Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

Buy and hold is just one of your silly “strawmen”…….as if there are legions of people with the same portfolio. You just make up talking points and repeat them over and over again.

I am not sure what you mean when you refer to “legions of people with the same portfolio,” Sammy. There are millions of investors who don’t see a need to make adjustments in their stock allocations in response to big swings in the price of stocks. It’s the promotion of Buy-and-Hold that is responsible for that. It’s our failure as a society to encourage people to practice price discipline when buying stocks (as they do when buying everything else that they buy!) that was the primary cause of the economic crisis. And I think it would be fair to say that the economic crisis played a big role in bringing on the political frictions on both the left and the right that we are seeing evidence themselves today.

I am not a fan of Buy-and-Hold. I was obviously kidding up above when I said that I take it all back. I know from the thousands of conversations that I have held over the past 15 years with both ordinary investors and with experts that lots of smart and good people agree with me that Buy-and-Hold is dangerous or at the very least should be subject to intellectual challenges. If the Buy-and-Holders got it wrong when they concluded that there is no need for investors to practice price discipline when buying stocks, they have caused a mountain of human misery for millions of middle-class people. A failed retirement is not a life setback that it is easy to recover from.

Robert Shiller has described his research finding that valuations affect long-term returns (an impossibility if the market were efficient, as the Buy-and-Holders claim) as “revolutionary.” I think that’s right. I think that Shiller’s findings turn everything that we once believed about how stock investing works on its head. I believe strongly that we should be debating the merits of Buy-and-Hold vs. the merits of Valuation-Informed Indexing at every investing discussion board and blog on the internet.

We are not doing that today. I think it would be fair to say that the primary reason why we are not doing it is the behavior that we see from Buy-and-Hold “defenders’ like yourself when those of us who have grave doubts begin telling people about the many exciting implications of Shiller’s research findings, findings for which he was awarded a Nobel prize. I believe that you and your Goon friends have hurt millions of people in very serious ways with your relentless harassment and abusiveness. i think your behavior has been as unfortunate as unfortunate can be.

I think that the people of this country will overcome you in the end. I think we are close. We have had thousands of community members express a desire that honest posting on safe withdrawal rates and on scores of other critically important investment-related topics be permitted at every investing site on the internet. I have spoken to academic researchers who would like to do good and important work in this area but who are afraid to stick their necks out. I have spoken to investment advisors who are afraid to stick their necks out. I have spoken to journalists who are afraid to stick their necks out. I know that there are economists who are afraid to stick their necks out. I believe that there are policymakers who are afraid to stick their necks out.

The good news here is 50 times more good than the bad news here is bad. There’s only so long that you will be able to block millions of people from learning stuff that it is so important that they learn. I believe that we will see a huge advance in the days following the next price crash. I believe that the only thing keeping you Goons going today is that there is a big difference between there being a solid, research-based case that Buy-and-Hold can never work long term and people seeing with their own eyes how much human misery it causes them personally. Following the next price crash, people will be able to see with their own eyes what following a Buy-and-Hold strategy really translates into in the long run.

I am not God. I could be wrong. But that is my sincere belief.

And I really do wish you the best of luck in all your future life endeavors regardless of how all the investing stuff turns out.

Hang in there, my good 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:

Most stocks are held by institutions. And it’s fair to say these institutional investors – the ones with infinitely more resources and knowledge than you have – don’t think stocks are overpriced – otherwise they wouldn’t hold them.

The mistake that you are making is the mistake at the core of the entire Buy-and-Hold project — assuming that stock investing is an intellectual activity when in fact it is primarily an emotional activity and only secondarily an intellectual activity.

My mother used to lament that my older brother smokes and she would say to me “Why does he do it? — he’s so smart!” Being smart has nothing to do with it. My older brother understands perfectly well that smoking is not a good thing to do. He is controlled by an emotional and physical addiction. So it is with all who believe that it is not necessary to practice price discipline when buying stocks, both ordinary individuals who do that and people who work in Wall Street institutions who have studied this stuff for years who do that.

Some of the people who work in the Wall Street institutions have doubts re Buy-and-Hold. Wade Pfau had studied this stuff for many years before he connected with me. He had doubts. Because he had doubts, I was able to persuade him of a lot of things that I would not have been able to persuade him of had he not already entertained those doubts. But his doubts were not as strong as my own, largely because at the time we connected I had been exploring my doubts on an in-depth basis for a number of years and he was only beginning to explore his. So he ultimately pulled back from his explorations. But he used to marvel at how I could teach him so many important things even though I had never studied this stuff in a formal way. The explanation of why that is possible is that it is not an intellectual lacking that causes people to believe in Buy-and-Hold, it is an emotional lacking, and I had been working on the emotional lacking that had once made me a Buy-and-Holder myself for a number of years before Wade and I met up.

We need to have every Buy-and-Holder alive exploring his or her doubts on a daily basis. That’s what this is all about. We have seen during the first 15 years of The Great Debate that there are thousands and thousands of our fellow community members who today entertain doubts about Buy-and-Hold. To help them see the merit of those doubts, we need to open every investing discussion board and blog on the internet to honest posting re safe withdrawal rates and scores of other critically important investment-related topics. That’s how we provide people with what they need to make an informed decision of their own as to which sort of strategy to follow.

The people who work in the Wall Street institutions are humans like all the rest of us. They have emotions like all the rest of us. So they have an inclination to fall for the Buy-and-Hold hype just like all the rest of us. To some extent, its worse for them. They have a personal investment in the hype, they make their living promoting it. They know that if they explore their doubts and discover that Buy-and-Hold is a big pile of smelly garbage, they will in all likelihood lose their jobs if they speak up in clear and firm and bold ways about what they know. So it is a benefit in this field today NOT to be a big-shot in some Wall Street firm. The big shots are more compromised than the rest of us.

But we are ALL compromised. We all carry a Get Rich Quick urge within us. We all need to be fighting that Get Rich Quick urge on a daily basis to have any realistic hope of seeing our retirement plans work out in the real world. We all need to have discussion boards and blogs that permit honest posting available to us to help us do that. The laws against financial fraud are much-needed laws and we all need to work together to insure that they are enforced in a reasonable manner in the investing realm.

My sincere take.

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:

Hmm if that were true, why don’t the Wall Street institutions, the ones who have far more intelligence, experience, and resources than you ever will, set stock prices at half their current value?

There is no one person or one institution that sets stock prices, Anonymous. Stock prices are set by ALL investors.

The people who work in Wall Street institutions are in many respects like all the rest of us. Some of them are Buy-and-Holders. That group doesn’t see a need to divide by two. Some have doubts about Buy-and-Hold. They might be open to dividing by two but not push it because they don’t hear other people talking about it and don’t want to get on the bad side of the Buy-and-Holders. Lots of people have probably never thought about it.

We didn’t always know that we need to divide by two when prices are at two times fair value. We learned that in 1981, when Shiller published his “revolutionary” (his word) research. That’s the revolutionary part. Shiller’s research was revolutionary because it changed our understanding of how stock investing works in a fundamental way. Prior to 1981, we thought that the market was efficient, which means that there is no such thing as over-valuation. Now we know that over-valuation is a real phenomenon and that it needs to be taken into consideration in every calculation that is performed.

Now we just need to get the word out. When everyone understands the realities, we all move forward in a big way. That’s why I want to be able to post honestly. It’s why I want every other community member to be free to post honestly as well. When we are all posting honestly, we all learn from each other. Which is how it should be.

Are you able to say why the idea of permitting people to post honestly re the last 36 years of peer-reviewed research upsets you so? What do you see as the downside? If there are some who are not convinced that Valuation-Informed Indexing has merit, they can always stick with Buy-and-Hold, right? So what is the problem?

We have had thousands of community members express a desire to be able to post honestly and to learn from others doing so. Why do you think you have a right to deny them this? Are you willing to cover any losses they suffer as a result of your abusive behavior?

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:

Sammy’s level of respect for you is maybe one notch above child molester. The notion that replying to his comments serves any purpose at all is ludicrous. Even Goon Central had more meaningful discussion.

I am not suffering under any illusions that anything that I say is going to be given fair consideration by Sammy, Anonymous. If Sammy were capable of engaging in reasonable discussion, he wouldn’t be a Goon in the first place and there wouldn’t be any problem.

Why do people who are not Goons tolerate his behavior? That’s the question. That one affects all of us. If all of the Normals had written e-mails to the site administrator at Motley Fool back in May 2002, Greaney would have been given the boot 15 years ago and we wouldn’t be living through an economic crisis today. We know how people feel about this sort of behavior. We adopted laws making financial fraud a felony a long, long time ago. We have published site rules at every site at which I have posted prohibiting the tactics employed by Sammy. So why the heck is he still an issue?

Sammy remains an issue today because we all carry a Get Rich Quick urge within us and it is a powerful force. It doesn’t affect us all to the same degree. I think it would be fair to say that Sammy’s Great Rich Quick urge is more powerful than the Get Rich Quick urge residing in most of our fellow community members. But most of our fellow community members follow some sort of Buy-and-Hold strategy. And most of our fellow community members are using the numbers written on their portfolio statements as a reasonable indicator of the stock-market wealth they possess. And most of our fellow community members see someone like Sammy come along and say “oh, what a shame that some people don’t know how to behave” and then do nothing more about the problem. Fair enough?

That’s why stock investing remains risky today. The last 36 years of peer-reviewed research shows that there is no intellectual reason why investing in stocks should be any more risky than investing in Certificates of Deposit. The peer-reviewed research that I co-authored with Wade Pfau shows us that by opening the internet to honest posting on safe withdrawal rates and scores of other critically important investment-related topics, we would diminish the risk of stock investing by close to 70 percent. That’s pretty darn cool stuff, no?

Why is everyone who works in this field not working with me to get the word out re what the last 36 years of peer-reviewed research tells us about how stock investing works in the real world? There’s obviously a mountain of money to be made doing so. What’s the hold-up?

The hold-up is that the first rule of marketing is to flatter your potential customer. Valuation-Informed Indexing permits people to retire many years sooner and to reduce investing risk dramatically. But it does not flatter them. It does not tell them “oh, you are a 100 percent rational creature, all investors are” like Buy-and-Hold does. Valuation-Informed Indexing insults investors by telling them that they are highly irrational beings who will fall for any Get Rich Quick scheme that happens to come along if they do not work hard to resist their natural Buy-and-Hold inclinations. Valuation-Informed Indexing is what works. Buy Buy-and-Hold is what sells.

That’s the bottom line on all this. I am not able to go with what works from a marketing perspective when I consider how much human misery it causes. I am okay with a certain amount of marketing hoo-hah. But Buy-and-Hold crosses an important line when it deceives investors re how much money they need to accumulate to enter a safe retirement.

There were people who posted at the Motley Fool board who became friends of mine over time and who believed that the numbers in Greaney’s study were rooted in real research. I do not have it in me to play along with such lies. I view a failed retirement as a serious life setback. I feel strongly that, when I identify the safe withdrawal rate, I need to make a realistic effort to get the numbers right. If I discover at some point that I have made a mistake, I feel required to correct it and apologize for the harm that I have done.

I believe that a good percentage of the population is going to have sympathy for that position in the days following the next price crash, when they are able to see with their own eyes what the relentless promotion of the Buy-and-Hold “strategy” for 36 years after the peer-reviewed research was published showing that there is precisely zero chance that such a strategy could ever work out well for even a single long-term investor has done to our country. I’m not God. I could be wrong. But I know I love my country. And I know that someone who loves his country has an obligation to stick to it in circumstances like this. So we will see how that one turns out as time works its way through the hourglass.

I think that responding to Sammy’s comments serves a purpose. The good news of the 15-year saga is 50 times more good than the bad news of the 15-year saga is bad. To move forward to a world in which Buy-and-Hold and bull markets and economic crises are all a thing of the past, we are going to need as a society to make sense of what has been done to us and what we have done to ourselves. That story is contained in the materials set forth at this web site, including a good number of the comments that I have posted in response to Sammy.

We all need to be talking about this strange behavior. It is killing us. We cannot overcome it by ignoring it. Sunshine is a disinfectant. We need to get all the stuff that troubles us out into the open where we can make it clean. We need to overcome our Get Rich Quick impulse, not ignore it in the hopes that it will go away by magic.

Take a look at your own comment. You say that Sammy views me as nearly equivalent to a child molester. That’s a strong statement. Why would Sammy consider someone the near equivalent to a child molester solely because he happened to be the person who discovered the errors in a type of retirement study that was used by millions to plan their retirements? In intellectual terms, that makes zero sense.

In emotional terms, it makes sense. People care about their financial futures. If the last 36 years of peer-reviewed research is legitimate, millions of people have made terrible mistakes in planning their retirements. It hurts to hear that you have been taken. Lots of people have been taken. So we have seen a lot of emotional pain evidence itself during these 15 years of The Great Debate About Whether or Not to Permit a Great Debate. There is no one who is going to sprinkle pixie dust on us and make that pain go away, Anonymous. We are going to have to work up the courage to approach this matter like grown-ups and FACE THE FREAKIN’ PAIN.

We have to find some means to get accurate and honest investing advice out to millions of middle-class people. This is not optional. It is 100 percent imperative. It would be nice to think that we could do it without mentioning the 15-year cover-up. But that’s just not realistic. The first question people ask when anyone tells them about what the last 36 years of peer-reviewed research says is, “But what about what the Buy-and-Holders have been saying all these years — they say just the opposite!” You can’t spend hundreds of millions of dollars promoting a discredited investing strategy and then one day just turn on a dime and start promoting a true research-based strategy. There has to be a transition. There has to be an explanation of all that has gone down.

The proof that I am not a child molester is the fact that I am willing to work with my Buy-and-Hold friends and even with my Goon friends to do anything that is even a tiny bit reasonable to make the transition go as easy for my Buy-and-Hold friends and my Goon friends as possible. But there are obviously lines that cannot be crossed. I don’t commit financial fraud. Not in 15 years, not in 15 billion years. I don’t say that the Greaney study contains an adjustment for the valuation level that applies on the day the retirement begins. And I don’t deny that there is 36 years of peer-reviewed research showing that a valuation adjustment is required. Short of committing financial fraud and going to prison, I am up for just about anything that keeps feathers from being too ruffled.

When things get to a point where doing something a tiny bit reasonable comes to possess some appeal to you, please let me know. I am 100 percent in. Until that day, the best that I can think to do is to wish you all the best that this life has to offer a person. It’s the sort of thing that any self-respecting child molester would do for his friends.

Take care, man.

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:

If you had confidence in VII, you wouldn’t need to call people goons. You can dish out criticism, but you can’t take it.

I am a journalist, Anonymous. It is my job to tell this story fairly and completely and honestly. I am not telling the story honestly if I do not use the word “Goons.”

There was a time when the peer-reviewed research really did seem to support Buy-and-Hold. That was from 1965 to 1981. The Buy-and-Holders are heroes for telling us so many important things about how stock investing works. In 1981, those following the peer-reviewed research learned that the Buy-and-Holders had messed up re the valuations matter. In an ideal world, John Bogle would have come clean on the day that Shiller published his “revolutionary” (his word) research. Bogle did not come clean on that day. I believe that he was suffering cognitive dissonance. He truly believed in Buy-and-Hold and Shiller’s research findings really were revolutionary. It would be asking a lot to expect him instantly to appreciate all of the far-reaching implications of that amazing advance in our understanding.

The reality remains that we are now 36 years down the road. Our economic system will collapse if we do not find a way to get accurate and honest investing advice out to millions of middle-class people. This is not a joke. This is public policy concern #1 in the United States today. I am going to get the word out re what has happened over the past 15 years.

If I could wave a magic wand and take us back to the morning of May 13, 2002, I would be happy to do so. I am 100 percent sure that Mel Linduaer and John Greaney and Jack Bogle would sign on to the idea in about two seconds. I don’t have a magic wand. Neither do you. We are going to have to find another way.

The only thing that I have been able to come up with is just to continue reaching out to people and asking for their help. I am 100 percent confident that we will see different results following the next price crash. There are millions of good and smart people living in the United States, people who love their country and who will be happy to do what they need to do to help us all out. We will get to where we need to go. I wish that it would have happened sooner. But the full reality remains that the good news here is 50 times more good than the bad news here is bad.

When I explain to people following the crash that those who follow the peer-reviewed research have known for 36 years that it is not possible to perform any investing-related calculation without making an adjustment for the valuation level that applies on the day the calculation is made, most are going to ask an obvious question — Why didn’t I hear about this back when I could have saved my retirement by knowing it? What would you have me tell those people?

They didn’t hear about it because you Goons blocked my efforts to spread the word. Your efforts are documented at this site. Only Goons inject death threats into discussions of stock investing strategies. Only Goons inject demands for unjustified board bannings into discussions of stock investing strategies. Only Goons inject tens of thousands of acts of defamation into discussions of stock investing strategies. Only Goons inject threats to get academic researchers fired from their jobs into discussions of stock investing strategies.

People need to hear about the role that you Goons played in causing the economic crisis. The Goon aspect of the story is an important element of the story. This story doesn’t make sense without an explanation of the role played by you Goons. But for you Goons word would have gotten out 15 years ago. And there obviously had to be other Goons that blocked efforts to get the word out in the years from 1981 through 2002. No? What else could explain the fact that most people have never considered the far-reaching implications of Shiller’s revolutionary research findings?

I have sympathy for you Goons. You are hurting. You believe in Buy-and-Hold. You have told your friends about it. You were embarrassed to have your friends learn that you got the numbers wrong in the studies they used to plan their retirements. I wish that hadn’t happened to you. But you have no beef with me. Your beef is with Bogle and the other Wall Street Con Men. They should have come clean years ago. Had they come clean, you would have been spared that embarrassment. I did what I had to do to protect my friends at the Motley Fool site from suffering failed retirements. There were many people at the Retire Early board there who believed that Greaney’s study was legitimate research. Someone had to speak up. I was just the first community member to work up the courage to do something that very much needed to be done.

I am happy to bend over backwards to help you Goons in any way that I can. I don’t ask for anything in return. I will do that because I think it is the right thing to do.

I won’t say that Greaney’s study contains an adjustment for the valuation level that applies on the day the retirement begins. That’s fraud. That’s a felony. That’s a prison sentence. For me! Not freakin’ interested, you know?

I won’t say that there is not 36 years of peer-reviewed research showing that a valuation adjustment is required in any honest and accurate calculation of the safe withdrawal rate. Again, a felony. Again, not freakin’ interested.

You do the math.

Tell me what you want me to do for you and, if it is on the right side of the felony line, I will do it.

I won’t cross the felony line. Not in 15 years. Not in 15 billion years. Not for any amount of money.

You know the score. Be a tiny bit realistic in your requests and I will do anything that I can to help out. Ask me for things that I cannot possibly even consider doing for you and I obviously will say that I wish you all good things and be on my way. I don’t exactly have any other options open to me, do I?

Your move, old friend.

Rob