A Rich Life

The Old Ideas on Saving & Investing Don't Work -- Here's What Does

“I Am Saying That the Experts Are Wrong Because They Cater to Millions of Investors Who Are Wrong and Who on Some Level of Consciousness Know That They Are Wrong and Yet Want To Be Assured That They Are Right. I Am Essentially Saying That “the Customer Is Always Wrong.” Whew! That Can Be a Tough Sell.”

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

Rob, your awesome mind-reading powers notwithstanding, I can assure that even if the market drops to zero tomorrow, I will take Bogle’s opinion over yours. On literally any topic.

That’s emotion speaking, Anonymous.

So long as I hear so much emotion, I am not persuaded. To get me on board, you would need to be able to rein it in a bit.

I am not saying this to bug you. I acknowledge that it may be that you are right and that I am wrong. I am just stating my opinion re a topic that is relevant to the general topic of the role that investing plays in investor decision-making. I continue to believe that you just don’t know what your feelings about Bogle will be following a price crash that causes you to lose more than half your life savings and that remains in place for a number of years.

We will just have to wait and see how it all plays out. If you really do stick with Bogle after we fall to 8 or below, I hope that you will recall this conversation and bring it to my readers’ attention at that time. That would be an entirely fair thing for you to do, says the today version of me!

By the way, I think that this particular post of yours and my response to it reveals one reason why Valuation-Informed Indexing does not click with some people. We like to believe that we are in control of our own decisions, peer-reviewed research showing otherwise be darned!

I am not just saying that the “experts” in this field are wrong. I am saying that the experts are wrong because they cater to millions or investors who are wrong and who on some level of consciousness know that they are wrong and yet want to be assured that they are right. I am essentially saying that “the customer is always wrong.” Whew! That can be a tough sell.

Don’t let the bad guys get you down, my good friend.

One more thing. It’s not really “mind reading.” All that I do is to report honestly and accurately what the peer-reviewed research tells all who are open to hearing its message. The historical return data knows our minds better than we know our minds! Yikes! It all sounds kinda creepy when you think about it that way. Still, I cannot resist that 70 percent risk reduction combined with the far higher returns.

Please take good care.

Rob

“My Job Is To Keep Things From Getting Out of Control. That Means Helping People to Understand the Pressures and Fears That Drove You Goons to Do What You Did. My Hope Is That Clear-Thinking People Will Step Forward and That We Will See Prison Sentences on the Shorter End of the Spectrum of Possibilities.”

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

Rob, prison overcrowding is a serious issue today. Given that most Goons are non-violent offenders, do you see a scenario where they just wind up on probation after the next big stock crash? Or are we looking at real prison time, in your view?

I don’t think it’s possible to say. There’s never been a situation like this before. People are going to be very pissed off to find out that they have lost most of their life savings and that it was all 100 percent unnecessary. I know that I would be very pissed if that happened to me. So I am not going to say anything to make light of the justified anger that millions of middle-class people are going to feel towards you, Anonymous.

Concerns over prison overcrowding didn’t keep Madoff out of prison. I don’t think you can count on that sparing you.

But I do think it’s important that we pull together as a society and put the negative stuff behind us and do all we can to understand why you Goons did what you did and to be as forgiving as possible. I will certainly be arguing the case with whatever energies and skills I am able to direct to the project. So I am not going to say that I believe with 100 percent certainty that there will be actual prison sentences either. If things go the way I would like to see things go, there will either not be actual prison sentences or at least there will be prison sentences that will be a lot shorter than the ones you would ordinarily expect to see in such circumstances.

We will have to see how it goes. The biggest factor is going to be the level of people’s anger. I have worries that people are going to be very angry. I say that because the level of emotion that we have seen over the past 14 years has been off the charts. The greater the extent of the irrationality we see during a bull market, the greater the extent of the irrationality we should expect to see during the bear market that follows. People don’t like to be tricked out of their retirement money. So I can easily see us experiencing an explosion of hate toward you Goons.

But my job is to keep things from getting out of control. In the days before the crash, that means doing what I can to bring the con to a close so that the hate does not get so out of control. In the days following the crash, that means helping people to understand the pressures and fears that drove you Goons to do what you did. My hope is that clear-thinking people will step forward and that we will see prison sentences on the shorter end of the spectrum of possibilities.

I obviously cannot guaranty anything. It may be that my voice will count for as much in the days following the crash as it has in the days leading up to the crash — that is, not too much at all. We are in uncharted waters. I think the key here is the comment that you made a little while back, that perception is everything. People will look at the Post Archives and form a determination as to how much you Goons were responsible for what happened to them.

I wouldn’t want to be in your shoes, it would be fair to say that much! But I do not personally believe that it would be fair to put all the blame on you Goons. What happened is largely due to human ignorance; as a society we truly did not know how stock investing worked until 1981 and in the grand scheme of things not so much time has passed since then. And lots of institutions had to fail us for you Goons to do what you did — journalists failed us, bloggers failed us, economists failed us, policymakers failed us, academics failed us, and on and on. Our own freakin’ human nature failed us!

If people take all that happened into account, I would think that there would be actual prison sentences but perhaps not terribly long ones. But I do not feel that I can say with any confidence at all how things are going to play out. People may strike out in anger without taking all of the realities into account. We will have to wait a bit to find out together how it all plays out.

I naturally do wish you all the best with it regardless of any differences that we have re the investing matters.

Rob

“Michael Kitces Does Not EVER Address the Financial Fraud Matter in Clear and Firm and Simple and Bold Language. Everyone in the Field Tiptoes Around It. Freakin’ Robert Shiller Tiptoes Around It! No One Wants to Use the Words “Financial Fraud” or the Words “Prison Sentence” or the Words “Got the Numbers Wrong” or the Words “Caused the Economic Crisis.” I Use Those Words. It Is Only By Using Those Words That We Can Bring This Madness to an End.”

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

So, is Michael lying in this article?

The words that appear in the article are accurate.

But he is obviously not being 100 percent honest.

He knows that the Old School safe withdrawal rate studies do not contain adjustments for the valuation level that applies on the day the retirement begins and he is not saying anything about it. That issue is 5,000 times more important than the issue he does address. So it is exceedingly odd that he does not address it. And this is of course not an isolated case. Michael does not EVER address the financial fraud matter in clear and firm and simple and bold language.

That’s why the financial fraud problem has remained a problem for 14 years running now. It’s not just Michael who tiptoes around the most important issue in the personal finance realm. Everyone in the field tiptoes around it. Freakin’ Robert Shiller tiptoes around it! No one wants to use the words “financial fraud” or the words “prison sentence” or the words “got the numbers wrong” or the words “caused the economic crisis.”

I use those words.

I will continue to use those words.

Because it is only by using those words that we can bring this madness to an end.

And don’t give me any of the b.s. about me being “mean” to my Buy-and-Hold friends by using those words, Anonymous. You wouldn’t be on your way to spending the remainder of your life in a prison cell if someone who came along before you came on the scene had posted about the mistake that the Buy-and-Holders made that was discovered 35 years ago at any time between 1981 and the day you came on the scene. You are going to prison because thousands of people exhibited the same cowardice that Micheal Kitces showed in that article, thereby leading you to believe that you could “get away” with all of the garbage that you have pumped out over the past 14 years.

I’m not doing it.

It doesn’t matter how many death threats you direct at me. It doesn’t matter how many demands for unjustified board bannings you direct at me. It doesn’t matter how many acts of defamation you direct at me. It doesn’t matter how many threats of career destruction you direct at me.

I enjoy all of that smelly garbage just as much as Michael Kitces and everyone else in this field enjoys that smelly garbage. Not at all. But I cannot bear to think of what we have as a society done to the financial futures of millions of middle-class Americans by continuing to tell these lies about how stock investing works. Many of the people who posted at the Retire Early board were my friends. They matter to me. I don’t go there. No in 14 years. Not in 14 million years. It doesn’t happen.

I believe that I will one day become one of the richest men in the United States as a result of my working up the courage to be the one to take on this massive act of financial fraud. But maybe not, you know? No one can say anything for certain. Maybe we will all go down in flames following the next price crash. Maybe this act of financial fraud has grown so big that it has gone beyond the point at which we can as a society ever make it right. Maybe we will all go down in flames and I will end up with a big fat nothing for my efforts, no better off than you and no worse off than you.

If that happens, then so be it, you know?

I did what I could. I couldn’t live with myself if I didn’t do what I could. This way I can live with myself until the day that it all goes down in flames.

I don’t personally believe that it is going to go down in flames. I think we are going to work up the courage we need to turn things around and to bring this Buy-and-Hold Crisis to a full and complete stop. I believe that we are on the one-yard line. I believe that Michael Kitces is so close to flipping and going with a fully honest approach that he can taste it.

But either way I feel better about playing it the way that I have played it than I would feel if I had played it the way Michael has played it. I don’t say that I am better than him. I was afraid to speak up for three years. And I certainly think it would be fair to say that I am the world’s leading authority on just how brutally abusive the Buy-and-Holders become when challenged by honest reports of what the last 35 years of peer-reviewed research in this field says. So I am fully sympathetic to Michael’s situation. I am grateful that he has offered as much help as he has (he has offered a great deal of help).

But I cannot play it the way that Michael has played it. Not after what I have seen. Too many people have lost their jobs in the economic crisis brought on by the sick promotion of Buy-and-Hold “strategies” for 35 years after they were 100 percent discredited by the peer-reviewed research. Too many people are facing failed retirements as a result of the failure of people in this field to speak up about the mountain of Buy-and-Hold Lies. Too many early retirement dreams have been destroyed. Too many of you Goons are going to prison for long stretches of time. Too many discussion boards and blogs have been burned to the ground. Too many people have seen their faith in their fellow humans undermined by exposure to the poison that you Goons pump out so relentlessly. We have seen too much political unrest surface as a result of the destruction of middle-class lives that inevitably follows any time-period in which the Wall Street Con Men are able to persuade large numbers of people that there might be some merit in their Buy-and-Hold marketing pitch.

It’s not for me, Anonymous.

You go do whatever in your mind seems right for you.

These horrors are not for me. I OPPOSE the 14-year cover up of the errors in the Old School safe-withdrawal-rate studies.

Please mark it down. Please tell all your friends. Please get the word out all over the internet. Please bring lawsuits against me if you think that would help publicize the matter.

But just please for your own sake stop believing that there is ever going to come a day when I am going to join Michael in tiptoeing around this matter. I love Michael. I admire him. I respect him. I value our friendship. I am grateful for his many fine contributions. But I also love my country. My country is under attack and needs my help urgently. I am not able to tiptoe around the matter causing so much human misery.

It’s not freakin’ in me.

I hope that helps a bit.

I wish you all good things.

Rob

“Wade Pfau Has Two Small Children to Support. That’s Why He Felt That He Could Not Stand Up to Bogle and His Various Internet Goon Squads. We Are Going to Need to Create Communities of People Outside the Investing Realm Who Are Willing to Help Out Those of Us Trying to Expose the Corruption and To Open Up the Possibility of People of Integrity Obtaining Work in the Investing Field.”

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

The non sequitur answer you give when you have no answer.

Try to stay on point, Rob. What gain is to be had by spending your time on political sites, Twitter, etc?

The investing advice field has become completely corrupt in the Buy-and-Hold Era, Anonymous. Lots of people know about Shiller’s research findings. Lots of people know that he was awarded the Nobel prize for this “revolutionary” (his word) advance. And lots of people in this field want to do honest work and to thereby help other people (they are just people after all — people in every field of human endeavor possess a natural desire to do honest work and to thereby help other people).

But they feel that their careers will be destroyed if they dare to “cross” the Buy-and-Holders by reporting honestly on the implications of the last 35 years of peer-reviewed research. Wade Pfau is the obvious and most clearly demonstrated example of the phenomenon. But there are of course many, many others. Rob Arnott told me about academic researchers he knows who tried to do honest research and who were taken aside and warned that their careers would be destroyed if they did so. Jack Bogle himself includes lots of honest stuff in his speeches all the time and then undermines his own message by suggesting in the last paragraph that Buy-and-Hold is just fine.

The Buy-and-Hold Crisis does not affect only people who work in the investing field. It affects all of us. It is a political issue. We have millions of people unemployed today because of the crisis. We have millions on the way to suffering failed retirements. We have people on both the left and the right losing confidence in our political process. This is serious stuff. We are going to have to find some way to get honest investing advice out to people. We are going to need to get prison sentences announced for you Goons and then to reward those doing honest and accurate work in this field with various economic benefits.

People respond to incentives. We need to provide positive incentives to people of integrity who want to work in this field and call the Buy-and-Holders out on their b.s. We can’t find people in the investing field to do it because people trying to make a living in this field are too compromised. Wade has two small children to support. That’s why he felt that he could not stand up to Bogle and his various Internet Goon Squads. We are going to need to create communities of people outside the investing realm who are willing to help out those of us trying to expose the corruption and to open up the possibility of people of integrity obtaining work in the investing field.

I haven’t finalized my plans in this area. I am still outlining an agenda. My guess is that I will get to work on this new phase early next year. I have been thinking more and more about it over the past few months.

I am debating not even going to FinCon16 in September because I may want to devote my time and energies in this new direction. I have not made a decision but I expect to do so within the next few weeks. Regardless of which way I go with the FinCon decision, I more and more expect to be moving toward directing more of my efforts at political sites and at social media sites.

Once we generate pressure from outside the investing realm for honest work to be permitted in the investing realm, I believe that we will see things begin to happen quickly in the investing field. There’s is already a great deal of pent-up desire both to provide honest investing advice and to hear honest investing advice. We have been seeing that going back to May of 2002. We need help from outside the investing field to help deal with the pervasive corruption within the field. I have tentatively concluded that that’s where I should be placing most of my efforts in days to come.

Those are my scattered and tentative thoughts re this matter at this time, in any event.

I hope that helps a bit.

Hang in there, my old friend.

Rob

“My Aim Over the Next Year or Two Is to Shift My Energies Away from Investing Sites to Political Sites and to Social Media in General in an Effort to Explain to Those Outside of the Industry How This Industry Got So Fucked Up at the Very Moment in History When it Came Within Inches of Achieving the Amazing Promise of the Early Days of the Buy-and-Hold Era.”

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

How long should we wait for the crash, Rob?

You can wait as long as you want to wait, Anonymous.

Or don’t wait at all, if you prefer.

It’s up to you. It always has been. It always will be.

I believe that we will see another price crash that will take the P/E10 value below 8. I don’t believe that because I have a crystal ball that shows me that when I look into it. I believe that because there is now 35 years of peer-reviewed research showing that stock price changes are caused by shifts in investor emotion and, every time in history in which we have seen the positive shifts that cause a secular bull market transformed into the negative shifts that cause a secular bear market, we have ended up at a P/E10 level of 8 or lower.

I am going to wait until it happens. Or until I come across some reasoned argument for why it may not happen. One of those two.

When people ask me what I believe, I am going to tell them. When they ask why I believe what I believe, I am going to tell them that. When they ask me what I think follows from the 35 years of peer-reviewed research that forms the foundation for this new way of thinking about how stock investing works, I am going to offer whatever thoughts along those lines that I am able to muster. I am going to continue to encourage challenges to those thoughts because I think we need to have lots of smart people offering their thoughts re these matters and because I think that I could make mistakes and I worry that if people put too much confidence in what I say, they could get hurt by doing that and I don’t want to see that happen. Also, I learn new things when people criticize my ideas in reasonable ways and I like to learn new things.

I am just going to continue exploring this path for so long as it seems to be generating a bigger payoff than anything else that I could be doing with my time. I believe strongly that the last 35 years of peer-reviewed research in this field is the most important 35 years of peer-reviewed research in the history of investing analysis. I believe that Buy-and-Hold is the past and that Valuation-Informed Indexing is the future I naturally intend to devote my energies to exploring the model for understanding how stock investing works of the future rather than the model of the past. It wouldn’t make even a tiny bit of sense for me to play it any other way. For reasons that are perfectly obvious to any human beings capable of thinking clearly about these matters (but of course not necessarily for those suffering the pains of cognitive dissonance because they invested too much of their emotions in a model that advanced our understanding of how stock investing works in some very big ways but that failed in its treatment of valuations and that has not yet been corrected by its lead promoters).

Does that help?

I am going to continue to give credit to my Buy-and-Hold friends for their many amazing contributions and I am going to continue to try to explain how they got on the wrong track and why as a society we need to make special efforts to be forgiving of their mistakes rather than judgmental. I see it as my job to pull us all together and to focus on the positive side of this story (which is huge indeed). That’s my most important job of all, in my assessment. So I am going to put a particular emphasis on that aspect of the question. My aim over the next year or two is to shift my energies away from investing sites to political sites and to social media in general in an effort to explain to those outside of the industry how this industry got so fucked up at the very moment in history when it came within inches of achieving the amazing promise of the early days of the Buy-and-Hold Era.

I am going to continue to make the point that we need to pull together and demand prison sentences for those who have posted in “defense” of Mel Lindauer and John Greaney and Jack Bogle because I view it as cowardly for us all not to do what we can to help shorten the prison sentences of those friends of ours who have come to find themselves walking down a very dark path indeed. We are all going to feel better about ourselves if, when those prison sentences are announced, we are able to say that we did everything we could when there was still time to take positive steps. I would want my friends to help me out if the tables were turned. So I hope to continue to be able to work up the courage to do for my Goon friends what I would want you to do for me were I sitting on the other side of the table.

Does that cover it?

Wait as long as you like, Anonymous. Please don’t feel any push from my side of the table to wait one second less than you like or one second more than you like. God created lots of different people and each of those people needs to put forward his or her particular take for the right result to be achieved through the process through which ideas are advanced, challenged and replaced in the Marketplace of Ideas. We all need you to decide how long you should wait and we all should be encouraging you to wait precisely that long.

I will wait until the crash arrives or until a better model than the one supported by the last 35 years of peer-reviewed research (based on 145 years of stock market history) comes along. I am a peer-reviewed research guy. I learned that one from my good friend Jack Bogle. Nice fellow. Pretty darn smart guy too. You should check him out.

That’s my sincere take re these terribly important matters, in any event.

Love is the answer.

I am sure.

Rob

“There Are Hundreds of Thousands of People Who Make Their Living Giving Investing Advice. When a Fundamental Advance Is Achieved, They Are Put in a Tough Spot. It Makes Them ‘Look Bad’ to Acknowledge to All the People They Have Advised That They Got it Wrong. This Is a Field in Which ‘Expertise’ Is Highly Valued. So the People Who Would Have Jumped at the Opportunity to Spread Shiller’s Ideas Had They Not Previously Promoted Very Different Ideas Instead Ignored Them.”

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

Yes, it makes a lot more sense versus running around calling people goons, making up stories about death threats, sending out 30,000 emails about Wade Pfau, calling Jack Bogle a con man, expecting $500 million windfalls, etc.

It’s a process, Sammy.

Shiller’s “revolutionary” (his word) finding that valuations affect long-term returns changed our understanding of how stock investing works in a fundamental way. It’s a huge advance. It’s good stuff piled on top of good stuff piled on top of good stuff. With now downside whatsoever.

So what’s the problem?

Really big advances are hard to accept. It’s a paradox. We all want to enjoy the benefits that come with huge advances in understanding. But the practical reality is that there are hundreds of thousands of people who make their living giving investing advice. When a fundamental advance is achieved, they are put in a tough spot. It makes them “look bad” to acknowledge to all the people they have advised that they got it wrong. This is a field in which “expertise” is highly valued. So the people who would have jumped at the opportunity to spread Shiller’s ideas had they not previously promoted very different ideas instead ignored them.

They have now ignored them so long (35 years!) that they feel a need to cover them up, to pretend that the finding that stock risk is not static but variable (that is, that all investors seeking to keep their risk profiles roughly stable are REQUIRED to change their stock allocations in response to big valuation shifts) is not such a big deal, that Buy-and-Hold might somehow work out okay for some despite the 35 years of peer-reviewed research saying otherwise.

Did I cause any of this? I did not. All of these realities were in place when I came on the scene in 2002. You are mad at the wrong guy.

Be mad at the humans, you know? The humans are the ones who suffer cognitive dissonance when huge advances are achieved and who try to delay realization of those advances for as long as possible. We are what we are. We are flawed in that we really do suffer from cognitive dissonance when faced with such circumstances and in that we really do engage in cover-ups that cause a lot of human misery. But please don’t forget that it is also the humans who come up with the huge advances that help so many to live richer and fuller and brighter and happier lives. Both things are so. We are mess-ups and we are heroes. Whachagonnado?

I’m going to continue to encourage a speeding up of the transition from the now discredited Buy-and-Hold Model to the first true research-based model for understanding how stock investing works — Valuation-Informed Indexing. I am excited re our future. This is the real thing. This is what Bogle had in mind when he came up with his first-draft version of a research-based approach. I want to see the guy realize his dream. So I am going to continue to do what I can to get the word out about what we have learned over the last three decades re what really works.

One of these days you are going to come around and join in the effort to get over The Big Black Mountain and to the place where deep in our hearts we all want to go. I hope it happens soon. The sooner it happens, the better for every single person involved. But, if there’s one thing that I have learned over the first 14 years of our discussions, it’s that you cannot rush a Goon. You are going to come around when you are good and ready to come around and not two seconds sooner no matter how much I long to see you (and millions of others!) enjoy all the good stuff waiting for you on the other side.

I naturally wish you all the best regardless of when you make your move or even in the event that you elect never to make it. Despite your nastiness, I have learned many important things by talking things over with you and I am grateful for the role you played in helping me out in that way.

My best and warmest wishes to you.

Rob

Valuation-Informed Indexing #309: The Value Proposition of Stocks Changes By a Factor of Three As Valuations Move from Low to High Levels

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I’ve posted Entry #309 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Value Proposition of Stocks Changes By a Factor of Three As Valuations Move from Low to High Levels. 

Juicy Excerpt: Please understand that it is Rob Bennett saying these things about Wade Pau’s graphic, not Wade himself. I believe that, if you asked him privately, Wade would agree with the thrust of what I am saying. We exchanged hundreds of e-mails during the 16 months that we were working together and he told me during that time that he was so excited about what he was finding in his research that he could hardly sleep at night. He once exclaimed bluntly: “Yes, Virginia — Valuation-Informed Indexing works!” But for now Wade is letting his graphic do the talking for him — that alone shows that he is a lot smarter than his old friend!

“When Prices Are Insanely High, Buy-and-Holders Tell Themselves That “Oh, Price Doesn’t Really Signify Anything of Importance, the Value Proposition of Stocks Is Always the Same.” And When Prices Are Moderate or Low, They Say “Wow, Look at Those Prices — Stocks Are Really a Good Buy Now!”

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

“Over time, I’ve become more comfortable with the idea of making more allocation changes. I still don’t make them at all frequently. But I permit myself an allocation change whenever a significant valuation change takes place.”

What allocation changes? You got out of stocks in 1996, according to your posts and you never got back in, including the buy if a lifetime in 2009.

Part One of the article explains that it is about what I have learned about the how-to aspects of stock investing through use of the five VII calculators posted at this site. I have not made any allocation changes in my personal account since the Summer of 1996 (I have been at zero stocks during that time). But I make allocation changes in the portfolios I create with the Scenario Surfer. I am comfortable today making more allocation changes in the runs I do with the calculator that I made in the old days. However, I still do not make many changes. There is no need to do so.

If you truly think that stocks provided the “buy of a lifetime” in 2009, you do not possess a strong understanding of the past 35 years of peer-reviewed research, Anonymous. The fair-value P/E10 value is 15. The lowest we ever got in early 2009 was 13. Stocks represent a very strong long-term value proposition when they are priced at fair-value levels or a bit below, to be sure. But it is silliness to suggest that investors are being offered the “buy of a lifetime” when stocks are offered at fair prices. There has never once in the history of stock investing been an extended time-period in which investors were not able to purchases stocks at prices well below fair-value levels. I have a funny feeling that it’s not all going to turn out different this time than how it has ever turned out before. Just one of those crazy hunches that I have been known to experience from time to time.

I also find it worth noting that a long-time Buy-and-Hold Goon feels okay with using the phrase “buy of a lifetime.” If you truly believed in Buy-and-Hold, you would believe that stocks offer the same value proposition at all times (that’s the only possible rationalization for staying at the same stock allocation at all times).

You’re not the only Buy-and-Holder who does this sort of thing, Anonymous. I see it all the time among Buy-and-Holders. When prices are insanely high, they tell themselves that “oh, price doesn’t really signify anything of importance, the value proposition of stocks is always the same.” And when prices are moderate or low, they say “wow, look at those prices — stocks are really a good buy now!”

It’s marketing garbage planted in their heads through the relentless promotion of Buy-and-Hold “strategies” by the Wall Street Con Men. The come on is: “Come buy our product because it is always a good buy regardless of how insanely overpriced it is!” Then, when overpriced stocks wipe out their marks, the new push is: “Oh, don’t let that bother you, just because we lied about stocks being a good buy before doesn’t mean that we are lying about it today — stocks really ARE a good buy after all you marks have been wiped out and the only people with the money to buy them are us Wall Street Con Men!”

Heads the Wall Street Con Men win, tails the millions of middle-class investors whom they view as their marks lose. Funny how it works out that way with the pure Get Rich Quick approach. And people said Bernie Madoff was dishonest!

Buy-and-Hold! Buy-and-Hold! Buy-and-Hold!

The New Science!

Rob

Buy-and-Hold Goon to Rob: “You Are Now Close to 60 and Getting a Real Job, Instead of Trolling the Internet, Will Be Very Difficult. Bogle, and His Followers, Have Had Successful Strategies. Your Fairy Tales Won’t Change History.”

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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, followed by the response of one of my Buy-and-Hold Goon friends:

We’ll have to wait and see how it all plays out, Sammy.

Shiller published his “revolutionary” (his word) research findings showing that valuations affect long-term returns in 1981. When a revolutionary advance is achieved, all existing strategies need to be updated. Can you name 20 changes that Bogle made to his Buy-and-Hold strategy upon his discovery of Shiller’s findings? Can you name 10? Can you name 5? Can you name 1?

We need to update Buy-and-Hold to reflect the last 35 years of peer-reviewed research in this field. This is important. Millions of people’s retirements are riding on it. When you update Buy-and-Hold to reflect the last 35 years of peer-reviewed research, you’ve got Valuation-Informed Indexing That’s the updated version of Buy-and-Hold that I have been writing about for 14 years.

When Bogle acknowledges the need for an update, all of the nasty stuff that you refer to above goes away. It is only the Buy-and-Holders who engage in this behavior. And there is no need for the behavior once the update is made.

We are all on the same side, Sammy. We all want the same things. We all believe in using the peer-reviewed research as a guide to how to invest. We all should be urging Bogle to make that update so that we can all begin enjoying the benefits of those last 35 years of research.

This is my sincere take re these terribly important matters, in any event.

I naturally wish you all the best that this life has to offer a person.

Rob

We have already seen it played out. Your retirement plan failed. Your predictions of a stock crash didn’t happen. Moving the goal posts is not a strategy. You are now close to 60 and getting a real job, instead of trolling the Internet, will be very difficult.

Bogle, and his followers, have had successful strategies. Your fairy tales won’t change history.

Buy-and-Hold Goon to Rob: “I Guess My Vanguard, Fidelity and Schwab Statements Must Be Full of Lies”

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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 guess my Vanguard, Fidelity and Schwab statements must be full of lies.

That’s correct. And that’s a big deal.

People need to know the amount that they have put aside for retirement to be able to plan their financial futures. This is important stuff because it is so basic. If you get these basic numbers wrong, you get everything wrong.

We need to integrate what Shiller showed with what those who came before Shiller showed. Only then can we begin as a society getting the numbers right and bringing an end to these horrible economic crises that cause so much misery to millions.

The first step down the positive path is giving ourselves permission to talk about the far-reaching implications of Shiller’s amazing research. We cannot come over time to understand things that we never permit ourselves to discuss.

The reason why as a society we have for 35 years been reluctant to proceed down this positive path is that the positive path leads in a very different direction than the Buy-and-Hold path that we are on today. The words “I Was Wrong” or “I’m Not Sure” are magic words, like “Open Sesame.” When as a society we say those words, the world changes in a life-affirming way for all of us.

My job is to help us all to see this, to provide us the courage we today lack to leave behind the path that has failed us and to move to the path that offers so much promise.

The numbers on all of our portfolio statements are wrong. Not a little wrong. A lot wrong. We need to get that fixed. But a society cannot fix a problem until it acknowledges that it has a problem. We are stuck at the Should-We-Acknowledge-the-Problem stage.

A good number of us (about 20 percent of the population of most large internet discussion boards and blogs) see appeal in the idea of acknowledging the problem (the fact that Fama’s findings and Shiller’s findings cannot be reconciled reveals that there is a flaw in the core ideas that support the Buy-and-Hold Model). You Goons don’t like the idea of acknowledging that there is a problem. You don’t want to see effective challenges to Buy-and-Hold to appear on your computer screens. You want to shut that stuff down. That sort of thing makes you very angry.

I am working at cross purposes with you Goons. I want all this stuff to get out. I don’t think it is healthy to keep this stuff covered up. I believe that the 35-year cover-up has been an unmitigated disaster. It threatens to undo all the good work that those who came before Shiller did. If they correct the one error they made, all of their good work produces amazingly good fruit. If they fail to correct the one error they made, our economic system collapses and the collapse in on the heads of those who made the mistake that set the forces in motion that caused the collapse. This is a good thing how?

The next chapter of the saga arrives with the next price crash. The next drop will hit people with more force than the 2008 crash because people’s financial resources have already taken a big hit and thus there is less strength to weather hits at this time. The economic problems will worsen and the political frictions will worsen.

Then the people who see the problem and have long wanted to do something about it but who have held back out of fear of what you Goons would do to their reputations and their businesses if they spoke with full honesty about their views re how stock investing works will face a decision: Continue down the road that has now caused four economic crises in the past 145 years and that has in recent years caused political frictions threatening to tear our country apart or dare to “cross” you Goons by suggesting that we enforce the laws against financial fraud in a reasonable manner and permit people of integrity to do work in the investing advice field just as we permit people of integrity to do work in every field other than the investing advice field.

I believe that we are going to choose the positive path at that time. I cannot prove it. I don’t have the ability to see into the future. So I could be wrong. But that’s what I believe. Naturally every action that I take today is rooted in that belief. We all act pursuant to our beliefs. You Goons believe on one level of consciousness that we will not as a society work up the courage to send you Goons to prison. That’s why you Goons do what you do, work as hard as you can to stop me from doing what I am trying to do.

I am working at cross purposes with you. It doesn’t follow that I don’t like you. I once believed in Buy-and-Hold. I know how pissed I would have been if I continued down that path and then one day learned that it had all been a lie (that’s not entirely true, in the early days it was a mistake rather than a lie, but the emotional reaction that one has to learning that one has planned one’s entire life around a false premise is that one has been lied to). So I have sympathy for the Goon position. I don’t support the criminally abusive stuff, obviously. But I have sympathy for the flawed (like me!) human beings who have experienced so much pain in their travels through the Valley of Tears that they have come to feel a need to engage in such behavior.

Had circumstances been different, it could have been me. I think that’s the right way to think about it. We are all tempted at times to respond to bad behavior that we see play out in front of us by declaring to ourselves, “Oh, I am so much better than that, I could never go there.” The smart thing (in my view!) is to let God decide that one. None of us know ourselves well enough to know with certainty how we would react if we were placed in the same pressure cookers than caused others to behave in a way that we can safely conclude from our non-pressure-cooker-exposed selves is “bad.” My take.

Anyway, you are hitting on something important with this question, Anonymous. The numbers on all of our portfolio statements are wrong. Prior to 1981, those numbers were wrong because we lacked the knowledge needed to get them right. We truly believed that the market was efficient and that the market was capable without extensive discussions of investor emotion of getting the numbers right. In 1981 we “learned” (we learned this intellectually but we have not yet permitted ourselves the emotional freedom to integrate the new good knowledge with the good old knowledge while discarding the discredited old knowledge) that, to get the numbers right, we need to permit widespread discussion of the emotional realities of stock investing (discussions that we quite reasonably refrained from in our days of ignorance because discussions of investor emotions are nonsensical in a world of efficient markets).

We live in the worst of all worlds today. Our dominant model for understanding how stock investing works is a numbers-based model. Numbers are everything in this world. The success of every strategy that we pursue depends on getting the numbers right. But because of a mistake that we made in 1965 and that has remained uncorrected since it was discovered in 1981, we today are getting all the numbers wrong. Every article that is published on the topic of how to invest in stocks makes the economic crisis worse because it fills people’s heads with more garbage.

People are losing confidence in our institutions because they are seeing that things are getting worse and the “leaders” of our country are not taking effective action. But each time one of us dares to offer effective leadership, you Buy-and-Hold Goons go into action with your threats of physical violence and with your threats of career destruction. We have come a long way from the days when my good friend Jack Bogle was making the case that we all should consider what the peer-reviewed research shows when making investing decisions. Holy moly!

I love my country. I believe that there are millions of good and smart and hard-working people living in it. I believe that even some of you Goons could fairly be described as good and smart and hard-working people if you were dealing with some subject that caused you less distress than the message of the last 35 years of peer-reviewed research and what it says about the role you played in bringing on the worst economic crisis in our nation’s history. I believe that Jack Bogle himself deep down inside is a good and smart and hard-working person. I believe that when he sees with his own eyes the human misery that he has brought on by his association with you Goons that he will come clean and the words that he will offer at that time will give the needed reassurance to the thousands of experts who need to hear some reassuring words before they will be willing to put their necks on the line and speak the full truth re their beliefs on stock investing.

From that day forward, we will all be walking the positive path rather than the path that we are on today. We will be learning more and more and more about the first TRUE data-based strategy with each day that passes. We will not be destroying our country, we will be rebuilding it. We will not be celebrating Goons, we will be putting them in prison or, better yet, removing them from our discussion boards and blogs before things reach a point where they have done so much damage to so many good people that we have no other realistic options but to imprison them. We will be feeling better and better and better about ourselves with each day that passes rather than worse and worse and worse. We will be engaged in a huge Learning Together project rather than the Goon project of generating ever more hate and anger and envy and deception.

Love is the answer, Anonymous. That’s the short version.

We’re getting there. It’s a process. And we are getting there ever so slowly.

We all want to see accurate numbers on our portfolio statements. So that we can plan our financial futures effectively. We are all going to get what we want. We are on the one-yard line. The only thing holding us back today is that we need to work up the courage to announce prison terms for those who have elected to advance posts in “defense” of Mel Linduaer and John Greaney and Jack Bogle. One more price crash will get us where we need to be to change paths.

I am sure.

But not really, you know? No human can ever be 100 percent sure. We are imperfect creatures. We can never really know for certain even the things that we very much think we know for certain.

Or so Rob Bennett believes, in any event.

We will have to wait and watch together to see how it all plays out in the real world.

I naturally wish you all the best that this life has to offer a person.

Hang in there, old friend. It gets better. A LOT better.

Rob