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

Could you point at a non-goon comment that has been posted here? If nothing else, then for the sake of guidance.

You would have to go back a few years, Drftr. It’s been a long time since I can recall seeing a non-Goon comment.

John Walter Russell used to post here almost daily. He obviously was no Goon.

Wade Pfau posted here regularly for a time. He obviously was no Goon (although he certainly feared you Goons and he held back from saying some things because of his fear of you).

There was that fellow Arty. He was a non-Goon. He posted here a good bit for a time. He left when I called out Wade for flipping to the Goon side.

When I was a actively writing Guest Blog Entries, I used to get some of my fellow bloggers to post here on rare occasions.

There are others. But there has never been a large number of non-Goons. And for a long time now there have not been any.

When John Walter Russell was alive, he used to get more comments than I did. That killed me! I obviously was happy to see John get the comments. I think he is one of the best researchers who ever lived. I put him up there with Wade Pfau and Rob Arnott and Robert Shiller. But I had significantly more traffic than he did. So it amazed me that he got more comments.

I say things that drive people away.

That’s not my intent. I love to have people post comments here. But I don’t see what other conclusion a fair-minded person could draw at this point in the proceedings.

The key thing that I do is that I say: “Buy-and-Hold doesn’t work, the Buy-and-Holders got it wrong.” People don’t mind so much if you just say “this is what I think works” and you don’t say what doesn’t work. John used to do more of that. He had a gentle heart and it was not like him to say “Buy-and-Hold doesn’t work.”

I think you have to say what doesn’t work as well as what does. I think it is the journalist in me that causes me to see things that way. Journalists tell people things they don’t want to hear. They report on corruption. They get people mad sometimes. But they see that as the job. I think it is an important job. I am PROUD that I have led the effort to help people understand the dangers of Buy-and-Hold.

But people don’t like it when I do that. Usually, they don’t tell me. They just go away. Sometimes they do tell me. But a lot of people seem to feel that way about things. I don’t ever recall someone saying “Wow, I love how you tell it straight re those darn Buy-and-Holders!” Even people who have grave doubts about Buy-and-Hold don’t applaud me for taking them on.

I was talking to my priest the other day about this stuff (we had him out to the house). He said: “Why don’t you write Shiller and ask him to help you out?” Good question, Father! I’ve written Shiller. He responded when John asked him a technical question re the data. But when I wrote him seeking help with you Goons, he did not reply. Shiller does not want to get involved! That says a lot about why we are in this situation.

I think that EVERYONE should be talking openly about the dangers of Buy-and-Hold, just like everyone talks openly about the dangers of smoking and how it is bad to throw garbage on the ground and how we should make an effort to avoid racism and sexism. Causing an economic crisis is just as bad, in my assessment. But there’s some sort of social stigma that holds people back from pointing out that Buy-and-Hold has caused just as much human misery as lung cancer and destruction of the environment and racism and sexism. People certainly do not feel comfortable talking about it today.

I think it is a shame.

I think people realize on some level of consciousness that Get Rich Quick strategies are not the answer and they also realize that we have all played a role in letting the Buy-and-Hold stuff get so out of hand. We should have all spoken up way back in 1981, when the peer-reviewed research showing that there is zero chance that a pure GRQ approach could ever work for even a single long-term investor was published. The New York Times should have been running front-page articles every day back then about all the doors that Shiller opened for us all by showing that Buy-and-Hold was a terrible mistake.

When we all failed to act, we came to feel ashamed of ourselves for having fallen for a marketing gimmick. Now so much time has passed that we cannot bear to acknowledge what we have done. So now we keep it zipped. We are hoping that somehow we will get through this thing without having to come clean. But we lack confidence that we can pull this off. So the issue has become a super-sensitive one. We try to pretend that there hasn’t been fraud, that there is just a lot of natural confusion about what works and what doesn’t and that there is no need for prison sentences. These rationalizations just end up causing the prison sentences to grow longer, of course!

It’s hard to acknowledge a mistake. That’s human nature. What makes this one worse is that is is so obvious a mistake. Price discipline is the key in all markets other than the stock market. So it is simple common sense that long-term timing would always be 100 percent required. What knuckleheads we humans can be at times!

But it has of course become much worse than that with the passage of 34 years. It’s not just a mistake now. It’s a crime. The biggest act of financial fraud in U.S. history. So now we are really, really, really ashamed. How do we escape this trap? We need to get 10 people to stand up to you Goons and then we are home-free. But of course there WILL be prison sentences. It’s too late to avoid that at this point. People hate that. Did you ever know somebody whose teeth were rotting in his mouth and who was not willing to go to a dentist because he knew it was going to hurt? That person is making the problem worse with more delay. But he just doesn’t have the courage to face the problem he has created for himself. It’s sad.

That’s where things stand. People don’t like it that I talk frankly about this stuff. They tell themselves that it is uncharitable. I see it entirely the other way around. I see it as uncharitable NOT to speak frankly about this stuff. It is by living in denial for so long about what the peer-reviewed research says that we have created this enormous problem.

That’s my sincere take re these terribly important matters, in any event. I hope that these words shed a little light on the question of why we don’t see non-Goons posting here, Drftr. People are ashamed. People are scared. People are confused. The good news here is 50 times more good than the bad news is bad. We are the luckiest generation of investors ever to walk Planet Earth!

It sure would be nice to focus on all the good stuff instead of the prison sentences. But I have a hard time seeing how that is ever going to happen until a reasonable number of us work up the courage to take on you Goons and to do so without fear or apology or hesitation. People need accurate and honest information re how to invest their retirement money. That’s not optional, it’s imperative. I am sure!

My best and warmest wishes to you and yours, Drftr.

Rob

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

You have complained innumerable times that anyone who speaks favorably of PE10 gets banned. That’s the very definition of the “Ban on Honest Posting”. Several people in that Bogleheads thread spoke of the merits of PE10. They have not been banned. So what conclusion can we draw?

No. I have never said that anyone who speaks favorably of P/E10 gets banned. That’s far from being so. As you point out, there are numerous comments in that thread that are pro-P/E10. And some of those posters have hundreds of comments in their files. CJKing is an AMAZING poster. He has offered some of the best pro-P/E10 commentary that I have ever seen. So it is not even close to being the case that there is a ban on pro-P/E10 stuff.

That’s not true in the bigger world either. Robert Shiller is the godfather of Valuation-Informed Indexing. He is the guy who started all this (unless you count Benjamin Graham, who was speaking in favor of the VII concept back at a time when index funds were not available and when the potential of the concept was thus much more limited). My guess is that there have been LOTS of intimidation tactics directed at Shiller. I believe that he could write a book about the intimidation tactics that have been directed at him. Still, his book was widely reviewed. He was awarded the Nobel prize. Lots of people, including Buy-and-Holders, speak respectfully re Shiller. So Shiller’s ideas are not 100 percent banned.

The conclusion you can draw is that the Buy-and-Holders have employed intimidation tactics to stop the Valuation-Informed Indexing concept from spreading as quickly as it should. The particular thread that you are pointing to is a good thread. Both sides are represented on it. People can learn from it. That’s all to the good. The site administrators at the Bogleheads Forum are corrupt. But the board that they administer produced that good thread. It doesn’t help anything to ignore that. We should be celebrating that. We should be pointing out the corruption. But we should ALSO be pointing out the good that these people do when they do good. To be slanted or biased pulls things in the wrong direction. Nothing whatsoever is achieved by such behavior. So I applaud Mel Linduaer for whatever role he played in producing that thread (and he certainly played some role given the huge role he has played in building the board at which the thread appears).

The question you are asking is: What precisely is the line that one cannot cross before being put on the “Must Destroy” list of the Buy-and-Hold Mafia? I have obviously crossed that line. Wade Pfau obviously crossed it at one time and now no longer does. The people who posted on that thread obviously have not crossed the line.

The line is not in a fixed place. I crossed it on the morning of May 13, 2002, just by asking a question as to whether valuations should be considered when calculating safe withdrawal rates. My initial post didn’t even express a belief that valuations should be considered; it just asked the question. That was enough for me to become Public Enemy #1 of the Buy-and-Hold Mafia back in May 2002. Today, I could obviously get away with that with no problem. So the first thing that must be understood is that the line is not in a fixed place.

The line is fluid. To understand where the line is, you must understand the motivations of those establishing the line. The Buy-and-Holders are good and smart people who achieved huge advances in our understanding of how stock investing works. They believe themselves in the recommendations they offer to others. They follow those recommendations. But they have doubts. These doubts haunt them. If the doubts turn out to be rooted in something real, that means that the Buy-and-Holders have hurt themselves in very serious ways. It also means that they have hurt their friends and neighbors and co-workers and fellow community members in very serious ways. The idea that their doubts might be rooted in something real horrifies the Buy-and-Holders. They set out with an aim to do something good and, if those doubts end up being rooted in something real, they instead caused a huge amount of human suffering.

The purpose of the intimidation tactics is to stop the pain that the Buy-and-Holders feel when they are faced with words that at least partly persuade them that their doubts are rooted in something real. The purpose is to STOP THAT DARN PAIN through whatever means are necessary to do so.

The Buy-and-Holders realize that they cannot stop the pain entirely. Back in May 2002, it was possible to block all discussion of the errors in the Old School retirement studies. That’s not possible today. Every major publication in this field has published an article saying that those studies are in error. So it is just not realistic today to push the Old School studies in the way that they were pushed years ago. But it is still possible to get away with failing to correct the discredited studies. So today the thing that will get you banned is to say that the discredited studies should be corrected. The line has moved. But the basic impulse — stop the deeply painful stuff from appearing on people’s computer screens — remains the same. There is still a Ban in place. But the line at which the Ban comes into effect has moved because the Buy-and-Holders have acknowledged the reality that every publication in this field has acknowledged that the 4 percent rule is pure and complete garbage with nothing whatsoever to support it.

The debate that is going on in the thread to which you point is a good one. People can learn about both sides from reading it. But the Valuation-Informed Indexers are holding back in that thread. Most of the Valuation-Informed Indexers posting on that thread know that I was banned because I posted honestly at that board. Why don’t they say that? That goes to the integrity and confidence of the Buy-and-Holders and integrity and confidence are huge issues that everyone listening in needs to know about. They know that Mel Linduaer has a long history of resorting to threats of physical violence to silence posters who make points to which he does not have a good response. Why don’t they point that out on the thread? They know that you Goons threatened to get Wade Pfau fired from his job if he continued to do honest research. Why not say that? They know that Jack Bogle permits his name to be used at that board even though he has known for years that it is a corrupt enterprise. Why don’t they say that?

They don’t say it because they know they will be banned if they do say it. That’s the only reason. It is intimidation, nothing else. The Bogleheads Board is ruled by intimidation. The entire reason why they had to move the board from the Morningstar site is that there were limits to the intimidation tactics that they could employ at the Morningstar site and they needed to have those limits removed to have any hope whatsoever of continuing to “defend” the Old School retirement studies.

Buy-and-Hold cannot be defended in reasoned and civilized debate. It is impossible. There is now 34 years of peer-reviewed research showing that it is garbage, it was all a mistake that should have been corrected many, many years ago. So we see nasty stuff in discussions of Buy-and-Hold that we do not see in discussions of any other topic discussed on the internet. The issue of whether Buy-and-Hold can ever work is of huge importance and there is precisely zero reason in the peer-reviewed research to believe that it ever could work. So we have seen an act of financial fraud bigger than any earlier act of financial fraud in U.S. history to cover up the 34 years of peer-reviewed research.

I want no part of it, Dizzy. If you were thinking clearly, you would not want any part of it either.

You feel that you cannot give up the intimidation tactics because they are the only thing keeping you out of prison today. But the deeper reality is that the length of your prison sentence will be determined by how many middle-class lives you destroy and there are thousands more lives destroyed each day that the Ban remains in place. We are on the same side. I am trying to get your prison sentence reduced by bringing the Campaign of Terror to a full and complete stop by the close of business today. And on some level of consciousness you would like to see your prison sentence reduced. You just cannot bear to accept ANY prison sentence! That’s the Goon part of your talking. And, unfortunately, the Goon part of your personality is dominant today.

I’ll be there for you whenever you are ready to accept my help. My offer of charity is not a limited-time offer.

I will never say that John Greaney’s retirement study contains am adjustment for the valuation level that applies on the day the retirement begins. That’s financial fraud. Financial fraud is a felony. That means prison time. Going to prison is not on my bucket list. Find someone else. No can do. I can’t go for that.

I hope that helps a bit.

My best and warmest wishes to you and yours, Dizzy.

Rob

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

Rob,

Good ideas — ideas that pass logical and empirical muster — simply cannot be long suppressed. Even if one ‘inventor’, ‘discoverer’, or vocal proponent is somehow squelched, others inevitably will come forth with almost simultaneous discovery. Witness the ‘discovery’ of radio, telegraph, the calculus, and many other examples. The annals of history are replete with such occurrences, and in fact, one theory is that even if a genuinely good idea is actively suppressed, the energy used to suppress it will form a sort of springboard to bounce it back into the eye of humanity. That is if it has merit. So you should not despair, if your REAL objective is to get the ‘truth’ out there. Because, totally without you being involved at all, the truth still will come forth. It always does. Reading this does not bring you comfort, though, does it? No. Because it undermines your twisted need to be a martyr and somehow obtain personal public recognition, no matter what the cost.

Please read:
http://en.wikipedia.org/wiki/Multiple_discovery

“”When the time is ripe for certain things, they appear at different places in the manner of violets coming to light in early spring.”

I strongly agree with what you are saying here, Anonymous.

I have spent the last 13 years of my life developing the Valuation-Informed Indexing concept. And I of course am very proud of the work I have done. We have discovered some absolutely amazing things. And I have played a big role. So good for me, you know?

But I certainly could not have done what I have done without Jack Bogle. And I certainly could not have done what I have done without Robert Shiller. And I certainly could not have done what I have done without John Walter Russell. And I certainly could not have done what I have done without Wade Pfau. And I certainly could not have done what I have done without Mike Piper. And I certainly could not have done what I have done without Todd Tresidder. And on and on and on.

I’ll go even a step further. I couldn’t have done what I have done without you Goons! Imagine that!

These ideas cannot be long suppressed. I agree 100 percent. They have been suppressed for 34 years now. But that’s not a long time in the grand scheme of things. The humans have been trying to come to a better understanding of how stock investing works for hundreds of years. The shift from Buy-and-Hold to Valuation-Informed Indexing is BY FAR the biggest advance we have ever achieved. That has been the entire problem going back to the first day. If I had shown how to reduce the risk of stock investing by 5 percent, I would be on the cover of Time magazine. Unfortunately (!), I showed how to reduce the risk of stock investing by 70 percent. Something that big makes the people pushing the outdated approach feel bad. That’s why we have seen death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs. WhaChaGonDo?

I can’t change things so that this is only a small advance to make the Buy-and-Holders less defensive. The peer-reviewed research says what the peer-reviewed research says. ALL of the research supports VII. NONE of the research supports Buy-and-Hold. The Buy-and-Holders need to come to terms with that. We all want the same things. When the Buy-and-Holders come to terms with our good fortune and realize that it is in their best interests to look forward rather than backward, we will get to the other side of The Big Black Mountain and enjoy together our good fortune in being the luckiest generation of investors ever to walk Planet Earth.

I am not despairing. Something that I have said hundreds of times now is that the good news here is 50 times more good than the bad news is bad. We are on the verge of achieving the greatest advance ever achieved in the history of personal finance. I am humbled to have played a big role in bringing it about

And, yes, I believe 100 percent that “the energy used to suppress it will form a sort of springboard to bounce it back into the eye of humanity.” That’s exactly how things usually work out in life, in my experience. John Walter Russell said something along these lines many years back. He said that this is all going to work out in way better than any of us can imagine. Those words struck me as having the ring of truth to them. That’s how I believe it is all going to turn out.

I hope that helps you understand two things: (1) why I want to do whatever I can to help out you Goons; and (2) why I never, ever, ever want to engage in any acts of financial fraud myself. My focus is on the rebuilding effort. I want to turn from the negative to the positive. So I don’t want people getting caught up in some sick desire to seek revenge on your Goons. And I know that the key to my helping you out is maintaining credibility in the eyes of the millions of middle-class investors whose lives are in the process of being destroyed. So I try to be as careful as possible not to do anything to aid this massive act of financial fraud.

Thanks for putting forward a super post, Anonymous. I think you are making a very important point with this one.

Take good care, my long-time abusive posting friend.

Rob

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

Yes, this is the crux of the issue. Since you have emotionally and (weirdly) escalated a 12+ year campaign into a high stakes game of 500MM paychecks you have painted yourself into a corner. At this point admitting that you have no idea what you are doing makes you look so completely ridiculous that it is ‘better’ mentally/emotionally for you to continue persisting beyond all reason/logic/evidence.

I openly acknowledge that I could be wrong, Laugh. I don’t think that I am wrong. If I thought that I was wrong, I wouldn’t say what I say. But there have been times when I thought that I was right and it turned out that I was wrong. I acknowledge that there is a possibility that that is the case here.

There was an instance of this just the other night. I was playing Dominion with my boy Timothy and an obscure rule question re a particular card came up. We didn’t want to stop the game to look up the rule. I insisted that I knew the rule and he reluctantly backed down. After the game was over (he won — so the rule issue didn’t matter), we looked up the rule. He had been right. All I could say was: “You were right and I was wrong.” These things happen.

There is no ultimate test re the investing matter as to who is right and who is wrong. Even if there is a 65 percent crash next month, there are going to be people who continue to say that Buy-and-Hold is right. We can’t sit Mr. Market down in a room and demand the truth from him.

We all form different opinions because we possess different perspectives and different personality types and live through different life experiences. And that’s pretty much that. We WILL see changes in the popularity of different opinions over time; a crash will certainly swing things in my direction. But there is no absolutely final determination here. There is no rule book to consult. People have different opinions and there is no changing it.

There’s plenty of support for my opinion. There is 34 years of peer-reviewed research supporting it. Shiller has won a Nobel Prize. And on and on and on and on. So there is nothing even a tiny bit crazy about what I say. And the issues are of extreme importance. If I am right, then the Buy-and-Holders caused an economic crisis. It doesn’t get any bigger than that.

But in no way, shape or form have I ever been even a tiny bit stubborn about even a single issue. I have praised the Buy-and-Holdes to the skies (with 100 percent sincerity). I have acknowledged that I could be wrong. I have extended the hand of friendship hundreds of thousands of times. I have done everything that a person possibly could do to interact with my Buy-and-Hold friends in a warm and friendly manner.

With one exception.

I have been 100 percent firm and unyielding on the question of whether I will post dishonestly. I won’t say things about investing that I do not believe.

That’s a matter re which every one of us should be 100 percent firm and unyielding. NO ONE should ever agree to post dishonestly re these matters.

Would you agree to that, Laugh? I have never asked you to do that and no one else has ever asked you to do that. But would you do it if you were asked? If the tables were turned and if Valuation-Informed Indexing were today the dominant strategy, would you agree to post dishonestly just to gain access to a discussion-board community?

I hope that the answer is “no.” I would think less of you if the answer were “yes.”

The board interactions suggest that about 10 percent of the population believes in Valuation-Informed Indexing today and 90 percent believes in Buy-and-Hold. As a Valuation-Informed Indexer, I obviously would like to see that percentage grow. How is that ever going to happen if the Valuation-Informed Indexers all live in fear of what the Buy-and-Holders will do to them if they dare to commit the terrible crime of posting their honest views?

All ideas smart with a small number of advocates. The number grows over time as people become convinced of the merit of the new idea. There is something called “The Marketplace of Ideas.” The competing investing strategies do battle in The Marketplace of Ideas. I want my ideas to win. I start out outnumbered by a factor of 10 to 1. If there is going to be any hope whatsoever of my ideas winning, I need to fight hard. That’s my job. I take pride in my work. If Valuation-Informed Indexing is going to prevail in this world, I need to advance every argument I put forward as forcefully as I am able to advance it. So does every other advocate of the new model.

I need to fight fair. There are lines. If I cross those lines, I bring discredit on the idea. You Goons cross those lines on a daily basis. I am appalled by that. But there’s not a whole big bunch that I can do about it, is there? I could go to bed and cry big tears into my pillow. Do you think that might help, Laugh? I don’t think so either. So I don’t even bother. I play it this other way instead.

I love my Buy-and-Hold friends. I will do anything in my power to help my Buy-and-Hold friends short of committing a felony under the laws of the United States. That’s not a limited-time offer. That offer remains on the table forever and no matter what. But that’s as far as I can go. If I cross The Felony Line, I’ve got a lot bigger problems that those I have now. So that’s out. You call that “to continue persisting beyond all reason/logic/evidence.” So be it. Going to prison is not high on my bucket list. I ain’t going there. Not in 13 years. Not in 13 million years.

Everything else is on the table. Everything short of committing a felony I will agree to with a smile on my face and with a kind word back in reply.

You Goons got caught up in something much bigger than what you imagined was at stake on the morning of May 13, 2002. So did I. Neither of us intended to end up in this place. But here we are. That’s the reality.

I have zero ill will in my heart towards any Buy-and-Holder. I LOVE the great good that the Buy-and-Holders have done. I have said that thousands of times. If I need to say it thousands of times more, I will do so. It’s important that I say that. It’s important that you hear the words and take them in and accept that they are true words.

The Buy-and-Holders are capable of making mistakes. Again, you need to let those words in. It’s okay for you to continue to believe in Buy-and-Hold and it’s okay for you to believe that the possibility that the Buy-and-Holders made a mistake is small. But you must accept that there is at least a small chance that the Buy-and-Holders made a mistake.

And you must accept that our system of government provides a means by which such mistakes come to be revealed over time. Mistakes are revealed through honest discussions. There is no other way that it can happen. I need to persuade lots of people of the merit of Valuation-Informed Indexing to get all the textbooks rewritten in the manner in which I believe they must be rewritten if our economic system is going to survive (and thrive). The only way to do that is through honest discussion. There is no other way. So we must have that.

One of you Goons said the other day that you believed it would have been “impossible” to have permitted the Valuation-Informed Indexers to post their honest views. If that’s so, then there’s something wrong with Buy-and-Hold. If the evidence for Buy-and-Hold is so strong that discussion of alternatives must be banned, there should be a mountain of evidence so high that it would not be possible for someone like me to persuade a single person of the merit of an alternative. If that were so, there would be no need to ban me at a single board or blog. Your assessment that it would be “impossible” to permit a debate shows us that the case for Buy-and-Hold is too weak for us to go along with a ban on the discussion of alternatives.

I am not being stubborn here. I am insisting on the recognition of a basic human right — the right to express oneself honestly re an important matter. It is you Buy-and-Holders who are being stubborn. You are being stubborn because you are afraid that your investing beliefs are not as secure as you once thought them to be.

You can go two ways re that reality. You can dig in your heels and cause more destruction. Or you can accept that there is an amazing potential here to change the world for the good and play the role that you need to play to see either that that potential is achieved or that Valuation-Informed Indexing is shown once and for all to be the inferior strategy.

If Bogle can answer my questions, Valuation-Informed Indexing fails in The Marketplace of Ideas. If Bogle cannot answer my questions, Buy-and-Hold fails in The Marketplace of Ideas. If you care about knowing the realities of stock investing, you want to see whether my claims can stand up to Bogle’s challenges and whether Bogle’s claims can stand up to Bennett’s challenges.

I am not in a corner, Laugh.

Or, if I am, it is our entire nation that is in a corner.

We have ways of settling the sorts of differences of opinion that have revealed themselves here.

I believe that we will as a nation eventually turn to our normal procedures for dealing with such matters. I believe that the new ideas will prevail at that time.

If we never turn to normal procedures, I believe that we will all go down together. That makes me sad as sad can be. But if that is what happens, it’s our entire nation that is in a corner, not just me. If that’s the reality, I have the small consolation of knowing that I did everything that a human being could do to pull things in the other direction. If it cannot be done, it cannot be done. I have to accept it. There are limits to what one person can do.

I love my country. I will fight for her.

I believe that I will win in the end. I accept that there is at least some possibility that we all will lose.

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

Rob

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

Intimidation? You mean like when someone threatens you with prison because they don’t do what you want?

I’m not threatening you with prison, Anonymous. I am offering to do whatever is in my power to help get your prison sentence reduced. There’s a big difference.

You have to take a step back and look at the history to understand what is going on here.

I am opposed to Buy-and-Hold, right? I have two problems getting Valuation-Informed Indexing on the map. One is that the Buy-and-Holders don’t believe in it. That’s a problem but not an insurmountable one. In theory, the way to overcome that problem is to convince enough people of the merits of Valuation-Informed Indexing to take on the Buy-and-Holders at every board and blog on the internet. Eventually, the better ideas would prevail. Right?

One big problem with the usual approach is that the Buy-and-Holders are so ruthlessly abusive. They will do ANYTHING to stop people from learning about the implications of the past 34 years of peer-reviewed research. That makes my job a lot harder. But even that does not make my job impossible.

There’s a way in which the Ban on Honest Posting cuts in my favor. It creates a huge OPPORTUNITY for those who jump on the VII bandwagon first. Bogle is famous today because he was one of the first to push Buy-and-Hold. You would think that someone like Wade Pfau would want to become as famous as Bogle and so would lead the VII cause today. Why doesn’t he?

A big problem here is cynicism. People see things in black and white. Either Bogle is the greatest genius who ever lived and is incapable of ever making a mistake. Or else he is the Frank Underwood of Personal Finance, the most corrupt person who ever lived. The Buy-and-Holders believe he is the former. Those who lose confidence in Buy-and-Hold usually fall into the trap of believing the latter. They adopt the cynical view that Bogle (and the other Wall Street Con Men) are 100 percent corrupt. Thus, they conclude that it is just too risky to take them on. They satisfy themselves with including BITS of honesty in their work. They don’t tell the full truth known to them but they tell more truth than most others and are able to live with themselves by rationalizing that that is the best that can be done given the circumstances that prevail.

I DO NOT SHARE THIS CYNICAL VIEW.

I believe that Bogle really believes what he says about stock investing on one level of consciousness. He knows that Shiller’s research is a threat. He would have to be a moron not to see that. But he tells himself that Buy-and-Hold is as close to what works that we are ever going to get and that that is good enough. He compares it to other stuff out there and rationalizes that he is helping people by advocating Buy-and-Hold.

Why do I believe in this non-cynical interpretation of events? I have had a front-row seat to all of this for 13 years now. I have been able to see up close and personal how people develop their various rationalizations. No one else has the level of experience with this aspect of the question. I am truly the world’s #1 expert on this side of things.

Greaney’s study was an advance. He said that the safe withdrawal rate was 4 percent when a lot of people were still saying that it was 7 percent. Heck! There was one guy at Motley Fool who once said that it was 15 percent! Greaney believed that his study served a good purpose by showing why people making such claims are wrong. He is the leader of the Campaign of Terror and he believes in his heart (on one layer of consciousness) that he is going good.

If Greaney believes that, why should anyone conclude that Bogle thinks anything less? Bogle is not The Frank Underwood of Personal Finance. He is a good and smart and hard-working person who happened to make a mistake, fell victim to cognitive dissonance and thereby found himself in a trap that he cannot figure out how to escape.

I had many conversations with Mike Piper before he banned me from his site. Mike told me that he believes that Valuation-Informed Indexing can work. I reported on my conversation in a blog entry from a number of years back. Mike does not follow VII himself. He is a Buy-and-Holder. So he properly advocates Buy-and-Hold at his site. But he does not permit discussion of the last 34 years of peer-reviewed research at his site. That’s a strange reality. We need to solve that puzzle.

I figured out the answer to that one when you Goons threatened Wade and got him to flip. You had committed felonies long before that. I hadn’t mentioned prison sentences before that because I believed that it would just inflame things all the more. But I saw when you threatened Wade that, once you committed the felonies, you reached A Point of No Return. Once you passed that point, you felt that you would go to prison no matter what you did. So it didn’t much matter anymore what you did.

You now felt compelled to do things that you never would have dreamed of doing in the early days. In the early days, you fought because you cared about what was right and you thought Buy-and-Hold was right. Once you committed felonies, all concern about what was right went out the window. Now it was about staying out of prison. Even research showing how we all can reduce the risk of stock investing by 70 percent was not going to cause you to come clean once coming clean meant going to prison.

There is no way out of the trap you are in today. If you come clean, you still go to prison! Not for as long, obviously. But prison is not appealing for even one day. So you are not interested in coming clean. I want you to come clean. But seeing that it means prison for you, I can’t say that I don’t see at least a tiny bit of logic in your position.

Given that you cannot come clean, it doesn’t make much sense for me to hold back from talking about the felonies. It doesn’t matter how much I inflame you anymore. You are not open to coming clean no matter what I say.

The next step down the logic chain was to realize that it is the same for Jack Bogle and all the other Wall Street Con Men. Jack would come clean in two seconds if it were a question of going back to 1981 and playing it straight this time. The problem is that he does not have that option available to him.

If Jack comes clean, people are going to ask why he didn’t come clean in 1981. They are going to ask why he caused an economic crisis. They are going to ask why he caused millions of middle-class retirements to fail. They are going to ask why he did nothing when he learned that Mel Linduaer uses threats of physical violence to keep people in line at the Bogleheads Forum. What is he going to say? What good answers are there to such questions?

You Goons are in a trap. And Bogle is in a trap. And Mike Piper is in a trap. And the Wall Street Jourmal is in a trap. And every academic researcher is in a trap. And Princeton University is in a trap. Wade Pfau received a doctorate in Economics at Princeton. He sure should not have had to come to me to learn how to calculate the safe withdrawal rate. His Princeton teachers should have taught him that. But they can’t. Because they are in the same trap that holds Bogle and Piper and you Goons and everybody else.

Our entire freakin’ society is in a trap!

Now –

The question is — What are we going to do about it? How do we get OUT of the trap?

We are not going to get out of it by people like me being mean to people like you, Anonymous. So I am happy to do absolutely anything in my power to help you out Anything. And you don’t have to do anything in return to persuade me to do it. I ask for nothing. I just want to help you. And I want to do it for free.

There’s only one hitch.

I want to get us all out of this trap.

If I don’t get us all out of the trap, you end up in prison. So that’s not helping, is it?

And if I don’t get us all out of the trap, Bogle never gets credit for the amazing work he has done, does he? Bogle never intended to cause the biggest economic crisis in our nation’s history. But unless we get out of this trap, that’s what he will be known for for decades to come. I love the guy. So I need to get him out of this trap as much as I need to get you Goons out of this trap.

And of course I need to get Wade out of the trap. And I need to get the Wall Street Journal out of the trap. And on and on and on and on and on.

We are not arguing intellectual points anymore. Intellectual points are a secondary consideration for everyone on “the other side.” Their first concern is staying out of prison and avoiding legal liabilities. What the heck am I supposed to do about that? How am I supposed to persuade people in those circumstances?

One possibility is that we could adopt an amnesty. I have no problem with that. My aim is to be able to tell millions of middle-class people about the first true research-based investing strategy, a smart and simple and safe way to invest in stocks. If adopting an amnesty gets us there, why would I object? I am fine with that.

But I cannot adopt an amnesty on my own, can I?

When there are enough powerful people working together to get an amnesty adopted, I will help out. I cannot do it on my own. I have to wait for some others to step forward. That’s where things stand.

For now, it would be cruel of me not to mention the prison sentences. Because the lengths of the prison sentences increase each day. I want the prison sentences to be as short as possible for all sorts of reasons. So I am bound in conscience to continue mentioning them. Even though I do not personally believe that it is going to make much difference. I think that the game-changer is going to be the next price crash. When the crash comes, I want to be able to show people that I at least mentioned the prison sentences on hundreds of occasions. I want to be able to show people that I at least tried.

If you have any bright ideas, please feel free to share them, Anonymous.

Otherwise (and I know that the reality is otherwise — I have been wracking my brain for a long time to come up with any ideas that help us all out of this mess in which we find ourselves), we just have to wait until the crash comes and see how people react to it. Then I believe the chances are good that constructive and helpful and life-affirming things will begin to happen.

My best and warmest wishes to you and yours, my long-time Goon friend.

Rob

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

Then where are they? Why aren’t they posting here? They can certainly do so anonymously, without any threat of “intimidation”

Say that you were a white person living in a Southern state in the early 1950s, Anonymous. You notice that people with black skin are not permitted to sit where they like on buses, as you are, or to drink from the same water fountains or to go to the same schools. Say that you are not a bitter, hateful racist. You are just an average sort of person. You have an average sort of job and you do average sorts of things. You have grown to like most of the black people you have come to know just as you have come to like most of the white people you have come to know. You don’t think it is entirely fair that the rules are different for black people. But the rulebook that applies is the only rulebook you have ever seen. You cannot imagine life being different for black people. Things have ALWAYS been this way. You presume that things always WILL be this way.

A friend of yours becomes a civil rights advocate. He asks you to get involved, to speak out, to put yourself on the line. Do you do it?

Say that there’s an opportunity to get involved anonymously. Your friend asks you to show up at a protest. There will be hundreds of people there. No one will take your picture or write down your name. You of course have a legal right to show up at a protest. Do you do it?

Most people didn’t participate in protests. At least not until things had changed enough that participating in civil right protests became a norm instead of an “out there” thing to do. Human beings are social creatures. We don’t just do what we think is right. We do what we think is right and SAFE.

People look to leaders to figure out what is safe. This is why I say all the time that the key to overcoming this economic crisis is for Jack Bogle to walk to the front of a room and say the words “I” and “Was” and “Wrong.” LOTS of people see the holes in the Buy-and-Hold dogmas. There is a Social Taboo that stops us from speaking out about them in clear and firm and frank terms. THAT IS WHAT NEEDS TO CHANGE. Once Bogle gives his speech, you are going to see THOUSANDS of people speaking out. But people want to first see that it is SAFE for them to do so.

New ideas don’t start out with ten million supporters. They start out with one. Then one becomes two. Then two becomes two-hundred. Then two-hundred become two-thousand. Then its two million. And on like that.

I was the first person to work up the courage to say publicly that the Old School retirement studies got the numbers wildly wrong. Good for me. That was great stuff. That had the potential to save millions of middle-class people from suffering failed retirements.

Lots of people have come around in recent years. The Wall Street Journal now says that I was right all along. So does the Economist magazine. So does Bill Bernstein. So does Wade Pfau. So does Todd Tresidder. So does Vanguard. And on and on and on.

So I was right.

Why do all of these people not also say that the 13-year cover-up of the errors in those studies is the most massive act of financial fraud in the history of the United States? It obviously is that, right?

Because they are scared, Anonymous.

It’s not just that they are scared of someone taking their name down and coming to their house and killing members of their families, as Greaney threatened to do with me. They are scared of breaking the Social Taboo. People live in communities. People do not like to violate the norms of their communities.

People saw what happened to me when I worked up the courage to “cross” Greaney by posting honestly on the safe-withdrawal-rate topic. And, if they haven’t seen what happened to me, they have seen what has happened to others who tried to speak honestly about stock investing in other ways. People try not to violate Social Taboos. People have learned from many experiences in life that it is best to keep it zipped when Social Taboos forbid pointing out that the emperor is wearing no clothes.

But societies that survive find ways to overcome Social Taboos that are causing too much destruction. There was a time when no one spoke up about racism. Then that changed. There was a time when no one even imagined asking others not to smoke in a restaurant where they were eating. Then that changed. There was a time when no newspaper other than the Washington Post wrote about the Watergate matter. Then that changed.

When the Social Taboo falls, EVERYONE will be speaking out about the wonders of Valuation-Informed Indexing, Anonymous. There are hundreds of billions of dollars to be made helping people learn how stock investing works in the real world, according to the last 34 years of peer-reviewed research in this field. Everyone in this field wants to get in on that action.

Lots of people are just waiting until the time is right. They want to see OTHERS speak out and receive rewards for doing so. Then they will feel that it is safe for them to do so as well. The ability of the Buy-and-Hold Mafia to destroy people’s lives because they tell the truth about these matters is growing weaker and weaker by the day. Following the next crash, more people will work up the courage to violate the Social Taboo in clearer ways. And then the entire smelly Buy-and-Hold house of cards will come crashing to the ground.

If Buy-and-Hold were a legitimate strategy, there never would have been a single death threat. People who are promoting legitimate strategies don’t behave that way. Not ever. No exceptions.

But the Buy-and-Hold Mafia does have lots of power and lots of money and lots of influence on its side. So it has been able to keep the Social Taboo in place for 14 years now despite my best efforts at tearing it down.

But how much longer do you think that will remain so?

I don’t think it will be for much longer.

But we’ll see, you know?

I am not God. I don’t know everything. But I truly believe that the Social Taboo that keeps us trapped in ignorance is in the process of tumbling to the ground. I even see a change in the way you Goons talk about this stuff. I see a lot of good stuff up ahead in the distance.

We will all get to see how it turns out. It’s just a question of time. And not all that much more time at this point. Fair enough?

I naturally wish you all good things, my long-time Goon friend.

Rob

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

Here’s a tip: if absolutely no one agrees with you, you’re wrong. And before you trot out Rosa Parks again, even she had plenty of people on her side in her day.

I don’t have PLENTY of people on my side, X. I have EVERYONE on my side.

I have freakin’ Jack Bogle on my side! It was from Jack that I learned about the errors in the Old School SWR studies. Jack Bogle was John Walter Russell’s favorite investing expert. Bogle is on my side, not yours.

Jack is AFRAID to tell millions of middle-class investors that, oopsie, he made a little mistake that cost them their retirements. He is just like all the rest of us. We are ALL afraid. I was afraid prior to the morning of May 13, 2002, just like Jack is today.

That’s my edge here. We all want the same thing. We are all in this together. Our nation’s laws reflect our common beliefs and our laws come down 100 percent on the side of permitting honest posting at every board and blog on the internet on safe withdrawal rates and scores of other critically important investment-related topics.

It’s all just a question of HOW and WHEN we make the transition from Buy-and-Hold to Valuation-Informed Indexing. The question of whether or not we are going to do this was settled back in 1981. The question today is HOW and WHEN.

I have offered to do everything in my power short of committing a felony myself to help the transition go as easy as possible for all of my Buy-and-Hold friends. I have asked for nothing in return for making that pledge. I have said that that pledge will always remain on the table, that there is nothing ever a tiny bit time-sensitve about it.

It would be pretty darn hard to imagine a kinder and more generous offer than that. No?

Sooner or later, you Goons will accept that offer. Or Jack will. Or Motley Fool will. Or some political blogger will. Or some academic researcher will. Or the New York Times will. Or some investment advisor who wants to become a multi-millionaire will. It is obviously going to happen sooner or later. Something that benefits every person on the planet and that is backed by 33 years of peer-reviewed research and a Nobel Prize is sooner or later going to happen. I mean, come freakin’ on.

It could happen in someone else’s name. That is possible.

But even if it happens in someone else’s name, once it happens the Ban on Honest Posting becomes untenable. So then all the work that I have done at this site gets out. And then my name becomes part of it. Even a small part of this is worth hundreds of millions of dollars. So it is not like I am going to go without huge rewards even if this comes out under someone else’s name.

And, given the level of fear that we have seen, it is more likely to come out in my name than in someone else’s. That obviously pays off even bigger for me.

Are you able to imagine any scenario in which I do not see personal rewards from this greater than the personal rewards experienced by only a handful of the most fortunate people in all of U.S. history? I sure am not. We are talking Bill Gates-type personal rewards. Steve Jobs-type personal rewards. Paul McCartney-type personal rewards. Giancarlo Stanton-type personal rewards.

I am happy to do this by the close of business today. Because that is in the best interests of Rob Bennett and the millions of middle-class investors and the entire blogger community and the Wall Street Con Men and you Goons and all the academic researchers and on and on and on. If you can persuade Jack and the other powerful people behind this 33-year cover-up to close the deal today, I am in, X. I don’t have to think it over for two seconds.

If you cannot close the deal today, my best bet is to wait for tomorrow. No?

And if you can’t close the deal tomorrow, my best bet is to wait for the day after tomorrow. No?

I ain’t freakin’ walking away from a $500 million payday. Would you?

If you don’t want to close to deal until we see the next crash, then you don’t want to close the deal until the next crash. I HATE that idea. Hate it, hate it, hate it.

It’s not my call, is it?

So I will wait.

It’s not like I have any other choices.

We all have to deal the cards we are dealt. These are the cards that I have been dealt. There are some AMAZINGLY great cards in my hand. And there’s this really nasty Goon card mixed in with the amazingly great ones. WhaChaGonDo, you know? I didn’t ask for these cards, either the amazingly great ones or the awful, nasty Goon one. I have played them to the best of my ability, that’s all. I will continue to do that.

And I will also of course always continue to wish you all the best of luck with all your future life endeavors regardless of what investing strategies you elect to pursue.

I sure hope that works for you.

Because I sure cannot see any merit to spending even two seconds considering any other options.

My best wishes to you and yours.

Hang in there, man. It gets better. A LOT better.

Rob

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

They can speak their minds on internet forums and post here anonymously anytime, with no fears of anything. But they don’t. What does that tell you?

That’s a 100 percent fair and 100 percent important question, Anonymous. It is the question around which everything turns. I have spent time thinking about that question on every day of the past 12 years.

I have some answers and I have posted about them in hundreds of posts and articles and RobCasts already on the site. As I discover new answers, I write those up too. That’s pretty much all I can do.

If I was asked to give one short response to your question, I would say: “It’s because it is all so big.” People don’t want to take on the responsibility of saying something that requires that all the textbooks be rewritten. So even when they understand the arguments, they tell themselves “Let some others say this and then, when it is a commonly voiced view, I will agree that it makes sense.” We are not all independent thinkers. We are social creatures. We don’t like to tell our friends and neighbors and co-workers that they are wrong about something important. And this stuff is SO important. Most of us just cannot work up the courage to do it.

I sometimes report on my wife’s reactions here. I do that because I am trying to be fair. I call you guys “Goons” and thereby plant the suggestion that you say what you do because you are biased against me. My wife is obviously not biased against me. She has every reason to agree with me on every point. But she does not. I think that the fair thing to do given that reality is to report it so that anyone trying to make sense of this have that information available to them.

My wife doesn’t support the Goon tactics. But she doesn’t understand Valuation-Informed Indexing on a deep level. It’s not because of a lack of intelligence. She is more than intelligent enough to get all this. We sometimes go on walks and I try to bring the subject up. She will listen for a bit but her patience is limited. The other day I made another plea for her to go through the entire thing with me step by step. She said that it would be painful for her to do that.

I have had similar experiences with MANY good and smart people.

John Walter Russel was my right-hand man. There is no one on the planet who showed more support for me. John and I had a knock-down, drag-out fight in the days before we released the Retirement Risk Evaluator. His research showed that the SWR at the top of the bubble was 1.6 percent. He didn’t feel comfortable saying that because it is such an extreme change from the old findings. So he wanted to report the withdrawal rate that is most likely (the one for which there is a 50 percent chance that the real-world result will be higher and a 50-percent chance that the real-world result will be lower) as the “safe” rate. I told him that I could not put my name to that. A day or two later, he came around. But this was my freakin’ partner, the guy who had done all the research! There never should have been any disagreement.

I had similar experiences with both of my brothers.

Richard and I had a discussion about it one Thanksgiving over the dinner table. He asked me about my income situation and I explained that I felt that I was in “The Perfect Trap.” I said that the work I was doing was so important that I couldn’t possibly give it up. Then I added that the work that I was doing was so important that people on the other side felt that they could not possibly recognize it and so I couldn’t make a dime from it. He asked me to explain the investing ideas. He never crossed the line into being hostile but I would describe every comment he made as being highly skeptical. We didn’t want to get into an argument so we both dropped it. But my brother Steven told me that Richard spoke to him later and told him that he thought that the explanations that I put forward were impressive. Why couldn’t he say that to ME?

My brother Steven had a lump sum to invest sometime back before the 2008 crash,. He knew that I had a calculator on the internet so, without telling me, he checked it out before deciding how much to put in stocks. Then, after the crash, he told me that he wished he had paid more attention to my ideas. He looked at the calculator. It said that the most likely 10-year return on stocks was something in the neighborhood of 3 percent real. The return on super-safe investments was less than that, so he went with stocks. That’s NOT what the calculator was trying to tell him! The rule that I use is that you should get an extra return of 2 percent real for taking on the risk of stocks. The super-safe investment classes were offering a better value proposition at the time (they were paying something slightly in excess of 2 percent real, I believe). But he felt funny not going with the conventional advice. So he rationalized a belief that the Return Predictor SUPPORTED the conventional advice.

My boy Timothy has the best understanding of VII of people who are close to me. We talked about it all late into the night one night and he asked the kind of penetrating questions that tell me that someone gets it. This past Thanksgiving we were at my brother’s house and there was a NASA engineer there to whom I was telling the story. On the ride home I asked Timothy to describe the guy’s reaction to what I said. “Blank face,” he said without missing a beat. That’s exactly it! Goon reactions are rare outside the internet. But Blank Face is common. It’s not that people are not capable of understanding. It’s that people don’t WANT to understand.

Go through all of the reports of the e-mails that I exchanged with Wade Pfau and you will come to understand better what is going on. Wade was obviously intrigued or he would not have contacted me. But at the start he had serious reservations about foundational points. We talked those out. The ice started to melt a bit. And then one day he was writing to me with huge enthusiasm about how this was going to change the world. It clicked! Wade changed his stock allocation because of what he learned. That’s not just talk, that’s action. He never got it 100 percent. But something important clicked for him. That’s the process that people need to go through. But it doesn’t happen with one exposure. You have to be exposed to the new ideas on multiple occasions and hear answers to lots of questions before your mind can take it all in. It’s a paradigm shift. It takes time.

I could go on and on.

None of the people on the other side are bad people. They sincerely believe what they say. They follow Buy-and-Hold themselves. They are trying to help others by sharing what they know with them.

But there is another level of consciousness in which they have doubts. That makes them defensive. That makes it painful for them to hear about the new ideas.

All of that is fine. We NEED to be skeptical of new ideas. This stuff affects people’s lives in serious ways and the responsible thing is to respond to new ideas with a great deal of skepticism. I have no problem with any of it up to that point.

But there have to be lines that you don’t cross. Most people are not willing to put enough time and energy into learning about investing to study these things for themselves. Most people look to two things in forming their opinions: (1) the credentials of the people putting forward the ideas; and (2) the number of times that they hear the ideas endorsed. Buy-and-Hold has a HUGE edge in both departments because it has been around so long. Valuation-Informed Indexing cannot rise unless it can be freely discussed and people can gradually come to see merit in it and hear lots of different people endorsing it at lots of different places.

We are in a Catch-22. People don’t believe in Valuation-Informed Indexing because they don’t hear about it enough. And people don’t hear about it enough because most people don’t believe in it and will never come to believe in it enough until they feel safe talking publicly about their doubts re Buy-and-Hold.

The only way to change that is to open every board and blog on the internet to discussion of the implications of Shiller’s ideas. If people felt safe talking about these ideas, they would do so. We have seen that is so at every board and blog at which discussion has been permitted for a time. People LOVE the discussions so long as the ugliness is kept to a minimum. Every board and blog permits discussion of ideas put forward by Nobel prize winners. And the laws of the United States prohibit the tactics that have been employed to block discussions of these ideas. So we are as close as close can be to having some amazingly good stuff happen.

The problem is the defensiveness of the Buy-and-Holders. It is not possible just to tell people what works without criticizing Buy-and-Hold because what works is price discipline and price discipline is long-term timing and the key idea in the Buy-and-Hold Model is that timing never works. When you tell people that the path to effective long-term stock investing is to always, always, always practice long-term timing, the Buy-and-Holders go nuts.

That’s the problem. There is a Social Taboo on saying that timing is required. The Buy-and-Holders have said so many times that timing doesn’t work that people feel that saying timing is required is like saying the earth is flat. People are social animals and they don’t feel comfortable going against such a widely held belief.

But the reality is that there is zero support in the peer-reviewed literature for this belief. Wade Pfau checked that and he has a Ph.D. in Economics. Buy-and-Hold was built on a false premise.

We need to get the word out. Once we do, we will all be on the same page. We all want the same things.

But how do we do that?

The Buy-and-Holders want absolute proof that Valuation-Informed Indexing is perfect in every possible way before they will permit open discussion at even a single site. And we cannot persuade enough people that Valuation-Informed Indexing is perfect in every possible way to overcome the abusive tactics of the Buy-and-Holders without first having open discussions. We are as a society stuck in a very bad place. 

We need Jack Bogle to stand up on a stage and make a speech. Then we need that speech reported on on the front page of the New York Times. That will make everyone who has doubts about Buy-and-Hold feel comfortable about expressing those doubts publicly. And that will make the Buy-and-Holders understand that they need to take the abusive stuff down about 6,000 notches.

The reason why people don’t participate is not that they are so confident in Buy-and-Hold, Anonymous. People don’t participate because the Buy-and-Holders are so defensive that they engage in behavior that scares people into not participating. The Buy-and-Holders should be INVITING challenges to their ideas as a learning experience. When they start doing that, I guaranty you that we will have zero problem getting a national debate launched. We have been seeing since the morning of May 13, 2002, how much interest there is in having a national debate in which all feel safe saying what they truly believe.

I hope that helps a bit.

My best and warmest wishes to you and yours.

Rob

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

Ok, but again, being able to purchase a single premium immediate annuity late in life allows for a higher SWR. So would you agree all studies not including this critical factor get the numbers wildly wrong and should be corrected immediately? Simple question.

See for example:

“The results were rather striking; on a Monte Carlo basis, the 4.5% withdrawal rate for a moderate growth portfolio had a 12.6% risk of depletion, while annuitizing 25% of the assets dropped the risk of failure to 7.8% and annuitizing half the portfolio dropped it down to only 3.3%”

https://www.kitces.com/blog/understanding-the-true-impact-of-single-premium-immediate-annuities-on-retirement-income-sustainability/

I don’t say that a study that fails to account for the effect of buying an annuity is wrong or needs to be corrected.

But I DO say that someone who employs death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs to block people from learning about the effect of buying an annuity is guilty of financial fraud and is on his or her way to life in a prison cell.

Intent to deceive is an element of the crime of financial fraud.

The person who leaves out a discussion of annuities in an SWR study has no intent to deceive. So there is no crime. If that person engages in the behaviors listed above, then he DOES evidence an intent to deceive. Then you have a crime.

John Greaney did not wake up one morning and say to himself:”I know what I will do. I will craft a retirement study that gets all the numbers wrong and thereby cause millions of people to suffer failed retirements and bring down the U.S. economy.” He made a perfectly understandable mistake. If he had acknowledged that mistake, we all would have moved forward in our understanding of these issues and we would not be living through an economic crisis today. It is the cover-up that is the crime here, not the mistake.

You are suggesting that people can leave things out of studies and that that’s okay. I don’t agree that something as big as the valuations factor should ever be left out. But I also believe that there are millions of people who do not view valuations as being as important as I believe them to be and I obviously believe that those people have a right to produce retirement studies. There are lots of people who like Greaney’s study and the other Old School SWR studies even after learning that those studies do not contain an adjustment for the valuation level that applies on the day the retirement begins. I believe that there is a way for those people to produce and share the retirement studies that they want to produce and not end up going to prison.

The way to do it is to produce the study the way that Greaney did and then to add a note saying: “This study does not contain an adjustment for the valuation level that applies on the day the retirement begins. There is peer-reviewed research indicating that that is an important factor. Studies containing such adjustments produce very different numbers. To get a full explanation of why some people think the valuations factor is so important, please go to the page [provide link here] where my friend Rob Bennett sets forth his Retirement Risk Evaluator calculator and read the materials at his site explaining why he thinks this is a better way to identify the safe withdrawal rate.”

When you do it that way, you are not deceiving anyone. You are presenting the case for what you think the SWR is with your own work but you are also putting your reader on notice that there is another school of thought in the academic community re how such calculations should be made. You are shifting the burden to the reader of the study to decide which model to follow when crafting his retirement plan. Take subterfuge out of the picture and you take prison sentences out of the picture.

It is not possible to make sense of any of this without taking into consideration the broader context in which all the events that have taken place have taken place. Humankind did not come into existence with complete knowledge of how stock investing works. We have been picking things up day by day for a long time now. We achieved a huge advance in 1965 when Eugene Fama discovered that short-term timing never works. I view that insight as the second most important insight in the history of investing analysis.

Fama made a mistake. Bogle had not yet founded Vanguard. So long-term timing was not a practical option in 1965. So Fama did not think to examine whether it works or not. If he knew what Shiller was going to discover years later, he would have announced his finding by saying that “Short-term timing never works.” But he didn’t appreciate the significance of the distinction between short-term timing and long-term timing. So he just said: “Timing never works.” That got us onto a path that led to an economic crisis more than 40 years later.

If these matters were not so important, the mistake would have been corrected in 1981, when Shiller showed that long-term timing always works and is always 100 percent required. But these matters are terribly important. They affect people’s life savings and people’s hopes for their futures. An entire industry had been built up promoting the Buy-and-Hold strategy between 1965 and 1981. The good and smart people who worked in this industry were too embarrassed to acknowledge their mistake. A common human defense mechanism that comes into play in such circumstances is cognitive dissonance. They rationalized the mistake away. They told themselves that it wasn’t that big a deal. And then they rationalized not pointing out the defect in their strategy to others on grounds that it was not such a big deal.

I believe that it is a very, very big deal. I believe that the mistake needs to be acknowledged and corrected.

Millions of good and smart people don’t see it. They think that Buy-and-Hold works well enough.

The answer is not to suppress discussion of the differences between the two models. If it is ENCOURAGE exploration of the differences between the two models. It is by talking these things over that we all learn. I believe that the result of a national debate is that we all are going to become Valuation-Informed Indexers. But I am of course as prone to errors and misunderstandings as any of my other fellow humans. So I have to acknowledge that there is at least a theoretical possibility that it could go the other way, that the national debate could lead to an enhanced confidence in the merits of Buy-and-Hold.

Either way, having the debate is a positive. If the dominant model is flawed, we need to warn people of the dangers of following that model. If the dominant model is perfect in every way, people need to hear that so that they will appreciate the dangers of going along with what this Shiller fellow says and what this Bennett fellow says.

It is not possible that the right thing for me to do here is to agree to keep quiet about what I have learned about what follows from Shiller’s “revolutionary” (his word) findings. All of the scores of powerful insights that our communities have developed together (with me playing the lead role in encouraging the debate to go forward) need to be debated on a national scale, at every discussion board and blog on the internet.

Will there still be prison sentences after that is done?

If I had the power to make a deal where we would drop all the prison sentences in exchange for having the national debate, I would take that deal in two seconds. I would be a fool not to do so for a host of reasons.

I don’t have that power, Anonymous. I can advance lots of words making the case that we are all capable of making the sorts of mistakes that you Goons made and that we all should be merciful in our judgments and all that sort of thing. I am 100 percent happy to do that. So my willingness to do that is not an issue here.

I do not get to set the length of the prison sentences. That is done by the millions of middle-class Americans who are in the process of seeing their retirements fail. I have obligations to those people every bit as strong as my obligations to you Goons and to the Wall Street Con Men. I need to BALANCE the competing interests.

I am 100 percent happy to do everything in my power to help you out. That’s not an issue. But you have to understand that my power to help you out diminishes with every passing day that the Ban on Honest Posting remains in place. You are going to go to prison not just because you committed all the elements of the crime of financial fraud. You are going to go to prison because you committed all the elements of the crime of financial fraud AND because millions of people are angry about it.

There are not millions of people angry about it today. That’s why you are not in prison today. There are going to be millions of people angry about it following the next crash. I don’t believe that at that time any words that I put forward to appease the anger of those millions of people are going to make much difference. So the time available to us to work together to get your prison sentence shortened a bit is running out. That’s my sincere take.

I hope that all helps a bit.

Please let me know if you want to work together. If you do NOT want to work together, the sensible play for you is just to wait this thing out. If I am wrong and Bogle is right, we probably will not even see another price crash. So you are off the hook in that case. I obviously believe that we are going to see a crash and so I frequently warn you and others of the dangers of letting this thing play out in the way in which it is appears likely it will play out. But if I am wrong, nothing that I say matters, you know? It’s your life. Please feel free to play it whatever way you think best. But please understand that I intend to do the same from my side of the table. I think it would be best for all of us to come clean re these matters by the close of business today.

My best and warmest wishes go out to you and yours during this holiday season. Love is the answer. It’s not a close call.

Rob

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

You’ve already agreed that nobody actually uses these strategies as you define them. Instead, everyone makes individual allocation decisions based on their unique situations. So why keep talking about two imaginary strategies?

You overstate things as is the usual Goon practice, Anonymous.

You are right (and it is an important point) that few investors follow Buy-and-Hold dogmatically or Valuation-Informed Indexing dogmatically. Some do. But they are in the minority.

But there are many investors who follow a somewhat softer version of Buy-and-Hold (what I call Strategy C). And there are a good number (but a much smaller number) who follow a somewhat softer version of Valuation-Informed Indexing (what I call Strategy D).

Neither of the two strategies are “imaginary.” Both have had great influence. Buy-and-Hold has had far more influence than Valuation-Informed Indexing thus far. But it is my belief that Valuation-Informed Indexing will have more influence in the future. It was the intent of the people who developed both strategies to develop a research-based strategy. That is a huge advance. So both strategies are of huge historical importance. Both increased our knowledge of how stock investing works. I don’t see how it is fair to refer to either strategy as “imaginary.”

I DO think it would be fair to say that the vast majority of investors find limited appeal in theory. Most investors live in the practical realm. They want to know what works, not what the research says. I think it is a mistake to ignore the theoretical. I think that the research can be a great guide to learning what works in the long term and that placing too much focus on what works can cause one to place too much focus on short-term results. But I do think that it is fair to say that most investors do not focus too much on the theoretical appeal of either of the two models.

Even investors who focus on the practical are unknowingly influenced by the theoretical. You believe with all your heart, mind and soul that the numbers on your portfolio statement are real. That is probably largely because you are drawn to the practical and accepting a number on a portfolio statement as real is a practical thing to do. But the bigger reality is that, if all the experts in this field told you that you need to make an adjustment to those numbers to obtain accurate numbers suitable for serving as the basis of your financial planning efforts, you would come to view the idea of making the adjustments as a practical thing to do and would begin doing it.

The line between the practical and the theoretical is not a thick, bold line. The one realm bleeds into the other. Even people who think of themselves as not interested in theory are influenced by it because they are influenced by the teachings of others who are influenced by theory in a more direct way.

I mentioned the other day that there was a time when physicians used bleeding as a cure for all sorts of illnesses for which it is not an appropriate remedy. Say that you were a doctor in those days and that you had developed an effective cure not involving bleeding for an illness conventionally addressed with bleeding. If you tried to apply that cure, you would have been attacked by those using the bleeding cure. You would be viewed as a threat by them. It would be said that your treatment was “dangerous.” Patients who didn’t care at all for theory and just wanted to be cured would run from you because they would view your methods as “dangerous” from a practical standpoint even though your methods were the proper ones. The continued reliance on the discredited theory would be holding back progress by holding back acceptance of a perfectly practical course of treatment by causing it to be perceived as less than practical.

That’s where we stand in the investing realm today. The theory behind the Buy-and-Hold strategy has long been discredited. But in the practical realm Buy-and-Hold remains dominant. There are few pure Buy-and-Holders. But the vast majority of investors follow stock allocation strategies more in line with the theory behind Buy-and-Hold than in line with the theory behind Valuation-Informed Indexing.

That’s what I want to see change. I want people to follow the strategies that appeal to them. But I want them to be able to hear about the strengths and weaknesses of both theories before making a choice. So it is important to me that I and all other community members who believe in Valuation-Informed Indexing be permitted to post honestly. If we all post honestly, I believe that knowledge of how the VII theory works will spread over time and stock allocation choices that are at least somewhat influenced by that theory will become more popular. For so long as we defer to the intimidation tactics of the Buy-and-Holders and hold back from giving complete and clear explanations of why we favor the theory behind VII, Buy-and-Hold will remain dominant and VII will not experience the growth that I want to see it experience.

I hope that helps a bit.

Rob