Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“I can use all the help that I can get.”
Yes, you do. We have suggested many times that you need to seek the help of a qualified mental health expert.
That suggestion is one of the things showing me that Buy-and-Hold is rooted in emotion, Anonymous. If Buy-and-Hold were real, it would be possible to engage in civil and reasoned discussions re its merit. But Buy-and-Holders go nuts when someone challenges their belief in their strategy because there is nothing behind it but a shaky emotional desire that gains produced by irrational exuberance count for as much as gains produced by economic realities.
I think about how I would react if someone on the Valuation-Informed Indexing side behaved the way you Goons behave. If someone on the VII side said that Bogle needs to consult a mental health professional, I would be horrified. I would distance myself from the comment in every way possible because I would feel that all reasonable people would conclude that reliance on that tactic showed that the research-based case for Valuation-Informed Indexing must be weak. Most Buy-and-Holders don’t personally employ such tactics. Only a small percentage are outright Goons. But the vast majority of Buy-and-Holders TOLERATE the employment of such tactics by you Goons. That’s why we are where we are today.
When I point out that there is no valuation adjustment in the Buy-and-Hold retirement studies even though we have 37 years of peer-reviewed research showing that valuations affect long-term returns, there should be a universal acknowledgment that that point is of huge importance. If the Buy-and-Holders got the numbers that people use to plan their retirements wrong, what else did they get wrong? Probably everything. The entire point of investment analysis is to help people finance their retirements. If you are that careless about retirement planning, you just shouldn’t be working in this field. You may be as smart as the dickens (most Buy-and-Holders are indeed very smart). But you haven’t achieved the level of control over your emotions that you need to possess to offer helpful investment advice if you don’t appreciate the need to get the numbers right in retirement studies.
The Great Safe Withdrawal Rate Debate has never been an intellectual debate. There have been good intellectual points made on both sides. But the core dispute has never been one that could be resolved by making reference to data or research or logic or common sense. The core dispute is emotional in nature. The Valuation-Informed Indexers say that we should consult the peer-reviewed research in this field to determine the true and lasting value of our stock portfolios. The Buy-and-Holders say that we should go by the numbers printed on our portfolio statements, that the validity of those numbers may not be questioned in public discussions. 90 percent of the population wants those numbers to be real, 90 percent of the population desperately needs those numbers to be real.That’s the story and that has always been the story.
Will the story change when prices fall by 50 percent or more? I think it will change. I don’t think there is going to be much interest then in maintaining a belief that the earlier numbers were real. When the numbers no longer appear on portfolio statements, most reasonable people are going to come to accept that those numbers were fantasy numbers all along. If they were real, they wouldn’t change so dramatically in such a small amount of time. And then the learning process will go into hyper-drive. We will have 37 years worth of powerful stock investing insights opened to us all at once. My guess is that we will as a nation of people learn more about how stock investing works in the year following the next price crash than we learned in the preceding 37 years (or whatever it turns out to be) in which Shiller’s “revolutionary” (his word) research findings were available to us for our review and consideration.
But I could be wrong. That’s always the curve ball. I thought that Greaney’s smear campaign would be shut down after two days, three at the most. The joke was obviously on me re that one. If I could be wrong about that one, I obviously could be wrong re this one too. But I just am not able to play it any other way. In a debate between reason and emotion, I am going to take the side of reason. It’s what I am, right down to the core. I was a Buy-and-Holder myself for several years and the thing that drew me to the strategy was its claim that it was a strategy rooted in research (I believe that the Buy-and-Holders were being sincere in making that claim even though I also of course believe that they have been proven wrong).
I think that stock investing strategies should be rooted in peer-reviewed research and I think that in future days they will be. I believe that there will come a day when every investing discussion board and blog on the internet will permit honest posting on the last 37 years of peer-reviewed research in this field. I believe that it is going to take a price crash that is going to cause an ocean of human misery to get us there and that reality of course breaks my heart in a thousand pieces. But I do think we will get there all the same. And, as John Walter Russell suggested many years ago, I believe that in the end The Great Safe Withdrawal Rate Debate will end up helping us all in many ways that today we cannot even imagine.
I vote for reason over emotion in stock investing. Every time. I offer no apologies whatsoever.
I naturally wish you all the best that this life has to offer a person, my dear friend.
Reasonable Rob
Anonymous says
“If someone on the VII side said that Bogle needs to consult a mental health professional, I would be horrified.”
What would be worse is for someone to call him a con-man. Wouldn’t you agree?
Rob says
It’s worse to call someone a con man. We agree re that much, Anonymous.
The part that you always leave out is that I hate, hate, hate, hate, hate calling my good friend Jack Bogle a con man. Bogle is a hero in my eyes. I believe that Valuation-Informed Indexing is the future and Bogle did as much as anyone alive to build the concept (I consider his contributions to be roughly equal to those of Shiller). I learned about the errors in the Buy-and-Hold retirement studies by reading Bogle’s book (I was aware of Shiller’s work at the time but Bogle was a bigger influence on my thinking at the time) There is no bigger fan of Jack Bogle alive on Planet Earth than Rob Bennett.
All that said, yes, I do believe that the man is working a con. My personal view is that he conned himself before he conned anyone else. But it remains the case that, if Shiller is right about how stock investing works, Bogle’s continued promotion of the Buy-and-Hold strategy for 37 years after Shiller showed with peer-reviewed research that there is precisely zero chance that such a strategy could ever work for even a single long-term investor will end up causing an ocean of human misery when the next price crash causes millions of investors to see 50 percent of their life savings go “Poof!” virtually overnight.
I love the man. The man is hurting himself. I have asked him to knock off the funny business. I have asked others who love the man to work up the courage to join me in asking him to knock off the funny business. Is there anything that I could possibly do to help Bogle out of the mess in which he finds himself that I have not already done? If you ever think of something, I would be grateful if you would pass along the idea, Anonymous.
We live in a great country. We come up with new ideas all the time. This is the primary reason why we are so prosperous a nation. We don’t find fault with the people whose old ideas are replaced by the new ideas. We express gratitude to them for helping us out as they could when they could. But we of course do not permit people to advance death threats or demands for unjustified board bannings or thousands of acts of defamation or threats to get academic researchers fired from their jobs as their means to block people interested in learning about new ideas from doing so. Bogle’s tolerance of the behavior of Mel Lindauer makes him look very, very, very, very bad. He didn’t engage in that tolerance as the result of my recommendation, I urged him on several occasions to take things in a very, very, very different direction.
I love the man. I always will. There is no bad thing that he can do today to change the feelings that I have for him as a result of the many great things that he has done for millions of people at earlier times. I intend to focus on that side of the story after we see the effects of the next price crash on millions of people and there are lots of others taking their digs at this giant.
I have done all that I can and I will continue doing all that I can. There obviously are limits to how far a law-abiding person can go. I do not believe that the retirement study posted at John Greaney’s web site contains an adjustment for the valuation level that applies on the day the retirement begins and it obviously would be financial fraud for me to say that I do. So I am not going to go there. The rest follows from that.
I am the biggest fan of Jack Bogle alive on Planet Earth today. But, yes, he aids a massive con when he puts up words in “defense” of Mel Lindauer. Everyone who posts at the Bogleheads Forum sees those words when they appear and becomes worried about what will be done to them in the event that they work up the courage to call Lindauer out on his b.s. intimidation tactics. Bogle’s involvement in this is as sad as sad can be. I am proud that I can say that I have done all in my power to turn things around for him and for all of my other dear Buy-and-Hold friends as well.
If you had asked me prior to May 13, 2002, whether I thought that anyone was capable of engaging in the sorts of behavior that we have seen employed by those posting in “defense” of the Buy-and-Hold retirement studies, I would have said that there is zero possibility that anything like that could ever happen. I was worried that I might get something wrong and cause someone to suffer a failed retirement. I would have sent two dozen roses to anyone who noticed an error that I made in a retirement study and pointed it out to me before it caused more damage. And yet here we are.
Humans are strange animals, you know?
Bogle is a giant regardless of the rest. But, yes, when he posts in “defense” of Mel Lindauer, he advances a con that will likely in days to come destroy the lives of millions of people. If he were thinking clearly about these matters, he would thank me for bringing the matter to his attention and for being kind enough to insist that he take prompt and effective action.
The difference is that, when you say that I need to consult a mental health professional, you are not doing it out of love. When I say that Bogle is today involved in a massive con (through his tolerance of and implicit endorsement of Mel Lindauer’s criminal behavior), I am doing it out of the love and respect that I feel for this great man.
I hope that helps a small bit, Goon friend.
I naturally wish you all the best that this life has to offer a person.
Bogle Loving (But NOT Con Loving!) Rob
Anonymous says
“The part that you always leave out is that I hate, hate, hate, hate, hate”
Yes, you do seem to be a very hateful person. That is not a good thing.
Rob says
Do you think it was hateful of me to point out the error in the Buy-and-Hold retirement studies?
I have a funny feeling that, in the days following the next price crash, there will be millions of people who will see that that was an act of brave love.
We’ll see, you know?
My best wishes to you.
Very Hateful Rob
Anonymous says
“I have a funny feeling that, in the days following the next price crash, there will be millions of people who will see that that was an act of brave love.”
Your funny feelings are batting zero out of a thousand. Yet THIS one will come true, for sure!
“When I say that Bogle is today involved in a massive con (through his tolerance of and implicit endorsement of Mel Lindauer’s criminal behavior), I am doing it out of the love and respect that I feel for this great man.”
So slander is okay if you do it out of love. So I can say you are a brainless, lying, selfish, irresponsible, passive-aggressive loon, with poor personal hygiene, and in fact lacking any redeeming qualities whatsoever. Maybe if I see you on the street I’ll even take a swing at you. Is that okay because I do it all out of love, in the hope that you will someday reform?
Anonymous says
I apologise for that last comment. It was uncalled for. I’ll leave you alone now.
Rob says
Thanks for the apology Anonymous.
I love Jack Bogle. I love ALL of my Buy-and-Hold friends.
I love them in a real, deep way, not in some phony, flattering way.
If you are drunk and getting in your car to drive home, should your friend let you do what you want or make an effort to talk you out of driving drunk to protect you from your own self-destructiveness? I believe that he should do the latter. That’s the way that I try to play it re my Buy-and-Hold friends.
I believe that Jack Bogle is a good man and a great man. I am 100 percent certain that, if he were thinking clearly, he would want to bring a full and complete stop to the death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs. He is today suffering from cognitive dissonance re the “revolutionary” (Shiller’s word) research findings of 1981. So he has a self-destructive voice within him telling him not to act. I contradict that self-destructive voice out of a deep love for the real man, not this weak, dark part of him that is in control of him at this point in time.
I am 100 percent certain that Jack will thank me for my efforts in the days following the next price crash, when he is able to see with his own eyes that I was speaking up for the best of him and looking out for his future as well as the futures of the millions of middle-class investors who listen to his investing advice. It will all work out.
If you don’t believe that it will work out, you just will have to wait to see how things play out in the days following the next price crash. I don’t have anything else that I can tell you.
But please be assured that I act out of love both in what I say about Jack Bogle and in what I say about you Goons.
I hope that helps at least a tiny bit.
My best and warmest wishes.
Brainless (and with Poor Personal Hygiene!) Rob