A Rich Life

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

“There Is No Intellectual Controversy Here. All of the Evidence Is On One Side and There Is Zero Evidence on the Other. What We Have Is a Power Imbalance. The Wall Street Con Men Have More Power and Money and Connections Than the Rest of Us and They Have Demonstrated a Ruthless Willingness to Destroy Anyone Who Exposes Their Con. This Is About Power, Not Research.”

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

Rob says: “The legal way for this debate to have proceeded would have been to have permitted honest posting going back to 1981. ”

Uhm, Rob…….the internet did not exist in 1981. Not only that, it was a long time until there were financial discussion boards after the start up of the internet.

No, the internet didn’t exist. But the same tactics were being employed in the pre-internet days.

Shiller has made several comments suggesting that intimidation tactics have been directed at him. When the prison sentences are announced, all sorts of things are going to come out. I bet that Shiller could write an entire book about the intimidation tactics directed at him.

Rob Arnott posted here about two academic researchers who showed an interest in doing research showing the benefits of Valuation-Informed Indexing and were taken aside and told that their careers would be destroyed if they dared to “cross” the Wall Street Con Men by doing honest work.

And of course I reported here on discussions I had with Ravic Sethie at Columbia. He wants to do honest work. He is afraid to go there. Gee, I wonder why.

You can go back to the morning of May 13, 2002, and look at the responses we saw from my famous post pointing out the errors in the Greaney study. There were two types of reactions. All the people who were on the level (both Valuation-Informed Indexers and Buy-and-Holders) were saying how this was the most exciting discussion we ever had at the Retire Early board. And then there were the Goons threatening to kill family members of posters who posted their honest views. Huh?

I didn’t know about the financial fraud stuff on the morning of May 13, 2002, Pink. I was just telling people about the errors in the Greaney retirement study. I assumed that the errors would be fixed and that that would be the end of it. You Goons obviously knew about the errors before I posted or you wouldn’t have gone so nuts. You freaked out because you knew all along that Greaney was vulnerable if someone worked up the courage to post honestly. You were insanely defensive and there had to be a reason for that.

There are lots and lots of other examples of what I am talking about here. This site documents what happened from May 13, 2002, forward. I wasn’t personally involved in this matter before then. But it is clear that people knew about the problems with Buy-and-Hold long before I came on the scene and were keeping their mouths shut because it had become widespread knowledge that speaking honestly about Buy-and-Hold meant career death.

There is no intellectual controversy here. There never has been, at least not since 1981. All of the evidence is on one side and there is zero evidence on the other side. So what is there to discuss?

What we have is a power imbalance. The Wall Street Con Men have more power and money and connections than the rest of us and they have demonstrated a ruthless willingness to destroy anyone who exposes their con. That’s the deal. This is about power, not research. I believe Fama is real. He is a top-notch researcher. But Fama never even looked at long-term timing. So the idea that his research showed some legitimate grounds on which to conclude that price discipline might not be needed when buying stocks is pure fraud. Some believe it. I guess you could say it’s a mistake with those people. But it’s fraud for those using death threats and threats of career destruction to keep those who show an interest in exposing the con in line.

The significance of the internet is that it made it impossible for the Wall Street Con Men to keep the massive act of financial fraud going. The millions of middle-class investors whose lives were in the process of being destroyed now had a way to share what the research says and thereby protect themselves from the con. That’s where the Internet Goon Squads came into the picture.

This is why I focus on the prison sentences today. Lots of people want to make nice with the Wall Street Con Men. I tried doing it that way myself. But people who have been participating in a massive act of financial fraud are primarily concerned with going to prison. Showing them that they can help millions of readers or clients is not going to have much effect on them. The only way to change things is to get the prison sentences announced so that we can put the ugly side of this behind us and move on to all the exciting insights that have been opened to us by the last 34 years of peer-reviewed research.

The Wall Street Con Men should have jumped at the chance to come clean that I inadvertently presented them with my May 13, 2002, post. They cannot keep the con going indefinitely. So it is in their best interests to get everything out in the open and behind them. I don’t think there would have been prison sentences had they come clean in May 2002. Not too many people had been hurt in a serious way at that time and there’s a lot of genuine confusion re the content side of this. Had Motley Fool shut down Greaney, we would all be in a very different place today.

But we cannot change any of that now. Now there is too much stuff on the record for us to avoid prison sentences. I believe that even the Wall Street Con Men and you Goons would play it differently if we could go back in time. But it’s too late for that. Given where we stand, it’s best for every single person involved that everyone come clean by the close of business tomorrow. But the Goon brain doesn’t see things that way.

Anyway, it’s been going on for 34 years, going back to long before the internet became a factor. The benefit of the internet is that we have time-stamped posts to document the con from May 13, 2002, forward. Those time-stamped posts will be a huge help in all the trials. This story shows the tremendous power of the internet to do good as it achieves its potential as a new communications medium. That’s a very exciting aspect of the story, in my assessment.

Come clean tomorrow, Goon!

I know you won’t. But it doesn’t hurt to ask every now and again.

Take care, man.

Rob

If There Were a Way to Get This Done Without People Going to Prison, I Would Be All For It. We Could Adopt an Amnesty. The Problem Is That I Don’t Have the Power to Bind the Millions of Middle-Class Investors Whose Lives Have Been Destroyed by the 13-Year Cover-Up. What Do You Want From Me?”

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

Your problem is with Shiller. Take it up with him. Maybe if you threaten him with prison, it might make him do what you want since that threat has worked so well for you in the past.

My problem isn’t with Shiller, Anonymous. My problem is with financial fraud. It’s a violation of the laws of the United States. It’s a felony. That means prison time. Going to prison is not on my bucket list. So I am 100 percent unwilling even to consider going there. Do you see?

I like your second sentence A LOT. That one is right on point.

Shiller doesn’t want to go to prison. Neither does Bogle. Neither does Pfau. Neither do you. But all these people have committed financial fraud by failing to speak up against the 13-year cover-up. I get it that they don’t want to go to prison. I don’t either. So I sympathize 100 percent. What the heck am I supposed to do about it?

If there were a way to get this done without people going to prison, I would be all for it. We could adopt an amnesty. That makes some sense in these circumstances. I don’t oppose that. If Bogle comes to me with an offer where everyone who has posted in defense of Linduaer and Greaney and Bogle gets off in return for an opening of the entire internet to honest posting re the last 34 years of peer-reviewed research, I would sign that deal in ten seconds. Why the heck wouldn’t I? What possible motivation would I have not to sign?

The problem is that I don’t have the power to bind the millions of middle-class investors whose lives have been destroyed by the 13-year cover-up. I don’t have the authority to sign that piece of paper and have it stick. So what do you want from me?

This situation is a big mess. The Buy-and-Holders tried to do something very good. They did indeed achieve a good number of amazing breakthroughs. They got one point wrong for perfectly understandable reasons. When the error was discovered, they went into a state of shock. They couldn’t believe that they messed up. Part of the reason why it shocked them so much is that their intent was to do good and it horrified them to think that they had hurt people they were trying to help. So they went into cover-up mode. The longer the cover-up continued, the harder it became to come clean. Things eventually reached a point where their mountain of lies caused the worst economic crisis in U.S. history. Now they really don’t want to come clean.

I feel bad for them. I LOVE the Buy-and-Holders. I have respect for them. I have affection for them. I am grateful for all that I have learned from them. I obviously could not have even begun to do all the important work that I have done over the past 13 years without first having learned all the wonderful stuff that I learned from my Buy-and-Hold friends.

Now –

What the heck do you want from me?

If you want me to endorse an amnesty, I will do it. But guess what? My endorsement is not going to have much effect because you have for 13 years threatened to destroy anyone who associates with me and the result is that there won’t be many people spreading the word about my call for an amnesty. You have placed yourself in this crazy situation where you will be going to prison for a long time following the next price crash. I have been fighting you every step of the way. I have been fighting HARD.

Please tell me what you want from me.

I have offered to put forward some words aimed at getting your prison sentence reduced a bit.

Is there something else?

Rob

“If Investing Advice Didn’t Matter That Much, the Buy-and-Holders Would Have Corrected Their Error When It Was Discovered in 1981. People Are Too Old to Start Saving Again When Their Retirement Plans Go Bust. So It Is Very Hard for the Buy-and-Holders to Acknowledge Their Mistake.”

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

http://www.bloomberg.com/news/articles/2015-06-08/u-s-stocks-on-wrong-side-of-history-with-rate-increase-in-sight?cmpid=yhoo

So the next stock market drop will be blamed on higher interest rates and not on goons or buy and hold.

I guess we won’t see anyone going to prison and you will have to do without your $500 million. Better cancel your order for the new Porsche.

You are accurately describing the game that the Buy-and-Holders have been playing for a long time now, Anonymous. They take credit for anything that happens that is good and they blame others for anything that happens that is bad. When Taylor Larimore is able to buy a house with the Pretend Money he gets from following a Buy-and-Hold strategy, he calls it “The House that Jack Built.” But when we see the economic crisis that inevitably follows from the widespread promotion of this strategy, he does not refer to it as “The Economic Crisis That Jack Built.” Heads, the Buy-and-Holders win. Tails, everybody but the Buy-and-Holders lose.

Your suggestion is that everyone will continue to permit the Buy-and-Holders to get away with such nonsense. I don’t buy it.

My personal belief is that even the Buy-and-Holders won’t permit themselves to get away with such nonsense following the next crash. The Buy-and-Holders are not bad people. They did not INTEND to cause an economic criss. They did. It happened. There is 34 years of peer-reviewed research showing why we always experience an economic crisis when large numbers of people are persuaded that Buy-and-Hold strategies can work in the real world. So the Buy-and-Holders messed up big time. But I have not seen any evidence that they INTENDED all this bad stuff. I have been studying this stuff for a long time and it is my strong impression that the Buy-and-Holders did NOT intend all this bad stuff and that they are on one level of consciousness horrified to see it playing out.

Do you see?

We are not on different sides. We are on the same side. Even you Goons did not intend all this bad stuff. So even you Goons are going to want to set things right following the next crash. Then of course we all have no problem. From that point forward, it is good stuff piled on top of good stuff piled on top of good stuff. For ALL of us. Valuation-Inforrmed Indexers and Buy-and-Holders alike.

Humans respond to incentives. If you want people to perform good acts, you reward them for them. If you want people to avoid performing bad acts, you penalize them. That’s how we do it in every field of human endeavor other than investing analysis. With investing analysis we encourage advisors to perform bad acts (to say that price discipline is not always 100 percent required) and we discourage advisors from performing good acts (to always point out that it is essential to exercise price discipline). Why the heck do we do that? Why are all the rules that apply in every other field of human endeavor turned on their heads in the investing advice field? That’s the question that we all need to come to terms with to be able to bring this economic crisis to an end and move on to the greatest period of economic growth in our history.

It’s not because getting investment advice right doesn’t matter. It’s because getting investment advice right matters so darn much. If investing advice didn’t matter that much, the Buy-and-Holders would have corrected their error when it was discovered in 1981. They would have said “sorry” and moved on to giving better advice and no one would have been upset and that would have been the end of it.

The reason why it didn’t happen that way is because it is a very big deal when someone gives bad advice on how to finance a retirement plan. People cannot fix their retirement plans when they go bust. They are too old to start over and earn all the money they need for retirement a second time. So it is very, very, very hard for the Buy-and-Holders to acknowledge their mistake. The mistake has had devastating consequences. We all need to keep that in mind when we are trying to persuade them to come clean.

And we need to keep in mind that this was so in a smaller way way back in 1981. The Buy-and-Holders were excited about their own discoveries, which they believed were taking us all to a very good place. Shiller’s 1981 research discredited the corner-stone on which the entire Buy-and-Hold strategy was built. The Buy-and-Holders were horrified to think that they had been giving dangerous advice. They became defensive. They went into cover-up mode. Not because they are bad or stupid. Because they care about their readers and clients and possess a sincere desire to help them and because they could not bear to think that they were hurting the people they thought they were helping.

Do you see, Anonymous?

This didn’t start out as financial fraud. It started out as a sincere effort to do wonderful things. And, indeed, many of the things the Buy-and-Holders did really were wonderful. Part of the answer here is making that point over and over and over again. The more we make the Buy-and-Holders feel good about all of their very real and important contributions, the less defensive they feel and the more willing they become to come clean about the issue (valuations) re which they messed up.

You are suggesting that they will never come clean, that the Buy-and-Holders are 100 percent corrupt and that they will continue to use their power and wealth and connections to destroy anyone who dares to “cross” them by posting honestly re any important investment-related question. I don’t see it. I believe that you are wrong. I believe that the Buy-and-Holders are going to come clean and that we all are going to make it safely to the other side of the big black mountain and that in coming days we all will be achieving financial freedom many years sooner than we ever imagined possible back in the days when we were collectively ignorant of the realities of stock investing.

The Buy-and-Holders have blocked the learning process that we all need to see take place for far, far longer than I imagined possible. I will give you that one. It is my job to figure out WHY that is so. I do not believe that it is because the Buy-and-Holders are corrupt through and through. It would take a long time for me to put forward all the reasons why I am convinced that that is not so. If you ask for me details, I will give them. But I cannot spell it all out in a single post. What I will say here is that I am personally persuaded that the Buy-and-Holders started out with good intent and generally possess good intent right up to the current day. That’s an important part of the story.

The people who now run the Bogleheads Forum used to refer to themselves as “Vanguard Diehards” back when their board was run from the Morningstar site. Does that mean that they were evil? It does not. It means that they really, really, really believed in what they were saying. Being a “diehard” is a bad thing when it means that you are arrogant and not willing to listen to other points of view. Being diehards has gotten these people in a lot of trouble and caused millions of people to suffer serious financial harm. But the feeling that caused these people to become “diehards” was a positive one. THE BUY-AND-HOLDERS WANT TO HELP PEOPLE! Good! That’s wonderful!

We need to take this positive energy and turn it to positive purposes.

Do you see?

The Buy-and-Holders want to help people. They know all about the laws of the United States. We need to persuade them that they need to FOLLOW those laws. You can’t commit felonies just because you are a “diehard.” That’s 100 percent unacceptable. So they need to rein in this impulse they have to lash out at anyone who talks about the implications of the last 34 years of peer-reviewed research in this field. The financial fraud stuff is 100 percent unacceptable. But the other stuff is great. The fact that the Buy-and-Holders want to help people is great. They fact that they care so much is great. The fact that they have so much energy and determination is great.

You are suggesting that the energy that the Buy-and-Holders have been putting to negative purposes for 13 years now can never be put to positive purposes. I just don’t buy it. If the Buy-and-Holders were bad people, I might buy it. But they aren’t! They are good people. They are smart people. They want to help. They are determined. That’s good. That’s what we want. So long as they don’t take the diehard part so far that they are committing felonies under the laws of the freakin’ United States.

I don’t buy into any of your negative scenarios, Anonymous. That’s all just garbage Goon talk.

I of course get it that bad stuff has happened. But the root realities here are 50 times more good than they are bad. We are going to get things on the right track. It might well take another price crash to get us there. But I am firmly convinced that we are going to get things to a positive place. I am sure.

Do you know who taught me what I needed to know to see that Greaney’s retirement study got the numbers wildly wrong?

It was John Freakin’ Bogle! It was by reading Bogle’s book that I figured out what I needed to know to take Greaney on.

What a terrible, terrible person that Jack Bogle is! How horrible that he helped us all learn how to calculate safe withdrawal rates properly and by doing so opened the door to hundreds of additional powerful insights that we have developed together over the course of the past 13 years!

You see things though a Goon perspective. I do not. You see only negative stuff. I see tons and tons and tons of positive stuff, enough positive stuff to make us the luckiest generation of stock investors ever to walk Planet Earth.

We are headed to a good place. Bogle is going to come clean. So are all the rest of the Wall Street Con Men. So are you Goons.

I am sure.

Hang in there, man. It gets better. A LOT better.

Rob

Valuation-Informed Indexing #250: Why Stocks Follow a Random-Walk Pattern in Some Time Frames and Not in Others

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I’ve posted Entry #250 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called  Why Stocks Follow a Random-Walk Pattern in Some Time Frames and Not in Others.

Juicy Excerpt: Say that a significant factor in whether a basketball falls through the hoop or not is the level of confidence felt by the player taking the shot. And say that confidence grows when a high percentage of shots taken over a period of time goes in. Having shots go in would increase the shooter’s confidence. So it would be natural to expect more shots to go in during the following time-period.

Hot hands are the product of increased player confidence. That means that they are real. You want the player with the hot hand taking a shot in the final seconds of the fame because he is the more confident player and thus the player more likely to sink the shot.

“This is the First Case That I Know of Where a Group of Wall Street Con Men and Their Internet Goon Squads Used Board Bannings to Keep Millions of Middle-Class Investors From Learning What the Peer-Reviewed Research Says. The People On Your Jury Will Be People Who Have Lost Most of Their Life Savings As a Result of Your Massive Con.”

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

Who makes the determination of what is “honest” .

Under our system, the jury makes the ultimate determination for legal purposes. But you obviously know this without asking me.

Also, please state specific case law that supports your conclusion that banning someone from a website is considered fraud.

There’s lot of caselaw on what constitutes financial fraud. You obviously possess the same ability to research caselaw that I possess.

This is the first case that I know of where a group of Wall Street Con Men and their Internet Goon Squads used board bannings to keep millions of middle-class investors from learning what the peer-reviewed research says. The people on your jury will be people who have lost most of their life savings as a result of your massive con. I feel pretty darn confident re how your case is going to be decided.

But I am not God. I have been wrong before. We will have to wait for the next crash to come to see how long your prison sentence will be.

Fair enough?

Rob

 

 

 

Rob,

Who makes the determination of what is “honest” . Also, please state specific case law that supports your conclusion that banning someone from a website is considered fraud.

 

“Others Saw the Campaign of Terror and Ran in Fear Because of the Money and Power Possessed by the Wall Street Con Men. I Saw Opportunity.”

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

And, how’s that workin’ out for ya so far, slick? LOL

It’s working out pretty darn well, since you asked.

I don’t have a penny in my hands today. But look at what I do have — the most valuable web site on the internet.

There are going to be millions of people looking for someone to sue to recover their retirement money following the next price crash. I have 13 years of Post Archives showing who was responsible for the massive 13-year cover-up. There are hundreds of billions of dollars to be made suing all the individuals and corporations who in some way, shape or form participated in this massive act of financial fraud.

Do you think lawyers are going to be too shy to sue these people after the crash? I sure don’t.

Do you think the people who have lost large percentages of their life savings are going to be too shy to sue these people following the crash? I sure don’t.

There will be congressional hearings looking into how this all happened. What web site do you think will be getting linked to daily from the THOUSANDS of web sites covering those hearings?

Gee, I hope I don’t go broke with all the offers to pay millions for this site that I will be receiving on a daily basis. And I hope I don’t get too tired handling the thousands of invitations to speak at conferences that will be coming my way. How will I be able to carry all the big bags of money? There is only so much that one man can endure!

I don’t support the massive act of financial fraud. I have done everything in my power to bring it to a quick end. But the full reality here is that I would not be collecting a $500 million paycheck had there not been a massive cover-up. Shiller published his “revolutionary” (his word) research in 1981. Had there been no cover-up, this site would have no special value, the stuff provided here would be provided at hundreds of other places.

Others saw the Campaign of Terror and ran in fear because of the money and power possessed by the Wall Street Con Men. I saw opportunity. I saw back in August 2002 that there was not one web site on the internet exploring the implications of Shiller’s “revolutionary” (his word) research in depth and I set out to be the first. Now I have a mountain of material that can be used by all of us to rebuild our broken economic system following the crash.

You Goons have caused me a lot of trouble. You also appear to be in the process of making me a very, very wealthy man. We are talking Steve Jobs levels of wealth. Thanks, Goons Friends!

I’ll take the $500 million and I will say “thank you!”, Anonymous. That’s how I feel about it. I love our system of government. Our laws against financial fraud have not been enforced in a reasonable manner for 13 years now. But what matters is not what happens in the early chapters of the story but what happens in the latter chapters of the story.

I’d rather have gotten the $500 million some other way. But the reality is that few of us ever have an opportunity to earn $500 million in ANY way. So when one comes along, we are smart to grab it. That’s what I have done. We are close to the finish line today. We are close to the day when I won’t be just talking about the $500 million but when I will be collecting it and then putting it to good use spreading the word about the first true research-based strategy. Good for me! Good for the people of the United States! Good for Shiller! Good for Bogle! In a funny way, good for you Goons! (Prison sentences eventually come to an end so it is best for you that yours get started soon)

I don’t like any of the ugly side. You Goons have shown us all a very dark side of human nature.

But the good here is 50 times more good than the bad here is bad. I am proud to have led this 13-year-long effort to open every board and blog on the internet to honest posting re safe withdrawal rates and scores of other critically important investment0-related topics. It’s truly exciting stuff!

Take care, man.

Rob

“I Will Name Names. Any Blogger Who Has Permitted Participation at His Site By an Individual Who Has Posted in “Defense” of Mel Lindauer or John Greaney or Jack Bogle Will Be Named.”

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

“We need to make a demonstration as a people that we will not tolerate the intimidation tactics of the Buy-and-Holders any longer. ”

Intimidation? Please. You’ve been afforded much more presumed credibility than any internet crank deserves, by having many people tolerate your crap and even respond to it as if it were a legitimate case of ignorance or misunderstanding or other solvable situation, rather than just ignoring you — as is the most deserving response. Over the years, people have continually provided you links, discussion, argument, examples, references, analogies, details, particulars, history, explanation, and any number of other valuable resources all geared towards your personal enlightenment. So, ‘Intimidation’? Please. Hardly. For the last decade, you have used the same phone number that you publicly provide, same address that you publicly tout, same web address, same everything, and have never provided once scintilla of evidence of a SINGLE threat or act of intimidation. So, I’d say that is not just remarkable, but damn near incredible, given the nature of the internet, which attracts crazy likes flies to a picnic. And no, this is not a death threat, you idiot. It’s a friendly and human sincere invitation for you to finally to wake up, smell the coffee, greet your wife, kids, community, and acquaintances anew, and from this day forward, begin to act towards them as a responsible adult: get a job, save some money, be a responsible parent and spouse, and quit being nothing but a full-time nuisance internet crank, devolving deeper and deeper into your self-made land of mental illness, and imaginary threats.

I’ll talk a bit about intimidation.

The thrust of your comment is a suggestion that you will not be going to prison because you never came to my house with a gun at fired it at my wife or children. That’s not the test. You will be going to prison.

The threat to come to my house with a baseball bat and kill my wife and children is an act of intimidation. My wife certainly saw it as that. She will testify to how she felt when that threat was made. She was at the time taking care of a two-year old and an infant of five months of age. The jury will hear all this. They will decide on the length of your prison sentence.

Motley Fool deleted the most violent posts. But I believe we can get them to present as evidence either by going to the Motley Fool files or by using a WayBack machine or through some other means. Portions of the deleted posts were included in posts that were not deleted. So we always have those. And there were references to the death threats made at the Bogleheads Forum and other boards and blogs and you Goons demanded bannings of all posters who posted honestly on the matter. That shows a guilty conscience. If the death threats had not been made, there would have been no need to cover them up.

I filed a police report re the death threats. That will be available as evidence. I also made a report with a special office on internet crimes in Virginia. I also contacted the FBI. The question that the police officer focused on was whether I believed that you would follow through on the threats. I said that my wife was much more worried about that than I was but that I did not believe that my wife should have to live in fear because an individual got an important number wrong in a retirement study posted at his web site and because I pointed that out to friends of mine who had been planning their retirements pursuant to a belief that that individual (John Greaney) had done honest work. I said that I personally did not believe that you Goons would kill anyone. I added that I could not be certain because anyone who was crazy enough to put up a post in “defense’ of John Greaney is capable of just about anything.

I have copies of posts containing HUNDREDS of threats of physical violence. There are posts where you Goons discussed what model of gun to use to kill me. Those will be seen by your jury. I have copies of posts in which you posted photos of my church and made suggestions that you Goons would be showing up there. Those will be seen by your jury. I have posts showing that a swarm of you Goons descended onto the Bogleheads Forum when community members there complained about the constant abusiveness. You wouldn’t have had a swarm descend if you didn’t have a long record of abusiveness at many different forums. Those posts will be seen by your jury. And on and on and on and on and on.

And of course your jury will be seeing all of the threats that were directed at Wade Pfau. The Bennett/Pfau research is the most important piece of research published in this field in three decades. That research should have been written up on the front page of the New York Times when it was first published. The only reason it has not been is because you Goons threatened to destroy Wade’s career if he continued to post about it and Jack Bogle indicated that he backed you and your use of intimidation tactics 100 percent. Bogle allows his name to be used at a site that permits posting by Mel Linduaer, a guy who was employing threats of physical violence to suppress honest posting on the peer-reviewed research in this field long before I came on the scene!

The most important question is WHY Buy-and-Holders feel a need to resort to threats of physical violence and of career destruction whenever anyone posts honestly on safe withdrawal rates or any other critically important investment-related topic. The obvious explanation (it wasn’t obvious to me on the morning of May 13, 2002, but it is 13 years later) is that Buy-and-Hold was based on a MISTAKE going back to the first day. There has never been even a tiny sliver of support for the preposterous Buy-and-Hold claim that there is no need for investors to practice price discipline when buying stocks. The entire historical record shows that practicing price discipline is 80 percent of the game. That’s a lie that Buy-and-Holders use to take money out of the pockets of millions of middle-class investors and to put it into their own.

This massive act of financial fraud will be exposed. I will expose it. You have my pledge. I am sure.

I will name names. Any blogger who has permitted participation at his site by an individual who has posted in “defense” of Mel Linduaer or John Greaney or Jack Bogle will be named. Their juries will decide the length of their prison sentences. That’s not my call. But I guaranty you that their names will become known to the millions of middle-class investors who are in the process of seeing their lives destroyed because of the 34-year cover-up of the biggest “revolutionary” (Shiller’s word) advance in the history of personal finance.

I am going to see that you are put in prison, Anonymous. There will be no meanness to it. My aim is to put you in prison as soon as possible so that your sentence will be as short as possible, given the circumstances that apply. But it would be cruel of me for me to suggest that there is any but the most long-shot chance that you will not be going to prison. I will continue to do what I can to get your sentence reduced a bit. But that’s as far as my bending goes. There will be no felonies being committed on my end. There will be no discussion of felonies being committed on my end. Find someone else.

My best and warmest wishes to you, Goon friend.

Rob

Valuation-Informed Indexing #249: Why We’re Reluctant to Take Advantage of What We Learned from Shiller’s Research

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I’ve posted Entry #249 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Why We’re Reluctant to Take Advantage of What We Learned from Shiller’s Research.

Juicy Excerpt: The most powerful demonstration of the phenomenon is the famous research that was done by Solomon Asch in the 1950s. Asch arranged for groups of five to seven confederates to meet in a room with a single real experiment subject and answer questions about the lengths of lines on cards presented to them. Only 24 percent of the real participants gave accurate answers to questions in all circumstances. 75 percent conformed to the social pressures to give inaccurate answers in at least some circumstances. 5 percent conformed every time. The overall conformity rate was 37 percent. In a control group, in which there was no social pressure to give an erroneous answer, only one out of 35 participants gave incorrect answers to the questions asked.

We’re sheep.

Or perhaps not.

Participants were asked to explain why they gave incorrect answers. Many said that they knew that the answers were incorrect when they were giving them. They answered incorrectly to be polite!

We’re not really sheep. We’re just too nice to say what we truly believe when there are lots of our fellow humans expressing confidence in a very different story.

My experiences trying to spread the word about the exciting implications of Shiller’s work support this explanation. I have had many experiences in which people express great enthusiasm over the idea of learning more about how Valuation-Informed Indexing works. Then they hear Buy-and-Holders express emotional pain over Shiller’s findings. Then they get quiet. If I push, they get hostile to me.

“That’s Why Shiller Writes in Code. He Doesn’t Want to Hurt Bogle’s Feelings. He Knows a Hugely Important Thing That Bogle Does Not Yet Appreciate. But He Holds Back From Saying It Clearly Because He Knows It Will Make Bogle Feel Bad for Bogle to See How Many Lives He Has Destroyed. Some Friend, Huh? But It Is Human.”

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

I have a feeling if you read it 7x, you would be reading between the lines and finding where Shiller had written a secret code to warn you of the Goons.

Once you read it 15x, it will teach you how to succeed in your quixotic crusade.

That’s not too far off the mark, Laugh.

I understand that you are making fun of me. But the reality really is a strange one. The words of a book don’t change each time you read it. Yet I really have seen exciting new stuff in Shiller’s book each time that I have read it. How does that happen? How do I miss important things on the earlier reads? That shouldn’t happen and yet it does.

Our minds can only take in so much at a time. That’s the reality. That’s why we have to encourage everyone to post with full honesty and frankness. That’s why it is so critical that no one feel any intimidation when they post. At atmosphere of intimidation causes people to be timid, to hold back. When they do that, we all miss out on a lot of what is in other people’s brains. We all lose. That’s what has to change here.

I wrote a column that will show up at the Value Walk site on Tuesday that gets to the heart of things, in my assessment. I talk about how I used to be ashamed to tell people that I had paid off my mortgage. That’s crazy. That’s something to be proud of, not something to be ashamed of. I should have been spreading the word to all my friends about how they could live richer lives. What was holding me back? It was peer pressure. It was a Social Taboo. That’s what we are up against here.

Everyone wants to know how to invest more effectively. And we all DO know how to do so today — Intellectually. But we all are afraid of giving voice to what we know because it will hurt the feelings of all our Buy-and-Hold friends for them to see that they made a mistake many years back and have left it uncorrected for a long time now. That’s the only thing holding us back. That weird reality creates this strange situation where we say things in code and we need to read books multiple times to hear important parts of the message contained in them.

That’s what I need to change. That’s the job here. When those of us who have seen through the b.s. part of the Buy-and-Hold story start speaking plainly and clearly and frankly, it gets a lot easier for everybody. The practice of speaking in code holds us all back. We need to give that up. It will be huge when we do that.

When I was writing the column, I had to look up what happened in that famous peer-pressure research from the 1950s where they showed people cards and asked them to say which lines on the cards were the same length and when people would give obviously wrong answers if there were others giving those crazy answers (because they were working with the researcher) before it was their time to speak. All of us would deny that we could ever behave that way. But we all do. Peer pressure is a huge force with humans.

And bull markets are a peer-pressure phenomenon. There’s nothing else to them. When we reach the point where we can talk openly about what we know from the psychological literature, we eliminate most of the risk of stock investing. The thing that had made stock investing risky from the beginning of time until now is that we humans flatter ourselves that we do not respond to peer pressure but really we do.

When one of us gains the ability to post honestly, we all gain the ability to post honestly. When we all gain the ability to post honestly on safe withdrawal rates, we all gain the ability to post honestly on every possible subject. We are up against a Wall of Ignorance that was ready to collapse on the morning of May 13, 2002, and needed just one good hard push for it to topple. The purpose of the past 13 years has been to supply that one good hard push and to thereby make all of our lives a lot richer than they have ever been before. We are close today. I think the next crash is going to supply the final elements of that push. We’ll see.

The researchers asked the participants in that study why they gave such crazy answers. Many of the participants said that they knew the right answers all along! So why did they say such crazy things? It seems so impossible!

They said they were being polite! They didn’t want to hurt the feelings of the people who gave crazy answers before them!

That’s why Shiller writes in code. He doesn’t want to hurt Bogle’s feelings. He knows a hugely important thing that Bogle does not yet appreciate. But he holds back from saying it clearly because he knows it will make Bogle feel bad for Bogle to see how many lives he has destroyed. Some friend, huh?

But it is human. That’s what the research is telling us. Bogle is responding in a human way — we all have a hard time acknowledging that we have gotten something terribly wrong. And Shiller is responding in a human way — we all have a hard time letting people know that they have made a mistake. This is a painfully human story in all respects.

There’s your conspiracy! It’s those darn humans and that darn desire to be polite that is hardwired into them! Whatchagonnado?

We’re all too darn polite. We can’t help ourselves. That’s why millions of people are unemployed today. That’s why millions are on their way to experiencing failed retirements. We need to learn how to be less polite. Our excessive politeness is killing us!

That’s a joke. But it’s a joke that expresses an important truth. We really do need to learn to be less polite when there are important truths that have been discovered and that need to become better known. There’s nothing polite about participating in a cover-up that causes an economic crisis. There’s nothing polite about letting your friends suffer failed retirements because you don’t have the courage to say what needs to be said to stop them from suffering failed retirements.

Shiller really does talk in code. That’s the reality here. He does it because he wants to be a nice person.

And one of the things he talks in code about is you Goons. Shiller has experienced the Goon phenomenon. He was telling the truth about stock investing long before I was. I would bet $5 that he has seen MANY death threats and MANY threats of career destruction directed his way. I would bet that he could write a book about the hundreds of intimidation tactics directed his way over the course of the past 34 years.

The difference between Shiller and me is that I want him to write that book. I think that’s the key. I think he needs to stop being so darn polite and just take a blast at those darn Goons! Not out of meanness. He needs to blast them because there is a part way down deep in the Goons where they want to get all this investing stuff right too. The Goons don’t like being told that they made a mistake. But they don’t like suffering failed retirements either.

Shiller INSULTS you Goons when he holds back from blasting you. When he does that he suggests a belief that you are ALL Goon and nothing else. He’s wrong. The Goon Conversations that appear at this site on a daily basis show him to be wrong re that one.

We all need to work up the courage to start blasting you Goons. We need to stop insulting you by thinking that you precious flowers will melt into nothingness if we happen to mention what the last 34 years of peer-reviewed research shows and work up the courage to appeal to your non-Goon selves and thereby lift you up to the human level rather than letting you pull us down to the Goon level. That’s how this thing ends. That’s what this thing has been leading up to since the first day.

The Buy-and-Holders show zero hesitance in stating their case. They are “Diehards” to borrow a apt characterization. The Valuation-Informed Indexers are frightened little babies, living in fear of their own shadow lest they hurt the feelings of one of the Diehards by saying what they truly believe in too clear a way. Those on my side of the table need to stop being such frightened little babies. We cannot win this battle of ideas playing it that way. It’s because we act like frightened little babies that this battle of ideas has produced such little good fruit in 34 years.

I’m polite too. I care about you Goons too. The difference with me is that I care enough not to insult you. I respect you for your genuine accomplishments, which came from a belief that this stuff matters. If you believe that it matters, then there is a part of you deep down that wants to get it right. That’s my core belief. Shiller needs to stand up to Bogle and say precisely what he believes, straight, no chaser. That’s when the huge advance takes place. That’s when all the ugliness gets buried 30 feet in the ground, where it can do no further harm to humans and other living things.

Shiller needs to stop being so darn polite to Bogle, gosh darn it!

I look forward to the day when none of us feels the need to speak in code re how we all need to go about financing our retirements.

Rob the Polite (But in a Different and Deeper Way)

“If One Soda-Fountain Owner Treated Blacks Fairly, It Made All the Soda-Fountain Owners Who Did Not Do So Look Very Bad. So a Social Taboo Was Created Prohibiting Fair Treatment of Blacks. That’s Where Things Stand Today With Buy-and-Hold.”

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

So which of the Vanguard funds and underlying securities are run as a Ponzi scheme similar to Bernie Madoff?

They all are. Every last one of them.

That’s like asking: “How many of the soda fountains in the pre-Civil Rights South discriminated against blacks?” They all did. Every last one of them.

The reason why the answer is the same in both cases is that the underlying dynamic is the same in both cases.

There was no justification for discrimination against people with black skin. There was an historical explanation of the phenomenon. But there was no justification that made sense to people in the years just before the Civil Rights Revolution took place. For anyone to practice racial discrimination, everyone had to do so.

There were soda-fountain owners who did not want to practice racial discrimination. It was made clear to them what would happen to them if they failed to do so. If one soda-fountain owner treated blacks fairly, it made all the soda-fountain owners who did not do so look very, very bad. So a Social Taboo was created prohibiting fair treatment of blacks.

Not everyone believed in racial discrimination. But everyone practiced it. That was so by definition. If you didn’t practice racial discrimination in the pre-Civil Rights South, you were removed from the society. So, once again, everyone in the society practiced racial discrimination. The practice was too horrible to survive unless it was universally practiced (and therefore never challenged).

That’s where things stand today with Buy-and-Hold.

There has never been a sliver of support in the peer-reviewed research for this smelly Get Rich Quick garbage. It is impossible for the rational human mind to imagine how there ever could be a sliver of support. So to keep it going, we must force everyone to pretend to believe in it. The day Buy-and-Hold is subject to questioning in the same way that every other idea is subject to questioning in our society is the day that Buy-and-Hold falls.

How can an “idea” survive when it is plainly absurd (the claim that price discipline is not required in the stock market is the OPPOSITE of what is true in every other market — price discipline is the thing that makes every other market work!) and 100 percent at odds with all of the peer-reviewed research available. Huh?

For Buy-and-Hold to survive, everyone must pretend to believe in an absurdity. There is 34 years of peer-reviewed research showing us all that Buy-and-Hold is dangerous as all get-out. So in ordinary circumstances we would all move on to better things (Valuation-Informed Indexing). The problem is the 34-year cover-up. If as a society we permit honest posting re what works with stock investing, lots of wealthy and powerful people will be going to prison for a long time. They don’t want to go to prison. So they are using their power and wealth to keep the cover-up going another day, another week, another month, another year.

The problem with that strategy is that each day the cover-up remains in place we destroy thousands of additional middle-class lives. That means that the anger will be even greater following the next price crash. And that means that the prison sentences for those who continued to advocate Buy-and-Hold with 34 years of peer-reviewed research showing that there is precisely zero chance that it could ever work for even a single long-term investor grow even longer. Not good.

My job is to help BOTH the millions of middle-class investors AND the Wall Street Con Men. By exposing this massive act of financial fraud, we let the millions of middle-class investors learn about the first true research-based strategy. At the same time, we shorten the prison sentences for the Wall Street Con Men and for the members of their Internet Goon Squads. Pretty darn cool trick, huh?

I sure think so.

I wish you all the best that life has to offer a person, Anonymous.

Rob