buy-and-Hold all the more popular down the road. And, in the event that Buy-and-Hold really is as dangerous as I think it is, it is of course to your benefit to find that out. And the only way that you are ever going to find it out is to permit me and the thousands of others who have grave doubts about the Buy-and-Hold strategy to express their honest views.
Shiller’s ideas cannot be reconciled with Bogle’s ideas. Bogle believes that the market is efficient. Shiller believes that valuations affect long-term returns. These are completely different premises on which to build investing strategies. Some (the majority) believe that Bogle is right. Some (the minority) believe that Shiller is right. That’s not a bad thing. I think it is kind of a cool thing. Because we disagree, we both have someone on the other side to challenge our thinking and keep us honest. It’s a good thing that we don’t all agree.
So that’s my agenda. I want us all working together. I say that the goal is to learn the truth about stock investing and that the means by which we get there is to show respect and tolerance for those with other views. I don’t agree with you on many investing issues. But I sure respect you. I sure like you. I sure enjoy learning from you. I think it would be just groovy if you could say the same back to me.
It’s to be expected that we are going to have somewhat different takes re what Shiller says. And re what Bogle says. And re thousands of other things. We have different perspectives. When some new information bit appears before us, we both send it through out respective filters, which are designed to protect our differing perspectives from feeling the pain that comes when they are challenged in too serious a way. So we hear the same words and I have one take on what those words signify and you have a somewhat different take. What of it? That’s how things work when two people have different viewpoints. There’s nothing bad about that. That’s normal. That’s healthy.
I have learned things from you, Sammy. You show up here every week and you harass me. You have been harassing me at one place or another for 15 years running now. I would be grateful if you would just kindly knock off the funny business. But, if I were put to the challenge, I could write a long post detailing all the things I have learned from my interactions with you. That’s the good side of all this. That’s the side that I would like to focus on. I think it is very cool that I have learned things from you despite all the complications. And I have a funny hunch that if you were being perfectly honest you would acknowledge that there have been one or two occasions over the 15 years in which you have learned something from me too. That warms my heart, you know? It makes me happy that I have helped my friend Sammy out on one or two occasions.
I do indeed interpret what Shiller and everyone else says to fit my agenda. That’s normal. That’s healthy. That’s good. I cannot help you or anyone else if I do not process information in the way that I was built to process information. So that’s what I do. You can take or leave any of the products of my agenda. That part is up to you. But please don’t ask me to stop producing material that follows from a belief in my agenda. I cannot produce anything that helps you or others unless I post what I sincerely believe. So I do that and I intend to continue doing that.
I do it all out of friendship for you, Sammy. Believe it or not, that’s the bottom-line reality here.
Rob
I see Wade has a new book out: “How Much Can I Spend in Retirement?”
https://www.amazon.com/How-Much-Spend-Retirement-Investment-Based/dp/1945640022
Note the positive editorial reviews, including one from that death threat maniac Mel Lindauer. Although SWR is one of your main topics, I don’t suppose we can expect a review from Rob Bennett anytime soon.
When Wade reported on the very important peer-reviewed research that he did with me at the Bogleheads Forum, Mel accused him of engaging in unethical research practices. Wade properly reacted with anger. These charges were unjustified. Mel Linduaer is a Goon. Wade properly called him out on his b.s.
In the days that followed, more threats were directed at Wade. He wrote to me to tell me that he was scared of what you Goons would do to him. And then he flipped to the Goon side.
I am 100 percent confident that there is lots of good material in Wade’s book. He is a smart guy. And he goes as far as he thinks he can get away with in the direction of giving good retirement planning advice. But, no, I don’t intend to read the book or to review it. I can recommend it sight unseen because I know the quality of the work that Wade puts out. But I want to read a book in which Wade engages in FULL honesty. And I want to see others in this field learn from and react to THAT book. I have a funny feeling that Mel Linduaer would not be giving a book in which Wade shared with us all his fully sincere views re what works in retirement planning a positive review. Call me madcap.
Retirement planning is an important subject. We ALL should want Wade to feel 100 percent free to post his honest views. It’s all upside for all of us to encourage him to do that. Linduaer is a Goon, one of the two most brutally abusive Goons in the history of the internet. But Lindauer too is smart and Lindauer too has made many positive contributions over the years. Lindauer too could do better work if the Ban on Honest Posting were lifted, if Bogle gave an “I Was “Wrong” speech and it was written up on the front page of the New York Times and if from that day forward we all spent our energies trying to learn more about this important subject matter instead of “defending” positions we adopted in earlier days, when we just didn’t know as much about how stock investing works in the real world. We advance in our understanding by acknowledging our mistakes and moving forward to better ways of thinking.
The Ban on Honest Posting on safe withdrawal rates and scores of other critically important topics is a stupid, stupid, stupid game, Anonymous. It is all downside and no upside. I have zero interest in playing the stupid game. I love Wade and I would love to be interacting with him on a daily basis in an environment in which we could both learn together. I feel less warm toward Mel but I would like to be sharing a Learning Together experience with him too. Death threats? Demands for unjustified board bannings? Thousands of acts of defamation? Threats to get academic researchers fired from their jobs? Are you freakin’ kidding me? Are you joking? Find someone else, you know? Not this boy. And it’s not a terribly close call either.
I know from personal experience that Wade has a great deal to offer the world. I encourage people to read his book because I believe that just about anyone who read it would learn something important from it. That includes me. I am confident that, if I read the book, I would come up with several ideas for column entries by doing so. So perhaps one day I will indeed do just that. But my inclination today is to believe that it is a better use of my time to work on getting the entire internet opened to honest posting on safe withdrawal rates and scores of other critically important investment-related topics. Wade is not the only smart guy who works in this field. There are LOTS of people who could be doing much better work if they felt free to do fully honest work. We could probably see scores of books of the value of the one Wade has produced if Wade had stood up to Lindauer a few years ago and we had had the Ban lifted. There’s more leverage in getting the Ban on Honest Posting lifted than there is in reading one book on retirement, even if it is high quality stuff.
I wish Wade all the best of luck with his book. I am proud of him. There are no hard feelings on my side. But I do believe that he is capable of doing a lot better than he is doing and I want to see him take the steps he needs to take to get to a better place in his understanding of how stock investing works. I want to do what I can to help him find his way to that magical place.
Wade said numerous times in his e-mails to me that he views the Buy-and-Hold retirement studies as “dangerous.” Does he say that in his book? If he does not, why not? We need to get the word out to millions of middle-class investors as quickly as possible, no? If Wade does say that the Buy-and-Hold studies are dangerous, why is Lindauer endorsing the book if he disagrees? And, if he agrees, what is he doing to get these dangerous studies corrected by the close of business today?
The 15-year cover-up of the errors in the Buy-and-Hold retirement studies is the biggest case of financial fraud in the history of the United States. Excuse me if I elect not to participate in it and thereby set myself up for a prison term in the days following the next crash. I told Wade that I thought that he was “insane” to play it the way that he did. I obviously don’t want to play it in an insane way myself. I believe that the Buy-and-Hold retirement studies lack valuation adjustments and I am going to continue saying just that and we will just have to watch the chips fall where they may.
Do I like Wade as a person? I do. Very much. But I don’t like financial fraud even a tiny bit. I love my country. The commission of felonies is not for me.,
Am I sympathetic re the circumstances in which Wade was placed that made him feel that going to the wrong side of the felony line was his only realistic option, given his need to provide financially for his family? I am very sympathetic indeed. But I believe that he made a bad choice. It is only when the people who are threatened in the manner that Wade was threatened speak out that we can get this story written up on the front page of the New York Times and bring the massive case of financial fraud to a full and complete stop. Wade didn’t like what was done to him. But by joining up with you Goons he has insured that similar things will continue to be done to many others. Huh? What the f?
Not this boy, Anonymous. No way, no how. Not in 15 years, not in 15 billion years.
Wade has a lot to offer and I hope that he continues to offer it. But I think he has sold himself short. I think he is capable of doing better and I believe that he WILL be doing better in the days after your prison sentence is announced and we bring the nasty side of this to a rest. I look forward to lots of good times with my friend Wade in those days. And, after Mel has served his debt to society, I look forward to good times with my friend Mel as well. And of course the same goes for you, Anonymous.
I hope that helps a small bit, my long-time Buy-and-Hold friend.
Rob
“Bogle believes that the market is efficient. Shiller believes that valuations affect long-term returns. These are completely different premises”
How so? The market for US Treasuries goes through periods of low and high returns. That doesn’t mean it’s inefficient.
Was this you, Rob?
https://www.reddit.com/user/Rob_Bennett_
How so?
An efficient market is one in which all factors known to have a bearing on price are taken into consideration in the setting of the price. We know that stocks offer poor long-term returns when valuations are high, If the market were efficient, that factor would be taken into consideration in the setting of today’s price. Investors would see that their stock allocations are too high given the likely long-term return, sell some of their stocks to get their allocations to what they should be given their risk profiles and the sales would bring valuations down to more reasonable levels.
Stock prices are self-regulating in an efficient market. You cannot have insanely high or insanely low valuations in an efficient market.
The reason why the market is not efficient is that efficiency is achieved through the transmission of information, Investors need to act rationally to set prices properly. To act rationally, they need to be informed. But as you Goons know well, there is a Ban on Honest Posting re the last 36 years of peer-reviewed research in this field. So investors are not able to learn about the implications of the peer-reviewed research in this field by talking things over with other investors. The result is that investors act in an uninformed, irrational way, producing inefficiency.
An efficient market would not be selling at two times its fair value, John. An efficient market would be selling at its fair value or at least at something close to it. Today’s market is far from efficient, I would like it to be more efficient. But to make it more efficient, I need to be able to post honestly, And of course you Goons don’t like that idea one little bit.
The great paradox is that, if we permitted honest posting on every site, investors would be properly informed and the market really would be efficient or close to it. Then valuations would not change enough to ever make stocks too dangerous and Buy-and-Hold really would work.
I hope that helps a small bit.
Rob
Was this you, Rob?
Yes, it was me.
For the past two months or so, my boy Timothy and I have been having regular conversations about various aspects of the Valuation-Informed Indexing concept. I send him an article or blog post or whatever every few days, then he reads it and ponders it, and then we talk it over a bit.
I told him about the Reddit comment that mentioned me from a few weeks back. He doesn’t believe that the Goon stuff could possibly be as crazy as I describe it. He happened to see the announcement of the Wade Pfau AMA and he told me that I should sign up. I was reluctant. But as we were discussing the pros and cons and he was indicating that he just doesn’t believe that you Goons can be as out there as you are, I decided to just sign up and let him see what he sees for himself.
I am not promising to be around tomorrow. I will make an effort and will probably be there for at least a portion of the time. It’s not my intent to post unless I am asked a direct question or if Wade mentions me or something like that. But we’ll see, you know? I believe that there’s a God up in heaven and that he controls this stuff. Maybe I was meant to know about this AMA and to sign up. Maybe not. I trust that whatever is meant to happen will happen.
Rob
“We know that stocks offer poor long-term returns when valuations are high, If the market were efficient, that factor would be taken into consideration in the setting of today’s price. Investors would see that their stock allocations are too high given the likely long-term return, sell some of their stocks to get their allocations to what they should be given their risk profiles and the sales would bring valuations down to more reasonable levels.”
So if markets were efficient, the demand/pice for capital could never vary? That interest rates and P/Es would never experience times of higher and lower returns?
The long-term return has been 6.5 percent real for a long time, John. That’s the realistic expectation.
There could be small changes. Our economy might become a bit more or a bit less productive. That would cause a justified change in the realistic expectation. But it is not realistic to think that the value of the U.S. stock market could increase by 30 percent in a single year. When you see something like that, you are seeing investor emotion. The experts in this field should be warning investors that those sorts of gains are not real so that they can engage in effective financial planning.
Rob