Set forth below is the text of an e-mail that I sent on November 29, 2018, to Will Davies, the author of an article titled “Why We Stopped Trusting Elites.”:
Will:
My name is Rob Bennett. I enjoyed your article “Why We Stopped Trusting Elites.” This is a terribly important issue re which I have greatly mixed feelings. I don’t think that our system of government (I live in the United States) can continue to succeed without a good bit of trust in elites remaining in place. But I certainly feel that there have been cases in which the elites have failed us and thus I cannot help but be somewhat sympathetic when people turn against them.
I have attached an article title “Buy-and-Hold Is Dangerous.” It reports on a project re which I have done a great deal of work and one that illustrates the problem with elites well. Robert Shiller is an elite. He is a professor at Yale and has been awarded a Nobel prize. I don’t see how you can get more establishment than that. But it is not possible to discuss the implications of his ideas on how stock investing works at any major web site today. I find this reality amazing.
The problem of course, is that there is another group of elites (those who developed and who promote the Buy-and-Hold Model) who oppose him. The elites who teach the dominant theory are not willing to give up any of the turf that they won in earlier days. This is a violation of the social contract by which elites gain the respect of the general public. Elites are supposed to possess at least a degree of interest in the general welfare. Otherwise, they should not be granted the respect that in the past has been bestowed on them.
I am grateful for the good work that you have done and continue to do.
Rob
Will sent a response e-mail later that day saying:
Thanks, Rob. Interesting issues to consider here.
Will
Dear Abby,
My name is Rob Bennett. I know people write to you every day and you respond to them in an attempt to solve their problems. I need to tell you that your advice is wrong. Most of the problems in this world are caused by the goons and the buy and hold mafia. You need to tell your readers to come to my website to learn about valuation informed investing and call me their leader and all their problems will be solved.
P.S. : Please tell the New York Times to put me on the front page.
You’re obviously being sarcastic. But you know what? I have seen many articles saying that the biggest cause of marital problems is financial difficulties. Money is the fuel of life. When we give people bad investment advice, we cause friction between husbands of wives and we ruin the dreams that young people have of going to college and of thereby realizing their potential and we cause old people to be left penniless at a stage of life when they cannot go back to the workforce and obtain a redo on their retirement plans. This stuff is called personal finance for a reason. It affects real live human beings. We should be trying to get it right.
In 2000, the most likely 10-year annualized return on stocks was a negative 1 percent real. The guaranteed return on TIPS was 4 percent real. If the internet has at the time been open to honest posting on the the post-1981 research in this field, we could have gotten the word out to millions of middle-class people and improved their lives in very, very big ways. I think we should have done it.
It would have made our Wall Street Con Men friends feel bad because they made a mistake thinking that Buy-and-Hold was the answer and they worry that people will not think of them as experts if they acknowledge that they didn’t always know it all. I think that even our Wall Street Con Men friends would benefit from us opening the entire internet to honest posting on the last 37 years of peer-reviewed research. Our Wall Street Con Men friends are at heart like all other people. They would like to be able to feel that they are doing some good with their lives. Once they say those words “I” and “Was” and “Wrong,,” all sorts of exciting possibilities to do good for others open up to them. Their reluctance to move ahead is a result of their fear that the transition will be hard. But in the long run, they would be happy to get the hard stuff behind them and to enjoy that feeling of seeing each day get better than the one before. They can never experience that feeling again for so long as their advice is rooted in a strategy that was discredited by the peer-reviewed research nearly four decades ago.
Dear Abby might end up helping us in the days following the next price crash. Dear Abby is not compromised by the need to retain employment in a field that in recent decades has become severely corrupted. I have more confidence in the investment advice of someone like Dear Abby than I do in the investment advice of someone who feels that his ability to earn a living for himself and his family will be destroyed if he acknowledges that a man who was awarded a Nobel prize for his work in this field might have something important to tell us all about how stock investing works in the real world.
https://www.youtube.com/watch?v=b2ccC4aULow
My sincere take.
Dear Robbie
Dear Rob,
It sounds like you live in a pretend world. Please join us in the land of reality.
Signed,
Abby
You’re entitled to your opinion, Abby. But I think it is the Buy-and-Holders who are living in a pretend world.
Yale Economics Professor Robert Shiller was awarded a Nobel prize for his research showing that valuations affect long-term returns. If that’s so, investors need to adjust the numbers on their portfolio statements for the effect of valuations to know the true and lasting value of their portfolios. Buy-and-Holders don’t do that. I believe that you should be helping your readers by letting them know how important it is that they make that adjustment so that they are not shocked someday to see a large portion of their life savings disappear into thin air.
Common sense impresses me., Abby. Peer-reviewed research impresses me, Abby. Nobel prizes impress me, Abby. Death threats, not so much. Demands for unjustified board bannings, not so much. Thousands of acts of defamation, not so much. Threats to get academic researchers fired from their jobs, not so much.
Please keep doing the good work that you do, Abby.
The Great Pretender Rob
I just saw a headline saying that Bogle died.
This of course makes me sad.
He was a great man.
I will continue to say that he was wrong not to stand up to Lindauer. But I will also continue to say that he was a great man who advanced our understanding of how investing works in a major way. I believe that people will gain an enhanced sense of Bogle’s many important contributions after we have opened every discussion board and blog on the internet to honest posting re the last 38 years of peer-reviewed research in this field.
Rob