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

What new information do you have that you believe people have not already heard from you?

That’s a super great question, Anonymous.

It’s not information that people need. Everything that I say is rooted in information supplied by Shiller back in 1981. People can hear the phrase “valuations matter” 10,000 times and not have it have any influence on how they invest.

What people need is discussion. People need to talk these things through.

And people need exploration. Most people do not today appreciate the many far-reaching implications of the finding that valuations matter. One of the reasons why I posted so frequently is that the finding that valuations matter affects every strategic question that comes up in stock investing. I want to show people that this advance in our knowledge changes everything we once thought we knew about how stock investing works. It is not a single information bit that I am supplying. It is an entirely new way of thinking about the stock investing project. People can only come to appreciate how important this is if Valuation-Informed Indexers show them how it applies in hundreds of different circumstances.

And people need multiple sources of confirmation of the insights. I am not going to be the only one posting about Valuation-Informed Indexing in days to come. We need to have THOUSANDS of posters doing this. People are just not going to believe what one person says and for good reason. We need to hear Bogle comment on VII. And Bernstein. And Burns. And on and on and on and on.

Those people are not going to offer only positive comments. That’s good. People will not learn from hearing only positive comments. People need to hear positive comments from posters who believe that positive comments are warranted. And people need to hear negative comments from posters who believe that negative comments are warranted. That’s how learning experiences work. We need a National Learning Experience re the last 33 years of peer-reviewed research in this field and re how the findings of the post-1981 research relate to the findings of the pre-1981 research (which also contains many powerful insights, to be sure).

Do you see?

There was a fellow named “Earnabuck” at the Bogleheads Forum when I posted there. He didn’t agree with most of my investing ideas. But he was a big defender of mine because he believed strongly that all posters should be permitted to post their sincere views. He said one time that he was present for the Motley Fool discussions and that at the time he agreed with Greaney but that over time he had come to agree with me that the valuation level that applies at the time the retirement begins must be taken into consideration in the calculation of the safe withdrawal rate.

That was an amazing statement.

The guy was obviously not biased against me. So when he agreed with Greaney, he was not being a Goon. And the guy was obviously smart. So why couldn’t he appreciate the simple point that I made on the morning of May 13, 2002, within one or two hours of the time I made it?

He couldn’t. That’s clear beyond any reasonable doubt.

The point is a painfully simple one. The price you pay matters when buying stocks just as it does when you buy anything other than stocks. Could anything be more obvious? But this guy really did not get it for a long, long time. It took him YEARS.

We do not lack for information, Anonymous. That is not our problem. Humans are not information processing machines. That’s not how they operate.

We need to talk about this stuff. Openly. Honestly. Bluntly.

We need to be friendly to those on “the other side.” We need to be respectful.

But we MUST all say what we truly believe. That’s how humans learn.

I could talk about this aspect of the question for a long, long time. So I am going to stop there unless you ask further questions.

But the question you are asking here could open all sorts of doors if you would ponder the matter a bit.

You Goons are not bad people. I do not say that.

The Wall Street Con Men are not bad people. I do not say that.

We all want the same things. We are all on the same side.

If you could LISTEN to what the other side is saying without so much defensiveness, you could learn some amazing things. In time you would come around.

Or not. I believe that you would come around. Perhaps I am wrong. If you did not come around, you would still gain from the experience. By letting the other side have its say and seeing that you were not persuaded, you would be confirmed in your current beliefs. You would over time become more confident in what you believe. Which is a big plus when you are following a strategy that you must stick with for it to work.

People don’t shift to a new model because they are exposed to some “information” about it. Conversion is a more gradual process. People need to be permitted to talk things out. With LOTS of different proponents of the new idea. They need to be able to challenge those people, to ask lots of hard questions. They need to ponder things over time. They need to be able to watch to see the extent to which friends of theirs are convinced over time. They need to try out different possibilities.

We have had the information we need for 33 years. Now we need to take it to the next step and start enjoying the big-time learning experiences that follow from it.

Rob

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

If any newspaper ran a story, as you say, you and they would both be in court defending yourselves against a lawsuits for false accusations.

The accusations aren’t false. So we need have no concerns on that score.

But you are pointing to something real and important, Anonymous. Lots of newspapers and bloggers who would love to tell this story are afraid to do so. The Wall Street Con Men have lots of power and lots of wealth and lots of connections. So, yes, there is risk attached to telling the story of this massive act of corruption. I held back from telling the full story for a long time myself. I didn’t use terms like “financial fraud” for a long, long time.

What do you propose we do, Anonymous? Not tell the story?

If we don’t tell the story, we end up in the Second Great Depression. I think it would be fair to say that not one of us, including our Wall Street Con Men friends, wants to see us end up in that dark place. So what do we do?

I think we have to tell the story. I think we have no choice.

Once you accept that the story must be told, it makes sense to tell it as soon as possible. The sooner the story is told, the fewer people go to prison. And the sooner the story is told, the shorter the prison terms are for those who do go to prison. And of course everyone not going to prison benefits in a huge way. So the responsible thing for all of us to do is to do everything in our power to get this story told as soon as possible.

I have worries about what the Wall Street Con Men will do to me. The main thing that I do to address those worries is to try hard always to tell the story in the most charitable way possible. I don’t think this started as an act of fraud, I think that until 1981 Buy-and-Hold was a real thing. That’s a kind thing to say. But I feel free to say it because I have seen a lot of evidence that that is indeed the case. So I believe that the way that I tell the story helps the Wall Street Con Men in a big way.

Even after 1981 I believe that the Wall Street Con Men suffered cognitive dissonance. It is not financial fraud to get something wrong because you suffer from cognitive dissonance. So, again, I tell the story in the way that is most charitable to the Wall Street Con Men while also always being 100 percent honest.

I don’t think that abusive acts — 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 — can be excused by cognitive dissonance. So I do believe that there will be prison sentences. But I believe that the reality of the cognitive dissonance phenomenon will get the vast majority of people who advocate Buy-and-Hold off the hook.

Another point that you may be missing is that the transition to Valuation-Informed Indexing will be a huge boon to the investing advice industry. The primary reason why many people are afraid to buy stocks is that they are concerned about risking their money. Going with a VII strategy reduces risk by 70 percent. So this will be a boon to the industry. Lots of people on “the other side” are aware of this and would love to find some way to make the transition. The only thing holding them back are concerns re the prison sentences and re civil lawsuits for damages. That’s why I work so hard to do all that I can to minimize those factors to the greatest extent possible.

The Wall Street Con Men are not bad people. Ironically, their downfall has been their huge wealth and the power edge that it provides them. No other industry could get away with something like this because people outside their industry would call them on their b.s. Everyone is afraid to call out the Wall Street Con Men because they have so much darn money and so much darn power. I am not saying that that makes them angels. I am pointing out another mitigating factor that should be taken into consideration when people try to assess their level of guilt for what has happened.

You don’t want to go forward. The reason why you don’t want to go forward is that you have convinced ourself that things will not really be so bad, that we will all get through this somehow. I encourage you to spend more time working the numbers. I have spent a lot of time on this and I do not believe that our economic system can survive a drop to a P/E10 of 8 that remains in place for a good number of years. It is going to be a devastating hit to millions. People are even going to lose confidence in our political system. We saw some of that in the wake of the 2008 crash.

I am not anti-Wall Street Con Men. I like the Wall Street Con Men. I have learned many important things from them. I have hopes of working with them in the future. I consider the Wall Street Con Men my friends. I do what I do to help the millions of middle-class workers whose lives are in the process of being destroyed by the Wall Street Con Men AND the Wall Street Con Men themselves as well. It is my strong belief that we are all in this thing together. I think it is a terrible mistake to believe that there are two different “sides.”

I am always going to do everything in my power to praise the Wall Street Con Men to the skies, to make the transition as easy for them as possible. If all that I do is not enough to keep them from coming after me, then all that I do is not enough to keep them from coming after me. I cannot betray my country. That’s 100 percent out. I have been offered no alternative but to bust through The Big Black Mountain. So busting through The Big Black Mountain I will go. But always with kindness. Always with the greatest amount of kindness that I am able to advance without crossing the line and engaging in dishonesty myself. That cannot possibly be the right way to go.

Will some newspaper or some financial or political blogger work up the courage to tell the story following the next crash? I believe that that will happen. I don’t have a crystal ball. But I believe that will happen. I love my country and one of the things that I love about it is that we have always figured a way to get out of these sorts of situations once it became painfully clear to everyone that that was what we had to do. I think it will become painfully clear to everyone following the next crash. I sure hope so.

I am like everyone else, Anonymous. I am scared. But I continue to believe that we can take this to a good place. I continue to believe that the good news here is 50 times more good than the bad news here is bad.

I don’t believe that the Wall Street Con Men intended to bring on the Second Great Depression. I think they started down a road that they saw as being only somewhat dark and then things got carried away and now they feel like they have painted themselves into a corner. Bogle ignores my e-mails. But I believe that following the crash he may see that I have been his best friend in the world all along. And then he will work with me. And then we will get this thing turned around in no time.

I have spent a lot of time thinking about this matter from ever possible angle. I sincerely see no better way to proceed.

So we will see what happens.

I hope that helps you understand where I am coming from a bit more clearly.

My best and warmest wishes to you and yours.

Rob

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

a) An attack on steam as unscientific, ungodly, an evil con job, a 100% unworkable method that could never transport a single passenger or package to anywhere (though people used it every day for decades with apparently wonderful and expected results), a method promoted by nasty bigoted horrible people bent on destruction, who were harassing and threatening you, a smelly approach that needed to be buried 100 feet underground… etc, etc, etc,

There’s another aspect of this that jumped out at me upon reading your words, Anonymous.

Electric engines were indeed a huge advance over steam engines, just as Valuation-Informed Indexing is a huge advance over Buy-and-Hold. But there is a particular problem that comes up in making the case for VII that often causes a lot of friction and that did not exist when those promoting electric engines were making their case.

The thing that makes VII so wonderful is that it calls for the exercise of price discipline (long-term timing). Buy-and-Holders say that price discipline (long-term timing) is a bad thing. So Buy-and-Holders actually DISCOURAGE the thing that the last 33 years of peer-reviewed research in this field shows to be the key to long-term success.

You put a lot of nasty words in my mouth in your comment. I do not hate Buy-and-Holders. I LOVE Buy-and-Holders. I do not say that Buy-and-Holders are bad people. I say that they are good people. I do not say that Buy-and-Holders are dumb. I say they are smart. I do not say that Buy-and-Holder are evil. I say they made a mistake.

There is a big difference between what you say I say about Buy-and-Holders and what I say I say about Buy-and-Holders.

I do say that a good number of Buy-and-Holders have committed financial fraud in their efforts to defend Buy-and-Hold. That’s obviously a very, very, very bad thing.

But I obviously say that because I care about my Buy-and-Hold friends and because I want to persuade them to STOP committing financial fraud.

There would be no Valuation-Informed Indexing but for the foundation built for it in earlier years by the Buy-and-Hold Pioneers. I obviously am very proud of the work I have done over the past 12 years developing the VII concept. Well, guess what? There would be no VII but for the work done by the Buy-and-Holders before I came along.

The Buy-and-Holders did a lot of the heavy lifting. I try to give them credit for that every chance I get. I will be giving the Buy-and-Holders credit for all their wonderful contributions until the day I die. I took my friend Jack Bogle’s work and took it to places that he never imagined it could go. Jack didn’t do it all on his own and I didn’t do it all on my own. Jack and I created the first true research-based strategy TOGETHER. I only wish he would accept credit for his wonderful accomplishment!

There is no way to make the case for VII without pointing out the dangers of Buy-and-Hold AS IT IS CURRENTLY BEING PROMOTED. The peer-reviewed research in this field shows that nearly all the risk of stock investing comes from the failure of investors to practice price discipline (that is, the failure of investors to practice long-term TIMING).

Practicing long-term timing is 80 percent of the game! It is the key to everything!

And Buy-and-Holders say NOT to practice any form of timing!

That’s the entire problem right there. When we work that one out, we have worked it all out.

I love Buy-and-Hold when it sticks to first principles. The first principle of Buy-and-Hold was to use the peer-reviewed research as a guide to how to invest. The last 33 years of peer-reviewed research says that investors must, must, must, must, must ALWAYS practice long-term timing (while of course never, never, never, never, never practicing long-term timing).

This is going to end when Jack acknowledges his mistake and the speech in which he does so is written up on the front page of the New York Times. Starting on that day, everyone working in this field will be exploring every angle of how to practice long-term timing. The first chapter in every textbook will explain why long-term timing (price discipline) is the key to everything.

Everything else stays the same. When the Buy-and-Holders acknowledge the mistake that was uncovered by the peer-reviewed research 33 years ago, Buy-and-Hold works. Then there is no cause for friction, right?

ALL of the friction results from Bogle’s failure to acknowledge the mistake when it was uncovered 33 years ago. We all should be working to get him to make that all-important speech.

There’s no way to say what works in stock investing without talking about what the Buy-and-Holders got wrong. Price discipline is 80 percent of the game. And the Buy-and-Holders advocate that investors exercise zero price discipline (they advocate staying at the same stock allocation even when prices change — this is called RE-balancing).

We are on the same side.

You are just 33 years behind the Valuation-Informed Indexers because Jack hasn’t yet given his “I Was Wrong” speech. Once he gives that speech, it’s good stuff piled on top of good stuff piled on top of good stuff for all of us. Even those of us in prison will be better off to be living in a country with a strong economic system rather than one in a state of collapse.

I LOVE Buy-and-Hold. That’s why I want to fix it. That’s why I want it to work. That’s why want to be sure to do everything I can to get the prison sentences of my Buy-and-Hold friends shortened a bit.

I hope that all makes good sense to you, my old friend.

Rob

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

It is fine for people to disagree and this happens almost every day on most of the popular financial boards out there.

There is some disagreement on most boards. But the range of acceptable opinion is far too narrow.

One time I put up a post at a blog in which I described Buy-and-Hold as “a Get Rich Quick scheme.” One fellow posted that he had never heard anyone say that before. That’s the problem.

Shiller didn’t publish his “revolutionary” (his word) research last week or last month or even last year. He published it in 1981. There should be a common understanding today that there is now 33 years of peer-reviewed research showing that there is precisely zero chance that Buy-and-Hold could ever work for a single long-term investor. There isn’t. That’s why there is shock when I say it. People need to hear that message over and over and over again if they are to successfully ignore the constant promotion of the pure Get Rich Quick approach (Buy-and-Hold) by the Wall Street Con Men. The number of times a message is repeated affects how persuasive it is. We need to hear the anti-Buy-and-Hold message repeated as often as the pro-Buy-ad-Hold message is repeated. And we need to hear it being repeated by many different voices.

Todd Tresidder agrees with me on safe withdrawal rates. How often has he gone to the Bogleheads Forum to explain why he thinks the Old School SWR studies are dangerous for investors? He hasn’t done it, Pink. If he did it every day, and if hundreds of others did it everyday, no one would think twice when I warned people of the dangers of those studies. But Todd doesn’t want you Goons attacking his site. So he keeps it zipped; he makes his comments only at his own site. That’s why we are in an economic crisis today.

I don’t play that game, Pink. I love my country. I want to bring the economic crisis to an end. I want millions of middle-class investors to have access to accurate and honest reports of what the last 33 years of peer-reviewed research says.

Greaney said in his study that the ideal stock allocation is 74 percent stocks. The last 33 years of peer-reviewed research shows that 20 percent stocks is a far better choice for the long-term investor when stocks are priced as they have been for the past 18 years. Not everyone at the Bogleheads Forum says exactly what Greaney says. Some say that 90 percent stocks is better. Some say that 60 percent stocks is better. Some even say that 50 percent stocks is better. How many say that 20 percent stocks is better? Very, very few. And those who do tend to say it once and then shut up while those arguing for 60 percent stocks or 70 percent stocks or 80 percent stocks say it over and over and over again.

Those posting research-based views have every bit as much right to express their views as those going with the pure Buy-and-Hold/Get Rich Quick garbage. When threats of physical violence are used to intimidate those who believe in research-based strategies from posting their sincere views, the board becomes a corrupt enterprise. Many posters see that the range of opinion expressed at the board stretches from 50 percent stocks to 80 percent stocks. That makes them inclined to think that 65 percent stocks might be roughly right. If they knew that the only reason why there aren’t hundreds of posters making the case for the research-based allocation (20 percent or perhaps 30 percent stocks), those community members would have a very different belief as to how to go about investing their money.

You are personally responsible for the losses those people will be experiencing in coming days, Pink. This isn’t a case where you permitted the research-based views to be heard on the same terms as the pure Get Rich Quick views. You permitted ONLY Get Rich Quick views. And you didn’t warn people that that was your policy,. You stated in the published rules of the site that honest posting was PERMITTED. You committed financial fraud. So you are responsible for all losses suffered. And you are guilty of a felony under the laws of the United States.

I want no part of it. Going to prison is not high on my bucket list.

Not this boy.

I can’t go for that.

No can do.

Rob

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

What specific texts did you study that Greaney and other Motley Fool members were unaware of? I am planning my own early retirement and would like to learn, as you did. Please don’t say “Irrational Exuberance.” I already have that one, and I believe Greaney as well as most members of Motley Fool have either read it, or are certainly familiar with it’s essential elements, so that doesn’t fit your claims. Looking for those other hallowed texts that you had access to, and informed your opinions, but others somehow overlooked. Thanks.

It’s not just what you read that matters, Yogi. It’s what you do with what you read. If all that mattered was what you read, we would all be even; we all have access to all the same books. But Bogle obviously doesn’t share all the same views as Shiller. And Shiller obviously doesn’t share all the same views as you. And you obviously don’t share all the same views as Wade Pfau. And Wade obviously doesn’t share all the same views as me. And on and on.

We all have access to the same materials. And to a considerable extent we read the same things. But we come to very different conclusions about how stock investing works as a result of reading generally similar materials. Why?

Part of it is that we have different personalities. I am an INFJ under the Myers-Briggs personality assessment system. Greaney is an INTJ. That’s a HUGE factor here. An INFJ and an INTJ can read precisely the same materials and come to very different conclusions re the subject they are examining. The two personality types process information in very different ways.

There are many more INTJs (and personality types that are similar to the INTJ type) in this field than there are INFJs. That’s a big factor here. That will change as Behavioral Finance becomes the dominant school of thought. But we are not there yet. Most people who work in this field today have a numbers focus. It’s as if we had a bunch of people who are engineers trying to wrote novels. That’s never going to work out well. There have been exceptional cases. But as a general rule the things that engineers are good at and the things that novelists are good at are very different things. For many years we thought that investing was a field of human endeavor in which engineers would do a good job. In recent years we have been learning that novelists possess more of the necessary skills (while engineers also have important things to contribute, to be sure).

Another factor is the life experiences held by the people who read the materials.

Say that Shiller had published his “revolutionary” research in 1961 rather than in 1981. That means that there never would have been an industry of wealthy and powerful and well-connected people built up around the promotion of Buy-and-Hold before it was discredited. Had things played out that way, we would ALL be Valuation-Informed Indexers today. Bogle would have had zero trouble understanding the implications of Shiller’s work had he not been a Buy-and-Holder for 16 years before Shiller published it. The cognitive dissonance kicked in because he felt that his reputation was tied up in the continued popularity of Buy-and-Hold.

Bogle felt that he had something to defend. So he was not capable of looking at things objectively. You often put up sarcastic comments suggesting that it is crazy that I say that I am 12 years ahead of Bogle in my understanding of how stock investing works. You are ignoring the fact that I have a big edge on Old Saint Jack. I don’t pretend to be an expert. So I don’t feel any need to be defensive when I learn about new ideas. My edge over Jack Bogle has nothing to do with what books I have read or what books he has read. It is largely the result of the fact that he got famous promoting Buy-and-Hold and I didn’t and so I had nothing to lose by discovering the implications of Shiller’s revolutionary findings.

A third factor is that it is not just how open you are to reading certain materials and the extent to which your personality is attuned to taking in the insights that can be mined from those materials but also how hard you work it when you come across materials that make points that have never been made before. You say that you have read Irrational Exuberance. How many times?

I have read it four times. Please understand that I did not get all there is to get from reading the book the first three times I read it. I would probably profit from reading it a fifth time.

This is a strange phenomenon. It is highly counter-intuitive. The same words were on all the pages the first three times I read the book. Why is it that I did not mine all the insights that are available to someone reading the book on the first occasion on which I read it? If I was smart enough to gather those insights on the fourth read, surely I was smart enough to gather them on the first read.

No.

It doesn’t work that way.

I was able to mine SOME of the insights that are available for mining in Shiller’s book on the first occasion on which I read it. But not all of them.

What happened is that I read the book the first time and mined some insights and then went about my business. When I went back to it a year or two or three later, I had one or two or three more years of arguing with you Goons behind me. So I had looked at lots more questions. And I had struggled with lots more puzzles. And I had SOLVED lots more puzzles. So the Rob Bennett who read Irrational Exuberance the second time possessed a very different mind (at least when it comes to its understanding of investing matters) than the Rob Bennett who read Irrational Exuberance the first time. There were scores of insights that Shiller planted in his book that skipped right by me when I read it the first time and that I jumped on when I read it the second time. You may have read the book and missed a large number of the insights available in it for mining, Yogi!

Those are three big factors that explain why you did not get out of Irrational Exuberance what I got out of it. However, the full truth here is that we cannot come to a full understanding of the puzzle that you are trying to solve here (why did Rob Bennett see the errors in the Old School safe-withdrawal-rate studies way back in May 2002 even though the Wall Street Journal did not acknowledge those errors until nearly 10 years later?) by looking only at Irrational Exuberance, as important as that book is.

I’ll let you in on a little secret, Yogi. I had not yet read Irrational Exuberance when I put forward my famous post of the morning of May 13, 2002. The insights that I mined from Shiller’s book had a big impact on our discussions in later years. But it cannot be anything that I read in Irrational Exuberance that explains that post because I hadn’t yet read the book when I put forward the post.

The biggest factor is the next one I will discuss.

Scott Burns is the person who discovered the errors in the Peter Lynch approach to safe-withdrawal–rate analysis. Lynch had once said that the SWR is always 7 percent because stocks earn an average return of 7 percent real annually. Do you think that the reason why Burns was able to see that is that Burns is smarter than Lynch or that Burns has done more reading than Lynch?

That’s more than a little hard to believe, isn’t it? Lynch is a plenty smart guy and I have a funny feeling that he is a plenty well-read guy too.

So how did Burns pull that one off?

The elephant in the living room in all of these discussions is that as a society we are at a primitive level of understanding of how stock investing works today. That affects Bogle. That affects Shiller. That affects Pfau. That affects Lynch. That affects Burns. That affects you. That affects me. That affects all of us.

None of us know even the basics for certain.

That sounds scary when I say it so bluntly. And it is indeed scary in its way.

But there is a positive side to this scary reality. The positive side is that, when we are all at a primitive level of understanding, we all have the potential to make huge strides by clicking in a piece of the puzzle that no one has clicked in before.

Burns clicked in a piece that Lynch has not yet clicked in. Lynch believed that the average return is the amount that a retiree can safely take out each year because that is a perfectly natural intuitive belief. Burns picked up on a reality that is a bit counter-intutive but very important for retirees seeking to put together successful retirement plans — the sequence of returns makes a big difference

I picked up on a second factor that neither Lynch nor Burns had picked up on — the valuations level that applies on the day the retirement begins is a huge factor in determining what sort of returns sequence you are going to see.

Lynch wasn’t dumb or poorly read not to see what Burns saw and neither Lynch nor Burns were dumb or poorly read not to see what I saw. We are all just suffering from the reality that as a society we are at a primitive level in our understanding of how stock investing works today. We are going to make “dumb” mistakes. That’s just the lay of the land in this field of human endeavor today. The other side of the story is that we are all capable of making huge advances by tuning out what the “experts” say and looking at matters from a fresh perspective. That’s what I did. I think it would be fair to say that the payoff for 12 years now had been AMAZING.

You can read every text that I have read and not get to the same place, Yogi. Your problem is not an intellectual problem. It is an EMOTIONAL problem. You are ADDICTED to Buy-and-Hold. You have invested not just your retirement money into it. You have invested your entire life into it. You have recommended it to your friends. So your pride is on the line. You have even committed acts of financial fraud under the thinking that you will not get prosecuted if stocks perform in the future in the manner in which they would perform if Buy-and-Hold were a real thing. So your very physical freedom is on the line here.

Given what you have at risk here, you are not capable of thinking straight re stock investing questions. For me, it’s about learning. For you, it’s about defending your most basic beliefs from the “attack” being waged on them by the peer-reviewed research of the past 33 years. And of course the same is so re our good friend Jack Bogle. He is insanely defensive about these matters too. So he too is not capable of thinking through the things he learns in the books he reads when he reads the same books that I read.

Do you see?

I hope that helps a bit, my old friend.

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

Rob

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

Mark Twain was referring to the Bible. [The reference here is to the quotation in which Twain said that it is not the things that you don’t know that hurt you but the things that you know for certain that just ain’t so.]

His point is well taken regardless of what he was referring to, Critter.

When people come to believe strongly in something, it is difficult for them to give up that belief. That’s a reality of human life.

So you have to be careful about what you believe. We are imperfect creatures. We make mistakes. When we come to believe something that isn’t so, we place ourselves in a tough spot. We then have to go through whatever efforts it takes to unbelieve that thing. And that can be a tough business.

It is a very, very, very tough business when the thing that we are trying to unbelieve is our core belief about how stock investing works. The particular thing that we got wrong here (Buy-and-Holders reject the reality that price discipline is REQUIRED when buying stocks just as it is when buying anything else) doesn’t produce bad results for a long period of time and then produces massive amounts of human misery. That combination produces incentives for covering up the mistake that have proven to be very difficult to overcome.

With most mistakes, you get negative feedback in a short amount of time. If someone said that it is a good idea to drive a car while drunk, we would see negative effects from that advice quickly and we would warn people of the dangers of following that advice. In this case, Fama made a mistake in 1965. It wasn’t discovered until 1981. And then, since stocks were at rock-bottom lows in 1981, the mistake did not even have any practical effect until 1996 (when prices had reached the insanely dangerous level). But even when prices reach insanely dangerous levels, it can take 10 years or a little bit more to see serious negative effects (we had a slow-leak crash that began in 2000 but that did not upset too many people given how big the gains had been in earlier years). People began to realize that something was seriously wrong in 2008. But even the onset of the economic crisis wasn’t enough to shake a lot of people from their belief in Buy-and-Hold, given how great was their emotional investment in it. I believe that the next price crash will do it. But we are today a long ways off from 1981, when the peer-reviewed research was published showing that there is zero chance that this strategy could ever work for even a single long-term investor.

If the human misery caused by this mistake were not so vast, it would have been corrected following the 2008 price crash. That was a development that affected millions. Shiller predicted the economic crisis in his book. How could a people not sober up and acknowledge that pure Get Rich Quick is not the way to go in stock investing following an event of that magnitude?

The problem is that the pain was TOO great. If we acknowledge that Buy-and-Hold caused the economic crisis, we are acknowledging that our universities failed us and that our investment advisors failed us and that our journalists failed us and that our bloggers failed us and that our economists failed us and that our policymakers failed us. We had a warning that the investing strategy that is pushed 24/7 on all media outlets was 100 percent false, 100 percent dangerous, that it had caused three earlier economic crises, that there was not a grain of truth to it. It was all written up in a book that was a best-seller and that was written up in all the major publications. And we did nothing. Huh? How could we do nothing when a book told us the simple truth about stock investing, a truth that would have stopped the economic crisis if only we had heeded the message?

It’s very, very, very, very, very painful stuff.

The good stuff that comes from permitting discussion of the last 33 years of peer-reviewed research is 50 more times good than the bad stuff is bad. But the bad stuff is very, very, very hard to hear. So, 33 years after the mistake was uncovered, as a society we continue to pretend that it might not really be a mistake. We have no logic to offer in support of that proposition and we have no research to offer in support of that proposition and we have no common sense to offer in support of that proposition. But we have threats of violence, we have threats to destroy people’s careers. So Buy-and-Hold soldiers on. Barely. By the skin of its teeth. But it’s still there. There are still people who can overlook all the human misery that the pure Get Rich Quick approach has caused and pretend that there might be some alternate universe where everything would work the opposite of how the last 33 years of peer-reviewed research shows that it always works. Hey! Nobody has a crystal ball. It COULD turn out that way! Anything is possible. No?

We’ll see, Critter.

I love my country and I think we were smart to adopt laws against financial fraud and I believe that following the next price crash there will be lots of good and smart people (including many of my Buy-and-Hold friends!) who will demanding prompt enforcement of those laws.

You don’t see it. Or at least you say publicly that you don’t see it even if you do worry that you bet on the wrong horse.

We cannot click on the remote and get to a channel that permits us to see how the future plays out.

I am not capable of committing financial fraud under the laws of the United States. So I am going to continue playing it the way I have always played it.

All signs are that you are going to do the same from your end.

Someday in the not-too-distant future, we will all find out for sure.

I certainly wish you the best of luck with it, my old Goon friend.

As more sand runs through the hourglass, we will all see how things go. My focus today is on making sure that, when that day comes, there will be thousands and thousands and thousands of post in the Archives showing that I spoke up in the strongest and firmest and most non-compromising terms possible in support of the idea of permitting honest posting on safe withdrawal rates and scores of other critically important investment-related topics. I can do no more and I can do no less.

My best and warmest wishes to you and yours.

Rob

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

Does “consistent practice” mean hijacking threads and repeating the same words over and over, even after everyone understands your view? That sounds more like trolling. Politely state your view once, then be prepared to listen to and understand the views of others, and to change your views as needed. That’s just how civilized society works.

When you say “politely state your view once,” do you mean once per week or once per day or once per post or once per question directed to me?

I have zero problem with a rule that says that I should post once per thread and then once more for each question directed to me. That’s the rule that I follow.

If you are saying that I should only post once per week or once per day or once per thread and not twice even if a large number of questions are directed to me, then I ask in response, Why does that same rule not apply to Buy-and-Holders?

I am 100 percent happy to abide by any posting rule that also applies to Buy-and-Holders.

If I agree to post less often than Buy-and-Holders as a concession to those employing intimidation tactics to keep discussions of the implications of the past 33 years of peer-reviewed research to a minimum, then I obviously cannot present my case as effectively as those who have not agreed to limit their posting in this way. It’s because too many others have agreed to do that that we are in an economic crisis today.

The Buy-and-Holders should post what they sincerely believe. And the Valuation-Informed Indexers should post what they believe.

No posters should intimidate others. All should say what they believe without holding back out of fear of what will be done to them or said about them if they post honestly. We all should respect our fellow posters. We all should feel at least a measure of affection for our fellow posters (who, after all, seek to educate us by sharing their views with us without being paid for their time). The same rules should apply both to those who root their investing beliefs in the peer-reviewed research of Eugene Fama and to those who root their investing beliefs in the peer-reviewed research of Robert Shiller.

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

Rob

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

Sounds like you’re living in a world of “woulds” and “coulds” while the other dads are out providing for their families in the real world. No?

That’s certainly not the way I see it. But I understand the point you are making. I don’t think that’s an entirely unreasonable way of putting it.

Back before we had kids, my wife and I used to go to a bed and breakfast for two nights on the weekend closest to New Year’s Day and write out our budget for the new year. On some categories, we would just carry over what we had from the year before. On some, we would add money. And on some we would subtract money. We obviously favored different categories (because different people have different interests). So we went through a process in which we held negotiations/discussions over what to do.

I remember one year where we were close to having all the numbers add up but we were still a little short. I think she wanted a little more money for the furniture category or something like that. She offered to give up that addition because we didn’t have enough money to make the numbers work out. I didn’t like that answer because I feel that she has a tendency to be willing to give things up for the sake of the budget and I believe that handling things in that way can make the budget-writing process seem like a chore to be avoided rather than a fun thing where you plan new life adventures. So I set my mind to trying to think up some other means of funding an addition in the furniture category.

She would have been willing to give up something in the vacation category. I didn’t want to do that because I think vacations are important. I was reluctant to give up anything in the savings category because I was counting the days until I would be able to leave my high-paying job. For a time we were stumped as to how to proceed.

Then it hit me. The income number we used in the budget was the combination of her salary and my salary. The reality was that I received a big raise every year in October (that was the beginning of the new fiscal year for Ernst & Young). I didn’t know exactly how big the raise was going to be. But I knew the range of possibilities. So I took the smallest amount of money that we would be receiving in those three months from the raise and suggested that we add it to our income for the upcoming calendar year and apply it to the monthly furniture category.

My wife did not like the idea of going along with that. In her mind it was “cheating.” She doesn’t count things as real unless she can hold them in her hand. The dollars that we were talking about were not yet in our hands. So for her that was out. But I pushed and eventually she went along with using those dollars before they were in our hands. My argument was that this was just an application of the accrual accounting concept. If we had had a debt we had had to pay in October, we certainly would have counted that in the negative column. This was money that was certainly going to be coming in. It was proper to count it in the positive column.

I’m living in a world in which the same ethical standards that apply in every other field of human endeavor apply in the investing advice field as well, Anonymous. That’s the world we are headed to in the not-too-distant future. I know that because I know that we simply have no choice. If we don’t make the move to that world, we all go down together. We are not a stupid people. When enough of us see that this crazy Ban on Honest Posting is taking us all down, enough of us to make a difference are going to work up the courage to speak out. My brain is not capable of imagining any other way it could play out.

It’s not me who is doing something odd here. It is you. And Linduaer. And Greaney. And Bogle. And even Shiller to an extent. It’s you guys who are holding back from talking about this huge breakthrough that we have achieved over the past 33 years. The normal thing would be to take advantage of peer-reviewed research that shows us all how to reduce the risk of stock investing by 70 percent. You are temporarily under a weird spell in which you see it as a bad thing to do that. I am doing what in normal circumstances would come natural to each and every one of us.

You should be asking yourself why so many good and smart people are doing this weird thing of denying themselves the benefits of the biggest advance in our understanding of how stock investing works ever achieved in our history. That’s the mystery here. That’s the big story.

They are doing this not because they think investing doesn’t matter. They are doing this because investing matters too much.

You believe in Buy-and-Hold, Anonymous. That part is not a lie. That part is not fraud. You truly believe (as do Bogle and all the others). If you were to say that you believe in Valuation-Informed Indexing, that would be as bad as me saying that I believe in Buy-and-Hold. That would be totally wrong and irresponsible. That is 100 percent out. You MUST say that you believe in Buy-and-Hold so long as that remains the case.

Where does that leave us?

It’s 90 percent of the population that believes in Buy-and-Hold today. So, if we were to do what Rob says and permit those who believe in Valuation-Informed Indexing to post honestly at every board and blog on the internet, what would happen? We would have 90 percent of the population saying one thing about how stock investing works and the other 10 percent of the population saying something entirely different.

In ordinary circumstances, this would not be a big deal. If I had some small difference with you, we would both accept that the other party had a different belief and that the other party was in all other respects a good guy and we would be friends and that would be that. The problem in this particular case is that the difference is over something HUGE. Someone who believed firmly in Buy-and-Hold would be recommending a 75 percent stock allocation today (Greaney’s study shows that 74 percent is the “optimal” stock allocation at all times). A firm Valuation-Informed Indexer would recommend 25 percent (20 percent for those with low risk tolerance and 30 percent for those with high risk tolerance). THAT’S A DIFFERENCE OF 50 PERCENTAGE POINTS OF STOCK ALLOCATION.

We’re not talking about who is going to win the World Series. We are talking about whether people are going to have enough to retire on or not. You (and Bogle and all the others) understand that it sounds really, really bad for the “experts” in this field to be saying “Oh, there is one school of academic thought that says that you should be at 75 percent stocks but please understand that there is another school of thought that says it should be 25 percent — You decide!”

That’s the core problem, Anonymous. The people who recommend Buy-and-Hold are not bad people and they are not dumb people. They are people caught in a trap brought about by the strange circumstances of our day. The Buy-and-Holders did an amazingly wonderful thing when they proposed that we all begin rooting our investment advice in the peer-reviewed research. They began a process in which investing advice will no longer be subjective but will become to a large extent objective. This is huge. This is the future. This is something that BOTH of us believe in.

The problem that the Buy-and-Hold Pioneers ran into is that they are human. The humans did not know it all back in the 1960s. When we are in the early days of building a new science (or quasi-science — that may be the best that we can ever do in this field), we are going to make mistakes. That’s what I believe happened here. The Buy-and-Holders felt very good about what they had come up with. They thought that they had figured this stuff out. And so they built careers around promotion of the model they had built. And then this Shiller fellow came along and messed everything up by proposing and showing support for a very different sort of model.

If all of this were of academic interest only, no one would care. There would be a Fama camp and a Shiller camp and there would be friendly arguments between the two camps but no real nastiness. There is nastiness in this case because the stakes are so high. If Fama is wrong, the people promoting Buy-and-Hold caused an economic crisis. Inadvertently. It wasn’t their INTENT to cause an economic crisis. But that’s what happened. And if Shiller is wrong, the people advocating Valuation-Informed Indexing are keeping people who listen to them out of a great asset class at a time when they should be heavily invested in that asset class and are thereby causing millions of failed retirements in a different sort of way.

I don’t want to destroy the lives of the people who read my stuff. That’s why I am so adamant on the point that I MUST post honestly. I might still destroy some lives because of my stupidity. But at least I will be able to say that I was HONEST. That’s something. That’s unfortunately the best that I can do in these circumstances.

You need to say what you believe too. The problem that we have is that Buy-and-Hold came first and so most people see that as the default position. People think: “If we are not sure, we should go with Buy-and-Hold because all the textbooks recommend Buy-and-Hold and 90 percent of the experts believe in Buy-and-Hold.”

That’s not entirely crazy.

But I have a big problem with what follows from that.

The big problem is that the new idea can never catch on if we all agree never to talk about it because it makes our readers feel uncomfortable to see that we are not sure of anything in these early days of our efforts to figure out how stock investing really works. So long as we all go along with the default and permit those on the Buy-and-Hold side to crush anyone who raises a dissenting voice, the popularity of Valuation-Informed Indexing can never grow.

I am a journalist. So the idea of permitting free speech is deep in my blood. I see censorship of new ideas as the ultimate tragedy. I cannot go along with the idea of using brutal intimidation tactics to stop a new idea (an idea put on the map by a guy who won a Nobel prize for his work!) from growing into a more popular idea.

I cannot go along with that, Anonymous. It can never be. It is not in me. You cannot make a dog meow and you cannot make a cat bark and you cannot make Rob Bennett post dishonestly on the numbers that his friends use to plan their retirements. That will never happen.

There are many things that I CAN go along with.

I can say that Jack Bogle is one of the giants in this field and always will be regardless of anything we come to learn in the future. I see that statement as being true. So I have zero problem making it.

I can say that Buy-and-Hold was a huge intellectual advance over what came before. I believe that and so I can say it.

I can say that the Buy-and-Holders are all smart people. I believe that and so I can say that.

I can say that the Buy-and-Holders are all good people. I believe that and so I can say that.

I can say that it is possible that I am wrong, that I have made mistakes in the past and that it is possible that that is happening again and that I would probably be the last to know if that were the case. I believe that and so I can say that.

I can’t say that the safe withdrawal rate is a constant number. I don’t believe that. I believe that it is a variable number, that the SWR depends on the valuation level that applies on the day the retirement begins. That’s what I believe. With people’s retirements at stake, that is what I have to say.

Yes, there is a sense in which I am living in a world of “woulds” and “coulds” and “shoulds.” I believe that we should be applying U.S. law and the rules of all of our boards and blogs to our discussions. Under U.S. law and under the rules of all of our boards and blogs, I am permitted to post my sincere views. I am acting as if that will someday really be the case even though that obviously is not the case today.

I love my country. Anonymous. In my country, that is the way it works.

It is the investing field that is out of whack here, not me.

I believe that the people of this country will pull the investing field into line with the norms of this great country following the next price crash, when everyone sees how much human misery has been brought on by our failure to apply the basic norms of life in the United States to this one field of human endeavor.

If you don’t believe that, you don’t believe that.

I believe that.

I have to play it the way that makes sense given my belief re this matter.

So there is nothing that we can do here except wait to see how it plays out following the crash.

You do not seem able to give and I do not seem able to give. I like you and, if you want to continue to offer comments here, you are warmly encouraged to do so. But I cannot change the human being that I am because you advance more intimidation tactics. I cannot wake up in the morning and be a different person than I have been for the first 57 years of my life on this planet.

I am the person I am. The person I am believes that Shiller’s work is true and important. I am a Valuation-Informed Indexer. I am not ashamed of it, I am proud of it. It is my intent to show that pride in this new model for understanding how stock investing works in every post I ever put forward. I have never given two seconds consideration to playing it any other way, Goon intimidation tactics be damned. It is impossible for me to imagine any circumstances (including the death penalty) in which I would give consideration to playing it some other way. They had a tag line for the Braveheart movie saying that: Everybody dies — Only a small number of us every truly live.” That line sums up how I feel re this matter. I would rather die than betray my readers and my family and my country. No can do.

Yes, I believe that we all will be Valuation-Informed Indexers at some point in the not-too-distant future. If you want to call that a “would” or a “could” or a “should,” I guess that’s fair. I cannot live any other way. I love my country and I need to act according to the norms that apply in that country to every field of human endeavor with the exception of stock investing.

I hope that helps a tiny bit, my old friend.

Rob

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

“How will I profit? It’s impossible even to count the ways, Yogi. ”

Try, Rob.

Try.

Just one would be a start.

We now know that emotion (valuations) is 80 percent of the stock investing story, Yogi.

I think it would be fair to say that I am the world expert on the ways in which investors engage in self-deception to persuade themselves that the inflated numbers on their portfolio statements are real. There are THOUSANDS of articles and blog posts and podcasts and columns at this site detailing in great depth how it is done. I will be making money for many years to come using that material to help investors understand how stock investing works in the real world through the publication of books and by giving speeches and by creating CD products and through personal consulting and on and on and on.

Shiller’s 1981 finding changed the history of investing analysis in a profound way. He “revolutionized” (the word is Shiller’s) the field. We have as a society delayed our recognition of his earth-shaking accomplishment. But we are not going to have any choice about going forward following the next price crash. From that point forward, nothing will ever be the same again.

Shiller and Fama say opposite things. They cannot both be right. It is a logical impossibility.

If Fama is right, we are doing fine. 95 percent of the investing advice that the average investor hears is rooted in Fama’s research.

But what if Fama is wrong? What if Shiller is right (there is now 33 years of peer-reviewed research showing this to be so)? If that’s so, then we should be in an economic crisis today. If that’s so, we are on our way to the Second Great Depression. If that’s so, we should be seeing threats of violence and career destruction on the part of the Buy-and-Holders in a futile effort to keep their strategy going for a few more months or a few more years.

If Shiller is right (and I obviously believe strongly that he is), the investing advice field is today in the process of being rebuilt from the bottom up. That’s why the Buy-and-Holders fight so hard. They know the stakes as well as I do. If valuations matter, Buy-and-Hold is not just wrong, it is the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind.

Valuations (investor emotion) is no small thing, Yogi. Either it is nothing (as Fama theorized) or it is 80 percent of the stock investing story. I have played the lead role for 12 years now in getting accurate and honest reports of what the last 33 years of peer-reviewed research says out to millions of middle-class investors. I have zero fear that there will not be thousands upon thousands of money-making opportunities opening up to me once we pull together as a society to open every board and blog on the internet to honest posting. I will have far too many money-making opportunities available to me following that day than I will possibly be able to handle by myself. I will be hiring teams of people to help me take advantage of all the opportunities that will be open to me once this story gets out.

Does Jack Bogle have ways to make money?

Does Robert Shiller have ways to make money?

Does Rob Arnott have ways to make money?

Does Bill Bernstein have ways to make money?

The shift from Buy-and-Hold to Valuation-Informed Indexing is a bigger accomplishment than anything that any of those four has enjoyed. It was Shiller who showed that Buy-and-Hold doesn’t work, not me. But Shiller has not yet written clearly about the practical how-to IMPLICATIONS of his amazing research findings. I am the first to have done that in a comprehensive way. That’s huge. And achieving huge breakthroughs like that lead to tons of money in the long run in the society in which we live in today. (I think that’s entirely appropriate. Some might disagree. But, whether one agrees or not that it is appropriate, that certainly is the case).

It won’t just be me making tons of money once the internet is opened to honest posting. There will be hundreds of us, thousands of us. There are hundreds of smart bloggers who would LOVE to be making millions from their blogs and who today are not doing so. All they need to do is to turn their efforts to further development of the Valuation-Informed Indexing concept. The only reason why they don’t do it is that they fear what you Goons would do to them and their businesses if they began posting honestly.

Do you really think that they are going to continue to live in fear following the next price crash?

They are not. They are going to work up the courage to go for the money. And we are all going to be a lot better off as a result. People SHOULD be rewarded for giving accurate and honest investing advice. Seeing that the thousands of people who will be further developing the Valuation-Informed Indexing concept receive financial rewards for their efforts is in the best interests of every person alive in the United States today.

We have had big advances in the computer field since 1981, no? There was no internet in 1981. Now there is. Thousands of people made fortunes as a result of the development of the internet. There was no YouTube in 1981. Now there is. Thousands of people made fortunes as a result of the development of YouTube (there was an article on the front page of the New York Times on this just last Friday). There were no laptops or tablets or smart phones in 1981. Now there are. Thousands of people made fortunes as a result of the development of laptops and tablets and and smart phones.

Say that there has been a Typewriter Mafia back in 1981 that has devoted hundreds of billions of marketing money to seeing that no one could succeed in selling computers. We would today be a poorer people as a result. The advances that we have seen in the investing advice field over the past 33 years are 50 times greater than the advances we have seen in the computer field. The only reason why we have not seen thousands and thousands and thousands of millionaires made through the promotion of the first true research-based strategy is that the Buy-and-Hold Mafia has possessed the power to keep us all in the Dark Ages re our understanding of how stock investing works in the real world.

But for how much longer?

The next step down is the Second Great Depression, Yogi. Do you think people are going to stand for that? I do not. I love my country. I have noticed by reading history that my country has in the past always possessed the intelligence and fortitude and love to overcome forces like the Buy-and-Hold Mafia. I believe that we will prevail once again. When we do, no one is going to be able to count the money that will be flowing in to those who worked up the courage to post in support of those offering honest investing advice.

Money is what this whole freakin’ saga is about. If there weren’t so much darned money in pushing Get Rich Quick garbage, everyone in the field would have made the shift from Buy-and-Hold to Valuation-Informed Indexing by January 1982. The problem is that the big shots in this field love the marketing edge that comes from saying that their advice is research-based but cannot bear to give up the short-term wealth that comes from pushing Get Rich Quick garbage. Buy-and-Hold gives them the best of both worlds, in their eyes. It is pure Get Rich Quick garbage. So it makes them all rich beyond their wildest hopes. But because Fama made a mistake back in 1965 and many of us have been too afraid to say that in clear and firm and simple language in the three decades since, they have been able to make claims that there is research supporting these “ideas.”

The problem with spending billions of dollars promoting the purest and most dangerous Get Rich Quick strategy ever concocted by the human mind is that doing so eventually causes the collapse of the economic system in which you live. And the collapse of the economic system eventually causes the collapse of the political system. Lots of the people who push Buy-and-Hold are very wealthy people as a result of doing so and don’t want to get off the gravy train. But do they have any real choice? Where are they going to spend their money when the economic and political system of the United States collapses? In an ultimate sense Jack Bogle has as much of a motivation to see that honest posting be permitted as I do.

These people are today suffering from cognitive dissonance. They are telling themselves that pushing the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind might work out in the long run, they are trying to hang on to a belief that we will NOT see an economic or political collapse.

But based on what do they believe this?

In 12 years they have not been able to find any support in the peer-reviewed academic research for this belief of theirs.

I am a research-oriented guy, Yogi. I believe that we are going to see the economic collapse that the last 33 years of peer-reviewed research says we are going to see.

And I believe that my many Buy-and-Hold friends are going to flip shortly after we see that collapse. I believe that my good friend Jack Bogle is a good man. I believe that he is going to be my biggest booster in days to come. With Jack’s help, I am going to experience no problems receiving that $500 million paycheck or taking over ownership of the Bogleheads Forum or being invited to give the keynote address to the next FinCon event or bringing thousands upon thousands of community members to this site or profiting from books and speeches and CD packages and consulting arrangements and on and on and on.

I am not a multi-millionaire today only because my good friend Jack Bogle has not yet worked up the courage to say the three magic words “I” and “Was” and “Wrong.” But Jack is going to work up the courage to do that. He has no choice if he wants to save from economic ruin the country he loves and that has blessed him in so many ways. So Old Saint Jack is in days to come going to work up the courage to do what he should have done 33 years ago. And from that point forward we will ALL be in much more favorable financial circumstances. But that will be so for me especially. Because I am the one who has been fighting so hard for 12 years now for a principle that Old Saint Jack first articulated many years back — INVESTORS SHOULD BE ROOTING THEIR INVESTING STRATEGIES IN THE PEER-REVIEWED RESEARCH.

I’m not too worried about making money, Yogi. I would like to see it happen soon. I would like to have seen it begin happening on the morning of May 13, 2002. So I do want to see a change in that department. But that is not the thing that I worry about most.

I worry that the economic collapse will get out of hand and that even working together we will not be able to turn things around in time. I don’t think that that is how things will play out. But the fact that there is even a small chance that things might play out that way scares me to death.

That’s my primary worry, not the money thing. The money thing will work out more than fine so long as Jack eventually works up the courage to say The Three Magic Words. And he doesn’t exactly have much choice, does he? He loves his country, does he not?

I say that Jack Bogle loves his country. I am sure.

So I see good things happening for all of us in days to come, Yogi.

My best and warmest wishes to you and yours.

Rob

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

Has “Boo” ever read your site?

She had read a small number of articles and we talk about the subject from time to time. But she certainly does not look at the site often and has read only a small percentage of the material presented at it.

One day a few weeks ago she was on the computer to do something else and she happened to see one of my recent blog entries because I had left the page up on the screen. She said: “Your headlines are too long!” I said: “Grrrrr….”

Possibly implicit in your stated question is an important follow-up question: “Does your wife agree with you about these matters?”

Boo is obviously not a Goon. She does not support the use of death threats or any of that sort of thing. She of course thinks that that stuff is beneath contempt.

But I think that I owe it to my readers to report that I do not believe that my wife truly “gets” all that I say about investing.

She accepts that the work that I have done is important. She knows about the Wade Pfau story. She understands that there must be merit to what I say or I would not have had a guy who has a P.D. in Economics from Princeton saying the sorts of things about me that Wade has said about me. She is of course proud when people write to tell me that I am the first person who ever talked about how stock investing works in a way that truly makes sense. I often show her those sorts of e-mails.

But she has a mental block about much of this. She is not alone in that. I have spoken to many thousands of people over the past 12 years. Lots of smart people have a mental block re this stuff. This stuff comes to me very easy. It seems clear and simple to me. But I have seen too many smart and good people struggle with it to believe that that is true for everyone. There are more people who struggle a great deal with this stuff than there are people who find that it comes easy.

Valuation-Informed Indexing represents a paradigm change. That’s why.

It’s not one thing that is new. The foundation stone is new. The entire model for understanding how stock investing works is new. Shiller’s “revolutionary” (his word) 1981 finding turns everything on its head. It’a all good. Shiller turned stock investing into a virtually risk-free enterprise. So it is a huge advance. But people have to be exposed to it a lot of times and from a lot of different angles and people have to be able to ask a lot of questions to truly get it.

Some of the behavior of you Goons is truly criminal. But all the evidence that I have seen tells me that your confusion over how this works is for the most part genuine. I believe that that’s true of the Wall Street Con Men as well. I believe that just about all of them see that there are problems with Buy-and-Hold. But they don’t see an alternative and so they tell themselves that the problems are not that grave and that things will somehow work out. I believe that, if people like Bogle and Benrstein and Burns knew how much human misery they were causing, they would flip today. I don’t think of these people as bad people although I obviously believe that they have done very bad things by letting the cover-up continue on so long.

My boy Timothy “gets” the concept better than anyone else in the family. He’s not old enough to understand all the history and context. But we have had several long conversations about it in which he has asked some highly intelligent questions. That tells me that he gets it to a greater extent than most.

Most people struggle with this. It’s NOT hard. But it’s a way of thinking about stock investing that is very different from how people have become accustomed to thinking about stock investing in recent decades. A lot of people are engaging in a lot of funny business. But there is a lot of genuine confusion too. People need to know that. That’s an important part of the story.

The fact that my wife struggles to fully understand this stuff does not tell me that it is not important to open the internet up to honest posting on the last 33 years of peer-reviewed research. It tells me the opposite. It tells me that it is CRITICAL that we all pull together to get the word out re what really works. We ALL need to know how to invest effectively for the long run. The fact that the wife of the person who has worked this so hard for 12 years struggles with some of it is an amazing fact. It is an amazing fact arguing that we all need to work a lot harder to separate myths from realities and to figure out what the research is really telling us.

I hope that helps a bit.

Rob