A Rich Life

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

“An Entire Industry Is Going to Have to Be Rebuilt. The Freakin’ Textbooks Are Going to Need to Be Rewritten. That’s What’s Holding Us Back.”

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

What absolute BS.  After he makes his “famous” (but actually insipid) statement on 2 May 2002, less than two weeks later he says: That shows the power of social pressure, GW.

Which is the entire story here.

I am not smarter than Jack Bogle. And I am not smarter than Bill Bernsteinzzz. And I am not smarter than Scott Burnssss.

All those people — and most of the others who have advocated Buy-and-Hold since 1981 — know about Shiller’s research.

So why was I the first to point out the errors in the Old School SWR studies?

It’s because they face greater social pressure than I do. When Bogle gives his “I Was Wrong” speech (and he will), an entire industry is going to have to be rebuilt. The freakin’ textbooks are going to need to be rewritten. All the tests that these people take to become “qualified” to give investing advice are going to need to be redone. That’s pressure. That’s what’s holding us back, not a lack of intelligence. Almost without exception, the Buy-and-Holders are smart as smart can be.

I was sure on the morning of May 13, 2002. I checked it every which way it can be checked before I pushed the “Send” button.

But I was not so sure that I could not still be persuaded by relentless and ruthless social pressure exerted by hundreds of my internet friends.

I did write the apology post. I did believe it was appropriate that Thursday night.

But it turned out that I was wrong about being wrong, didn’t it?

Two days later, Russell advanced his sensitivity study of Greaney’s study. That pretty much sealed the deal, didn’t it?

I was sure. Then I faced relentless social pressure that made me unsure. So I did the right thing and took the words back. Then I saw the numbers-based proof that proved beyond any reasonable doubt that I was right to be sure. And then of course we have had 10 years of confirming evidence since then without ever seeing a tiny sliver of data pointing in the other direction.

This story is a story of the power of social pressure to cause people to believe things that do not make sense.

That’s not just the story of safe withdrawal rates. That’s the story of stock investing.

It is the social pressure we all feel to pretend that we believe that bull prices are real that is the source of just about all stock investing risk.

You take that social pressure away and we never again have another bull market. You take that social pressure away and stocks are no longer any more risky than Certificates of Deposit.

Social pressure is the story here. All you are doing in showing that social pressure influences Rob Bennett just like it influences everyone else is showing how powerful a force social pressure is in stock investing. Yes, it affects me too. That’s because I am human.

If social pressure can influence that stubborn SOB Rob Bennett on the very topic on which he is a stubborn SOB, why should anyone believe that it has zero influence on JAck Bogle or Bill Bernsteinxxx or Scott Burnsxxx?

Social pressure matters, GW. It’s social pressure that got us into this mess in the first place.

And yes, I was have been wrong about things. I was wrong about being wrong about SWRs. There are now 10 years of Post Archives showing this to be so.

And you have been wrong about things. And, when people like Bogle and Bernsteinzz and Burns come to see that it is their job to help you to RESIST the social pressure to believe in bull markets, you will become empowered to earn far higher returns at greatly diminished risk and to retire many years sooner.

Empowering you (and millions of others) has been the entire point of this going back to the first day.

Rob

“I Am Indeed Slow to Act. Some Interpret That As a Lack of Courage. My Take Is That It Is Better Understood As a Situational Kind of Courage. I Need to Be Very Sure Before I Become Unbending.”

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

He’s all talk and no action.   He never does anything.

I am slow to act, GW. For good or for ill. If I were asked to give one word to describe my personality, it would be “methodical.” I like to be sure.

That’s why I was the first one to go public about the errors in the studies. I had noticed them years before. My guess is that lots of other people noticed them. I didn’t shoot my mouth off. But I didn’t stop thinking about them either. I thought and thought and thought. And when I felt that I knew enough to venture forward and say something, I ventured forward and said something.

It was the same with everything else.

It was the same with contacting Bogle. It was the same with sending the e-mails. It was the same with saying that Buy-and-Hold caused the economic crisis. It was the same with saying that the new research shows us that stocks are less risky than bonds and that we can reduce stock risk by 70 percent. It was the same with using the phrase “financial fraud” (I used that phrase in correspondence with an e-mail respondent the other day, the first time I recall using it somewhere other than here — I test things out here and then work up the courage to follow-up elsewhere). It was the same with making note of the prison sentences.

There are some lines that I will never cross. No matter how bad things get.

I am the leader re this matter. But FoolMeOnce  once made the point that being a leader doesn’t amount to much if you don’t have followers. FoolMeOnce wanted to be with me. But he was afraid because there were not lots of others publicly declaring that they wanted to be with me. Lots of people are like that.

If that never changes, my efforts will never succeed. This is not a one-man job.

You’ve got me re that one.

I think it will change. But I am not God. I’ve been wrong about lots of things. It could be that I am wrong about this.

However, if there comes a day when people show a willingness to follow, I will lead. I’ll be scared. I was scared when I put forward the May 13, 2002, post. I forced myself to push the “send” button. I’ll force myself to lead this effort where it needs to go for millions of people to feel safe saying what they truly believe about stock investing on EVERY board and blog on the internet. That’s the job. I will see it through to completion presuming that I someday have the number of followers required for this to be a viable proposition.

I don’t think of myself as being a person of great courage. If I had been a person of great courage, the May 13, 2002, post would have gone up in May of 2000.

But I am something. I follow through. When I commit myself to something, after pondering and pondering and pondering whether it is the right choice or not, I stock to that path in the face of relentless opposition. There have been one or two other turning points in my life in which similar events played out. I handled things in the same way. With love for the other side. With a great desire for compromise. But with a steel resolve not to betray the core mission, which I elected only after a great deal of pondering as to what was the right way to proceed.

It’s not my purpose here to brag. I am not saying how great I am or how strong I am. I am not predicting ultimate victory. Perhaps I will end up in the electric chair, like Greaney once predicted.

What I am saying is that, if I fail, it will not be because I did not follow through. I am slow to act. But I evidence determination in the actions I take. There’s something in the nature of the methodical person that makes him slow to act in cases in which he is not sure (which is most cases) and determined in cases in which he is sure (the small number of cases to which he has devoted so much thought that even his methodical soul is clear re what must be done).

I believe — based on my life story — that the methodical person is the most determined person once he has convinced himself that an action absolutely must be taken. People don’t see it that way because the methodical person so rarely sticks his neck out. But it is not really a lack of courage that causes the methodical person to generally refrain from sticking his neck out. It is a lack of certainty. The methodical person sees both sides of the story. So he is generally content to let the other guy — who seems so much more sure of himself — call the play. In those few cases in which the methodical person has directed enough mental energies to a matter to feel comfortable sticking his neck out, he is so sure that he cannot live with himself if he does not evidence follow-through.

That’s where I think things stand, in any event.

There are lines that I will never cross because I could never feel comfortable crossing them. I will never say “I know for certain that Valuation-Informed Indexing works” because I don’t believe it is possible for one person to be that sure of anything. No one person knows it all. I could be missing an important piece of the puzzle. I can believe that VII works. I cannot by myself know for certain.

It’s not just me on the issue of whether honestzzz posting should be permitted. That one is backed by our entire society, our entire culture, our entire history, our entire legal system. That’s why I feel so sure re that one. Re that one I am positive.

If I obtain a sufficient number of followers to achieve my goals, I will have what it takes to follow through. I know this from life experience. I won’t flinch. I won’t go sentimental. I won’t offer deference to my “betters.” I’m tough as nails when the circumstances are such that a person with my personality feels driven to be as tough as nails.

If I don’t obtain a sufficient number of followers, this will not happen. I will never feel that it is right to force it. I don’t believe that that can ever be the right thing to do and I will never be able to persuade myself that it is the right thing to do, no matter the circumstances. If things reach a point where our entire economic system is about to collapse and I still do not have a sufficient number of followers, so be it, that’s what was meant to happen. I don’t judge myself according to whether I achieve success in the eyes of the world (perhaps you have noticed!). I judge myself according to whether I have lived up to my internal standards. My internal standards compel me to send the e-mails. My internal standards forbid me from crossing lines that I believe should never be crossed. So there are many “options” that some others might consider that are not even remotely possible options in my mind.

Anyway, that’s where things stand from my perspective.

I am determined. And I am optimistic. But I am not certain. There are ways that things could play out that you guys would “win.” That sort of win would be a horrible loss for all of us, in my assessment. But I do not say that there is zero chance that we will all have to endure what comes with a win for you guys (and witches).

I am not entirely lacking in courage, though. I am indeed slow to act. Some interpret that as a lack of courage. My take is that it is better understood as a situational kind of courage. I need to be very sure before I become unbending.

Valuation-Informed Indexing #139 — Our Mixed-Up Ideas About Stock Investing Risk

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I’ve posted Entry #139 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Our Mixed-Up Ideas About Stock Investing Risk.

Juicy Excerpt: No one deliberately tries to drive in a risky manner.

No one starts out a school year saying “I want to risk getting an “F” this semester, so I am going to try to get in the habit of never doing homework.”

No football player practices how to drop the football with the aim of increasing the risk of a turnover.

It drive me crazy that Buy-and-Hold investors describe how investing works in such a manner as to suggest that risk is a good thing. They tell investors that stocks pay high returns because they are a risky asset class. The clear suggestion is that taking on risk is inherently a good thing.

The idea of an effective investing strategy is to avoid risk.

Marcelle Chauvet, a Professor in the Department of Economics at the University of California at Riverside: “I Totally Agree. The Only Thing Is the Cost of Obtaining Information As Opposed to Buy-and-Hold. Why Would Your Job Be Jeopardized by Such a Sensible Claim?”

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I have been sending e-mails to numerous people letting them know about my article on The Silencing of Academic Researcher Wade Pfau by the Buy-and-Hold Mafia.  Marcelle Chauvet wrote in response: “I like it and I totally agree. The market goes through cycles and if we want to or need to sell in the wrong cycle phase all bets are off. The only thing is the cost of obtaining information as opposed to Buy-and-Hold. This would be a good research topic. Why would your job be jeopardized by such a sensible claim?”

The text of my reply e-mail follows:

Marcelle:

You are asking the $64,000 question.

There is a clear answer. Once people get it, it sticks. But a person needs to be open to hearing it for it to get through. Getting people to hear the answer to this question is the solution to our economic troubles.

Bull markets are Ponzi schemes.

Shiller says just that in his book. In fact, he goes farther. He says that, since bull markets possess every characteristic of Ponzi schemes, we should assume they are Ponzi schemes until we come into possession of some evidence that they are NOT Ponzi schemes. Of course there has never been any such evidence. Bull markets are Ponzi schemes.

Now —

Think about how many groups in our society benefit from this particular type of Ponzi scheme.

Wall Street benefits. But it is not just Wall Street. Newspapers benefit. Policymakers benefit (people vote for incumbents during bull markets because they are happy with their circumstances). Economists benefit (people want to learn more about how our economic system works when it is booming). Researchers benefit (people want to know more about how to benefit from the booming economy). Airlines benefit (more people can afford travel when their portfolio values are temporarily high). Car manufacturers benefit (more can buy second and third cars). The construction industry benefits (people can afford bigger houses). And on and on.

At the top of the bull, we had $12 trillion in Funny Money sloshing around our economy.

Now —

Did we know it was funny money? We did. We all possess common sense. No one really believes on a deep level that their retirement accounts can increase by 20 percent or 30 percent in a year for no good reason. We all knew all along that there was some sort of funny business going on and that we should look into it. BUT WE DIDN”T WANT TO KNOW. So we silenced the voice within us telling us “this is wrong.”

If you tell an alcoholic that he has a problem, does he acknowledge it? He does not. That’s not because he doesn’t know. He knows better than anyone. He SUPPRESSES the information. Until the consequences become so bad that he can suppress no more. It is when we can suppress no more the voice telling us that our bull market gains are not real that we have a stock crash or a series of stock crashes. It’s what alcoholics call “hitting bottom.”

Please do not be discouraged by this report. The other side of the story is wonderful indeed.

Every economic crisis we have experienced from 1870 forward (that’s as far back as we have records of stock returns) was started by a bull market in stocks. There is not a single exception. So, if we learned how stock investing really works, we could stop experiencing economic crises. Following the three earlier Buy-and-Hold crises, we went right back to committing the mistakes that caused them. This time we will not do that. Because this time we have 30 years of peer-reviewed academic research telling us how the stock market really works.

Many of us cannot bear to have people hear what we have done to ourselves. It is too painful. Hearing these truths spoken out loud makes people feel ashamed and angry and afraid. But it is hearing these truths spoken out loud that is ultimately going to save us.
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Think about what happens when we all become free to talk about what the research really says at every discussion board and blog on the internet. Every time stock prices start to rise too high, people will look at what the research says and lower their stock allocations because the value proposition is now poor. Those sales will bring the price back to fair-value levels! Stock prices are self-regulating once we know how stock investing works.

The market really is “efficient” in a sense. Investors truly want to act in their self-interest. The problem until now is that the research was not sufficiently developed for us to know what our self-interest was. Now we know. Now we have 30 years of research telling us. Because of the pain we feel when hearing the news, we have not yet permitted ourselves to discuss the new research. But that will end with the next price crash.

We just have to be sure to have means put in place in advance to help us get the word out about what the research says immediately following that next crash. Otherwise, the losses will be great enough to cause the Second Great Depression. That won’t be so if we get the word out. If we get the word out, we will fall only to fair-value price levels. If we do not get the word out, we will see a negative emotional reaction as strong as the positive emotional reaction we saw in the bull years. That will bring us down to one-half of fair value, which is where every earlier Buy-and-Hold crisis ended.

People’s jobs have been jeopardized because those who still believe in Buy-and-Hold (they number in the millions and they are good and smart and hard-working people) are in great emotional pain today. They are suffering from cognitive dissonance on a massive scale. We all should be doing what we can to help them out and thereby to help all the rest of us out too.

All this is my sincere belief re where things stand today, in any event. I am grateful to you for listening and for your kind words. Hang in there!

Rob

Note: I received a comment (see below) on August 2, 2014, in which Marcelle expressed a concern that readers might pick up the impression that she endorsed all of my views on investing. She has never said any such thing and I do not believe any such thing.

“You Are Angry With Me Because You Are Trying to Suppress a Part of Yourself That Knows That I Am Right. You Hate Me Because You Hate the Part of Yourself That Causes You to Suppress Your Capacity to Engage in Reason re Investing Issues”

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Set forth below is the text of a comment that I recently put to a discussion thread at this blog:

Rob,

Since you believe that you are right and everyone else is wrong, you must have a massive net worth by now. Care to share the details?

We all believe we are right, Sparky.

You believe you are right. If you didn’t, you wouldn’t be here.

The difference between me and you is that, while I believe I am right, I ALSO believe that it is possible that I could be missing something and that I could be wrong. So I believe in letting the other guy have his say. That way, if it turns out that HE is right and I am wrong, I get to learn from him and correct my error before it destroys me.

That’s the practice that you should follow too. I am right about that one! I am sure!

I don’t believe everyone else is wrong.

I learned about the errors in the Old School studies from reading Bogle’s book. If I thought he was wrong, I wouldn’t have put up that famous May 13, 2002, post, right?

I learned that valuations affect long-term returns from Shiller. If I thought he was wrong, I wouldn’t have created the Stock-Return Predictor, right?

I learned that we today are capable of reducing stock risk by 70 percent from Wade Pfau. If I thought he was wrong, I wouldn’t be sending 100 e-mails per day trying to get the word out about his research, right?

I don’t even think YOU are wrong about everything.

I don’t know which Goon you are. But I recorded two podcasts that were rooted in questions posed to my by Drip Guy at the Goon Central board. How would he know to pose those questions if he was wrong about everything? What you are saying here just does not add up.

You’re not angry with me because you think that I think you are wrong. If you thought that I thought that you were wrong, you wouldn’t care what I thought. You would do your thing and you would be content for me to do mine. It wouldn’t be an issue.

You are angry with me because you are trying to suppress a part of yourself that knows that I am right. You want to treat those bull market gains as real. And, if you allow yourself to think about what the word “overvaluation” means, you can’t do it. So you suppress the part of your thinking process that leads you to that conclusion. And I remind you of that. So you hate me. BECAUSE YOU HATE THE PART OF YOURSELF THAT CAUSES YOU TO SUPPRESS YOUR CAPACITY TO ENGAGE IN REASON RE INVESTING ISSUES.

That’s the source of the hate, Sparky. We are so alike and we agree on so many issues that you cannot dismiss what I say. And yet you must! If you were to acknowledge that what I say is OBVIOUSLY so, you would have to acknowledge that you have thrown away opportunities to earn far higher returns at greatly reduced risk. That hurts. That hurts a lot.

You know what?

It hurts more to delay the resolution of the hurt. All you are doing is extending it. That’s a lose/lose/lose. It is because I am your friend that I always urge you to experience the pain and thereby put it behind you.

All the others are doing the same thing.

Not because they are dumb. Not because they are bad people.

Because we the humans did not come to this planet with perfect knowledge. We pick up insights here and there and try to put the puzzle together over time. Lots of good and smart people came before me and put lots of important pieces together. I happened to be the person who was standing over the last piece and happened to notice it and picked it up and made the entire thing click.

So the heck what?

I don’t say that I get all the credit for Valuation-Informed Indexing. YOU say that. And they you become enraged to hear it. I never said it. I offered my friend John Greaney the opportunity to have his name on the first New School SWR study. He would have the biggest investing site on the internet today if he had taken me up on that offer. He pissed away the chance. Not at my urging. I urged in the other direction. A lot.

I don’t say that I am better than you, Sparky. I say that science is better than superstition. I say that love is better than hate. I say that data is better than intimidation tactics. YOU are the one who aligns Sparky with superstition and hate and intimidation tactics. YOU are the one who keeps pulling you down, thereby making me look better and better and better in contrast. I have nothing to do with any of that. The only role I have played is to urge you over and over and over again to knock off the funny business.

I wish you well.

That says it, Sparky.

Only you can turn off the hate inside you. No one else has the power to do it.

Rob

“I Have Attended Two Years of the Financial Bloggers Conference, Letting All My Fellow Bloggers Know How Important It Is That We All Work to Bring the Campaign of Terror to a Full and Complete Stop. I Have a Funny Feeling That I Am Covered re This One.”

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Set forth below is the text of a comment that I recently put to a discussion thread at this blog:

Rob,

Take a look at this:

http://www.wisegeek.com/what-are-internet-harassment-laws.htm

It looks like this describes what you are doing.

Here’s an article where I report on the Campaign of Terror of which Wade and I and many other good people have been victims:

http://www.passionsaving.com/internet-harassment.html

I have contacted my congressman, Sparky. I have contacted the Purcellville police. They have a file re this matter. I have contacted the FBI. I have contacted numerous lawyers. I have contacted a special division of the Virginia law enforcement authorities that deals with internet crimes. I have contacted the site owners who permitted abusive posting or criminal behavior at their sites. I have sent 9600 e-mails (it will be 9700 by the end of today) to my fellow citizens letting them know of the 10-year cover-up of the errors in the Old School retirement studies and how it has been carried out through the use of actions that constitute criminal financial fraud. I have written scores of guest blog entries on this matter. I have created five unique calculators that help people learn what they need to know to overcome the effects of this fraudulent enterprise. I have posted hundreds of thousands of comments at discussion boards and blogs. I have prayed. I have written and talked this over with a good number of the biggest names in the field, including Jack Bogle and Rob Arnott and Scott Burns and William Bernstein and Larry Swedroe. I have recorded 200 hour-long podcasts. I encouraged John Walter Russell to create an entire web site featuring his amazing research. I worked with Wade Pfau for 16 months telling him what he needed to know to prepare the most important research paper published in this field in the past 30 years. I write a daily blog devoted soley to discussion of these matters. I have 200 articles at my web site relating to these matters. I have attended two years of the Financial Bloggers Conference, letting all my fellow bloggers know how important it is that we all work to bring the Campaign of Terror to a full and complete stop by the close of today’s business. I talk about this to my friends at parties and Little League games and picnics and when I bring my boys to the pool. I have prepared a first draft of a book on the subject.

I have a funny feeling that I am covered re this one, my old friend.

Just one of those crazy hunches that I experience from time to time.

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

Rob

“My Personal Preference Would Be to Find Some Way That No One Would Go to Jail. For Years I Did All in My Power to Make That a Reality. I Don’t Think That’s Possible Today.”

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Set forth below is the text of a comment that I recently put to a discussion thread at this blog:

Rob,

Just a few more questions

How many boards have banned you?

How many emails have you sent to Wade?

How many emails have you made about Wade?

How many posts have you made about Wade?

How many people do you think should go to jail?

On what basis do you believe people will be charged with a crime that would lead to jail time?

There have been roughly 15 bannings.

Wade and I exchanged scores of e-mails.

The count for the e-mails that I have sent was at 9,500 this morning. I sent 100 more today. So it’s 9,600 at this moment in time.

I have an article that provides links to all the blog entries about Wade. My recollection is that there were 140. That was before I began the e-mail campaign.

I’m not able to answer the jail question. My personal preference would be to find some way that no one would go to jail. For years I did all in my power to make that a reality. I don’t think that’s possible today. Too many people have been hurt in very serious ways. I believe that there will be a good number of people going to prison. The question of who and for how long will be one that we will decide as a society. I will be arguing for prison sentences somewhat reduced from those that are supported by the consensus of opinion. I would like to see us focus on the positive side of all this rather than on retribution and all this ugly stuff. I believe that we need to work hard to keep our eyes on the prize.

No one will go to prison for believing in Buy-and-Hold. There are obviously millions of good and smart people who believe in Buy-and-Hold, The prison sentences will be for those who have engaged in financial fraud over a prolonged period of time. If you have failed to correct a retirement study after learning of an error you made in it, that’s obviously financial fraud. If you threaten to kill people to cover up errors you made in a retirement study, that’s obviously financial fraud. If you ban honest posting at your web site, that’s obviously financial fraud.

It’s not possible for any one person to say what is right re the prison question or what will happen re the prison question. We have never faced circumstances like this before. People are going to be very angry. And there’s no way to pay them their money back — the money was all pretend in the first place! So there are going to be calls for prison sentences for those who threatened academic researchers and all this sort of thing. I see it as my job to try to rein in emotions and to keep people focused on the positive. That’s why I am working hard today to bring the cover-up to an end. I see bringing the economic crisis to an end as our best option for keeping the prison sentences as limited as possible.

The charge will be financial fraud. You need to be careful here. The academic research showing that there is zero chance that a Buy-and-Hold strategy can work in the long term was published in 1981. So in an objective sense anyone who has recommended Buy-and-Hold strategies over the past 30 years has engaged in financial fraud.

The full reality, though, is that the vast majority (perhaps all?) of those who have recommended Buy-and-Hold are suffering from cognitive dissonance. They know in one part of their minds that Buy-and-Hold cannot work. That’s why Buy-and-Holders become so defensive when their strategies are questioned. But they also “believe” in the strategy in another part of their minds. They follow it. I have not seen any evidence that the people endorsing Buy-and-Hold strategies are not following them themselves.

So you don’t have bad intent. Bad intent is an element of the crime of financial fraud. So an endorsement of Buy-and-Hold in itself is not fraud despite the 30 years of research showing that it cannot work.

But what about when you have death threats or board bannings or defamation or threats to academic researchers?

Those acts show bad intent. Those acts turn a misunderstanding of what works in stock investing into financial fraud, a crime under the laws of the United States.

That’s my sincere take re this matter, Sparky. It obviously would be a good thing if others chimed in. If some want to argue that there is no financial fraud here, we need to hear from them, If others are as concerned about the prison sentences as I am, those people should be speaking up. It is only by speaking up that we can help our Buy-and-Hold friends either avoid prison sentences altogether (in cases in which they have not yet evidenced bad intent) or have their prison sentences reduced (by helping to bring the economic crisis to an end and thereby diminishing the public anger that otherwise might result in very long prison sentences).

I hope that helps a bit, Sparky. Don’t let the bad guys get you down, man.

Rob

Valuation-Informed Indexing #138 — Will It Be Okay to Say “I Told You So!” After the Next Crash?

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I’ve posted Entry #138 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Will It Be Okay to Say “I Told You So!” After the Next Crash?

Juicy Excerpt: Predictions are a way of testing the merit of competing theories. Shiller’s theory permitted him to predict events that actually did play out. The Buy-and-Holders did not predict the crisis. To the contrary, they were shocked and amazed and stunned by the crisis. That should tell us something about the merit of their model for understanding the markets. It does not by itself tell us they are wrong in all that they say. But the fact that they failed so spectacularly re this one issue suggests that we should evidence greater skepticism toward other ideas being put forward by people from that school of thought.

Even more importantly, a full discussion of the research findings behind Shiller’s prediction would go a long way toward helping us overcome the crisis. The first thing that a doctor does when trying to cure an ailment is to form a diagnosis. Get the diagnosis wrong and you are likely to get the treatment wrong. Have we gotten the diagnosis for our economic troubles wrong? It sure seems so to me.

George Rossolatos, Author of the the Disruptive Semiotics Blog: “I’ve Familiar with this ‘Script’. It Is Part of a Trilogy That Might Be Called ‘Double-Binds in a Spiraling Funfare'”

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I’ve been sending numerous e-mails letting people know of my article on The Silencing of Academic Researcher Wade Pfau by the Buy-and-Hold Mafia. Set forth below are reports on five responses.

1) Wm. Denis Huber, part of the Core Faculty at Capella University, wrote: “What are you asking me? What do you mean ‘if it pulls you in’?”

I responded: “I am not seeking any particular acton from you or any of the others I have contacted. I am a journalist. I view this as a scandal. People need to know what works in investing and this information is being held from them. I am banned at numerous boards and blogs because I told people the truth about what the recent research in this field says and Buy-and-Hold advocates don’t want people to find out about it. I think people need to know, especially given the evidence that it was the heavy promotion of Buy-and-Hold strategies that caused the economic crisis, which has hurt us all in a very serious way. By “pulls you in,” I just mean if the article holds your interest. If it does, you might tell a friend about it. That might help. I want to see people educated about these issues. My profession is a profession that favors the spread of information, I don’t believe that intimidation tactics should be used to stop academic researchers from doing the research they view as important. I know that it sounds shocking to many for me to speak bluntly, but I view this as a massive act of financial fraud. Anyway, I am grateful if you are able to give the article a read. I certainly wish you well in all your future endeavors.”

2) George Rossolatos, Author of the Disruptive Semiotics blog, wrote: “I’m familiar with this ‘script’. It is part of a trilogy (maybe more parts) that might be called ‘Double-binds in a spiraling funfare’.” I responded: “Thanks for being able to appreciate the lighter side of it all. Take care, man.”

3) Dalvinder Singh, a Professor at Warwick School of Law, wrote: “Can you send me the paper and bio as a word document?” I of course did so.

4) Jack Mintz, Director of the School of Public Policy at the University of Calgary, wrote: “Thanks for the note. There is a good literature on alternative investment strategies and gains from it so I would be surprised at someone not getting tenure or promotion for working in this area. Always possible for a journal to reject papers in an area forcing someone to choose other journals (I have seen before). But there are outlets. Anyway, Hard to get involved without knowing far more about quality of work, overall teaching and research quality, etc. Academic decisions are complex.”

I responded: “Wade’s paper was indeed published in a credible peer-reviewed journal. And you are of course right that there has been other work along the same lines published in peer-reviewed journals. Wade’s work follows from Shiller’s work, which of course was published over 30 years ago. So please don’t think that I am trying to say that work discrediting Buy-and-Hold is not available. I wouldn’t have the views on stock investing that I have today had I not seen such work. So it’s out there. The problem is more that there are amazing steps taken to discourage such work and thus MOST people do not know about it or do not place much confidence in it because they hear about it so rarely. My aim is to launch a national discussion of the Shiller model (Valuation-Informed Indexing) and of Wade’s research showing the exciting practical implications of Shiller’s model. I want people to know that there are good reasons to reject Buy-and-Hold strategies. It is of course fine if people follow such strategies after hearing about the alternatives. But I want people to know that there are alternatives.

“My personal experience is that I cannot post at any major investing board or blog because I am the person who ten years ago discovered the errors in the Old School safe withdrawal rate studies and I have thus been a marked man in the eyes of the Buy-and-Holders ever since. Many of my fellow bloggers have seen what has happened to me and are thus highly reluctant to point out the dangers of Buy-and-Hold themselves. We need that to change to get good discussions started. I like and respect the Buy-and-Holders and I certainly want to hear their side expressed. But I also want those on the other side to feel free to express their sincere views without fear of inappropriate negative consequences being visited on them. Both sides need to speak openly and freely and without fear for the debate to be truly productive.

“Please don’t think that I am trying to be argumentative here. Your comments are perfectly fair and helpful. I sent a response to them because I wanted to be clear that I am NOT saying that there is zero literature available on this. There IS literature. There is more all the time. That’s one of the positive signs. It is my belief that we are going to see big changes following the next crash. I believe there is a pent-up desire for an open discussion of what really works in stock investing. The problem today is that so many people have so much invested (not just financially but emotionally as well) in Buy-and-Hold that it hurts them to hear the concept challenged and people have reacted irrationally. Anyway, thanks much for taking time out of your day to read my words. My warmest wishes to you.”

5) Michel Habib wrote: “Thank you, Rob. I must say I do not work on that. I wish you the best of luck.”

“I Know More About What Works in Stock Investing Than Most Experts in This Field Because I Abandoned Buy-and-Hold in August 2002, When Greaney Advanced His First Death Threat and Hundreds of Buy-and-Holders Cheered Him On.”

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Set forth below is the text of a comment that I recently put to a discussion thread at this blog:

Did you come across as the expert you purported to be?

I’ll answer this one separately.

I don’t think that there can be such a thing as an investment “expert” today, Banned. We only started doing academic research on investing questions in a systematic way in the 1960s. So we are talking about a field with a history of about 50 years. We are still in the Pioneer days, when we are going to make lots of mistakes and track back and re-start and all that sort of thing. So I think it is dangerous for people to be taking too seriously the idea that they have developed some form of permanent “expertise.”

So I don’t really think of myself or anyone else as an expert. I don’t object if someone refers to me as an “expert” in an introduction because this is common practice in this field. If the question comes up in the discussion, I make the point I made in the paragraph above, that it would be best if investors appreciated that there is no such thing as an true investment expert in today’s world, the science is too young.

I am very proud of my accomplishments. I potentially saved millions of middle-class retirements by discovering the errors in the Old School SWR studies back in 2002. The discussions that followed from that discovery (“The Great Safe Withdrawal Rate Debate”) led us to all sorts of exciting places. I think it would be fair to describe Valuation-Informed Indexing as the first true research-based investing strategy (it obviously owes a great deal to the Buy-and-Hold pioneers). Nothing could be more exciting than the discovery I made with my friend Academic Researcher Wade Pfau that it is today possible for us to reduce the risk of stock investing by 70 percent by warning investors of the dangers of Buy-and-Hold strategies (dangers that we did not know about until Shiller published his revolutionary research in 1981).

Do I know more about what works in stock investing than any of the “experts” who advocate Buy-and-Hold strategies? I think that is certainly fair to say that that is so in a practical real-world sense. They know more about what is written in the textbooks. I know more about what works in the flesh-and-blood world. But not because I am smarter than my Buy-and-Hold friends! I know more because I abandoned Buy-and-Hold back in August 2002 (when Greaney advanced his first death threat and hundreds of Buy-and-Holders who saw him do it cheered him on). That told me that Buy-and-Hold causes those who follow it to become excessively emotional. So I have learned all sorts of amazing things about how stock investing works over the past 11 years that the Buy-and-Holders have closed themselves off from learning by virtue of their unwillingness to acknowledge the 30 years of peer-reviewed academic research showing that there is zero chance that a Buy-and-Hold strategy can ever work for a single long-term investor.

Do I want my Buy-and-Hold friends to join me in this amazing learning adventure? I do. Very, very, much. There’s nothing that would make me happier than to be working beside great and smart and good people like Jack Bogle and Bill Bernstein and Larry Swedroe and Scott Burns. Tell me what magic words I need to say to them to get them to drop the pose that they knew it all going back to the day they were born on Planet Earth, and I will say those magic words, Banned.

I am not working with these people today not because I am too good for them. I am not working with these people today because their puffed-up egos don’t permit them as of today to acknowledge that they got on the wrong track during the insane bull market and that we all become better informed about how stock investing works when we all work TOGETHER for the purpose of helping the people who look to us to provide effective guidance.

I love these guys, Banned.

Do they love me? That’s the question you should be asking.

Are they even able to swallow their pride enough to acknowledge that there’s a lot that they can learn from me? (I have certainly acknowledged on many occasions that I have learned a lot from them).

That’s where things stand today, Banned. There’s no issue on my end. The problem is with the Buy-and-Holders. The hand of kindness is extended to them. Can they work up the courage and grace to reach out and accept it before their investing advice brings on another stock crash and puts us in the Second Great Depression?

No, I am not an expert in the conventional meaning of that word. And, no, my good friend Jack Bogle is not one either. So Jack and I should be comparing notes, learning what we can from each other so that we can do a better job for the people who look to us to learn how to finance their retirement plans.

That’s my take re this important question, in any event.

My warmest wishes to you and yours, Banned.

Rob