I’ve posted Entry #678 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called How Has the Mood of Investors Changed Over the Past 27 Years?
Juicy Excerpt: I took money out of stocks as a result of what I learned from reading Bogle’s book. I was planning to leave my corporate employment and make a living building a business on the internet in the not-too-distant future. I imagined that the new business would not produce much in the way of earnings in the early years. So I wanted my savings to be secure. What Bogle’s book told me about the risks of owning stocks at times of high valuations told me that stocks were not the right place for most of my money at the sorts of valuation levels that applied at the time.
Why did you leave your job before making sure you had built a sustainable business?
I didn’t. I didn’t hand in my resignation until I had seen the reaction to the publication of my Soapbox.com report on “Secrets of Retiring Early.” The reaction was so off-the-charts positive that I was set.
I had saved enough that I only needed to earn $20,000 per year to get by.The first report brought in earnings of $15,000 in six months. I would be able too write three new reports every year and I of course would be able to continue earning smaller amounts from the older ones. My name recognition would grow as more reports came out. All signs were good.
Rob
You did not have a sustainable business earning $20k a month. You had one report with a short track record and $15K is pocket change. In fact, it is poverty level wages. Further, you were not producing continued reports and you were not trying to sell on different platforms. There was almost nothing there.
We disagree, Anonymous.
I had an almost unlimited ability to create more reports. They were all likely to sell more than the first one because my name recognition on the internet was going to grow and grow with the publication of each new report. I had a raving positive fan base at the Motley Fool board. That’s why that first report took off do quickly. And the amazing community that me at the Motley Fool board had the ability to spread my ideas far and wide. That’s what we saaw when I put forward my famous post of the morning of May 13, 2002, pointing out the error in the Greaney retirement study. It was my intention to take what we learned from the early days of The Great Safe Withdrawal Rate Debate and share it at every site on the internet. That would have been the end of Get Rich Quick/Buy-and-Hold and would have enhanced the lives if millions of people in very big ways. That obviously would have earned me hundreds of millions of dollars.
That’s where I’m coming from re this one. Permitting honest posting re the peer-reviewed research helps every single person on the planet. It’s not possible for the rational mind to imagine any possible downside. People often use retirement studies to plan retirements. I mean, come on.
Rob
Rob,
Look at my words. Sustainable means that there is a long track record. What you are saying is that you thought you had the POTENTIAL to make $20k. It is the same as how we look at the stock market. We look at the long term track record. It was very clear early on that your plans were not working out. In fact, you gave a financial update in 2005. When you saw this over 18 years ago, why did you not go back to work? You clearly knew that you would not have enough money at that time, let alone any other time along that 18 year period. If this happened to a buy and holder, wouldn’t you tell him that his plan wasn’t working?
I didn’t have a long track record of prodcuing income with an independent writing business because I didn’t have such a business until I started it. Everyone has to start somewhere. It’s because I didn’t have a long track record that I elected to hold off on leaving my corporation employment until I had done two things: (1) saved enough so that I only needed to earn $20,000 per year with the business to get by; and (2) demonstrated that the business had the potentila to earn a very large multiple of that amount by publishing a report and seeing it become the #1 best-selling report in the history of the Soapbox.com site, with lots of insanely effusive customer reviews (including one by my old friend John Greaney, to be sure).
The potential wasn’t to earn $20,000. $20,000 was the absurd lowball number that I needed to reach for my family to be in fine shape, a number that I could only miss if my decision to post honestly re safe withdrawal rates led to the biggest act of financial fraud in the history of the United States, something that no reasonable person could have possibly imagined was possible. The realisitc potential at the moment that I took the plunge is that I would earn in the high six figures. It turned out that the real potential is that I would earn a large mulitple of $500 million. Opening every site to honest posting re the research would obviously bring in a large multiple of that amount, given how important it is to get the numbers in retirement studies right and given how many big-name experts have expressed a desire to do honest work in this field if they could only find some means of getting around the Lindauerheads and the Greaney Goons and any other Buy-and-Hold Goon Squads.
I didn’t go back to work because I realized from the reactions of thousands of fellow communty members how great and widespread the interest was in honest posting re the peer-reviewed research and how important it was to the country that I love that we get the entire interent opened to honest posting re the research as quickly as possible. If I saw Valuation-Informed Indexers behaving in this manner in response to a Buy-and-Holdee who had worked up the courage to post honestly re the last 42 years of peer-reviewed, research, I would urge my Valuation-Informed Indexing friends to know off the funny business.
Rob
Rob,
Potential doesn’t really mean much as it always has a risk factor. In my business, we look at new medical therapies. We see many with huge potential, yet it doesn’t mean anything without actual outcomes showing long term success.
Your reason for not going back to work is detached from your retirement plan. Your plan required an income of at least $20k a year. Your opinion of what you think community members want or need on the internet had nothing to do with your financial requirements for supporting you and your family. In other words, you made the decision to not go with your plan to bring in $20k of annual income.
I didn’t make a decision not to go with the plan. I experienced this amazing situation where we have 10 percent of the population of investors (which translates into millions of investors) expressing a desire to be able to hear honest posting re the peer-reviewed research and a small gang of Buy-and-Hold Goons engaging in abusive and in some cases criminal behavior to block them from being able to hear it. I think it would be fair to say that that was a new reality that needed to be taken into consideration.
We have a situation where those who us who believe that honest posting re the reseach should be permitted have the choice of permitting the ban on honest posting to continue and seeing their country enter into another Buy-and-Hold Crisis that will liklely cause huge financial reversals for millions of people ot of insiting on their right to post honestly and thereby bringing on the largest surge of economy growth in the history of the United States. Gee, somehow the latter option appears to offer more appeal in my eyes. I wonder why.
My best wishes, etc.
Rob
“ I didn’t make a decision not to go with the plan.”
Sure you did. You decided to make your internet posting your focus versus doing some kind of work that would bring in an income. Your original plan was producing reports.
The Motley Fool’s Retire Early board was my platform for demonstrating the value of those reports to the rest of the world. When Greaney and his Goon Squad burned that board to the ground because a large percentage of its member demonstrated an interest in participating in honest discussion of safe withdrawal rates, that took away my platform. I tried to build platforms at other place and experienced the same results — strong interest by a large percentage of the community bu intense opposition by a number of Buy-and-Hold Goons who were willing to engage in criminal behavior if that is what it took to block honest discussions of the last 42 years of research. So I have no platform.
The question on the table today is whether the onset of the next Buy-and-Hold Crisis will change that. I believe that, when we see millions of failed retirements and hundreds of thousands of biusinesses going under and millions of people being thrown out of work and an increases in political frictions, we may see some kind and brave person work up the courage to open his large site to honest posting re the research. Then we will all be on our way to living better and fuller and richer and freer lives than we ever imaging possible back in the pre-Shiller Buy-and-Hold days. I can live with that, you know?
It will be interesting to see how it all plays out. What’s the alternative. That I say that I believe that the Greaney study contains a valuations adjustment after all. Thanks but no thanks, you know? Committing felonies (financial fraud is a felony) has never made its way to my bucket list.
My best wishes, etc.
Rob
Those are all other people’s platforms. None of them owe you a format for your business. You have to build your own platform or use other avenues. All this is beside the point. The issue still remains that you never had a $20k per year established business and when you failed to develop one, you did nothing to fill that income need.
You made your decision based on a single data point, a single report that sold well. That is the very definition of irrational exuberance.
Those are all other people’s platforms. None of them owe you a format for your business. You have to build your own platform or use other avenues. All this is beside the point. The issue still remains that you never had a $20k per year established business and when you failed to develop one, you did nothing to fill that income need.
They owe their readers honesty re what the last 42 years of peer-reviewed research says about how stock investing works in the real world. That’s my sincere take, in any event.
Rob
You made your decision based on a single data point, a single report that sold well. That is the very definition of irrational exuberance.
It wasn’t a single data point. The Retire Early board was an amazing place in the days before Greaney burned it to the ground. There was information being provided there about how to achieve financial freedom early in life that wasn’t available in the largest personal finance libraries in the world.
Rob
They owe their readers YOUR opinion of what YOU think the research says? Do they owe you access to their website to assist you in generating an income?
Whether posting honestly re the research earns me a big income or not should be of no concern to them. But, yes, they absolutely owe it to their readers to permit posting by those who believe in Buy-and-Hold strategies and by those who believe that the last 42 years of research in this field is legitimate research. To prohibit posting re the tesearch solely because it undermines confidence in the pre Get Rich Quick/Buy-and-Hold “strategy” is financial fraud.
My sincere take.
Rob
So you agree they don’t owe you a format for generating income.
As to the other point, why do they owe you a format for YOUR opinion on what research says? You don’t make the same allowance to others in your website. Why the double standard?
Since the published rules of every site permit honest posting re the peer-reviewed research, every site owner should permit that. If there is someone who wants to play it the way that the Buy-and-Hold Goon Squads want to see it plated, that owner should tell people up front that he is banning honest posting as a means of turning a quick buck. That way people reading the site know what they are getting and it’s not fraud. The default expectation in every field other than the investment advice field is that honest posting re the peer-reviewed research is permitted.
Rob
“ My name recognition would grow as more reports came out.”
Just Google your name and see your infamous reputation. You did it to yourself, Rob.
Not so. The vast majority very much appreciate being able to hear what the last 42 years of peer-reviewed reserch teaches us all about how stock investing works in the real world. You Goon are a minority voice, perhaps 10 percent of the Buy-and-Hold population. You have an influcence far, far beyond what your numbers alone would suggest. Your power comes from the fact that Normals are afraid of you. Most people have never seen behavior like this and don’t know what to make of it.
If the ideas were not of great interest, you never would have insisted on a single ban. You could see the potential for Valuation-Informed Indexing to take off going back to the early days. What we lack on the research-based side is the courage to stand up to you. I believe that the onset of the next Buy-and-Hold Crisis may help us to work up the courage we need to get to a better place. But we will have to see how things play out to know for sure.
My best wishes, etc.
Rob
If what you said was true, you would have a following here on your website.
That’s certainly what one would expect to see happen. I’ll give you that much. It’s what I expected to see happen when I worked up the courage to advance my famous post from the morning of May 13, 2002.
Why DIDN’T it play out in the manner in which you are suggesting (properly) that it should have played out? That’s what we all need to figure out. Figuring that one out is the secret to effective long-term stock investing. My job is to figure that one out and to tell the story in my book.
The solution can be found by pondering the deep meaning of the title of Shiller’s book — IRRATIONAL Exuberance.
Stock investors are humans. Which means that they are emotional creatures. Which means that in some respects they are highly IRRATIONAL.
What you are describing is the way that the rational mind would expect things to play out. But stock investing ain’t rational. So it doesn’t work that way in this field. In this field, irrational Get Rich Quick/Buy-and-Hold strategies are popular, rational research-based strategies cannot even be discussed at any large sites. That’s the core reality.
Say that it weren’t so. Say that investors were rational, which is what I need to be the case for my work to become popular. Then what?
If that were the case, today’s CAPE value would not be 32. The CAPE value tells you why I am banned. Today’s stock investors are trying very hard to believe in a fantasy, that their stock portfolio is worth two times what it is really worth. I am trying to pop a hole in the fantasy baloon. I am pointing out what the peer-reviewed research says. That’s why I am banned at so many places. The last thing that a Buy-and-Holder wants to hear is what the research says. Research and Buy-and-Hold cannot co-exist. They are opposites.
Will it change after the onset of the next Buy-and-Hold Crisis? We’ll see, you know? I sure hope so. We will all begin living richer and fuller and freer and better lives once we open out minds to hearing about the dangers of going with a pure Get Rich Quick/Buy-and-Hold strategy. We are not there today. We have seen great interest in going down that path on the part of thousands of investors during the first 21 years of our discussions. But we are not quite there yet.
That’s where I’m coming from re this matter, Anonymous.
My best wishes to you.
Rob
“That’s what we all need to figure out.”
No, it is what you need to figure out. The rest of us know why you don’t have a following here and it has been explained to you many times.
The only thing stopping people from posting here is you.
Okay, Anonymous.
I spend some time each day trying to deepen my understanding of that one. I think it is important and it is my intent to continue to work on finding the solution to the puzzle.
I wish you all good things.
Rob