Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
No, you said your beef with Greaney is that he got the SWR numbers wrong. You’ve been hammering that for years. “Personally responsible for millions of busted retirements”, you said. If so, then Bengen’s numbers are even wronger. And he is well known, unlike Greaney. So why are you not at least posting a comment to that linked article? Don’t you have any convictions at all?
I haven’t read the Bengen article. I am going to read it. It is the sort of piece that I often write Valuation-Informed Indexing columns on. It is possible that I will do that in this case. I need to read the article to decide whether it is a good fit for that or not.
The issue is not how far off the mark the numbers are. Peter Lynch was at one time saying that the safe withdrawal rate was 7 percent. He was a lot more off the mark than Greaney was and is. But Lynch responded to criticism of his numbers very differently than Greaney. Lynch was informed of his mistake by Scott Burns. He acknowledged the mistake and thanked Burns for pointing it out to him and then hired Burns to write a column for a magazine that he owned. That’s the right way to go about things.
I 100 percent think that Greaney got the numbers wrong. But I also believe (I wrote this in an article that I posted at this site years ago) that Greaney personally believes that his numbers are not in error. The way that I wrote it was that, if Greaney’s best friend asked him what the SWR is, Greaney would tell him that it is 4 percent. Another way of saying it is that, if Greaney took a lie detector test and was asked if the SWR is always 4 percent, he could answer “yes” and pass the test. I do not believe that the objective evidence supports this belief. But I also believe that he is suffering from cognitive dissonance — as we all [including Old Farmer Hocus!] do from time to time. I believe that Greaney believes that the number is always 4 percent.
Is it possible that Bengen believes that the number is 4.5 percent? I believe that that is possible. If that is the case, I believe that Bengen is wrong. But of course it is possible that I am wrong. The way that we resolve matters like this in our society is that we let both people speak and then people interested in the subject listen to both sides make their case and try to figure out the realities for themselves. I have had a few interactions with Bengen. They have been pleasant. My view of Bengen is that he got something wrong but that he is HONESTLY wrong. That’s very, very, very different from Greaney, who I believe will be going to prison for a long, long time in the days following the next price crash.
You of course know the difference. Greaney has advanced death threats in an effort to cover up his mistake. He has demanded unjustified board bannings. He has put forward thousands of acts of defamation He has advanced threats to get academic researchers fired from their jobs. Greaney has destroyed millions of middle-class lives with his insanely abusive behavior. Those people obviously have a right to bring civil suits against him to recover their losses. Those losses are in the trillions. Greaney is obviously not going to be able to make them whole. They obviously have a right to seek criminal prosecutions. I believe that, when this story is written up on the front page of the New York Times, Greaney will be prosecuted in a criminal action and will be placed in a prison cell for the remaining days of his life. I would be very surprised if the same thing happened with Bengen. So the two cases are very different.
In the event that Bengen makes strong points in his article, he could help us all. I can write a response piece and then interested parties can look at both articles and form their own conclusions as to who has the best of it. That’s how our system works. It is my strongly held view that it is a very good system indeed. So, presuming that Bengen is sincere (as I believe he is), he is doing a good thing for all of us by making his case. I think it is wonderful and, if I can advance the ball a bit by responding to his article, I will do so.
Greaney has done that sort of thing from time to time. All of you Goons have. The reason why I am writing these words is that I want to encourage you to do more of that. I learn from you when you challenge me. I could be wrong. If I am wrong, I want to learn that and I am more likely to learn it from people who challenge me than from people who tell me that my every word is gold. So thanks for that. And I of course am grateful to my good friend John Greaney for the times that he has challenged me and thereby taught me and helped me.
But I did not build that Motley Fool board into the #1 most successful board in the history of the Motley Fool site for the purpose of seeing any of my friends thrown in prison cells. I consider Greaney a friend. So, when I saw him walking a very dark path, I got about the business of working up the courage to call him out on his b.s. and thereby to help him set things right before he destroyed his own life and the lives of millions of other middle-class people. I believe strongly that the site administrator at Motley Fool should have booted him from the board long before Greaney found himself in circumstances where he would be going to prison down the line a bit. The site administrator was more concerned about the dollar bills that Greaney brought in with his relentless promotion of the pure Get Rich Quick investing strategy than he was with keeping John out of prison. I think he was wrong to fail to execute his job responsibilities reasonably and thereby to ruin John’s life for the sake of a few crummy dollar bills. Not this boy, you know? I am proud to say that I tried very hard to take things in a very different direction. I asked the site administrator to do his job and, when he failed to do so, I asked my fellow community members to join together and to demand of him that he do his job. That is all in the Post Archives.
I see all the difference in the world between the behavior of John Greaney and the behavior of Bill Bengen. John has taken himself and the rest of us down, down, down, down, down, Bill has been helping us all out. You couldn’t have a bigger contrast. I only wish that all of my fellow community members felt the same measure of friendship towards John that I still feel to this day and would thus join me in trying to make the best of his very bad situation.
Does all of that not sound at least pretty much on the mark, my old friend?
Rob
The crash is here!
https://www.cnbc.com/2018/02/02/us-futures-move-lower-as-investors-worry-about-rising-yields.html
Call up The New York Times. Get that article on the front page. The checks should come rolling in and you will have your $500 million.
Do you think that the risk of seeing a price crash is greater when stocks are priced at two times fair value than they are when stocks are priced at fair value?
I do.
If that’s so, then there is a price attached to every price increase that takes place at a time when stocks are already overpriced. The price increase leads to a bigger number on the portfolio statement. But the increased risk diminishes the value proposition for stocks on a going-forward basis. The pros and cons of such price increases cancel each other out, meaning that price increases that take place at times of overvaluation are not real. They are pretend.
It makes a difference, If an aspiring early retiree ignored what the last 36 years of peer-reviewed research teaches us about pretend price increases, he would use a 4 percent safe withdrawal rate to plan a retirement planned to begin on Jan. 1 2000. If he took the 36 years of peer-reviewed research into consideration, he would use a safe withdrawal rate of 1.6 percent for his planning. Getting the numbers right in retirement planning makes a difference.
The promotion of Buy-and-Hold strategies always leads to stock crashes. There has never been one exception in the history of stock investing. Stock crashes hurt people in very serious ways. It’s not for me. I was a Buy-and-Holder in the days when I believed that claim that Buy-and-Hold is rooted in the peer-reviewed research. When I learned that that is not so, I moved on.
I don’t laugh about causing stock crashes. I see nothing funny about them. Your behavior tells the tale. Buy-and-Hold is rooted in investor emotion, not peer-reviewed research. It is investor emotion that has been making stocks a risky asset class since the first stock market opened for business. The job of an investment adviser is to help people rein in their emotions, not to encourage them to give their emotions free rein.
My sincere take.
Rob
If the last 36 years of peer-reviewed research is legitimate research, there will indeed be a price crash sometime within the next year or two or three. There will be a huge amount of human suffering associated with a price crash that lowers stock prices by 50 percent or more. And, yes, Valuation-Informed Indexing will be written up on the front page of every newspaper in the country at that time.
I wish that it could have happened sooner. If Motley Fool had banned Greaney in June 2002, when I first sent them an e-mail suggesting that he be banned, we would not be in this situation today. We would have left all the Get Rich Quick emotionalism behind a long time ago. Every person alive on Planet Earth would be better off as a consequence.
Call me madcap for preferring that result to seeing my Goon friends spending the rest of their lives in prison cells.
Rob
“If the last 36 years of peer-reviewed research is legitimate research, there will indeed be a price crash sometime within the next year or two or three.”
Didn’t we hear that in 2010…..and 2011……and 2012……and 2013…….and 2014……..and 2015…….and 2017…………..hhhhmmmmmmm…….I am noticing a trend.
And I am noticing a trend re high P/E10 levels that dates back to 1996, Anonymous. That’s over 21 years.
That didn’t just happen for no reason. That’s what Buy-and-Hold has done to us.
My sincere take.
Rob
Prison, goons, death threats, job threats……repeat over and over again for 15 years……I am noticing a trend here.
I don’t say different.
And I don’t offer any apologies.
I’m not the one who got the numbers wrong in a retirement study posted at my web site, Anonymous. That was the other fellow.
Do you think it was a bad thing that I pointed out his mistake to him so that he could correct it promptly? I sure don’t.
I’m proud of it.
I think we all should be proud of what we have learned over the past 36 years.
All of the stuff that you mention — the death threats and the prison sentences and all the rest — follows from the fact that some of us want to remain in the past, when there was peer-reviewed research that seemed to show that the stock market is efficient.
I want to move forward.
I didn’t write the laws that made financial fraud a felony.
I understand the need for those laws. I see them as good and necessary laws. But that’s as far as it goes.
I am happy to do what I can to keep your prison sentence limited to the extent possible. But I cannot say that no prison sentence is appropriate. I am not going to put salt in the wounds of the millions of people who are seeing their lives destroyed as a result of this massive act of financial fraud.
We’ll see how it goes. It’s what your jury members say about prison sentences that matters, not what I say about them. Your jury will speak to the matter in the days following the next price crash.
And then the rest of us are free. From that point forward the rest of us will never have to speak about prison sentences again.
That works for me. I hope it works for you in some strange sort of way.
Rob
It seems you will live out your days as a sad little man that has been isolated from the world and reality.
I hope not. And I certainly don’t think that that is where this thing is going at all.
But if it is, I will have the consolation of knowing that I did not sell out my fellow community members and that I did not sell out my country.
That means something to me. That means a lot to me.
We all have to play the cards that we have been dealt, Anonymous. It is my strong impression that I have been dealt some amazing cards over the past 16 years and I have certainly tried to play them to the best of my ability. If at some point things take a bad turn, I will just have to live with it, you know? I have a funny feeling that there are one or two people who have in the course of time been asked to give up more for their friends or for their country.
I can say that I stood up to you Goons and told the truth re safe withdrawal rates when few others had the guts to do so. That’s pretty darn cool, you know? I can live with that.
I naturally wish you all the best that this life has to offer a person.
Rob
You isolated yourself. You refuse to post at Bogleheads or anywhere else. And now your Value Walk columns no longer accept comments. Was that your doing? How long before you shut off comments here too?
I haven’t done anything to stop comments at the Value Walk site. I had a good back-and-forth discussion with a non-Goon last week. It wasn’t re the most recent column; it was one from a few weeks back. But he put his comments up a few days ago and I responded to them a few days ago. It sounds to me like the site administrator may be taking down Goon comments. But I don’t know that for sure.
My policy with comments here is that I am looking for material that people with an interest in the subject of stock investing can learn from. If one of you Goons puts up a death threat, I would probably leave it up the first time so that people can see what those of us trying to open the internet up to honest posting re the past 36 years of peer-reviewed research in this field are up against. It is possible that I would let a second death threat remain up just to show that the first one wasn’t a quirk. But I wouldn’t permit 10 deaths in a row appear at the site. That stuff takes us down. It is a negative. It has no place at a site about financial freedom.
There is stuff that you Goons have posted that have helped us. While you are Goons, you really are human investors too. So you have questions about the last 36 years of peer-reviewed research that Normals have as well. I think it is helpful for me to respond to those questions to the best of my ability. And sometimes you offer links to articles making the case for Buy-and-Hold that are helpful. I am always grateful when you bring those sorts of things to our attention. So I obviously leave that stuff up. There have been numerous occasions where something that one of you Goons said in a post or something I saw at a link that one of you Goons posted led to a column. So there is value there.
The judgment call is of course what to do when you mix in some words of value with a heavy dose of Goon garbage, which is most of the time. My rule is that, if a post is 90 percent Goon garbage and only 10 percent material of value, I will delete it; the stench of the garbage is so overpowering as to render the good stuff not useful — people cannot learn from the good stuff if they cannot breathe because the smell is so bad. If there is more than 20 percent stuff of value and only 80 percent Goon garbage, I vote for letting the post appear and focusing on the good stuff in response while pointing out that the heavy dose of garbage shows how emotional a strategy Buy-and-Hold is. In cases where the Goon garbage is more than 80 percent of a post but less than 90 percent of it, I look to whether the useful points being made are something fresh or points that have been many times before. If it is old, tired stuff, I delete the post. If fresh Buy-and-Hold material, I would vote for swallowing a lot of Goon garbage to be able to get that fresh material out to people.
Over time, you have less fresh material. So the percentage of comments being deleted should increase. I think that is generally the case. The curve ball is that, as you see more posts getting deleted, you might make more of an effort to get the percentage of useful material up a bit, so the deletion percentage might drop rather than rise. That happens from time to time. Overall, though, I would say that it is harder for you Goons to get a post to appear here today than it was a few years ago. And over time I expect that it will get harder still. But I will of course always be open to material that adds to the discussion rather than subtracts from it. And, if I am going to make mistakes, I would prefer by a factor of ten to let too much Goon stuff in to taking too much pro-Buy-and-Hold stuff out.
As for Bogleheads and other places that have permitted the use of criminally abusive posting tactics as a means of keeping the 15-year cover-up of the errors in the Buy-and-Hold retirement studies from becoming known to millions of middle-class investors, it is the entire United States that has adopted laws against financial fraud. I am a citizen of this country and I love this country. When I see acts of financial fraud take place before my eyes, I am required to point them out and to ask that they be brought to a full and complete stop. If I fail to point them out, I become part of the cover-up and I take the risk of being sent to prison myself in the days following the next price crash. No thanks, you know? I am 100 percent happy to help out at Bogleheads in any way that I can so long as it does not require me participating in any criminal acts. I am not going to say that I believe that John Greaney included a valuations adjustment in the retirement “study” he posted at his web site. I am not going to deny that there is 36 years of peer-reviewed research showing that valuations affect long-term returns.
Does that help?
Rob the Balanced Site Administrator
“I am 100 percent happy to help out at Bogleheads in any way that I can so long as it does not require me participating in any criminal acts.”
Last week you said you were going to post at Bogleheads. You backed out. Now you say that you won’t post there because that would be a criminal act.
Of course Bogleheads is perfectly happy that you stay away, for whatever reason. But you’ve convinced yourself that anything you don’t like or don’t want to do is a crime. Do you realize how far detached from reality that is?
Financial fraud is a crime, Anonymous. That is not a hard one. Bernie Madoff is in prison today for committing that crime in a way that hurt only a tiny fraction of the number of people whose lives were destroyed by the cover-up led by Linduaer and Greaney and Bogle. Not this boy.
If Greaney truly believed that he had included a valuation adjustment in his “study,” we never would have seen a single death threat or a single demand for a single unjustified board banning or a single act of defamation or a single threat to get a single academic research fired from a single job.
Are you joking?
Rob
So the answer is No, you don’t realize how far detached from reality you are.
And no, I’m not joking.
All humans are vulnerable to self-deception, Anonymous.
That’s why I became a Buy-and-Holder once upon a time. I believed that it really was about rooting your investment strategies in the peer-reviewed research and I believed that that was the way to do battle with those Get Rich Quick urges that we all have residing within us.
I lost confidence in Buy-and-Hold on the night of August 27, 2002, when 200 of my fellow community members endorsed a post in which John Greaney threatened to kill my wife and children because I had “crossed” him by pointing out that the retirement study posted at his web site lacked an adjustment for the valuation level that applies on the day the retirement begins.
I still believe that research-based investment strategies are the future. Today I am a Valuation-Informed Indexer all the way.
My best and warmest wishes to you and yours.
Rob
“All humans are vulnerable to self-deception”
Yes, occasionally. You, on the other hand, are immersed and wallow in self-deception 24/7/365.
You were never threatened. Not once. Not in the real world. Of course me saying that means nothing. You will forever believe that you were, despite there being no evidence anywhere that it ever happened. In fact you probably believe this comment is a threat. Such is the depth of your paranoia.
We’re just going to have to wait to see how it all plays out, Anonymous.
I wish you all good things. Does that help at all? If there is ever anything that I can do for you, I hope you will let me know and I assure you that you will not have to ask twice (so long as doing this thing leaves me on the right side of the felony line).
It will all work out in the end. I am 100 percent sure. We are as a society working our way through a process. As John Walter Russell once put it, I am certain that this is all going to end in ways better than any of us today can imagine.
Hang in there, my old friend. It gets better. A LOT better.
Rob
A comment was posted that said the following:
“It seems you will live out your days as a sad little man that has been isolated from the world and reality.”
You replied:
“I hope not. And I certainly don’t think that that is where this thing is going at all.”
and later, you said (like you have for years):
“We’re just going to have to wait to see how it all plays out, Anonymous.”
The reality is that you are already in this place. From time to time, you say “I could be wrong”.
Rob, it isn’t just a few crackpots telling you that you have some major problems. It is the same conclusion that thousands have come to. There is a very good reason you have been banned. One would have hoped by now that you would have spent time in self reflection. Don’t you think you owe it to yourself and your family? You have a problem that you need to face.
I’ve had thousands tells me a very, very different story, as you well know, Anonymous.
Shiller’s book was a best-seller. So the market for honest, accurate, research-based investment advice is very large. But, again, you know that or you never would have put forward a single abusive post.
We will work it out as a society on the other side of the next price crash.
I naturally wish you all good things.
Rob
“I’ve had thousands tells me a very, very different story, as you well know, Anonymous.”
I have seen your creative interpretation of some of these comments. You just don’t have the support you seem to convinced yourself as having. The lack of consistent comments is these “thousands” should indicate to you that you need to reconsider what you are doing.
Should Bernie Madoff have interpreted the popularity of his fund as evidence that he was doing good work?
Get Rich Quick schemes are popular until they destroy the lives of those who fall for them, Anonymous. And then not so much.
My sincere take.
Rob
“Should Bernie Madoff have interpreted the popularity of his fund as evidence that he was doing good work?”
No. And neither should you interpret your UNpopularity as evidence that you are doing going work. But that’s exactly what you do.
“Everybody hates me, that means I’m on to something”, says every crank ever.
How many cranks have been awarded the Nobel prize in Economics?
Rob
And it’s not so much that I say that my unpopularity proves that I am doing important work. I say that your abusiveness shows that you have doubts as to whether Buy-and-Hold can prevail in civil and reasoned debate.
Shiller showed that it is investor emotion, not the economic realities, that determine stock prices. And what have we seen from you Goons for 16 years now? Insane levels of emotion. At a time when stock valuations are the most insane that they have ever been in history. THAT’S evidence that I am doing important work. If the Buy-and-Holders are not capable of keeping their cool, Buy-and-Hold needs to be challenged.
Rob
“How many cranks have been awarded the Nobel prize in Economics?”
You think you and Shiller are similar? You really lack self awareness.
Every word that I have written over the past 16 years is rooted in Shiller’s “revolutionary” (his word) finding that valuations affect long-term returns. There should be THOUSANDS of people exploring the implications of the last 36 years of peer-reviewed research on a daily basis. There WILL be thousands once we open one major internet site to honest posting on investment issues. There is a mountain of money to be made presenting honest and accurate and research-based investing advice. So, once your prison sentence is announced, all sorts of good stuff begins to happen for millions of us.
Shiller was awarded a Nobel prize for his “revolutionary” work. There should be scores and scores of changes that Jack Bogle has made to Buy-and-Hold in the 36 years since Shiller’s research was published. Can you name 10? Can you name one?
No, neither can I.
I wonder why.
I don’t do cons, Anonymous. I love my country. Non-negotiable.
Rob
“Every word that I have written over the past 16 years is rooted in Shiller’s “revolutionary” (his word) finding that valuations affect long-term returns.”
No, it is what you think Shiller should be saying.
What I say is what follows logically from what Shiller said.
I am not saying that Shiller has said precisely the same things that I have said. In some cases that is so. But in most cases it is not. I say what seems to me to logically follow from what Shiller said. There is a second brain involved. People need to know that. For me to say it is not the same as for Shiller to say it. So you have a point here. If Shiller thought about every word that I have ever put forward and commented on it himself, there would probably be a good number of cases where Shiller’s take would be at least a little different from my take. And people need to make that distinction. They need to be able to identify Shiller’s takes on all of the various topics and then identify Bennett’s takes on all of the various topics and then of course they should make an effort to resolve the differences, to figure out for themselves which takes on which topics make the most sense and which can be improved and which can be discarded.
My point when I say that every word that I have written is rooted in Shiller’s “revolutionary” (his word) research findings is that I am not just some guy on the internet who woke up one morning and revealed that I had had a dream that valuations affect long-term returns and then addressed every question of investment strategy as if that were so. No. The finding that valuations affect long-term returns is rooted in peer-reviewed research that was published in 1981 and led to the awarding of a Nobel prize in Economics in subsequent years. So the foundation of everything that I have ever said on stock investing is very, very, very strong. People need to know that. That reality is an important part of this story.
I can get things wrong. People need to know that too, of course. But what has happened for 16 years running is that the Buy-and-Holders have not been able to find problems in what I say. If they could, they would. They naturally want to defend the strategy they believe in when I challenge it and the natural way to do that is to point out errors in my thinking. But in every case they have given up on that effort. In every case they either just stop participating in the discussion with me (this is what usually happens) or they resort to threats of violence and board bannings and all of the other Goon garbage that we have seen (this is what happens when I refuse to take hints that I should silence myself). When the Buy-and-Holders either resort to abusiveness or tolerate seeing others resort to abusiveness, they are making an implicit statement that they cannot imagine any other way of challenging my claims. That’s a big deal. The fact that that has been our universal experience for 16 years running now is a very big deal.
The ordinary experience would not be for me to play the role that I have played. I’ve written close to 400 columns at the Value Walk site. Let’s take just one of them to make the point. I wrote a column a number of years back in which I argued that, if it is true that valuations affect long-term returns, then it is not true, as has long been believed to be the case, that stocks are more risky than bonds. If it is true that valuations affect long-term returns, then most of the risk of stocks is optional. All that investors need to do to avoid that risk is to take valuations into consideration when setting their stock allocations. I was particularly proud of that column. I have been hearing that stocks are more risky than bonds for many years now. It is obviously a very big deal if it turns out that that is not so and if the community of investors learns that. And I have never seen anyone else say that. So that one has my name on it. I have a column posted on the internet with my name on it and with a date stamped on it showing when I came to this conclusion that makes a very important statement about how stock investing works in the real world. That’s just one column out of 400. But, if just that one column turns out to be correct, then I have changed the world of stock investing in a huge and very positive way. That’s as cool as it gets.
But is it true? That’s what we need to know. No one should go just by what I say. Anyone who would go solely by what I say about such a matter is an idiot. We agree re that much. What we don’t agree on is what we should do in response to that reality. Your response is to say that I should shut up, I should stop expressing my views on the implications of Shiller’s “revolutionary” (his word) finding of 1981 that valuations affect long-term returns. I think that’s a horrible, horrible, horrible response. I think that the proper response is to show the proper amount of skepticism re what Rob Bennett says but to have thousands of other smart people comment on Shiller’s Nobel-prize-winning research findings and find out what they mean that way.
Bogle should be writing about this stuff every single day. Shiller should be writing about this stuff every single day. Pfau should be writing about this stuff every single day. Bernstein should be writing about this stuff every single day. That’s the answer. The answer is not to shut Rob Bennett up, the answer is to get everyone else talking. That’s my sincere take, Anonymous.
The obvious question is: Why isn’t everyone already talking about this “revolutionary” (Shiller’s word) stuff? There are mountains of money to be made providing millions of middle-class people with honest, accurate, research-based investment advice. We know that there is a huge market for what I do because we saw the reaction at the Motley Fool board when I first raised the suggestion that Shiller’s findings should have changed what we think about how safe withdrawal rates are calculated. So why is it Rob Bennett who writes the column arguing that stocks are actually not more risky than bonds? Why aren’t there thousands of smart people out to help people and make a buck doing it who got to that one long before this Rob Bennett fellow ever came on the scene?
This is where death threats enter the picture. You Goons have your lives riding on the validity of the Buy-and-Hold Model for understanding how stock investing works. It drives you freaking nuts to think that you might have gotten it all wrong. You cannot bear to hear someone on the internet challenge your beliefs. And there are lots of non-Goons who don’t approve of the tactics you employ to crush discussion of the implications of Shiller’s findings but who are not too upset to see those discussions crushed and who thus go along with your use of those tactics anyway. And we end up as a society that has missed out once again on learning whether it is true that stocks are more risky than bonds or whether that is in fact not true.
Days pass. Weeks pass. Months pass. Years pass. We remain trapped in our ignorance despite 37 years of peer-reviewed research pointing us all to a better way.
The American way is not to remain trapped in our ignorance. The American way is to talk things over in civil and reasoned discussions. That’s why every board on the internet has rules prohibiting the tactics employed by you Goons. That’s why we have laws against financial fraud. The American way is to move forward even though it hurts sometimes to move forward because moving forward sometimes means learning how to pronounce those words “I” and “Was” and “Wrong.” I love my country. I favor the American way. That’s the bottom line here.
Shiller has not said every word that I have said. I am not claiming that he has. I am saying that every word that I have spoken is rooted in a “revolutionary” (that’s Shiller’s word) finding of Shiller’s from 1981 that we all should have been exploring for 37 years now. I have been exploring it for 16 years now. I offer no apologies. I think that every single person in the field should be doing what I am doing. We are not all going to agree. That’s of course fine. That’s part of what the American way is all about. So long as we remain civil and reasoned in our discussions, we will learn. And learning is the one true free lunch out there. So that is the road we need to take, the American road, the road approved by the laws of the United States and by the posting rules of every site on the internet.
That’s the deal, Anonymous. Every word that I say is rooted in Shiller’s 1981 findings, the findings that caused him to be awarded a Nobel prize. We need to know not just what Rob Bennett thinks are the implications of those findings, we need to know what Shiller thinks are the implications of those findings. We need to freakin’ ask him. If we drop all the Goons garbage, I am 100 percent certain that he will be happy to share with us. But we most certainly will have to drop the Goon garbage. He has shown that he is not going to be forthcoming until we do that. And of course we need to hear from thousands of others too. And all of those others will be forthcoming as well once we drop the Goon garbage. Dropping the Goon garbage opens the floodgates on the greatest advance ever achieved in the history of personal finance.
I am doing my part. I can do no more and I can do no less. If I want thousands of others to start sharing their sincere takes re the far-reaching implications of the last 36 years of peer-reviewed research in this field, then I had better be willing to take on all the heat that for the moment goes with doing that. So that’s what I do. I offer my take on hundreds of different topics that we all should be examining on a daily basis. And I take the heat that for the time being is associated with doing that. There will come a day when there will not be so much heat. I am 100 percent certain of that. Then there will be thousands offering their takes on all these questions, not just me. That will be a very, very, very good thing.
But it has to start with one, you know?
I wish that someone else had taken on you Goons. It would have made my life a lot easier if it had all gone down that way. I wouldn’t be in line for a $500 million settlement payment if someone else had been the trailblazer before I ever showed up on the scene. But I still would have preferred that it had been done that way. This job is fun intellectually and it is fun because it involves helping millions of people in a very big way. But the nasty stuff is not fun. I do it because it has to be done. I noticed back in the Summer of 2002 that no one else had done it and so I pulled up my big boy pants and got about the business of doing it. And here we are, you know?
I am not Shiller. What I say is not necessarily what Shiller would say. But every word that I say is rooted in what Shiller showed in 1981. It’s not my fault that we don’t today have thousands of people addressing all of the topics that need to be addressed. That’s the fault of you Goons. I don’t have the power to make you knock off the funny business. All that I can do is to call you out on your b.s. I have done that. And yet you continue! All that we can do at this point is to wait patiently for the price crash and see whether living through what that is going to mean for millions of people causes the emotional background in which these discussions take place to change enough for us to get lots of other people involved in the discussions in a constructive way.
I am highly confident that we will all pull together in the days following the crash to take this thing to a very, very, very positive place. But we are going to have to wait and see to find out for sure. I could be wrong. If I were, I would probably be the last to know. So we are just going to have to wait and see.
I naturally wish you all the best that this life has to offer a person regardless of how things play out, my good friend.
Rob
“There is a second brain involved.”
Your classic crank mistake is assuming that second brain (yours) is in any way remotely equal to Shiller’s. He’s a Nobel winner, you barely understand basic arithmetic. Your supposed insights about “what follows logically from what Shiller said” are utterly worthless.
Does anyone care what some high school kid thinks of Einstein’s work? Even if he writes lots of papers about Einstein? Of course not. And so it is with you and Shiller. He’s the real deal, you’re the wannabe. This fact is completely obvious to everyone. No crash will ever change that reality.
I don’t buy it, Anonymous.
I worked with Wade Pfau for 16 months. We exchanged scores and scores of e-mails. He praised my work to the skies. This is a fellow with a Ph.D. in Economics. And he told me that he learned things from me that he had never learned in all those years of schooling. He checked Valuation-Informed Indexing out every which way to Sunday and concluded that: “Yes, Virginia — Valuation-Informed Indexing Work!”
And of course Wade is not the only one. Rob Arnott said that all my stuff checks out. Carl Richards said that my work has huge value. Bill Shultheis was excited beyond belief when he discovered all the amazing stuff at my web site. Michael Kitces engaged in long e-mail correspondence with me, saying that he learned a great deal from our interactions. And thousands of my fellow community members put their lives on the line by standing up to you Goons by asking that honest posting be permitted at our boards. My insights are not “utterly worthless.”
What is “utterly worthless” are your death threats and your demands for unjustified board bannings and your thousands of acts of defamation and your threats to get academic researchers fired from their jobs. Wade spent years learning what he has learned. He shouldn’t have to live in fear of what a gang of internet Goons will do to him is he posts honestly re his views on investing at internet discussion boards. Financial fraud is a felony. You Goons should be placed in prison cells so that people like Wade can feel free to express their true beliefs. Then we all move forward together. That’s the answer.
And you don’t for two seconds believe that Shiller is “the real deal.” If you did, you would be encouraging discussion at every site as to the implications of Shiller’s “revolutionary” (his word) research findings. I have asked you scores of times to identify even one big change that Bogle made to the Buy-and-Hold strategy in response to what he learned from Shiller’s Nobel-prize-winning research. You have not been able to do so. That’s because there isn’t one. The core principle behind the Buy-and-Hold strategy (that the market is efficient) was discredited by Shiller’s 1981 research findings and Bogle has failed to address that reality publicly for 37 years now.
I think the next crash will change how we all deal with these matters. But I could be wrong. We are just going to have to show a little patience to find out for sure.
I naturally wish you the best of luck in all your future life endeavors, old friend.
Rob
“I don’t buy it, Anonymous.“
Actually, you know he is right, yet you try so hard to convince him, yourself and others that it is just the opposite. You respond with long winded/rambling responses that include the same worn out lines and then accuse the person with the made up death threats, when you have no idea who that person is.
“I don’t buy it, Anonymous.”
Of course not. Like all cranks, your whole identity starts from the assumption that you are the smartest person in the world. But does the world treat you with the enormous respect you are due? Well, no. The world treats you more like a baby treats a diaper. How can that be?
Your answer: Goons. Your towering intellect somehow is incapable of overcoming a couple mentally inferior goons, who aren’t even trying.
Somehow all that doesn’t “logically follow”.
Actually, you know he is right, yet you try so hard to convince him, yourself and others that it is just the opposite. You respond with long winded/rambling responses that include the same worn out lines and then accuse the person with the made up death threats, when you have no idea who that person is.
I wish you the best of luck with it in any event, Anonymous.
Please take good care.
Rob
Your answer: Goons. Your towering intellect somehow is incapable of overcoming a couple mentally inferior goons, who aren’t even trying.
Somehow all that doesn’t “logically follow”.
I don’t believe that I possess a towering intellect. And I don’t believe that you Goons are mentally inferior.
My enemy is the Get Rich Quick impulse that resides within all of us. We all are prone to permitting our emotions to overrule our intellects. That’s why stock investing has always been risky. Stocks are the most emotional asset class. Shiller gave us the research we need to gain better control of our emotions and thereby told us what we need to know to take the vast majority of the risk out of the stock investing project.
But our first reaction to hearing what he has told us is to feel insulted. The Buy-and-Holders tell us investors that we are perfectly rational creatures. That’s a flattering message. Shiller tells us that we are highly emotional and that we permit our emotions to hurt us, that we are self-destructive. That message is not so flattering. That message is insulting. That’s why Valuation-Informed Indexing has had a hard time gaining a foothold.
The question that remains to be answered is whether the losses we suffer in the next price crash will humble us enough to cause us to listen to what the last 36 years of peer-reviewed research is telling us. If it does, then we will all live far richer lives from that point forward and none of us will ever look back. If it does not, we will probably see our economic system go down because our need for accurate, honest investing advice is greater today than it has ever been before. We learned the realities of stock investing just in the nick of time. Now it’s a question of whether we want to take advantage of the huge benefits now available to us enough to be willing to consider the possibility that we might have gotten something wrong at an earlier time. I vote for considering that possibility.
You say that the story doesn’t logically follow. In a sense, it doesn’t. There’s a lot of irrationality in evidence in this story. But it is not possible to tell any story involving humans without being willing to examine some irrationality BECAUSE HUMANS ARE EMOTIONAL CREATURES. Acceptance of that core reality is what Shiller added to the mix. The Buy-and-Hiolders started with an ASSUMPTION that humans are 100 percent rational and then just followed the logic chain where it took them. They did a good job of following the logic chain but there is now 36 years of peer-reviewed research showing that their core assumption was in error. Investors are humans and humans are no more rational when buying stocks than they are when doing anything else that humans do.
Shiller added the human element to the stock investing story. He thereby made it possible to get the numbers right because every calculation done in an investing context is affected by the irrational behavior of the humans who buy and sell the stocks. This is why the title of my book is “Investing for Humans.” You cannot get stock investing right without taking into consideration the human element. Shiller’s revolutionary insight was that investors are human and humans are not 100 percent rational and therefore any investing strategy assuming they are cannot possibly work in the long run.
The Buy-and-Holders are flattering themselves when they tell themselves that they are capable of perfect rationality, Anonymous. I don’t say that to hurt the feelings of my Buy-and-Hold friends. I say it because I want my Buy-and-Hold friends to achieve financial success and a big part of that is knowing how stock investing works in the real world.
I hope that helps a small bit.
Rob
“The Buy-and-Holders are flattering themselves when they tell themselves that they are capable of perfect rationality, Anonymous. ”
Gee, we are so lucky we have you to tell us stupid idiots that we don’t know anything. I guess we should have been listening to you since you have made Billions in the market, while we get by on our few millions.
Shiller predicted the 2008 economic crisis in a book published in March 2000, Anonymous. Had the ideas in the book been widely promoted, we could have avoided that economic crisis. Shiller’s work shows that stock prices are self-regulating so long as investors have access to good information and are encouraged to act in their self-interest. We all would have been better off had we avoided the economic crisis.
The situation is similar to the one we have with environmental pollution. If we pass no laws relating to pollution, individual companies are forced to pollute the environment because they will be driven out of business by their polluting competitors if they do not. But if laws are passed putting a price on pollution to discourage it, most are perfectly happy to live within those laws. For so long as the Ban on Honest Posting remains in place, any stock adviser who gives honest and accurate advice is hated because he is telling his clients that their portfolios are worth only 50 percent of their nominal value. But if honest discussion of what the peer-reviewed research says becomes commonplace, there is no longer any penalty for telling investors the truth about stock investing.
I am not a fan of economic crises. They destabilize not only our economic system but also our political system. We now have 36 years of peer-reviewed research showing us how to bring economic crises to an end — just permit honest posting on what the last 36 years of peer-reviewed research in this field teaches us about how stock investing works, The Buy-and-Holders hate the idea because it makes them “look bad.” But it’s not going to make them look bad anymore once they flip to giving true research-based advice. If we are going to be required to do it sooner or later anyway, it makes sense to me to do it as soon as possible and get all the nasty stuff behind us as quickly as possible.
We’re ALL lucky. I am lucky too for having learned so much from Bogle and Shiller and all my Buy-and-Hold friends. Learning together is the one true free lunch, in my experience.
These are my sincere thoughts re these terribly important matters, in any event.
Rob
These are just ramblings of a bitter and isolated person that blames everyone else for their own failures.
Yeah, yeah.
Rob the Bitter