“The Shift from Buy-and-Hold to Valuation-Informed Indexing Is the Personal Finance Equivalent for the Cure for Cancer. We Have the Cure in Our Hands. We Have Tested It and 100 Percent of the Evidence Available to Us Tells Us That the Cure Works. But the People Who Make Money in Cancer Treatment Centers Don’t Want Millions of People to Learn About the Cure and Have Engaged in Criminal Acts to Keep Knowledge From Advancing.”

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 seen a long list of people that have investigated your claims of death threats. Not one person could find any proof. The burden of proof falls on you as you are the only one making the claim.

Will my ability to meet the burden of proof change in the days following the next price crash? That’s the question on the table today.

There are people who don’t like it that there have been death threats but who are afraid to speak out today because they have seen what happens to people who speak honestly re these matters. I understand where those people are coming from because I was essentially one of them myself from May 1999 (when I put my first post to the Motley Fool board) until May 2002 (when I finally worked up the courage to say publicly that I did not believe that Greaney’s retirement study contains an adjustment for the valuation level that applies on the day the retirement begins).

The thing that caused me to work up the courage to cross the line was the smear campaign that Greaney led against Wanderer when Wanderer said that he thought that there were circumstances in which it could be a good idea to invest in real estate. Wanderer was our best poster and I loved that board community. So I could no longer live with myself if I didn’t do something. So things had reached a point where the cost of remaining quiet was greater than the cost of posting honestly. So I crossed the line.

We need to see that happen with lots of other people. Most people don’t even know who Wanderer is. So the smear campaign that Greaney launched against Wanderer is not going to bring other people around in the way that it brought me around. But losing 50 percent or more of their retirement savings may do it. That will mean that people’s hopes for their financial future will be crushed. People will be reading about how tens of thousands of businesses have failed. They will be reading about how millions of workers have lost their jobs. They will be seeing political frictions get worse and worse. I believe that all that may bring people around. I believe that in the days following the next price crash we may be seeing millions of people experience the sort of conversion experience that I experienced in the days following Greaney’s smear campaign against Wanderer in February 2002.

We are not going to see millions flip overnight. But within a few months we might see enough flip that we get the percentage of the population that believes that Shiller’s research tells us something important about how stock investing works move from 10 percent to 20 percent. That could prove to be a very big change. There are things that the Buy-and-Holders are able to get away with today when the percentage is only 10 percent that they will not be able to get away with when the percentage has increased to 20 percent. So the nature of the discussions will change significantly. As the discussions become more balanced, people will be able to hear both sides of the story. When people are able to hear both sides of the story, conditions will be right for the percentage to go even higher, to 30 percent, and then to 40 percent, and then to 50 percent, and then higher.

It’s an astounding reality that we are only at 10 percent after the publication of 38 years of peer-reviewed research showing that valuations affect long-term returns. That is an amazing reality. There are huge amounts of money to be made offering honest, research-based investment advice. So you would think that there would be many smart and good people rushing in to mine Shiller gold. But we obviously have not seen that. We have seen some rush in. Rob Arnott. Wade Pfau. John Walter Russell. Microlepsis. John Craig. Me. There are others. But that group has just not been large enough to get the job done. We don’t have enough people to turn to for help when we are attacked. And so we self-censor ourselves just so that we can avoid being silenced altogether. And that means that statements put forward by Buy-and-Holders remain unchallenged and as a people we remain in our general ignorance about foundational principles re how stock investing works.

We need to get that percentage up to make significant forward movement. And, once we get it up, that forward movement can come very quickly. Lots of groundwork has been laid over the past 38 years by that vanguard 10 percent. We’ve got the research that we need to make our case effectively. We’ve got responses to every challenge that could possibly be directed at us. We’ve got calculators. We’ve got podcasts. We’ve got graphics. We’ve got everything. We’ve got everything today but the courage to post honestly in the face of the hurricane of abuse that is directed at anyone who dares to speak in a clear and honest way about what Shiller’s research teaches us all about how stock investing works in the real world.

Most people are not terribly interested in theory. Most people are interested only in real-world, practical stuff. Buy-and-Hold failed the intellectual, theoretical test back in 1981. That’s a long time ago. But never in those 38 years have we seen millions of people lose a large portion of their life savings because of Buy-and-Hold. We have not once since 1981 seen a bull/bear cycle come to an end. It is when a bull/bear cycle comes to an end that Buy-and-Hold delivers its most horrible pain. We can point to how Buy-and-Hold has done this in the past, in the Great Depression, in the stagflation of the 1970s, in the near depression that we experienced in the early years of the 20th Century. But there are very few people still alive who personally experienced the Great Depression. There are people who experienced the stagflation of the 1970s but that third Buy-and-Hold Crisis was the least horrible of the four crises that were caused by this theory.

So most people are not alarmed by the mistake at the core of the Buy-and-Hold concept, So even people that go to the trouble to understand that arguments of the Valuation-Informed Indexers are not concerned enough about the mistakes at the core of the Buy-and-Hold concept to take action to get them fixed. The downside of Buy-and-Hold is not clear to people living today because as of this moment in time Buy-and-Hold is telling us that our stock portfolios are worth two times what they really are worth and that seems like a good thing. And the price of speaking out is very high, as my personal experience testifies very strongly. So most people conclude that the prudent thing is to keep it zipped. And as a nation we remain locked in our ignorance of the realities.

Does a 60 percent price crash change that? That question is the entire ball of wax at this point, Anonymous.

I think that a 60 percent price crash that remains in place for a good bit of time is going to change things. I could be wrong. I thought that Greaney’s smear campaign against me would be brought to an end by the site administrator at Motley Fool within two or three days. So I do not have a perfect record when it comes to speculating how things are going to play our re this matter. If you want to say that I am wrong and that a 60 percent price crash will have no effect, you can say that.

But that’s not what I believe. I believe that a 60 percent price crash will cause lots of people to stop and think. And I believe that we only need to get the percentage who have doubts about Buy-and-Hold up from 10 percent to 20 percent to bring about an amazing leap forward in our nation’s understanding of how stock investing works. I think that we are standing on the threshold of one of the most exciting learning experiences that we have ever enjoyed.

I think that the shift from Buy-and-Hold to Valuation-Informed Indexing is the personal finance equivalent for the cure for cancer. We have the cure in our hands. We have tested it and 100 percent of the evidence available to us tells us that the cure works. But the people who make money in cancer treatment centers don’t want millions of people to learn about the cure and have engaged in criminal acts to keep knowledge from advancing. All that we need to advance is a little more courage but we cannot get to first base in our efforts to educate every investor on the planet to the true realities of stock investing until as a people we work up a bit more courage to take on your Goons.

I think that a 60 percent price crash is going to do the trick. But we are just going to have to wait a bit to find out for sure. I naturally wish you the best of luck in all your future endeavors regardless of which way things go.

I am the one putting forward a new idea and so I am the one carrying the burden of proof. In ordinary circumstances, 38 years of peer-reviewed research would be enough to get the job done. These are not ordinary circumstances. Getting stock investing right is so important and this is so lucrative a field that we have powerful forces working against us as a nation as we try to consider these matters. We are going to need a shock to the system to change the conditions on which discussions are held enough for us all to make the trip from the horrible place where we reside today to the wonderful place where deep in our hearts we all want to be tomorrow. I believe that a 60 percent price crash will break down that wall of ignorance and set us free from the Buy-and-Hold Idea that price discipline is not required when buying stocks for ever and ever. But we are just going to have to wait a bit to find out for sure.

I hope that works for you, dear Goon friend.

Burden-of-Proof-Carrying Rob