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

Calling someone a goon speaks more about you instead of the person you have targeted.

It says that I do my job, Anonymous. I am a journalist. Journalists tell people what is going on in the world. The 12-year cover-up of the errors in the Old School safe-withdrawal-rate studies is the biggest economic and political story of our time. Pointing to the behavior of you Goons is part of the job of telling this story. Things could not have played out as they have played out without a heavy helping of Goonishness. The story doesn’t make even a tiny bit of sense if the Goonishness is ignored.

One big reason why the Behavioral Finance School of personal finance has not achieved more in the practical realm despite the many powerful insights it has advanced is that too many people in this school are afraid to describe and document the Goonishness we all see taking place all around us every day from those who believe and follow the conventional (Buy-and-Hold) investing advice. Goonihsness is the story. Goonishness is the thing we need to combat if we are to become effective investors. We will not as a society become able to combat Goonishness until we first work up the courage to at least talk about it.

I am the fellow who doesn’t hold back from noticing and talking about and exploring and commenting on and trying to rein in Goonishness. That’s why I am today 12 years ahead in my understanding of how stock investing works of people like my good friend Jack Bogle. Jack shies away from this topic. It has its ugly side. I certainly don’t say different. But you know what? A doctor who wants to cut out cancerous tissue has to draw blood to do so. There are times when a person seeking to do something good has to engage in some awful task to get the job done.

Jack Bogle has more I.Q. points than I possess and he has more training in this field and he has more experience. But he has held himself back because of his fear of talking about the ugly Goonishness that has come to dominant this field in the Buy-and-Hold Era. I care about what happens to the people who read my words. And so I cannot go there. I talk about non-Goon stuff all the time and I enjoy being able to do that when it is an option. But when the Goon stuff stares me in the face and demands to be reported, I make an effort to work up the courage to do that. I work it hard and I think it would be fair to say that I have gone to places that no one else in this field has ever gone to before. I pray that I will continue to push when called on by realities taking place before me to do so.

Had Shiller published his “revolutionary” research in 1961 instead of 1981, there never would have been any Buy-and-Hold. The Buy-and-Holders don’t want to destroy our economic system. They don’t want to invest ineffectively themselves. Valuation-Informed Indexing has been shown to be so far superior to Buy-and-Hold in every test that has been done that it is silly to suggest that there is any intellectual debate here. There’s a mountain of evidence on the Valuation-Informed Indexing side and zero evidence on the Buy-and-Hold side. Zero evidence combined with a huge amount of Goonishness. Which has been enough to block the intellectual debate for 12 years now (it’s 33 years if you date things back to when Shiller published his revolutionary research). It will soon become 34 years if we don’t as a society work up the courage to face the Goonishness this year. It will soon become 35 years of we don’t as a society work up the courage to face the Goonishness either this year or next year. And so on.

The reason why we are in an economic crisis today instead of enjoying the greatest period of economic growth in our history is that we are not all Vulcans who pursue our self-interest in a purely rational manner. Eugene Fama is responsible for some major advances. We all owe him a debt of gratitude for the good he has done. But he also made one huge mistake that has caused a huge amount of human misery. And he doesn’t want to acknowledge it. He feels ashamed. He wants that mistake covered up. The mistake has destroyed millions of middle-class lives. So as a society we cannot permit the error to be covered up any longer.

And of course it is not just Fama. LOTS of people want the realities of what we know about how stock investing works in the year 2014 covered up. And that cannot be. These realities cannot be covered up any longer. We all want to be enjoying life on the other side of the river. But the only way to the other side is struggling through the hard stuff. The only way to the other side is exposing the Goonishness and talking about it and punishing it (both through civil and criminal actions) and then forgiving it and then putting it all behind us and moving on to all the good stuff.

It’s not an accident that we have gone 33 years since Robert Shiller proved that there is precisely zero chance that a Buy-and-Hold strategy could ever work for even a single long-term investor without every expert in this field declaring that to be the case. There’s money in Get Rich Quick investing strategies. A LOT of money. And so a lot of smart and otherwise good people have been attracted to the wrong side of the ethical lines out of a desire to be popular and make lots of bucks while the Get Rich Quick garbage is still paying out its huge payouts to those who put obtaining huge personal payouts above helping their clients and readers learn how to invest effectively for the log run.

Those people very, very, very, very, very much don’t want the truth getting out. And the only hope they have with 33 years of peer-reviewed research behind them showing that they are talking garbage when they say that there is no need for investors to practice price discipline when buying stocks is engaging in and tolerating and encouraging Goonishness. That’s where things stand. I didn’t create the reality. I report on it. I care deeply about my many Buy-and-Hold friends and I want to help them. But I know that I am not helping them by causing them to travel even farther down the dark path that they have elected to travel.

I will continue to report on the behavior of you Goons and on the behavior of the Wall Street Con Men that makes possible the existence of you Goons in a society that has adopted laws protecting us from this sort of behavior. I can do no more and I can do no less.

I wish you all good things, Anonymous.

Rob

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

Rob,

It is actually stupid to NOT put up the link. When you don’t, it just tells people that you are lying or hiding something. It is pure simple nature. We expect to see facts that can back up a statement because we are skeptical as a society.

No one is even a tiny bit skeptical re the abusiveness of you Goons, Anonymous. I have talked with thousands of people about this. The only ones who ever express skepticism are you Goons. And you obviously know the full truth of the matter.

What people are truly skeptical about are the substantive claims. People truly find it hard to believe that we today know what we need to know to reduce the risk of stock investing by 70 percent. Re that one, people need to ask lots of questions and engage in lots of discussion before they will come around. Something they cannot do until a number of us work up the courage to stand up to you Goons!

We all want to invest more effectively. There are no two sides re this one. We are all united re the most important issue.

But the Wall Street Con Men and you Goons are embarrassed that you made a mistake that has caused millions of failed retirements. So you possess zero willingness to permit those discussions to take place.

I have documented everything that has happened for 12 years now. I have developed five unique calculators. I have recorded 200 RobCasts. I am happy to respond to any questions that the Wall Street Con Men or you Goons or the millions of Normals need answered. I’ve done my part and then some more on top of that and then some more on top of that.

I am not Superman, Anonymous. I need help from my fellow bloggers to get the message out. And I need help from economists. And I need help from journalists. And I need help from researchers. And I need help from venture capitalists. And I need help from policymakers. When others work up the courage to provide the help I need, we are all off to the races. Until that happens, the good stuff doesn’t happen. That’s the reality here. I don’t like it. But I accept it.

If you find some pleasure in playing a stupid game where you pretend that John Greaney did not threaten to kill family members of any poster who posted honestly on safe withdrawal rates, then you find some pleasure in that. I believe that your pleasure will come to an end following the next price crash. I am not God. So I could be wrong. But that’s what I believe. And I am playing it according to that belief.

When as a society, we want to know how the Buy-and-Holders have gone about the business of destroying our economic and political system through their stubborn unwillingness to fix a mistake revealed by the peer-reviewed research of a Nobel-prize-winning economist 33 years ago, we will get about the business of spreading the word far and wide about the far superior Valuation-Informed Indexing model. Until we do, the Buy-and-Holders will continue to destroy wealth on a daily basis and the prison sentences for those who have put up posts in “defense” of Mel Lindauer and John Greaney will grow ever longer day by day.

That’s the deal here.

My best 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:

I like how you call buy and hold a get rich quick scheme but one of your favorite claims is that VII can help the average person retire 5-10 years earlier.

I DO believe that Buy-and-Hold is a Get Rich Quick scheme. But I do NOT believe that it was intended to be that. And I do not believe that the people who follow it do so because they were looking for a Get Rich Quick scheme. I believe that the people who developed the Buy-and-Hold concept were excited about it because they believed it was real. And I believe that the people who follow it are excited about it because they believe it is real.

I believe that as a society we tolerate heavy promotion of this Get Rich Quick scheme because of a MISTAKEN understanding of how stock investing works that an understanding of the implications of Shiller’s research CORRECTS. The need for a correction has come as a shock because the people who made the (understandable) mistake were trying to do something good and over time became highly confident that they had indeed done so.

All that said, we DO need to correct the mistake. The only way we can pull enough people together to bring about the correction is by engaging in civil and reasoned discussion of what Shiller’s research reveals. This is why I am so “strident” on the honest posting question. There is just no other way to make good things happen here.

One day about five years back my wife and I were driving somewhere and I was telling her about the wonders of Valuation-Informed Indexing. At one point she said: “You sound like one of those infomercial people!”

I would have more success pushing VII if the benefits were less! People would be more inclined to believe me if the benefits were less!

But I cannot lie to make the benefits seem less appealing. That simply makes no sense.

The reason why the benefits are so huge is that we are as a society still at a primitive stage of our understanding of how stock investing works. It is when you are at the primitive stage of understanding that huge advances remain possible.

We messed up on a fundamental question. We learned that short-term timing doesn’t work and we jumped to the conclusion that long-term timing doesn’t work either. Now we know (intellectually if not emotionally) that long-term timing is the key to success, long-term timing is 80 percent of the game.

How do we get that mistake corrected?

There are lots of rich and powerful people who are embarrassed to have made the mistake. They don’t want the millions of middle-class investors to learn about the mistake. But the longer the cover-up continues, the more embarrassment these people feel. It gets worse very day. There is no possibility that it can ever get better.

We do these people no kindness by aiding the cover-up. The charitable thing is to insist that the cover-up be brought to a complete and total stop by the close of business tomorrow. We can show kindness by applauding the people who made the mistake for their genuine contributions and by explaining that the mistake was understandable and by noting that we wouldn’t be where we are today without the work these people did at an earlier time. But continuing the cover-up is an UNMITIGATED DISASTER for every single person involved. We are making these people look worse and worse and worse with each new day of financial destruction that we permit to take place.

We have to return to first principles. We have to remember that the point of Buy-and-Hold in its early days was to root one’s investing strategies in the PEER-REVIEWED RESEARCH. We cannot continue to pretend that the last 33 years of peer-reviewed research does not exist. It exists! It matters! It is important!

Rob

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

Isn’t it just funny as to how all these people like Scott, Jack, Bill, Larry, Rick, Wade, JD, Mike, etc, etc, etc all have experienced significant succcess, yet Rob feels as though these people are wrong and that only he has things right. Meanwhile, Rob has yet to see success with himself.

It is results that matter, Rob.

All of those people know or at least suspect that Buy-and-Hold is a big pile of smelly garbage, Pink. They don’t know all the details. They rationalize their support of the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind because they couldn’t live with themselves if they didn’t. So their strong intellects are not capable of functioning well when it comes to analyzing investing issues. But their behavior shows that they know that there are big problems. They wouldn’t be so defensive if they thought that Buy-and-Hold could be effectively promoted in an environment in which research-based challenges to it were permitted.

And they are not bad people. If we could wave a magic wand in the air to take us all back to 1965 while retaining knowledge of what we learned from Shiller’s revolutionary research of 1981, every one of the people you name would favor getting it right and advocating Valuation-Informed Indexing rather than Buy-and-Hold from the first day. We cannot do that. And they cannot bear to acknowledge that their efforts to promote Buy-and-Hold have caused so much human misery. So they talk themselves into believing that we will find some way to survive this economic crisis WITHOUT coming clean on the dangers of Buy-and-Hold.

The numbers tell a different story . The numbers say that the direct losses from Buy-and-Hold are $12 trillion and that the total losses (both direct and indirect) are in excess of $20 trillion. So ducking the issue won’t work, according to the numbers.

What do you think these people will do following the next price crash? Do you expect them to hold?

I do not. I expect to see their hearts melt when the human misery is no longer theoretical but something they see reported on the news every night. It’s one thing to know that there is 33 years of peer-reviewed research showing that we are headed into the Second Great Depression and to tune it out for personal profit. It’s something else to see your friends and neighbors and co-workers lose their jobs and know it is your fault and yet continue to keep your mouth shut.

I think there is a limit to how much pain these people can cause and continue to live with their acts of deception and intimidation, Pink. I think these people have consciences and I think they are at battle with them and I think they sense that over time they are falling behind in those battles. I think that one more economic crisis will put their consciences over the top.

We only need one of them to break. Once one breaks, all the others have to break, conscience pangs or no conscience pangs, just to limit their prison sentences. I think that at least one will break and that then all the other dominos will fall.

I’m not God. I could be wrong. But I am telling you my sincere belief. I don’t like my position re this matter. But I won’t be going to prison in any event. So I like my position over your position 50 times over.

If it plays out as I anticipate, I end up one of the richest men in the United States and you end up in a prison cell. Those are the results that matter, the long-term results. If it plays out as I anticipate, the lesson that everyone will draw from this saga is that personal integrity pays off in the long term. If you study history I think you will find that this is a lesson that we humans have had to re-learn at many different times and in many different places. This SWR saga is really just one more go at an old, old story.

The sort of success that Bernie Madoff enjoyed before he was sent to prison is a sort of success that I have never desired for myself.

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

Rob

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

Rob,

Do you think you will ever see one of your predictions come true in your lifetime? Your batting average hasn’t been that great so far.

Every substantive-based prediction has come true, Iron. I reported on the errors in the Old School safe-withdrawal rate studies 10 years before the Wall Street Journal reported on them. I predicted the economic crisis long before it became a reality. I told people to lock in those 4 percent real returns that were once available in TIPS and IBonds before they disappeared. I reported that stocks offered a strong long-term value proposition when prices dropped to moderate levels in early 2009 and those who invested in stocks at that time have seen the decision pay off. And on and on and on.

You are right, though, that my batting average has been ATROCIOUS on the process side. I expected to get beaten up by you Goons for two or three days when I worked up the courage to post honestly on safe withdrawal rates back on the morning of May 13, 2002. I was a wee bit off re that one. And, if you had asked me back at that time what the odds were that people like Scott Burns and Jack Bogle and the owners of the Motley Fool site and the Morningstar site and the Index Universe site would tolerate the behavior we have seen from you Goons, I would have put the odds at one-million to one.

What we are seeing is that, when it comes to the stock market, emotion dominates everything.

We learned something amazing back in 1981. The Buy-and-Holders achieved some major advances. They missed out on one big issue (price discipline), the issue that is more important than all the other issues put together. We ALL benefit by fixing that mistake. But so far as a society we have just not been able to work up the courage to do it. I never imagined that it would be this difficult.

To understand why this is so, it helps to look at how negative emotions can cause people to act irrationally on non-investing contexts. It is the same humans who destroy themselves in non-investing contexts who destroy their portfolios by failing to exercise price discipline in the investing context. To understand how investing works, we need to understand how the humans who buy and sell stocks work.

Say that there is a man who has a great deal to offer to the world who becomes an alcoholic. Over time, he loses everything — his wife, his children, his house, his money, his job, his friends, his self-respect, perhaps even his freedom (if he ends up in jail). Sad stuff. Now say that he hits bottom and gets to work solving the drinking problem. You look at him five years later and he has it all together again. He is able to build a wonderful new life.

He always had it in him. He just couldn’t do what he needed to do because admitting that he was an alcoholic hurts his feelings of false pride. So for years he engaged in choices that seemed to everyone who knew him to be 100 percent irrational. The actions WERE irrational in an objective sense. But in the mind of the poor fellow suffering from alcoholism they made perfect sense. He was hurting so much that he just had to protect his feelings of false pride no matter how much destruction they caused. In fact, the more destruction they caused, the more defensive he became re the root problem!

That’s where we stand re Buy-and-Hold today, Iron. It is killing us. It is the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind. It caused the economic crisis. It threatens to put us in the Second Great Depression if we don’t sober up soon. But the idea of coming clean re the bad investing advice we have been giving for decades now scares us all to death.

It means rewriting all the textbooks. It means fixing all the calculators. It means seeing wealthy and powerful people reduced to saying the words “I” and “Was” and “Wrong.” It means thousands and thousands of lawsuits to recover financial damages. In a few extreme cases (like yours, Iron Man!), it means prison sentences. It’s a hard, hard, hard, hard business.

I underestimated how hard this would be. You got me re that one, Iron.

I also vastly underestimated how wonderful the results would be on the substantive side. If you had told me on the morning of May 13, 2002, that my working up the courage to post honestly on safe withdrawal rates would a number of years later lead to me becoming the co-author of peer-reviewed research showing millions of middle-class investors how to reduce the risk of stock investing by 70 percent, I would have said you were loco. But here we are.

You’re feeling great pain, Iron. I don’t say different. Millions and millions of others are feeling great pain. It is horrible for me to contemplate that it is likely going to take another price crash for us to open the internet to honest posting. But we are in a Catch-22. We cannot open the internet to honest posting without causing millions to for a time experience even greater pain than they feel today. And we cannot relieve the pain of these millions of people in a permanent sense without opening the internet to honest posting. It’s a mess!

It’s bigger than me, Iron. I will continue working this as hard as I can every day of my life. It’s my patriotic duty to do so. But I am more or less resigned to the apparent reality that it is going to take another price crash for us to pull together to bury Buy-and-Hold 30 feet in the ground, where it can do no further harm to humans and other living things. I am not Superman. I am some guy whose only claim to expertise in this field is that he figured out how to get his words posted to the internet. I’ll do what I can do. I can do no more and I can do no less.

The fact that it has been so hard to get the word out re the importance of price discipline to the millions who very much need to hear it does not tell us that taking investor emotions into consideration when setting one’s stock allocation is unimportant. It tells us that it is 500 times more important than I realized on the morning of May 13, 2002. The reason why we are able today to reduce the risk of stock investing by 70 percent is that our knowledge of how stock investing works has been so primitive that huge advances remain possible. Investor emotion is BY FAR the most important factor in any investing analysis. Our mistaken decision during the Buy-and-Hold years to give zero consideration to the most important factor has caused more human misery than any other mistake ever made in the history of personal finance. By a factor of 500.

I will soldier on, despite my horrible batting average, my long-term Goon friend.

With love in my heart for the Wall Street Con Men and the Lindauerheads and the Greaney Goons as well as the millions of middle-class people that comprise the group that truly drives my efforts.

I naturally wish you the best of luck in all your future life endeavors.

Rob

Set forth below is the text of a comment that I recently posted to the SiteSell.com discussion forum:

Set forth below is the text of a comment that I recently posted to the SiteSell.com discussion forum:

Rob,

I finished reading the research article you shared and your follow up post and…

…what can I say…

Wow. Wow and wow!

What you’ve shared here really seems to offer some important missing pieces of the puzzle for me in terms of building a long term investment strategy that makes PERFECT sense

Thanks again for your kind words, Eli.

The words of yours that I have quoted above do a nice job of summarizing where we stand today AS A SOCIETY re our understanding of how stock investing works, in my assessment. My post caused you to experience an epiphany moment. I have had my own epiphany moments re this stuff over the years and I have been in the room when lots of others have experienced those moments. My life project is to help millions of middle-class people experience those epiphany moments. Please understand that I do not come up with this stuff because I am some sort of investing genius. I am not. I am a journalist and all of the work I do is done with the skills set of a journalist. I look for weak points in the cases that are put forward for the various strategies and, when I find them, I puzzle over them until I figure out how those weak points got there. Then I try to figure out what should be there instead. When I come up with something that seems to make sense, I go to a blog or discussion board and see what other people think. I learn from the reactions I get and I refine the ideas until I have confidence that I am really onto something.

My point here is that I am gratified and humbled by your praise. Please understand that I have been working this for 12 years and that the ideas that I put forward today are the product of the feedback and contributions of THOUSANDS of fine and good and smart and hard-working and generous people. If you knew how much some people have helped me out, you would be amazed. There was one fellow (John Walter Russell) who spent EIGHT YEARS OF HIS LIFE doing research on the Valuation-Informed Indexing concept. He created an entire SiteSell web site exploring these ideas. At one time, he was posting fresh research on almost a daily basis. John died a few years back. I wish that he could hear your words. John was an amazing human being and his friendship was one of the greatest rewards I have seen from all this (I haven’t earned a dime in financial compensation yet although I sure hope to earn a mountain of dimes somewhere down the road a piece). There were lots of others, some big names in the field and some just ordinary investors. We’re all involved in a project aimed at enriching the lives of millions and it is an encouraging event when we see things click for someone like you.

Please understand also that I include my many Buy-and-Hold friends in that statement. The Buy-and-Holders missed out on an important part of the puzzle. But they also advanced our understanding of how stock investing works in many important ways. It’s so important that people understand this. I am a controversial figure in the personal finance blogosphere. There are people who love me to death. And there are people who hate me with a burning passion. The fellow who wrote the Pop Economics blog once told me that I need to figure out a way to tell the truth about stock investing while also permitting the Buy-and-Holders to save face. That is 100 percent true. These ideas have been met with a great deal of resistance and only a small bit of it has been rooted in intellectual skepticism (which is of course justified and appropriate whenever a new idea is put forth). Most of the resistance has been from people who experience emotional pain when they hear that the investing strategies that they have been following for years and that they have recommended to friends have been discredited by 33 years of peer-reviewed research.

I care about these people and I want to present things in a soft way. But the realities are what the realities are. I cannot make stuff up. The Buy-and-Holders got one piece of the puzzle terribly wrong. Long-term timing is price discipline. Price discipline is 100 percent required for any market to work. It’s impossible to exaggerate how far-reaching are Shiller’s findings. His research changed our understanding of how stock investing works in a fundamental way. It’s very positive and liberating and life-affirming stuff. But the move forward greatly threatens the thousands of “experts” (I use scare quotes because there is no such thing as an expert in the field of investing analysis today — our knowledge is at too primitive a level today for anyone to rightfully claim to be an expert) who built their careers promoting Buy-and-Hold. We all need to figure out a way to reach these people and to calm them down and to help them do what deep in their hearts they very much want to do — join in the effort to advance the ball and thereby to help their clients and readers to live better lives.

I have a recommendation if you want to pursue this stuff to the next step, Eli. At the top of every page of my site I have a slider that presents comments that people (both big names and ordinary investors) have offered on my work. There are over 200 of them. If you take the time to go through those comments (the slider advances by itself or you can use the forward button on your keyboard to move at a quicker pace), you will obtain a nice summary of all that I have learned over 12 years of exploration of Shiller’s ideas. I am very proud of those comments. As I noted above, they are the result not only of my own work product but of the contributions of thousands of fine people. Here’s a link to the home page of the blog (the slider is at the top right-hand corner of the page):

http://arichlife.passionsaving.com/

Thank again for your interest in the ideas.

Rob

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

Rob, what you’re clearly missing is that the financial markets aren’t subject to the laws of physics — just because something has happened in the past doesn’t mean it will happen again. And mistakenly believing that might mean that someone misses out on a tremendous buying opportunity.

Shiller recognizes this, which is why he decided that prudence dictated he allocate 50% of his portfolio to stocks. He realizes that it’s folly to stay on the sidelines waiting for a pe 8 bus to appear when the reality is that it might not show up in our lifetime. Better to be approximately right than precisely wrong.

Every word you put forward in that post is on the right side of the line, Curious. You have not only a right but also a responsibility to say that on the boards and blogs at which you participate, presuming that it is your sincere take (I believe that it is).

I am 100 percent certain that a large percentage of the good and smart people posting at those board and blog communities will agree with you. Every indicator that I have seen over the past 12 years tells me that this will be the case.

I wish you the best of luck with it and with all your other future life endeavors.

Rob

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

Rob is definitely going into some kind of demented death spiral. He can’t write more than 2-3 sentences without talking about all his enemies going to prison.

That’s the only issue that remains, Laugh.

We know that there are many academic researchers who long to be doing honest work in this field.

We know that there are many bloggers and journalists who long to be doing honest work in this field.

We know that there are many investment advisors who long to be doing honest work in this field.

Even Jack Bogle, the King of Buy-and-Hold himself, has advanced MANY signs that he longs to be doing honest work.

And I think it would be fair to say that you Goons are none too happy with the status quo at this point in the proceedings.

So we’re got everybody on board.

Now we need to figure out how to make the transition.

We saw way back in the Motley Fool days that there is a HUGE interest among ordinary investors in learning about how stock investing really works. Going by what we saw at that community of a few thousand people, the number in the general population that has an interest in learning the realities has to be in the many millions.

And we have seen that it is rare for someone to make the switch to Valuation-Informed Indexing as the result of a single exposure to the concept. People need to gradually come to an ever-more-enhanced understanding of the new paradigm. They need to be able to have their questions answered. They need to see how everything connects. They need to see how their friends react to the new ideas. One day they experience an epiphany. It is rarely the first day on which that happens.

What does all that add up to, do you think?

It adds up to a conclusion that it is absolutely imperative that we open up every investing board and blog on the internet to honest posting on the last 33 years of peer-reviewed academic research. There is no reasonable argument going the other way. That one is settled and has been settled going back to the morning of May 13, 2002. I even asked on a thread at the Motley Fool board whether the community there felt that honest posting should be permitted and the respone was virtually unanimous.

We ALL want every board and blog opened up to honest posting. We don’t all say so out loud. But we all want the same thing. It is silly to argue otherwise. People like Jack Bogle and Bill Bernstein and Wade Pfau would not be mixing in honest stuff along with the Buy-and-Hold garbage they also often promote if they didn’t have a desire deep inside to see the Ban on Honest Posting lifted.

So far so good. We are the luckiest generation of investors ever to walk Planet Earth. We know what it takes to reduce the risk of stock investing by 70 percent while also dramatically increasing returns AND bringing the boom/bust cycle that causes economic crises to an end. Pretty darn exciting. But we have experienced a certain amount of friction re these matters over the first 12 years of our discussions. Something is holding us back from realizing our dream. Whatever could it be?

The problem is that these matters are too darn important. That’s an irony. You would think that we would move quicker on matters that are particularly important. But it has worked out just the other way. Because these matters are of high importance and affect so many people, those who advocated Buy-and-Hold in good faith in earlier times don’t want to acknowledge having made a mistake. They feel embarrassment. They feel shame. They worry that they will be held financially liable for poor investing advice they offered at earlier times. In the case of you Goons, they worry about going to prison for having committed the greatest act of financial fraud in the history of the United States.

That’s the problem, Anonymous.

There’s nothing else to talk about. The intellectual case is settled. It’s not just the Valuation-Informed Indexers who believe that. The Buy-and-Holders believe it. They don’t believe it on every level of their consciousness. They really do follow Buy-and-Hold strategies. That’s evidence of a sincere belief. But they don’t feel confident enough of the strategy to believe that it can be defended in civil and reasoned discussion. So there clearly is another level of consciousness on which they do not believe at all. It’s a mix. You could say that they believe but that they almost entirely lack confidence. If the Buy-and-Holders themselves don’t feel that the intellectual case for Buy-and-Hold is strong enough to support a confidence that it can survive challenges raised in civil and reasoned discussions, there really is no one who truly believes in this stuff in the sense that that word signifies in most cases in which it is employed.

We all want to know how to invest. We are entirely united re that one. Some of us are scared to death that the strategies we continue to follow are not going to work and so it pains us to hear academic research showing otherwise even discussed. So progress has been blocked for a long, long, long time.

What do you propose we do?

It is an imperative public policy initiative that we spread the word re Valuation-Informed Indexing. But spreading the word causes intense emotional pain for the Buy-and-Holders. No one wants the Buy-and-Holders to experience pain. But no one wants to see the Second Great Depression either. We ALL share an interest in working this one out.

What do you propose we do?

I propose the announcement of prison sentences. Or an “I Was Wrong” speech by my hero Jack Bogle. Either one of those would break the logjam. Either one of those would cause enough people to learn about the issues that we would see a national debate launched that ultimately would take us to one of two places. Either Valuation-Informed Indexing would not stand up to scrutiny and we would be back where we were on the evening of May 12, 2002. Or Buy-and-Hold would not stand up to scrutiny and we would move on to a brave new world that I of course expect to turn out to be pretty darn wonderful for all concerned.

But even if you don’t believe that today, you should want to go to that brave new world if you truly believe in following research-based strategies, as all the evidence available to us indicates you do. The Buy-and-Holders will obviously have a chance to make their case in the national debate. If they cannot make it, it is to your benefit to make the shift. You don’t see it today. But of course we have not had the debate yet. So you simply do not know whether you will end up seeing it or not after the debate has taken place. If you become convinced as a result of the debate, you won’t be complaining that we had the debate. You will be thrilled that you were carried to it kicking and screaming.

We need to have that national debate, Laugh. There is no other way out of this mess. Many commenters noted how odd it was that the Nobel Prize in Economics was awarded to two men with opposite views on how stock investing works. That happened because we haven’t yet had this national debate. The purpose of a debate is to resolve the matter. Who is right, Fama or Shiller? That is the most important economic and political question before the people of the United States today. We obviously cannot answer the question without first giving ourselves permission to talk about it.

So the debate happens. The question that remains is — How do we get there?

I say that we get there through the announcement of prison sentences for you Goons. The announcement of the prison sentences goes viral and then lots of people turn to examination of the substantive issues to figure out what the heck is going on. There’s your kick-off to a national debate!

My sense is that that is how this is going to play out. So, yes, I am focused today on your prison sentence. I obviously will return to a focus on the substantive issues after the debate gets underway. But the goal today is not to win the substantive debate, the goal today is to get the darn substantive debate off the ground. The aim is to bring The Debate About Having a Debate to an end and to commence with the debate proper, the real thing, the question of whether Fama or Shiller (or some combination of the two — which is what I believe is the reality) is right about how stock investing works.

Do you have any ideas other than the announcement of prison sentences for how we can as a society move on to the national debate we all very much need to see begin by the close of business today? If you have ideas, please advance them. That would be a constructive and positive and life-affirming thing to do.

If you don’t have any ideas for how to solve the obvious problem that confronts us, then I will keep pressing on the prison sentence idea. Not because I enjoy the idea of seeing you go to prison. Because that’s the way our system is set up. We adopted the laws against financial fraud for a reason. We knew as a people that we didn’t want situations like this to develop. I love my country and I support our system for addressing matters of this sort. So my inclination is to go with the procedures that are already part of the system. The laws against financial fraud are part of our system and they serve an important purpose and that purpose needs to be served in this case.

Do you have some other idea that solves the problem that needs to be solved?

I don’t think you do.

If you do, I am of course happy to hear about it.

But if you do not, yes, I am going to return again and again to the solution that already exists on the statute books, imprisonment of those who have participated in the 12-year cover-up of the errors in the Old School safe-withdrawal-rate studies, the greatest act of financial fraud in the history of the United States by a long shot.

I will win. Maybe not by the close of business today, as I would like to be the case. But following the next price crash. The emotion that counts in your favor today turns against you when millions of people lose most of the money they were counting on to finance their retirements. That shift in the emotions of millions of ordinary investors changes everything.

You will come back with something stupid. I know that. But I also know you are worried about that prison sentence. Otherwise, you wouldn’t be posting here on a daily basis.

If you have an idea for solving the problem better than mine, put it forward.

If you don’t, I’ll stick with the idea that the people of the United States enacted as part of their system of laws to protect us from this kind of situation.

In any event, I naturally wish you good luck with whatever investing strategy you elect to pursue.

Rob

Set forth below are the texts of two comments that I recently put to another blog entry at this site:

I should add that I think it is possible that a big reason why the Buy-and-Hold Pioneers did not say that price should be considered in the setting of one’s stock allocation may have been a feeling that it would be more simple to have investors stay at the same stock allocation at all times. Back in the early 1980s, when Shiller published his research, valuations were at rock-bottom lows. People may not have been able then to imagine the P/E10 ever going above 20 again. There may have been a feeling that there was no harm being done in ignoring valuations.

If that is the case, the idea didn’t work. We not only went to 20. We went to 44. Things got out of hand. And it was Buy-and-Hold that caused things to go out of hand. People saw stocks delivering big payoffs and they of course liked that. They never heard the other side of the story, that unjustified payoffs lead to big problems down the road. Now that we are living through the big problems, more and more people are coming to believe that ignoring price didn’t turn out to be such a hot idea.

I like your comment because it is at least rooted in something real, Sensible. I think this simplicity concern was probably a real consideration in why things were done the way they were done. People were not bad to want things to be simple. But people need to accept that it was a mistake or at least that there is a POSSIBILITY that it was a mistake. No one gets it all right in the first draft. THere is a lot of interest among investors in the idea of incorporating valuations into their strategy. We have to permit discussion of the idea. To not do so makes people look unethical. THat’s not a line you want to cross.

It makes sense to tell people to limit their valuation-induced changes. I can see something like that being done for the sake of simplicity. And it is entirely possible for VII to work with only one valuation change every ten years or so on average. But people need to know when things get out of hand. The problem with not looking at valuations at all is that you look up one day and the most likely annualized 10-year return is a negative number. None of us should ever want to see that happen.

Bogle says that allocation changes for valuation reasons can be considered six times in an investor’s lifetime. That’s exactly correct. That’s once every ten years or so. The problem is that Bogle says that the changes should not be more than 15 percent. That’s not even close to being right. In 1982, the most likely annualized return was 15 percent real. In 2000, it was a negative 1 percent real. 15 percent just doesn’t do it.

But that’s the only point on which there is a difference between me and Bogle. And if we had all been calling for occasional allocation changes (once every 10 years on average) all along, we never would have hit 44. We hit 44 because people just stopped worrying about valuations. Had people been aware of the danger, we might have been able to get away with allocation changes not much greater than 15 percent.

There’s a lot of common ground here. If people came to this with good intent, it could all be worked out with mutual respect and warmth. If you are signaling a willingness to play it that way, I obviously am 100 percent on board. You next post will tell the story. If people want to work it out, it certainly can be worked out. The hard part is getting people interested in following a path that leads in time to a mutually positive result. Anyway, I am certainly supportive of the idea of taking such a path.

Rob

I’ll take this a step further.

Bogle has said that changes should not be more than 15 percent. That’s not enough to get the job done. But I think it could be possible to come up with a reasonable approach that doesn’t ever call for changes too much bigger than that.

Benjamin Graham suggested a 75-50-25 scheme. So long as the investor is always sure to not wait until things are so out of hand that he needs to make two switches at once, he would never need to make a switch of more than 25 percent under the Graham scheme. That’s not far off from what Bogle has recommended and the additional change can be justified on grounds that valuations ended up getting more out of hand in recent years than people realized they would in earlier days.

I’ll see what comes back.

Rob