Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

Thanks Rob:

Frank Martin and Seth Klarman agree that sometimes it is best to hold a larger than normal amount of cash and wait for a better opportunity set. The way I look at it is…

First the value guys stop buying and might trim back a bit so they can sleep well.
Then the garp guys stop buying and might trim back a bit until they can
sleep well. That leaves only the momentum guys buying but the momentum
list gets smaller and smaller and volatility gets stronger and stronger.
A bit more selling by the value and garp guys to sleep better and then
the Doors start playing ” This is the End “. Is it a waterfall or does
it just grind down lower 1% each day or week or month.

I do not care as  long as the cash holdings that let me sleep at night is ready for finding
bargains.

And that is how it works.

Thanks much for stopping by, Kirk.

We agree much more than we disagree. Basically, there are lots of people who have differing views and all those views get mixed together to create a market. My own view is that valuations count for a lot more than most people think, but that’s just me. I could be wrong. The market as a whole is better able to assess things than any one individual. So as a general rule I think it would be better for people to listen to what the market is saying than to listen to what Rob Bennett is saying.

There is one more element of the story that causes me to be a bit more alarmed than most others are re where valuations stand today. What if some views are flat-out censored? What if some views are suppressed so brutally that the people who hold those views stop expressing them publicly? Then you get into a situation where the market cannot do its jobs of mixing all views together and coming to a reasonable aggregate of lots and lots of different takes.

I have seen this sort of thing play out many times. I posted at a Retire Early board at Motley Fool where there were thousands of people using the Buy-and-Hold retirements studies to plan their retirements. Those studies say that the safe withdrawal rate is always 4 percent regardless of how high or low valuations go. That cannot be so according to the 35 years of peer-reviewed research showing that valuations affect long-term returns. People who know about the last 35 years of peer-reviewed research know that those retirement studies get the numbers wrong, wildly wrong at times of outlier valuation levels. The demonstrably false claims made in those studies are going to cause millions of people to suffer failed retirements in day to come, in the event that the stock market continues in the future to perform anything at all as it has performed during the 145 years of stock market history for which we have good records.

Not one of those studies has been corrected in the 14 years since I put up that post. Instead, I have been banned at over 20 investing discussion boards and blogs run by Buy-and-Holders who do not want their readers to know what the last 35 years of peer-reviewed research says on this subject. I have had many top-name experts tell me that they think that my point is right on, that the retirement studies should be corrected. But they have also told me that they are afraid to say so in public. I have had University professors contact me. I have had academic researchers contact me. I have had investors advisors contact me. Those people live in fear that their true beliefs about how the stock market works will be discovered and they will lose their jobs as a result.

The market cannot function when people live in fear of giving voice to their true beliefs. The purpose of a market is to set prices properly and the means by which a market works this magic is through the transmission of information. For example, a car dealer can ask for a certain price for a certain model of car. But if the person with an interest in buying the car learns by reading Edmunds that the price being asked is too high, the market punishes the person who set his price too high by giving the potential buyer the information he needs to obtain a better price from a different dealer.

It doesn’t work that way in the stock market. Treasury Inflation-Protected Securities (TIPS) offered a 4 percent real return in 2000. The most likely 10-year real return for stocks when they are selling at the price at which stocks were selling in 2000 is a negative 1 percent. Every investor could have raised his annual return by 5 percentage points for 10 years running just by shifting money from the stocks asset class to the TIPS asset class. That’s a total increased return of 50 percent of the initial portfolio value. Increase your portfolio value by 50 percent through a 10-minute transaction (backed by 35 years of peer-revirewed research!) and you can retire many years sooner. This is a very big deal.

There are of course reasons why the Buy-and-Holders are so hotly opposed to the idea of permitting millions of investors to learn what the peer-reviewed research says. These people have built careers promoting Buy-and-Hold strategies. They put themselves forward as “experts.” If they acknowledge the mistake that was discovered by Shiller’s 1981 finding that valuations affect long-term returns, they are going to cause their customers to doubt their expertise. The fact that they have covered up the error for 35 years makes them look like salesmen (at best!) more than true experts. This is a turf war. There is a mountain of money to be made by keeping millions of investors in the dark re what the research says.

The other side of the story is that the market cannot do its job (setting prices properly) if people cannot be informed as to what the research says. People cannot make intelligent, rational choices if they cannot gain access to important information relating to those choices. I believe that as a society we all need to pull together to work up the courage to stand up to the Buy-and-Holders and DEMAND (not ask!) that they follow the laws prohibiting the use of the tactics that have been employed for 14 years now to keep people from learning what they want and need to learn.

I hope that helps a bit. That’s where I am coming from, in any event.

I hope we get another chance to talk things over a bit. Your comment brought a nice bit of sunshine to my Wednesday morning, my new friend.

Rob

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

Why does getting a news article published depend on someone going to jail ?

Because people won’t publish the article until they feel safe doing so, Laugh.

I am not the first person who noticed that what Shiller says about stock investing does not square with what Bogle says about stock investing. It does not take an I.Q. of 140 to figure out that the two are saying opposite things. As you Goons never tire of pointing out, there should be thousands of people promoting Valuation-Informed Indexing if Shiller’s 1981 findings really are as important as I say they are. It appears as if there is some sort of conspiracy stopping people from speaking out about all of the many exciting implications of Shiller’s 1981 findings.

The “conspiracy” is that every human being who ever lived wants to be liked by his fellow humans. Shiller wants that. Bogle wants that. I want that. Pfau wants that. Everyone wants that. We are social creatures. We don’t act only to uncover the truth or only to make money or whatever. We like to uncover truth and we like to make money but most of all we like to be liked. It is our desire to be liked that has been holding us back from learning how stock investing works for 35 years now.

The editors of the New York Times want to be liked. They are of course capable of understanding that Shiller says something about how stock investing works that is very different from what Bogle says about how stock investing works. So in ordinary circumstances they would be jumping on this story. Telling this story tells people why we are in an economic crisis today. Telling this story tells people why we are seeing so much political unrest today. This is the biggest finance-related story of my lifetime. The New York Times should be all over it. So should every web site on the internet. But my web site is the only one covering it on a daily basis in any great detail.

That’s because the owners of these other web sites want to be liked. If you tell this story, people hate you with a burning hate. That’s why you Goons get away with what you do. People don’t like your intimidation tactics. That’s why as a society we have adopted laws against the use of them. But people like my truth-telling even less. People rationalize tolerance of your intimidation tactics on grounds that at least you are using them to make that damn Rob Bennett fellow shut up about what the last 35 years of peer-reviewed research says. In this one case they can see why such intimidation tactics might be called for and so they let it slide.

The big question is — What happens following the next price crash? At that point, the Buy-and-Hold fantasy no longer holds any appeal. What good does a Get Rich Quick scheme do you when you are poor? People loved Bernie Madoff right up to the day when his act of financial fraud was exposed and then they hated him with a burning hate. People love Jack Bogle today because of the big numbers they see on their portfolio statements, which they attribute to his advice. They are not going to love him when those numbers disappear and are replaced with much smaller numbers. Then they are going to hate him in the way that the Madoff investors today hate Madoff.

That’s when you see prison sentences announced. That’s when the spell is broken. That’s when no one sees any point in holding back on telling what the last 35 years of peer-reviewed research says. That’s when the benefit is in telling the truth about stock investing and not in repeating the Buy-and-Hold lies. At that point, an article on the front page of the New York Times detailing the entire 35-year cover-up will be Pulitzer Prize material. This story will be bigger than Watergate when it is told. Unfortunately, it appears that it cannot be told until the spell is broken, until we see not just with research that Buy-and-Hold is a con but with a mountain of flesh-and-blood human misery. Seeing what Buy-and-Hold does to real live human beings changes everything.

Cover-ups usually end badly, Laugh. The ordinary thing would be that Bogle would have given a speech back in 1981 noting that he still believed in Buy-and-Hold (presuming that he did still believe, which is what I believe was the case) but noting that this Shiller fellow had raised important questions that would have to be examined in a national debate. Then we would have seen new research published every year and thousands of articles and podcasts and all this sort of thing and over time confidence in Buy-and-Hold would have diminished and confidence in Valuation-Informed Indexing would have strengthened. That’s the way it is supposed to work.

What threw things off track is that this issue of how stock investing works is so important. It is similar to this thing where you hear people say that certain banks are too big to fail. Shiller’s 1981 finding is the research finding too revolutionary to examine in any depth. The opportunity to make millions exploring the implications of Shiller’s research findings has been there for any reasonably smart person to take advantage of for three decades now. But the longer the cover-up has continued, the more protective of their turf the Buy-and-Holders have become. Today, it is career death to talk about these matters in a clear and simple and honest and understandable way. People want to help their fellow humans. But they don’t want to see their careers destroyed as their reward for doing so. So most of us (not this boy!) have learned to keep our mouths shut.

When the cover-up is exposed, we won’t see the beginning of the process that we would have seen had Bogle come clean back in 1981. The whole Buy-and-Hold empire will collapse in a short amount of time. Everyone will be coming clean at once, everyone will be adopting new positions at once. We will see a “crash” in confidence in Get Rich Quick investing strategies rather than a gradual discovery of their weaknesses. The article on the front page of the New York Times and the announcement of the prison sentences and our recovery from the economic crisis and the opening of every web site to honest posting on safe withdrawal rates will all happen at more or less the same time, when the humans realize that we have no choice as a society but to tell the truth about these matters and so we just go ahead and do all the right things we have long known we need to do at the same time.

No one advocates investment in the Madoff fund today. Because it has all come out. The entire thing was a scam. Before he was exposed, there were people who said that it was pointless to talk about the Madoff scam because his fund was just too popular to fail. Those people were wrong. It was talking about the scam that caused the fund to become unpopular. So it will be with Buy-and-Hold. Once people see others talking about the Buy-and-Hold scam, they will realize that it is safe to do so and they will join in. Then there will be an avalanche.

I am not God. I am not all-knowing. I am telling you what I believe will happen, nothing more and nothing less.

I naturally wish you all the best things that this life has to offer a person, my long-time Goon friend.

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:

Buy, hold and rebalance people buy when stocks are going up and when they are going down.

Exactly.

Buy-and-Holders don’t exercise price discipline when buying stocks.

Huh?

What the f?

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:

“I haven’t finalized my plans in this area. I am still outlining an agenda. My guess is that I will get to work on this new phase early next year.”

What needs to be planned? The wildest political environment since the internet was invented is happening right now. If you’re not posting at political sites now, you never will.

You are entitled to your opinion, Anonymous. I don’t share that opinion. I am going to proceed in the manner that feels right to me.

I don’t think what you are saying is crazy. You are making a legitimate point. The political environment is indeed wild today and so maybe the guiding thought should be to strike when the iron is hot. Perhaps I am making a mistake by waiting a bit. My gut tells me that this is not quite the right time. I have learned over the years to trust my gut re such matters. So it is my intent to hold off for a bit. But I acknowledge that it is possible that I am making a mistake by doing that.

I’ll offer one possible explanation for why it might be better to wait a bit.

Yes, the political environment is wild today, as you say. Is that a good thing? Is that what we want?

I don’t want that. There is a sense in which I do want it. I want to see change. Wildness is conducive to change. We are as a people now in the process of shaking things up. So perhaps I have a great opportunity that has appeared before me that I should be taking advantage of before it passes. Perhaps there are people who would listen to what I have to say today who will not listen tomorrow and I am making a terrible mistake by holding back for a bit. I can see how that might be so.

But there’s another side to the story. The people who are voting for Trump are angry today. Fair statement, no? And the people who are voting for Clinton are perhaps not quite angry but they are something on the negative side too. Perhaps they are disgusted. Perhaps they are dismissive. Perhaps they are just shocked. They are something on the negative side, in my assessment. They are not today fully open to the possibility that they have something to learn from the Trump people. They do not feel warm and friendly toward the Trump people. At least that much is fair to say.

That’s a problem, in my view. I understand that it is probably insanely idealistic to think that there is ever going to be a day when there will be zero antagonism between the Trump people and the Clinton people. But the answer is not to engage in more yelling. I intend to spend more time in future days at political sites because the investing field has in the Buy-and-Hold Era become 100 percent corrupt. People feel (with good reason) that it is not possible to make a living in this field unless you give up your personal integrity to make nice with the Buy-and-Holders. So it makes sense for me to spend more time at political sites where people may feel more free to talk openly about the Wall Street Corruption that is poisoning our country today. But I am not a tiny bit interested in generating more hate. If what you are suggesting by saying that the political environment today is more “wild” than it has been at most other times is that there is an openness to hate today that was not present before, please count me out, you know?

I am one of many people who believe that the best moment in Sunday’s debate was when both Clinton and Trump were asked to say one positive thing about the other and both offered sincere and kind comments re his or her “opponent.” That’s the United States I love. That’s what works. That’s the answer. That’s where I am taking this thing between the Valuation-Informed Indexers and the Buy-and-Holders.

Love is the answer, Anonymous. So, yes, I want to work at sites where it is possible to say openly “Jack Bogle is a con man who has more responsibility than anyone else alive for bringing on the biggest economic crisis in U.S. history.” That must be said because that’s the obvious truth here and we need to make everyone aware of the obvious truths if we are going to solve our biggest problems. But that by itself is not hateful. Saying “Jack Bogle is a con man” is an act of love so long as the intent behind the statement is to bring Bogle to a better place and thereby to secure for him in the minds of millions a reputation as a great man, which is what he is (the full truth is that he is BOTH a con man and a hero to the middle-class).

Yes, we need a political moment in which people are desperate enough about the pain that the Wall Street Con Men have brought on to open themselves to some new, peer-reviewed findings about how stock investing works in the real world. But we are going to waste that opportunity if we give in to human weaknesses that tempt us to blame ONLY the Wall Street Con Men for our troubles. Bogle couldn’t have gotten away with what he got away with if the newspapers had called him out on his b.s. and if the academic researchers had called him out on his b.s. and if the freakin’ millions of middle-class investors themselves had called him out on his b.s. We are ALL complicit in this huge act of financial fraud, every last one of us, including yours truly. That reality has to be part of the story that is told.

I am not convinced that the political environment that exists today is the political environment in which that FULLY true message can at last be heard. My sense is that we are inching up to a better place, that we are being put through some awful smelling stuff as part of a process that will over time come to yield some amazing fruit for our entire nation. But that we are not quite there yet.

I am not God. I could be wrong. I am not sure. But my sense is that the opportunity here is not quite ripe. So my inclination is to hold back a bit longer and watch to see how things develop. I want to help out at sites that permit people to give voice to important truths that for too long have been censored or self-censored. But one of the truths that needs to be voiced is that love is the answer, that for all of their flaws the Wall Street Con Men want to do good and long to do good and are highly capable of doing good. I need to be able to tell BOTH sides of the story to get this job done right. And I am not interested in achieving half-way successes. We need full successes to get things back on the right track. I need to be able to speak HONESTLY. That means saying that “Jack Bogle is hero to the middle class” as much as it means saying “Jack Bogle is a con man who has participated at sites that permit posting by the sorts of individuals who associate with Mel Linduaer and John Greaney.”

That’s where I am coming from. It would be a mistake to wait for the perfect moment because we don’t get perfection in this fallen world. But I am not sure that the time is quite ripe for what I am trying to do and for what I must do if all of our efforts of the first 14 years of discussions are to bear good fruit for all of us. I am in wait-and-see mode. I am watching and pondering and planning and hoping and praying. Posting (on political sites) comes later.

Those are my sincere thoughts re these terribly important matters, in any event.

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

I hope that helps a tiny bit.

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:

I guess my paid off home and cars are all lies. My kids paid for college education is all a lie.

If you counted your stock portfolio as being worth its nominal value when making decisions as to how much to spend on the house and car and college education, you made poor decisions. It’s not possible to engage in effective financial planning when you start by following a long-discredited investing strategy that insures that you get all the numbers wrong.

The stock part of your story is a lie. And as a result the overall story is not good.

My take.

Rob

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

Emotions matter to you because that has been what has driven your behavior. You did not save enough and your retirement plans failed. You then started to blame other people and things for your failure and when people pointed out how you were wrong, you got embarrassed and decided to double down on the poor behavior. As a result, you got kicked off all major financial boards and people no longer talk to you.

Yes, it is no wonder why you focus on emotions.

For me, I focus on the numbers, results and facts.

What number do you use to adjust for the overvaluation present in the nominal market price today?

Rob

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

Spare me your silly slogans. I only deal with facts.

Buy-and-Hold — The Respectable Ponzi Scheme.

I’m just having a little fun, Sammy.

If I were being serious, I would ask you whether you consider emotions to be “facts.”

That’s the big mistake that Buy-and-Holders make. They feel uncomfortable talking about emotions. They like to talk only about “facts.” But investors are humans and humans have emotions. Emotions matter — That’s a fact. If you fail to consider the emotional side of investing, you fail to consider all the facts.

Or so says Rob Bennett, in any event.

Re that,here’s another silly slogan: Rob Bennett — Another One of Those Darned Flawed Humans!

Oh, my!

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:

“I am going by what has happened over the past 145 years.”

There are all sorts of patterns we can tease out of 145 years of data. Example: When stocks rose over 19% for 2 years in a row, they fell at least 14% within 132 weeks after! Unfortunately, the market doesn’t check the “rules” before it moves. It moves randomly based on new information.

So the Buy-and-Holders say, Anonymous.

But do you know for certain?

An alternate explanation is that, when stock prices rise 19 percent in a year,that reflects a 6.5 percent increase in the value of the underlying assets rooted in economic productivity and a 12.5 percent increase fueled by investor emotion that will be reversed over the course of 10 years or so. If this is the case, the 6.5 percent gain can be relied on to finance an old-age retirement and the 12.5 percent gain cannot. If this is the case, it is important for investors to know this.

If your explanation is the right one, looking at valuations is pointless. If your explanation is the right one, the people who handed Robert Shiller a Nobel prize in economics were fools. I don’t buy it. I think valuations matter.

And, as we have seen during the first 14 years of our debate over whether honest posting re the last 35 years of peer-reviewed research in this field, so do a lot of academic researchers and professors and journalists and economists and policymakers and bloggers and ordinary investors. All of these people have a right to post their sincere views re how stock investing works wherever opinions re how stock investing works are advanced. All of the people listening in to such conversations have a right to hear both schools of thought articulated with the full force and clarity and depth at which those following them are able to put to the task.

Once your prison sentence is announced, all of these people will feel free to express their sincere views and the investing advice field will no longer be 100 percent corrupt and we will able to bring the Buy-and-Hold Crisis to an end. We adopted the laws against financial fraud for just this purpose. Financial fraud hurts people in very serious ways. When we fail to prosecute it, we permit further damage to be done.

You don’t like the idea of our laws against financial fraud being enforced because that would mean you going to prison, perhaps for a very long time. I get that. But have you really thought this through? The cover-up showing that Buy-and-Hold is a big pile of smelly garbage didn’t begin in 2002; it began in 1981. Say that someone in the time-period from 1981 through 2002 had had the courage to stand up to the Buy-and-Hold Goons of that day. If that had happened, Greaney would never have reacted the way he did when I posted honestly about safe withdrawal rates and neither he nor any of his friends (you!) would be headed to prison today. By going to prison yourself, you are helping some potential future Goon from sharing your fate.

While also helping yourself. The number of lives you destroy is obviously going to affect the length of your prison sentence. The sooner you come clean, the fewer lives you destroy. So helping out future Goons ends up helping the current-day Goons too. And of course you would be helping out the millions of middle-class investors at the same time. You would even be helping out the Wall Street Con Men. They will be able to sell MORE stocks once honest posting is permitted at every site on the internet. The single thing that holds people back from buying this wonderful asset class is the risk associated with it. The peer-reviewed research that I co-authored with Wade Pfau shows that investors who follow the first true research-backed strategy thereby reduce risk by 70 percent. Wow!

And of course you would be helping restore confidence in our political system by coming clean today. The laws against financial fraud are a key guardrail in our system. The millions of people who worked for decades to earn the money they need to retire on should not lose that money to a small group of Wall Street Con Men just because it is so easy to turn a buck by exploiting the Get Rich Quick urge that resides within all of us. Being an investing advisor isn’t all about turning a quick buck. There are ethical responsibilities involved. One of those is to speak out in strong and blunt and simple and uncompromised terms when Goons like you show up on the scene. It was the continued promotion of Buy-and-Hold “strategies” that caused the economic crisis and that thereby cost millions of your fellow citizens their jobs. The people of the United States need to see us address this matter effectively by sending you away to prison for a long, long time. It is a simple matter of basic justice.

These are all my sincere thoughts re these terribly important matters.

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 discussion thread for another blog entry at this site:

I’ve yet to meet a middle class person who ‘lost it all’ through buy and hold. Most of them appear to be in serious debt, which has everything to do with spending habits and nothing to do with investing habits – which normally are erratic and undisciplined – the farthest thing from buy and hold.

What universe do you live in where middle class people have stock portfolios and have been ruined by buy and hold? Let’s take the past 30 years, which has had 2 major recessions. The US market has returned about 7.9% real. Looks like those middle class folks that actually invested in stocks did very well.

Stocks are an amazing asset class, Laugh. There is certainly no disagreement there.

The question is — Presuming that stocks are an amazing asset class that everyone should be using as the primary means of supporting his or her retirement, is it better or worse that people be taught to exercise price discipline when buying stocks? The last 35 years of peer-reviewed research shows that it is far, far better if people are taught to exercise price discipline.

Failing to exercise price discipline adds nothing to the equation except to help turn a quick buck for the Wall Street Con Men. And they could make plenty of bucks offering honest, research-based advice. The Wall Street Con Men themselves would love to make the transition from Buy-and-Hold to Valuation-Informed Indexing. I have never seen any evidence that Bogle was not sincere when he developed the Buy-and-Hold concept as a first-draft effort at developing a research-based strategy. If Bogle is okay with people following a research-based strategy, (at least according to most of his public words — I of course understand that he has offered an implicit endorsement of Mel Lindauer’s abusive posting), who are you to object?

Shiller’s “revoltionary” (his word) 1981 findings represent an advance in our understanding of how stock investing works. They help everyone: the Wall Street Con Men; the millions of middle-class investors who need to finance their retirements; even the millions of non-investors who would like to see the economic recessions and depressions that cause such economic and politicsl turmoil put to an end. A huge advance in knowledge is a win/win/win/win/win.

The only thing that has been holding us back now for 35 years is the unwillingness on the part of the Buy-and-Holders to acknowledge having made a mistake. It was an honest mistake. And it was certainly not a dumb mistake. So there is nothing to be ashamed about re the mistake. What the Buy-and-Holders are ashamed about is the 35-year cover-up of the mistake. It is the shame re the long cover-up that is causing all the problems.

That should be our focus. That’s why I often make reference to your prison sentence. The announcement of your prison sentence will give people the confidence that our system is operating properly, that we have overcome the wealth and power of the Wall Street Con Men and the hate of the members of their Internet Goon Squads. Once we have more and more people speaking out honestly every day re their sincere views re how stock investing works, we will all come to feel better and better about ourselves every day. We need to bring an end to all the ugliness and just let the same process of gradual learning that applies in every field of human endeavor other than stock investing apply in the stock investing realm as well. We need to overcome the corruption that has been keeping us in ignorance for over three decades now. We need to let our system work in the investing realm in the same manner that it works in all other realms by applying U.S. law in a reasonable manner when we see people like you committing financial fraud.

There is nothing wrong with stocks. If you somehow got the idea that I am saying something negative about stocks, you dialed a very wrong number. But I do see something wrong with those two major recessions that you made reference to. We now know how to describe how stock investing works in a way that helps us either do away with recessions or at least greatly reduce their impact. All we need to do is to be honest with people re what the peer-reviewed research says about how stock investing works. Why not do that? What’s the downside? The only downside is that Jack Bogle will need to say the words “I” and “Was” and “Wrong.” But once he does that, he gets applauded as a hero for the remainder of his days and long into the future. Is that so terrible an outcome for a fellow who was intending to do good for everyone going back to his early days? I don’t see this as a terrible outcome.

Say that someone goes bankrupt because he over-extends himself using credit cards irresponsibly. That happens all the time, right? Does that mean that credit cards are bad? I don’t see it that way. I say that it is the irresponsible use of credit cards that is bad. We need to help people to understand how to spend reasonably in the present while also planning effectively for their futures.

So it is with stock investing. There is nothing even a tiny bit wrong with people investing in stocks and earning that 6.5 percent real return that stocks really do reliably provide. The problem comes when people start believing that they can earn MORE than 6.5 percent real just by believing in the Buy-and-Hold fantasy that it is the economy producing those oversized returns rather than their Get Rich Quick impulses left untethered and out of control. The message of the last 35 years of peer-reviewed research is that Buy-and-Hold investing strategies are every bit as bad as irresponsible spending strategies. Failing to rein in our irrational emotional impulses hurts us big time in the personal finance realm (as well as in all other realms, to be sure). We need to update the investing advice that we provide people to reflect the last three decades of research-based learning experiences.

I am saying that we should tell people the truth about stock investing. Stocks provide an awesome return. They are the best asset class for middle-class people seeking to finance their retirements. But stocks don’t ever provide returns of 20 percent or 30 percent in a single year. That’s what the Buy-and-Holders were telling people in the late 1990s. The Buy-and-Holders caused a great deal of human misery by telling those lies and I am asking them to knock off the darn funny business. I am telling them to continue to encourage people to buy stocks to finance their retirements but to begin doing so RESPONSIBLY. Doing so irresponsibly adds nothing and subtracts a great deal indeed.

John Greaney destroyed many lives with his lies about safe withdrawal rates. The people who met at the Retire Early board were friends of mine. I wanted to tell them the truth about what the peer-reviewed research in this field says. Those people made clear that they wanted to hear the truth. I have every right in the world to tell them the truth. We even have laws in place to protect me and those people when Goons like you enter the scene and engage in insanely abusive posting practices to block people like that from being able to engage in the conversations that they need to engage in to learn the truth. Those laws need to be enforced in a reasonable manner. Otherwise lots of people (including you Goons) get hurt. It’s a lose, lose, lose, lose, lose for us to fail to enforce our laws against financial fraud.

I believe that Greaney himself wanted to help the people who met at the Retire Early board. I believe that he knew all along on at least one level of consciousness that his retirement study lacked a valuations adjustment and that that was a problem. His problem is that he saw that Bogle and the other Wall Street Con Men were not including valuation adjustments in their studies and so he felt that he didn’t need to include one in his study either. It’s worse than that. If he did include a valuations adjustment, his study would generate accurate numbers. But those accurate numbers would look funny because they would differ from the numbers being generated by the Wall Street Con Men. Once Buy-and-Hold became dominant, any studies rooted in reality began to look funny. Greaney got trapped by that insanity. He took the easy route of pretending that he didn’t understand why it was wrong not to include a valuations adjustment and look where he ended up as a result.

Greaney was wrong to conclude that it was okay for him to commit financial fraud because Bogle is a big shot and Bogle was doing it long before Greaney came on the scene. Greaney should have reported the numbers honestly. At the very bare minimum, he should have pointed out in the study that it lacked a valuations adjustment, that there was research showing that such an adjustment is required and that the study would generate very different numbers if the adjustment were included. That way the readers of his study would be put on notice that they were following a Get Rich Quick approach and Greaney would be off the hook for committing financial fraud. There has to be deception for there to be financial fraud.

The same is of course true of Bogle. Bogle thought he was doing good when he developed the Buy-and-Hold concept. And of course he did do a great deal of good in about 20 different ways. But he messed up re the valuations question because the world just did not know at the time he was developing the Buy-and-Hold concept how stock investing really works. Then Shiller provided us the missing piece of the puzzle in 1981 and it became possible for us to develop a research-based approach that really works, Buy-and-Hold 2.0 or what we today call Valuation-Informed Indexing. All of Bogle’s many years of hard work were about to pay off.

The man dropped the ball. Like Nixon, he went into cover-up mode. Nobody destroyed him. He destroyed himself. Like all of the humans are tempted to do from time to time. And Greaney a number of years later elected to follow Bogle down the road of self-destruction. And of course Mel Lindauer eventually did the same.

When does the madness end, Laugh?

It ends when enough of us join together and form a resolve to send you Goons to prison. That’s my sincere take, in any event.

There is nothing whatsoever wrong with investing in stocks. The thing that is wrong is financial fraud. Those who report honestly what the last 35 years of peer-reviewed research says never feel the slightest temptation to commit financial fraud. Buy-and-Holders feel that temptation ALL THE TIME and give in to it over and over again when “forced” to do so by people like me who stubbornly continue to post honestly despite the many warnings dished out by their Buy-and-Hold friends re what will happen to them if they continue to do so.

I post honestly, Laugh.

That one is non-negotiable.

There is nothing whatsoever wrong with stocks. Stocks are wonderful. For all the reasons that both Buy-and-Holders and Valuation-Informed Indexers cite.

It is financial fraud that is not so wonderful. The financial fraud practiced by the Buy-and-Holders has caused a mountain of human misery over the past 35 years. I want no part of it. I have led the effort to EXPOSE the financial fraud of the Wall Street Con Men and their Internet Goon Squads for 14 years now. I intend to continue until we all achieve a second Independence Day and we all feel free to state our sincere beliefs re the last 35 years of peer-reviewed research at every investing discussion board and blog on the internet.

I hope that’s okay by you.

I intend to soldier on in either event.

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

Rob

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

You remind me of the George Costanza character from the Seinfeld show. Maybe you could do what George did, which is doing the opposite of what you are thinking and then that will help you become successful.

I understand that you mean that as a put-down, Sammy. The curious reality is that, looking at things from the perspective of a Buy-and-Holder, Valuation-Informed Indexers really do live in Opposite World.

It is the core beliefs of the two models that are different. When you start from a different core belief, every strategic decision ends up in a different place.

Buy-and-Holders believe that the market is efficient. It follows that the idea that the market could ever be mispriced is pure silliness. Thus, stocks offer the same value proposition at all times. Timing can never work. That all follows.

Valuation-Informed Indexers believe that valuations affect long-term returns. It follow that stock investing risk is not static but variable. Investors MUST practice long-term timing to have any hope whatsoever of keeping their risk profiles roughly constant.

We live in opposite worlds. In ordinary circumstances, that would be fine. But in this case, the Buy-and-Holders got to the top of the hill first and have for the past 35 years used their dominance to block millions of investors from learning about the other universe of stock investing strategies.

If the Buy-and-Holders are wrong about their core belief (that is, if the market really is not efficient and if valuations really do affect long-term returns), 95 percent of the stock investing advice that millions of people have heard over the past 35 years is in error.

Imagine what would happen if this were the case in any other field. If doctors were still bleeding patients today, the medical field would be a big mess.

This is why we are all enduring an economic crisis today. We learned 35 years ago that everything that we once thought we knew about how stock investing works is wrong and the Buy-and-Holders have intimidated into silence those trying to get the word out.

Yowsa!

Rob