A Rich Life

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

“Political Correctness As Applied Both in the Political Context and in the Investing Context Is a Form of Low-Grade Violence. When Someone Threatens to Destroy Someone’s Reputation Because of a Difference of Opinion, He Is Not Engaging in Free Speech, He Is Seeking to Limit Free Speech. When Free Speech Ends, Violence Comes in to Fill the Void. People Ultimately Find a Way to Express Themselves; If No Good Way Is Made Available to Them, They in Time Explore the Bad Ways.”

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

I am doubtful that combating political correctness with complete A-hole-ishness is going to yield positive results.

In the end the results will likely be about as positive as yours.

Either way the election goes we are going to be facing difficult circumstances, in my view. If Clinton wins, she is going to have a hard time leading millions of people who she says are voting for someone entirely beyond the pale. If Trump wins, he is going to have a hard time leading millions of people who he says are voting for someone who belongs in prison. An effective leader needs to pull people together. When you participate in the sort of race we are seeing, it is very hard to do that. It didn’t used to be this way in the United States and it makes me sad to see what we have come to.

We came to this because of political correctness. Political correctness is a short-term strategy. It rules certain issues out of the bounds of rational debate. There is obviously never any real change achieved re issues that are not debated. So those favoring a status quo position gain a big edge when that subject is deemed beyond discussion by the restrictions of political correctness. It’s not the American way. At all. But the side favoring the status quo gains a big edge in the short term. The status quo wins every debate that is never held because it is only through persuasion that people can be brought to support new ideas. Political correctness exists because, as ugly as it is and as outside of the U.S. tradition as it is, it works. It provides wins. It provides power.

But it does so at a great price. Views that are not aired over time become hardened and embittered. You get to a point where neither side is requesting debate; they are instead just wielding power or attacking those who wield power. At that point you are on the edge of seeing violence. I think it would be fair to say that that is where things stand today in the United States re many issues.

There are legitimate differences of opinion on many of the issues that affect our country today. There are things that can be said on both sides of the immigration question. There are things that can be said on both sides of the terrorism question. There are things that can be said on both sides of the police brutality question. There are things that can be said on both sides of the abortion question. But people on both sides of these questions are no longer even trying to debate the matters. They share horror stories with those on the same side as themselves. And they yell at those on the other side. There is no back-and-forth discussion, no friendly learning, going on.

That’s how it became possible for a figure like Trump to go as far as he has. Yes, he is an “asshole,” as you put it. Those who oppose him marvel at how he can do outrageous thing after outrageous thing and suffer little or no loss of support. Most of his supporters don’t care how much of an asshole he is. They are sick of not being heard. They are supporting Trump no matters what he does or says. They have moved beyond the realm of debate. They are voting for him as a punishment of those who denied them the right to speak for so many years.

This is not good. This is scary stuff. If Trump were the greatest person in the world, it would be dangerous to put him in circumstances where he has power and a large portion of the electorate will not question anything he does. And Trump is not the greatest person in the world. We have hurt ourselves big time. It is not Trump who did that or Trump’s supporters who did that. It is all the people who employed political correctness as a strategy and all the people who saw political correctness being employed as a strategy and failed to speak out who did that.

I think it would be fair to say that I have been the polar opposite of Trump in my dealings with you Goons. Many of my fellow community members, including many Buy-and-Holders, have kindly observed that I am the most polite poster that they have ever encountered on the internet. It’s largely because of my belief in the value of warm human interaction as a better way of resolving differences than the violence that follows from goonishness/assholishness that I have been so resolute in not giving you Goons back some of your own medicine. I don’t believe in that stuff. So I condemn it when I see it being practiced by others. And I am careful never to engage in it myself.

Trump is wrong to go there. If he loses, that will be the reason he loses. If he took the high road, he would win. The polls support that conclusion. But the deep reality here is that Trump IS an asshole, he can’t be anything other than what he is. So he is probably going to continue with the behavior that we have seen. If he manages to rein in the ugliness for a few weeks, he is going to return to it following the election. At his age, it is hard for a man to change so fundamental a personality trait. An asshole won the Republican nomination for President, whether we like the idea or not, whether the idea makes us sad about where our country stands today or not.

I intend to vote for that asshole. Asshole or not, he has taken on political correctness in a big way. He has dealt with the biggest issue tearing our nation apart. He has generated LOTS of discussion on issues that could not be discussed in recent years. Re all that, good for him. I have come to the conclusion that the reason why we have an asshole representing one of the major parties is that no one but an asshole could have taken on the biggest issue and survived. It may be that it takes an asshole to end political correctness, a debating strategy rooted in assholishness. Say what you will about Donald Trump, he has a thick skin. Assholes tend to have a think skin.

It may be that the reason why I have not been able to prevail over you Goons is that I lack the quality of assholishness that Trump possesses. I will never travel that path. It is not in me. I will always approach you Goons and indeed all Buy-and-Holders with an outstretched hand of kindness. I see that as my best and most important trait. I don’t think that our problems can be solved without that element being part of the solution and that is the element re which I think it would be fair to say that I possess a unique ability. I intend to vote for an asshole. But I never intend to become an asshole. Let’s all pray that I can continue to walk that fine line.

We need Trump today, in my view. We need to take on political correctness and none of the many non-assholes who ran for the job in recent years have been willing or able to do what the biggest asshole in the crowd managed to do. As much as I am repulsed by the assholishness, I have to give the man credit for what he has achieved. He’s done something none of the others managed to do. Perhaps there is a place in this world for a certain measure of assholishness. It pains me to say that. But it’s not fair for me to call the man an asshole and then fail to give him credit for the achievements that seem to have followed from his willingness to be a major asshole in a very public way.

Anyway, that’s where I stand. People who like Clinton are going to dislike me because I am voting for Trump. People who like Trump are going to dislike me because I call Trump an “asshole.” So be it. That’s my sincere take re this matter and I am just going to have to accept the consequences that follow from stating one’s sincere take at a time in history in which people in the United States communicate re the most important issues before them by talking past each other at best and by yelling at each other and calling each other names at the worst.

I think that Clinton would win if she could find it within herself the courage to come out against political correctness in a major way. People respect her accomplishments. They just cannot bring themselves to vote for a continuation of the approach that has gotten us where we are today. They are looking for real change and real change cannot be achieved until we collectively decide that we are going to put the politically correct garbage behind us and go back to the idea of talking things through with the aim of coming to mutually acceptable solutions to all our problems.

I think that Trump would win if he could find it within himself to apologize for having been such an asshole to so many people. That would amaze people and cause them to be willing to take a chance on him.

We’ll see what happens. I love my country and part of loving it is believing in it. So I believe that we will work the matter out through some process that is hard to foresee in the current day. It’s scary to think of either of these two individuals becoming the most powerful person in the world. But I have to believe that one or the other is going to use the difficult circumstances to bring on the measure of self-growth needed to be effective as a leader of our country.

I am the anti-asshole. But I am voting for the asshole in this particular election because I admire the ability that the asshole has shown to get a discussion going in a nation where lots of powerful people have forgotten how important it is to turn to discussion rather than violence to solve problems. Political correctness as applied both in the political context and in the investing context is a form of low-grade violence. When someone threatens to destroy someone’s reputation because of a difference of opinion, he is not engaging in free speech, he is seeking to limit free speech. When free speech ends, violence comes in to fill the void. People ultimately find a way to express themselves; if no good way is made available to them, they in time explore the bad ways.

This is my take re these terribly important matters in any event, my long-time assholish friend.

Rob

“There Have Been Numerous Articles in Big-Name Publications Picking Up on My 2002 Finding That the Old School Safe Withdrawal Rate Studies Get the Numbers Wildly Wrong. None of Them Describe the Death Threats and Board Bannings and Tens of Thousands of Acts of Defamation and the Threats to Get Academic Researchers Fired From Their Jobs.”

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

Another key is acting within the limits of the statute of limitations, i.e. one year in Virginia.This is an ongoing act of financial fraud, NFS.

There have been numerous articles in big-name publications picking up on my 2002 finding that the Old School safe withdrawal rate studies get the numbers wildly wrong.

That’s of course a good thing in itself.

But there is an obvious oddity about every one of those articles.

None of them report the number accurately. None of them (the article by Todd Tresidder was an exception) give credit to me for being the person to discover the errors and for having done it 11 years ago. None of the articles describe the death threats and board bannings and tens of thousands of acts of defamation and the threats to get academic researchers fired that have been relied on by The Buy-and-Hold Mafia to keep millions of middle-class investors from learning what they need to learn to invest effectively.

Why?

Because the entities who publish these articles and the journalists who report on them are afraid of what The Buy-and-Hold Mafia will do to them if they file honest and complete reports. This all comes through clearly and plainly in the Wade Pfau Matter. Wade was thrilled to learn how stock investing really works. He showed great excitement in his many e-mails to me. He said that he couldn’t understand why no one had done the research that he and I produced together. Why? Was he missing something? He checked his numbers over and over again. They really said what they said! How could this be? How could this powerhouse stuff have been ignored for all this time? He even went to the Bogleheads Forum to see if anyone there could make sense of it. No one could. No one (including Jack Bogle!) had ever heard of a single study showing that price discipline is not required when investing in stocks. The entire Buy-and-Hold “strategy” is built on sand. And there is not a sliver of evidence pointing in the other direction. But lots and lots and lots of smart people are careful not to say this in public.

Because they are scared of what will happen to them if they do. They have seen how ruthless the Buy-and-Hold Mafia is. They know what is good for themselves and they keep their mouths shut. As Wade learned to do when you Goons threatened to send defamatory e-mails to his employer with the aim of getting him fired from his job and my good friend Jack Bogle raised not a peep of protest about it.

That’s fraud, NFS. Anyone who participates in it is part of the fraud. And anyone who fails to speak when he sees the fraud play out in front of him is part of the cover-up of the fraud

The fraud is ongoing. The statute of limitations will not begin to run until Jack gives his “I Was Wrong” speech and it is reported on the front page of the New York Times.

I will be sure to get the papers filed within 12 months of that day.

The full truth is that I am not going to need to file papers. Once Jack gives his speech and it is written up on the front page of the New York Times, we will all be working together to keep our economy from falling into the Second Great Depression. Every one of the people involved in the fraud wants to come clean and to be able to do honest work again. Once one big name makes the jump, all the others will follow within days. I doubt that I am going to need to file legal papers to get the money that I earned with my work of the past 11 years. These things can be handled easily once the will to handle them is present.

We’ll see. But I am not expecting to have to file papers. And, in the unlikely event that I am forced to file papers, I can assure you that I will file them within 12 months of Jack’s big speech.

I wish you all good things, old friend.

Rob

“It Doesn’t Matter, Even If You Are Right. Not One Bit. Because Everyone Thinks You Are a Complete Ass and You Will Be Long Forgotten When Someone Actually Does Anything Semi-Productive With the Vague Notions You Have Been Spewing for 10+ Years”

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

It doesn’t matter, even if you are right. Not one bit. Because everyone thinks you are a complete ass and you will be long forgotten when someone actually does anything semi-productive with the vague notions you have been spewing for 10+ years.

You’re wrong, What.

You pretend to think I am an ass. You are in a tiny minority. When I go to the Financial Bloggers Conferences, I meet lots of people. Not one of them has ever indicated in any way to suggest that he or she thinks I am an ass.

People are EMBARRASSED. That much is so.

People are SCARED. That much is so.

People are CONFUSED. That much is so.

That’s not at all the same thing as thinking I am an ass.

I have seen a parallel case showing how this will turn out. My site host (SiteSell) is owned by a fellow named “Ken Evoy.” He is a smart guy and he came up with some ideas for how to get traffic on the internet that were ahead of their time. His ideas worked for a good number of years. People LOVED him. I never followed his system because it didn’t make sense for what I am trying to do with my site. But I certainly noticed how much people loved the guy. It was over the top.

The Evoy system no longer works since Google came out with its Panda and Penguin changes. People don’t say “Oh, Evoy had good ideas but Google has changed.” Hardly anyone does that. There is one group, smaller than before, that continues to love him to this day. That group says that Panda and Penguin don’t affect the system despite a mountain of evidence to the contrary. Another group now hates the guy with a burning passion. Their businesses have failed. They blame him.

Evoy is John Bogle.

Bogle is very smart. Bogle did things no one before him was able to do. Bogle deserves to be lauded as a hero. I laud him as a hero and always will. But I do that with an appreciation of the one thing he got wrong. Those who today laud him without an appreciation of the thing he got wrong are going to turn on him after the next price crash. I OPPOSE that. I think that’s a mistake. But I cannot control the world. I am virtually sure that that is what is going to happen.

I am not certain to succeed. But the risk for me is not the risk you point to. If people reach a point where they are willing to hear the realities of stock investing, I have the only site on the internet with 11 years of material exploring those realities. My site will go viral if a good percentage of the population opens up to the message. I am not worried about what happens to me in that event. In that event, I won’t have to file any legal papers to enjoy a $500 million payday. I will have multiple parties pushing the money on me, asking me to take it fast to help them with their guilt feelings.

My risk is that people are going to become excessively disillusioned with Buy-and-Hold. Valuation-Informed Indexing is Buy-and-Hold with one change. If people come to hate Buy-and-Hold with a burning passion, their emotionalism may cause them to tune out Valuation-Informed Indexing as well on the grounds that they just cannot bear to hear about anything that even reminds them of Buy-and-Hold.

If you were smart, you would join me in doing what you can to insure that that doesn’t happen. People don’t hate Buy-and-Hold today. So, if the Buy-and-Holders joined forces with me, we could stop the next crash from happening and all would be well on about 20 different fronts. But I obviously don’t control what people do. I am not expecting the Buy-and-Holders to help out. I hope they will. I urge them to. But I understand that that part of this is out of my hands.

I think you are wrong in your take as to how things will play out. I think you are being emotional once again. You are so ashamed of what you have done over the 11 years that you would rather see the entire planet go to hell over seeing Rob Bennett get any acknowledgment for the amazing work he has done over these past 11 years.

That’s on you, What. Your hate doesn’t just hurt me. It hurts you too. In very, very serious ways. It so blinds you that you cannot even see how much it is hurting you. All I can do is type out those words and hope that they cause some melting of your heart. I have said many times that I am happy to help you in any possible way and I of course stand by those words today. If you are too filled with false pride to accept my help, then that’s just the way it is. It makes me very sad. But there’s not one darn thing I can do to change the situation if that is indeed what the situations is (all signs indicate that it is).

I wish you well, man. I will keep on saying that with a hope that one of the times I say it the message will get through to a part of you that remains capable of hearing it.

Rob

“You Try to Dominate All Conversations. Your Posts Make Up 80 Percent of the Content. You Rarely Consider Other Comments…The Volume of Your Posts Was Huge, Like Always, and in the Course of 24 Hours, You Turned a Mild Supporter Into a Detractor.”

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

Rob, just do a quick search of your past interactions. In almost every thread, you try and dominate all conversations. Your posts make up 80% of the content. You rarely consider others comments unless it furthers your position or if you can use it to distort a conversation. I was reading through some old FMF posts the other night and noticed a thread that you jumped in on. Most FMF threads get 20 or less comments. In this one, it quickly passed 100 and FMF shut it down. You seemed to be demanding a guest post and then the debate started. The volume of your posts were huge, like always, and in the course of 24 hours, you turned a mild supporter (Apex) into a detractor.

Do want to change perceptions? If so I suggest you do the following:

Make massive apologies (starting with Wade);

Establish credibility (it is earned, not given away);

Listen 90% of the time, and comment less than 10% of the time- note the percentage of conversation on other blogs;

Be humble;

Don’t insult your audience.

I’m not going to be making any apologies, Pink.

There’s one exception. I am willing to apologize for waiting too long to put forward the post that I put forward on the morning of May 13, 2002. That was wrong.

Outside of that, apologizing is the worst possible thing I could do.

It’s not a problem that Buy-and-Holders and Valuation-Informed Indexers do not agree. That’s a good thing. That’s healthy. For so long as we disagree, the Buy-and-Holders can keep the Valuation-Informed Indexers honest and the Valuation-Informed Indexers can keep the Buy-and-Holders honest. We all benefit from being exposed to the other point of view on a regular basis.

The problem we have is that the Buy-and-Holders got used to being dominant during the insane bull years. They made so much money in so little time that they began thinking that they knew it all. They became arrogant, and, worse, got away with it. They became accustomed to shouting down other points of view. Yuck!

The Buy-and-Holders are responsible for their own bad behavior, Pink. But you know what? The Valuation-Informed Indexers played a role in causing the messed-up situation we have today too.

The Valuation-Informed Indexers failed to speak up when they should have spoken up. Buy-and-Holders advanced death threats and most of the Valuation-Informed Indexers (but not me!) tolerated it. That was wrong. And it didn’t just hurt the Valuation-Informed Indexers. It hurt the Buy-and-Holders too. It led them to believe that behavior that is 100 percent intolerable might be tolerated.

No!

That’s the thing that we all very much want to change deep in our hearts.

I’ll apologize if I get something wrong. That’s a very, very different story.

But I am not going to apologize because I discovered the errors in the Old School safe withdrawal rate studies. That discovery helped everybody. In some part of their consciousness, the Buy-and-Holders want to get the numbers right. My post helped them do that. So no apologies for the exceedingly helpful and brave post of May 13, 2002.

Rob

 

“If You Had Been Banned on One or Two Boards, One Could Say That Maybe There Was the Possibility That Someone Overreacted in Banning You. However, When You See That It Is Consistent Behavior from You Followed by the Consistent Reaction of Those That Read the Boards and Administer the Boards, It Is Clear that the Problem Is You.”

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

Rob,

From what I have read and have also seen in MANY examples, you were banned due to your continued abrasive attitude as well as your refusal to answer direct questions as well as provide proof to back up your claims (such as threats). If you had been banned on one of two boards, one could say that maybe there was the possibility that someone overreacted in banning you. However, when you see that it is consistent behavior from you followed by the consistent reaction of those that read the boards and administer the boards, it is clear to see that the problem is you.

I gave you an example of a similar issue the other day. As I mentioned, I was looking at old postings on the FMF board. I am sure you will agree that this particular board is mostly devoid of confrontation and friction. However, we saw what happened when the comments section (heavily dominated by you) surpassed 100 comments in very quick order and FMF had to shut down the comments. This is not an exception. It seems to be a pattern for you.

You seem to have a campaign every time you post and try to drive over people like a Mack Truck.

I am grateful to you for asking a real and important question here, Pink. You are giving voice in this particular comment to a feeling that is shared by many smart and good people.

To understand what is going on, you must understand the context in which these discussions have been taking place.

Buy-and-Hold was the first effort at a research-based strategy for ordinary people. People LOVE the idea of rooting their investing strategies in peer-reviewed academic research. Buy-and-Hold provided millions of people with AMAZING results for DECADES. People LOVE Buy-and-Hold. They view the Buy-and-Hold pioneers as HEROES.

I say that Buy-and-Hold is dangerous. I say that it is irresponsible. I say that it is a Get Rich Quick scheme. I say that it caused the economic crisis. That’s strong stuff. That strikes the many good and smart people who view Buy-and-Hold in a very positive light as SHOCKING.

People have never heard anyone say the things I am saying before. My words come as a shock. That’s why my posts generate so many questions and comments. It’s not anything I do that causes this. It is the nature of the discussion that causes this. I am questioning fundamental beliefs. That is unsettling on a deep level. People respond in all kinds of unusual ways when their fundamental beliefs are questioned.

The Buy-and-Hold Mafia has handled this by shutting down debate at every board and blog. THAT IS A TERRIBLE MISTAKE.

We need to do just the opposite. We need to ENCOURAGE debate. We need to have a NATIONAL debate. We need these discussions to go viral. We need to get tens of thousands of people, experts and ordinary investors both, involved.

Why?

Because that is how we Normalize the discussions.

We are never all going to agree. It wouldn’t be healthy if we did.

But you are right that we cannot have 200 questions directed to Rob each time he says “hello, how about them Orioles?” We need people to come to accept that there is more than one legitimate viewpoint on all these questions. To do that, we must educate people as to the basics. We do that through discussion. Rather than shutting down discussions, we need to encourage discussions.

Once we do that, the phenomenon that you refer to will fade away in a natural way. You won’t have to force it to happen. It will happen because people will come to know the answers to their many questions. Whether they change their minds about what works in investing or not, they will settle down. Valuation-Informed Indexing will over time become one more thing to take into consideration when deciding on an investing strategy.

I have put forward the new ideas. I don’t apologize for that. The new ideas are very much worthy of the consideration of every investor alive.

I have not caused the circus atmosphere. We have seen a circus atmosphere because debate on these questions has been held back for so long that, when people have an opportunity to ask some questions, their enthusiasm flows over the top of the cup.

Yes, we need to settle things down a good bit.

But not by further suppression.

We need to settle things down by handling discussions of investing strategy in the same way that we handle discussions of every other subject under the sun. We need to accept that there is more than One Right Way to Invest and show respect and affection and gratitude to those who hold viewpoints other than our own that they seek to share with us on discussion boards and blogs.

Rob

“People Do Not Post Comments Here. And People Do Not Link to Me. They Are Afraid to Do So. I Had Tons of Support Before Greaney Threatened to Kill Family Members of Any Poster Who Expressed Support for Me.”

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

I have 140 wildly supportive comments posted (with links!) at the “People Are Talking” section of the site, Sparky. There is no other blogger on the face of Planet Internet who has even a fraction of the number of wildly enthusiastic endorsements that I have won for myself.

Tell me one other blogger who has his name in the Acknowledgments section of peer-reviewed academic research (saying that he was the person whose views on investing inspired the research). And we’re not talking about any old research paper here. We are talking about research that a Ph.D. graduate from Princeton says belongs in the Journal of Finance, the top journal in the field.

Are you joking?

You are right that people do not post comments here. And people do not link to me. And people do not write articles about me.

They are afraid to do so.

I had tons of support before Greaney threatened to kill family members of any poster who expressed support for me. Do you think that might have something to do with the lack of comments here?

And it’s not just the death threats. The death threats were advanced by social misfits who in ordinary circumstances no one would pay attention to for two seconds. The bigger problem is the failure of people like Jack Bogle and Bill Bernstein and Larry Swedroe and Scott Burns to speak up and demand that something be done about those death threats and all the other intimidation tactics that you Goons have employed.

When Bogle speaks up, it is over, Sparky.

From that day forward, I will have not just hundreds of comments at this blog every day, I will have thousands.

That’s why I built the Retire Early board at Motley Fool into the most successful board in that site’s history in the first place. I want thousands of comments every day. And I want a thriving community of people helping those thousands of people to save and invest more effectively.

When your prison term is announced, that news is going to go viral. And then it will be over. The ugly part, I mean. The wonderful, life-enhancing exploration of the realities of saving and investing will continue for years and years and years.

Do I like it that my success depends on you being sent to prison?

I do not like it one tiny bit.

That’s why I have spoken out against the intimidation tactics going back to the first day.

I don’t control everything that happens in this crazy, mixed-up world of ours, do I, Sparky?

If it were up to me, there would be thousands of comments here every day and you would not be on your way to prison. It’s not up to just me. So I have been forced to watch it play out this other way instead.

I wish you all the best, my long-time abusive posting friend.

Rob

“We Are Going Up Against Heavy Hitters — Vanguard, Motley Fool, the Get Rich Slowly Blog, Index Universe, Morningstar, the Bogleheads Forum”

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

Personally, if I was confident that I’d been wronged and could make $500 million in a lawsuit, I’d pay the lawyer!   It works the other way around too, GW.

If the lawyers were as confident as I need them to be to be sure they can win the case, they would be happy to take it on contingency.

This is what changes with the next crash. After the next crash, what Buy-and-Hold has done to us is in all the newspapers and people are looking for villains to hang from trees. A good lawyer can take advantage of that reality. But that reality is not today’s reality. So the smart lawyer and the smart client wait it out a bit.

I met one lawyer in his office. He liked the case. But he felt that his firm was not big enough to handle it. It was my conversation with him that got me thinking that maybe it was better to be patient. I liked that guy and I would have gone forward had he taken the case. But what he said about needing a big team of lawyers for this particular case struck me as being true. We are going up against heavy hitters — Vanguard, Motley Fool, the Get Rich Slowly blog, Index Universe, Morningstar, the Bogleheads Forum. This is not a job for a small firm.

I don’t want just to bring the case. I want to win the case. A case for $500 million (the case will obviously be for a much larger number — that’s a number that I have put forward as a possible settlement amount for a settlement achieved PRIOR to the next crash) needs to be brought by a team of the best lawyers in the country. Can I get them today? I probably could if I had the right contacts and that still may happen. It could be that one of my e-mail contacts will have an in with some big-name lawyers. But, if I wait until the crash, I will have lawyers lined up around the block. What’s the rush?

My preference in the early days was to bring the case and get the ugly stuff behind us. I still would bring the case today if I had a team of top-flight lawyers showing their confidence by taking it on contingency. But I need to see from the lawyers that they are confident enough to put a good bit of skin in the game. I have a funny hunch that I will see a whole big bunch more of that sort of action FOLLOWING the next crash than I am seeing today. I would rather wait and get a number far in excess of $500 million than rush things and perhaps have to settle for a number a bit smaller than $500 million. Huh? For this case?

You are essentially placing all your bets on a hope that stocks will perform in the future in a manner unlike how they have ever performed before. I am doing the opposite. I say that today’s price is comprised largely of cotton-candy nothingness. It is the product of a huge confidence game, a huge flood of dangerous, worthless emotions. When those emotions fade, you lose it all. You lose the bull market gains you are today counting as real. You also lose the public’s confidence in your SWR studies and the experts’ willingness to pretend that there is some mystical data somewhere supporting those irresponsible claims. You ALSO lose the reluctance of the nation’s top lawyers to bring this case on a contingency basis. Lawyers read the papers. They will see how mad people will be. They know that it is juries that decide legal cases and that juries are comprised of humans.

So it may be that it all flips at the same time.

Rob

 

“The Wall Street Con Men Have Huge War Chests They Can Put to Use Destroying People Who Tell the Truth About Stock Investing”

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

Another example of you misunderstanding what you read.

I don’t think so, Evidence.

Michael is trying to earn a living. Like Wade Pfau. Like Robert Shiller. Like Rob Arnott. Like lots of us.

The Wall Street Con Men have huge war chests they can put to use destroying people who tell the truth about stock investing. So the people who tell the story straight nearly always pull their punches so as not to find themselves on the wrong side of a vicious and unrelenting smear campaign.

So, yes, he states things a bit softer than I do. But we are delivering precisely the same message. Everything I have said for 10 years now follows logically from the findings of Robert Shiller’s 1981 research. If people were not afraid to speak the truth out loud, there would be HUNDREDS of web sites saying what I say at this one.

The problem is that people are afraid. And, because people are afraid, they don’t say things clearly. And, because they don’t say things clearly, many people don’t hear the message. And, because many people don’t hear the message, it’s hard to make a buck telling the truth about stock investing. And, because it’s hard to make a buck telling the truth, many are tempted not to tell the full truth. And, because many don’t tell the full truth, it remains possible for the Wall Street Con Men to single out those who do and crush them.

When the Ban on Honest Posting is lifted, we will have hundreds of researchers saying what Michael says in his paper. And, when there are hundreds saying what he says, each of those hundreds will feel emboldened to say things more clearly and with more details and with a discussion of more practical implications. And we will then begin achieving a huge number of amazing advances in a very short amount of time.

We are mid-way through a process, Evidence.

We started out not knowing. This con was not a deliberate con. People really once believed in Buy-and-Hold. We have known now for 30 years that there is precisely zero chance that a Buy-and-Hold strategy can ever work for a single long-term investor. But, until the 2008 crash, most of us were afraid to speak up. Now we are getting some people to speak up in a tentative sort of way. Those voices will grow louder and firmer and more assertive over time.

Michael is saying the same thing that I am saying. He is just saying it in a softer way. What’s important to you as an investor is the message. The Efficient Market Theory was a terrible mistake. Buy-and-Hold was a terrible mistake. We need to move on.

I wish you well, Evidence.

Rob

“Rob Arnott Is 100 Percent Correct to Fault Stridency. But Failing to Speak Up About Criminal Acts Is Not Charity, It Is Cowardice.”

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

There’s just nothing of value to be learned in a circular argument You are pointing at any important truth with these words. It IS a circular argument.

If the market is efficient, everything you say is so.

If valuations affect long-term returns, everything I say is so.

The pre-1981 research supports the idea that the market is efficient. The post-1981 research supports the idea that valuations affect long-term returns. Where someone stands on all these questions depends on whether he is aware of the post-1981 research and has thought about it enough and explored its implications enough to know what it signifies.

Some of us have. Some of us haven’t. It’s hard for us to communicate with “the other side” because we start from entirely different premises. As a society, we are in a transition period. The majority still believes that the pre-1981 research is at least generally on the mark. And the minority believes otherwise but generally keeps its mouth shut.

THAT IS THE PROBLEM.

The minority keeps its mouth shut because of the social pressures imposed when any of us speak up about the implications of the post-1981 research. What makes me different is that I keep my mouth shut less than anyone else. That wasn’t always so. I kept my mouth shut entirely prior to May 13, 2002. And I kept my mouth shut about lots of things in 2003 and 2004 and 2005 and 2006 and 2007 and 2008 and 2009 and 2010 and 2011 and 2012. But it is true that I keep my mouth shut about less and less all the time. Why? Because I have learned from personal experience that keeping one’s mouth shut does not solve the problem.

Valuation-Informed Indexing is superior to Buy-and-Hold. In every possible way. There is zero chance that even a single human being would prefer Buy-and-Hold once he came to understand Valuation-Informed Indexing. This is the biggest advance in our understanding of how investing works in the history of investing analysis. It is bigger than all the other advances combined. We will be living in Investor Heaven after we achieve this advance. There is not one of us on either “side” that does not want to live in Investor Heaven.

But there is always much resistance to a change when the change is so big and profound. All the textbooks need to be rewritten. People who are big shots today will not be big shots tomorrow. InvestoWorld is in the process of being transformed from top to bottom.

It is a good thing. It is a very, very, very good thing. Valuation-Informed Indexing is the culmination of Jack Bogle’s boyhood dream, and this fellow dreamed big. Now we are here.

The only thing holding us back is — We need to acknowledge what we have done. We have to stop being ashamed that we have learned how to reduce stock investing risk by 70 percent and start celebrating this wonderful reality.

We are a society in a state of transition. We need to get from Point A, a horrible, dark, smelling, scary place, to Point B, the place where each and every one of us deep in his or her heart wants to be tomorrow.

But how?

Rob Arnott tells me that the answer is for me to be less strident, to pull it back a few notches. to stay true to my message but to say if differently.

No!

He’s wrong. He’s a great man. I respect him. I am honored that he tells me that my investing ideas are the right ones. I believe that he offers this advice to me in good faith. But I will not follow that advice. He is wrong.

How do I know? I know because of what I have seen with my own eyes.

The Buy-and-Holders are hurting. They are hurting in a terrible way. Those of us who understand why they are hurting have an obligation as people who respect our Buy-and-Hold friends and who care about our Buy-and-Hold friends to hold out the hand of kindness and help these people out. Rob thinks that is what he is doing. BUT HIS APPROACH IS NOT GETTING THE JOB DONE.

The hurting continues. This is not acceptable. This must change.

Now —

The Buy-and-Holders really do not believe in Valuation-Informed Indexing. They have every right not to believe. And they have every right to present every argument they can muster in criticism of Valuation-Informed Indexing. And we are obliged to show them the respect and gratitude they have commanded with their very important and well-intentioned efforts. All that is so. All that should go without saying.

But not death threats. Not board bannings. Not tens of thousands of acts of defamation. Not threats to get academic researchers fired from their jobs.

We don’t tolerate that stuff. Not if we care about our Buy-and-Hold friends. We don’t rationalize failing to speak out when we know that failing to speak out may lead to prison sentences for our Buy-and-Hold friends. No way, no how. That cannot be.

Rob Arnott is wrong on the process question and I am right. The way to play this is to bring the Campaign of Terror to an end and THEN to adopt the least strident position possible. Rob is 100 percent correct to fault stridency. But failing to speak up about criminal acts is not charity, it is cowardice. Rob is not speaking up not because he is holding back in charity but because he is AFRAID to speak up. He’s probably not aware that that is what is going on. But it is my sincere belief that that is indeed the case. My good friend Rob Arnott is hurting my Buy-and-Hold friends by failing to speak up, not helping them.

I will continue to speak up.

I will talk about all the wonderful things that the Buy-and-Holders have taught us all. Always. That will never change. That part is already written in the books.

But I won’t be a party to actions that in the long time are going to put my Buy-and-Hold friends behind prison bars. Not this boy.

There are two things that need to happen for this circular argument to become a productive one. The people who understand the research need to work up the courage to stand up to the Buy-and-Holders and demand (NOT ASK!) that they honor our social norms re how reasonable people engage in discourse. And the Buy-and-Holders need to lose the attitude, they need to accept that, as strongly as they believe what they believe, there is always that small chance that they are wrong and they thus need to let the other guy have his say.

My best wishes to you and yours, Yip.

We are not enemies. We are friends. We are all on the same side. We are all in the same boat. If this country goes down, I go down with it. So I am rooting for you. Your success re this matter is my success too.

Rob

“If You Want to Stop Me, You Will Get Your Powerful Wall Street Friends to Crush Me With Lawsuits”

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

where you’re wrong lies in your belief you have some “right” to post your Bat$hit Crazy hocomania opinions anywhere you please on the Internet. I have the right to post honestly.

Wade has the right to publish honestzzz research.

Every American citizen has the right to tell his friends and neighbors and co-workers and fellow community members what they need to know to stop the Wall Street Con Men from pulling our nation into the Second Great Depression with their relentless and ruthless promotion of their Get Rich Quick investing strategies.

If you want to stop me, you will get your powerful Wall Street friends to crush me with lawsuits.

If I see no lawsuits, I will point to this reality in my posts. And I will point to posts like this one in which I invited them. When enough good people see that there are no lawsuits forthcoming, your intimidation tactics will be less effective than they are today.

And I am keeping a list of influential people who find great merit in the Valuation-Informed Indexing concept but as of today are too intimidated to speak out in a big way.

Things are reaching a point where bringing lawsuits is no longer going to be a last-choice option for “your side,” Yip. It’s getting to the point where bringing lawsuits is going to be your only hope of saving the ship from going down.

Hit me with your best shot, man. I’ve been overly optimistic before, it could be that I am being overly optimistic again.

I won’t post dishonestly on the numbers that my friends use to plan their retirements in any event.

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

Rob