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

So you want other people to give links to the exact comments/statements, but you have a different standard for yourself in which you feel you only have to offer links to your own comments.

Shiller’s book does not have any links to death threats either.

Let me use a baseball analogy: you have been batting .000 for the past 2 decades.

Shiller’s book does not describe death threats. But you don’t even have to go beyond the title of his book to understand that the Buy-and-Hold retirement studies get the numbers wrong. If a portion of our stock portfolios is comprised not of true and lasting economic value but is merely the product of irrational exuberance, then a model that treats the entire amount as real is going to get the numbers wrong. Every time. And sometimes by a very big amount. People planning to retire on these amounts need to know that. Everyone in this field should be working as hard as he or she can to make everyone aware of this reality.

Shiller SHOULD discuss death threats and the other intimidation tactics that have been employed by the Buy-and-Holders to block people from learning about the far-reaching implications of his research findings. Shiller once wrote: “There is a growing behavioral economics movement, but it has so far had limited impact. Economists are not fond of the softness and imprecision of psychology. These notions are considered vaguely unprofessional and flaky.” Think how the Buy-and-Holders would react if he described the intimidation tactics that have been directed at him. The would say that he was being “unprofessional” to discuss death threats and other such things. Rob Arnott told me that he knows of researchers who planned to do research on his ideas who were taken aside and told that it would be a career-limiting move to complete such research. Is that sort of behavior professional? It is not talking about intimidation tactics that is unprofessional, it is ADVANCING intimidation tactics that is unprofessional. There is nothing unprofessional in telling people about death threats. The unprofessional thing is using death threats to stop discussions that need to take place from taking place.

Shiller could write an entire sequel to Irrational Exuberance talking about the intimidation tactics that have been employed to silence him and about the intimidation tactics that he knows about that have been employed to silence others. That would be an amazing book. Once all this stuff is out in the open, people won’t be afraid of the people employing the intimidation tactics anymore because they will be able to turn to others who know about it and get help. When we keep quiet about the bullying, we empower the bullies. That’s a terrible, terrible, terrible mistake. It helps no one. It hurts everyone.

I don’t empower bullies. When death threats are directed at me, I talk. And I offer zero apologies for doing so.

My best wishes to you, my dear Goon friend.

Hitting-Below-the-Mendoza-Line Rob

 

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

These posts have been answered thousands of times. You have learned absolutely nothing.

I still believe that the retirement study posted at John Greaney’s web site lacks an adjustment for the valuation level that applies on the day the retirement begins, that much is fair to say. It was my claim to that effect that set this whole thing off on the morning of May 13, 2002, and I still believe that to this day. So you are right in a sense that I have “learned nothing.” I still believe today what I believed then re this critical matter.

Price discipline.

That is what is lacking in Buy-and-Hold.

If you publish retirement studies showing that the safe withdrawal rate changes when we see changes in the price of stocks, you have price discipline. And it is price discipline that makes markets work. So, if your model for understanding how stock investing works gives proper attention to price discipline, everything falls into place.

If you do not have price discipline, everything goes to pieces. If the effect of price is the most important factor that needs to be considered when setting one’s stock allocation and you ignore price in your calculations, you are going to get every calculation wrong. If the core job of the market is to get the price right and you encourage participants in the market to ignore price, sooner or later prices are going to crash because there is no other way for the market to do its job but to crash prices. Crashes don’t just happen, we bring them on when we come to believe in Buy-and-Hold strategies.

That’s my sincere take in any event, Anonymous.

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

Slow Learning Rob

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

“It is my view that the length of time that re have remained at high prices is the biggest piece of evidence suggesting that I might be wrong. ”

Might? I think you now realized you have been wrong all this time. It is time for you to give your “I was wrong” speech.

Everyone should question Valuation-Informed Indexing. I stand by that one 100 percent.

Everyone should also question Buy-and-Hold. I stand by that one 100 percent too.

It is by questioning our ideas and the ideas of others that we learn. And learning is the one true free lunch in this world. So I am a big-time advocate.

I don’t think i should offer any apologies. Because I have always said that people shouldn’t believe in Valuations-Informed Indexing just because I advocate it. I have always said that anyone who does that has a screw loose. And because I have raised a lot of good questions about Buy-and-Hold. Which is good for Buy-and-Hold. Those questions can either cause Buy-and-Holders to make needed adjustments, which would be a plus. Or it can cause Buy-and-Holders to come to a stronger belief in Buy-and-Hold because they have seen it survive more challenges, which would also be a plus.

So there is nothing to apologize for. Asking questions is a good thing for everyone concerned. I am here to help. So I ask questions. I ask the hardest questions that I can think of. And I offer no apologies whatsoever for doing so.

It is your best friends who challenge you with questions about your beliefs, Anonymous. True fact.

Or so Rob Bennett sincerely believes, in any event.

Rob

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

No, Rob, I have not seen any threats to Wade’s job. I, and others, have asked for links to that and to those death threats you have claimed, yet you have provided no evidence. Yet here you are again with your abusive talk about prison and your name calling.

It doesn’t matter what you say you see or what I say I say. What matters is what millions of middle-class investors say they see in the days following the next price crash.

Price crashes change what people can see, Anonymous. Or at least they can change what people say they see. Irrational exuberance disappears in a crash. It just goes “Poof!” And, when fantasies disappear, people see things that they didn’t see while the fantasies had influence over their vision.

I will do what I can to help you out. That much I can offer. I will not necessarily be able to persuade the millions of investors who suddenly will be able to see things that they couldn’t see before now that the fantasy stuff has disappeared for them. I do not have control over what those millions say or do. Perhaps you’ve noticed.

Fantasies giveth and fantasies taketh away. The way it is. Shiller was awarded a Nobel prize because he showed with peer-reviewed research the power that fantasies have over stock investors. We are today living through the stuff that he talks about. We are living through one side of the story today and we will be living through the other side in the days following the next price crash.In those days we will be living through the side of the story in which people like you are placed in prison cells for things they did when as a society we were living though the earlier side of the story.

Or so Rob Bennett sincerely believes, you know?

Hang in there, man. It gets better, prison cells or no prison cells. A lot better.

Rob

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

Show just one reference on your site in which someone made a death threat or threatened Wade’s job.

The only abusiveness I see is this person that calls people goons and tells them they are going to prison.

You’ve seen the Wade one 50 times, Anonymous. I love it. But even I am tired of looking at it.

You’re Goons. And you’re going to prison. People who threaten academic researchers are Goons and they go to prison.

The question is — Why haven’t you gone to prison YET? Why are we talking about it? If it had happened years ago, we wouldn’t be talking about it. Why hasn’t it happened?

People are complacent. Prices are at two times fair value and that’s what people care about. They care about the number on their portfolio statement.

Will they get upset when that number drops by 50 percent or more? If they get upset about that, then they’ll get upset about the criminal stuff. So you’ll go to prison THEN.

Is that crazy? It’s completely crazy. It would be better if we told people the truth about how stock investing works before they lost their money so that they could avoid having that happen to them. And it would be better if you weren’t going to prison. But whachagonnado?

You think you’re going to prison too or you wouldn’t be posting here. At the very least you’re worried about it. It’s not my fault. I asked Motley Fool to give Greaney the boot in June 2002. He wouldn’t be going to prison if they had done that. So what’s his beef with me? He has none.

We can’t have different laws apply for the investment advice field. I know we do for now. But that cannot be a permanent situation. It’s a mixed-up short-term thing.

Irrational exuberance is irrational, you know? High stock prices are irrational. It is true that investors like to act in their self-interest. So, if we permitted honest posting, if we sent you to prison as soon as you committed your crimes, could we even have these crazy prices? We could not. Your crimes helped keep prices up. That’s why we permitted them. We like high prices and it takes a lot of irrationality to get them and your criminal stuff has kept the research-based stuff from shutting down the irrational stuff.

Good for you, I guess.

Yowza!

Rob

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

“It will be interesting to see how it all plays out, Anonymous.”

See above. It has all played out. Time for you to get that job. At your age and lack of recent experience, you can’t be that picky. Take what you can get. Let us know where you land and I will try to throw a few extra bucks in your tip jar.

The tip-jar thing is quintessential Goon stuff. It’s a celebration of the fact that you have been able to deny me an income for my fine work for 17 years with your ruthlessly, criminally abusive posting.

I see things from just the opposite perspective. I believe that someone who challenges your thinking on an important subject is doing you a favor. It’s possible that the person will convince you, in which case they have improved your life in a big way. And it is possible that the person will not convince you, in which case you are certainly not worse off and in reality are at least a bit better off because your conviction in your belief is strengthened by your having seen it survive the challenge. So all good stuff and no possible bad stuff.

You obviously don’t see it that way. Your reactions are DEFENSIVE. Defensiveness is not a rational response. Defensiveness is an emotional response. The insane amount of defensiveness that we have seen from Buy-and-Holders over the past 17 years tells me that Shiller is right. It’s very strong evidence. It is my view that people should be talking about that defensiveness on every investing site on the internet. We all need to know whether it is Shiller or Fama who is right and the defensiveness that we have seen makes a compelling case that it is Shiller. The frustrating paradox, of course, is that you almost have to believe that Shiller is right to even consider that sort of evidence. If you are a Buy-and-Holder you believe that investment decisions are 100 percent rational. So how could there be any defensiveness?

Each defensive post makes me more confident of my position and more confident in my belief that it will ultimately prevail. The stuff that persuades me a bit is when my Buy-and-Hold friends engage in rational and civil debate. That always at least impresses me and creates a desire within me to look at things anew and to do my best to give the Buy-and-Hold position as much credit as I possibly can. The abusive stuff is a huge turn off and assures me that it was a good thing that I finally worked up the courage (after three years of living in fear!) to advance that famous post of the morning of May 13, 2002.

The Ban on Honest Posting is consistent with the core principle of Buy-and-Hold. If investors are 100 percent rational, a Ban on Honest Posting is not even possible. So why worry that there is one in place? But the Ban on Honest Posting is not consistent with the laws of the United States. We protect people from fraud because we know that the humans have weaknesses that cause some of them to practice fraud and that cause others to fall for the fraudulent claims and that cause still many others to tolerate both the practicing of fraud and the falling for it without speaking out.

So the bottom line here is whether or not a 50 percent price crash will be a sufficient shock to prompt another 10 percent of the population to speak up about the ban which has been keeping us all in ignorance for so many years since Shiller published his “revolutionary” (his word) research showing us how stock investing works in the real world. We cannot get over the ignorance until we acknowledge that we humans are capable of preferring ignorance so long as it makes the numbers on our portfolio statements bigger than they should be and we cannot acknowledge that for so long as we remain in ignorance. So we are trapped by a Catch-22. But a 50 percent price crash might be painful enough to shock us out of it and cause us to appreciate the wonderful gift that Shiller bestowed on us when he published research showing us how to make such price crashes a thing of the past.

It all comes down to whether I believer that this is a good country or not. I believe that this is a good country, I believe that we are a good people. Not a perfect people, obviously. But a good people. If we were not a good people, Shiller’s book would never have found a publisher and would not have become a best-seller. If we were not a good people, Shiller would not have been awarded a Nobel prize. If we were not a good people, Wade Pfau would not have devoted 16 months of his life to preparing research with me showing that Valuation-Informed Indexing has been far superior to Buy-and-Hold for the entire time-period for which we have good records of stock prices. We are a good people who have been held back for 17 years (or for 38 years, if you count back to 1981) by a Catch 22 that has made fools (and, in the case of you Goons, criminals) of us.

I believe in us! I believe in research! I believe in the published rules of all the sites! I believe in learning! I believe that investors are humans and that humans possess emotions!

But we’ll see, you know? I certainly never thought that it would take 17 years for us to make our way to the other side of The Big Black Mountain. I thought that it would take perhaps 17 hours. So I have something less than a perfect track record when it comes to this stuff. Reader be warned!

My best and warmest wishes to you, Anonymous.

Life-Affirming Rob (All You Need Is Love, Man)

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 made a few calls to lawyers a long time ago. I experienced the same problem talking with the lawyers re my lawsuits as I have experienced trying to get the errors in the Buy-and-Hold retirement studies corrected. People have a hard time believing in what you refer to as “this whole conspiracy thing.” ”

That should have been your clue that you were wasting your time.

The effect on me was just the opposite.

Say that Shiller is right. That means that bull markets are a mass delusion.

How does a society engage in a massive delusion? It’s not easy. If the site owners were enforcing the published posting rules, we could not have bull markets. People like me would spill the beans and the mass delusion would come to an end.

In ordinary circumstances, if criminal acts were used to stop people like me from spilling the beans, people like me could go to lawyers and get help and again the mass delusion would come to an end. So the reaction of the lawyers is part of the bull market story too.

Shiller was awarded a Nobel prize because he did something of huge importance. The Buy-and-Hold Model is the dominant model for understanding how stock investing works. The Buy-and-Hold Model says that stock prices are set through a rational process. So they are real, they can be trusted. Shiller says something different. He says that prices are set by shifts in investor emotion. They are NOT real. They cannot be trusted. They are temporary. To the extent that stock prices are set by investor emotion, they are the product of a mass delusion. Learning that that is so is a huge advance.

I love my country. So I want news of this advance to be shared with every investor on the planet. So that we all enjoy its benefits. I am not even able to imagine any downside.

You are saying that I should interpret any sign that Shiller is right, that stock prices really are the product of a mass delusion, as a sign that I am wasting my time. I suppose that in the short term that is kinda, sorta so. It’s hard to break through the mass delusion. I have been trying for 17 years and I have had my head slammed against the wall 17 million times.

But the mass delusion hurts each and every one of us in very, very big ways. If we are going to get over it, we are going to need to discuss these matters openly and frankly and honestly. There is no other way. So I don’t interpret signs that we really are suffering a mass delusion as signs that I am wasting my time. I interpret those signs as signs that we all really need to get about the business of opening every discussion board and blog on the internet to honest posting re the last 38 years of peer-reviewed research.

Buy-and-Hold says that it is reason that matters. Shiller says that it is emotion that matters. All that I have seen from Buy-and-Holders for 17 years now is emotion on top of emotion on top of emotion. That doesn’t tell me that I am wasting my time. It tells me that we all need to be paying more attention to what Shiller showed.

If Shiller is right that it is emotions that determine stock prices, emotions are not going to be the same when the CAPE value is 8 as it is when the CAPE value is 30. If Shiller is right, all of the people who today do not want to hear what the Valuation-Informed Indexers say are going to in the days following the next price crash be angry about the lies that were told to them by the Buy-and-Holders. Emotion works in two directions. You have benefited from them for 17 years. When the CAPE value is 8, I think that the emotion will be helping me, not you.

But, again, I think we are going to have to wait to see how it all plays out.

Rob

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

“The best thing for investors is for the price always to be at fair value. That allows for an annual price gain of 6.5 percent real, which is of course super.”

The problem is if there was a 6.5% real/no volatility asset available to buy, so many people would want to buy it that the price would be driven up.

Imagine there was an investor named Rob, he loves stocks but doesn’t want to over pay for them so he is at a 0% stock allocation.

Then one day, as if by magic, stocks priced to deliver 6.5% real, priced at “fair value” and poised to grow uniformly so as to always remain at “fair value” are available.

Rob gathers up his money, pulls up at the stock market, spies a suitable person who already owns some stock and says “Hey you, I’d like to buy some of those fine looking stocks”

The investor, lets call him Evidence Based Investing, takes a look at Rob and says “Are you f*ing kidding me? I own these 6.5% real/no volatility stocks and you want me to sell them to you? Not only will I not sell them you but if anymore are available I would buy them too. In fact I would out bid you. I don’t need 6.5% real, I am happy with 6.0% real and there are probably many investors who would accept lower returns and pay more. Sell them to you? You’re crazy”

You see, that is the fundamental problem with your whole magical high return low risk future. If it ever happened it would attract so many new buyers that the price would rocket and returns fall. It simply can’t happen.

I am grateful to you for making an intelligent point, Evidence. The kind of question that you are raising here is the sort of thing that needs to be the subject of a national debate. I wish that more people were here to read your words. And I would like people to read my response too. But not because I want to “win” the debate. I want people to think these things over and to come at them from multiple perspectives. These are important matters. And they are puzzling matters in many respects. People should be trying to figure these things out.

The premise of all of your words in this comment is that investing is a rational enterprise. The entire Buy-and-Hold Model is built on that premise. Shiller has CHALLENGED that premise. That’s the difference in point of view. If it really is so that investing is a rational enterprise, Buy-and-Hold is the ideal strategy. I grant you that. But Shiller has showed with the examination of historical return data that investing is NOT a rational enterprise, that it is a highly EMOTIONAL enterprise. And I think he is on to something. So it is not persuasive to me to say “this just doesn’t make rational sense.” The entire history of the market does not make rational sense. If investing were a rational enterprise, prices would fall in the pattern of a random walk. They do not. There is a strong correlation between today’s CAPE level and the price that will apply 10 years from today. That shouldn’t be. And yet it is so.

Do we have to get angry at each other because we do not agree on this point? I am not angry at you. I like it that you are here. You keep me honest. You add points that I would not be able to make because I do not share your perspective. What I want is to feel free to keep YOU honest. And to keep other Buy-and-Holders honest. Not because I don’t like you. Because I DO like you. Because I want you to at least be exposed to any questions about Buy-and-Hold that you need to be exposed to to know the full story. Hearing those questions can make you experience doubts. Hearing them and wrestling with them can also strengthen your confidence over time. I want us both to say what we believe and either persuade the other over time or make the other more confident in his position over time because it is a position that has been tested and that has survived the test.

Those are my thoughts, in any event.

If we give people the information that they need to obtain higher returns from stocks while taking on less risk, the safer asset classes will have to offer higher returns. I give you that one. But I see that as a good thing. I would like to see the returns on Certificates of Deposit increase.

My point, though, is that you cannot assume rationality. In 2000, TIPS were paying a risk-free 4 percent real and the likely 10-year return on stocks was a negative 1 percent real. Explain that one. You seem to think that irrational things simply cannot happen. But that happened. I don’t even recall too many people speaking up about it at the time.

We should all want more rationality. I want as much rationality as possible. But I am not willing to assume it. We have to WORK for rationality. Giving people the information they need to earn higher returns on stocks while taking on less risk is helping them to invest more rationally. It’s a good thing. We shouldn’t be worried that, if we make stock investing better for everyone, that some other asset class will do worse. The people offering the other asset classes will figure out how to keep up. Markets adjust to changed circumstances. Opening up the entire internet to honest posting on the last 38 years of peer-reviewed research in this field would just be one more changed circumstances re which the markets for all of the various asset classes would need to adjust.

What you really are highlighting with your comment is that stocks are an amazing asset class. Under the reasoning you use in your comment, we could conclude that even the current situation is impossible, that stocks are just too darn good. Stocks really are an amazing asset class. That’s just the way it is. And I don’t think we should worry that it is impossible that stocks could ever be a better asset class than they are today. If the research shows that we can make stocks a more appealing asset class than they are today, we should go for it.

And please remember that we would never see huge bull markets in a world in which we were free to post honestly re the last 38 years of peer-reviewed research in this field. Stock prices increased by 126 percent from 1996 through 1999. Something like that could never happen in a world in which investors were able to educate themselves about how poor a long-term investment stocks become when the price gets too high. So there would be negatives for stocks in a post-Shiller world.

However, the positives for stocks would be much greater than the negatives. Risk would be dramatically reduced. And returns would be far more stable. And ultimately, returns would be higher because economic growth would be increased in a world in which these insane price swings did not cause so many business failures. Rationality is a plus. One could argue that it is a “free lunch.” We just have to accept that rationality cannot be assumed, we have to work to secure it.

There’s no reason why you have to take on huge amounts of risk to get a return of 6.5 percent real from stocks. The 6.5 percent real return comes from the productivity of the underlying companies. Why shouldn’t investors be able to tap into those gains? They are putting up the money that produces them. That’s a perfectly legitimate arrangement. Most of the risk of stock investing is voluntary in the days since publication of Shiller’s amazing, Nobel-prize-winning research.

That’s my sincere take, in any event.

Rob

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

How about some honest posting. TIPS didn’t exist in 1996. Secondly, you have exaggerated the returns.

https://www.morningstar.com/articles/801922/20-years-in-have-tips-delivered.html

Third, you don’t just give yourself bonus points on what you think was risk. There are not risk adjustments to historical results because they are actual results, not forecasts.

Just admit you were wrong to get out of stocks. You can’t change history will lies.

In the days before TIPS and IBonds were available and when stocks were priced at insanely high levels, I put some money in certificates of deposit (CDs). They were paying a (non-inflation-adjusted) return of close to 7 percent and inflation at the time was less than 3 percent. So I obtained a real return of more than 4 percent. That’s as good as TIPS and IBonds provided once they became available.

All of these wonderful opportunities were available to you as well as to all other investors. Why weren’t they being widely written up? Because most investment experts are Buy-and-Holders. They believe that it is impossible that there could be investment classes offering a better deal than stocks. So, when they see them, they don’t see them. We don’t see things that we don’t want to see, things that we have persuaded ourselves cannot be seen.

I don’t agree with what you are saying about risk. The investor doesn’t know at the time he makes a decision to buy TIPS or stocks what the return on stocks is going to be. The return on TIPS is a sure thing, the return on stocks is unknown. So there is more risk in buying stocks. Should the investor not be compensated for taking on that risk? It seems to me that he should be. If I have a choice between getting a sure 4 percent real from TIPS and possibly getting 6 percent real from stocks but also possibly seeing a negative return from stocks, I would rather take the sure 4 percent real. The ceiling is higher with stocks. But I am not being sufficiently compensated for risk in that case.

Why shouldn’t investors demand higher returns from stocks, given that they are riskier? Should they not receive any compensation for being willing to take on that risk.

Stocks ended up doing better from 1996 forward. I give you that one. But there was no way of knowing that was going to happen in 1996, when the investment decision had to be made. TIPS or CDs were offering a sure thing. Stocks offered a chance of doing better but also a chance of losing lots of money. I want to be compensated for taking on that risk. If stocks cannot offer a return of 2 percentage points of return more than I can get from an asset class with a guaranteed return, I don’t want them. I just don’t see the appeal if there is no compensated being paid for the added risk taken on.

If you take on added risk without being compensated for doing it for your investment lifetime, you are going to end up doing poorly. If you get compensated for taking on risk, I could see it working out. But if you are willing to take on more risk without being compensated, it is my view that you are being foolish. I don’t see how that could work out in the long run,

To take on added risk without being compensated for it is an emotional choice, in my assessment.

I wasn’t even a tiny bit wrong to get out of stocks. The fact that I am ahead today shows that. And the fact that I will go much farther ahead after the next price crash highlights the point. And then of course I will enjoy decades of compounding returns on the amount by which I am ahead. Valuation-Informed Indexing gets better and better and better over time while Buy-and-Hold gets worse and worse and worse over time. It’s been working that way for 150 years now. That’s as far back as we have good records of stock prices.

Do you even divide the numbers on your portfolio statement by two in making these assessments? It is my sense that you do not. Huh? What the f? How can you possibly get the numbers right if you fail to do that? Do you understand what is being signified by the words “the stock market is now priced at two times its fair value”? To fail to divide the numbers on your portfolio statement by two at a time when stocks are priced at two times their fair value is like trying to calculate the safe withdrawal rate without including an adjustment for the valuation level that applies on the day the retirement begins.

It’s the mistake that the Buy-and-Holders make over and over and over again — treating Pretend Gains (“Irrational Exuberance”) as if they were real. Irrational Exuberance is not real, Anonymous. Irrational Exuberance will not help you to pay the electric bill when it is cold outside.

Now you get angry. Now you come back with name-calling and threats of violence and threats of career destruction. The Buy-and-Hold Way.

That stuff doesn’t show that Irrational Exuberance is real. That stuff shows that Shiller is right that investing is a highly emotional endeavor and that it is not possible to get it right without taking the emotional (valuations) side of the story into account.

My sincere take.

Right-to-Get-Out-of-Stocks (According to the Numbers, If Not the Marketing Slogans) Rob

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

Your post wasn’t famous. In fact, it ended with you making an apology.

It’s a good thing to make an apology when you think you’ve gotten something wrong, Anonymous. Had Greaney made an apology at the time I did, every last one of us (especially Greaney) would be in far better circumstances today.

And the post was the most important post ever advanced in the history of this new communications medium. You know that list of 45 comments by Wade Pfau re his view on Valuation-Informed Indexing that I often set forth in comments here? We wouldn’t have any of those comment available to us had I not worked up the courage to advance that May 13, 2002, post. That post changed everything.

It changed the history of investment analysis. Either valuations affect long-term return or they do not. If valuations affect long-term returns, then there ain’t no way in God’s green earth that the safe withdrawal rate is the same number at all valuation levels. On the morning of May 13, 2002, people in this field had known for 21 years that valuations affected long-term returns and yet still believed that the safe withdrawal rate is always the same number. Huh? What the f?

My magical post pointed out that contradiction. The obvious follow-up question was: If the Buy-and-Holders got safe withdrawal rates this wildly wrong, what else did they get wrong? And of course the answer was — Everything. Buy-and-Hold is a numbers-based model. Get the core number wrong (you are always going to get the core number wrong if you assume that the market is efficient when in reality valuations affect long-term returns) and you are going to get every calculation wrong. That’s why a number of years later Wade Pfau concluded that, not only were the safe-withdrawal-rate numbers wrong but that long-term timing is always required and that: “Yes, Virginia, Valuation-Informed Indexing works!”

I think that you Goons knew on some level of consciousness on the morning of May 13, 2002, how big this was. Your reaction was over the top. It was violent. Why would a difference of opinion on how the safe withdrawal rate is calculated cause people to go so nutso? What was going on was that you sensed that the debate that we were having concerned a lot more than just safe withdrawal rates — it concerned every strategic investment question that there is. Get safe withdrawal rates wrong and you’re going to get it all wrong. Get safe withdrawal rates right, and you’re going to get it all right.

You couldn’t stand the thought that the Buy-and-Holders had gotten it all wrong. To you, it was like hearing that everything that you had believed in for your entire life was wrong. A belief in Buy-and-Hold was core to your identify and my decision to point out the error in Greaney’s study was perceived as an attack on your entire world view.

Of course the reality is that we are all better off if our world view is rooted in reality and the fact that 38 years of peer-reviewed research shows that Buy-and-Hold is rooted in error means that we can all live better lives when Buy-and-Hold is updated to reflect the new research. So there have all along been people trying to help us make the transition to Valuation-Informed Indexing. And indeed I am sure that there were people trying to help us make the transition prior to my famous post. The post just got things out on the table that had been going on quietly in the background for many years before I came on the scene.

It is a huge benefit that for 17 years now things have been out on the table. We have been able to document how all of the research supports Valuation-Informed Indexing and how the Buy-and-Hold “idea” (that the stock market is the only market that ever existed in which it is not necessary to practice price discipline — the claim is on its face absurd when you give it a moment’s thought) is rooted in nothing more than an emotional Get Rich Quick impulse. So, when the next Wade Pfau comes along, he doesn’t need to work through all the preliminary questioning that Wade had to work through — he can see how the debate has progressed for 17 years and begin his own efforts at a much more advanced place in the logic chain.

I am very proud of that post, Anonymous. I couldn’t be more proud of it. It changed the world in a very, very, very positive way. And it took a lot of courage for me to put it forward. It took me three years to work up the courage to advance that post.

I am proud of the apology too. The apology was of course in error; I had nothing to apologize for — I have been proven right that Greaney failed to include a valuation adjustment in his study 1,000 times over. Still, I like it that I was willing to make an apology at a moment in time when I thought that I might have made a mistake. All of our troubles follow from that unfortunate reality that you Goons have NOT been able to admit mistakes. It makes me feel good about myself to know that I played it very, very differently.

I also like it that I made the mistake. It didn’t do any harm. I realized (by seeing Greaney’s behavior) that I was wrong to make the apology within a day. But the fact that social pressure could cause me to make that mistake shows the power of social pressure to cause lots of others to make much worse mistakes. Wade Pfau obviously has been negatively influenced by social pressure imposed by Buy-and-Holders. So has Shiller. So was Bogle. So have lots and lots of others.

It helps me feel more sympathetic to all of the great people who have failed to speak out as strongly as they should have for me to know that I was afraid to stand up to social pressure at the time that I advanced that apology. So I possess that same human weakness that I am pointing out in all the other humans. We all want to get along with the other humans. I think that evolution put that inclination within us. And it is that inclination not to speak out about the absurdity of Buy-and-Hold strategies at times when our weakness for Get Rich Quick marketing slogans is making us all feel a lot richer than we really are that has historically made stocks a high-risk investment class.

Shiller’s “revolutionary” (his word) insight is that stocks are not inherently risky. When as a people we develop the courage to speak out publicly about the dangers of Buy-and-Hold, most of the risk of stock investing goes “Poof!” That’s the thing that made Wade so excited about Valuation-Informed Indexing. Our research showed that just by permitting people to talk openly about what the last 38 years of research in this field shows, we can reduce stock investing risk for everyone by nearly 70 percent. That’s the biggest advance in the history of investing analysis and there is nothing in even a remotely close second place.

I’ve seen a good number of wonderful discussion boards burned to the ground as a result of the efforts of you Goons to block millions of people from learning what they very much need and want to learn about how stock investing works. But none of the many amazing advances that we have achieved over the past 17 years would have been achieved had I not worked up the courage to push the “Send” button on that amazing post. I would do it again 10,000 times over if I knew then what I know now. And a lot of what has gone down has been exceedingly ugly stuff. It’s just that there is even more life-affirming stuff that has gone down and that, once we all get to the other side of The Big Black Mountain, it is only going to be the positive, life-affirming stuff that is going to matter.

No apologies for pointing out that Greaney got the numbers wrong in a study that thousands of my friends were using to plan retirements. No apologies whatsoever. I am thrilled that I was given the gift of living in a place and at a time in which it was possible to help so many people by putting forward those few brave words. The only thing that I apologize for today is that it took me three darn years to work up the courage to advance that post!

My best wishes to you, dear friend.

Apology Making Rob