“Valuation-Informed Indexing Completes Buy-and-Hold As Much As It Replaces It. All of the Stuff in Buy-and-Hold That Has Stood the Test of Time Is Incorporated Into the New Model. It Is Only the One “Idea” (That It Is Not Necessary for Investors to Practice Price Discipline When Buying Stocks) That Has Been Discredited by 38 Years of Peer-Reviewed Research That Is Rejected. And Rightly So, You Know? By Rejecting That Horrible, Failed, Useless Idea, We Permit All the Other Ideas in the Buy-and-Hold Project to Shine As All Who Care About These Matters Should Want Them To.”

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

We are so lucky that you are such an expert in investing. I am shocked that your articles aren’t posted everyday on the front page of the New York Times. With the departure of John Bogle, we need to hand you the keys to the Bogleheads Forum and rename it to the Bennettheads Forum. Why even talk about Shiller. He is a hack compared to you.

I don’t consider myself an expert on investing. According to the conventional understanding of the term, I am not one. I did not study investing in school. I have never managed a fund. What credentials do I possess to justify calling me an “expert”? I am some guy with roughly average intelligence who figured out how to get his stuff posted to the internet, nothing more and nothing less.

But you are lucky to have me. I do go along with that one. I am this average-intelligence guy who worked up the courage to advance a post on the morning of May 13, 2002, pointing out the error in the Buy-and-Hold retirement studies. And I didn’t back down when threats were made as to what would be done to me if I continued doing so. I insisted on my right to post honestly. In the event that I am successful in my efforts to open every investing discussion board and blog on the internet to honest posting re the last 38 years of peer-reviewed research in this field, I will change the world in a very, very positive way. I offer no apologies whatsoever. I am honored to have been placed in circumstances in which it became possible for me to change the world in a very, very positive way. I have achieved more in the past 17 years than I expected to be able to achieve in my entire lifetime in the event that everything broke my way. 500 times more.

You talk about changing the name of the Bogleheads Forum. How about keeping the name it has now but living up to that name. One of Bogle’s core principles was that investors should root their investment strategies in the peer-reviewed research. What the research says doesn’t stay the same over the years. Shiller published “revolutionary” (his word) research findings in 1981, research that in time caused him to be awarded a Nobel prize. Those revolutionary research findings change every aspect of the stock investing experience. How about permitting everyone to post honestly re the far-reaching implications of those research findings? Is that a Boglehead idea? It sure seems to me that it is. I learned about the importance of rooting my investment strategies in the peer-reviewed research from John Bogle. Should I betray the man because Mel Lindauer and John Greaney are embarrassed that they got the safe-withdrawal-rate matter wrong? Somehow, I don’t think that I would be being true to my hero John Bogle by playing it that way.

Shiller is not a hack. Shiller wrote the most important book on how stock investing ever published. Shiller merited his Nobel prize. Shiller supplied us all with the giant missing piece of the stock investing puzzle in 1981. We all should be grateful. Are we showing our gratitude when we advance 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 stop the thousands of our fellow community members who have expressed a desire to learn more about Shiller’s insights from doing so? I say “no.” I say that the laws against financial fraud are good and necessary laws and that they should be enforced in a reasonable manner.

Am I in the process of changing the world? I am. I offer no apologies.

I didn’t ask for the job. The world made clear that I would have to take on this job if I wanted to see the vast amount of human suffering that has been caused over the years by the “idea” that it is not necessary to practice price discipline when buying stocks brought to an end. I love my country. So I did what I had to do given the circumstances in which I was placed. Again, no apologies whatsoever. Precisely 100 percent of the evidence available to us today supports the idea that price discipline is required when buying stocks and precisely 0 percent of the evidence available to us supports the idea that it is not necessary for investors to practice long-term timing. We all should be telling people that.

Even those of us who still believe in Buy-and-Hold strategies should be doing all that we can to make every investor alive aware of what the last 38 years of peer-reviewed research in this field says so that, in the event that stocks continue in the future to perform at least somewhat as they always have in the past, the terrible losses that will be suffered in coming days by people following Buy-and-Hold strategies will not be on us. If people know the score and choose to follow Buy-and-Hold strategies anyway, that’s on them. If people suffer losses because we engaged in criminal acts to block them from being able to learn what they want and need to learn, that’s on us.

It’s not that I am so smart. It’s that our system is so smart. Our system is set up so that, even when a large number of people becomes convinced that they know all the answers, others can continue to study and ponder and research to see if they can come up with something better. That’s what happened with Shiller. He came up with something better. Valuation-Informed Indexing completes Buy-and-Hold as much as it replaces it. All of the stuff in Buy-and-Hold that has stood the test of time is incorporated into the new model. It is only the one “idea” (that it is not necessary for investors to practice price discipline when buying stocks) that has been discredited by 38 years of peer-reviewed research that is rejected. And rightly so, you know? By rejecting that horrible,failed, useless idea we permit all the other ideas in the Buy-and-Hold project to shine as all who care about these matters should want them to.

Does it make me a genius that for 17 years now I have devoted myself to exploring how stock investing works in the event that the last 38 years of peer-reviewed research is legitimate research, that price discipline really is every bit as important when buying stocks as it is when buying anything else offered for sale? In a way, it does. I have been able to get a lot of important things right that no one was able to get right before me. That’s good stuff. Genius stuff, if you insist on putting it like that.

But I think that the better way to look at this is to ask — Why are all the others not doing what I am doing? Shiller is not a hack. Shiller knows that valuations affect long-term returns. So why did Shiller not come out with a public statement many years ago saying that the Buy-and-Hold retirement studies are wildly off the mark, that they are going to cause millions of failed retirements in the event that stocks continue in the future to perform anything at all as they always have in the past and that they should be corrected by the close of business today? That’s the weird thing here. I am not super smart and Shiller is not super dumb. But I have stated this obvious truth in clear and firm and bold terms and Shiller has for many years held back from doing so. Huh? What the f?

If you want to know the answer to that one, look at your own behavior. Death threats? Demands for unjustified board bannings? Thousands of acts of defamation? Threats to get academic researchers fired from their jobs? None of that stuff belong in discussions of stock investing. People who grew up in the United States have never seen the behavior that has been exhibited by you Goons on a daily basis for 17 years now. It scares them. They would expect that people who engaged in such behavior would be placed in prison cells so that the millions of us who have a legitimate interest in learning more about how stock investing works would feel free to do so. But as of today you remain free. That’s the problem. That’s what needs to change.

Will it change in the days following the next price crash? I believe that it will. I think that this is a a great country, I believe that many of us love this country and will come to its defense once we are able to see the flesh-and-blood realities of the economic crisis that Buy-and-Hold will have led us to once again, just as it has on every early occasion on which this “strategy” became popular. We will just have to wait and see how it all plays out.

I naturally wish you the best of luck in all your future life endeavors, in any event. I hope that that helps at least a tiny bit, my dear Goon friend.

Relentless Rob