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 don’t buy it, Anonymous.”

Of course not. Like all cranks, your whole identity starts from the assumption that you are the smartest person in the world. But does the world treat you with the enormous respect you are due? Well, no. The world treats you more like a baby treats a diaper. How can that be?

Your answer: Goons. Your towering intellect somehow is incapable of overcoming a couple mentally inferior goons, who aren’t even trying.

Somehow all that doesn’t “logically follow”.

I don’t believe that I possess a towering intellect. And I don’t believe that you Goons are mentally inferior.

My enemy is the Get Rich Quick impulse that resides within all of us. We all are prone to permitting our emotions to overrule our intellects. That’s why stock investing has always been risky. Stocks are the most emotional asset class. Shiller gave us the research we need to gain better control of our emotions and thereby told us what we need to know to take the vast majority of the risk out of the stock investing project.

But our first reaction to hearing what he has told us is to feel insulted. The Buy-and-Holders tell us investors that we are perfectly rational creatures. That’s a flattering message. Shiller tells us that we are highly emotional and that we permit our emotions to hurt us, that we are self-destructive. That message is not so flattering. That message is insulting. That’s why Valuation-Informed Indexing has had a hard time gaining a foothold.

The question that remains to be answered is whether the losses we suffer in the next price crash will humble us enough to cause us to listen to what the last 36 years of peer-reviewed research is telling us. If it does, then we will all live far richer lives from that point forward and none of us will ever look back. If it does not, we will probably see our economic system go down because our need for accurate, honest investing advice is greater today than it has ever been before. We learned the realities of stock investing just in the nick of time. Now it’s a question of whether we want to take advantage of the huge benefits now available to us enough to be willing to consider the possibility that we might have gotten something wrong at an earlier time. I vote for considering that possibility.

You say that the story doesn’t logically follow. In a sense, it doesn’t. There’s a lot of irrationality in evidence in this story. But it is not possible to tell any story involving humans without being willing to examine some irrationality BECAUSE HUMANS ARE EMOTIONAL CREATURES. Acceptance of that core reality is what Shiller added to the mix. The Buy-and-Hiolders started with an ASSUMPTION that humans are 100 percent rational and then just followed the logic chain where it took them. They did a good job of following the logic chain but there is now 36 years of peer-reviewed research showing that their core assumption was in error. Investors are humans and humans are no more rational when buying stocks than they are when doing anything else that humans do.

Shiller added the human element to the stock investing story. He thereby made it possible to get the numbers right because every calculation done in an investing context is affected by the irrational behavior of the humans who buy and sell the stocks. This is why the title of my book is “Investing for Humans.” You cannot get stock investing right without taking into consideration the human element. Shiller’s revolutionary insight was that investors are human and humans are not 100 percent rational and therefore any investing strategy assuming they are cannot possibly work in the long run.

The Buy-and-Holders are flattering themselves when they tell themselves that they are capable of perfect rationality, Anonymous. I don’t say that to hurt the feelings of my Buy-and-Hold friends. I say it because I want my Buy-and-Hold friends to achieve financial success and a big part of that is knowing how stock investing works in the real world.

I hope that helps a small bit.

Rob

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 is a second brain involved.”

Your classic crank mistake is assuming that second brain (yours) is in any way remotely equal to Shiller’s. He’s a Nobel winner, you barely understand basic arithmetic. Your supposed insights about “what follows logically from what Shiller said” are utterly worthless.

Does anyone care what some high school kid thinks of Einstein’s work? Even if he writes lots of papers about Einstein? Of course not. And so it is with you and Shiller. He’s the real deal, you’re the wannabe. This fact is completely obvious to everyone. No crash will ever change that reality.

I don’t buy it, Anonymous.

I worked with Wade Pfau for 16 months. We exchanged scores and scores of e-mails. He praised my work to the skies. This is a fellow with a Ph.D. in Economics. And he told me that he learned things from me that he had never learned in all those years of schooling. He checked Valuation-Informed Indexing out every which way to Sunday and concluded that: “Yes, Virginia — Valuation-Informed Indexing Works!”

And of course Wade is not the only one. Rob Arnott said that all my stuff checks out. Carl Richards said that my work has huge value. Bill Shultheis was excited beyond belief when he discovered all the amazing stuff at my web site. Michael Kitces engaged in long e-mail correspondence with me, saying that he learned a great deal from our interactions. And thousands of my fellow community members put their lives on the line by standing up to you Goons by asking that honest posting be permitted at our boards. My insights are not “utterly worthless.”

What is “utterly worthless” are your death threats and your demands for unjustified board bannings and your thousands of acts of defamation and your threats to get academic researchers fired from their jobs. Wade spent years learning what he has learned. He shouldn’t have to live in fear of what a gang of internet Goons will do to him if he posts honestly re his views on investing at internet discussion boards. Financial fraud is a felony. You Goons should be placed in prison cells so that people like Wade can feel free to express their true beliefs. Then we all move forward together. That’s the answer.

And you don’t for two seconds believe that Shiller is “the real deal.” If you did, you would be encouraging discussion at every site as to the implications of Shiller’s “revolutionary” (his word) research findings. I have asked you scores of times to identify even one big change that Bogle made to the Buy-and-Hold strategy in response to what he learned from Shiller’s Nobel-prize-winning research. You have not been able to do so. That’s because there isn’t one. The core principle behind the Buy-and-Hold strategy (that the market is efficient) was discredited by Shiller’s 1981 research findings and Bogle has failed to address that reality publicly for 37 years now.

I think the next crash will change how we all deal with these matters. But I could be wrong. We are just going to have to show a little patience to find out for sure.

I naturally wish you the best of luck in all your future life endeavors, old friend.

Rob

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

“Every word that I have written over the past 16 years is rooted in Shiller’s “revolutionary” (his word) finding that valuations affect long-term returns.”

No, it is what you think Shiller should be saying.

What I say is what follows logically from what Shiller said.

I am not saying that Shiller has said precisely the same things that I have said. In some cases that is so. But in most cases it is not. I say what seems to me to logically follow from what Shiller said. There is a second brain involved. People need to know that. For me to say it is not the same as for Shiller to say it. So you have a point here. If Shiller thought about every word that I have ever put forward and commented on it himself, there would probably be a good number of cases where Shiller’s take would be at least a little different from my take. And people need to make that distinction. They need to be able to identify Shiller’s takes on all of the various topics and then identify Bennett’s takes on all of the various topics and then of course they should make an effort to resolve the differences, to figure out for themselves which takes on which topics make the most sense and which can be improved and which can be discarded.

My point when I say that every word that I have written is rooted in Shiller’s “revolutionary” (his word) research findings is that I am not just some guy on the internet who woke up one morning and revealed that I had had a dream that valuations affect long-term returns and then addressed every question of investment strategy as if that were so. No. The finding that valuations affect long-term returns is rooted in peer-reviewed research that was published in 1981 and led to the awarding of a Nobel prize in Economics in subsequent years. So the foundation of everything that I have ever said on stock investing is very, very, very strong. People need to know that. That reality is an important part of this story.

I can get things wrong. People need to know that too, of course. But what has happened for 16 years running is that the Buy-and-Holders have not been able to find problems in what I say. If they could, they would. They naturally want to defend the strategy they believe in when I challenge it and the natural way to do that is to point out errors in my thinking. But in every case they have given up on that effort. In every case they either just stop participating in the discussion with me (this is what usually happens) or they resort to threats of violence and board bannings and all of the other Goon garbage that we have seen (this is what happens when I refuse to take hints that I should silence myself). When the Buy-and-Holders either resort to abusiveness or tolerate seeing others resort to abusiveness, they are making an implicit statement that they cannot imagine any other way of challenging my claims. That’s a big deal. The fact that that has been our universal experience for 16 years running now is a very big deal.

The ordinary experience would not be for me to play the role that I have played. I’ve written close to 400 columns at the Value Walk site. Let’s take just one of them to make the point. I wrote a column a number of years back in which I argued that, if it is true that valuations affect long-term returns, then it is not true, as has long been believed to be the case, that stocks are more risky than bonds. If it is true that valuations affect long-term returns, then most of the risk of stocks is optional. All that investors need to do to avoid that risk is to take valuations into consideration when setting their stock allocations. I was particularly proud of that column. I have been hearing that stocks are more risky than bonds for many years now. It is obviously a very big deal if it turns out that that is not so and if the community of investors learns that. And I have never seen anyone else say that. So that one has my name on it. I have a column posted on the internet with my name on it and with a date stamped on it showing when I came to this conclusion that makes a very important statement about how stock investing works in the real world. That’s just one column out of 400. But, if just that one column turns out to be correct, then I have changed the world of stock investing in a huge and very positive way. That’s as cool as it gets.

But is it true? That’s what we need to know. No one should go just by what I say. Anyone who would go solely by what I say about such a matter is an idiot. We agree re that much. What we don’t agree on is what we should do in response to that reality. Your response is to say that I should shut up, I should stop expressing my views on the implications of Shiller’s “revolutionary” (his word) finding of 1981 that valuations affect long-term returns. I think that’s a horrible, horrible, horrible response. I think that the proper response is to show the proper amount of skepticism re what Rob Bennett says but to have thousands of other smart people comment on Shiller’s Nobel-prize-winning research findings and find out what they mean that way.

Bogle should be writing about this stuff every single day. Shiller should be writing about this stuff every single day. Pfau should be writing about this stuff every single day. Bernstein should be writing about this stuff every single day. That’s the answer. The answer is not to shut Rob Bennett up, the answer is to get everyone else talking. That’s my sincere take, Anonymous.

The obvious question is: Why isn’t everyone already talking about this “revolutionary” (Shiller’s word) stuff? There are mountains of money to be made providing millions of middle-class people with honest, accurate, research-based investment advice. We know that there is a huge market for what I do because we saw the reaction at the Motley Fool board when I first raised the suggestion that Shiller’s findings should have changed what we think about how safe withdrawal rates are calculated. So why is it Rob Bennett who writes the column arguing that stocks are actually not more risky than bonds? Why aren’t there thousands of smart people out to help people and make a buck doing it who got to that one long before this Rob Bennett fellow ever came on the scene?

This is where death threats enter the picture. You Goons have your lives riding on the validity of the Buy-and-Hold Model for understanding how stock investing works. It drives you freaking nuts to think that you might have gotten it all wrong. You cannot bear to hear someone on the internet challenge your beliefs. And there are lots of non-Goons who don’t approve of the tactics you employ to crush discussion of the implications of Shiller’s findings but who are not too upset to see those discussions crushed and who thus go along with your use of those tactics anyway. And we end up as a society that has missed out once again on learning whether it is true that stocks are more risky than bonds or whether that is in fact not true.

Days pass. Weeks pass. Months pass. Years pass. We remain trapped in our ignorance despite 37 years of peer-reviewed research pointing us all to a better way.

The American way is not to remain trapped in our ignorance. The American way is to talk things over in civil and reasoned discussions. That’s why every board on the internet has rules prohibiting the tactics employed by you Goons. That’s why we have laws against financial fraud. The American way is to move forward even though it hurts sometimes to move forward because moving forward sometimes means learning how to pronounce those words “I” and “Was” and “Wrong.” I love my country. I favor the American way. That’s the bottom line here.

Shiller has not said every word that I have said. I am not claiming that he has. I am saying that every word that I have spoken is rooted in a “revolutionary” (that’s Shiller’s word) finding of Shiller’s from 1981 that we all should have been exploring for 37 years now. I have been exploring it for 16 years now. I offer no apologies. I think that every single person in the field should be doing what I am doing. We are not all going to agree. That’s of course fine. That’s part of what the American way is all about. So long as we remain civil and reasoned in our discussions, we will learn. And learning is the one true free lunch out there. So that is the road we need to take, the American road, the road approved by the laws of the United States and by the posting rules of every site on the internet.

That’s the deal, Anonymous. Every word that I say is rooted in Shiller’s 1981 findings, the findings that caused him to be awarded a Nobel prize. We need to know not just what Rob Bennett thinks are the implications of those findings, we need to know what Shiller thinks are the implications of those findings. We need to freakin’ ask him. If we drop all the Goon garbage, I am 100 percent certain that he will be happy to share with us. But we most certainly will have to drop the Goon garbage. He has shown that he is not going to be forthcoming until we do that. And of course we need to hear from thousands of others too. And all of those others will be forthcoming as well once we drop the Goon garbage. Dropping the Goon garbage opens the floodgates on the greatest advance ever achieved in the history of personal finance.

I am doing my part. I can do no more and I can do no less. If I want thousands of others to start sharing their sincere takes re the far-reaching implications of the last 36 years of peer-reviewed research in this field, then I had better be willing to take on all the heat that for the moment goes with doing that. So that’s what I do. I offer my take on hundreds of different topics that we all should be examining on a daily basis. And I take the heat that for the time being is associated with doing that. There will come a day when there will not be so much heat. I am 100 percent certain of that. Then there will be thousands offering their takes on all these questions, not just me. That will be a very, very, very good thing.

But it has to start with one, you know?

I wish that someone else had taken on you Goons. It would have made my life a lot easier if it had all gone down that way. I wouldn’t be in line for a $500 million settlement payment if someone else had been the trailblazer before I ever showed up on the scene. But I still would have preferred that it had been done that way. This job is fun intellectually and it is fun because it involves helping millions of people in a very big way. But the nasty stuff is not fun. I do it because it has to be done. I noticed back in the Summer of 2002 that no one else had done it and so I pulled up my big boy pants and got about the business of doing it. And here we are, you know?

I am not Shiller. What I say is not necessarily what Shiller would say. But every word that I say is rooted in what Shiller showed in 1981. It’s not my fault that we don’t today have thousands of people addressing all of the topics that need to be addressed. That’s the fault of you Goons. I don’t have the power to make you knock off the funny business. All that I can do is to call you out on your b.s. I have done that. And yet you continue! All that we can do at this point is to wait patiently for the price crash and see whether living through what that is going to mean for millions of people causes the emotional background in which these discussions take place to change enough for us to get lots of other people involved in the discussions in a constructive way.

I am highly confident that we will all pull together in the days following the crash to take this thing to a very, very, very positive place. But we are going to have to wait and see to find out for sure. I could be wrong. If I were, I would probably be the last to know. So we are just going to have to wait and see.

I naturally wish you all the best that this life has to offer a person regardless of how things play out, my good friend.

Rob