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

The biggest problem with VII is that there is no long term track record with implementation. To the opposite, there is a very long and solid track record with actual outcomes from people that have implemented buy, hold and rebalance. You have spent too much time trying to tell people that their investment strategy is a failure, when they have actually had superior results. They can look at their own numbers and see that what you have said is a flat out lie.

You would have been better off saying that you see a number of successful strategies and you want people to consider your option. You then show them how to implement it and show actual real world results as time goes on. What further hurts your position is that you haven’t even followed it yourself, nor have you made changes to improve your situation.

Valuation-Informed Indexing has been far, far superior to Buy-and-Hold for as far back as we have records of stock prices. The Bennett/Pfau research paper shows that beyond any reasonable doubt whatsoever. That’s why you Goons threatened to get him fired from his job if he continued doing honest work. You never would have put yourself at grave risk of ending up in a prison cell if you didn’t see that our research has great power to persuade millions to shift to a more sensible strategy. I mean, please give me a freakin’ break.

The only way that anyone can claim that Buy-and-Hold has ever had superior results is by failing to adjust the numbers on their portfolio statements for the effects of overvaluation. Gee, I wonder why that makes things look different. Shiller’s Nobel-prize-winning research shows that you have to adjust for valuations. Do that, and you will see clearly which strategy is superior. Fail to do that and you may or may not fool others but always at the risk that you may fool yourself as well. To what good purpose?

I don’t have any problem with telling people that there are two schools of academic thought as to what works. Fama was awarded a Nobel prize on the same day that Shiller was. There are millions of good and smart people who swear by Buy-and-Hold. I used to be one of them. So I certainly have no problem with any of that.

But where does that leave us on the safe withdrawal rate question? If Fama is right, the SWR is always 4 percent, just as Greaney’s study indicates. If Shiller is right, the SWR is a number that can drop to as low as 1.6 percent and rise to a number as high as 9 percent, depending on the valuation level that applies on the day the retirement begins. Should I lie about the matter and tell my friends on the various boards and blogs that I believe that there might be a valuation adjustment buried so deep in the Greaney study that no one has been able to find it in 17 years? If I do that, I am guilty of financial fraud too and I go to prison as well. Thanks, but no thanks, you know?

My best and warmest wishes you you, my dear Goon friend.

Prison-Free (Both Now and After the Crash!) Rob

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

We are so lucky that you are such an expert in investing. I am shocked that your articles aren’t posted everyday on the front page of the New York Times. With the departure of John Bogle, we need to hand you the keys to the Bogleheads Forum and rename it to the Bennettheads Forum. Why even talk about Shiller. He is a hack compared to you.

I don’t consider myself an expert on investing. According to the conventional understanding of the term, I am not one. I did not study investing in school. I have never managed a fund. What credentials do I possess to justify calling me an “expert”? I am some guy with roughly average intelligence who figured out how to get his stuff posted to the internet, nothing more and nothing less.

But you are lucky to have me. I do go along with that one. I am this average-intelligence guy who worked up the courage to advance a post on the morning of May 13, 2002, pointing out the error in the Buy-and-Hold retirement studies. And I didn’t back down when threats were made as to what would be done to me if I continued doing so. I insisted on my right to post honestly. In the event that I am successful in my efforts to open every investing discussion board and blog on the internet to honest posting re the last 38 years of peer-reviewed research in this field, I will change the world in a very, very positive way. I offer no apologies whatsoever. I am honored to have been placed in circumstances in which it became possible for me to change the world in a very, very positive way. I have achieved more in the past 17 years than I expected to be able to achieve in my entire lifetime in the event that everything broke my way. 500 times more.

You talk about changing the name of the Bogleheads Forum. How about keeping the name it has now but living up to that name. One of Bogle’s core principles was that investors should root their investment strategies in the peer-reviewed research. What the research says doesn’t stay the same over the years. Shiller published “revolutionary” (his word) research findings in 1981, research that in time caused him to be awarded a Nobel prize. Those revolutionary research findings change every aspect of the stock investing experience. How about permitting everyone to post honestly re the far-reaching implications of those research findings? Is that a Boglehead idea? It sure seems to me that it is. I learned about the importance of rooting my investment strategies in the peer-reviewed research from John Bogle. Should I betray the man because Mel Lindauer and John Greaney are embarrassed that they got the safe-withdrawal-rate matter wrong? Somehow, I don’t think that I would be being true to my hero John Bogle by playing it that way.

Shiller is not a hack. Shiller wrote the most important book on how stock investing ever published. Shiller merited his Nobel prize. Shiller supplied us all with the giant missing piece of the stock investing puzzle in 1981. We all should be grateful. Are we showing our gratitude when we advance death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs to stop the thousands of our fellow community members who have expressed a desire to learn more about Shiller’s insights from doing so? I say “no.” I say that the laws against financial fraud are good and necessary laws and that they should be enforced in a reasonable manner.

Am I in the process of changing the world? I am. I offer no apologies.

I didn’t ask for the job. The world made clear that I would have to take on this job if I wanted to see the vast amount of human suffering that has been caused over the years by the “idea” that it is not necessary to practice price discipline when buying stocks brought to an end. I love my country. So I did what I had to do given the circumstances in which I was placed. Again, no apologies whatsoever. Precisely 100 percent of the evidence available to us today supports the idea that price discipline is required when buying stocks and precisely 0 percent of the evidence available to us supports the idea that it is not necessary for investors to practice long-term timing. We all should be telling people that.

Even those of us who still believe in Buy-and-Hold strategies should be doing all that we can to make every investor alive aware of what the last 38 years of peer-reviewed research in this field says so that, in the event that stocks continue in the future to perform at least somewhat as they always have in the past, the terrible losses that will be suffered in coming days by people following Buy-and-Hold strategies will not be on us. If people know the score and choose to follow Buy-and-Hold strategies anyway, that’s on them. If people suffer losses because we engaged in criminal acts to block them from being able to learn what they want and need to learn, that’s on us.

It’s not that I am so smart. It’s that our system is so smart. Our system is set up so that, even when a large number of people becomes convinced that they know all the answers, others can continue to study and ponder and research to see if they can come up with something better. That’s what happened with Shiller. He came up with something better. Valuation-Informed Indexing completes Buy-and-Hold as much as it replaces it. All of the stuff in Buy-and-Hold that has stood the test of time is incorporated into the new model. It is only the one “idea” (that it is not necessary for investors to practice price discipline when buying stocks) that has been discredited by 38 years of peer-reviewed research that is rejected. And rightly so, you know? By rejecting that horrible,failed, useless idea we permit all the other ideas in the Buy-and-Hold project to shine as all who care about these matters should want them to.

Does it make me a genius that for 17 years now I have devoted myself to exploring how stock investing works in the event that the last 38 years of peer-reviewed research is legitimate research, that price discipline really is every bit as important when buying stocks as it is when buying anything else offered for sale? In a way, it does. I have been able to get a lot of important things right that no one was able to get right before me. That’s good stuff. Genius stuff, if you insist on putting it like that.

But I think that the better way to look at this is to ask — Why are all the others not doing what I am doing? Shiller is not a hack. Shiller knows that valuations affect long-term returns. So why did Shiller not come out with a public statement many years ago saying that the Buy-and-Hold retirement studies are wildly off the mark, that they are going to cause millions of failed retirements in the event that stocks continue in the future to perform anything at all as they always have in the past and that they should be corrected by the close of business today? That’s the weird thing here. I am not super smart and Shiller is not super dumb. But I have stated this obvious truth in clear and firm and bold terms and Shiller has for many years held back from doing so. Huh? What the f?

If you want to know the answer to that one, look at your own behavior. Death threats? Demands for unjustified board bannings? Thousands of acts of defamation? Threats to get academic researchers fired from their jobs? None of that stuff belong in discussions of stock investing. People who grew up in the United States have never seen the behavior that has been exhibited by you Goons on a daily basis for 17 years now. It scares them. They would expect that people who engaged in such behavior would be placed in prison cells so that the millions of us who have a legitimate interest in learning more about how stock investing works would feel free to do so. But as of today you remain free. That’s the problem. That’s what needs to change.

Will it change in the days following the next price crash? I believe that it will. I think that this is a a great country, I believe that many of us love this country and will come to its defense once we are able to see the flesh-and-blood realities of the economic crisis that Buy-and-Hold will have led us to once again, just as it has on every early occasion on which this “strategy” became popular. We will just have to wait and see how it all plays out.

I naturally wish you the best of luck in all your future life endeavors, in any event. I hope that that helps at least a tiny bit, my dear Goon friend.

Relentless Rob

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

“Once Bogle gives his speech and it is written up on the front page of the New York Times, we will all be working together.”

Oops. Well, that didn’t work.

A big difference between you Goons and me is that you live in fear. I look forward to The Speech. You Goons dread the prospect of seeing millions of people freed to hear what they need to hear. I wouldn’t trade places with you for $500 million, just to pull a crazy number out of the air.

Bogle was the person best positioned to do it because he is perceived as the king of Buy-and-Hold. If he gave a speech telling Buy-and-Holders that they need to be more open-minded re the last 38 years of peer-reviewed research in this field, it would be pretty darn hard for them to reject what he was saying. But there are others who can do the job.

Shiller can do it. That Nobel prize gives him a lot of credibility, even among Buy-and-Holders, who are obviously suspicious of him. Shiller also has an amazingly affable personality. I think that would help him build bridges to “the other side.” If Shiller speaks out, people in the middle will pick up on what he is saying and at least a good percentage of Buy-and-Holders will listen. That group will eventually persuade the others to soften their opposition to discussion of the last 38 years of research.

Buffett could do it. He is respected by all camps. Buffett has said lots of positive things about Bogle. So he would be heard by Buy-and-Holders. And Buffett is a value investor. He obviously understands the importance of Shiller’s message although he rarely speaks about the far-reaching implications of Shiller’s research. Buffett is too big a figure in this field to be ignored.

Pfau could do it. Wade does not have the same level of influence as Bogle did or as Buffett or Shiller do. But Wade has a very, very compelling story to tell. He is obviously a strong Valuation-Informed Indexer in his heart. But he has always bent over backwards to applaud Buy-and-Holders for their many powerful and legitimate insights. So he has credibility on both “sides.” And Wade’s personal story tells the tale that needs to be told better than any research paper ever could. The paper that I co-authored with Wade is the most important research paper published in this field in three decades. He meant for that paper to benefit every investor alive. Your threats have denied a valuable resource to millions of people in desperate need of it. When Wade tells that story, it is going to go viral. It is by taking this thing viral that we make the world a better place in some very important ways.

Bernstein could do it. Bernstein is, like Bogle was, widely respected and loved by Buy-and-Holders. But Chapter Two of Bernstein’s book is the best concise statement of the case for Valuation-Informed Indexing that I have ever read. So Bernstein can obviously cover both sides of the story. So he can make things happen here.

Losing Bogle hurts. In many ways. Without question. But we are going to move on. And we can do so without Bogle. We obviously will be citing Bogle’s writings, which strongly endorse the key principle of Valuation-Informed Indexing — using peer-reviewed research as a guide to how to invest. So we’re fine. I just wish that SOMEONE would step forward and make that speech that we need to hear to turn things in a positive direction. I am not expecting to hear it until the days following the next price crash. But I obviously would like to be pleasantly surprised to hear it by the close of business today.

My best wishes.

Rob

 

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

Given the unfortunate news of Jack Bogle’s passing yesterday, one would have expected you to make a post today honoring Jack. But then again, given how much you have slandered him extensively by calling him the biggest con-man, saying he has cost people millions and saying he would go to prison, I guess it is not surprising you failed to do so.

Of course, you will use the same tactic as always by acting like you are praising him, which is just sickening. It is like smiling at someone while stabbing them in the back. You can spare us all from your hollow words.

Maybe you are a bit sad today. You had told us Jack would be giving his “I was wrong” speech and that he would then be working with you as well as making sure you get a $500 million windfall. I guess that retirement plan has failed as well. What is plan C?

 

Given the unfortunate news of Jack Bogle’s passing yesterday, one would have expected you to make a post today honoring Jack.

I did that.

But then again, given how much you have slandered him extensively by calling him the biggest con-man, saying he has cost people millions and saying he would go to prison, I guess it is not surprising you failed to do so.

The Big Guy screwed up in a major way by failing to address the Linduaer Matter even though it was clearly his responsibility to do so. I sent him three e-mails asking him to do so. I know that others (such as John D. Craig) also sent him e-mails. So he screwed up in a big way. It makes me sad to say that. But there’s no getting around it. It’s as much my job to say that as it was Bogle’s job to speak up about the Lindauer matter when Lindauer was threatening people for the “crime” of saying that they believe that the last 37 years of peer-reviewed research in this field is legitimate research and that the Buy-and-Hold retirement studies saying that the safe withdrawal rate is always the same number are in error and are dangerous studies.

It is like smiling at someone while stabbing them in the back.

I see it very, very, very differently. There is a thing called “The Golden Rule.” The idea is to do unto others as you would have them do unto you. If I screw up in some way, I would like to think that my friends would point out the mistake to me and implore me to fix it as soon as possible. I love Bogle. So of course that’s what I did. Those who failed to speak up hurt him in a very serious way. I question how deep their friendship runs. I am sure that they rationalize failing to try to help him out. But I know that I would want my friends to try to help me. So that’s what I have tried to do for my friend Jack Bogle.

It’s an extremely cynical perspective to think that Bogle would prefer that people just keep quiet about his mistakes. The suggestion is that he does not care about getting things right, that he does not care how many people he hurts so long as he never has to say the words “I” and “Was” and “Wrong.” To forward that suggestion is to communicate a belief re Bogle that is 50 times more negative than any belief about Bogle that I have ever expressed. Not this boy, you know?

What is plan C?

Someone else will have to give the speech that brings the 17-year cover-up to a full and complete stop. Shiller could do it. Buffett could do it. Bernstein could do it. Pfau could do it. Arnott could do it. I am sure there are others who could do it. Bogle was best-positioned to do it because he is perceived as the king of Buy-and-Hold. But others will be able to get the job done. The key is that the message be sent loud and clear that, from the day of that speech forward, everyone who comments on stock investing should feel 100 percent free to express his sincere views on the subject and that the days of Buy-and-Holders employing death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs to silence those of us who believe that the last 38 years of peer-reviewed research is legitimate research have come to a full and complete stop.

I believe that the national debate in which we will all be participating in the days following the next price crash will highlight the absolutely critical role that Bogle played in advancing our collective understanding of how stock investing works while also of course demonstrating beyond any reasonable doubt whatsoever that it is not possible to calculate the safe withdrawal rate accurately without taking the valuation level that applies on the day the retirement begins into consideration.

My work completes Bogle’s work, it does not come anything close to entirely refuting it. It refutes the parts that were developed before Shiller published his “revolutionary” (Shiller’s word) research findings. But Bogle offered a large number of hugely powerful insights as well as the unfortunate false claim that it is not necessary to exercise price discipline (by practicing long-term timing) when buying stocks.

It will be interesting to see how it all plays out. I look forward to the day when we are working together to promote all of Bogle’s ideas to every investor alive on Planet Earth while also of course doing all we can to let people know about the ideas that Bogle put forward before all the research needed was available to him and which he unfortunately failed to correct when the error on which they were based (the idea that the market is efficient) was revealed to us all.

I naturally wish you the best of luck in all your future life endeavors, my dear Goon friend.

Bogle-Loving (and Bogle Correcting!) Rob

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

“Huh? What the f?”

That’s what people say when they read your posts.

I think it’s true that many do indeed do that, Anonymous. If I could go back in a time machine to when I was 45 (the age I was on May 13, 2002) and then read one of these posts that my age-62-year self wrote in the year 2019, I think that would be my reaction. The story of what has gone down over the past 17 years is as crazy as all get-out. But it’s an important story. It’s a story that very much needs to be told.

I don’t know how much you know about psychology. I don’t know very much, I took a few courses and read articles about it from time to time, that’s all. Everyone has heard of Freud. He changed the world. Not all of his ideas are 100 percent accepted today. But everyone who works in the field must learn Freud. His work is the foundation of this discipline that employs hundreds of thousands of people and which affects every last one of us at one time in our life or another. What do you think of the “Projection” concept? Somebody accuses another person of something not because the other person has done the thing but because the person making the accusation has inclinations in that direction. Huh? What the f? That’s pretty darn weird stuff. It’s not intuitive that things would work that way. The normal expectation would be that someone would accuse another person of doing something because there is evidence that the other person did that thing. This projection concept argues that there can be very strange motivations driving human action. Freud taught us important things about how the human being operates in this world. He advanced knowledge by pointing us to some important truths.

That’s what Shiller did. I point out over and over and over again that Shiller describes his insights as “revolutionary” in the subtitle to his book. His ideas really are revolutionary. They are shocking to the pre-1981 mind, which is the Buy-and-Hold mind. The Buy-and-Holders presumed that investors are trying to maximize personal profit when they set stock prices. That sure seems to make sense. People want money for thousands of reasons. Why wouldn’t they act to maximize profit? If they did act to maximize profit, then they would collectively consider every bit of evidence bearing on what the price of stocks should be when setting the price of stocks. The market would be “efficient.” No investor would be able to do a better job than the market as a whole at identifying the true value of stocks at any point in time. Timing would not work. Investors could count on the number on their portfolio statement to represent something real and lasting, something rooted in economic realities. If that number showed that you were on track to meet your retirement goals, then it would indeed be so. That’s Buy-and-Hold.

Shiller said something very different. He said that investors are human and therefore not entirely rational. Investors at times become highly emotional. When they do, they do not act in their self-interest. They do crazy, self-destructive things. Their irrational exuberance causes them to set prices at crazy places where the number on the portfolio statement is not at all reflective of the long-term realities, where using that number to decide when to hand in a resignation to a high-paying corporate job would cause the investor to suffer horrible life setbacks in years to come, where the collective craziness would cause an economic contraction or even a great depression when the time came when the market had to set prices properly again by crashing them (because the investors making up the market refused to exercise price discipline and thereby to set prices properly without a crash and an economic crisis).

Shiller changed the world, as Freud did before him. He showed us how our emotions play a role in the setting of the stock price and why we need to take the role of emotion into account in every strategic choice we make as investors. He helped us. We should be celebrating his work at every discussion board and blog on the internet. We should be trying to mine new insights out of it so that we can live better, richer lives in the future than we are able to live today. To ban discussion of the implications of Shiller’s Nobel-prize-winning research is like banning the use of electricity. If we banned the use of electricity, we would all suffer. The discovery of electricity liberated us all to live better lives. So did Shiller’s amazing research findings. We need to be making greater use of them.

The problem that we are facing as a society is that we did not always have Shiller’s amazing research findings available to us. There was a day when Buy-and-Hold looked like the real thing and we built an entire industry around it. The people who advocate Buy-and-Hold strategies to investors feel highly threatened by the discussion of Shiller’s insights. If the last 38 years of research in this field is legitimate, they have been getting it all wrong for years now. They will end up looking foolish. They may get sued in civil proceedings by investors who have suffered losses because they offered bad advice. In extreme cases, they might even go to prison for financial fraud. It’s a bad scene.

What to do?

Some of us are blissfully unaware of the far-reaching implications of Shiller’s work. That group just continues preaching Buy-and-Hold and thinks no more of it.

Another group possesses at least a dim understanding that this Shiller fellow did some important work. People in that group drop hints from time to time as to how investor emotion might influence things. But, when they see investors who follow Buy-and-Hold strategies getting angry because they say scary things, they back off and wait for a time when exploring Shiller’s ideas will not cause so much damage to their own careers.

I say what I believe. Period.

I acknowledge that the Buy-and-Holders offered many amazing insights of their own. That’s part of our history and I certainly don’t see that any benefit would be obtained from denying that part of the story But I do not hold back from pointing out ways in which the continued promotion of Buy-and-Hold will hurt us all if it turns out that that Shiller fellow is on to something. I made friends with a lot of the people at the old Motley Fool board. Those people used Greaney’s retirement study to plan their retirements on a daily basis during the years when I posted actively at that board. Thousands of friends of mine are likely to see their lives ruined because of the errors in his study that have remained uncorrected for the 17 years since he learned about them. Criminally abusive tactics have been employed by Greaney’s Goon friends to keep the word from getting out to the people who need to know about the errors in the study (which is every last one of us). I am outraged and horrified by this reality. So I do what I can to expose it.

The ordinary thing would be that every last person on the planet would thank me for discovering the errors in the study and for pointing them out. Including Greaney.

That’s obviously not the way it played out. So we are in this strange place instead.

I cannot commit felonies. I love my country. It is not in me to break its laws, certainly not the ones important enough to be classified as felonies. So what you Goons want of me is 100 percent out. It has been a non-starter from Day One. It is just not in the cards.

I am open to absolutely anything else. Anything that is on the right side of the felony line, I am in on in three seconds and you won’t have to ask a second time. Anything on the wrong side of the felony line, I won’t even look at. Not for 17 years. Not for 17 billion years. That’s me.

Where you stand is that you are looking at a long prison sentence beginning in the days after prices crash. I would be happy to let you out of the prison sentence in exchange for you helping me to get the word out about the far-reaching implications of Shiller’s Nobel-prize-winning research to every investor alive on the planet. I think you would be happy to agree to that deal if only I could offer it. But I obviously am not able to offer it. It is your jury that will decide the length of your prison sentence, not me. So my hands are tied re that one.

I have offered to do the best that I am able to do. I can tell people about cognitive dissonance, I can explain to people that Greaney follows Buy-and-Hold strategies himself and personally believes that a 4 percent withdrawal is safe. I can point out that we had a responsibility to rein in the abusiveness when we saw it and so it was not you Goons alone that caused the problem. I can explain why I believe that the Greaney study and all the other Buy-and-Hold studies were an advance over the retirement analyses that came before them (Peter Lynch once wrote that the safe withdrawal rate was 7 percent — it was the Trinity study that helped him to see his mistake). I can say that the Buy-and-Holders are good and smart people and that we all should be grateful for the many ways in which they advanced our understanding of how stock investing works. I can point out that there would be no Valuation-Informed Indexing had Buy-and-Hold not come along before it to set the foundation for the first true research-based strategy.

Those things I can do. I cannot say that Greaney’s study contains a valuation adjustment. Those are the realities we face.

All of the nastiness is of course as crazy as all get-out. Learning how stock investing works in the real world helps each and every one of us to live a better life. This stuff is all good. It is not possible for the rational human mind to imagine any way in which opening every investing site on the internet to honest posting could do harm to a single soul. But the Buy-and-Holders feel very, very, very threatened. That’s a reality too. We need to do what we can to help them adjust. It is their fear of what this amazing advance for the human race will mean for them that is causing all the craziness that we see before us.

I am happy to do anything in my power to help ease the pain of the transition. I am not willing to travel to the wrong side of the felony line. I know with 100 percent certainty that that cannot be the answer here. It is because good and smart people hesitate to speak up and to do what they know is right that we are all in the mess we are in today. So having one more of us hesitate to speak up is surely not the answer. Kindness is the answer. I can agree to that one. But the kindness must be mixed with a measure of honesty. We need to permit enough honesty to allow millions of middle-class people to learn what the last 38 years of peer-reviewed research teaches us all about how stock investing works in the real world.

Freud shocked people in the early days. People got over it in time. All good things are shocking when they are new. There will come a day when the idea that valuations affect long-term returns and that valuation adjustments are required in retirement studies will not be so shocking anymore. The more we talk about the new ideas, the less shocking they will seem. It is not talking about them that makes them seem shocking, not talking about them. Talking about them over time makes them become familiar and reduces all the craziness that we have seen over the first 17 years of our discussions. Permitting honest posting will normalize the discussions.

You know when lots of people will be saying “Huh? What the f?”? When they see 50 percent or more of their life savings disappear into thin air. That’s going to cause a reaction. When millions of people are left wondering how it is that their lives were destroyed by following the “experts,” I will tell them the story of how the experts were taken in by an idea (that the market is efficient) that was never supported by the peer-reviewed research but which was never anything more than an assumption that became popular many years ago among economists. I will tell them that I believe that it is Shiller who is right, that investors really are humans and humans are emotional and thus the market is not efficient at all and that stock prices are often the product of irrational exuberance rather than of reason and that they need to make the necessary adjustments to the numbers on their portfolio statements when that happens.

The situation is crazy. But it is a good crazy. When we all lose a good portion of our retirement savings, we are going to have to come to terms with what happened. We cannot just give up because we made a mistake and it hurt us. We are going to need to brush ourselves off and get back on the bicycle. The purpose of my work is to help us do that. Sometimes crazy things happen in this big old goofy world of ours. We cannot always just ignore the craziness and walk on. Sometimes we need to come to terms with the craziness. When Greaney advanced his first death threat on the evening of August 27, 2002, that was truly crazy stuff. A good number of us elected to ignore that craziness, to just act like it had not happened. So the craziness did not stop but instead spread and grew worse over time. And here we are.

Permitting honest posting on the last 38 years of peer-reviewed research will not make us more crazy. It will make the craziness go away. Knowing how stock investing works in the real world helps us all. We need to stop being so crazy as to deny ourselves the benefits of that deeply normal and healthy and smart and good and life-affirming course of action.

My sincere take.

Crazy (But Maybe Not!)Rob

 

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

“I am grateful for any help or suggestions that you can offer.”

I’ll offer this. You’re wasting your time sending your magnum opus to these nobodies. The League of Goons has already anticipated everyone you might decide to send it to, and warned them.

You need to focus on the NY Times and the Wall Street Journal. They’re too big for goons. Send it to them every day until they publish it. And if that doesn’t work, start sending it twice a day.

I don’t agree with much of what you say in this comment. But there is one point that you make re which we are in strong agreement. The New York Times and the Wall Street Journal are the difference makers. When they report on all the fraud stuff that has suppressed questioning of Buy-and-Hold for 37 years now, everyone else will feel safe doing the same. We beat the cover-up by making people aware of it. And we make people aware of it by getting it written up on the front page of the New York Times. When the Times has the story on its front page, everyone else will add follow-ups in a very short amount of time.

We are not too far from having the New York Times and the Wall Street Journal report what needs to be reported. Brett Arends wrote an article titled “The Market Timing Myth” in the Wall Street Journal on October 14, 2010. It stated that: “For years the investment industry has tried to scare clients into staying fully invested in the stock market at all times, no matter how high stocks go. It’s hooey. They’re leaving out more than half the story. Anyone who followed the numbers would have avoided the disaster of the 1929 crash, the 1970s or the past lost decade on Wall Street…. I wonder how many stayed fully invested because their brokers warned them ‘you can’t time the market’.”

That’s it. That’s the story that needs to be told. To tell the entire story would take a ten-part series. But the 2010 article from Arends says what most needs to be said in a very concise manner. So the Ban on Honest Posting has not been complete. There have been breaks in the wall. Some very big breaks. If the Ban were 100 percent complete, Shiller would not have have been able to find a publisher for his book. If the Ban were 100 percent complete, Shiller would not have been awarded a Nobel prize. If the Ban were 100 percent complete, the Bennett/Pfau research paper would not have been published in a peer-reviewed journal. If the Ban were 100 percent complete, there wouldn’t have been so many community members telling me that they were looking forward to meeting me when I attended the annual convention with Bogle (before I was banned from attending).

It took courage for Arends to write that article. It took courage for the editors of the Wall Strert Journal to run the article. But the article was published. Why didn’t it bring on the collapse of Buy-and-Hold?

It didn’t bring on the collapse of Buy-and-Hold because there was no reaction to publication of the article. I was expecting the next morning to see 20 or 30 of my fellow personal finance bloggers offer reactions to those amazing words, either positive or negative or in-between. I didn’t see one of them do that. Just me. I am the only personal finance blogger who commented on that amazing, provocative, break-through, bold article. That’s why we are where we are today. That’s why we are looking forward to a deepening of the economic crisis rather than living through the greatest period of economic growth in our history.

The $64,000 question is — Will there come a time when more of my fellow personal finance bloggers will come to see that the pain of not talking about the last 37 years of peer-reviewed research in this field has grown so great that it is worth taking on the beating they will experience by standing up to you Goons to get the word out to people? I think that day is going to come. I think that’s when we will see the entire Buy-and-Hold Model come tumbling down to the ground.

Arends would have written a follow-up had there been a strong reaction to that article. His editors would have published his follow-up had there been a strong reaction to that article.

We are deciding these matters as a community. Today there are huge benefits paid to those who are willing to pretend that the last 37 years of peer-reviewed research doesn’t exist. And there are huge penalties imposed on those who work up the courage to do honest work in this field. So we don’t get much honest work. We get lots of Buy-and-Hold marketing slogans. And the stock crashes that follow from the relentless reiteration of those marketing slogans. And the economic crises that follow from the loss of spending power we all experience as the result of those stock crashes.

The price is too high. The personal price for posting honestly is insanely high today. So we don’t see too many people working up the courage to stick their necks out. But the collective price for continuation of the Ban on Honest Posting will be so high in the days following the next price crash that a good number of us just will no longer be able to bear keeping it zipped. And then someone like Arends will publish something like what he published in 2010 but instead of generating zero reaction it will generate a huge reaction and we will as a society see 37 years of advances in our understanding of how stock investing works achieved in the space of a few weeks.

Or so Rob Bennett believes, in any event, you know?

I think we are close. I don’t think that Arends would have written that article unless we were close, It turned out that at the time he wrote it we were not close enough to get the job done. That’s of course very sad in about a million ways. But the optimistic take is that we were close enough to get that article written. And the publication of that article sent a message to all the rest of us who would like to be doing honest work in this field that we are very, very, very close to seeing something that will change all of our lives in a very, very, very positive way.

I am going to hang in there and wait for all the amazing good stuff to take place. I love my country, I think we are going to win this one. I think that death threats and threats of career destruction are the past and that open, civil, respectful discussion of the last 37 years of peer-research is the future.

We will see.

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

Rob

Set forth below is the text of a comment that I recently posted to the  discussion thread for one of my columns at the Value Walk site:

First of all, you didn’t author Wade’s paper. Second, you have zero results for VII as you have no outcomes data from implementation. Third, you didn’t address one single point I mentioned above.

Wade wrote the entire paper. But he came up with the idea of writing a paper comparing Valuation-Informed Indexing and Buy-and-Hold by reading my posts on the Bogleheads Forum (it was then called the “Vanguard Diehards”) and he consulted with me at every step as to how Valuation-Informed Indexing works. We exchanged scores and scores of e-mails during the 16 months in which we worked together. He was effusive in his praise for me and my contributions and for the Valuation-Informed Indexing concept during that entire time-period.

It would be good if we had all started exploring the Valuation-Informed Indexing concept back in 1981, when Shiller published his peer-reviewed research showing that price discipline/long-term timing always works. I very much wish that we had done so. It didn’t happen that way. Shiller’s research findings came as a shock. Hundreds of thousands of people were already building careers based on the promotion of the Buy-and-Hold strategy. Lots of cognitive dissonance kicked in. Then there was a huge bull market, which in the eyes of millions of good and smart people confirmed the merit of the Buy-and-Hold strategy. And here we are.

The best that we can do today is to use the historical return data to show which strategy has been superior over the entire history of the U.S. market. That’s what Wade and I did in our paper. Our paper left no doubt as to the answer to that question. Valuation-Informed Indexing has been delivering higher returns at greatly reduced risk for 150 years. What we need to do now is to open every investing site on the internet to honest posting re these matters. Then we will see lots of good and smart people asking lots of good and smart questions and we will see lots of good and smart follow-up research published.

Do I believe that Valuation-Informed Indexing will continue to outperform? I very much believe that. Do I acknowledge the possibility that that will not be the case? I acknowledge that possibility. There is only one way to find out. We need to launch a national debate re these matters. That works to the benefit of each and every one of us. If Buy-and-Hold is best, that will come out. If Valuation-Informed Indexing is best, that will come out. If some combination of the two strategies that no one has even proposed as of today is best, that will come out. Permitting extensive debate on these matters is a win/win/win/win/win.

That’s my sincere take, in any event. I naturally wish you all good things,.

Rob

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

Another year over. Was 2018 your best year yet? What new, exciting plans to you have for 2019?

I wouldn’t say that 2018 was my best year yet. It was like all the other years from 2002 forward. I was undefeated on the substance side. And I had no victories on the process side. The story has been that as a society we see over and over and over again that valuations affect long-term returns and that as a society we elect over and over and over again to ignore what we see and to continue believing that the numbers that turn up on our portfolio statements as the result of a highly emotional process possess real and lasting economic significance. We are in the process of learning how we fool ourselves by letting our Get Rich Quick impulse run wild.

I don’t think that we made great progress in 2018. We achieved little advances here and there and failed to take advantage of opportunities to achieve bigger advances that were presented to us. Sometimes when you achieve the big advance, you look back at years of small advances like 2018 and see that those small advances set things up so that the big advance became possible. The journey from the not-so-great place where we are today to the wonderful place where we all deep in our hearts want to be tomorrow is achieved through a process. I think the process is moving forward. I am not able to say how close we are to the end. We were close on the morning of May 13, 2002, you know? The comments that we saw at the old Motley Fool board showed that. We were close but obviously not close enough. We are closer today but still obviously not where deep in our hearts we all want to be.

I am not able to say whether 2019 will be the year or not. I obviously hope so. All human reason says that it will be. Permitting honest posting on the last 37 years of peer-reviewed research is all good stuff with zero possibility of any downside. So my mind tells me that we will cross the goal line in 2019. But of course my mind also told me that we would cross the goal line in 2002 and in 2003 and in all the other years through 2018. So I have learned not to trust what my mind tells me re the timing of these things.

It COULD be 2019. That’s what matters. But it also might not be 2019. I have to be realistic re that aspect of things or I wouldn’t be able to continue on despite the many, many, many crushing disappointments. So I am not going to form a personal assessment as to whether it is actually going to be 2019 or not. I will permit myself to entertain some hopes and and then just accept that that’s as far as I can dare to push it.

We will decide as a society whether it will be 2019 or some later year. That’s as it should be. I have a role. My role is to give it my best shot to push things in a positive direction. But that’s as far as my role extends. I cannot force things.

I can offer my take on what is going on for people who care to to consider. And, if there are others who jump in and tell those people “we will not permit you to consider this take,” I can say why I think it is a bad idea for us as a society to let those people take on that power to decide things for the rest of us. But if I am met with a shrug of the shoulders when I make my case, I have to accept that answer despite how strongly I disagree with it. That’s just the way things are. That’s reality.

I don’t think that that reality is a permanent one. There are too many sub-realities pointing in the other direction for me to accept that meta-reality as the permanent reality. But I don’t feel that there are any plans that I could make for 2019 that would insure that a new meta-reality would become the dominant one in 2019. There are too many factors at play, there are too many people involved. I have to wait for the decision of our society as a whole as to whether to resolve the dramatic tensions between what Buy-and-Hold teaches us about how stock prices change over time and what the last 37 years of peer-reviewed research teaches us about how stock prices change over time.

Do I believe that as a society we will ultimately make the right decision? I do. I love my country. That runs deep. There’s been no questioning of that at any time over the past 16 years. There’s been a mountain of disappointments. I give you Goons that one. But my core belief in the goodness of our country remains in place. So we will have to see how it all plays out.

The same country of people that has left a Ban on Honest Posting in place at every large investing site on the internet for 16 years now also awarded Robert Shiller a Nobel prize in Economics during that same time-period. We are a conflicted people at this moment in time. I believe that it will be the next price crash that will shock us out of our confusion, that will help us to see that we need to work harder to resolve the question that the publication of Shiller’s “revolutionary” (his word) research findings of 1981 first placed before us.

I believe that that price crash is coming (because I believe that Shiller’s research findings are legitimate). But I don’t believe that it is possible to say that that crash is coming in 2019 (because Shiller agrees with Fama that short-term timing doesn’t work). So I don’t have precise plans for 2019. My plan is just to continue to give it my best shot in hopes of helping each and every one of us (including you Goons) to live better lives from this point forward.

My best wishes to you for a happy and healthy and prosperous New Year, my dear Goon friend.

Partying (in a Family Man Sort of Way) Rob

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

I put credibility in having actual proof. Secondly, I put credibility behind the person directly impacted (Wade), as he would know if he was actually threatened.

He obviously knows that he was threatened. He is also obviously EMBARRASSED and ASHAMED that he let the threat influence his behavior.

The real question is — Why did you feel a need to threaten him?

Shiller published his “revolutionary” (his word) research showing that valuations affect long-term returns in 1981. Buy-and-Hold has not been updated to reflect the new research findings for 37 years now. That’s the problem.

That’s the problem for you. That’s the problem for me. That’s the problem for Bogle. That’s the problem for Shiller. That’s the problem for Pfau. That’s the problem for everyone.

Did I cause that problem? I had nothing to do with it. I have been arguing for 16 years that we should open every discussion board and blog on the internet to honest posting on the last 37 years of peer-reviewed research in this field. That would solve the problem for everyone. Everyone would say what they truly believe and over time Buy-and-Hold would be updated. There would be no further need for cover-ups. There would be no further need for threats.

I even suggested that we might be able to get by just acknowledging that there are two schools of academic thought re how stock investing work. I don’t view that as ideal. It is my belief that Shiller discredited Buy-and-Hold. So I think that we should be saying that it is Valuation-Informed Indexing that is the first true research-backed model. But I believe that cognitive dissonance is a real thing. So I have suggested that, if my Buy-and-Hold friends just feel too much pain in the idea of giving up on their strategy, they could acknowledge that there are two schools of thought and let those who believe in Buy-and-Hold promote Buy-and-Hold and those who believe in Valuation-Informed Indexing promote Valuation-Informed Indexing. I believe that that would get us all on the right side of the felony line. If people choose to use a 4 percent safe withdrawal rate even after they have been informed that a study that includes a valuation adjustment generates a very different number, I think that most juries would say that that is on them. So just doing that much would be a big advance.

Where is the Bogle speech acknowledging that there are two schools of academic thought re how stock investing works? I wrote to him about this on several occasions. Has he given that speech? Had it been written up on the front page of the New York Times?

Why not?

Your beef is with Bogle, Anonymous, not with me. I have done all that I can do. I love the man and I have bent over as far backwards as I can with that suggestion. If he hasn’t given the speech yet, your beef is with him. Have you written him? If not, can you please explain? There are millions of people who put together retirement plans at least in part in reliance on the long-discredited Buy-and-Hold retirement studies, the ones that Wade Pfau characterized as “dangerous.” A failed retirement is a serious life setback.

The threats will stop when Bogle gives his speech and it is written up on the front page of the New York Times. Wade will on that day return to saying all the wonderful things that he was saying in the 16 months before you threatened him. The ball is in your court, my dear Goon friend.

Highly Credible (Since He Stopped Pretending that He Believed There Was a Valuation Adjustment in the Greaney Retirement Study) Rob

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

Let us know when Bogle and Shiller call you. We will be waiting for your update.

If Shiller published his research today, we would all be working together to expand our knowledge of how stock investing works tomorrow morning. It would set off a nuclear explosion of learning experiences. That is how it is supposed to happen.

Our problem today is trying to recreate that experience 37 years after the fact. We should have seen that nuclear explosion in 1981. We obviously didn’t. My guess is that people were suffering from cognitive dissonance. The conditions were prefect for it. The change was a very big one. It was a 100 percent positive change but a very, very big change. So, as positive as it was, it was hard to process. And it was threatening to a lot of people on a personal level. Even though intellectually it was a huge advance, people who had built careers promoting Buy-and-Hold no doubt felt personally threatened. So the nuclear explosion of learning did not take place.

The evidence that Shiller is right is of course much stronger today. So in theory we could have that nuclear explosion of learning today. But the power of the cognitive dissonance holding us back is also many times greater. In 1981, all that the Buy-and-Holders would have had to say was “It turns out that I was wrong about one thing” and most reasonable people would not have given it a second thought given how many positive and genuine contributions the Buy-and-Holders made. For things to go forward today, they have to acknowledge both the initial mistake plus the 37-year cover-up of that mistake, which includes a good number of criminal acts. That’s very, very, very, very hard stuff. So we are all caught in a trap today.

The big question is — What will it take to break that trap?

A Second Great Depression would certainly do it. Our economic and political systems changed big-time as a result of the First Great Depression. Social Security, child labor laws, the minimum wage, on and on. So a new depression would open people’s minds to all sorts of wonderful advances.

I obviously do not want to see things proceed in that direction. I pray that things do not have to get that bad. What we need is an economic crisis bad enough that it shakes us up enough to open every discussion board and blog on the internet to honest posting re the last 37 years of peer-reviewed research in this field but not so bad that it brings on a Second Great Depression.

Will it happen? I don’t know. I hope so. I certainly think that it is possible that we could pull it off. But i don’t think it is a lock. I don’t think that we can survive as a nation if we do not find a way to provide millions of people with access to honest and accurate reports re what the research says about how stock investing works in the real world. I see that one as a lock. But I can’t stand the thought that we might have gone so far down the road with this cover-up at this point that the only way to overcome it is with a Second Great Depression. I am not at all sure that we would survive a Second Great Depression. My big fear is that we never get to experience the benefits of Shiller’s breakthrough findings because the cover-up has continued for so long that things have reached a point where it can only be overcome with a Second Great Depression and that could be game over.

Perhaps that discussion gives you some idea why I think this matter is important enough for me to devote 16 years of my life to it. If we follow U.S. law, we all enter a golden age of safe stock investing and economic growth. The Bennett/Pfau research paper shows that we can reduce the risk of stock investing by 70 percent overnight just by opening every discussion board and blog to honest posting re the last 37 years of peer-reviewed research in this field. But the other side of the story is that continued delay in doing what we all know deep inside we need to do could put us in a Second Great Depression and that could be game over. Those are pretty darn dramatic circumstances, you know? Yikes!

Shiller and Bogle are two of my favorite people. So I am confident that they will both do the right thing when circumstances look dire enough to convince them that they have no choice. But at that point will things already be so dire that it will be too late to turn the car around? I don’t think that anyone can say in advance. I think we are just going to have to let things play out a bit to find out.

I know that I want to do my part to help each and every one of us attain good outcomes and avoid bad outcomes. So I continue to do my little part. I can do no more and I can do no less, you know?

I naturally wish you all the best that this life has to offer a person, my dear Goon friend.

Worried (and Excited!) Rob