Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

Your problem is not with Sammy or any of the other hundreds you have called a goon. Your problem is that you have this ambition for people to consider you a leader in the investment community and for that to happen you need others, like Shiller, to say you have offered some unique understanding or other significant contribution to the investment community. Unfortunately, you haven’t done that. Your attempts have failed you have become frustrated to the point that you have made outrageous comments to overcompensate. All you have to show for it is ridicule and embarrassment.

I’m a leader, Anonymous. I pointed out the error in the Buy-and-Hold retirement studies in a post that I put to a Motley Fool discussion board on the morning of May 13, 2002. 18 years have passed and those studies have not been corrected to this day. If everyone in the field had been calling for them to be corrected, they would have been corrected by now, So I must be ahead of a lot of people in this field. That makes me a leader.

The question here is HOW did I become a leader? I should’t be one. I don’t have the training or experience that it would ordinarily take for someone to become a leader in this field. It doesn’t take an I.Q. of 140 to notice that the Buy-and-Hold retirement studies lack an adjustment for the valuation level that applies on the day the retirement begins. Everyone in this field should have noticed that those studies lack a valuation adjustment long before I came on the scene. If everyone else had spoken out years ago, I obviously wouldn’t be any sort of leader.

But I am. A few others have spoken out. But not enough to get the job done. As you Goons have noted from time to time, even Shiller himself has never advanced a simple statement that the Buy-and-Hold retirement studies are in error and should be corrected immediately. So I am a leader. But I shouldn’t be. It is an exceedingly strange situation.

The job of a journalist (which is what I am — I am certainly not an investing expert) is to explain how this strange set of circumstances came to be. That’s what I try to do. I try to tell the story. I believe that there will be many people trying to make sense of things in the days following the next price crash and I see it as my job to tell them the story in a complete and honest and fair way. It’s a big job. I think that I can do that job better than anyone else alive because of the experiences that I have lived through over the past 18 years. I certainly am going to give it my best shot.

You Goons have ridiculed me thousands and thousands and thousands of times. But I have also had people like Wade Pfau marvel at my work. Wade told me that he learned over time never to question what I had told him because in the early days he did that numerous times and every time after he did some research he learned that I was right. Wade told me that I taught him lots of things that he never learned in his Ph.D. program. That ain’t ridicule!

Those sorts of reactions have taught me that I am on to something very important. And then the response of you Goons — to threaten to get Wade fired from his job if he continued doing honest work in this field — doubled my confidence that that is so. You wouldn’t risk going to prison if you thought that there was a rational case that could be made that the safe withdrawal rate could be calculated accurately without taking valuations into consideration. You engage in the criminal stuff because you see no other option other than urging corrections of the studies — and you just cannot bear to do that.

Your behavior hurts me. It holds me back But it doesn’t persuade me. There are some exceptions to that general rule, cases in which you have made reasonable points. But the Goon stuff has zero persuasive power. Actually, it has a negative persuasive power. When I see the Goon stuff, it tells me that the case for Buy-and-Hold is very weak because you Goons have all the motivation in the world to make a case for it and have not been able to come up with anything. If you have not been able to come up with anything in 18 years, how likely is it that someone else is going to come up with anything?

The idea that market timing is not required was just a mistake. There has never been any research showing that that is so. There is research showing that short-term timing doesn’t work but that is very different from a showing that market timing in general is not required. Market timing is price discipline. How could exercising price discipline ever be a bad idea? Once you think about it for a little bit, you come to see that the Buy-and-Hold claim is preposterous. The research shows that it isn’t so. But all you need is common sense to understand that it CANNOT be so.

Being willing to apply common sense to stock investing shouldn’t make me any kind of a leader. But the reality is that it does. The reality is that the Buy-and-Holders still say to this day that market timing is not required. And most people don’t correct them when they do it. I do. So, yes, that makes me a leader. I will be happy when everyone who works in this field is saying openly that market timing is always, always, always required, I won’t be a leader anymore at that time. But I will be living in a better world. I can accept that trade-off!

I wish you the best of luck in all your future endeavors, Goon friend.

Rob the Leader (Who Will Be Happy When He Isn’t One Anymore)

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

“ There are scores and scores of places where all kinds of people who work in this field say that they are afraid to tell the truth about Buy-and-Hold. That’s the entire story.”

The entire made up story.

t’s not a made-up story, Anonymous.

Shiller was awarded a Nobel prize for his work. So he must be saying something very, very, very different from what the Buy-and-Holders who came before him are saying. Please identify 20 ways in which the Buy-and-Hold strategy has been changed to reflect Shiller’s findings.

You can’t identify 20 changes. The fuller truth is that you cannot identify 10 changes. Or even five. Or even one.

The Buy-and-Hold of today is the same as the Buy-and-Hold of 1980, And yet research that is so important that it has been awarded a Nobel prize was presented to us all during the past 39 years. We just haven’t yet incorporated it into our thinking re how stock investing works. That’s the issue. That’s the dispute. That’s the conflict.

How do you think that happened? The piece that Shiller provided to the stock investing puzzle is the most important piece ever supplied. It would make all the difference in the world if every expert in this field encouraged investors to always practice market timing instead of being in a situation where there is this relentless promotion of the “idea” that there might be some magical, mystical alternate universe where market timing (price discipline!) is not 100 percent required. The market for accurate, honest investment advice is huge, People could be making millions promoting Valuation-Informed Indexing. So why aren’t they?

The only possible explanation is that the Buy-and-Holders are engaging in intimidation, making people feel that there will be a price to be paid if they say what they really believe about how stock investing works in the real world. And of course I have 18 years of documentation of just that sort of thing. Death threats. Demands for unjustified board bannings. Thousands of acts of defamation. Threats to get academic researchers fired from their jobs.

That’s Buy-and-Hold. That’s the economic crisis of 2008. That’s the entire story. All of that criminal stuff is what Buy-and-Hold IS. All of that criminal stuff is how Buy-and-Hold survives today, 39 years after the peer-reviewed research showing that there is precisely zero chance that this “strategy” could ever work for a single long-term investor.

I don’t say that that is all that Buy-and-Hold ever WAS. Buy-and-Hold started out as a beautiful thing. It was the first research-based strategy. But research never stands still. We learn new things over time. Those new things need to be incorporated into the old understanding for the old understanding to remain research-based. That hasn’t happened over the past 39 years. The Buy-and-Holders act as if Shiller’s research dos not exist. They still denigrate market timing 39 years after Shiller showed that valuations affect long-term returns and that therefore stock investing risk is not stable but variable (and that any investor seeking to keep his risk profile stable over time MUST practice market timing to have any hope of doing so).

I love what the Buy-and-Holders believed in when they started out. That’s why I have incorporated all of the Buy-and-Hold insights that checked out (which is all of them except for one the about market timing not being required) into the Valuation-Informed Indexing model. Valuation-Informed Indexing is what Buy-and-Hold would be today had the Buy-and-Holders remained true to their core belief that investors should look to the peer-reviewed research for guidance re how stock investing works. The message of the peer-reviewed research changed in 1981. Valuation-Informed Indexing reflects the change. Buy-and-Hold does not.

And the Buy-and-Holders do not want the world to know that. So we see all this ugly stuff to keep discussion of the past 39 years of research suppressed.

I like the last 39 years of peer-reviewed research. I think it is important. So I am working at cross purposes to the abusive Buy-and-Holders. Not because I do not like them as people. Because I believe that we all need to know what the research says. If Buy-and-Hold as it is currently promoted can survive that, fine. But the Buy-and-Holders themselves obviously do not believe that Buy-and-Hold can survive as currently promoted if word get out re what the research says. Otherwise, they wouldn’t behave in the manner that they do.

It’s all intimidation. That’s all that Buy-and-Hold is today. There was a time when that was not so. But today there is 39 years of peer-reviewed research showing that valuations affect long-term returns that did not exist in the old days. And, if valuations affect long-term returns, then there is precisely zero chance that a strategy that does not call for market timing could ever work for a single long-term investor. So there is a conflict between what we once thought the research said and what those who follow the peer-reviewed research know today that it really does say. The Buy-and-Holders have the edge in that conflict because they got there first and have built an entire industry around the idea that market timing is not required, with all the wealth and power and connections that go with it.

What Valuation-Informed Indexing has going for it is the millions of investors who need to know the realities and who will be upset if they see 50 percent of their life savings disappear into thin air That’s why I believe that we will see things move forward in the days following the next price crash.

We’ll see.

Rob