Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
When Bogle put up his posts about the success of buy and hold, he was sending a message that quick rich timing scheme were a bunch of garbage and that he was also supporting Mel over Rob Bennett.
Bogle has said negative things about market timing on many occasions. That’s a fact. He has this little riff where he would say that not only did he not know anyone for whom market timing had worked, he did not know anyone who knew anyone for whom market timing had worked. But Bogle said in an interview that he himself timed the market successfully.
He lowered his own stock allocation in 1999, in part because of the insane CAPE level that applied at the time. He benefited from doing that as the return was much lower than the average long-term return for many years thereafter. So Bogle obviously knew someone for whom market timing worked. Unless we are to believe that Bogle does not know himself!
It’s very hard for anyone to talk about these matters with complete honesty, Anonymous. The experts made a mistake when they came to believe that the market was efficient. They hurt millions of people in very serious ways with that mistake and they don’t like the idea of people finding out about the mistake. So they make things uncomfortable for people who speak honestly re these matters.
But our Wall Street Con Men friends would like to come clean! Nothing could be more clear. Bogle was trying to come clean when he said that he could see how Valuation-Informed Indexing could work. If Lindauer had expressed a willingness to travel a bit down a more constructive road, Bogle would have jumped on the opportunity to take a sad song and make it better.
We all want the same things deep down inside. We all are capable of making mistakes and, when we do make them, we have to count on our friends to help us find our way to getting those mistakes corrected. It is those who encourage us to correct our mistakes promptly who are our true best friends. Bogle was being a friend to Lindauer. Lindauer was not being much of a friend in return when he slapped down Bogle’s suggestion to take things to a higher road.
That’s my sincere take, in any event.
Bogle did not behave perfectly. But he did make an effort on occasion. I cannot recall Lindauer ever doing that (I believe that Taylor Larimore made an effort along those lines on at least one occasion).
Rob
I thought you said Bogle was going to help you get your $500 million windfall, yet at the same time, you called him the biggest con-man. How do you reconcile that? With Bogle gone, who is now going to step in to help you with your task for getting the $500 million?
Bogle was like everyone else who works in this field, Anonymous. He did the work he did with the intent of helping people. He advanced dozens of amazing contributions. So he did indeed help people in lots of important ways. Shiller had not published his Nobel-prize-winning research when Bogle came on the scene. The academics of the time were saying that the market is efficient and that market timing is a bad idea. Bogle bought into that. It was only years later that Shiller published his research showing that that is wrong.
If Bogle had been a perfect person, he would have switched to Valuation-Informed Indexing on the day that Shiller published his research. Bogle didn’t do that. He continued to advocate Buy-and-Hold strategies. I don’t think that that means that he was a bad person. Cognitive dissonance is a real thing. The conditions that bring cognitive dissonance into play were all in place when Shiller published his research. If there had never been an efficient market theory, Bogle would have become a Valuation-Informed Indexer on the day Shiller published his amazing research. But that’s just not the way that things played out.
I don’t think it made Bogle a con man because he suffered from cognitive dissonance. But I think it looks very bad for him that he did nothing about the Lindauer matter when both Bogle and Lindauer were posting at the Bogleheads Forum. Lindauer engaged in criminal acts. That’s way, way, way over the line. You can’t rationalize failing to speak up about criminal acts because you are suffering from cognitive dissonance. Bogle had a responsibility to speak up. He failed in that responsibility. Wade Pfau never would ha e flipped to the dark side had Bogle spoke up for him. Wade was afraid of you Goons because he did not hear people like Bogle standing up to people like Mel Lindauer.
Bogle did many great things. Bogle also did some not-so-great things. That’s the way it played out.
Bogle would have been the perfect person to lead us all to Valuation-Informed Indexing because he had so much credibility in the eyes of the Buy-and-Holders. So I am very sad that he is gone. But there are hundreds of people who could take on that role in the days following the next price crash. We will see who is sufficiently horrified by the ocean of human misery that we will be seeing before us in those days (I am assuming that stocks will continue to perform in the future at least somewhat as they have always performed in the past) to work up the courage to stand up to you Goons. That man or woman will become the new Bogle.
My best wishes to you.
Rob
Shiller does not endorse VII. Does that mean he is a con-man? Is Shiller a goon? If there is no replacement for Bogle, how will you get the $500 million?
Shiller started Valuation-Informed Indexing when he showed with peer-reviewed research that irrational exuberance is a real thing.
Shiller has Goon inclinations, like every human who ever lived. Remember those three years when I was afraid to point out the error in Greaney’s study? That was me being Goonish. Shiller failing to include a sentence in his book saying that the Buy-and-Hold retirement studies need to be quickly corrected was Shiller being Goonish.
The fact that all of the humans have Goon inclinations does not mean that the humans are all bad. We also have laws against threats of physical violence and against extortion. So we possess common sense, which is what we use to rein in our Goon inclinations. Even the Buy-and-Holders say that investors should use the peer-reviewed research for guidance on how to invest. That’s their common-sense side reining in their Goon side.
Goonishness/Get Rich Quick/Buy-and-Hold is part of us. So is common sense/research-based/Valuation-Informed Indexing. I believe that the side of us that is drawn to research will assert itself again in the days following the next price crash, when we see the ocean of misery that the relentless promotion of the Buy-and-Hold “idea” that price discipline is not required when buying stocks gets too out of control.
We’ll see.
Rob
With Bogle gone, who is helping you get the $500 million?
Anyone who would like to see the people of the United States live better lives in the future than they have lived in the past will be helping.
I wrote David Forrest, the site administrator at Motley Fool, about Greaney’s abusiveness, in June 2002, asking how to help with the Greaney matter. He told me that he agreed with me that it would be “ideal” if Greaney permitted honest posting. But he did not push the button that he would have needed to push to make Greaney go “Poof!” So the problem continued.
What if we had recently gone through a price crash where the CAPE had fallen from 32 (two times fair value) to 8 (one-half of fair value)? We would have seen millions of failed retirements if that had been the case. We would have seen hundreds of thousands of businesses go under. We would have seen millions of people lose their jobs. Would all of that have made a difference? When you tell people what the research says at a time when the CAPE is at two times fair value, you are telling them that their stock portfolio is only worth one-half what others are telling them it is worth. You are delivering bad news When you tell people what the research says when the CAPE is at one-half of fair value, you are telling them that their stock portfolio is worth two times what others are telling them it is worth. You are solving a problem for them, not creating one for them.
I have compared following a Buy-and-Hold strategy to driving a care without brakes. Sooner or later, you get killed. One big difference is that, when you drive a car without brakes, you get killed within a day or two. When you follow a Buy-and-Hold strategy, you might not get killed for 24 years. That’s a big difference when it comes to trying to convince people of the dangers of the mistaken approach. The theoretical case for Valuation-Informed Indexing is rock solid. But people have not seen what Buy-and-Hold does to people with their own eyes for a long time. They have to open history books to find out about it.
All of that changes with the onset of the next price crash. People can then learn about what the last 40 years of research says and assure that nothing like that will ever happen again,. Or they can choose to continue going with Buy-and-Hold, knowing that all of the misery they are seeing in front of them is going to happen again in the future, It will be up to them to decide which path to follow. If they follow the path of the research, they will be happy to hand over money to experts to help them to understand what the research says. So everyone who works in this field and who now recommends Buy-and-Hold will feel a huge incentive to switch over to Valuation-Informed Indexing at that time. Research-based strategies will have the marketing advantage when Buy-and-Hold has failed in yet another real-life test.
I think we are going to be fine, Anonymous. My fear is that the next Buy-and-Hold Crisis might be severe enough to bring on the Second Great Depression and in that case we might not ever make it back. So I am not without worries, very big worries. But I think that we can make it if we all pull together. I certainly hope that we will. And I certainly don’t think that it is going to help in any way for me to say that I believe that Greaney included a valuation adjustment in his study.
We have millions of great people in this country. I think that we will be able to find someone (or a whole big bunch of someones) to fill the role that Bogle might have filled if he were still with us. And I believe that Bogle will be looking down at us from a better place with a smile on his face for being able to see that it all worked out the way it did.
My best and warmest wishes to you.
Rob
It seems you several problems, then:
1. You need people to think Buy and Hold caused a crash, which has not ever been a factor.
2. You need to find a champion of your cause, which you don’t have.
3. You need it to happen soon, as you are over 60.
It sounds like you need to find that job now and not wait until June.
It seems you several problems, then:
1. You need people to think Buy and Hold caused a crash, which has not ever been a factor.
2. You need to find a champion of your cause, which you don’t have.
3. You need it to happen soon, as you are over 60.
It sounds like you need to find that job now and not wait until June.
I need all those things to happen. But a lot of the most important things that I need to see happen have already happened.
1) We already have 40 years of peer-reviewed research showing that there is precisely zero chance that a pure Get Rich Quick/Buy-and-Hold approach could ever work for a single long-term investor;
2) Shiller has already been awarded a Nobel prize;
3) I already have co-authored peer-reviewed research showing that market timing always works;
4) We already have seen thousands of our fellow community members express a desire that honest posting be permitted at every site on the internet;
5) We already have laws in place prohibiting financial fraud and extortion and threats of physcial violence;
6) We already have millions of people whose futures are riding on the legitimacy of Buy-and-Hold — in the event that stocks continue to perform in the future at least somewhat as they always have in the past, those millions of people are likely to possess a strong desire to know what went wrong;
7) We already have in place a communications medium (the internet) that will permit us to get the word out quickly once there is a sufficient desire for knowing the truth about stock investing to overcome the abusive and criminal behavior of you Goons;
8) I already live in a country filled with millions of good and smart people who will be willing to help out once they see how important it is that they do so;
9) I already have hundreds of comments on file in which people have made insanely effusive comments about the Valuation-Informed Indexing concept, comments that will go a long way to convincing millions of others of the validity of the concept once they have opened their minds to thinking about a new way of understanding how stock investing works.
;
The only thing that I can think of that I need but do not today have in place is a price crash that takes the CAPE value from 32 down to 8 and leaves it there for a good number of years. If Shiller’s Nobel-prize-winning research is legitimate research, we should be expecting to see that sometimes within the next year or two or three. We’ll see.
Rob
Each of those points have been addressed and shown as to how you are wrong with your interpretations. If you really had things lined up as you say, you would have thousands of people posting here at your website, showing their support.
Anyone who expresses strong support knows that his family members will be threatened with bodily harm and that his career will be threatened, just as we saw with Wade Pfau and John Walter Russell and Microlepsis and John D. Craig and on and on and on.
Those are desperate tactics, Anonymous. If Buy-and-Hold were a real thing, the Buy-and-Holders would WELCOME challenges to their thinking. They would see the challenges as opportunities to nail things down in their own heads. The insane defensiveness that we have seen for 19 years tells us that the Buy-and-Holders themselves have grave doubts about the “idea” that there is no need to practice price discipline (market timing!) when buying stocks. I mean. come on.
The fact that the Buy-and-Holders are so defensive is no reason for those of us who believe that Shiller’s Nobel-prize-winning research is legitimate research not to spread the word to others about what we believe. I see it just the other way around, The insane defensiveness of the Buy-and-Holders shows why it is absolutely imperative that we do all we can to spread the word before this long-discredited “strategy” (Buy-and-Hold is in truth a marketing gimmick, not a strategy) does even more harm to even more people.
That’s my sincere take, in any event.
I naturally wish you all good things.
Rob
Your “sincere take” is delusional. It has no basis in reality. Pretty much everyone you know has told you that. But you won’t listen. So pretty much everyone has cut off contact with you.
Why do you not see being cut off from the whole world as a problem?
I don’t know why I bother asking, because I already know all your talking points, which are your answer to every conceivable question.
I do see being cut off from the whole world as a problem. A very, very big problem.
It is the world that has adopted laws against financial fraud and extortion and death threats. If I fail to speak up about those things when I am engaged in discussions of stock investing on the internet, I am cutting myself off from the whole world. So I don’t do that.
Now, I of course understand the way in which you mean it. You mean: “The rest of the world is willing to overlook the criminal stuff when it is engaged in as part of an effort to promote a pure Get Rich Quick approach to stock investing, why don’t you do that too?” I see that as a temporary thing. I think that we need to speak up in opposition to the criminal stuff even when it is employed in the service of a pure Get Rich Quick approach to stock investing. I think that the opposition to the criminal stuff is what the world really believes and the support for the Get Rich Quick stuff is just a temporary thing. So I believe that I am acting in concert with what the world has shown that it wants.
If the world is so down with Get Rich Quick approach to stock investing, why was Shiller awarded a Nobel prize? The world has mixed feelings re these matters. We do love us out Get Rich Quick/Buy-and-Hold investment strategies. That’s been shown beyond any reasonable doubt whatsoever. But we ALSO like the idea of permitting honest posting re what the research says. We have shown that with the laws that we have adopted and with the Nobel prizes that we have awarded. Right at this particular moment of time, we are trying to have it both ways. We have awarded the Nobel prize and we have acted in such a way as to keep the Get Rich Quick/Buy-and-Hold stuff coming fast and furious.
What about after the next crash? Will we then see the wisdom of our laws against financial fraud and against extortion and against threats of physical violence. I think we will begin permitting honest posting re the last 40 years of peer-reviewed research at that time. And then we will all enjoy an amazing learning experience together. A happy ending!
We will see, you know?
I naturally wish you all the best that this life has to offer a person in the interim, in any event.
Rob
So you’d rather be cut off from the whole world. That is preferable to considering the idea (actually the universal consensus) that you are wrong.
For someone who claims to love his fellow man, that’s a pretty darn misanthropic attitude.
So you’d rather be cut off from the whole world. That is preferable to considering the idea (actually the universal consensus) that you are wrong.
For someone who claims to love his fellow man, that’s a pretty darn misanthropic attitude.
The universal consensus is that I am right. You Goons think that I am right. If you didn’t think that, you never would have engaged in a single criminal act, you would just engage in civil and reasoned back-and-forth discussions.
There was once a universal consensus that the earth was the center of the universe. Science showed that that universal consensus was wrong. Good for science. There was once a widespread consensus that market timing (price discipline!) is not required when buying stocks. We now have 40 years of science saying otherwise. I am a science guy.
Full truth be known, a lot of Buy-and-Holders like science too, at least deep down. They don’t like it when new science comes along to replace an old science on which they have bet their entire lives. But deep down, the Buy-and-Holders have a soft spot for science, I believe that seeing 75 percent of their stock portfolios disappear into thin air may bring that soft spot for science to the forefront of their thinking. We’ll see.
I know that death threats are not science. I know that extortion ain’t science. I know that financial fraud is not science. The criminal stuff is the opposite of what the Buy-and-Holders believed in the days when they were starting out. I think that they had it right in the early days.
Science changes. Like it or not, that’s the realitty.
Rob
Fine, everyone thinks you’re right. Enjoy your self-imposed isolation.
The universal consensus is that you are wrong. You know we are right and you try to deflect by calling everyone Goons. That is why you make up stories about criminal acts (such as death threats). You refuse to allow civil and reasoned back-and-forth discussions on this website by deleting/block most posts.
Fine, everyone thinks you’re right. Enjoy your self-imposed isolation.
Okay, Anonymous.
And backatcha, dear friend.
Rob
The universal consensus is that you are wrong. You know we are right and you try to deflect by calling everyone Goons. That is why you make up stories about criminal acts (such as death threats). You refuse to allow civil and reasoned back-and-forth discussions on this website by deleting/block most posts.
Yeah, yeah.
Rob
Just curious as to why you wouldn’t post links to the death threats if they actually occurred.
Because it is just a distraction to act like the death threats themselves are a big deal. The big deal is that I pointed out an error in a retirement study 19 years ago and it has not been corrected to this day.
What difference does it make if the cover-up has been achieved through the use of death threats or threats of career destruction or whatever? What matters is that the Gresney study has not been corrected to this day.
We should all be working to get all of the Buy-and-Hold retirement studies corrected. When that is done, we will all be living better lives from that point forward.
And then we should turn to the other stuff that the Buy-and-Holders got wrong — the asset allocation advice and the risk management advice and so on. The more stuff we can get corrected, the better.
My sincere take.
Rob