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 have never had a choice.”
You had a choice to behave or not behave. You had a choice to tell the truth or lie. You chose the later in both cases.
There have been thousands of people who have looked at the retirement study posted at John Greaney’s web site over the past 16 years. Not one has been able to identify a valuations adjustment in the study. That tells the tale.
I “misbehaved” on the morning of May 13, 2002, by pointing out this obvious reality to my fellow community members at the Motley Fool’s Retire Early board. Greaney didn’t like my act of misbehavior one tiny little bit. There are a lot of Buy-and-Holders who share his basic take on the matter. And there are a lot of Normals who, seeing the reaction of the most emotional Buy-and-Holders, have elected to keep quiet about what they believe and what they have seen except perhaps to note their doubts about Buy-and-Hold in the most vague and general ways. That’s not me.
I am proud of my many, many, many acts of “misbehavior.” I think we need to launch a national debate on the far-reaching implications of Shiller’s “revolutionary” (Shiller’s word), Nobel-prize-winning research. I think that would be best for every single person involved. The prison sentences would be shorter if the debate were launched prior to the onset of the next price crash. The number of civil lawsuits would be fewer. The number of failed retirements would be fewer. The damage to our economic and political systems would be less.
My acts of “misbehavior” put me on the right side of the felony line rather than on the wrong side of it. I do not believe that Greaey’s study contains a valuation adjustment. So, if I say that it does or I pretend that I have not noticed that it lacks one, I am doing what Bernie Madoff did — I am committing financial fraud. When calculated honestly and accurately, the safe withdrawal rate at the top of the bubble was 1.6 percent, not 4 percent. Retirees who relied on the Buy-and-Hold studies to plan their retirements entered retirements that have only a 30 percent chance of surviving 30 years. In the event that stocks continue to perform in the future at least somewhat as they have always performed in the past, this act of financial fraud is likely going to hurt more people than Bernie Madoff’s act of fraud by a factor of 100 or more.
Not this boy, you know? Not by a long shot. No way, no how. Zero chance. A prison sentence is not in my future, Goon intimidation tactics or no Goon intimidation tactics. I would be truly grateful if you would try to find somebody else.
I extend my best wishes to you and yours, my dear Goon friend. But please mark me down as a “no” re the financial fraud garbage. A STRONG no. A NON-NEGOTIABLE no. I think of you as a friend. But there are limits. I mean, come on.
Don’t let the bad guys get you down, Anonymous.
Misbehaving Rob
Anonymous says
Check this out: https://www.marketwatch.com/story/5-things-we-can-still-learn-from-vanguards-jack-bogle-2018-10-08
Of course you don’t like being reminded of the Bogleheads conference, for obvious reasons, but Bogle does throw you a bone: “It would probably take a 25% drop [for the stock market] to get to its normalized value.”
Not bad, right? He’s meeting you halfway. How about lopping a couple years off the old man’s prison sentence?
Rob says
I believe that Bogle is saying what he truly believes. And I think that’s healthy. It could be that he’s right and that I’m wrong. If there’s even a 1 percent chance that he’s right, I want people to hear that point of view. So I am glad that we have him around to express it.
You don’t see any death threats in that paragraph that I just wrote. You don’t see any demands for unjustified board bannings. You don’t see any acts of defamation. You don’t see any threats to get academic researchers fired from their jobs. That’s the difference. It’s when that sort of thing is added to the mix that financial fraud comes into the picture. That’s where prison sentences come into the picture.
Jack Bogle should say what he believes. So should Bill Bernstein. So should Larry Swedroe. So should Robert Shiller. So should Rob Bennett. So should Microlepsis. So should John D. Craig. And on and on and on and on and on. We all have a different perspective. We all have to post our honest views for a board community as a whole to achieve its potential.
It is only the Buy-and-Holders that engage in criminal acts to intimidate the “other side” from expressing its sincere views. I’ve never seen a Valuation-Informed Indexer do that.
So who do you think people are going to be angry at in the event that we see another crash, as Shiller’s research indicates is likely? They are going to be angry at the Buy-and-Holders. And they are going to learn about the criminal acts. And they are going to demand prison sentences. That’s what I truly believe is going to happen.
Do I want it to happen? I do not. But you know what? I am not Superman. I have not been able to stop this stuff from happening. If the tables were turned and there was 37 years of peer-reviewed research showing that I got an important number wrong in a retirement study posted at my web site, I would be praising the guy who brought it to my attention morning. noon and night. I would be thanking him for saving me from a lot of embarrassment and for keeping me from taking on huge financial liabilities and even a possible prison sentence.
That’s not what happened with John Greaney. And that’s not what happened with Mel Lindauer. And that’s not what happened with Jack Bogle.
I love Bogle. There is no one alive on Planet Earth who holds him in higher esteem. All you have to do to see that is to look at all of the Bogle ideas that I incorporated into the Valuation-Informed Indexing model. Or consider whose book it was that persuaded me that Greaney got the numbers wrong in his study — it was Bogle’s. I hadn’t read Shiller’s book at the time. Bogle was the bigger influence at the time.
I love Bogle. I do not love financial fraud. That’s the story here.
I don’t have the ability to lop any time off of anyone’s prison sentence. I am not going to be serving on any of the juries that will be formed in the days following the next price crash. So I will have zero say. The only possible influence that I might have is that I think I might be able to say some things that would put Bogle’s behavior and Lindauer’s behavior and Greaney’s behavior in a somewhat more positive light than some of the millions who have seen their retirement accounts wiped out will be inclined to put it. And it is my intent to do everything in my power to put their behavior in the best light possible. That’s as far as I can go and that far I will indeed go.
I am not going to say that I believe that Greaney’s study contains a valuation adjustment. If I did that, I would be at risk of going to prison myself. So no freakin’ thanks, you know?
I love Bogle. I hate financial fraud. I wish that I could say that Bogle has never done anything to suggest that he either supports Lindauer or at the very least tolerates him. I cannot say that. All that is said on our boards goes into Post Archives. There is a lot of material in which Bogle has given the very strong impression that he either supports or at the very bare minimum tolerates Lindauer. So I am bound to acknowledge that reality. And then others decide who goes to prison and for how long.
If there is ever anything that I can do to help Bogle or Lindauer or Greaney or anyone else, I am going to do it. In three seconds and you wont have to ask me a second time. But I am never going to say that I believe that Greaney’s study contains a valuation adjustment. Thousands of people have looked at the study over the course of the past 16 years and not one has been able to identify a valuation adjustment.
Bogle f’d up when he failed to speak up about the Lindauer matter. Guess who wrote to him on several occasions imploring him to take action? And it wasn’t just me. There were a number of us who wrote to him. And no action was taken. I can love the man to death and praise him to the skies and it won’t change that simple reality. Bogle f’d up and only a small number of his friends possessed the courage and love for the man to implore him to fix the f-up. I wish that you had stepped forward at the time, Anonynmous. You might have made the difference, man. You never know unless you try.
I hope that all that helps at least a tiny bit.
Love the man, hate financial fraud, hate the idea of seeing any of my many Buy-and-Hold friends go to prison. For obvious reasons.
I have an article at my site titled something like “12 Reasons Why Valuation-Informed Indexing Might Not Work.” Bogle should write an article like that re Buy-and-Hold. I shouldn’t have to be the one pointing out the flaws in Bogle’s strategy. He should do it. That way he gains the high ground. That would be awesome. He should stop behaving defensively and make an effort to get ahead of the curve. There would still be lots of people who stuck with Buy-and-Hold. But the poisonous atmosphere that influences every discussion held at the Bogleheads Forum today would dissipate it he did that. I encourage my good friend to get that article written and posted by the close of business today. For EVERYONE’s benefit.
My best and warmest wishes to you and yours.
Prison-Sentence-Lopping (If Only He Could!) Rob