“We See a Mountain of Gold in Front of Us and It Is Hard to Accept That It Is Real and It Is Hard to Understand Why Everyone Else Is Not Picking Up the Gold That Has Been Sitting There for 38 Years Now.”

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

Let’s talk about real numbers, Rob.

In 2002, you quit your job and stated that you had a nest egg of $400k and annual expenses of $30k. You stated you were invested in i bonds, TIPS and CDs. On many occasions, you quoted a real return rate of 3.5%. In 2005, you stated that your expenses were up to $38k, but that the market was returning 7% real and you would be getting bigger returns than that. After 17 years, you have stayed out of the market, so we know your plan failed. You are a shining example as to why you shouldn’t try to time the market. To this day, you refuse to answer the question as to why anyone should take YOUR advice, given your failed track record.

Like all the other humans, I was given skills that permit me to add value to the world. It is by being compensated for the value that I add to the world with those skills that I am able to cover my costs of living and pursue happiness for myself and my family. Following the principles that I describe in my book “Passion Saving: The Path to Plentiful Free Time and Soul-Satisfying Work,” I elected to leave my safe corporate job to do work that would pay less in the short term but that had the potential to permit me to add much more value and thus earn much more income in the long term.

That plan worked like a dream, Sammy. In the short-term, it worked horribly. I have not earned a penny since I left my job. That’s of course a catastrophe. But look at the other side of the ledger — look at the value that I have added to the world that will bring in compensation in the days following the next price crash. The shift from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance in the history of personal finance.

It changes everything that we once believed we knew about how stock investing works. In the Buy-and-Hold days, we thought that market timing was a bad idea. As a result of our explorations of Shiller’s research findings. we now know that market timing is the key to long-term investing success. The peer-reviewed research that I co-authored with Wade Pfau shows that investors who incorporate market timing into their investment plan can thereby reduce the risk of stock investing by nearly 70 percent! While increasing their lifetime returns! Is that investor heaven or is that investor heaven?

And all of this is rock-solid stuff. Shiller was awarded a Nobel prize in Economics for his work. We should have been talking about this going back to 1981. We haven’t been because the advance is so big that it caused us to experience a large amount of cognitive dissonance. And, as the years have passed, the embarrassment felt by the Buy-and-Holders over making a mistake re the critical importance of market timing has grown to a point where many of them cannot stand the thought of people openly discussing what really works.

What does a society need in circumstances like that? A good journalist to get the word out! That’s what I am! That’s what I do! I am in the process of getting the word out. I wish that I had been getting compensated all along, in which case I would be a multi-millionaire today. But the abusiveness of you and a number of other Buy-and-Holders, which is the only thing holding me back, is not evidence that there is not a mountain of money to be made here. It is evidence that the mountain is so huge that it is hard to comprehend how huge it is.

Did you notice how excited Wade was in the days when he was doing research on Valuation-Informed Indexing? Those were the happiest days of his life. There are thousands of researchers who would like to experience that feeling. And there are thousands of journalists who would like to be writing about this stuff. And there are thousands of investment advisers who would like to be giving the straight story to their clients. And there are thousands of policymakers who would like to be pursuing policies that would help us all avoid economic crises like the one that we experienced in 2008 (that Shiller predicted in a book published in March of 2000). We are looking at good stuff piled on top of good stuff piled on top of good stuff piled on top of good stuff.

What’s holding us back? Why haven’t we cashed in all these mountains of good stuff?

We are afraid. Because we don’t see other people talking about this stuff. We wonder if, given the lack of discussion of the implications of Shiller’s research, we might be thinking about this stuff wrong. Wade told me that he experienced that exact feeling. I experienced that feeling at one time. John Walter Russell experienced that feeling. Everyone who begins pondering these ideas experiences that feeling. We see a mountain of gold in front of us and it is hard to accept that it is real and it is hard to understand why everyone else is not picking up the gold that has been sitting there for 38 years now. It is not the norm in our society for wonderful new ideas not to be widely discussed. But that’s the situation in the investment advice area since 1981. So we are in great need of a journalist to break this one wide open and to help millions of people live better lives by doing so.

And here I am, you know? That’s the job. It’s been a rough patch of road. These 17 years have been hard, hard, hard, hard, hard. I certainly don’t say different. You’ve got me on that one. But look at the asset that I have built up over those 17 years. I am in the process of writing a book (“Investing for Humans: How to Get What Works on Paper to Work in Real Life”) that tells the entire story in great depth. I expect to see that book change the world in a very positive way.

Not immediately. My expectation is that virtually no one will read it for so long as stock valuations remain where they are today. But what about after the next crash? I expect that at that time there will be millions of people who will want to know what happened to most of their life savings. And I will be able to tell them the story they want and need to hear in great depth. And tell them how we can all work together to be sure that nothing like this ever happens again.

That’s my life’s work, Sammy. That’s what I was put on earth to do. I have pulled off something amazing. In ordinary circumstances, I shouldn’t have been able to make one-five-hundredth of the contribution that I have made. Which would of course have meant that I would not have received one-five-hundredth of the compensation that I will receive. I don’t have that money in hand today. I don’t have one penny of it in hand today. But I have the asset that adds to the happiness of millions of people in hand. And I had to be willing and able to give up compensation for 17 years to acquire that asset. So I did what I had to do.

I say that my plan worked beyond my wildest dreams and hopes. I don’t like the way that things played out. If I were king of the world, we never would have seen a single abusive post. But I didn’t create the circumstances in which the things that happened happened and were tolerated at many, many places. All of those circumstances were in place before I came on the scene. My job is to provide people with the information that they need so that we can all work together to change the circumstances that prevail so that we can all live better lives. I am in the process of doing that.

Shiller’s research is important, Sammy. That’s why he was awarded a Nobel prize. I don’t think you are going to be able to hold back the History Train forever. I think you are fighting a losing cause. I would say that it is YOUR plan that has failed. But we are just going to have to wait to see how things play out in the days following the next price crash to find out for certain.

I naturally wish you all the best that this life has to offer a person, dear friend.

Wildly Successful But Poorly Compensated (For Now!) Journalist Rob