Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Why do you say your post in 2002 is famous, when it really isn’t? Does it have to do with your comment about wanting to be popular?
There’s never in the history of the internet been another post that generated so many responses, Anonymous. Reaction to that post dominated discussion at the Retire Early board for over a year and then dominated discussion at several other board communities for several years later. That post ultimately caused the death of the Retire Early board. It was a thriving community before the Greaney freak-out. Now there is no longer any discussion of early retirement there. The Bennett/Pfau research paper, which I think can fairly be described as the most important research published in this field in the past 30 years, would not exist if I had not first worked up the courage to advance that post. That post started it all. You Goons wouldn’t be going to prison if I hadn’t put forward that post. It was the message in that post that you felt you had to block that caused you to engage in all the intimidation tactics.
It was a simple post. It just asked a question: Should we be counting valuations when we calculate the safe withdrawal rate? The problem is that the obvious answer to the question is “yes” (why the heck wouldn’t we?) and yet the Buy-and-Hold answer is “no” (none of the Buy-and-Hold retirement studies contain valuation adjustments). So, if the question is permitted, Buy-and-Hold goes down. And bringing Buy-and-Hold down would be the biggest advance in the history of personal finance. It is because we cannot question Buy-and-Hold that we have not been able to advance in our understanding of how stock investing works for 37 years now. Bring Buy-and-Hold down and you open up an enormous learning experience for millions. That post and the reaction it provoked is eventually going to be the cause of every discussion board and blog on the internet being opened to honest posting on safe withdrawal rates and scores of other critically important investment-related topics. It would be pretty darn hard to top that.
You would never have written a single post here if you didn’t see the importance of that May 13, 2002, post, Anonymous. You’ve never gotten over it. It drives you to this day. You believe in Buy-and-Hold and it is an important part of your life. But that post implicitly questions Buy-and-Hold and there is no intelligent answer to the question that it poses but to abandon Buy-and-Hold (at least the dogmatic version of it that was responsible for the error in the Buy-and-Hold retirement studies).
So, yes, the post was a super, super big deal. It took me three years to work up the courage to write it. That’s why. I held back because I sensed the power that I was unleashing. Advancing that post was my finest moment. It is my job to create learning experiences like that and I went far beyond anything that I thought I was capable of achieving with that one. It was such a big wave that I created that instead of just enjoying a fun ride, I was knocked to the ocean floor and spun around head to toe about 500 times. So there’s been a scary side to the aftermath of that post, I am not saying different. I of course have not collected the $500 million yet. And we haven’t opened the internet to honest posting yet. And we haven’t gotten the textbooks rewritten and all that sort of thing. So we have not yet seen with our eyes the full impact of that amazing post.
But we have seen the beginnings. We have seen hundreds and hundreds of thousands of reaction posts. Those of us who are capable of thinking clearly about these matters can see where things are headed.
The answer to the post is that, yes, we should have been taking valuations into consideration all along. We destroyed millions of lives by failing to do so. And human psychology is such that we have been able to rationalize doing that for so long as prices remain high. That’s the story. Humans are capable of rationality. But we are also the rationalIZING animal. For so long as prices remain high, we will continue to rationalize and hurt ourselves and others. But we will accept what our rational minds tell us re these matters when prices drop and we are in a corner with no choice but to move forward in our thinking. And the reactions that we have seen from that post will tell us what we need to know. We have the negative reactions that reveal our human weaknesses. And we have the thousands of positive responses to the post that show us what we can do when we permit rationality to exist in our discussions of how stock investing works.
If it is true that the Buy-and-Hold retirement studies lack valuation adjustments, then Buy-and-old is dangerous. Every person alive in the United States today is affected deeply by that reality.
If there really are valuation adjustment in those studies, then I was wrong in what I said in that post. But that of course is not the case. You Goons would not have responded in the way you did if you truly believed that the Greaney study contained a valuation adjustment.
The story is still being told. That’s why we are still here. In the end we are going to determine as a society whether the study contained a valuation adjustment or not and move on with a much stronger understanding of how stock investing works than we ever possessed before. We are not there yet. But we are close. We are getting closer every day. And the post of May 13, 2002, generated a mountain of material that we can use to understand how we got off the right track and caused all this human misery.
I don’t say that I knew when I hit the “Submit” button. I didn’t. I knew that the post was important. I knew that it was going to create a stir. But I didn’t anticipate 1/500th of what we have seen. I was only slightly less in the dark than everyone else. I was still a Buy-and-Holder myself on the morning of May 13, 2002. I kick myself for it today. I don’t see why I hadn’t put the pieces together. If the retirement studies were so off, the entire model was suspect. But I didn’t see that then. It takes time for the human mind to let all these things in.
As a society we are still working through the process of letting it all in. But the post pointed us to the future. Not one Buy-and-Holder has been able to answer the question posed in that post honestly and effectively in 16 years. Should we be taking valuations into consideration when calculating the safe withdrawal rate? OF COURSE we should. And yet we still do not. Every abusive post that you Goons have advanced has been an effort to see that that remains the reality. And that’s a doomed effort. All of the board bannings in the world cannot change the reality bought to light by that post. If the Buy-and-Hold retirement studies do not contain valuation adjustments, they are in error and they have hurt millions of people in very, very serious ways. There is no more important public policy issue before us today than the need for us all to pull together and fix that.
I’m working on it! I’m working on it!
Whew!
No apologies for the post. That’s what I aim to do with all of them. It was not my intent to hurt anyone’s feelings. My intent was to help. If I had gotten a number wrong in a study, I would want one of my friends to point it out. So I did for my friends what I would have wanted them to have done for me. I think you Goons will see that one day. Not today, I know. But I believe that there will come a time when you will be able to get your heads around it. And we will all go out for a nice cold one and laugh about the crazy things that went down in the old days.
The post sure has not made me popular. I don’t think there has ever in the history of the internet been a post that caused a person to lose so many popularity points. In the long run, I believe that that will change. But I guess we are just going to have to wait to see. I could be wrong. It’s been known to happen.
My best wishes.
Unpopular (For Now!) Rob
Just because YOU think your post is important, it doesn’t mean others think it is so.
You’re an other, Anonymous. And you just posted about it. 16 years after it went up. YOU think that post was pretty darn important.
You are willing to go to prison over it. That’s pretty darn freakin’ amazing. One of the problems that I have persuading newcomers is that things like that are close to impossible to believe. If I hadn’t seen it all take place before my own eyes, I don’t think that I would believe it either. But it’s all documented. Anyone who wants to spend some time going through the Post Archives can do so and they can thereby see it all for themselves.
There was a professor at George Washington University who wrote me in response to an e-mail to tell me that his first reaction to my e-mail was to conclude that I must be crazy. But he was intrigued and so he asked me a few questions about Valuation-Informed Indexing. After some back and forth, he came to the conclusion that everything I said about stock investing checked out and he was going to include a discussion of Valuation-Informed Indexing in his lectures for his course on investing from that point forward.
Was this guy right that what I told him sounded crazy? Of course! And was he right that it all checks out? Of course! And was he right to teach his students about Valuation-Informed Indexing? Of course!
If Greaney had truly included a valuation adjustment in his retirement study, he wouldn’t have come back with the death threats and all the rest, Anonymous. The obvious thing to do would have been to just point out where in the study he included the valuation adjustment. If he had done that, my famous post would not have generated hundreds and hundreds of thousands (is it millions by now?) of response posts over the following 16 years. But of course that’s not what happened. The post generated more responses than any other post ever put to a discussion board in the history of this new communications medium.
Some of the responses were very, very, very positive. Some of the responses were very, very, very negative. Most were somewhere in the middle. But there’s no question that there has never been a discussion board post that generated such a reaction. If Bogle is right that there is no need for investors to practice price discipline when buying stocks, we wouldn’t have seen that sort of reaction. If the Buy-and-Holders were truly confident re their strategy, they would have shown us a “ho-hum” reaction. Death threats are not a ho-hum reaction. Demands for unjustified board bannings are not a ho-hum reaction. Thousands of acts of defamation are not a ho-hum reaction. Threats to get academic researchers fired from their jobs are not a ho-hum reaction. The Buy-and-Holders care very, very, very, very deeply about what I said in that post. It’s not me saying that. It’s our Buy-and-Hold friends saying that with every death threat and with every demand for every unjustified board banning and with every act of defamation and with every threat to get an academic researcher fired from his job that they advance.
And the hugely positive responses also of course tell us something important. When we see an academic researcher like Wade Pfau get so excited over something he discovered that he cannot sleep at night and when we hear him saying that he is going to send his research paper showing that Valuation-Informed Indexing is superior to Buy-and-Hold in every possible way to the top journal in the field, we are learning something important. Academic researchers receive years of training to make sure that they don’t jump to hasty conclusions. Wade researched these matters for 16 months. He asked lots and lots and lots of questions before he reached his conclusion that “Yes, Virginia, Valuation-Informed Indexing works!” And his conclusion that the Buy-and-Hold retirement studies are “dangerous.”
And we have also learned from the reactions to my post of the morning of May 13, 2002, why Shiller’s ideas on how stock investing works have not become dominant in the 37 years since he published his wonderful, “revolutionary” (his word) research findings of 1981. Yes, Wade loved the idea of publishing the most important research in this field in 30 years. He also loved the idea of being able to feed his family and pay his bills on an ongoing basis. So, once the criminally abusive behavior of the Buy-and-Holders reached truly epic, insane levels, he backed down and agreed to keep quiet about what the research says until a later day when he sees that is is safe for him as an individual to share with the millions of middle-class people who invest in stocks what they need to do to invest safely and effectively.
So the entire story is told in those hundreds of thousands (millions?) of responses to the famous post. We have a group of powerful, wealthy people who very, very, very, very much do not want the millions to learn about the mistake that they made (that it is not necessary to practice price discipline when buying stocks), we have a group of millions who very, very, very, very much wants to learn about the realities and we have a group that very, very, very, very much wants to tell them but is inclined to hold back until the criminal stuff is reined in about 4,000 notches.
The only piece of the puzzle that is not in place today is the effect that the next price crash will have on those millions of people, When the failed retirements and economic crises that the heavy promotion of Buy-and-Hold “strategies” always cause are no longer just theoretical certainties but present-day realities causing widespread misery for all of us, will a group of us work up the courage to stand up to you Goons and get the word out to the millions that those who follow the peer-reviewed research have known for DECADES that the “idea” that there is no need to practice price discipline (long-term timing) has never been anything more than a marketing gimmick, a way to turn a quick buck, that there is precisely zero support for this “idea” in the historical record of stock price changes?
I think we are a great country. I think we will pull it off.
But that’s going to persuade you Goons. You are not going to come clean until the men come with the handcuffs and take you away to your prison cells. Sad? Indeed. But I think it would be fair to say after 16 years of this that this is the reality that we face. I can offer to help you in any way possible. And I have done so. And I will continue to do so. But I cannot reach in and take out a Goon brain and replace it with a Normal brain. So we will just have to wait and see how things play out in the days following the next price crash.
You think that my May 13, 2002, post is every bit as important as I do, Anonymous. The only difference is that you want to suppress the learning experience that that post launched while I want to spread it to the entire world. We are working at cross purposes. That’s for sure. But it is the learning experience of that May 13, 2002, post that drives both of us. I want to expand the learning experience that was launched by that post and you want to crush it.
It will be interesting to see how it all plays out.
I certainly wish you the best of luck with it, in any event. I hope that that helps at least a small bit.
Rockin’Rob
“You’re an other, Anonymous. And you just posted about it. 16 years after it went up. YOU think that post was pretty darn important.”
I don’t think it is important. I am just responding to your post in which YOU claim it is important. Isn’t that what this comment section is about?
The fact that your comment section lacks any positive support just provides further proof that what you have to say is just not that important to anyone.
We couldn’t possibly disagree more.
If you didn’t think that reporting the safe withdrawal rate was important, 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 researcher fired from a single job. If you didn’t think that the last 37 years of peer-reviewed research was important, you never would have demanded that I be banned from a single discussion board and we would have thousands of people posting here every day.
I am not a tiny bit convinced by your words, my dear friend. Your actions tell a very, very, very different story.
I wish you all good things, in any event. I hope that that helps at least a tiny bit.
Action-Watching Rob