A Rich Life

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

“It Is Hard to Imagine Anything Too Much Worse Than Devoting Your Life to the Promotion of an Investing Strategy That You Believe Is Helping People and to Learn Late in Life That All Along Your Were Hurting People.”

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

Buy and Hold is “get rich slowly”

 

That certainly is how it is promoted, Sensible.And I believe strongly that that is what the people promoting it believe it to be.

And I believe strongly that that is what the people following it believe it to be.

But I do not believe it to be that.

And I don’t say that because of some sort of bias against Buy-and-Hold. I was a Buy-and-Holder myself prior to August 27, 2002. I wanted a Get Rich Slowly approach and Buy-and-Hold seemed to me to fit the bill.

I believe that a mistake was made.

I believe that, if the Buy-and-Holders could see that mistake, they would be horrified at what they have done.

So I don’t believe that I would be doing any kindness for my many Buy-and-Hold friends if I were to pretend that I believed that Buy-and-Hold really is a Get Rich Slowly approach.

Do you believe that it is at least POSSIBLE that the Buy-and-Holders made a mistake, Sensible?

If there is any chance whatsoever that that is what happened, I think it would be fair to say that it is very, very important that the Buy-and-Holders hear out those who believe they made a mistake.

I don’t mean that it is just important for the Valuation-Informed Indexers. I mean that it is important for the BUY-AND-HOLDERS.

It is hard to imagine anything too much worse than devoting your life to the promotion of an investment strategy that you believe is helping people and to then learn late in life that all along you were HURTING people.

If I were in that situation, I would like to think that my friends would try very hard to help me understand how I had gotten on the wrong track.

We all should be working together re this matter, Sensible. Deep in our hearts, we all want the same thing.

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

Rob

 

“People Have a Hard Time Understanding How This State of Affairs Could Continue for 32 Years. It Is Because of the Phenomenon Described in This Article. The Idea that Buy-and-Hold Is DANGEROUS (Not Just Imperfect) Has Been Considered Beyond the Pale for Those 32 Years.”

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Set forth below is the text of a comment that I recently put to the Goon Central board:

Simply put, this objection to the president’s healthcare law is based on a falsehood, and letters that have an untrue basis (for example, ones that say there’s no sign humans have caused climate change) do not get printed.

This is the answer to the question put to me so often over the past 11 years — Are you saying that there is a Grand Conspiracy to keep people from learning what the last 32 years of peer-reviewed academic says?

There is a Conspiracy of Ignorance. And there is a Conspiracy of Silence re evidence that Buy-and-Hold is dangerous.

There once was a sincere belief that Buy-and-Hold was the answer. People were very excited about that finding. They lost interest in pursuing alternatives to Buy-and-Hold. The only interest was in REFINING Buy-and-Hold, which is of course something very different.

So long as the bull market continued, this was not going to change. There was no DEMAND for an alternative.

Since 2008, there is SOME demand. It is not yet strong enough to get every board and blog on the internet opened to honest posting on the research. But there is some demand today and it is growing. It will grow much more quickly following the next price crash.

People have a hard time understanding how this state of affairs could continue for 32 years.

It is because of the phenomenon described in this article. The idea that Buy-and-Hold is DANGEROUS (not just imperfect) has been considered beyond the pale for those 32 years. Many, many people have grave doubts. But they are aware of the Social Stigma attached to saying that Buy-and-Hold is DANGEROUS, not just slightly wrong but WILDLY wrong.

The longer the Social Stigma remains in place, the harder it becomes to violate.

Once the Social Stigma is removed, we will all work together to make progress at an amazing speed.

There is ZERO evidence showing that Buy-and-Hold works. ZERO. It was all a mistake. What happened is that people discovered that short-term timing doesn’t work and jumped to the hasty conclusion that long-term timing is not required either. There has never been even a tiny sliver of evidence that the latter claim is so.

This is not science. This is superstition. Scientific claim can be questioned and can survive the challenges put to them. Superstitions must be accepted on faith or they collapse. Buy-and-Hold is today a superstition, something many people believe in but something for which there is zero evidential support. It is BECAUSE there is zero support for Buy-and-Hold that Buy-and-Hiolders are so unwilling to acknowledge the mistake. Acknowledging  a mistake that has been doing damage for 32 years is VERY embarrassing.

The embarrassment gets worse and worse with each day that the Ban on Honest Posting remains in place.

The only way out is tearing down the stigma that blocks us all from engaging in honest and respectful and free discussion of the possible DANGERS of Buy-and-Hold.

The only way out is forsaking superstition and returning to the original idea behind the Buy-and-Hold project — learning what the RESEARCH says about what works in stock investing.

Rob

“Valuation-Infomed Indexing Is What Bogle INTENDED to Create When He Created Buy-and-Hold. I Have Made Jack Bogle’s Boyhood Dream Come True. When He Is Able to Work Up the Courage and Grace to Say “Thank You, Rob!”, We Will All Be in a Much Better Place.”

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Set forth below is the text of a comment that I posted to the Out of Your Rut site:

Every researcher in this field should be looking at what we see on this thread and reporting on it.

Investing is not only a numbers game.

It is partly a numbers game. It is also an emotions game.

Get the emotions wrong, and you cannot possibly get the numbers right. Get the emotions wrong and you will direct all your energies to telling lies to yourself (and others).

Get the emotions right and the numbers part comes easy.

When Buy-and-Holders elected to ignore valuations, they elected to ignore emotions (all mispricing is caused by emotion). When Buy-and-Holders elected to ignore valuations, they insured that every number they produced from that point forward would be in error.

It’s a mess.

The good news is that, when we fix the error, we transform stock investing into something close to a risk-free endeavor.

The risky thing is the possibility that you might ignore the emotions.

The risky thing is the possibility that you might follow a Buy-and-Hold strategy.

When we bury Buy-and-Hold 30 feet in the ground, we bury investing risk 30 feet in the ground.

The future is bright.

It all starts with a group of us getting together and persuading our good friend Jack Bogle to stand on a stage and say the magical words “I” and “Was” and “Wrong.”

From that point forward, it’s downhill sledding.

We cannot learn anything without accepting the possibility that we did not know it all a long time ago. ALL learning experiences start with a willingness to acknowledge one’s fallibility.

Valuation_Informed Indexing is what Bogle INTENDED to create when he created Buy-and-Hold. I have made Jack Bogle’s boyhood dream come true.

When he is able to work up the courage and grace to say “Thank you, Rob!” , we will all be in a much better place.

And I will shake the man’s hand with great enthusiasm when he stops hating himself for having made a mistake and starts working to learn what he needs to learn to give far better investing advice in the future than he has ever given in the past.

Jack can thank me and move forward or he can spend the remainder of his days covering up a mistake that caused the greatest economic crisis in U.S. history.

I know which path I am hoping very much that my good friend will choose for himself (and for all of us).

Rob

“We Need to Permit People That Possess Personal Integrity to Work in This Field. We Need Their Input. We Need to Let the Many Thousands of People Who Work In This Field And Who WANT to Evidence Personal Integrity that, Starting Here, Starting Now, It Is Okay to Do That.”

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Set forth below is the text of a comment that I recently posted to the Goon Central board:

Hey, Rob — is this “Free-n-Open” enough for ya?
Dave Ramsey, Christine Benz, Mike Piper, Wade Pfau, et al mix it up with some pretty vigorous words and thoughts over on Money™! I thought the Buy-n-Hold mafia had this kind of ‘off-the-reservation’ chatter all clamped down!  GOONS: To the Gooncopter! LOL
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Did they talk about how Mel Lindauer uses threats of physical violence to block honest posting on safe withdrawal rates at the Bogleheads Forum and about how Mike Piper keeps it zipped about that, Drip Guy? That’s something that people need to knowto assess both what they are hearing from Mike Piper’s blog and from the Bogleheads Forum and from the Big Shot “experts” who promote their books at the Bogleheads forum.Personal integrity matters, Drip Guy.I have been saying that since Greaney put forward his first death threat.Personal integrity matters.

Yes, even in the investing advice field.

When we all agree on that, we all move forward to the greatest period of economic growth in U.S. history.

I think it would be fair to say that every last one of you Goons would play it a different way if we could all go back to the morning of May 13, 2002, and have a do-over.

We cannot do that. There is no reverse time machine.

The best we can do is to bring the Campaign of Terror to a complete and total stop at the close of business today and then work together to bring about the transition from Buy-and-Hold to Valuation-Informed Indexing.

I will help in any way possible.

I will NOT post dishonestly on safe withdrawal rates. I will NOT. I will NOT say that those studies are analytically valid. Please get that idea out of your head.

To aid the 11-year cover-up of the errors in those studies is to participate in an act of financial fraud. That’s a felony. That’s prison time. I am NOT interested.

Could I make it any more clear where we stand?

No, the discussion you point to was not an honest discussion. Mike should have been talking about the intimidation tactics he has seen at Bogleheads. Dave should have offered to help us all out with that. Wade should have been talking about the threats that were made to get him fired from his job because he co-authored the most important research paper in this field in the past 30 years. He should have told Dave about how Jack Bogle has been informed about those threats and failed to DO SOMETHING about them.

Personal integrity matters, Drip Guy.

How many ways can I say it?

All of the studies in the world don’t count for squat once you give up your personal integrity.

We need to permit people that possess personal integrity to work in this field. We need their input.

We need to let the many thousands of people who work in this field and who WANT to evidence personal integrity that starting here, starting now, it is okay to do that, that the Buy-and-Hold Era has come to an end and we are now working together to develop and promote Valuation-Informed Indexing, the first HONEST and ACCURATE research-based approach.

We all want the same thing, Drip Guy. We don’t get it by failing to speak up when we see death threats and board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs.

Personal integrity matters in the investing realm just as much as it matters in all other realms.

Really.

Seriously.

For true.

I naturally wish you the best of luck in all your future endeavors, my long-time dishonest posting friend.

Rob

Valuation-Informed Indexing #163 — All of Today’s Investment Advisors Need to Warn Their Clients That Their Advice May Be Wildly Off Base

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I have posted Entry # 163 to my weekly Valuation-Informed Indexing column at the Value Walk site. It is called All of Today’s Investment Advisors Need to Warn Their Clients That Their Advice May Be Wildly Off Base.

Juicy Excerpt: So the right way to handle things is to say: “I believe that the best allocation for someone in your circumstances is 80 percent but I have to add that there are good and smart people out there who believe just as strongly and with research every bit as serious backing up their belief that 20 percent is the better choice.” The Valuation-Informed Indexers need to say it the other way around, of course.

It’s not a super message from a marketing standpoint. Investors don’t want to hear a wishy washy message. They pay experts to tell them what to do. They view an expert who fails to take a stand as an expert who is not doing his or her job.

So all investing professionals need to take a stand. We all need to be saying “I believe that 80 percent is best and that the research supports me on that point” or “I believe that 20 percent is best and that the research supports me on that point.”

The idea here is that we ALSO need to note that there is another strongly held viewpoint out there that is every bit as legitimate (at least in the eyes of some). It’s wrong to fail to mention that. Investors need to know that the research is not settled, that a respected economics professor has raised a challenge to the premises of the now-dominant model and that that challenge has not been effectively countered in over three decades.

“In Some Cases, It Is Just Ego. People Are Too Proud to Admit Mistakes. In Some Cases, It Is Done for Profit. Research-Based Works. GRQ Sells. In Some Cases, It Is Done to Win Favor With One’s Clients or Readers. The Biggest Reason of All Is That People DO NOT THEMSELVES Know the Realities.”

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Set forth below is the text of a comment that I posted to the Goon Central board:

ban on honest posting? 
 
How is that being communicated and enforced? 
 
by whom? 
 
To what ends? 
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How is that being communicated and enforced?

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It is communicated every time someone is banned for honest posting or suffers some other detriment for telling the truth about stock investing.

Have you ever known anyone banned for getting the SWR wrong, Drip Guy?

It has never once happened.

Yet I have been banned 15 times for getting the SWR right.

That is how the ban in communicated and enforced.

Everyone who is paying a tiny bit of attention knows that the rewards are great for pushing Get RIch Quick and the penalties are great for mentioning what the peer-reviewd academic research says.

Rob

by whom? 

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By Buy-and-Holders.

Who else?

Rob

To what ends?

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In some cases, it is just ego. People are too proud to admit mistakes.

In some cases, it is done for profit. Research-based works. GRQ SELLS.

In some cases, it is done to win favor with one’s clients or readers. People LOVE to hear that their portfolios are bigger than what they really are. Buy-and-Holders flatter investors. This might be done for profit. But it might also be done just because one does not want to LOSE one’s readers. People rationalize not telling the truth about Buy-and-Hold by telling themselves that it is not possible for someone who tells the truth to make a living in this field.

The biggest reason of all is that people DO NOT THEMSELVES know the realities. The vast majority of Buy-and-Holders fool themselves about how stock investing works before they fool anyone else.

Rob

“The Wall Street Journal Ran a Column Saying That Buy-and-Hold Is A Big Pile of Smelly Garbage, That the People Pushing It “Leave Out Half the Story.” That Article Should Have Gone Viral. Every Blogger Who Has Ever Mentioned Buy-and-Hold Should Have Been Writing About It. They Are AFRAID.”

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Set forth below is the text of a comment that I recently posted to the Goon Central board:

claiming it has ANYTHING to do with some goofball in Purcellville is grounds for instant disqualification, since 99.999999999% of investors, bankers, retirees, professors, etc have never heard of your crazy ass.

Rob Arnott doesn’t hail from Purcellville, Drip Guy.

He told me in his e-mail to me that he has seen all the same intimidation tactics that I have seen. There were two young researchers who wanted to do research on Arnott’s ideas. They were taken aside by friends and told that the Buy-and-Hold Mafia would destroy their careers if they went forward. So they dropped the idea.

Who benefits when something like that happens?

Not you. Not me.

The Wall Street Con Men benefit. The Buy-and-Hold advocates benefit.

There was an economics professor from Columbia University who said he loved my stuff. He said that it all made sense although he couldn’t do research showing this to be so. WHAT THE HECK IS STOPPING HIM? He is AFRAID to do research because he knows what the Buy-and-Hold MAfia will do to him if he does HONEST research.

Why did Wade flip? Partly he was afraid of you Goons. But there are internet Goons all over the internet and there is no other subject area re which people of Wade’s stature take into consideration what Goons like you think. Wade rolls over and begs when you tell him to roll over and beg because Bogle backs you up, Drip Guy. If Bogle condemned you, you would be gone. If Bogle had gone to Vanguard the first time Mel Linduaer threatened violence on a poster who dared to “cross” him by posting honestly on the academic research in this field, there never would have been a second time. Give me a friggin’ break.

The Wall Street Journal ran a column saying that Buy-and-Hold is a big pile of smelly garbage, that the people pushing it “leave out half the story.” That article should have gone viral. Every blogger who has ever mentioned Buy-and-Hold should have been writing about it, letting his or her readers know of the dangers of a strategy that has been pushed relentlessly for decades now. Not one blogger other than myself mentioned the article. They are AFRAID.

Bernsteinzzz said in response to Ataloss’ e-mail that anyone who uses one of the Old School studies to plan a retirement needs his head examined. Yet he said in the same e-mail that the studies are not analytically invalid. Huh? He is AFRAID to tell the truth re this matter.

Scott Burnszzz told me in his first e-mail response to me that I was “right” about safe withdrawal rates. Then he thought better and put up an article saying that “some people” say that the studies got the numbers wrong but not letting his readers know that he, Scott Burnszzz, personally AGREES with those “some people” (whom he left unnamed). Scott is AFRAID to do his job.

People aren’t going to become less afraid by permitting The Great Buy-and-Hold Con to continue.

It is by bringing it to a total and complete stop that we overcome this economic crisis and gain the ability to start feeling good about ourselves again.

I’m afraid of the Buy-and-Hold MAfia too, Drip Guy. The difference with me is that I am MORE afraid of playing a role in causing the Second Great Depression.

I have a right to post honestly. And I worry what the consequences will be to me and to others if I fail to demand recognition of that right.

It ain’t just Rob Bennett who has pointed out that Buy-and-HOld is a big pile of smelly garbage, Drip Guy. Far from it. I think it would be fair to say, that, once your prison sentence is announced, there are going to be hundreds if not thousands of people saying it.

We need to stop punishing people for telling the truth and rewarding people for pushing Get Rich Quick garbage.

That’s how change will be achieved.

My sincere take.

Rob

“The Secret Edge That I Hold in These Discussions Is That There Is a Part of You That Wants to Learn How to Invest Effectively. That Part Is Also a Part of Millions of Other Middle-Class Investors. That Part is Growing Stronger Every Day.”

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Set forth below is the text of a comment that I recently put to the Goon Central board:

but all with RESPECT for all parties, as long as they are operating in good faith: 

I showed a respect to Greaney and to all the Buy-and-Holders that you have never showed them Drip Guy.

I pointed out Greaney’s mistake because I believe that he wants to help people learn how to retire early. It naturally followed that he wants to correct any errors he has made in any retirement studies that he has posted to his web site.

You have demonstrated for 11 years now that you are working from a very, very different presumption re what Greaney is all about.

Greaney has behaved in ways that support your presumption. Still, I know the man better than you. Greaney has ALSO behaved in ways that support my belief that he is suffering from cognitive dissonance. He has behaved poorly. He has committed felonies. He will be going to prison for a long time. All that said, there is a part of him that set up that site because he wanted to help people learn how to retire early and that part of him to this day wants to do that.

The same is true of Jack Bogle.

The same is true of Bill Bernsteinzzz.

The same is true of Scott Burnszzz.

The same is true of Larry Swedroe.

Believe it or not, the same is true of Drip Guy.

This is the secret edge that I have held in these discussions going back the the first day, Drip Guy.

There are not two sides here. We are all on the same side. We all want the same things.

You ACT like you don’t. But you don’t fool me.

You ACT like you fool yourself. But that is never more than partly true.

There is a part of you that wants to learn how to invest effectively and that wants to help others learn how to invest effectively.

That part of you is drawn to learning about what the peer-reviewed academic research in this field really says about what works in stock investing.

And that part of you is also a part of millions of other middle-class investors.

That part is growing stronger in each and every one of us every day.

It will soon grow strong enough to overcome the part in many of us that would rather put forward death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs rather than to say the words “I” and “Was” and “Wrong” even though admitting fallibility is an essential part of any learning process.

I win in the end, Drip Guy.

Or else we all lose.

I am happy to discuss the terms of our mutual victory this morning if you are up for it.

But I have zero interest in discussing the terms of our mutual defeat.

For obvious reasons.

Respect is indeed what it is all about. When you are feeling enough pain from the prospect of your prison sentence, a light switch will be flipped and you will start respecting yourself again. At that moment, all sorts of good things start happening for every Buy-and-Holder and for every Valuation-Informed Indexer, with not one exception.

Don’t let the bad guys get you down, man.

Rob

“I Know that Mike Piper Is Worried. We Had a Long Conversation About These Matters at FinCon11 and Mike Told Me That ‘There’s Nothing I Would Like More’ Than to See This Matter Resolved. Why Do You Think Mike Said That? It’s Because, When Mike First Started Writing About Investing, He Wanted to Help People. What Went Wrong?”

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

I suspect Mike Piper will not ask you that.

I wish he would, Evidence.

By coming clean today, Mike could reduce the odds that he will receive a prison sentence and reduce the length of any prison sentence that he does receive. That’s a win/win/win/win.

I know Mike is worried. We had a long conversation about these matters at FinCon11 and Mike told me that “there’s nothing I would like more” than to see this matter resolved.

Why do you think Mike said that?

It’s because when Mike first started writing about investing, he had good intentions. He wanted to help people, not get caught up in an 11-year cover-up of errors in studies that people use to plan their retirements.

What went wrong?

The Buy-and-Hold Mafia intimidated Mike (and many, many others, to be sure) into keeping quiet about a matter that we all know millions of middle-class investors very, very, very much need to know about.

I’m here to help my friend Mike Piper (and all the others). Continuation of the cover-up is not helping my friend Mike Piper (and all the others) even a tiny bit.

If Mike works up the courage to talk to me, I will do what I can to take things in a positive and constructive and life-affirming direction. I can do no more and I can do no less.

My best wishes to you.

Rob

“They All Know Me. They All Know the Basic Story. They Are All AFRAID to Mention It on Their Blogs. Tell the Truth about Buy-and-Hold on Your Blog and You Are Going to Get the Treatment That Was Dished Out to Rob Bennett and John Walter Russell and Wade Pfau.”

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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 keep getting these questions because your history at these conventions is to be a wallflower. If you tell any of those bloggers that he or she is going to prison, they undoubtedly will mention it on their blog.

At the first financial bloggers convention that I attended (FinCon11), there must have been 15 different bloggers who came up to me and said some version of: “Oh, so YOU’RE Rob Bennett! YOU’RE that guy!”

They all know me, X. They all know the basic story. Rob Bennett has pointed out that there is now 32 years of peer-reviewed academic research showing that Buy-and-Hold is a big pile of smelly garbage and not one of the big shot experts has been able to respond with an effective argument. They all know that everyone working in this field should be writing about this story, the most important economic and political story of any of our lifetimes.

None of them mention it on their blogs. They are all AFRAID to mention it on their blogs.

Tell the truth about Buy-and-Hold on your blog, and you are going to get the treatment that Rob Bennett got when he told the truth about Buy-and-Hold. Tell the truth about Buy-and-Hold and you are going to get the treatment that John Walter Russell got when he told the truth about Buy-and-Hold. Tell the truth about Buy-and-Hold and you are going to get the treatment that Wade Pfau got when he told the truth about Buy-and-Hold.

Everybody gets it, X.

The other side of the story is that, when 10 of us who want to tell the truth about Buy-and-Hold all agree to stick together and not let the Buy-and-Hold Mafia pick us off one by one, it is all over. Buy-and-Hold was a mistake. There has never been a single peer-reviewed study showing that an investor who refuses to consider price when setting his stock allocation can obtain good long-term results. Not one person in this field has ever supplied the URL of such a study because no such study exists. The entire thing was in its early days an innocent mistake and then over time was transformed into a marketing gimmick, The Marketing Gimmick that Destroyed the U.S. Economy.

After the next crash, people will be mad enough to demand honesty. And the Wall of Intimidation will come crashing down.

That’s when those who have posted in “defense” of Mel Linduaer and John Greaney will be sent off to serve long prison terms.

My job today is to do what I can to see that the number sent off to serve prison terms is as small as possible given the circumstances that apply and that the prison sentences assigned are as short as possible given the circumstances that apply.

I naturally wish you all the best things that this life has to offer someone on the road to being assigned a long prison sentence.

Rob