A Rich Life

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

“As Long as the Buy-and-Holders Are Not Called Out on the Fact That Their Claim That There Is Research Supporting the Idea of Not Exercising Price Discipline When Buying Stocks Is False, Their Marketing Pitch Is Unstoppable. Everybody Is Drawn to Get Rich Quick Strategies and the Buy-and-Holders Tell Them That There Is Actually Research Supporting Them. That’s One Heck of a Marketing Message!”

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

Boy Rob, you were having a couple of moments of clarity yesterday with talking about others view points. Alas this morning you fell back into full tilt hocomania. At least I think you did. Lord knows I’m not going to read beyond the first sentence. You need help, as I’m sure your family, neighbors, and everyone you interact with can see.

You Goons have a catch phrase that you use on me from time to time: “It’s not what you say, it’s how you say it.”

The Buy-and-Holders don’t mind people saying that they follow other strategies so long as they don’t point out the dangers of Buy-and-Hold. We all have a Get Rich Quick impulse within us. So, as long as the Buy-and-Holders are not called out on the fact that their claim that there is research supporting the idea of not exercising price discipline when buying stocks is false, their marketing pitch is unstoppable. Everybody is drawn to Get Rich Quick strategies and the Buy-and-Holders tell them that there is actually research supporting them. That’s one heck of a marketing message!

I want nothing to do with it. We are working at cross-purposes, Anonymous.

I have zero problem showing respect and affection for Buy-and-Holders. They have offered us many powerful insights. There wouldn’t be any Valuation-Informed Indexing today had Buy-and-Hold not come first. And of course there are millions of good and smart people who today believe in Buy-and-Hold. I was one of them myself for a long time. So it’s hard to imagine how I could be unsympathetic to the Buy-and-Holders or could try to silence them or anything along those lines.

But, no, I do not for two seconds want to see us as a society remain stuck with all the Buy-and-Hold garbage. We moved forward intellectually 33 years ago. Valuation-Informed Indexing is so far superior to Buy-and-Hold that it is a joke. When we permit honest posting on the last 33 years of research, we reduce risk dramatically while increasing returns dramatically. My job is to help us make that transition. My job is to take us out of the Buy-and-Hold dark ages and into a world in which millions of middle-class investors have available to them the first true research-based strategy, one that actually works in the real world.

Talking about other viewpoints is fine. But my aim is to see that we all achieve that transition from Buy-and-Hold to Valuation-Informed Indexing. ALL of my work is aimed at achieving that goal. Anyone who has somehow gotten the idea that I believe that there is some mystical, magical world in which Buy-and-Hold might produce good results for one or two long-term investors has somehow gotten the wrong idea. I want to see Buy-and-Hold fixed so that it can work in the real world. Valuation-Informed Indexing is Buy-and-Hold with the Get Rich Quick element removed.

That’s where I am coming from, in any event, Anonymous.

Other viewpoints — 100 percent A-OK.

Rob Bennett endorsing Buy-and-Hold — Never going to happen.

All of our problems today are rooted in the tentative way that those who have doubts about Buy-and-Hold express themselves. This is truly dangerous stuff. It has caused millions of failed retirements. It has caused the biggest economic crisis in U.S. history. A good number of people who were friends of mine in earlier days will be going to prison following the next crash because of the tactics they employed to “defend” this Get Rich Quick garbage. Support that? Huh? What? I don’t think so, man.

My best wishes to you and yours, Anonymous.

Rob

“No One Ever Talks About the Intense Emotional Pain of the Buy-and-Holders. I Don’t Think There Is One Article in the Literature About It. But Here It Was. I Was Seeing It With My Own Eyes. Investors Have Become MORE Emotional in the Buy-and-Hold Era. This Got My Attention.”

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

How do you feel about people you meet who make such enormously boastful (and in this case easily disprovable) statements? Are you attracted to those people? Do such antisocial behaviors earn them many friends?

People don’t like boasting. That’s certainly so.

But those words are required by the job I am doing here, Anonymous.

The Buy-and-Holders are in a trap. When the peer-reviewed research showing they were wrong was published, they were shocked. They found it hard to accept that they were wrong.

Given those circumstances, the best reaction would have been to present their ideas in a more humble way. They could have said: “This is what we think, but there is another school of thought in which good and smart people come to very different conclusions.”

They didn’t play it that way. They elected to double down on the arrogance. So now they are in a fix. The evidence that valuations matter is no so great that they want to acknowledge it and to open the internet to honest discussions and to let people find their way to the truth through the normal means of testing different ideas and determining over time which make the most sense. But they feel that to do that would mean huge legal liabilities given how long the cover-up has gone on. They can see that the cover-up cannot be sustained much longer. But they cannot bear the thought of taking on trillions in legal liabilities or going to prison. They cannot move!

While the Buy-and-Holders are frozen in place, knowledge of the error they made continues to spread. Shiller’s book was a best-seller. It is in most public libraries. It was in the news that he won the Nobel prize. People have heard about the economic crisis and they sense on some level of consciousness that the insane bull market must have had something to do with it.

So it is getting harder and harder to maintain the cover-up. The Buy-and-Holders have had to become more and more brutal in their intimidation tactics to keep everything from falling apart. This general dynamic (not as strong) was in place when I came on the scene on the morning of May 13, 2002.

I never went to investing school. I never managed a big fund. I am not a dummy. I possess at least average intelligence, but not a great deal more. I should not be able to do the things that I have done. I should not be able to revolutionize this field (Shiller was responsible for the revolutionary theory but I am the one who showed what that theory says about day-to-day investing decisions). I shouldn’t have been the one to point out the errors in the Old School SWR studies. Without the massive cover-up, someone else would have done that long before I came on the scene. I should not have been able to serve as co-author of the most important piece of peer-reviewed research published in this field in 30 years. All of that stuff is crazy stuff that in ordinary circumstances never could have happened.

I wasn’t responsible for the crazy circumstances into which I was thrust, Anonymous. It wasn’t like I woke up one day and said to myself: “I know what I’ll do, why don’t I go revolutionize the field of stock investing>?”

I was the lead poster at an exciting discussion board at Motley Fool. We had an insanely abusive individual posting at that board. He shoved his discredited SWR study down our throats on a daily basis. I had responsibilities re that board community. I didn’t go looking for trouble. I was backed into a corner and left with no other option but to bring this fellow down or see the entire community go down. So I posted what I knew about safe withdrawal rates (which I learned not because I am a super-genius but because I read things that most people don’t read in the course of planning my own early retirement). That’s what set everything off.

I didn’t expect a 12-year saga. I knew that Greaney would respond in an abusive manner. But we were talking about the calculation of a number. And this was a board filled with people re which the accurate calculation of that number was a matter of great significance. So I figured that I would be in for two days worth of heat, three at the most. I figured that I could handle that if it meant getting the board back on the right track. So I pushed the “Submit” button.

I obviously discovered something that I didn’t expect. I discovered two things, actually. I discovered that a large percentage of the population possesses doubts about the conventional investing advice and a desire to learn about new ideas in this field. Nothing could be more clear from the shower of praise that I saw from hundreds of my fellow community members. And I discovered that the Buy-and-Holders are in great emotional pain because they too feel these doubts but cannot bear to given them serious consideration or even to see others give them serious consideration if they are within hearing distance.

No one ever talks about the intense emotional pain of the Buy-and-Holders. I don’t think there is one article in the literature about it. Nothing in the peer-reviewed journals. No blogs explore the phenomenon. Nothing in the magazines or newspapers. But here it was. I was seeing it with my own eyes. And it obviously was a very important reality. Buy-and-Hold is marketed as a research-based strategy. If it is research-based, it should be lessening investor emotion. But it is doing the opposite. Investors have become MORE emotional in the Buy-and-Hold Era. This got my attention.

It REALLY got my attention on the evening of August 27, 2002. That’s the night that Greaney put forward his first death threats. There were about 50 community members who gave voice to negative feelings about this (that’s roughly the number that endorsed a post by FoolMeOnce saying that the board has become something that no longer merited the support of people with self-respect). But there was another post by Greaney that won 200 endorsements a short time later. So the MAJORITY of the board was fine with death threats if that is what it took to stop people from challenging the Buy-and-Hold dogmas. Yikes!

Forget Shiller! You don’t need data to show that Buy-and-Hold is a big pile of smelly garbage if you have 200 votes for death threats. That was the night that I stopped thinking of myself as a Buy-and-Holder. Buy-and-Hold CANNOT be research-based if it generates that sort of reaction in that many people. It HAS to be emotion-based.

Ever since, I have devoted myself to developing and promoting the Valuation-Informed Indexing concept. Shiller has never even bothered to give a name to his model. It must have a name if it is going to grow. So I gave it a name. And I went about the business of developing it, adding insight upon insight by doing new research or encouraging others to do new research or by thinking through implications on long walks or by talking things over with both experts and ordinary investors on discussion boards or whatever. I learned a lot by recording the 200 RobCasts that I recorded. I would push the “Record” button and, as I talked about one topic, I would find my thoughts wandering to another topic and the next thing you know, I would have a new insight and an idea for a new RobCast! It has been an exciting process.

It shouldn’t have been possible for me to have earned all those accolades. But it WAS possible because I have been exploring The Great Unexplored Continent of Investing Insights. Most people in this field work on the numbers side. The idea is that that is the hard side and so that is what earns you respect. But the numbers stuff has been done to death. It is on the emotions side where all the action is. People trying to advance in this field don’t work that side because it is treated either with contempt or indifference by most of the people who focus on numbers. Because so few have been working it, there are THOUSANDS of low-hanging insights to be picked from the Investor Emotion Trees. I just keep picking them, one after another after another. Why shouldn’t I?

LOTS of people want to get in on the action. My sense is that just about everybody does, including my good friend Jack Bogle. It’s only the brutal intimidation tactics of the Buy-and-Hold Mafia that stop them. People want to mine the insights because they know it will make them rich and famous to do so. But they hold back because the Buy-and-Hold Mafia will destroy their careers if they come up with anything too good. All of the truly good stuff shows how dangerous Buy-and-Hold is. So it’s the good stuff that the Buy-and-Holders hate with a burning hate.

EVERYONE wants to make the transition to Valuation-Informed Indexing. But no one can figure out how to pin the bell on the cat. That’s the state of play in the investing advice field in 2014.

I’m like everyone else. I cannot figure out how to pin the bell on the cat either. But I get it loud and clear that we all must pull together to do so or else go over a cliff. So I am not about to waste my time working a model that has been discredited for 33 years now. If as a society we come to our senses and elect to bring the economic crisis to an end, I have 12 years of work that will help us bring on the greatest period of economic growth in our history. If we elect to go over the cliff, that’s just the way it is. It makes me sad to think that that might happen. But there’s not a thing that I can do about it that I haven’t already tried to do. So it’s one of those things that I just have to accept.

Given that background, it is essential that I quote the amazing outpouring of praise that my work has generated. There is no other blogger on the internet who has won for himself even a fraction of the praise that I have won. Why? Because all those people praising me want to see us get to the other side of the river. They want to come clean. They want to do productive work. They want to help people. They want to join in an effort to bury Buy-and-Hold 30 feet in the ground, where it can do no further harm to humans and other living things.

When I quote the praise that my work has won, I am not bragging about my own accomplishments. I am bragging about the government system under which we live, which permits and encourages such huge breakthroughs. I am bragging about the thousands of fine people who have helped me out every step of the way. I am bragging about the Buy-and-Hold Pioneers, who started out with a wonderful idea and who made hugely positive contributions before their false pride caused them to fall off the right track.

I am bragging about human nature itself! We are NOT doomed to fall into Get Rich Quick thinking over and over and over again. I hear that all the time. People say “why do you fight Rob, don’t you see that people are just weak?” No! People LOVE hearing about true research-based strategies! The only problem today is that they want to hear recognized experts confirm all that I have come up with. Once Bogle gives his “I Was Wrong” speech, my site will be the most popular site on the internet. We have seen huge interest in these ideas at every board and blog at which I have posted for 12 years until you Goons entered the picture to poison things. People WANT to overcome their Get Rich Quick impulse. Once the experts acknowledge their responsibility to help them do so, it’s over. Get Rich Quick/Buy-and-Hold investing is a thing of the past once Bogle gives his speech.

So it is right for me to cite the amazing amounts of praise that my work has won for itself. I am part of a community. Praise for my work is not praise for me along. It is praise for all who have made positive contributions. That’s thousands and thousands of people.

Our story is a positive one. The transition from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance in the history of personal finance. There is nothing else in even a remotely close second place. It wasn’t Rob Bennett alone who made that happen. Robert Shiller played a huge role. John Walter Russell played a huge role. Wade Pfau played a huge role. Jack Bogle played a huge role. Bill Bernstein played a huge role. Andrew Smithers played a huge role. Ed Easterling played a huge role. And on and on and on.

Praise for Rob Bennett’s work is praise for all those people. And praise for Rob Bennett’s work is praise for every middle-class investor who ever expressed a desire for a truly smart and safe and simple way to invest in stocks that works. It’s my desire to give those people what they want and need that drives me. I never would have made it this far without the thousands of kind and warm and generous posts that those people put up in support of my efforts in the face of the most brutal intimidation tactics imaginable from you Goons.

So I will soldier on, Anonynous. And, yes, I will tell the positive side of the tale. You live in hate. But millions of your fellow community members live in love. And love will triumph over hate on the final page of this saga.

How do I know? I know because it always does. The first time hate triumphs is the time we all go down to a dark, dark place.

Not this boy!

No can do!

I can’t go for that!

My best wishes to you, my old Goon friend.

Rob

“The Test for the Lindauerheads Is — Are You Helping People to Appreciate the Dangers of Buy-and-Hold Investing Strategies? If You Say That You Personally Use a Low Withdrawal Rate, No One Cares. If You Point Out That the Old School SWR Studies Get the Numbers Wildly Wrong, You Are Putting the Buy-and-Holders At Risk of Being Sued for Financial Fraud and They Will Take Action to Stop You From Giving People the Information They Need to Protect Themselves.”

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

Thousands of posts with many strongly differing opinions on the topic suggest they most certainly do. Assuming you behave like an adult and post respectfully. In fact, I could post your comments about 15% vs 1% expected return rates right now, and I would hardly be banned.

Of course, I’d post respectfully, not boorishly, being open to differing opinions on the matter, and realizing that the future is so random and uncertain that many outcomes are possible.

You’d be banned in two seconds flat if you posted a link to The Stock-Return Predictor, which gives people all the numbers they need in any easy-to-access form. Why?

My friend Brian put up a post there when the Wall Street Journal ran an article saying that I was right about safe withdrawal rates and he was banned in two seconds flat.

I think you are probably right that if someone posted on a single occasion the 15 percent and 1 percent numbers, they would not be banned. But if someone made it a consistent practice to provide people the information they need and to answer questions and all that sort of thing, they would certainly be threatened with a banning. If they continued to post honestly in the face of the intimidation tactics, they would be banned. Again — Why?

The test for the Lindauerheards is — Are you helping people to appreciate the dangers of Buy-and-Hold investing strategies? If you say that you personally are using a low withdrawal rate, no one cares. If you point out that the Old School SWR studies get the numbers wildly wrong, you are putting the Buy-and-Holders at risk of being sued for financial fraud and they will take action to stop you from giving people the information they need to protect themselves.

Is it “respectful” to point out that the 12-year cover-up of the errors in the Old School studies is the biggest act of financial fraud in the history of the United States? Is it “adult” to do so? I ask because in other fields of human endeavor it is considered 100 percent adult and respectful to post honestly. I would like to see honest posting permitted in the investing field as well. In fact, I insist on it. I refuse to have my name associated with boards and blogs that demand dishonesty on the SWR matter as the price of admission.

I am 100 percent open to differing opinions on issues that don’t involve numerical calculations. Numerical calculations must be reported honestly and accurately. There is no room for differing opinions on whether a valuation adjustment is included in the Old School studies or not. The Wall Street Journal found no valuation adjustment. The Economist magazine found no valuation adjustment. Wade Pfau found no valuation adjustment. Are we to believe that there is some massive conspiracy here to pretend that there is no valuation adjustment in those studies even though there really is one?

Differing opinions on questions re which there can be reasonable differences of opinion are wonderful. It’s differing opinions that make a board work and that keep everybody honest. So differing opinions on non-calculation issues are a huge plus.

I agree that a variety of future outcomes are possible. My calculators show that as plain as day. All of the research shows that and all of the data shows that.

It’s a mistake to overstate that reality, however. The future is somewhat random but not entirelyrandom. It’s debatable as to whether it is more random than predictable (in the long run) or more predictable than random. I would say that it is more predictable than random. There are reasonable people who would say otherwise. Investors need to hear both sides of the debate to be able to make informed decisions for themselves.

Buy-and-Holders and Valuation-Informed Indexers hold different views as to the extent to which long-term returns are predictable. If I say that long-term returns are predictable with a great deal of precision, I am speaking falsely. But if I say that I believe that returns are no more predictable than the Buy-and-Holders say they are, I am speaking dishonestly.

Shiller showed that returns are MORE predictable than most people believed back in the day when the Buy-and-Hold strategy was developed. It would be a lie for me to say that I do not believe that I learned something from Shiller’s research and from the follow-up research that has been done relating to the same themes that he explored in his research.

ALL posters should be permitted to post their sincerely held views. There should not be even the slightest amount of controversy re this point.

Rob

“I Have Sent E-Mails to the 30,000 Names on the Social Science Research Network List. Many Wanted to Know How They Can Help. I Told Them That They Can Help By Letting Their Friends Know About the 12-Year Cover-Up. Neither You Goons Nor the Wall Street Con Men Possess Any Power Over Us Except What We Grant to You By Our Cowardice in the Face of Your Brutal Intimidation Tactics.”

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

You do that Rob. I can see how it feels better to live in a dream world where you’re about save civilization from itself rather than face the reality of being an aging, unemployed dude sitting forgotten in your basement surfing the net all day.

Your $500M payday is coming, Rob. It’s right around the corner! Keep checking that mailbox. Fingers crossed.

Every important advance in the history of humankind was led by PEOPLE doing the right thing, Anonymous. There is no other way it can be done.

I have had thousands of people respond to my work with insanely kind comments. I am grateful to each and every one of them. We all should be grateful to every one of them. Not every one of them has been brave enough to speak up in opposition to you Goons. People don’t like having the lives of their family members threatened by the sorts of individuals who have put up posts in “defense” of Mel Linduaer and John Greaney. But they helped out by putting up kind posts. And we should all acknowledge that.

I have sent e-mails to the 30,000 names on the Social Science Research Network list. I heard many kind comments from those researchers and academics as well. Many wanted to know how they can help. I told them that they can help by letting their friends know about the 12-year cover-up and about the great amount of human misery caused by you Goons and by the Wall Street Con Men who either encouraged you or failed to speak out in opposition to you. Neither you Goons nor the Wall Street Con Men possess any power over us except what we grant to you by our cowardice in the face of your brutal intimidation tactics. We all should be grateful for the kindness and intelligence evidenced by all those fine people as well.

And we should all be grateful for the wonderful work done by the Buy-and-Hold Pioneers. Many Buy-and-Holders have behaved shamefully in recent years. But we wouldn’t have learned how to reduce the risk of stock investing by 70 percent had the Buy-and-Hold Pioneers not first done the fine work that they contributed in earlier days. So I certainly intend to be sure that they get all the credit they merit while also of course insisting that they acknowledge the mistake that they made that has brought on the greatest economic crisis in U.S. history.

You Goons live in hate. I obviously get that. But I believe that there is a part of you deep inside that at some point in your life wanted to do good for others. I believe that it is your shame over your behavior over the past 12 years that holds you back from coming clean today. And, while I of course wish that you would come clean before you do more damage, I think that the shame you feel does point to some measure of good that remains alive within you. I hope that that measure of good grows stronger with time. I believe that it will following the next price crash, when you will no longer be able to deny how much damage the pure Get Rich Quick approach has done to so many human lives.

Yes, I will keep looking for the $500 million settlement payment. As I have noted before, I don’t believe that I will need to file papers to collect that payment. I believe that my good friend Jack Bogle will take care of it when he sees the harm he has done by failing to take action on the Lindauer matter. If he doesn’t, he is not the man that I have long believed him to be. If I must file papers to get the money, I will file papers. But my personal belief is that that is not even going to be necessary.

I’m grateful that I was offered this opportunity “to save civilization from itself.” Few of us are ever offered such an opportunity and I certainly had no expectation that my May 13, 2002, post was going to lead us all to such a wonderful place. Except I think it would be more honest to say that I am permitting civilization to save itself rather than helping to save it from itself. I didn’t develop all the genuine breakthrough insights in the Buy-and-Hold concept that really have stood the test of time. And I didn’t publish the 1981 research showing the need for a correction of the foolish (we now see this!) “idea” that stocks are the only thing available for sale in this world re which we are not required to exercise price discipline.

I stood up to you Goons and demanded that the magical Learning Experience proceed despite the great pain you experienced while we all went further and further and further ahead in our understanding of how stocks work in the real world. But I obviously couldn’t have done any of it without the help of thousands of other fine and kind and smart and hard-working and generous people. Even you Goons came forward with points that turned into helpful RobCasts on one or two occasions!

Hate dies out in time. It creates nothing. It is a purely destructive force.

Love is where its at. Love heals. Yes, even in the investing advice field!

Love can take the worst economic crisis in U.S. history and turn it in to something good.John Walter Russell once told us that we were going to see good things happen as a result of our efforts to get the Old School SWR studies corrected that we could not even imagine on the morning of May 13, 2002. I think it would be fair to say that John has been proven right 20 times over. He possessed an intelligence that is only ever evidenced by those who feel a deep love in their hearts. I think it would be fair to say that the day when we all will be following John’s injunction to have big bunches of fun draws closer and closer!

Hang in there, my bruised and battered (by your own hate-filled impulses!) friend. It gets better. A lot better.

Rob

“People Who Are Afraid That the Wall Street Con Men Are Going to Use Their Power and Money to Sue Them Can Look at Me and See That They Don’t Have the Gut to Pull the Trigger. People Who Are Looking to Prove That the “Defense” of Buy-and-Hold Has Become a Massive Case of Financial Fraud Can Find Thousands of Proofs of the Case in the Materials At This Site.”

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

Notice that when people learn more about you and your comments, they eventually move away from you, disagree with you or ignore you. Examples are JD, Mike Piper, and Wade. Remember the thread on FMF? When your story started to unfold and people learned more, they turned away. Why is it that your purported supporters like Joe and Kevin re not giving you a regular columns? Are they starting to catch on?

Once people really dig in, Rob, they just don’t like what they see.

People DO move away. You have that part right, Anonymous.

It has zero to do with me and it has zero to do with Valuation-Informed Indexing. People love me and people love Valuation-Informed Indexing.

People move away because they are afraid of the reactions they see from Buy-and-Holders when they talk openly and clearly and frankly about what the last 33 years of peer-reviewed research tells us about how stock investing works.

The Wall Street Con Men stop giving you links once you post honestly. Goons invade your site when you post honestly. The millions of investors who follow Buy-and-Hold strategies become upset with you when you post honestly and are less likely to visit your site or buy your products.

Buy-and-Hold started as a research-based strategy. Then research was published showing that there is zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor. Rather than acknowledging their mistake and fixing it, the Buy-and-Holders became defensive. Now that the cover-up has continued for 33 years, they have caused massive amounts of human misery. Buy-and-Hold is today the OPPOSITE of what it was intended to be when it was first put forward. Today, it is the Buy-and-Holders who go into brutal attack mode when anyone mentions what the last 33 years of peer-reviewed research tells us.

J.D. Roth knows that Buy-and-Hold is b.s. He doesn’t want Buy-and-Holders to attack his site and his reputation. So he keeps it zipped.

Mike Piper knows that Buy-and-Hold is b.s. He doesn’t want Buy-and-Holders to attack his site and his reputation. So he keeps it zipped.

Wade Pfau know that Buy-and-Hold is b.s. He doesn’t want Buy-and-Holders to attack his site and his reputation. So he keeps it zipped.

People will turn on the Buy-and-Holders after the next crash, Anonymous. They will be very, very, very angry when they see that their retirement money is gone and when they realize how the Buy-and-Holders caused that to happen with their millions of deceptions and with their brutal intimidation tactics. My job is two-fold: (1) Get the truth out; and (2) Heal the wounds caused by the 12-year cover-up (it’s 33 years if we count back to when Shiller published his revolutionary research).

Intimidation tactics are desperation tactics. If there were even a sliver of support anywhere in the research for this smelly Get Rich Quick garbage, we never would have seen a single death threat, much less 12 years of this stuff. Buy-and-Hold died its intellectual death a long, long, long, long time ago. Now it’s just a question of getting the word out to people.

All the people you mention would like this to be over. J.D. Roth has told me that, Mike Piper has told me that, and Wade Pfau has told me that. Wade talked about his feelings a LOT in the numerous e-mails that he sent to me that I have reported on here at the blog. Wade wants to be liked. That’s the story. He has seen that telling the truth about stock investing makes Buy-and-Holders hate him. And he wants no part of it. He wants to be liked. So he lies.

But he LOVED telling the truth back in the days when he thought he could get away with it. And Mike Piper would love to feel free to tell the truth if he thought he could get away with it. And J.D. Roth would love to feel free to tell the truth if he thought he could get away with it.

We need help from one big site or one big researcher or one big advisor or one big policymaker or one big economist or one big journalist or one big venture capitalist. Then it’s over. There is HUGE money waiting to be made telling the truth about stock investing. And, as the Buy-and-Hold Crisis worsens, more and more people are going to feel emboldened to tell the truth. And once they do, lots of others are going to join the party because it is those who tell the truth early who will win the biggest reputations for themselves and who will enjoy the biggest financial rewards.

There is nothing more pathetic in an intellectual debate than putting forward a death threat. There is nothing more pathetic than putting forward demands for unjustified board bannings. There is nothing more pathetic than putting forward tens of thousands of acts of defamation. There is nothing more pathetic than threatening an academic researcher for the “crime” of doing honest research.

Another way of saying it is — There is nothing more pathetic than Buy-and-Hold. There was a day when that was not so. But that is today’s reality. And the longer the cover-up continues, the more pathetic the plight of the Buy-and-Holders gets. Prison sentences. Huge financial liabilities. Destroyed reputations. The blame for causing the economic crisis. The blame for causing millions of failed retirements. These are the sorts of things the Buy-and-Holders bring on themselves with their continued abusive behavior today. And that stuff is as pathetic as pathetic gets, Anonymous.

Your high point in this debate was the morning of May 13, 2002. It got a little worse for you the next day. And then a little worse the day after that. And today it is a whole big bunch worse. The only thing worse than your predicament today is the predicament you will be in tomorrow. And the only thing worse than the predicament you will be in tomorrow will be the predicament you will be in following the next price crash. I wish you luck with that one, Anonymous. Please forgive me if I elect not to sign up with your Liar’s Club.

It can never get better for you. It can get a lot worse. But it can never get better. There’s an advantage that I gained from being on the right side of the History Train that you will never be able to enjoy again until you flip. Don’t blame me! I’ve been advising you to flip for 12 years now!

J.D. Roth will flip. Mike Piper will flip. Wade Pfau will flip (again). EVERYONE will flip. Because they ultimately have no choice. Buy-and-Hold is the greatest wealth-destruction engine ever concocted by the mind of mortal man. There are already millions of people hurting because of the wealth destruction already achieved by the Buy-and-Hold “idea” that investors need not exercise price discipline when buying stocks. There will be millions more following the next crash. At some point, the pain will have grown so great that there will be no choice but for all of us to flip.

Except for those of us who have been posting honestly all along. We don’t have to flip. We can just continue growing in our knowledge as time goes on. No flipping required. That’s one thing I like about telling the truth!

You have held back the future for a far longer time than I imagined possible, Anonymous. I give you that one. But I would never want to be in your shoes. Not in a billion years.

People who are working up the courage to tell the truth have a valuable resource with this site. I give them the articles they need and the calculators they need and the podcasts they need. I also teach them about the trickery of the Wall Street Con Men and their Internet Goon Squads. People who are afraid that the Wall Street Con Men are going to use their money and power to sue them can look at me and see that they don’t have the guts to pull the trigger. People who are looking to prove that the “defense” of Buy-and-Hold has become a massive case of financial fraud in recent years can point to THOUSANDS of proofs of the case in the materials at this site.

You want to show that Jack Bogle is in on the cover-up? The proof is in materials at this site. You want to show that Bill Bernstein is in on the cover-up? The proof is in materials at this site. You want to show that Wade Pfau is in on the cover-up? The proof is in materials at this site.

This site serves an important public policy purpose in presenting those materials for all the world to see, Anonymous. There are millions of middle-class people who are in the process of seeing their retirement plans destroyed. We are going to have to proceed with hundreds of thousands of civil lawsuits and perhaps hundreds of criminal financial-fraud cases following the next price crash. Having so much evidence collected in one place is a huge plus. We want to put the ugly stuff behind us as quickly as possible and thereby free ourselves to learn about all the wonderful research-based goodness that we should have begun exploring in depth 33 years ago.

J.D. Roth and Mike Piper and Wade Pfau won’t be afraid forever, Anonymous. Ruling though intimidation is a short-term strategy. I hate it that you have done so much damage to a country that I love. But I am proud that I worked up the courage to do a whole big bunch of good here. I intend to continue following the research-based path for a long time to come. (I thank my Buy-and-Hold friends for teaching me the importance of rooting one’s investing strategies in research back in the days when Buy-and-Hold was something more than a nasty marketing gimmick.)

My best wishes to you and yours, Anonymous. Please don’t worry too much about J.D. Roth and Mike Piper and Wade Pfau. They will work up the courage to post honestly as the Buy-and-Hold house of cards continues to collapse. All of us will. In the end, even you Goons will need to work up that courage.

Honest Goons! Imagine! Oh, my!

Rob

 

Valuation-Informed Indexing #191 — TIPS, IBond and CDs Are Better Alternatives to Stocks Than Bonds

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I’ve posted Entry #191 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called TIPS, IBonds and CDs Are Better Alternatives to Stocks Than Bonds.

Juicy Excerpt: Perhaps most important of all, it is an easy thing to shift money from TIPS or IBonds or CDs to stocks when stock prices drop. Bonds are like stocks in that there are time-periods in which you are down and in which you very much do not want to sell. The Valuation-Informed Indexer looks to stocks for growth. So he always wants to be able to take advantage of the juicy long-term returns available when stocks are selling at fair-value prices or better. You don’t want to be stuck in bonds at such times.

“As Of Today, Intimidation Works Because, As Much As People Want To Learn About The New Idea, They Are Unsure Of Their Own Knowledge And Don’t At All Like The Idea Of Being Confronted With The Brutal Abusiveness That Those Posting In “Defense” Of Mel Lindauer and John Greaney Have Been Employing For 12 Years Now. All Of Us Are Terrified By The Tactics That Have Been Employed By You Goons. We Will Overcome You. You Goons Will Be Sent Off To Long Prison Terms.”

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

Yes, they all love you. They’re just too frightened to show it. ALL of them. 100% terrified of the Goons. This is just SO much more likely than any other possibility. Such as the ridiculous notion that they find you vacuous, narcissistic, irritating and/or just plain nuts.

Yes, that is the problem, Miasma.

There is of course a lot of misunderstanding as well. The vast majority of people who recommend Buy-and-Hold strategies (I think it may be ALL of them) BELIEVE that Buy-and-Hold can work. Many have doubts. But those with doubts generally believe that, even with its flaws, Buy-and-Hold is the most responsible option. They might not think it works perfectly but they sincerely believe that it works well enough.

Valuation-Informed Indexing is the new thing. There have been hundreds of BILLIONS of dollars directed to the promotion of Buy-and-Hold. Money magazine has promoted Buy-and-Hold strategies in every monthly issue going back to the mid-1970s. Many people are afraid of stocks. So it gives them comfort to go with a strategy that has been around for a long time and that has been endorsed by numerous experts. Buy-and-Hold is the safe choice in a field where safety is prized. Valuation-Informed Indexing is something new and different and strange. So it starts out at a big disadvantage.

But thousands and thousands of people have expressed a desire to learn more about the new strategy over the course of the past 12 years. Including some of the biggest names in the field. And, yes, you Goons have made them afraid to participate in the discussions they want to participate in, afraid to learn the things they want to learn, afraid to ask the questions they feel they need to ask to become more comfortable with the new strategy.

Fear won’t work anymore once the entire world knows about Valuation-Informed Indexing and about the trickery that you Buy-and-Hold Goons have employed to keep millions in the dark for 12 years now. There will come a day when your Goon tactics will become 100 percent ineffective. But that is not where things stand today. As of today, intimidation works because, as much as people want to learn about the new ideas, they are unsure of their own knowledge and don’t at all like the idea of being confronted with the brutal abusiveness that those posting in “defense” of Mel Linduaer and John Greaney have been employing for 12 years now.

All of us are terrified by the tactics that have been employed by you Goons. That’s why we have published rules prohibiting such tactics at every discussion board and blog. That’s why we have made your tactics felonies under the laws of the United States. We wouldn’t be sending people to prison for behaving as you Goons do if we didn’t believe as a society that the behavior that you have engaged in is very, very, very bad stuff.

Most of us do not today understand how stock investing works. Investing was not even studied in a systematic and serious way until the 1960s. And we didn’t as a society know it all at the time when Buy-and-Hold was being developed. So we got off on a wrong track and for 33 years now have needed to set things straight again. People have become more open to the research-based approach as Buy-and-Hold has caused more and more financial devastation. But, yes, our knowledge base is still not strong enough for the learning project to go forward in the face of your abusiveness.

We will overcome you. The people of the United States will learn what they need to learn and you Goons will be sent off to long prison terms. We will collectively work up the courage to take you on and to free ourselves as a society from the ignorance in which we have suffered for the past 33 years.

People who want to learn are afraid of you Goons and of the Wall Street Con Men who pretend that they see nothing wrong with your behavior. But as you destroy more and more middle-class lives, we will work up the courage to stand up to you and to transform Buy-and-Hold into what it was intended to be in its early days by removing the Get Rich Quick element of the first-draft version and offering people for the first time in history a true research-based investing strategy.

I wish you all good things, Miasma.

Rob

“One Big Reason Why the Behavioral Finance School Has Not Achieved More in the Practical Realm Despite the Many Powerful Insights It Has Advanced Is That Too Many Are Afraid to Describe and Document the Goonishness of the Buy-and-Holders. Goonishness Is the Thing We Need to Overcome to Become Effective Investors. We Will Not As a Society Become Able to Combat Goonishness Until We First Work Up the Courage to Talk About It.”

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

Calling someone a goon speaks more about you instead of the person you have targeted.

It says that I do my job, Anonymous. I am a journalist. Journalists tell people what is going on in the world. The 12-year cover-up of the errors in the Old School safe-withdrawal-rate studies is the biggest economic and political story of our time. Pointing to the behavior of you Goons is part of the job of telling this story. Things could not have played out as they have played out without a heavy helping of Goonishness. The story doesn’t make even a tiny bit of sense if the Goonishness is ignored.

One big reason why the Behavioral Finance School of personal finance has not achieved more in the practical realm despite the many powerful insights it has advanced is that too many people in this school are afraid to describe and document the Goonishness we all see taking place all around us every day from those who believe and follow the conventional (Buy-and-Hold) investing advice. Goonihsness is the story. Goonishness is the thing we need to combat if we are to become effective investors. We will not as a society become able to combat Goonishness until we first work up the courage to at least talk about it.

I am the fellow who doesn’t hold back from noticing and talking about and exploring and commenting on and trying to rein in Goonishness. That’s why I am today 12 years ahead in my understanding of how stock investing works of people like my good friend Jack Bogle. Jack shies away from this topic. It has its ugly side. I certainly don’t say different. But you know what? A doctor who wants to cut out cancerous tissue has to draw blood to do so. There are times when a person seeking to do something good has to engage in some awful task to get the job done.

Jack Bogle has more I.Q. points than I possess and he has more training in this field and he has more experience. But he has held himself back because of his fear of talking about the ugly Goonishness that has come to dominant this field in the Buy-and-Hold Era. I care about what happens to the people who read my words. And so I cannot go there. I talk about non-Goon stuff all the time and I enjoy being able to do that when it is an option. But when the Goon stuff stares me in the face and demands to be reported, I make an effort to work up the courage to do that. I work it hard and I think it would be fair to say that I have gone to places that no one else in this field has ever gone to before. I pray that I will continue to push when called on by realities taking place before me to do so.

Had Shiller published his “revolutionary” research in 1961 instead of 1981, there never would have been any Buy-and-Hold. The Buy-and-Holders don’t want to destroy our economic system. They don’t want to invest ineffectively themselves. Valuation-Informed Indexing has been shown to be so far superior to Buy-and-Hold in every test that has been done that it is silly to suggest that there is any intellectual debate here. There’s a mountain of evidence on the Valuation-Informed Indexing side and zero evidence on the Buy-and-Hold side. Zero evidence combined with a huge amount of Goonishness. Which has been enough to block the intellectual debate for 12 years now (it’s 33 years if you date things back to when Shiller published his revolutionary research). It will soon become 34 years if we don’t as a society work up the courage to face the Goonishness this year. It will soon become 35 years of we don’t as a society work up the courage to face the Goonishness either this year or next year. And so on.

The reason why we are in an economic crisis today instead of enjoying the greatest period of economic growth in our history is that we are not all Vulcans who pursue our self-interest in a purely rational manner. Eugene Fama is responsible for some major advances. We all owe him a debt of gratitude for the good he has done. But he also made one huge mistake that has caused a huge amount of human misery. And he doesn’t want to acknowledge it. He feels ashamed. He wants that mistake covered up. The mistake has destroyed millions of middle-class lives. So as a society we cannot permit the error to be covered up any longer.

And of course it is not just Fama. LOTS of people want the realities of what we know about how stock investing works in the year 2014 covered up. And that cannot be. These realities cannot be covered up any longer. We all want to be enjoying life on the other side of the river. But the only way to the other side is struggling through the hard stuff. The only way to the other side is exposing the Goonishness and talking about it and punishing it (both through civil and criminal actions) and then forgiving it and then putting it all behind us and moving on to all the good stuff.

It’s not an accident that we have gone 33 years since Robert Shiller proved that there is precisely zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor without every expert in this field declaring that to be the case. There’s money in Get Rich Quick investing strategies. A LOT of money. And so a lot of smart and otherwise good people have been attracted to the wrong side of the ethical lines out of a desire to be popular and make lots of bucks while the Get Rich Quick garbage is still paying out its huge payouts to those who put obtaining huge personal payouts above helping their clients and readers learn how to invest effectively for the log run.

Those people very, very, very, very, very much don’t want the truth getting out. And the only hope they have with 33 years of peer-reviewed research behind them showing that they are talking garbage when they say that there is no need for investors to practice price discipline when buying stocks is engaging in and tolerating and encouraging Goonishness. That’s where things stand. I didn’t create the reality. I report on it. I care deeply about my many Buy-and-Hold friends and I want to help them. But I know that I am not helping them by causing them to travel even farther down the dark path that they have elected to travel.

I will continue to report on the behavior of you Goons and on the behavior of the Wall Street Con Men that makes possible the existence of you Goons in a society that has adopted laws protecting us from this sort of behavior. I can do no more and I can do no less.

I wish you all good things, Anonymous.

Rob

“There Are Millions of People Who Today Believe the Buy-and-Hold Lies. I Know Because I Have Talked to a Good Number of Them. I Have Had People Tell Me That Everything I Say About Investing Sounds 100 Percent Right On. But That One Thing Concerns Them. Big Shots Like Jack Bogle Are Saying the OPPOSITE of What I Am Saying, the OPPOSITE of What Makes Sense, the OPPOSITE of What the Peer-Reviewed Research in This Field Reveals. Research-Based Strategies WORK But Get Rich Quick Strategies SELL.”

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

No one is stopping you from selling your lucky VII scheme. Go short the market. Go start up a fund using your strategy. Do whatever you want. You can do whatever you want. Meanwhile, the rest of us will do what we want.

We are all big boys. We can make our own decisions and don’t need you telling us what to do. Advice can be be taken or rejected. What you want to do is shut down other people and then have you cecome the vaulted leader. How is that working out for you? Not very good, is it. It is not the so called “goons”. It is not some wall street conspiracy. You can find the source of the problem by looking in the mirror.

And you can market Buy-and-Hold, Anonymous. No one is trying to stop you from doing that.

But you cannot engage in acts of financial fraud to stop people from learning what the last 33 years of peer-reviewed research says. Advances in knowledge belong to EVERYBODY. If I want to post honestly at a discussion board about safe withdrawal rates, I have every right in the world to do so. So does Michael Kitces. So does Wade Pfau. So does Bill Bernstein. So does Larry Swdroe. So does everyone.

You have to make a distinction between marketing and research. Marketing is something you do to make a buck. If you want to make some marketing claim to make a buck, that’s your business. But your marketing claims cannot contain false statements about the peer-reviewed research in this field or you will be going to prison following the next crash. That’s financial fraud. That’s a felony.

There obviously is not a sliver of research showing that it is okay to ignore the valuation level that applies on the day a retirement begins when calculating the safe withdrawal rate. There is 33 years of peer-reviewed research showing that that is the most important element of the calculation. I understand that it helps your marketing efforts if you lie about that point. You need to understand that that’s a crime and that you can expect to be prosecuted for it.

There are millions of people who today believe the Buy-and-Hold lies. I know because I have talked to a good number of them. I have had people tell me that everything I say about investing sounds 100 percent right on. But that one thing concerns them. Big Shots like Jack Bogle are saying the OPPOSITE of what I am saying, the OPPOSITE of what makes sense, the OPPOSITE of what the peer-reviewed research in this field reveals. They want to know why.

The reason why is that Get Rich Quick sells. Research-based strategies WORK but Get Rich Quick strategies SELL. The Buy-and-Holders introduced the idea of rooting one’s strategies in the peer-reviewed research. That was a wonderful advance. But then when research was published showing that there is precisely zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor, they flipped. At that point, they continued SAYING that people should root their strategies in research but they began engaging in insanely abusive behavior aimed at intimidating people who reported honestly on the research (which has since 1981 shown that Buy-and-Hold NEVER works) into not doing so. That doesn’t fly.

This is not just an investing matter. Whether the millions of investors who need to know what the research says have some means to find out or not is a matter of grave ECONOMIC importance. When people cannot find out the truth about what the research says, they see their retirement portfolios wiped out. When people see their retirement portfolios wiped out, they stop buying goods and services. When they stop buying goods and services, hundreds of thousands of businesses go under. When hundreds of thousands of businesses go under, millions of workers lose their jobs. We are in an economic crisis today because the Buy-and-Holders are not willing to acknowledge that the “idea” that it is okay not to consider price when setting one’s stock allocation is a MARKETING claim with ZERO support in the peer-reviewed research in this field. That needs to change.

And this isn’t just an economic matter either. It is a POLITICAL matter. There are millions of people who are in the process of seeing their retirements fail because of the 12-year cover-up of the errors in the Old School safe-withdrawal-rate studies. Those people did nothing wrong. They listened to the “experts” (who were telling lies about SWRs for marketing reasons). We have no choice as a society but to bail those people out. That is going to cost us trillions of dollars in taxpayer money. The Federal budget deficit is going to EXPLODE. That’s all on the Buy-and-Holders and their unwillingness to permit honest posting on any of these questions because honest reporting of what the last 33 years of peer-reviewed research shows puts a crimp in their nasty MARKETING efforts.

There is a limit to how far you can take marketing, Anonymous. The Buy-and-Holders have destroyed millions of middle-class lives through this massive act of financial fraud. People are going to be sent to prison over this. We are going to see hundreds of thousands of civil lawsuits filed. Many reputations will be destroyed as word gets out about what the Buy-and-Holders have done to our country. Giving investing advice is not just about turning a quick buck. There are responsibilities involved. Jack Bogle and the other Buy-and-Hold advocates have failed in their responsibilities to their profession and to their clients and to their readers and to their country in a very, very big way.

No one is stopping you from selling your Buy-and-Hold garbage. But I AM in the process of stopping you from making claims that there is some mystical, magical “research” somewhere that supports it. Wade Pfau has a Ph.D. in Economics from Princeton. If there were ever a sliver of peer-reviewed research supporting Buy-and-Hold, he would have been able to find it. He searched for a long time. He found nothing. He couldn’t believe what he had learned. So he went to the Bogleheads Forum to see if anyone there had ever come across a single peer-reviewed research paper supporting Buy-and-Hold. Jack Bogle had never heard of a single study supporting the smelly Buy-and-Hold garbage. Bill Berntsein had never heard of a single study supporting the smelly Buy-and-Hold garbage. Larry Swedroe had never heard of a single study supporting the smelly Buy-and-Hold garbage. I wonder why.

I will continue posting honestly re safe withdrawal rates and scores of other critically important investment-related topics. If there comes a day when you want help from a friend re the mess you have created for yourself and many, many others, let me know, I will be your guy. So long as the price of admission to your “discussions” is engaging in a felony under the laws of the United States, I am afraid that you will need to find someone else. Not this boy. I can’t go for that. No can do. It’s not my particular cup of tea.

My best wishes to you and yours, Anonymous.

Rob

“The Experts Feel That Their Clients and Readers Won’t Think of Them as Experts Unless They Say Something More Definitive Than ‘80% Stocks Might Be Good But 20% Stocks Might Be Good Too.’ They Cannot Tell Their Clients and Reader to Wait 20 Years Until We Figure Out Whether It Is Fama or Shiller Who Got Things Right. So They IGNORE Shiller.”

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

Would you agree that your inital response in this thread can be reduced to the following dilema:

Either nearly every finance author, lecturer, blogger, advisor, and commenter on the planet is purposely corrupt and involved in a single-minded tight and as-yet completely unbreached unreportred and ongoing conspiracy against the truth that caused a major economic meltdown…

OR…..

a single unemployed layman blogger in Virginia has a profound [willful?] misunderstanding of mathematics and investing principles.

What really happened is that Shiller’s findings came as a shock. He turned what we believe about how stock investing works on its head. It takes some time for people to process such a fundamental change in our understanding of so important a matter. I don’t think it would have been too strange for it to have taken five or ten years for Valuation-Informed Indexing to catch on. That would have taken us to 1986 or 1991.

By that time, a huge bull market had been established. People did not want to hear that Buy-and-Hold does not work. They were getting daily feedback that it was working very well. And it wasn’t until late 2008 that the bull market ended in the popular perception. So it has only been for five years that most people have been open to questioning of Buy-and-Hold. And we HAVE seeing the door begin to open during that time. We are not yet where we need to be. But we are making slow but steady progress.

Another big factor here is that investing is too important to get wrong. Intuitively, you would think that that would make people super cautious about making dogmatic claims. The reality is that it has worked the other way around. Because investing is so important, experts feel that they need to demonstrate confidence in what they say. And the Buy-and-Hold and Valuation-Informed Indexing models often lead to OPPOSITE strategic recommendations. Experts feel that it would sound funny to say: “I believe that you should be at an 80 percent stock allocation but I also want you to know that there are good and smart people in this field who follow research that indicates that 20 percent stocks is a much better choice.”

That’s what people should be saying. There are two models for understanding how stock investing works and anyone who is educated re the research has a responsibility to let his clients or readers know that there is another school of thought that leads one to very, very different conclusions. But the experts feel that their clients and readers won’t think of them as experts unless they say something more definitive than “80 percent stocks might be good but 20 percent stocks might be good too.” The REALITY is that we are as a society today at a primitive level of understanding of how stock investing works. But the experts have to give advice on how to invest TODAY — they cannot tell their clients and readers to wait 20 years until we figure out whether it is Fama or Shiller who got things right. So they IGNORE Shiller. They act like he doesn’t exist. It’s a terribly irresponsible thing to do. But when you think this through carefully you can begin to see why things happened as they did.

It is certainly not the case that everyone in the field is purposely corrupt. That is OBVIOUSLY not true. Even people like Bogle and Bernstein and Swedroe include LOTS of honest and accurate comments in their books and articles and speeches. They even include comments that argue against their Buy-and-Hold recommendations. I learned about the errors in the Old School safe-withdrawal-rate studies by reading Bogle’s book. If he were 100 percent corrupt, he would not include that sort of language in his book. It would make no sense for an entirely corrupt person to do so.

What is going on is that we are living through a state of transition from Buy-and-Hold to Valuation-Informed Indexing. Bogle (and all the others) understands that there are problems with Buy-and-Hold. He is DEFENSIVE about the many obvious weak points in his model. But he has a lot invested in Buy-and-Hold and he once truly believed in it. So he is highly reluctant to give up on the model. So he downplays the weaknesses. Not only in his public comments. My sense is that he does this even in his own mind. He has convinced himself that Buy-and-Hold can at least kinda sorta work. He has convinced himself that he is not doing anything too horrible in failing to explore the challenges that have been presented to his model.

There is now a mountain of evidence that he IS doing something truly horrible. The relentless promotion of Buy-and-Hold strategies was the primary cause of the economic crisis. Bogle has caused tens of thousands of businesses to fail. He has caused millions of people to lose their jobs. He has caused millions of retirements to fail. He has even caused a significant number of people on both the left (The Occupy Wall Street Movement) and the right (The Tea Party Movement) of the political spectrum to begin to lose confidence in our system of government. That’s very bad stuff. But it does NOT amount to financial fraud so long as Bogle (or any of the others) is suffering from cognitive dissonance, a condition that afflicts all of us humans from time to time.

Death threats? Demands for unjustified board bannings? Tens of thousands of acts of defamation? Threats to get academic researchers fired from their jobs? We cannot excuse those sorts of things with stories about people suffering from cognitive dissonance. There are reasons why we have rules and laws protecting us from those sorts of behaviors. Those sorts of behaviors make our system unworkable. We all are capable of making mistakes and those sorts of behaviors make it impossible for us to discover our mistakes through civil and reasoned discussion. Those who engage in those sorts of behaviors or who see others engage in those sorts of behaviors and fail to take prompt action are guilty of financial fraud, a felony under the laws of the United States. Of that there can be no doubt whatsoever.

And there can be no doubt whatsoever that it is no act of kindness to cover up such acts of financial fraud or to fail to work hard to have them discovered and prosecuted. When we tolerate financial fraud, we insure that additional acts of financial fraud will take place by people who feel threatened by the findings of the last 33 years of peer-reviewed academic research in this field. The people who fail to speak up are insuring that more people will go to prison and that the prison sentences will be longer.

We are the luckiest generation of investors ever to talk Planet Earth. Once we make it to the other side, we will all know how to obtain far higher returns from stocks while taking on dramatically reduced risk. That’s investor heaven! It is because the advance we have achieved (at least intellectually!) is so great that as a society we have been slow to make the transition. We are naturally skeptical of such huge changes and so it is proper that we have proceeded cautiously. It is of course NOT proper that some of us have engaged in acts of financial fraud to block the change from taking place.

We are not a bad people. But we have made some bad choices that have caused huge amounts of human misery. We need to turn things around. We all should be doing everything in our power to insure that we do so by the close of business tomorrow.

That’s my sincere take re this terribly important matter, in any event.

Rob