Set forth below is the text of a comment that I recently posted o the discussion thread for another blog entry at this site:
Always a victim, aren’t you.
My view is that every last one of us is a victim of ignorance, Anonymous. Humankind was placed in this world not knowing everything there is to know about stock investing (and lots of other things too, to be sure). We struggle along, doing the best we can to see through the darkness. Every now and again some smart and kind soul comes along to enlighten us and to help us to understand things that make all of our lives richer and better. Shiller did that. That’s why he was awarded a Nobel prize for his work.
We don’t always appreciate those efforts immediately. There is something inside us that clings to the darkness we know, afraid to explore the light that we have been blessed with. I vote for moving from the darkness of Buy-and-Hold to the light of Valuation-Informed Indexing. I am a victim of humankind’s ignorance and suspicion and fear. That’s so. But we all are. I am glad that I was placed in circumstances that enabled me to see through the darkness to a superior way to invest in stocks, the first true research-based approach. I do not deny my victimhood but I certainly do not focus on it.
I don’t ask others to feel sorry for me. I ask them to note the conflict between their beliefs about life that caused them to enact laws against threats of physical violence and extortion and financial fraud with their tolerance of the violation of those laws by you and your Goon friends. What are we really about as a people? Is goonishness all we are, is the feeling of comfort we gain from hearing reassurances that a pure Get Rich Quick approach can work so important to us that we have given up for good our admiration for intelligence and decency and progress? Or do the laws that apply in all fields of human endeavor other than the investment advice field signal where we are headed as a people in the investment advice realm as well? I obviously believe that it is the latter possibility that applies.
I am a victim. I was born a human and so I suffer the pains that afflict all the humans. But I don’t whine about it. I point out how we are all victims of Get Rich Quick investment strategies because I want to see us do better in the future. I celebrate human life. It is sometimes necessary to point out how we have messed up to do the work needed to take us to a better place. But the focus is never on the failures. The focus is on the better way to live that we all desire deep down inside. The focus is on the better lives that we will all live in the future, not on our screw-ups of the past. I talk about the screw-ups of the past only because it is those magical words “I” and “Was” and “Wrong” that provide the magic that takes us all to a better place.
I hope that that helps at least a tiny bit, my dear Goon friend.
My best wishes to you.
Life-Affirming (and Corruption Exposing) Rob
“ But I don’t whine about it. ”
Yes you do. You keep talking about what goons, John Greaney, Wade Pfau, Mel, etc have done to you. You have posted about this thousands of times.
That comment reminds me of what Rob Arnott said to me during our e-mail conversation. He said that he thought that my work was “solid,” he had no concerns re the substance. But he said that I sounded like I thought of myself as a “victim.” I address this in a section of my book.
I 100 percent think of myself as a victim re these matters. The clarification that I make is that it is not only me. Arnott is a victim. Bill Bernstein is a victim. Wade Pfau is a victim. Heaven help us all but you Goons are victims. Everyone living in the United States is a victim.
Learning that valuations affect long-term returns is like learning how to harness electricity. We should have enhanced our lives in hundreds of ways over the course of the past 39 years as a result of what we learned from Shiller’s Nobel-prize-winning research. And instead we have been arguing for 18 years whether the Greaney study contains a valuation adjustment or not? What’s wrong with this picture?
You Goons have done a lot of damage to a lot of people. I am not whining about it but I am certainly pointing it out and trying to bring attention to it. That’s what journalists do — we uncover abuses and try to get them corrected. I certainly do not apologize for doing my job. But the purpose is not to complain. The purpose is to open up the possibility for millions of people to live richer lives in the future than they have been able to live in the past. The story has some negative elements to it but the purpose of telling it is a very positive one.
Goon!
Rob
“ I 100 percent think of myself as a victim re these matters. The clarification that I make is that it is not only me. Arnott is a victim. Bill Bernstein is a victim. Wade Pfau is a victim. ”
No, you are the only one sitting around complaining and doing nothing. The others you mentioned are not. You can’t even get a job, let alone finish a book. There are whiners and then there are doer’s.
I DID something of great importance on the morning of May 13, 2002, when I pointed out the error in the retirement study posted at John Greany’s site. That post changed the nature of the discussions held at the Motley Fool board from that day forward. All of your criminal garbage stopped people from talking about the error. You consider that a victory. But the reality is that the change was permanent. A lot of people left the board and never returned after they saw the death threats and all the rest. And those who remained, like you Goons, have never again been able to feel the same about the board project. So that post changed things forever. That’s DOing.
Shiller did something important in 1981, and. going by the laws of the United States, his Nobel-prize-winning research should have changed the investment advice field forever. It didn’t turn out that way. The advance that he achieved was just too big for people’s minds to accept. So Buy-and-Hold has remained dominant for 39 years after it was discredited. But that’s not a situation that can remain in effect indefinitely. We cannot continue as a society if we do not find some means to overcome you Goons and provide millions of investors access to honest and accurate reports re what the peer-reviewed research teaches us all about how stock investing works in the real world. So we have to face up to the Goon problems and overcome it. There is no other way forward.
I am facing it. I am not ducking the question. If everyone who believes that Shiller’s Nobel-prize-winning research is legitimate research faced up to the problem before us, we could overcome it by the close of business today. I cannot make decisions for all the others. But I can be a model for them. I can show them how it is done and invite them to join me. So that is what I do.
I believe that lots of good and smart people will join me in the days following the next price crash and that it will be all downhill sledding from that point forward. We’ll see, you know?
Wish me luck!
Rob
“I DID something of great importance on the morning of May 13, 2002, when I pointed out the error in the retirement study posted at John Greany’s site.”
While I, and others, don’t think you did anything important on that day and also think you are the one in error, let’s set that aside for the moment. THAT WAS 18 YEARS AGO. Get the point? What have you materially accomplished? You haven’t earned an income, you haven’t written a book, you never started a forum or built a side business. Get it?
Say that there is a 1 in 100 chance that I was right in what I said in my famous post from the morning of May 13, 2002, that Greaney truly did fail to include a valuation adjustment in his retirement study. I personally believe that the odds are more like 99.999. in 100. But for purposes of discussion, let’s say 1 in 100.How important would it be for someone to have discovered that error?
It’s the most important discovery in the history of personal finance. There were thousands of people at the Motley Fool board who used the Greaney study to plan their retirement. That can all be documented. We have Post Archives. A failed retirement is a serious life setback. So there shouldn’t be one person in the field who wouldn’t want to see that error quickly corrected.
But that’s the tip of the iceburg! Greaney isn’t the only one who has ever pushed the 4 percent rule. There are hundreds of financial advisors who have done so. It was written up in financial journals as if it were accurate. Thousands and thousands of newspaper articles that purported to help people plan their retirements cited the 4 percent rule. If that rule is in error (and we are not talking a small error, you get a very, very, very different number if you perform the calculation properly), MILLIONS of retirements have been placed in jeopardy. Just about everyone who lives in the United States has been affected in one way or the other by this error.
The most important thing that investment analysts do is to help people plan their retirements. If they can’t get that one right, what the heck can they get right? Did they get asset allocation right? Probably not if they got retirement planning wrong. Did they get risk management right? Probably not if they go retirement planning wrong. That May 13, 2002, post shows that the Buy-and-Holders got it ALL wrong. Every single calculation that they have ever performed is in error.
The Buy-and-Holders believe that the market is efficient. So overvaluation cannot possibly exist. Shiller discredited that belief, he showed that overvaluation DOES exist. If it exists and if the Buy-and-Holders don’t take it into consideration, then the Buy-and-Holders have gotten every calculation that they have ever performed wrong. Some by a little, some by a lot. But every single calculation that they have ever done is in error.
So we need to know whether Greaney included a valuation adjustment in his study or not. This stuff matters. We need to make an effort to get it right.
We have had thousands of people express a desire that honest posting be permitted, as you would expect. So far, so good. But the study has not been corrected to this day. Huh? What the f? As you point out, you Goons have terrorized every board community that has taken up these questions and thereby have committed the biggest act of financial fraud in the history of the United States. Does it matter? Yes, it matters.
Imagine that Greaney could provide a screen shot of the page in his study containing a valuation adjustment. If he could have done that, he would have done it on the afternoon of May 13, 2002. He hasn’t provided a screen shot because there is no valuation adjustment in the study. And he knows it! His behavior shows that he knows that there is no valuation adjustment in his study and that people will lose confidence in the study if they are able to hear criticisms of it by people like me. Every criminal act that he has engaged in was engaged in for a purpose — to keep the cover-up going.
And look at the people and institutions that either aided the cover-up or at least tolerated it. Motley Fool. Morningstar. Early Retiremnent Forum. The Get Rich Slowly Blog. The Bogleheads Forum The FIRE board. The Financial Bloggers Conference. And on and on and on and on and on.
You think of every abusive act as evidence that I should give up. You see, Rob, this field has become so corrupt during the Buy-and-Hold Era that you are not going to be able to make a dime doing honest work. You are finished. Give up and do something else with your life. I view the fact that so many are willing to commit criminal acts to keep people from learning about the error in the Greany study (and in all Buy-and-Hold retirement studies) as evidence that Shiller’s work really is just as important as the members of the committee that awarded him a Nobel prize thought it was. We wouldn’t see such resistance to discussion of his research findings if they did not represent a major advance in our understanding of how stock investing works. Shiller has revolutionized the field and we all will be living better lives once we have as a society worked up the courage to place you Goons in prison cells, where you belong.
What you are trying to do — stop human beings from learning new things about how the world works — goes against thousands of years of human history. It just cannot be done. When the discredited strategy causes enough human misery, people are going to pull together and find a way around you. I believe that the Buy-and-Holders themselves were seeking to do good when they developed the Buy-and-Hold strategy. If they had known at the time what you Goons would be doing today to “defend” their strategy, they would have spoken out against it. If the original Buy-and-Holders themselves are against you Goons, you ain’t got nothing. I mean, come on.
You’ve got violence. That’s it. People are afraid of you. So you have a temporary advantage. But it is not an advantage that will survive the next price crash, when all the good people will be pulling together to overcome you and to open every investing site on the internet to honest posting re the last 39 years of peer-reviewed research in this field.
Or so Rob Bennett sincerely believes, in any event.
Time will tell the tale. I’d rather be on the side of the table that I am on than on the side of the table that you are on by a factor of 500.
I wish you all good things. But I am not open to moving to the other side of the table. Not this boy. No freakin’ way, no freakin’; how.
The fact that you Goons concluded that Buy-and-Hold cannot be effectively defended in civil and reasoned debate left an impression on me. I was a Buy-and-Holder myself until the evening of August 27, 2002, when Greaney advanced his first death threat and when 200 of my fellow community members endorsed it. That was when I concluded that this stuff isn’t science, that it is all emotion, and that it is for the birds. Valuation-Informed Indexing was born on the next day. I didn’t have a name for it at the time. But I knew on that day that Buy-and-Hold had failed. My project from that day forward was to take all of the wonderful stuff in the Buy-and-Hold Model (there’s a lot of that) and incorporate it into a new model that also contains the stuff we learned from Shiller’s Nobel-prize-winning research. That’s the thing that now goes by the name of “Valuation-Informed Indexing.”
My best wishes to you.
Rob