“We Need to Make a Distinction Between Those of Us Who Just Have a Human Weakness That Makes Buy-and-Hold Strategies Appealing and Those of Us Who Have Made It Our Number One Mission in Life to Stop the World From Moving Forward in Its Understanding of the Last 40 Years of Peer-Reviewed Research in This Field. That’s a Very Extreme Form of Goonishness.”

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>“We all have goonishness within us.”

Then why call someone a goon? It is like starting out a post referring to people as breathing human-beings. Instead, what you are doing is immediately denigrating someone with a label. Same thing with the allegations of criminal acts. You are immediately attacking someone without offering up one bit of proof. There is no place for this kind of bad behavior.</i>

I have crafted a second response to this comment.

The comment makes an important point. We all have goonishness within us. We all are drawn to Get Rich Quick/Buy-and-Hold strategies. We all want something for nothing. We all want to believe that we can create a mountain of irrational exuberance and not be made to pay a terrible price for having done so. So why single out those who have posted in “defense” of Mel Lindauer and John Greaney as “Goons”? Are they so different from the rest of us?

They are not entirely different from the rest of us. I had determined that the Greaney study was in error before I ever put a post to the Motley Fool board. I had read John Bogle’s book “Common Sense on Mutual Funds” and it has a sentence in it that “Reversion to the Mean is an Iron Law of stock investing.” If that is so, there is zero chance that the safe withdrawal rate is always the same number. If prices are always reverting to the mean, then the going-forward return is lower starting from a time of high valuations than it is starting from a time of low valuations. So the safe withdrawal rate has to be lower at times of high valuations. I was too afraid of what Greaney and his Goon Squad would do to me to share what I knew with my fellow community members from May 1999, when I first posted, to May 2002, when I put forward my famous post asking if we should consider valuations when calculating the safe withdrawal rate. That was goonish behavior. So I have a little bit of Goon in me.

The reason why I only refer to Lindaurheads and Greaney Goons as “goons” is that these are the people who are stopping us as a society from moving forward in our understanding of how stock investing works. Yes, we all have goonishness within us. We wouldn’t have a CAPE value of 39 today if that were not so. But we all have the capacity for reason (anti-goonishness) within us as well. As a society, we encouraged Shiller to write his book (Jeremy Siegel, a Buy-and-Hold advocvate, suggested the idea to Shiller). We made Shiller’s book a best-seller. We awarded him a Nobel prize (that was done directly by a small number of people but there is a sense in which they were acting on behalf of the larger society around them in making their choice). Thousands of us expressed a desire that honest posting be permitted in their contributions to The Great Safe Withdrawal Rate Debate. As a society, we support the discussion of Shiller’s work in several respects while we also take actions that cause the CAPE level to rise to 39, a level higher than the one that brought on the Great Depression. We are torn between goonishness and non-goonishness.

I believe that, if we permitted honest posting at every internet site, we would work out this conflict. We would all get to hear both sides and over time we would reach some sort of consensus view. It is the Lindauerheads and the Greaney Goons who have stopped this healthy process from taking place. They are so addicted to Get Rich Quick/Buy-and-Hold strategies that they cannot even tolerate the discussion of their dangers. They have taken away our right to discuss these matters through the use of criminal behavior that frightens people into silence. That’s more than the usual amount of goonishness that we all carry within us. That’s an intense goonishness that has made rational discussion and the learning experiences that would follow from it flat-out impossible.

That’s the distinction. I refer to the humans that tolerate goonishness but would be perfectly happy to have rational discussion take place if they were not afraid of what would be done to them if they expressed that view as “Normals.” The vast majority of Normals are Buy-and-Holders because that is what they hear most experts endorse. But they are open to hearing the case for Valuation-Informed Indexing so long as the laws of the United States are respected in those discussions. They are not opposed to Buy-and-Hold. They follow Buy-and-Hold strategies. They possess the same amount of goonishness that we all possess. But they would never engage in criminal acts to “defend” Buy-and-Hold. However, they do on occasion recommend posts in which the Lindauerheads and the Greaney Goons engage in criminal acts. They find the threats of physical violence and similar intimidation tactics highly distressing and will do just about anything to make them go away. They feel that, if the only way that they can make it stop is to permit the discussions to be silenced, they can live with that.

The answer to the question is that I reserve the designation “Goon” for those who are so intense in their goonishness that they are willing to dictate to all of us what we may discuss in the investing realm. As a society we are trying to make the transition from a Get Rich Quick approach (Buy-and-Hold) to the first true research-based approach and the Goons are stopping that process from moving forward. That’s more than your normal amount of goonishness. I think that it is important that we recognize that we all have goonishness within us (that’s what makes Buy-and-Hold so popular). But I also think that we need to make a distinction between those of us who just have a human weakness that makes Buy-and-Hold strategies appealing and those of us who have made it our number one mission in life to stop the world from moving forward in its understanding of the last 40 years of peer-reviewed research in this field. That’s a very extreme form of goonishness that has to be described for any of us to be able to come to terms with why discussion of Shiller’s amazing research findings is still banned at every large investing site on the internet 40 years after it was published.

Rob