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

“If you do the math, you will see that you are wrong. There have been six different people who have done the numbers on my personal situation. I have been following VII strategies for 18 years and I have been ahead of where I would have been had I followed BH strategies for a long, long time.”

That comment was posted July 2014. Took me just seconds to find an S&P 500 historical return calculator. The real return between July 1996 and July 2014, counting dividends, is 5.9%. You claim to have everything in 3.5% real TIPS. Please explain how 3.5% is greater than 5.9%, and show your work.

You are right, Doing the Math.

I am going to add some complications below. But I checked what you say here and you are right in what you say in this post. The point you are making is important. So I am grateful to you for putting this post forward.

I do not retract my earlier comment. My personal situation has been analyzed on various boards MANY times (probably more than six times, but at least that many times) over the 13 years of discussions. I HAVE been ahead according to those earlier calculations. The unvarying response of you Goons when it was determined that I was ahead was to respond with acts of deception and intimidation. That has led to a LOT of confusion on both “sides.” In this care you are making a legitimate and important point. I wish that we could work together in future days to come to a better mutual understanding of the REALITIES rather than seeing the nastiness that has poisoned so many earlier discussions. The point you are making here is a POWERFUL one in support of the Buy-and-Hold position. I wish that we could all focus on that and learn what there is to be learned from it.

I do NOT look at these sorts of numbers very often at all. I don’t care about them. I care about long-term results, and, as you know, I am firmly convinced of the long-term merit of Valuation-Informed Indexing strategies. So these sorts of numbers don’t matter much to me.

That said, these numbers DO tell us something important. Buy-and-Hold has done well from 1996 forward even though prices were insanely high in 1996. That’s a LONG time-period. The fact that Buy-and-Hold has done that well for that long a time-period is compelling evidence in support of the Buy-and-Hold strategy, in my assessment. An argument could be made that I should look at these numbers more often than I have in the past. I certainly think that most other investors would want to know about these numbers. I am surprised by the numbers you have presented. I am going to write a column at the Value Walk site pointing out these numbers and noting that they make a strong case for the Buy-and-Hold strategy and that they undermine the case for Valuation-Informed Indexing a bit.

I hope you won’t see me as being defensive if I make a point that applies in my personal case that makes the numbers for my personal portfolio significantly different from the numbers you have presented. I am not presenting this information to undercut your point, which I think is a good one. I am presenting them in the interests of having readers of these words exposed to the complete picture.

I had a very small portfolio in the Summer of 1996, when I moved the money that I had in stocks first to CDs paying roughly 4 percent real and then to TIPS and IBonds paying 3.5 percent real when those became available. Until February 1996, I was directing all of my savings to paying off my mortgage. I owned only a small amount of stocks (perhaps $30,000 worth) when I made the transfer to CDs in the Summer of 1996. I was saving large amounts of money in those days in preparation for my early retirement in August 2000. For example, in the last 12-month period before I handed in my resignation, I saved $88,000. The numbers are VERY different for that segment of my portfolio (and to a lesser extent different for ALL of the post-1996 saving amounts).

The calculator that I used to confirm your numbers shows the annualized return for stocks (with dividends reinvested) from January 2000 forward until today as 2 percent real. My 3.5 percent real return soundly beats that number. And the $88,000 amount we are talking about here is much larger than the roughly $30,000 amount for which the Buy-and-Hold strategy soundly beat the VII strategy. My sense given these numbers is that I am STILL ahead of Buy-and-Hold today, given the size of the disparity.

My recollection, however, is that the earlier analyses showing that I was ahead did not incorporate that factor. So what you are showing DOES appear to me to show a change. That is significant. It also shows that Buy-and-Hold has done very well since 1996 despite the sky-high prices that applied in 1996. In fairness, it also shows that Buy-and-Hold has performed poorly since January 2000, especially in comparison with the results shown for TIPS and IBonds over those years.

This is an interesting development. My expectation is that you are going to respond with nasty Goonishness and undermine the learning experience that we both could profit from as a result of your helpful post. I hope that my unfortunate expectations will prove to be unfounded. My take is that these numbers offer support for BOTH the BH and VII positions. The 1996 numbers really support BH and the 2000 numbers really support VII. Intelligent investors should be thinking about what that combination of realities means re what is likely to work best on a going forward basis.

Anyway, I AM grateful for you willingness to correct the record on this point. I want to state things properly and I was not aware that the numbers were so supportive of the BH position from 1996 forward. I’ve learned something important this morning and I would not have learned that thing if you had not taken time out of your day to help us all out.

Take care, man.

Rob

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

“It is important because friendship is the prerequisite to learning.”

No. It’s not.

People learn all the time from sources that are not their ‘friends’, or even friendly! Your entire premise is ridiculous.

I don’t think it is ridiculous, Anonymous.

I am a conservative. At earlier times in my life, I was very much a liberal. I still have sympathies for a good number of liberal ideas.

Bill Maher often says things that rub my fur the wrong way. I don’t follow him. But there have been several times when I have heard him quoted saying things that make me feel that he is not worth following. That’s the REASON why I don’t follow him.

Yesterday he made some strong statements against these people who killed the satirists in Paris. The pitch he made is that “my position is the true liberal position.” I don’t agree 100 percent with everything Maher said. But I agree 90 percent. I certainly felt that he was speaking for me when he said what he said.

Am I “friends” with Maher? Not really. I don’t follow the guy. I would give a thumbs down to Maher in a general sense rather than a thumbs up.

But I felt drawn to him when he was saying the words he said yesterday. I don’t think it would be unfair to say that I felt “friendly” (in a small and limited way) toward him while I watched the video clip of him saying his words.

Marketers are in the business of persuading people. They study what is required. Any marketer will tell you that people don’t buy from people that they don’t like. The first step in making a sale is getting the customer to like you. The won’t sign on the dotted line until they study all the specifications and determine that the deal makes sense for them. It’s not all about being friends. The intellect kicks in at some point before most efforts at persuasion are complete. But it is emotion that leads the way. People won’t even look at the specifications until they decide they like you.

As a general rule, people only buy from people they like. People want to feel safe before they buy. They don’t feel safe around people they don’t like. This is true not just in sales of products and services. It is true in politics. There were Democrats who voted for Reagan. They liked him. There were Republicans who voted for Clinton. They liked him. Convincing someone that you care about them is the first and most important step in any effort at persuasion.

Shiller published his revolutionary research 33 years ago. The Buy-and-Holders have failed to incorporate that research into their strategy for over three decades. Why?

It’s not that the Buy-and-Holders are not intellectually capable of understanding the implications of Shiller’s research. I have never met a dumb Buy-and-Holder. They are 100 percent capable. The problem is that they do not hear people they like making the case for the Shiller model (Valuation-Informed Indexing).

Todd Tresidder is the smartest blogger in the personal finance field that I have met. Todd agrees with me about the importance of valuations. The Buy-and-Hold Mafia has not targeted Todd for career destruction as it has me. Why?

Todd keeps to his own kind. He offers powerful insights re how to invest effectively that are rooted in the peer-reviewed research of the past 33 years. But Todd does not present those insights at the Bogleheads Forum or at any other discussion board or blog dominated by Buy-and-Holders. People like him and so he is successful. But he poses only a small threat to those promoting Buy-and-Hold strategies because he doesn’t post at boards and blogs that they control and so the Buy-and-Holders are not concerned that Todd is going to become well-liked and thus effective at “their” boards and blogs.

I don’t limit myself in the way that Todd does. I want every investor on Planet Earth to learn about Valuation-Informed Indexing. I am 100 percent happy to post at boards and blogs dominated by Buy-and-Holders. So I pose a MAJOR threat to those promoting Buy-and-Hold strategies.

I don’t just post about the last 33 years of peer-reviewed research. I am likable. I know this is so because THOUSANDS of my fellow community members have told me so. Those trying to promote Buy-and-Hold strategies obviously see me as a threat. They know that, if they abide by the published rules of the sites at which I post, I will become more and more well-liked over time and the community members of those sites will listen to my message in a fair-minded way and a lot of them will be won over by it.

You Goons have been attacking me for 12 years now. Never has there been a single attack rooted in peer-reviewed research. Every attack that you have put forward has been aimed at getting people not to like me. You say that I stalk women. You say that I use drugs. You say that I am stupid. You say that I manage my money poorly. You say that my wife has left me. You say that my parents were alcoholics. You say that I am a bad father. You say that I am a liar. You say that I am jealous of Lindauer and Greeney and Bogle. And on and on and on.

If you didn’t see the importance of people liking someone who is trying to convince them of something, you wouldn’t focus all of your efforts on personal destruction. You would address issues. You know that people will only listen to someone whom they like. So you focus all of your efforts on destroying me as a person rather than addressing the very important substantive issues that have been put on the table.

Buy-and-Hold failed 33 years ago. The only thing keeping it alive today is these personal attacks. Many people still like the Buy-and-Hold advocates because they have not yet suffered all the losses that the peer-reviewed research in this field shows that they will suffer as a result of their decision to follow this “strategy.” I win every debate on the merits. But you Goons win on the likability matter because there are more of you and because you all act in a united way and because you employ tactics that those of us who follow research-based strategies are not willing to employ.

A nation of investors needs to learn who its true friends are. That’s what this all comes down to. I believe that people will begin to see following the next price crash that the Buy-and-Holders are true experts in only one area — Marketing. Get Rich Quick/Buy-and-Hold sells. But Get Rich Quick/Buy-and-Hold never works in the long run. Research-based strategies work in the long run. Once large numbers of people start to question their friendship with the Wall Street Con Men (a friendship that has been built and maintained with a mountain of deceptions and intimidations), we will be able to have a national debate on the MERITS. We will be able to talk about the last 33 years of peer-reviewed research says and that will change everything.

Humans need to feel some feelings of friendship with those with whom they are engaged in conversations to have any hope of learning from those people. I feel friendship toward you Goons. So I learn from you all the time. But you feel a burning hate toward me. So my words just bounce off you. Things will change in a positive direction when the next price crash breaks your excessive pridefulness and we are all able to begin LEARNING from the other fellow.

That’s what our boards should be about. That’s why we have rules at every board and blog prohibiting your Goons tactics. That’s why we have laws making financial fraud a felony with a penalty of prison time for those who will not accept the constraints that these laws impose on their behavior.

My sincere take.

Rob

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

Everyone else is lying and only you are telling the truth?

I am the only one telling the truth re the financial fraud aspect of this, Anonymous. You yourself have acknowledged this on many occasions.

Fama had good faith when he published his wonderful research in 1965.

Fama didn’t distinguish between short-term timing and long-term timing because long-term timing was at the time not a practical option. Bogle had not yet founded Vanguard. Long-term timing works only with index funds.

Shiller was the first to publish peer-reviewed research showing that long-term timing always works and is always 100 percent required. That was in 1981.

Bogle had a responsibility to walk to the front of a large room and to say the words “I Was Wrong” as soon as he learned of Shiller’s 1981 findings.

Bogle can be excused for not acting immediately. Shiller’s findings were truly “revolutionary” (his word). They turned everything we once thought we knew about how stock investing works on its head. It is a common phenomenon for humans to experience cognitive dissonance in such circumstances. This is almost certainly what happened to Bogle and the other Wall Street Con Men. They told themselves that people would figure all this stuff out over time. They noted that stock prices were at rock-bottom levels. It was hard to imagine at that time that prices would ever again be at fair-value levels much less at three times fair-value levels. The Wall Street Con Men rationalized that to hold off on declaring Buy-and-Hold 100 percent discredited for a few years would not do much harm.

The years passed and prices reached a point where telling the truth about what Shiller’s research showed would cause a recession. At that point, the Wall Street Con Men felt trapped. They worried that many would not understand why they held off on telling the truth for so long. They anticipated lawsuits and even prison sentences if the truth were to get out. They engaged in brutally abusive tactics aimed at scaring anyone who told the truth into holding back from doing so.

I came on the scene in May 2002. I pointed out that the Old School safe-withdrawal-rate studies got the numbers wildly wrong and needed to be corrected immediately. You Goons understood that permitting honest posting on the retirement planning question would cause the entire Buy-and-Hold Model to collapse. So you went into Campaign of Terror mode.

Bogle backed you up. Motley Fool backed you up. Morningstar backed you up. Index Universe backed you up. Everyone who had hopes of making a dime in this 100 percent corrupt field backed you up. Because everyone who has been paying attention knows that this field is today 100 percent corrupt and that those who talk about the implications of Shiller’s 1981 findings in places where con men are seeking to push their smelly Buy-and-Hold garbage see their careers destroyed.

Is everyone lying?

Obviously.

Nothing could be more clear.

Am I continuing to refuse to lie?

Absolutely.

Were all the members of Nixon’s White House lying when he obstructed justice, Anonymous?

Were all the people who made a buck from Lance Armstrong’s mountain of deceptions lying when they helped him continue his massive cover-up of his use of performance enhancing drugs?

Were all the people in the Penn State football program lying when they covered up the child molestation going on that Joe Paterno did not want people to know about?

People lie when the cost of doing so becomes so great that their careers and the lives of their loved one are at risk if they dare to “cross” the powerful people demanding that they lie. This is not the first time that something like this has happened. It is the worst. There has never been a lie that caused as much human misery as the lie that there is some mystical, magical research somewhere showing that there might be an alternate universe in which Buy-and-Hold might work for one or two long-term investors.

I’m not lying today. But I am a weak human like all the others. I lied once upon a time. I wrote words of praise for Greaney’s study in my “Secrets of Retiring Early” report. The words were in a hyper-technical sense correct (as are the words of Shiller that you quote here) because I really do believe that his study represented a major advance. But I knew at the time I wrote those words that his study did not contain a valuations adjustment and I knew that that was required. So I lied. I committed financial fraud. Because I was scared of what would happen to me if I told the truth. Shiller and all the others are lying for the same reason today.

Following the next price crash, the lies will stop. The human misery will be too great for people to continue to rationalize their lies. So people will start telling the truth. Buy-and-Hold will collapse, as it should have 33 years ago. And we will figure out as a society what sort of prison sentences should be handed out to all the liars.

I will be arguing for mercy. You can count on me for that.

But I will be telling the story honestly, as it happened. The millions of middle-class investors whose lives have been destroyed by the 12 years (it’s 33 years if you go back to when Shiller published his study) of lies will decide on the length of your prison sentence. That’s how our system works.

I naturally wish you the best of luck in all your future life endeavors regardless of what investing strategies you elect to pursue.

Rob