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:
Your 10% number is totally made up. You have taken selected comments and put them on you website as if that is confirmation that you have supporters. However, if people dig deeper, they will see just the opposite. Wade Pfau, for example detailed all the harm you caused him and will no longer communicate with you. The only comments on your board are from a few critics who check in from time to time. It looks like I am the only one that routinely comments here. All that talk above about people telling you various things is all made up. Other than the critics, there is no one else talking to you. It is all imaginary and you know it. In fact, when pressed on this topic, you blame some nameless “goons” as you call them and then tell any critic that they are going to prison. You then say that it doesn’t matter because the stock market will crash and then all these people will be coming to you with $500 million in settlement payments or in return for all your “valuable insights”.
Shiller was awarded a Nobel Prize in Economics, Sammy. Fama (whose research is the foundation stone for the Buy-and-Hold strategy) was awarded a Nobel prize on the same day. The front-page article in the New York Times that reported on this noted how odd is was that two people saying opposite things about how stock investing works were awarded Nobel prizes on the same day because it is not possible that both of them are right. If Fama is right, Shiller is wrong; and, if Shiller is right, Fama is wrong.
We all need to know which it is. Our retirements are riding on this question.
Had Shiller published his research in 1961 rather than in 1981, we all would be Valuation-Informed Indexers today. Unfortunately, it did not happen that way. There was a time when all that was known was what Fama’s research showed (that short-term timing never works) and when Shiller’s findings (that long-term timing is required for those seeking to keep their risk profile constant over time) were not yet available. So an entire industry was built around Buy-and-Hold and now there is a great deal of institutional resistance to exploring the far-reaching implications of Shiller’s research findings.
Wade Pfau and I worked together for 16 months. Those were the happiest days of his life. We co-authored research that was published in a peer-reviewed journal. He was so excited about our findings (we showed that investors who switch to Valuation-Informed Indexing can thereby reduce the risk of stock investing by nearly 70 percent) that he told me that he was giving thought to submitting our research to the most prestigious journal in the field. Yes, he became afraid of how you Goons could damage his career and stopped communicating with me. Not because that is what he wanted. Because that is what he felt he needed to do to be able to continue to work in this field.
The question is — Is that a good thing? I think that it is a very bad thing. I think that we all should be learning everything that Wade Pfau and lots of other researchers would be happy to teach us if they felt free to explore these questions openly and publicly and in great depth.
The Wade Pfau incident was not an isolated incident. I have seen the same general story play out on numerous occasions. Rob Arnott told me that he has had similar experiences. He told me that he believes that my work is “solid.” But he also told me that he is afraid to speak out too strongly because researchers who were planning to do work on his investing beliefs were taken aside and told that it would be a career-limiting move to do so. This needs to change if we all are to advance in our understanding of how stock investing works in the real world.
My best wishes to you.
Rob
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