Set forth below is the text of an e-mail that I sent on December 2, 2018, to Matt Yglesias, a senior correspondent at Vox.com:
Matt:
My name is Rob Bennett. I have attached an article titled “Buy-and-Hold Is Dangerous.” It explores an issue that I think is a big deal — the intimidation tactics that have been employed by advocates of the Buy-and-Hold investment strategy to keep people from learning about the implications of Nobel-prize-winning economist Robert Shiller’s research. If the pre-Shiller research on which Buy-and-Hold was built is right, the numbers on today’s portfolio statements are rooted in economic realities. If Shiller is right, 50 percent of today’s portfolio numbers are the product of irrational exuberance and will be going “Poof!!” in the next price crash. When millions of people suffer those sorts of losses, we will see a big economic contraction because trillions of dollars of spending power will be removed from the economy. I expect that we will even be seeing increased political unrest as middle-class people see a lifetime of saving effort wiped out.
My personal take is that this is the biggest public policy issue before us today. I would love to hear your thoughts.
I wish you the best of luck in all your future life endeavors.
Rob
Given the unfortunate news of Jack Bogle’s passing yesterday, one would have expected you to make a post today honoring Jack. But then again, given how much you have slandered him extensively by calling him the biggest con-man, saying he has cost people millions and saying he would go to prison, I guess it is not surprising you failed to do so.
Of course, you will use the same tactic as always by acting like you are praising him, which is just sickening. It is like smiling at someone while stabbing them in the back. You can spare us all from your hollow words.
Maybe you are a bit sad today. You had told us Jack would be giving his “I was wrong” speech and that he would then be working with you as well as making sure you get a $500 million windfall. I guess that retirement plan has failed as well. What is plan C?
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
The first post in this thread is a response by Anonymous to my post, which appears as the second post in this thread. The reason why they are out of order is that I initially placed my post in the thread attached to yesterday’s blog entry and Anonymous replied both in that thread and in this one. I decided that it is better for the thread to be associated with the more recent blog entry. So I deleted both my post and his post from the earlier thread and placed them here.
I’ll respond below to his reply post.
Rob
You can try and put lipstick on a pig, but the archives are there to see all the nasty comments you made about Jack.
You can even stop for one moment when it comes to your agenda. On the day after is death, you still have to say how you think he is wrong all in an effort to try and promoted yourself and your agenda. I bet that if you attended his funeral, you would find some way to promote yourself and VII, rather than honor Jack.
Given the unfortunate news of Jack Bogle’s passing yesterday, one would have expected you to make a post today honoring Jack.
I did that.
But then again, given how much you have slandered him extensively by calling him the biggest con-man, saying he has cost people millions and saying he would go to prison, I guess it is not surprising you failed to do so.
The Big Guy screwed up in a major way by failing to address the Linduaer Matter even though it was clearly his responsibility to do so. I sent him three e-mails asking him to do so. I know that others (such as John D. Craig) also sent him e-mails. So he screwed up in a big way. It makes me sad to say that. But there’s no getting around it. It’s as much my job to say that as it was Bogle’s job to speak up about the Lindauer matter when Lindauer was threatening people for the “crime” of saying that they believe that the last 37 years of peer-reviewed research in this field is legitimate research and that the Buy-and-Hold retirement studies saying that the safe withdrawal rate is always the same number are in error and are dangerous studies.
It is like smiling at someone while stabbing them in the back.
I see it very, very, very differently. There is a thing called “The Golden Rule.” The idea is to do unto others as you would have them do unto you. If I screw up in some way, I would like to think that my friends would point out the mistake to me and implore me to fix it as soon as possible. I love Bogle. So of course that’s what I did. Those who failed to speak up hurt him in a very serious way. I question how deep their friendship runs. I am sure that they rationalize failing to try to help him out. But I know that I would want my friends to try to help me. So that’s what I have tried to do for my friend Jack Bogle.
It’s an extremely cynical perspective to think that Bogle would prefer that people just keep quiet about his mistakes. The suggestion is that he does not care about getting things right, that he does not care how many people he hurts so long as he never has to say the words “I” and “Was” and “Wrong.” To forward that suggestion is to communicate a belief re Bogle that is 50 times more negative than any belief about Bogle that I have ever expressed. Not this boy, you know?
What is plan C?
Someone else will have to give the speech that brings the 17-year cover-up to a full and complete stop. Shiller could do it. Buffett could do it. Bernstein could do it. Pfau could do it. Arnott could do it. I am sure there are others who could do it. Bogle was best-positioned to do it because he is perceived as the king of Buy-and-Hold. But others will be able to get the job done. The key is that the message be sent loud and clear that from the day of that speech forward, everyone who comments on stock investing should feel 100 percent free to express his sincere views on the subject and that the days of Buy-and-Holders employing death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs to silence those of us who believe that the last 38 years of peer-reviewed research is legitimate research have come to a full and complete stop.
I believe that the national debate in which we will all be participating in the days following the next price crash will highlight the absolutely critical role that Bogle played in advancing our collective understanding of how stock investing works while also of course demonstrating beyond any reasonable doubt whatsoever that it is not possible to calculate the safe withdrawal rate accurately without taking the valuation level that applies on the day the retirement begins into consideration.
My work completes Bogle’s work, it does not come anything close to entirely refuting it. It refutes the parts that were developed before Shiller published his “revolutionary” (Shiller’s word) research findings. But Bogle offered a large number of hugely powerful insights as well as the unfortunate false claim that it is not necessary to exercise price discipline (by practicing long-term timing) when buying stocks.
It will be interesting to see how it all plays out. I look forward to the day when we are working together to promote all of Bogle’s ideas to every investor alive on Planet Earth while also of course doing all we can to let people know about the ideas that Bogle put forward before all the research needed was available to him and which he unfortunately failed to correct when the error on which they were based (the idea that the market is efficient) was revealed to us all.
I naturally wish you the best of luck in all your future life endeavors, my dear Goon friend.
Bogle-Loving (and Bogle Correcting!) Rob
You can try and put lipstick on a pig, but the archives are there to see all the nasty comments you made about Jack.
The Post Archives show that I have expressed my love for the man on hundreds of occasions going back to the earliest days of our discussions re these matters and continuing right through today. The Post Archives show that I rank the man as the second most important investing analyst in history, second only to Shiller. What a meanie I am!
You can even stop for one moment when it comes to your agenda.
It’s a pretty darn important agenda, Anonymous. There are millions of people who have put together their retirement plans pursuant to the demonstrably false claims advanced in the Buy-and-Hold retirement studies. If you think that Bogle wants to see those millions of people suffer failed retirements, we have very, very, very different beliefs about the purposes to which the man directed his life energies.
I bet that if you attended his funeral, you would find some way to promote yourself and VII, rather than honor Jack.
If some attending the funeral with me asked me what I thought of the man, I would say what I have said in these comments. I would tell both the good and bad sides of the story. I think that the cover-up of Bogle’s mistakes has done him great harm. I think that his contributions look even more important when one tells the full truth about what we know about how stock investing works in the year 2019. I think that the 17-year cover-up has done Jack a huge disservice. Until he died, he had an opportunity to set the record straight himself. Now that opportunity is lost to him. If Bogle is looking down on us today possessing a greater clarity of mind than he possessed yesterday, I think it would be fair to say that he is probably shedding a tear at having been deprived of that opportunity to set things straight before he was required to take his leave of us.
Again, one’s take on these matters is always going to be influenced by what one believes about how Bogle felt about these matters deep down inside. I think it would be fair to say that my assessment of the man’s character is 20 times more charitable than your own.
My sincere take.
Bogle-Helping (in a Spirit of TRUE Charity) Rob
Yes, “if” you attended Bogle’s funeral. Hypothetical of course, since you won’t be allowed anywhere near his funeral. Any more than you were allowed to attend any Bogleheads conference, or even join the Bogleheads board, where literally anyone else is welcome.
It’s very simple. Society shuns nasty people. And crazy people. And especially nasty crazy people.
But on the bright side, I guess this moves you up a notch on your list of the top ten greatest investment experts.
Everything is about Rob Bennett and VII.
“But on the bright side, I guess this moves you up a notch on your list of the top ten greatest investment experts.”
I think Rob already ranked himself above Bogle, so he didn’t really move up a notch.
you won’t be allowed anywhere near his funeral. Any more than you were allowed to attend any Bogleheads conference, or even join the Bogleheads board, where literally anyone else is welcome.
Because I insist on recognition of my right to post honestly re what the last 38 years of peer-reviewed research teaches us all about how stock investing works in the real world.
That makes a lot of sense, Anonymous.
Truly outstanding!!!
Crazy, Nasty Rob
Everything is about Rob Bennett and VII.
It’s my view that everything is about what the peer-reviewed research says. I picked that one up by reading the writing of one John Bogle, a widely recognized giant in this field.
What a crazy and nasty guy I have become.
Agenda-Pushing Rob
I think Rob already ranked himself above Bogle, so he didn’t really move up a notch.
What I say is that my work completes Bogle’s work by making it effective in the real world.
Buy-and-Hold is a numbers-based strategy. He developed it before Shiller published his “revolutionary” (Shiller’s word) research findings of 1981. And in the 38 years since, Bogle has never updated the Buy-and-Hold strategy to reflect the Nobel-prize-winning research showing that a valuation adjustment must be made to every calculation. So all of the calculations generated by the Buy-and-Holders are in error!
Huh? What the f?
The purpose of investment advice is to help people, not to ruin their lives. If we were all thinking clearly, there wouldn’t be one voice of dissent to my proposal that we open every discussion board and blog to honest posting re the last 38 years of pee-reviewed research by the close of business today.
I mean, come on.
True Boglehead Rob
“It’s my view that everything is about what the peer-reviewed research says. I picked that one up by reading the writing of one John Bogle, a widely recognized giant in this field.”
Even at a funeral%
When Richard Nixon dies, was there any mention of Watergate? It would seem to me that it would be pretty darn hard to discuss the man’s life without ever raising the subject.
I would like to think that there was also mention of him opening relations with China and expanding the Great Society programs and getting us out of Vietnam and taking us off the gold standard and winning reelection is a landslide. Those things were part of the RIchard Nixon story too. But I don’t see how anyone could just leave out Watergate when telling the story of Richard Nixon’s life.
I think it would be fair to say that Bogle’s failure to stand up to Linduaer when I and a number of others implored him to take effective action may even up causing millions of people to suffer failed retirements. Are we showing the proper respect to those millions of people if we talk only of the many great things that Bogle did and fail to even mention his failure to stand up to Lindauer when he could have helped millions of people by doing so. The lives of those millions of people matter too, in my assessment. I aim to do right by them as well as to do right by my dear friend Jack Bogle.
Rob
“I think it would be fair to say that Bogle’s failure to stand up to Linduaer when I and a number of others implored him to take effective action may even up causing millions of people to suffer failed retirements.”
No, that is not fair to say. If it was, the majority of people would agree with you. You can’t even produce one single person who agrees with you. Which means your statement is not only unfair, it’s the deranged raving of a bitter lunatic. Who has been rightfully shunned by society.
There have been hundreds of people who have agreed with me. Bogle agreed with me. I learned about the error in Greaney’s study by reading Bogle’s book. Bogle said in his book that reversion to the mean is an iron law of stock investing. If reversion to the mean is an iron law, there ain’t no way in Gods green earth that the safe withdrawal rate is the same number at all valuation levels. Reversion to the mean pulls returns down when valuations are at high levels. So the safe withdrawal rate is a lower number at times of high valuations than it is at times of low valuations or moderate valuations, according to John Bogle.
What I haven’t been able to produce is people who will continue saying that they agree with me in the face of your criminally abusive acts of terror. I believe that some people will work up the courage to hang in there in the days following the next price crash, when we will be able to see that the millions of people whose lives have been destroyed include friends of ours and neighbors of ours and co-workers of ours and fellow community members of ours. When it is no longer possible to turn a quick buck pretending that Buy-and-Hold is a real thing, we will all be able to move forward in our understanding of how stock investing works in the real world.
We’ll see, right?
I certainly wish you the best of luck with it, in any event. I hope that that helps at least a small bit.
Social Outcast Rob
“There have been hundreds of people who have agreed with me.”
That is what you claim, with selective editing of comments, yet not a single person will come here on a regular basis in support of you.
Wade Pfau worked with me for 16 months researching these matters in preparation for publishing the paper that we co-authored in a peer-reviewed journal. He declared flatly at the end of that process that: “Yes, Virginia, Valuation-Informed Indexing works!”
Will your threats of career destruction continue to sway him when he is called to testify at your trial for financial fraud? I have a funny feeling that they will not.
But we will find out together in days to come, no?
I wish you the best of luck with it. But that’s as far as I can go. I mean, come on.
Cautious Rob
Wade doesn’t talk to you and he said his job was never threatened.
Here’s what he said in the days before he was threatened:
A) Academic Researcher Wade Pfau’s Statements Showing Interest In and Confidence in Rob Bennett’s Work
1) “I do cite you and John Walter Russell in my paper as the earliest and strongest advocates of this approach [New School safe-withdrawal-rate research].
2) “Are you aware of Shiller offering asset allocation advice based on PE10? …. If you read Rob Bennett’s stuff carefully, I think he did provide an important contribution in terms of describing a way for PE10 to guide asset allocation for long-term conservative investors. I also think he was right on the issue of safe withdrawal rates.” — Posted at the Bogleheads Forum discussion board.
3) “I am also extremely grateful to Rob Bennett for motivating this topic and contributing his experience and encouragement.” — Written in Acknowledgments section of Wade’s breakthrough research paper.
4)”You deserve much of the credit as the whole idea of Valuation-Informed Indexing belongs to you.”
5) “I definitely need to cite some of your work as the founder of Valuation-Informed Indexing, as I have not found anyone else who can lay claim to that. Shiller pointed out the predictive power of PE10 but never discussed how to incorporate it into asset allocation, as far as I know.”
B) Academic Researcher Wade Pfau’s Statements on the Superiority of Valuation-Informed Indexing Over Buy-and-Hold
1) “What you see in the top part of the graph for each year is the amount of wealth accumulated after 30 years for someone following Buy-and-Hold against someone following Valuation-Informed Indexing….Valuation-Informed Indexing provides more wealth for 102 of the 110 rolling 30-year periods, while Buy-and-Hold did better in 8 of the periods.”
2) “I will take steps in my final paper to test a wide variety of assumptions about asset allocation, valuation-based decision rules, whether the period is 10, 20, 30, or 40 years, lump-sum vs. dollar-cost averaging, and so on, and to show that the results are quite robust to changes in any of these assumptions.”
3) “Any data mining that I am doing is in favor of buy-and-hold, not in favor of market timing.”
4) “The findings for “market timing” are so robust anyway, that it hardly matters how we do it.”
5) “The maximum drawdown from market timing is much less. That is how far the portfolio drops from past highs to current lows. The Buy-and-Holder once experienced a 60.96% drop, whereas the worst drop for market timing was 24.16%.”
6) “Market timing provides signficantly higher returns at a comparable level of risk.”
7) “The market timer enjoys a far less risky strategy.”
8) “On a risk-adjusted basis, market-timing strategies provide comparable returns as a 100 percent stocks Buy-and-Hold strategy but with substantially less risk. Meanwhile, market timing provides comparable risks and the same average asset allocation as a 50/50 fixed allocation strategy, but with much higher returns.”
9) “If everyone increased exposure after a market fall and vice versa, then this would dampen out the big swings in the market aggregates, and we might get shallower boom/bust cycles.”
10) ““‘I’m excited about this, as depending on what you have already done, I think I can design a study using the Shiller data to provide historical simulations of Valuation-Informed Indexing strategies against fixed Buy-and-Hold strategies and also lifecycle strategies (declining allocation to stocks as one ages). If Valuation-Informed Indexing consistently outperforms fixed and lifecycle strategies, then the proof is in the pudding so to speak. Given how well valuations help to explain withdrawal rates, I think there is a lot of potential for this topic.”
11) “Yes, Virginia, Valuation-Informed Indexing Works!”
12) “It makes complete sense to have an equity allocation that is in some way flexible. Having a completely inelastic demand for equities is a bit bonkers; no-one acts that way with life’s other important commodities.”
13) “I wrote up the programs to test your Valuation-Informed Indexing strategies against Buy-and-Hold, and I must say that the results look very promising…. I am quite excited about the findings so far. As you say in the podcast, Valuation-Informed Indexing should beat Buy-and-Hold about 90 percent of the time, and I am getting results that support this for various strategies.”
14) “I have been toying with the idea of sending the paper to the Journal of Finance, which is the most prestigious journal in academic finance.”
15) “Now that I am accounting for risk, I am even more amazed by how well Valuation-Informed Indexing works.”
16) You shouldn’t be too excited with great wealth accumulations if they happened due to unusually high valuations, and low wealth accumulations shouldn’t be as scary if valuations are also quite low.”
17) “My idea is to show many different tables with results over the whole period for returns and risks. Valuation-Informed Indexing always provides more returns for often less risk.”
18) “No matter what I try, Valuation-Informed Indexing will still perform better in 85-95% of cases for 30 years.”
19) “I have a new figure for showing this as well. And a nice figure showing the outperformance percentages across rolling periods of lengths between 1 and 40 years. I think it is all quite persuasive.”
20) “You haven’t seen anything yet! This was just the secondary study. I’m still working on the main one!”
C) Academic Researcher Wade Pfau’s Statements of Incredulity That He Was the First Academic Researcher to Examine the Valuation-Informed Indexing Strategy
1) ” I know that there is an extensive literature about the predictability of long-term stock returns dating back to Campbell and Shiller’s work in the mid-1990s. I also know that there is an extensive literature about short-term market timing strategies…. But my question is about LONG-TERM market timing strategies. In other words, using market timing over periods of at least 10 years to obtain better returns than a Buy-and-Hold strategy. The literature seems slim.”
2) “Let me just explain a bit more why I posted about this here. Valuation-Informed Indexing has had critics for years, but until Norbert did it in 2008, nobody seemed to have provided a serious investigation of it. I just couldn’t understand why. And that bothered me.”
3) “Two papers by Fisher and Statman are still all I can find that provide evidence against long-term market timing.”
4) “I’m so confused by why Fisher and Statman didn’t consider risk in their idiot switching tests. Valuation-Informed Indexing is much less risky by pretty much any standard I consider. I must wonder… did I make a mistake somewhere? Why haven’t academics already published research about this?”
D) Academic Researcher Wade Pfau’s Statements on the Dangers of the Conventional Retirement Planning Advice
1) “The traditional approach to retirement planning (as described on pages 10 and 11 of The Bogleheads’ Guide to Retirement Planning, for example) is counterproductive and possibly damaging.”
2) “Retirees now frequently base their retirement decisions on the portfolio success rates found in research such as the Trinity study…. This is not the information that current and prospective retirees need for making their withdrawal rate decisions.”
3) “This article provides favorable evidence based on the historical record for long-term conservative investors to obtain improved retirement planning outcomes (lower savings rates, higher withdrawal rates) using valuation-based asset allocation strategies.”
4) Wade sent me a link to an article in Business Week that was published more than eight years after my post pointing out the errors in the Old School retirement studies and which he characterized as “quite sympathetic to the point you were trying to make all along”.
5) “Though I was only trying to do an Old School safe-withdrawal-rate study, all that I ended up doing was showing in a different way what you had been saying all along: the safe withdrawal rate changes with valuations.”
6) “Valuations are the driving factor. ”
7) “This is similar to your drunk driving analogy, which I agree with.” The discredited but uncorrected retirement studies find that in most circumstances a 4 percent withdrawal rate provides a huge cushion for the retiree using it. However, in each of the three cases in history when stocks reached insanely high price levels, retirements using a 4 percent withdrawal came within a whisker of failing. To say that this shows that a 4 percent withdrawal is “100 percent safe” (these words are used in the Greaney study) for a retirement beginning at a time of insanely high price levels is like saying that driving drunk is “100 percent safe” because 97 sober drivers drove their cars 20 miles without incident while 3 drunk drivers were paralyzed for life in car accidents but did not die. The fact that 4 percent only worked by a whisker in the cases in which valuations were high at the beginning of the retirement shows that a 4 percent withdrawal is high-risk at times of high valuations, not that it is “100 percent safe.”
8) ” Actually, this issue shouldn’t really even be all that controversial. It’s just common sense that the probabilities from the Trinity study shouldn’t be interpreted as forward-looking probabilities for new retirees.”
9) Naturally, I am finding that Valuation-Informed Indexing can allow you to reach a wealth target with a lower savings rate, use a higher withdrawal rate, and also have a lower “safe” savings rate, than a fixed allocation.
E) Academic Researcher Wade Pfau’s Statements Showing His Concerns that Continuing to Report Honestly on the Investing Realities in the Face of the “Hostile Environment” for Doing So Created by Buy-and-Holders Would Harm His Career
1) “I was trying to pay tribute to your accomplishments in what I knew would be a hostile environment.”
2) “Valuations and long-term investors is a somewhat controversial topic.” Wade posted these words to his blog in October 2011 as his explanation of why he was abandoning his plan of doing further research on the superiority of Valuation-Informed Indexing strategies over Buy-and-Hold strategies. He had told me in earlier days that “You ain’t see nothing yet!” when I praised his breakthrough research in this area. After his flip to the dark side, Wade removed the page containing this blog entry from his site.
3) “We have both read and met to discuss your paper. Unfortunately, we did not find the paper’s incremental contribution to the academic finance literature, assuming the analysis proved to be correct, rose to the level that we are seeking for papers in the JFR. Thus sending the paper to a reviewer would be inefficient.” These words are from an academic journal’s “desk reject” of Wade’s breakthrough research.
4) ) ““ I was discouraged when I first received the “desk reject” by the editors of the same journal that published the Fisher and Statman paper. I realized that I didn’t have a chance with one of the top journals.”
5) “I think I should stay publicly quiet for a while, as I really don’t want anyone sending messages about any topics to officials at my university.”
6) I don’t want them [the Goons] working behind the scenes to derail me.”
7) “I did warn the editor of the Journal of Financial Planning that they may receive some ‘hate mail‘ after I mentioned your name in the safe savings rate paper.”
Selective editing. Where are the quotes about the harm you caused him? Where is quote where he said you were wrong about John Greaney? Where is the quote refuting the job threat?
Nothing that he said as a result of your threats counts.
Rob
Why should we take your word for that? We have never seen a threat and no one else will confirm that there was any threat. Yet Wade confirms he was never threatened.
The way that it works is that he will be called to testify at your trial and he will be put under oath. Are you willing to accept what he says when he is put under oath when it agrees with scores and scores of things he said over a 16-month time-period over a small number of things that he said after a gang of internet Goons threatened (with Jack Bogle’s implicit approval) to get him fired from his job if he continued doing honest work in this field?
Or, if you don’t want to wait, you could just go to Greaney’s site and check whether the retirement study posted there contains an adjustment for the valuation level that applies on the day that the retirement begins. Shiller published his research showing that valuations affect long-term returns years ago. It was written up in all the papers. He wrote a book describing his findings (Irrational Exuberance) and was awarded a Nobel prize for his “revolutionary” (his word) work. If valuations affect long-term returns, then it is obviously not possible to calculate the safe withdrawal rate accurately without taking valuations into account.
If the study does not contain a valuations adjustment (it does not), then you know that the study is in error. Ask yourself how a study that people are using to plan their retirements could remain uncorrected 38 years after the research needed to understand that it is in error became public knowledge. It would take a mountain of funny business for that to become a reality, no? Then go back and compare the scores of statements that Wade Pfau made in the days before he was threatened and compare them to the few he made in the days after he was threatened and you will understand why studies of this sort still exist today.
There was a time when people sincerely believed that Buy-and-Hold was real, that it was a model that could help us all understand how stock investing works that could help people invest more effectively. We learned in 1981 that that is not so. But the people who advocated the model suffered cognitive dissonance because the model had become so important to them and were not able to intellectually process how they had made their mistake. The cover-up had gone on for many, many years before Wade Pfau wrote to me and asked me to work with him to prepare research showing that Valuation-Informed Indexing is the superior strategy. So, when he presented our research to the Bogleheads Forum, a number of community members reacted positively and a number entered complete freak-out mode.
We have as a society been trying to make the transition from Buy-and-Hold to Valuation-Informed Indexing for 38 years now. Wade tried to help us (just as I tried to help us in earlier days — he got the idea from discovering my work). You Goons tried to destroy his career because you do not want this advance to take place. I believe that you are fighting a losing battle. Millions of people will be able to see clearly the pain that Buy-and-Hold always caused in the end in the days following the next price crash and they will be more open to learning what the last 38 years of peer-reviewed research teaches us re these matters and we will all move ahead in our understanding at that time. And we will of course all be able to take advantage of Wade Pfau’s contributions and of my contributions at that time because you Goons will be sitting in prison cells at that time.
I hope that helps a small bit, my dear Goon friend.
Rob
“Huh? What the f?”
That’s what people say when they read your posts.
I think it’s true that many do indeed do that, Anonymous. If I could go back in a time machine to when I was 45 (the age I was on May 13, 2002) and then read one of these posts that my age-62-year self wrote in the year 2019, I think that would be my reaction. The story of what has gone down over the past 17 years is as crazy as all get-out. But it’s an important story. It’s a story that very much needs to be told.
I don’t know how much you know about psychology. I don’t know very much, I took a few courses and read articles about it from time to time, that’s all. Everyone has heard of Freud. He changed the world. Not all of his ideas are 100 percent accepted today. But everyone who works in the field must learn Freud. His work is the foundation of this discipline that employs hundreds of thousands of people and which affects every last one of us at one time in our life or another. What do you think of the “Projection” concept? Somebody accuses another person of something not because the other person has done the thing but because the person making the accusation has inclinations in that direction. Huh? What the f? That’s pretty darn weird stuff. It’s not intuitive that things would work that way. The normal expectation would be that someone would accuse another person of doing something because there is evidence that the other person did that thing. This projection concept argues that there can be very strange motivations driving human action. Freud taught us important things about how the human being operates in this world. He advanced knowledge by pointing us to some important truths.
That’s what Shiller did. I point out over and over and over again that Shiller describes his insights as “revolutionary” in the subtitle to his book. His ideas really are revolutionary. They are shocking to the pre-1981 mind, which is the Buy-and-Hold mind. The Buy-and-Holders presumed that investors are trying to maximize personal profit when they set stock prices. That sure seems to make sense. People want money for thousands of reasons. Why wouldn’t they act to maximize profit? If they did act to maximize profit, then they would collectively consider every bit of evidence bearing on what the price of stocks should be when setting the price of stocks. The market would be “efficient.” No investor would be able to do a better job than the market as a whole at identifying the true value of stocks at any point in time. Timing would not work. Investors could count on the number on their portfolio statement to represent something real and lasting, something rooted in economic realities. If that number showed that you were on track to meet your retirement goals, then it would indeed be so. That’s Buy-and-Hold.
Shiller said something very different. He said that investors are human and therefore not entirely rational. Investors at times become highly emotional. When they do, they do not act in their self-interest. They do crazy, self-destructive things. Their irrational exuberance causes them to set prices at crazy places where the number on the portfolio statement is not at all reflective of the long-term realities, where using that number to decide when to hand in a resignation to a high-paying corporate job would cause the investor to suffer horrible life setbacks in years to come, where the collective craziness would cause an economic contraction or even a great depression when the time came when the market had to set prices properly again by crashing them (because the investors making up the market refused to exercise price discipline and thereby to set prices properly without a crash and an economic crisis).
Shiller changed the world, as Freud did before him. He showed us how our emotions play a role in the setting of the stock price and why we need to take the role of emotion into account in every strategic choice we make as investors. He helped us. We should be celebrating his work at every discussion board and blog on the internet. We should be trying to mine new insights out of it so that we can live better, richer lives in the future than we are able to live today. To ban discussion of the implications of Shiller’s Nobel-prize-winning research is like banning the use of electricity. If we banned the use of electricity, we would all suffer. The discovery of electricity liberated us all to live better lives. So did Shiller’s amazing research findings. We need to be making greater use of them.
The problem that we are facing as a society is that we did not always have Shiller’s amazing research findings available to us. There was a day when Buy-and-Hold looked like the real thing and we built an entire industry around it. The people who advocate Buy-and-Hold strategies to investors feel highly threatened by the discussion of Shiller’s insights. If the last 38 years of research in this field is legitimate, they have been getting it all wrong for years now. They will end up looking foolish. They may get sued in civil proceedings by investors who have suffered losses because they offered bad advice. In extreme cases, they might even go to prison for financial fraud. It’s a bad scene.
What to do?
Some of us are blissfully unaware of the far-reaching implications of Shiller’s work. That group just continues preaching Buy-and-Hold and thinks no more of it.
Another group possesses at least a dim understanding that this Shiller fellow did some important work. People in that group drop hints from time to time as to how investor emotion might influence things. But, when they see investors who follow Buy-and-Hold strategies getting angry because they say scary things, they back off and wait for a time when exploring Shiller’s ideas will not cause so much damage to their own careers.
I say what I believe. Period.
I acknowledge that the Buy-and-Holders offered many amazing insights of their own. That’s part of our history and I certainly don’t see that any benefit would be obtained from denying that part of the story But I do not hold back from pointing out ways in which the continued promotion of Buy-and-Hold will hurt us all if it turns out that that Shiller fellow is on to something. I made friends with a lot of the people at the old Motley Fool board. Those people used Greaney’s retirement study to plan their retirements on a daily basis during the years when I posted actively at that board. Thousands of friends of mine are likely to see their lives ruined because of the errors in his study that have remained uncorrected for the 17 years since he learned about them. Criminally abusive tactics have been employed by Greaney’s Goon friends to keep the word from getting out to the people who need to know about the errors in the study (which is every last one of us). I am outraged and horrified by this reality. So I do what I can to expose it.
The ordinary thing would be that every last person on the planet would thank me for discovering the errors in the study and for pointing them out. Including Greaney.
That’s obviously not the way it played out. So we are in this strange place instead.
I cannot commit felonies. I love my country. It is not in me to break its laws, certainly not the ones important enough to be classified as felonies. So what you Goons want of me is 100 percent out. It has been a non-starter from Day One. It is just not in the cards.
I am open to absolutely anything else. Anything that is on the right side of the felony line, I am in on in three seconds and you won’t have to ask a second time. Anything on the wrong side of the felony line, I won’t even look at. Not for 17 years. Not for 17 billion years. That’s me.
Where you stand is that you are looking at a long prison sentence beginning in the days after prices crash. I would be happy to let you out of the prison sentence in exchange for you helping me to get the word out about the far-reaching implications of Shiller’s Nobel-prize-winning research to every investor alive on the planet. I think you would be happy to agree to that deal if only I could offer it. But I obviously am not able to offer it. It is your jury that will decide the length of your prison sentence, not me. So my hands are tied re that one.
I have offered to do the best that I am able to do. I can tell people about cognitive dissonance, I can explain to people that Greaney follows Buy-and-Hold strategies himself and personally believes that a 4 percent withdrawal is safe. I can point out that we had a responsibility to rein in the abusiveness when we saw it and so it was not you Goons alone that caused the problem. I can explain why I believe that the Greaney study and all the other Buy-and-Hold studies were an advance over the retirement analyses that came before them (Peter Lynch once wrote that the safe withdrawal rate was 7 percent — it was the Trinity study that helped him to see his mistake). I can say that the Buy-and-Holders are good and smart people and that we all should be grateful for the many ways in which they advanced our understanding of how stock investing works. I can point out that there would be no Valuation-Informed Indexing had Buy-and-Hold not come along before it to set the foundation for the first true research-based strategy.
Those things I can do. I cannot say that Greaney’s study contains a valuation adjustment. Those are the realities we face.
All of the nastiness is of course as crazy as all get-out. Learning how stock investing works in the real world helps each and every one of us to live a better life. This stuff is all good. It is not possible for the rational human mind to imagine any way in which opening every investing site on the internet to honest posting could do harm to a single soul. But the Buy-and-Holders feel very, very, very threatened. That’s a reality too. We need to do what we can to help them adjust. It is their fear of what this amazing advance for the human race will mean for them that is causing all the craziness that we see before us.
I am happy to do anything in my power to help ease the pain of the transition. I am not willing to travel to the wrong side of the felony line. I know with 100 percent certainty that that cannot be the answer here. It is because good and smart people hesitate to speak up and to do what they know is right that we are all in the mess we are in today. So having one more of us hesitate to speak up is surely not the answer. Kindness is the answer. I can agree to that one. But the kindness must be mixed with a measure of honesty. We need to permit enough honesty to allow millions of middle-class people to learn what the last 38 years of peer-reviewed research teaches us all about how stock investing works in the real world.
Freud shocked people in the early days. People got over it in time. All good things are shocking when they are new. There will come a day when the idea that valuations affect long-term returns and that valuation adjustments are required in retirement studies will not be so shocking anymore. The more we talk about the new ideas, the less shocking they will seem. It is not talking about them that makes them seem shocking, not talking about them. Talking about them over time makes them become familiar and reduces all the craziness that we have seen over the first 17 years of our discussions. Permitting honest posting will normalize the discussions.
You know when lots of people will be saying “Huh? What the f?”? When they see 50 percent or more of their life savings disappear into thin air. That’s going to cause a reaction. When millions of people are left wondering how it is that their lives were destroyed by following the “experts,” I will tell them the story of how the experts were taken in by an idea (that the market is efficient) that was never supported by the peer-reviewed research but which was never anything more than an assumption that became popular many years ago among economists. I will tell them that I believe that it is Shiller who is right, that investors really are humans and humans are emotional and thus the market is not efficient at all and that stock prices are often the product of irrational exuberance rather than of reason and that they need to make the necessary adjustments to the numbers on their portfolio statements when that happens.
The situation is crazy. But it is a good crazy. When we all lose a good portion of our retirement savings, we are going to have to come to terms with what happened. We cannot just give up because we made a mistake and it hurt us. We are going to need to brush ourselves off and get back on the bicycle. The purpose of my work is to help us do that. Sometimes crazy things happen in this big old goofy world of ours. We cannot always just ignore the craziness and walk on. Sometimes we need to come to terms with the craziness. When Greaney advanced his first death threat on the evening of August 27, 2002, that was truly crazy stuff. A good number of us elected to ignore that craziness, to just act like it had not happened. So the craziness did not stop but instead spread and grew worse over time. And here we are.
Permitting honest posting on the last 38 years of peer-reviewed research will not make us more crazy. It will make the craziness go away. Knowing how stock investing works in the real world helps us all. We need to stop being so crazy as to deny ourselves the benefits of that deeply normal and healthy and smart and good and life-affirming course of action.
My sincere take.
Crazy (But Maybe Not!)Rob
Rob,
I don’t know if it is mental issues or if you are just a nasty person, but when a person dies and you can’t even stop promoting your own agenda over the top of honoring a person, or even just staying silent on your opinions for just one day, then you have something seriously wrong with you.
I see it very differently, Anonymous. I love John Bogle. I knew that there would be a price to pay if I spoke up about the Linduaer matter at the time when speaking up about it could do a great deal of good for my friend John Bogle. My love for the man helped me to work up the courage that I needed to stand up for my friend.
I think that a big part of the reason why you want to cover up his failure to deal with the Linduaer matter now is that you failed to stand up for your friend back in the day when he needed you. I am proud to say that I was on Bogle’s side when he needed his friends on his side.
Does it make me sad that his failure to stand up to Lindauer is now something that is on his record and can no longer be changed? Of course I am sad. But I don’t think that being dishonest about the choices he made is the answer. When I am honest about Bogle’s failure to take action on the Lindauer matter, that gives me credibility when I praise him to the skies re 50 other things that he really did that enhanced people’s lives in very important ways.
I don’t need to lie about Bogle to rank him as the second most important investment analyst in history. I find your suggestion that the only way to say anything good about the man is to start out by going into liar mode is insulting to him. His accomplishments are real and numerous. He screwed up big time re the Lindauer matter. Both things are so. Let’s just be charitable in our hearts and assume that if he could come back and do it over, he would play it very differently, and leave it at that.
It was telling lies that put Bogle in circumstances in which he was afraid to deal with The Linduaer Matter in the first place. Telling more lies is not the path out of the mess. Honesty combined with charity is the path to a better place. Bogle was a flawed giant. That’s the reality. That’s an HONEST statement of the reality, which is the sort of statement of the reality that the man merits from his true friends.
My best wishes to you, Goon friend.
Bogle Honoring Rob
“I see it very differently”
Yes, that’s the problem. You stubbornly, belligerently refuse to give two shits about anyone else’s thoughts or feelings. In short, nastiness. Which, in combination with your severe untreated mental illness, is what caused you to be shunned.
I care about people’s feelings.
I understand that lots of people like it when the experts jigger the numbers and put out a study that says that they have saved enough to be able to retire even though the reality is that they are nowhere close. That’s Buy-and-Hold. That’s Get Rich Quick. Telling people what they want to hear rather than what they need to hear is a time-tested way to turn a quick buck.
But how will those people feel when their retirements fail? That’s the other side of the story. I don’t think that reporting the numbers accurately and honestly makes me unfeeling. I think it is the more feeling position. I am just caring about people’s feelings both in the immediate moment and in the long term.
Thousands of people have told me that I am the first person who they ever heard talk about stock investing that really was able to make sense of the subject. I have my name on the most important piece of peer-reviewed research published in the last 30 years. Those things tell me that I am on the right track with this honest-posting kick that I am on. It’s not unfeeling (although it certainly upsets Buy-and-Holders). It’s MORE feeling.
My sincere take.
And my best wishes.
Nasty (???) Rob
Hearing what the last 38 years of peer-reviewed research says hurts if you are following a Buy-and-Hold strategy. I get that. Loud and clear.
But would it hurt so much if we had been permitting honest posting re the peer-reviewed research all along? I don’t think so. I think that it is the shock of hearing things that you have never come to terms with that causes a lot of the pain. So I don’t think that the answer is to continue the Ban on Honest Posting. I think we should permit honest posting while also encouraging people to be as kind and loving and warm and charitable as possible. I think that’s the answer. I think that love is the answer in the end. And I think that the truly loving thing is to aim to be both charitable AND honest.
I do wish you all good things.
Nasty, Nasty, Nasty, Nasty (and Loving?) Rob
“I see it very differently, Anonymous. ”
But this is not a dictatorship and you are not a dictator. There are certain standards that we have in a society about honesty and and respect. You speak about honesty, you are not honest. It is not just the lack of proof on your claims. From personal experience you have accused me and other people that I know of threats, which never happened. As to respect, you have slandered well respected individuals, and in the case of John Bogle, you do so wishing 24 hours of his death. You have no capacity to have a reasonable conversation and your a major manipulator. Those are serious characters flaws that cannot be overlooked and they cannot be tolerated.
You want to see it differently so that you can justify your behavior. In the end, a Marlo society can not justify that behavior and will ultimately reject that individual, as you have been.
“I care about people’s feelings.”
No. You only say you do. You’ve been asked before how your wife REALLY feels about how you’ve been spending the last 17 years. You indicated you don’t know, but if she had a problem with it, you wouldn’t change anyway. And this is your wife. If you don’t care about her feelings, you don’t care about anybody’s feelings.
But this is not a dictatorship and you are not a dictator. There are certain standards that we have in a society about honesty and and respect. You speak about honesty, you are not honest. It is not just the lack of proof on your claims. From personal experience you have accused me and other people that I know of threats, which never happened. As to respect, you have slandered well respected individuals, and in the case of John Bogle, you do so wishing 24 hours of his death. You have no capacity to have a reasonable conversation and your a major manipulator. Those are serious characters flaws that cannot be overlooked and they cannot be tolerated.
You want to see it differently so that you can justify your behavior. In the end, a Marlo society can not justify that behavior and will ultimately reject that individual, as you have been.
It will be interesting to see how things play out in the days following the next price crash, Anonymous.
I believe that honest posting re the last 38 years of peer-reviewed research in this field is going to win the day. On safe withdrawal rates. On asset allocation. On risk management. On everything, really. I just am not able to imagine any downside.
I wish you the best of luck with it all, in any event. I hope that that helps at least a tiny bit.
Major Manipulator Rob
No. You only say you do. You’ve been asked before how your wife REALLY feels about how you’ve been spending the last 17 years. You indicated you don’t know, but if she had a problem with it, you wouldn’t change anyway. And this is your wife. If you don’t care about her feelings, you don’t care about anybody’s feelings.
Get Rich Quick feelings are temporary feelings, Anonymous.
You had to click “I Agree” to the published rules of all of the sites to which you have posted before you were permitted to post at them. I think that those rules say as much about who we really are as a people as does out temporary fascination with Get Rich Quick investing strategies. I believe that in the end we are going to need to develop an investment strategy that can be defended without making use of death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs. That’s Valuation-Informed Indexing. It has all the good elements of Buy-and-Hold and it leaves the Get Rich Quick element (the idea that it is not necessary to exercise price discipline when buying stocks) in the trashbin.
It will be interesting to see how it all plays out.
My best wishes.
Non-Caring (Even About His Wife’s Feelings!) Rob
“It will be interesting to see how things play out in the days following the next price crash, Anonymous.”
That is just another one of your canned responses. We have already seen things play out. That is why you have been rejected.
Okay, Anonymous.
I do wish you all good things, in any event.
Rejected Rob