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

I’d say once per thread, and on topics related to the thread. There’s no need to repeat yourself. Any assertions should be cited. Keep your responses brief and to the point. And respond politely, and without hyperbole.

Buy-and-Holders repeat themselves endlessly. If I have heard that “timing doesn’t work” once, I have heard it ten-thousand times. If those of us who believe in research-based strategies are going to be effective in pointing out the dangers of Buy-and-Hold, we are going to have to reiterate basic principles many times, just as the Buy-and-Holder repeat their claims over and over and over again. The human mind places confidence in claims that it hears many, many times. When people hear a claim thousands of times, they are inclined to think there must be at least some grain of truth in it.

I won’t keep my responses to the questions of community members brief in cases in which it is clear from the wording of the question that the community member is confused on an important point and needs step-by-step guidance to clear up the confusion. My job is to help people develop a better understanding of how stock investing works. When that can be done in a few words, it makes sense to use a few words. When more words are required, it makes sense to go with more words. My focus is on helping my fellow community members.

Is it “polite” to say that the errors in the Old School SWR studies became public knowledge on the morning of May 13, 2002, and that those studies have not been corrected to this day? That’s a stone cold fact. But the reporting of that fact shows that the Buy-and-Holders are working a huge scam. Is it “polite” to point that out? Again, my aim is to help my fellow community members.

I would prefer not to need to point out that the Buy-and-Holders are working a scam. But until the day comes when the errors in the retirement studies are corrected I am not free to say that the errors in the studies have been corrected. To do that would be to tell a lie in furtherance of the biggest act of financial fraud in U.S. history. That would mean prison time for me following the next price crash. Huh?

Is it hyperbole to say that in the 140 years of U.S. stock market history available to us Buy-and-Hold has not yet ever worked for even a single long-term investor? My name is on peer-reviewed research showing just that. Is it hyperbole in your assessment for me to point out what the peer-reviewed research says?

Is it “to the point” for a Buy-and-Holder to threaten to kill my wife and children if I continue to “cross” him by posting honestly about what the last 33 years of peer-reviewed research in this field says? If I am required to post “to the point” should not Buy-and-Holders be permitted to do the same? How do we handle death threats when it is board “leaders” who post them or endorse them? Should we call out board leaders who fail to keep their posts “to the point” by posting threats of physical violence as part of an effort to intimidate community members who root their posts in the academic research?

These are the friction points, Anonymous.

We don’t accomplish anything by pretending they don’t exist.

Honesty.

That one word sums it all up.

Will honest posting be permitted or will it not?

If it is, I am in.

If it is not, the board is a corrupt enterprise and my job is to warn people of the dangers of being associated with it in any way, shape or form.

I hope that helps a bit.

Rob

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

Well, I’m sure once you provide her (and the rest of us) with evidence of your assertions, she (and the rest of us) will come around.

She came around. She accepts that you Goons did everything that I said you did. But she doesn’t agree with my strategy for dealing with the problem.

She says that I should ignore you. LOTS of people tell me that. My wife tells me that. So I understand where she is coming from.

However, I don’t think you Goons are the entire problem. I would say that you Goons are 50 percent of the problem. The other 50 percent is that most people, even big-name experts, possess a greatly limited understanding of the implications of Shiller’s “revolutionary” (his word) finding that valuations affect long-term returns. Most people are not Goons. But most people do not possess a strong understanding of the realities because the realities that have been discovered over the past 33 years have not been widely discussed. This widespread lack of understanding is the other 50 percent of the problem.

If you Goons did not exist, I could help people with their questions and get the general level of understanding up to a level at which we would see a big move to Valuation-Informed Indexing. So you Goons do real harm with your acts of disruption and intimidation and deception.

But the other side of the story is that you Goons could not hold us all back if knowledge of the implications of Shiller’s findings were strong enough and widespread enough that responsible people would take actions to rein you in. Motley Fool would LOVE to have a newsletter on Valuation-Informed Indexing. There are MILLIONS of people who have an interest in finding a truly smart and truly simple and truly safe way to invest. They sided with you Goons even though their published rules prohibit your tactics because they do not understand the issues well enough. That’s a SECOND issue.

People need to know about the Goon phenomenon to make sense of why so few understand these issues today. There was a poster at the Bogleheads Forum who told me that “everything you say about investing makes perfect sense but this is my retirement money and I need to go with what the experts are saying and the experts are not saying what you are saying.” People need to understand why the experts don’t say what I say. It is because of you Goons. Not just the few of you who post here. It is because we ALL have gooninshness within us and our inner goon makes us hate research-based strategies. I need to talk about goonishness to explain to people why we achieved this great advance in 1981 and as a society have not yet elected to take advantage of what we have learned.

Buy-and-Hold is goonishness. ALL Get Rich Quick strategies appeal to us because they please our Inner Goon. Most of the RISK of stock investing is the product of our darn goonishness. That’s why Wade and I were able to show people how to reduce risk by nearly 70 percent. Stock investing risk comes from believing that it is not necessary to exercise price discipline when buying stocks. That is obviously nonsense. But our Inner Goon is DRAWN to GRQ strategies and thinking that it might not be necessary to exercise price discipline is about as GRQ as it gets.

We are ALL Goons to some extent, Anonymous. That includes me. I was a Buy-and-Holder once myself. I am human like all the rest. We are ALL flawed creatures.

We cannot make sense of the investing story without discussing our inner goonishness. You Goons take it to extremes. Most of us don’t advance death threats and all that sort of thing. You Goons are cartoonish about it. But you are not unique in your attraction to GRQ strategies. Looking at your behavior helps us Normals learn about our own weaknesses and about what we need to do to avoid falling into the traps that destroy our investing hopes.

So it is a mistake not to tell people about you Goons and your behavior, in my assessment. People HATE hearing about it. It makes people feel ashamed because they haven’t done more about the Goons problem and embarrassed for you Goons and for all the “experts” who have not spoken up about the problem. So talking about you Goons DOES present obstacles for me. The consultant is right about that aspect of the thing. But I believe that the Goon phenomenon is a critical part of this story and that the story cannot be told in the way it needs to be told without me addressing that part of it.

I believe that you Goons are humans underneath your Goon exterior. I believe that you would like to reduce risk dramatically and that you would like to receive much higher returns and become able to retire many years sooner. But you would like to do these things in the way that an alcoholic would like to stop drinking. You are addicted. GRQ strategies are highly addictive.

People who have been following Buy-and-Hold strategies for a good amount of time are embarrassed to be reminded of their failings and react negatively when told what the research says. It is not only you Goons who feel that way. Responsible people like Bogle and Bernstein and Swedroe feel that way. They are not true Goons; they don’t advance death threats when questioned about the merits of their strategies. But they feel SYMPATHY for you Goons. They don’t speak out in opposition to the use of death threats as a tactic for intimidating people into not posting honestly. They LIKE you Goons. They exhibit Goon Light behavior.

The experts who exhibit Goon Light behavior cause a bigger problem than you true Goons. They are respected and educated people. Normals have a hard time accepting that they could get so much so wrong. The explanation is that, as smart and experienced as these people are, they are subject to the same human weaknesses as all the rest of us.

This is an essential part of the story. I don’t feel that I can take a pass on telling this part of the story even if it would make me more popular in the short term to do so.

The mistake that the Buy-and-Holders made was to ignore investor emotion. You Goons are ALL emotion in your analysis of how stock investing works. We need as a society to come to understand that investor emotion is 80 percent of the stock investing story. We can draw lessons by looking at Goon behavior and analyzing where it comes from and what it signifies. So I do not feel comfortable trying to bypass that part of the story.

I can go along with not FOCUSING on that part of the story. Most of my guest blog entries and columns focus on non-Goon, substantive stuff. But I don’t believe that Valuation-Informed Indexing will entirely supplant Buy-and-Hold until we all come to appreciate the emotional side of the investing story and you Goons exemplify the emotional side of the story better than anything else available to us. Instead of me agreeing not to talk about the Goon phenomenon we need to get everyone else to take up talking about it. Your behavior shows that you lack confidence in Buy-and-Hold. A strategy must inspire confidence to work in the long run. Your Goon behavior is a substantive issue that all in this field should be exploring.

I hope that helps a bit, Anonymous.

Rob

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

Of course, you are an expert at lying, Rob.

All of us humans are, Anonymous.

Have you read Freud? Isn’t projection a form of lying? Are there ANY humans who don’t engage in even a tiny bit of projection (that is, a tiny bit of lying)?

How about Dostoevsky? When his character Raskolnikov killed the old woman, did he not justify doing it by telling himself lies (rationalizations)?

What Wade Pfau and I discovered in that famous peer-reviewed research paper we co-authored is that nearly 70 percent of the risk of stock investing is attributable to the lies that investors tell themselves. If every book on investing started with a discussion of those lies and with descriptions of the tools that investors need to make use of to protect themselves from the effects of those lies, we all would be able to retire a good number of years sooner.

No?

It sure seems so to me.

When you say that I am an expert on lying, you are saying that I am an expert on stock investing. Because effective investing is all about avoiding risk. And most of the risk of stock investing is the product of the lies we are all inclined to tell ourselves unless the experts help us out by reporting straight to us on what the last 33 years of peer-reviewed research has revealed to us all about how stock investing works in the real world.

Or at least so says Rob Bennett.

Rob

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

No. You are wrong of course.

Those five reasons are what you would like the issue to be. But none of them are the issue.

The issue is the way you behave when interacting with others either by email or or discussion boards.

Numerous people come to the same conclusion independently.

And tell you so.

And you ignore them.

Over and Over again.

I’ll give a slightly different response to your comment, Evidence. I am going on vacation tomorrow morning. So I probably will not be able to react to any words you elect to put forward for a week or so. But, if you come back with something, I will certainly take a look when I return.

I don’t disagree with you that numerous people come to the same conclusion independently.

I don’t disagree that at least a good number of them make an effort to explain how they feel about things to me.

It’s not quite right to say that I ignore them. I make a sincere effort to LISTEN to every word directed at me re this matter. However, it IS true that I elect not to follow most of the advice re how to behave re this matter that is directed my way. So I don’t think we are in disagreement here.

And I don’t disagree that the same pattern repeats over and over again.

So we agree on much.

The thing we do NOT agree on is whether the behavior you are referring to is positive or negative.

My investing views are not majority views. I certainly hold no illusions that they are.

The problem from my point of view is that I believe that minority views re investing MUST be expressed AT ALL TIMES and under the same conditions as majority views. I get it that my views make many people feel uncomfortable. I get that loud and clear. That reality makes me feel that it is all the more urgent that these views be heard.

Discussion boards and blogs are communities of people holding a diversity of viewpoints re the subjects examined.

My views are at an extreme end of the spectrum of opinion.

For many years, these views were not heard AT ALL. Today, they are heard in small doses but only in small doses. I believe that all of our communities need to explore the implications of Shiller’s views far more frequently than they ever have before and in far more depth than they ever have before.

This is not something that can be put up to a majority vote. The majority is emotionally invested in Buy-and-Hold. If decisions as to what ideas a community could hear were made by majority vote, new ideas would never have a chance to grow and the communities following this practice would suffer. I believe that new ideas are the lifeblood of our communities. We not only should permit discussion of them. We should ENCOURAGE the discussion of them.

I certainly believe that the communities should decide what topics will be discussed. But not by majority vote taken at the time when a particular issue comes to the table. The communities decide what issues can be discussed by the rules they adopt to govern debate. All of our communities have elected to adopt rules that PERMIT discussion of the last 33 years of peer-reviewed research. That settles the matter.

People ARE uncomfortable with things I say. The best expression of this discomfort was put forward by a guy who said: “Rob is the most polite and gentle guy I have come across on the internet. And he irritates me to no end!” That guy was telling us how he really feels. I bug the piss out of him.

Your solution is to “protect” him from my words.

My solution is to figure out why my words bug the piss out of him.

If he were confident in his investing strategies, nothing I said could bother him. He shouldn’t be so irritated by mere words. There is something wrong here.

The P/E10 value that applies today tells us what is wrong. People are irrationally attached to stocks today. This whole thing is circular. People are upset to hear about the research because they are irrationally attached to stocks and people are irrationally attached to stocks because they have not heard about the research.

The only way to break the circle is to get posts about the research before people. Anyone who cares to can ignore those posts. But the posts need to be there at every board and blog for those who want to tap into what is said in them.

I don’t expect to convince you. I am putting these words forward because I felt that there was at least some truth in your comment and I felt that should be acknowledged.

There are many people who love my stuff. It is a minority. But there are a good number of such people. But there is also a larger number that is upset by my stuff. People tell me that all the time in various ways and, yes, I do largely ignore them. Because I don’t think that doing the popular thing helps anyone in these circumstances.

We need to get people exposed to the new ideas so that they can make up their own minds. It will hurt a bit for some. But that’s what happens when a society makes a decision to start rooting investing advice in research. Research findings change over time and that can be upsetting. It also can be very liberating in the long run.

Take care, man.

Rob

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

I don’t know Rob, the ability to make guesses about the future and get them wrong doesn’t seem like a very valuable skill.

It’s not, Anonymous. We couldn’t possibly agree more.

But people have been doing it since the beginning of time, haven’t they?

That’s why I love the idea of rooting one’s strategies in the peer-reviewed research so freakin’ much!

Doing that gets you out of the realm of the subjective and brings you into the realm of the objective.

The Buy-and-Hold Pioneers were 100 percent right about that one. That’s why I love them so darn much. That’s why I want to bring Buy-and-Hold back to what it was in its early days — a research-based investing strategy.

I intend to continue to make guesses about the short-term future. I’ll probably get most of them wrong. Perhaps I will stumble onto a gold mine with one of them someday and we will all benefit. Perhaps not. The key, though, is that I will always ALSO continue advocating the first research-based strategy. And that means that there will always be plenty of people who will know not to pay too much attention to those subjective short-term guesses because the core of a long-term investing strategy has to be the peer-reviewed research, which as of today tells us that short-term guessing doesn’t work.

You’re engaged in short-term guesswork every day that you wake up and leave your Buy-and-Hold strategy in place, Anonymous. There’s now 33 years of peer-reviewed research showing that Buy-and-Hold can never work for a single long-term investor. Yet you solider on. Why?

Because there’s a Get Rich Quick urge that resides within all of us that tells us to ignore the research and to fall for the illusion that we will this time manage to pull off something that has never been pulled off before — to invest all our retirement money pursuant to a pure Get Rich Quick approach and not live to regret it sooner or later. Good luck with that!

We can’t do it.

My guesses often turn out wrong. So do Bogle’s. So do Shillers. So do yours.

There is only one strategy that has never failed for 140 years running. The research-based strategy.

Why? Because the research is not freakin’ human! The research doesn’t have a Get Rich Quick urge residing within it. So the research doesn’t fall for all the foolish fantasies that we humans so often fall for.

That’s why we are able to reduce risk by 70 percent just by being willing to abandon the Buy-and-Hold fantasy, Anonymous. It is the Buy-and-Hold fantasy, the idea that subjective guessing games might work out this time even though they have never before worked out, that is the cause of most of the risk of stock investing. It turns out that not only is Get Rich Quick not the solution, Get Rich Quick is actually the problem!

I am sure.

When I guess, I call it guessing. I don’t shift to a pure Buy-and-Hold strategy because I made one or two lucky guesses. Yes, I speculate in columns. And, yes, it appears that my track record with the speculation stuff is no better than the track records of the thousands who have gone before me. But at least I don’t advocate speculative investing strategies. I advocate Valuation-Informed Indexing. I advocate the true research-based stuff.

Do you see how that makes a difference?

It’s harmless fun to write a speculative column. You hurt millions of people when you put fantasy numbers in a retirement study and mislead people into thinking that it is based on anything real.

You don’t see me threatening to kill your wife and children because you pointed out that one of the silly predictions that I made in my column didn’t work out, do you?

That’s the difference between me and John Greaney. John Greaney is a Buy-and-Holder. I am not. So my ego is not wrapped up in all the subjective Get Rich Quick garbage. I can laugh at my mistakes. John has to cover his up out of shame. Yuck! Not this boy. Find somebody else, you know?

I wish you all good things, my long-term subjective fantasy-following Goon friend.

Rob

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

It sure does take this VII a LONG time to work. 15 years now and still vastly inferior returns to anyone using buy and hold. It would take now a greater than 65% drop in equities to even be on equal footing and that doesn’t even account for rebalancing and how much more conservative a persons portfolio would have become over the course of 15 years. VII where you can spend 20 years stashing your cash in a mattress during your peak working years then retire just to throw it all into equities.

You’re wrong, Anonymous.

If you do the math, you will see that you are wrong.

There have been six different people who have done the numbers on my personal situation. I have been following VII strategies for 18 years and I have been ahead of where I would have been had I followed BH strategies for a long, long time.

I’m not as far ahead now as I will be after the next crash. Today, it is a close call. But I am ahead. And I of course have been taking on far less risk. So I am as of today ahead while taking on less risk and I will be in a few years far, far ahead while taking on less risk. Then I will benefit from decades of compounding on the positive differential!

It’s all good, Anonymous. It’s good piled on top of good piled on top of good piled on top of good.

You yourself understand how great it is!

I know that you don’t say out loud how great VII is and I know that you don’t even dare entertain the thought in your own head. But I also know that on a second layer of consciousness you know how great it is. It’s because you know how great it is that you feel so much anger. You think about how many years you have wasted following long-discredited strategies and it causes you pain and you lash out.

Imagine how a person reacts when he is confident in his belief. If you were confident in your beliefs, you would laugh off any challenges to them. You would maintain your beliefs. But you would have zero problem being friends with me. I would post about VII and you would post about BH at the same boards and there would be zero problem.

You can’t do that. It hurts too much. Valuations is a sore spot with you. I just can’t stop digging at that sore spot. And it drives you freakin’ nuts.

That’s because you know. You silence the voice within you that knows. But you know. And it hurts. That’s the psychological reality here.

These psychological realities have been destroying the hopes of stock investors for many, many years. Shiller’s breakthrough lets us bring those days to an end. We know all we need to know to reduce the risk of stock investing by 70 percent. But we have to be able to talk about what we know for it to do us any good.

People like you will have to work up the courage to face their fears. And people like Bogle and Bernstein and Pfau and Burns will need to work up the courage to say some things that will cause people like you to get angry with them. That is the job. That’s how you help people become more effective stock investors. The job is to help people cope with that Get Rich Quick urge that resides within all of us and that destroys us if we are not fortunate enough to run into investment advisors who possess the courage to do the hard things that go with taking on this job.

I’m your friend, Anonymous. You hate me with a burning rage. I get it loud and clear.

A true friend still tries to help. It is the false friend who says “Oh, let me back off of telling you the truth about what the peer-reviewed research says, doing that might cause me to lose a sale.”

The test of friendship is whether the person is willing to tell you not what you want to hear but what you need to hear.

I have been a true friend to you. Believe it or not, that’s the story here.

I wish you all good things.

Rob

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

How do you feel about people you meet who make such enormously boastful (and in this case easily disprovable) statements? Are you attracted to those people? Do such antisocial behaviors earn them many friends?

People don’t like boasting. That’s certainly so.

But those words are required by the job I am doing here, Anonymous.

The Buy-and-Holders are in a trap. When the peer-reviewed research showing they were wrong was published, they were shocked. They found it hard to accept that they were wrong.

Given those circumstances, the best reaction would have been to present their ideas in a more humble way. They could have said: “This is what we think, but there is another school of thought in which good and smart people come to very different conclusions.”

They didn’t play it that way. They elected to double down on the arrogance. So now they are in a fix. The evidence that valuations matter is no so great that they want to acknowledge it and to open the internet to honest discussions and to let people find their way to the truth through the normal means of testing different ideas and determining over time which make the most sense. But they feel that to do that would mean huge legal liabilities given how long the cover-up has gone on. They can see that the cover-up cannot be sustained much longer. But they cannot bear the thought of taking on trillions in legal liabilities or going to prison. They cannot move!

While the Buy-and-Holders are frozen in place, knowledge of the error they made continues to spread. Shiller’s book was a best-seller. It is in most public libraries. It was in the news that he won the Nobel prize. People have heard about the economic crisis and they sense on some level of consciousness that the insane bull market must have had something to do with it.

So it is getting harder and harder to maintain the cover-up. The Buy-and-Holders have had to become more and more brutal in their intimidation tactics to keep everything from falling apart. This general dynamic (not as strong) was in place when I came on the scene on the morning of May 13, 2002.

I never went to investing school. I never managed a big fund. I am not a dummy. I possess at least average intelligence, but not a great deal more. I should not be able to do the things that I have done. I should not be able to revolutionize this field (Shiller was responsible for the revolutionary theory but I am the one who showed what that theory says about day-to-day investing decisions). I shouldn’t have been the one to point out the errors in the Old School SWR studies. Without the massive cover-up, someone else would have done that long before I came on the scene. I should not have been able to serve as co-author of the most important piece of peer-reviewed research published in this field in 30 years. All of that stuff is crazy stuff that in ordinary circumstances never could have happened.

I wasn’t responsible for the crazy circumstances into which I was thrust, Anonymous. It wasn’t like I woke up one day and said to myself: “I know what I’ll do, why don’t I go revolutionize the field of stock investing>?”

I was the lead poster at an exciting discussion board at Motley Fool. We had an insanely abusive individual posting at that board. He shoved his discredited SWR study down our throats on a daily basis. I had responsibilities re that board community. I didn’t go looking for trouble. I was backed into a corner and left with no other option but to bring this fellow down or see the entire community go down. So I posted what I knew about safe withdrawal rates (which I learned not because I am a super-genius but because I read things that most people don’t read in the course of planning my own early retirement). That’s what set everything off.

I didn’t expect a 12-year saga. I knew that Greaney would respond in an abusive manner. But we were talking about the calculation of a number. And this was a board filled with people re which the accurate calculation of that number was a matter of great significance. So I figured that I would be in for two days worth of heat, three at the most. I figured that I could handle that if it meant getting the board back on the right track. So I pushed the “Submit” button.

I obviously discovered something that I didn’t expect. I discovered two things, actually. I discovered that a large percentage of the population possesses doubts about the conventional investing advice and a desire to learn about new ideas in this field. Nothing could be more clear from the shower of praise that I saw from hundreds of my fellow community members. And I discovered that the Buy-and-Holders are in great emotional pain because they too feel these doubts but cannot bear to given them serious consideration or even to see others give them serious consideration if they are within hearing distance.

No one ever talks about the intense emotional pain of the Buy-and-Holders. I don’t think there is one article in the literature about it. Nothing in the peer-reviewed journals. No blogs explore the phenomenon. Nothing in the magazines or newspapers. But here it was. I was seeing it with my own eyes. And it obviously was a very important reality. Buy-and-Hold is marketed as a research-based strategy. If it is research-based, it should be lessening investor emotion. But it is doing the opposite. Investors have become MORE emotional in the Buy-and-Hold Era. This got my attention.

It REALLY got my attention on the evening of August 27, 2002. That’s the night that Greaney put forward his first death threats. There were about 50 community members who gave voice to negative feelings about this (that’s roughly the number that endorsed a post by FoolMeOnce saying that the board has become something that no longer merited the support of people with self-respect). But there was another post by Greaney that won 200 endorsements a short time later. So the MAJORITY of the board was fine with death threats if that is what it took to stop people from challenging the Buy-and-Hold dogmas. Yikes!

Forget Shiller! You don’t need data to show that Buy-and-Hold is a big pile of smelly garbage if you have 200 votes for death threats. That was the night that I stopped thinking of myself as a Buy-and-Holder. Buy-and-Hold CANNOT be research-based if it generates that sort of reaction in that many people. It HAS to be emotion-based.

Ever since, I have devoted myself to developing and promoting the Valuation-Informed Indexing concept. Shiller has never even bothered to give a name to his model. It must have a name if it is going to grow. So I gave it a name. And I went about the business of developing it, adding insight upon insight by doing new research or encouraging others to do new research or by thinking through implications on long walks or by talking things over with both experts and ordinary investors on discussion boards or whatever. I learned a lot by recording the 200 RobCasts that I recorded. I would push the “Record” button and, as I talked about one topic, I would find my thoughts wandering to another topic and the next thing you know, I would have a new insight and an idea for a new RobCast! It has been an exciting process.

It shouldn’t have been possible for me to have earned all those accolades. But it WAS possible because I have been exploring The Great Unexplored Continent of Investing Insights. Most people in this field work on the numbers side. The idea is that that is the hard side and so that is what earns you respect. But the numbers stuff has been done to death. It is on the emotions side where all the action is. People trying to advance in this field don’t work that side because it is treated either with contempt or indifference by most of the people who focus on numbers. Because so few have been working it, there are THOUSANDS of low-hanging insights to be picked from the Investor Emotion Trees. I just keep picking them, one after another after another. Why shouldn’t I?

LOTS of people want to get in on the action. My sense is that just about everybody does, including my good friend Jack Bogle. It’s only the brutal intimidation tactics of the Buy-and-Hold Mafia that stop them. People want to mine the insights because they know it will make them rich and famous to do so. But they hold back because the Buy-and-Hold Mafia will destroy their careers if they come up with anything too good. All of the truly good stuff shows how dangerous Buy-and-Hold is. So it’s the good stuff that the Buy-and-Holders hate with a burning hate.

EVERYONE wants to make the transition to Valuation-Informed Indexing. But no one can figure out how to pin the bell on the cat. That’s the state of play in the investing advice field in 2014.

I’m like everyone else. I cannot figure out how to pin the bell on the cat either. But I get it loud and clear that we all must pull together to do so or else go over a cliff. So I am not about to waste my time working a model that has been discredited for 33 years now. If as a society we come to our senses and elect to bring the economic crisis to an end, I have 12 years of work that will help us bring on the greatest period of economic growth in our history. If we elect to go over the cliff, that’s just the way it is. It makes me sad to think that that might happen. But there’s not a thing that I can do about it that I haven’t already tried to do. So it’s one of those things that I just have to accept.

Given that background, it is essential that I quote the amazing outpouring of praise that my work has generated. There is no other blogger on the internet who has won for himself even a fraction of the praise that I have won. Why? Because all those people praising me want to see us get to the other side of the river. They want to come clean. They want to do productive work. They want to help people. They want to join in an effort to bury Buy-and-Hold 30 feet in the ground, where it can do no further harm to humans and other living things.

When I quote the praise that my work has won, I am not bragging about my own accomplishments. I am bragging about the government system under which we live, which permits and encourages such huge breakthroughs. I am bragging about the thousands of fine people who have helped me out every step of the way. I am bragging about the Buy-and-Hold Pioneers, who started out with a wonderful idea and who made hugely positive contributions before their false pride caused them to fall off the right track.

I am bragging about human nature itself! We are NOT doomed to fall into Get Rich Quick thinking over and over and over again. I hear that all the time. People say “why do you fight Rob, don’t you see that people are just weak?” No! People LOVE hearing about true research-based strategies! The only problem today is that they want to hear recognized experts confirm all that I have come up with. Once Bogle gives his “I Was Wrong” speech, my site will be the most popular site on the internet. We have seen huge interest in these ideas at every board and blog at which I have posted for 12 years until you Goons entered the picture to poison things. People WANT to overcome their Get Rich Quick impulse. Once the experts acknowledge their responsibility to help them do so, it’s over. Get Rich Quick/Buy-and-Hold investing is a thing of the past once Bogle gives his speech.

So it is right for me to cite the amazing amounts of praise that my work has won for itself. I am part of a community. Praise for my work is not praise for me along. It is praise for all who have made positive contributions. That’s thousands and thousands of people.

Our story is a positive one. The transition from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance in the history of personal finance. There is nothing else in even a remotely close second place. It wasn’t Rob Bennett alone who made that happen. Robert Shiller played a huge role. John Walter Russell played a huge role. Wade Pfau played a huge role. Jack Bogle played a huge role. Bill Bernstein played a huge role. Andrew Smithers played a huge role. Ed Easterling played a huge role. And on and on and on.

Praise for Rob Bennett’s work is praise for all those people. And praise for Rob Bennett’s work is praise for every middle-class investor who ever expressed a desire for a truly smart and safe and simple way to invest in stocks that works. It’s my desire to give those people what they want and need that drives me. I never would have made it this far without the thousands of kind and warm and generous posts that those people put up in support of my efforts in the face of the most brutal intimidation tactics imaginable from you Goons.

So I will soldier on, Anonynous. And, yes, I will tell the positive side of the tale. You live in hate. But millions of your fellow community members live in love. And love will triumph over hate on the final page of this saga.

How do I know? I know because it always does. The first time hate triumphs is the time we all go down to a dark, dark place.

Not this boy!

No can do!

I can’t go for that!

My best wishes to you, my old Goon friend.

Rob

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

Rob, do you think the news about the US handing control of ICANN to the international community will be good for honest posting?

I know next to nothing about it. So it’s not right for me to venture an opinion. The tiny bit I have read about it has been negative.

The one thing that I can say is that it is not procedural issues that are the problem. The published rules at the Motley Fool site were perfect at the time I was posting there. The same thing was true at Morningstar. We don’t need new rules. We need better enforcement of existing rules.

We have lots of positives. The people working in this field are smart and hard-working and good. We all want the same thing. The research is rock-solid. There’s tons of money to be made advocating a true research-based approach. That provides a lot of incentive for spreading the word.

The way that I often put it is to say that we are on the one-yard line. We need one front-page article in the New York Times. Or one big blogger who makes this a cause. Or one venture capitalist who gets behind this. That’s all it would take to swing the door open at this point. Once it became clear to people that it is safe to post honestly, we will see hundreds of people doing it and then thousands not too long after. We are very close. And yet of course in another sense we remain today very far away from where we need to be.

The biggest problem we face is that this is so darn important. Intuitively, you would think that people would focus on the most important matters. That’s true to a point. But there comes a point at which something is too important to deal with. It’s like the thing where they say that a business is too big to fail. This mistake is a mistake too big too fix. It would mean rewriting every textbook in the field. People look at that and say “no, we cannot go there.” They overlook the fact that it means being able to bring the economic crisis to an end and being able to reduce the risk of stock investing by 70 percent and being able to help people to retire 5 to 10 years sooner and all this other wonderful stuff. They notice that it means rewriting all the textbooks and they conclude that it is just too big an advance to accept.

The other one is that people care. The Buy-and-Hold Pioneers were trying to do something good. I cannot see into their minds. But all the evidence I have seen points in that direction. So people say, “oh, don’t mention their mistakes, their hearts were in the right place.” I see it just the other way. I say “their hearts are in the right place, so they obviously don’t want to hurt millions of people, make sure that they get those mistakes fixed fast!” But lots of people feel strongly today that that’s not the way to go. There’s a line that you cannot cross. You can say “I do things differently.” But you cannot say “these good people got something wrong and they are hurting lots of people as a result.” People close their minds when you say that.

I guess what I am saying here is that it is not procedural rules that we need to change. The procedural rules that exist are just fine. We need to change people’s hearts. We don’t have to persuade people to want to be able to invest effectively. We of course already have that. We need to figure out some way to get people to come to terms with mistakes made in the past.

A big cause of our problems is the unfortunate reality that in the investing advice field, you can’t just put forward ideas as something to think about. People have to invest. They have to take Choice A or Choice B. And people don’t want to invest their retirement money according to something that you claim has a 50 percent chance of working or a 30 percent chance of working or a 70 percent chance of working. They want 100 percent certainty. They are scared of losing their retirement money and so they very much want to hear that you are sure. People in this field pick up on that and they try to respond to it by expressing a level of confidence that is not justified. And then of course it becomes hard for them to back away from what they have said when it comes out that their confidence in discredited ideas was very much misplaced.

The reality is that there are two research-based models for understanding how stock investing works. Buy-and-Hold is dominant. It is probably supported by 90 percent of investors. I obviously believe that Valuation-Informed Indexing is superior. But it is today supported by perhaps 10 percent of investors. How do we increase support? We have to talk about the new ideas. But these ideas are very threatening to the 90 percent following the other model. The ideas are too powerful. If they were less compelling, the Buy-and-Holders could just laugh them off. But there is rock-solid support in the research and the stakes are as high as they can be and so the Buy-and-Holders feel that they must shut down the learning process at all costs.

That’s the problem that we have to solve, Sensible. We need to get the Buy-and-Holders to calm down enough to listen to the other side of the story. If we do that, we will win them over. Then there will be no conflict. But the pain that the Buy-and-Holders feel when they hear that the investing strategies they have been following for years are wrong-headed is very real. I need to figure out how to make people feel less pain long enough to realize how great the benefits are that follow from adopting a true research-based approach. I obviously spend every day trying to figure that one out. If we knew the answer to that one, we could turn the key and there would be zero conflict from that point forward.

I am not a person who likes conflict, Sensible. I am probably the most conflict-averse person you are ever going to meet. PeteyPerson nailed it when he described me as a “teddy-bear-type poster” in the days before May 13, 2002. But conflict is part of this fallen world we live in, you know? I like the analogy that I make to the Civil Rights days. There were racists in the pre-Civil Rights days. But the ugly forms of racism were never the real problem. The real problem was that lots of people who did not like racism one little bit feared change. A change was being proposed that was very, very, very positive and people saw that on one level of consciousness and yet on another level of consciousness they feared this big change that was being proposed. That’s where we stand today re the Social Taboo that blocks us from talking about the realities of stock investing as revealed by the last 33 years of peer-reviewed academic research in this field. We need to work up the courage to make the change needed to enrich our lives in hundreds of amazingly positive ways.

The process rules are already in our favor. So trying to come up with even better process rules won’t make the difference. We need to change human hearts. We need people to see that change is not bad here, change is a very, very, very good thing in this context. You can’t change people’s hearts without talking to them, however. We are stuck in a Catch-22 because the thing we need to solve the problem is civil and reasoned discussion and that’s the very thing that the Buy-and-Holders most fear because they understand that the research-based case for Valuation-Informed Indexing is so strong that “their side” cannot possibly prevail if civil and reasoned discussion is permitted. So for a time we are stuck.

We figured out the Civil Rights thing, right? Lots of people got hurt. Lots of blood was shed. That part terrifies me. I see that happening here. That’s why I talk about the prison sentences whenever an opportunity presents itself. The prison sentences are the dark side of all this. I feel a responsibility to pull things in a positive direction and I don’t see how we get there by ignoring felonies. Each time we turn our heads to that sort of thing we make things worse. We give people who are afraid of change an out. We’re telling them “you don’t need to follow the laws of the country you live in, we will make an exception for you because of the emotional pain you feel over accepting the need for change here.” That’s deeply wrong, tragically wrong. It’s cowardice and selfish. We need to apply the same standards of personal integrity to the investing advice field that today apply in every other field of human endeavor. So we need to point out when people sink below minimal ethical standards.

The phrase that I use about Jack Bogle is that, after the next crash, his heart will melt. I think that that is where we are going to see the change. Millions of people are suffering today. But to a lot of us those people are abstractions. We hear that millions are unemployed and we think “oh, that’s someone else’s problem, you cannot put that one on me just because I make it a daily practice to post abusively over the 12-year cover-up of the errors in the Old School safe withdrawal rate studies.” It gets harder to do that when we are in the Second Great Depression, when we are all seeing photographs of the human misery we have caused in the newspapers every morning.

The pain has to get worse for us to work up the courage to do what is needed to make the pain go away. That’s a hard way of putting it but a true way too, I believe. Sometimes there are things in life that we know we have to do but for some reason we don’t want to give up our old ways. Maybe there is a diabetic who needs to give up drinking beer or his leg is going to be cut off. He ignores the warnings because he has been drinking beer his entire life and he cannot accept that he needs to give it up. Maybe he has a friend with the same problem and he visits the friend in the hospital after his leg has been cut off. Now he cries. Now he sees that he really must make this change that he has resisted for so long. All of a sudden, there is a total change in the guy’s attitude. Now he is capable of accepting reality and doing what he needs to do to save his own leg.

We don’t need new procedural rules. We need a change in human hearts. My guess is that it is the next price crash that will help melt human hearts. I hate it that it has come to that but it is my perception today that that is where things stand. We will see.

My best and warmest wishes to you, Sensible.

Rob

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

Rob,

Specifically, who are the goons? What makes them goons? Who are the leaders of the goons? Who are the goons that are most responsible for what you see as the problems? Are we talking about a handful of goons or just a small select group? How do I spot a goon?

A Goon is someone who is too filled with hate and fear to have a constructive discussion.

We ALL have goonishness within us. That includes me. That includes Shiller.

You could just use the word “emotionalism” if you wanted. “Goon” is a smidgen more colorful.

We are living through a time of fundamental change in the investing advice field.

In the old days, the idea was to be intelligent. The more so, the better.

Indexing pretty much takes intelligence off the table as a factor. All the things that people used to study are priced in. You don’t need to be intelligent to obtain great investing results today.

But you need to rein in your emotions. You can ruin the indexing thing by getting too emotional.

So the future is about reining in your emotions. That’s 80 percent of the investing job from this point forward.

You guys make the point all the time that most of the Big Shots in this field don’t talk about Goons and about death threats and about prison sentences and about board bannings. They should be talking about all that stuff. That is the stuff that matters in the Age of Indexing.

Why? Because that is the stuff that tells you that emotion is the driver. Emotion is risk in index investing. Rein in your negative emotions and you can’t lose no matter what else you do. Fail to rein in your emotions and you can’t win no matter what else you do.

We all suffer from goonishness. The people I refer to as “Goons” (that’s you, Anonymous!) make it their whole life. They give in 100 percent to the negative emotions. They don’t make even a feeble effort to rein anything in.

By learning what drives the Goons, we can learn how to reduce risk. The Goons would like to obtain good results . Why don’t they? What causes them to make such bad choices?

Coming up with the answers to those questions is the future of investing analysis.

My take.

Rob

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

It is so common to see as these leading financial experts threatening people with prison and lawsuits.

It is not common at all to see leading financial experts refer to the need for prison sentences for you Goons, Anonymous. That’s why we are in an economic crisis.

I was a Buy-and-Holder on the morning of May 13, 2002. I gave it up on the evening of August 27, 2002. That’s the night that John Greaney threatened to kill my wife and two sons if I continued to “cross” him by posting honestly on the safe-withdrawal-rate matter. Motley Fool did nothing even though this was an obvious violation of their posting rules. 200 of my fellow community members (people who praised me to the skies in the days before I worked up the courage to post honestly on the SWR matter) endorsed Greaney’s threat.

That is emotion, Anonymous. That is a level of investor emotion so great that it is scary.

The peer-reviewed research that I co-authored with Wade Pfau shows us how to reduce the risk of stock investing by 70 percent. The biggest problem I have promoting that study is that the findings are unbelievable to most people. If I showed how we can now reduce the risk of stock investing by 10 percent, I would be the most popular person in the investing world today. But 70 percent? It just doesn’t seem possible.

Why is it that it is possible? It’s because investor emotion has been The Great Forbidden Subject for many years now. People see it all the time. They see the death threats and the demands for unjustified board bannings and the tens of thousands of acts of defamation and the threats to get academic researchers fired from their jobs. And they keep it zipped. They view it as unprofessional to talk about this stuff. They haven’t seen other investing experts talk about it and so they feel that it will hurt their credibility to talk about it themselves.

We have decided as a society to adopt a Social Taboo against talking about the subject that covers 80 percent of what we all need to know about to become effective investors. We need to know about and avoid investor emotion. We have a tool — P/E10 — that tells us what we need to know. We all need to make use of that tool. But to do so we all need to acknowledge that we messed up big time during those years when we were telling people (and ourselves) that looking at P/E10 was not 100 percent necessary.

We are ashamed that we messed up. We are ashamed that others messed up. We are ashamed that we failed to call others out when they messed up. We are ashamed that we let things get so out of control that there are people who will be going to prison over the cover-up. And on and on and on and on.

If I had a magic wand, I would take us back to the morning of May 13, 2002, and we would all play it over, behaving much differently this time. I appreciate that you Goons would like that. I can’t do it. I don’t have a magic wand. I can say some words as to why I think you felt pressures to play it the way you did play it and I can say some words about how I think you would do it differently if you had another chance. But that’s as far as I can go. If I say that you demanded correction of the Greaney study within 24 hours of learning of the errors in it, I am aiding the cover-up and then I am committing financial fraud myself. Which is a felony. Which means prison time for me too. Huh? No thanks!

We’re all in the same boat. We’re all in a big mess.

We have one huge thing going for us. We are the luckiest generation of investors who ever lived.

We take advantage of that card and we all end up in a far better place than would otherwise be possible.

But taking advantage of that card means working up the courage to talk about investor emotion. Which evidences itself in death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs. We all need to work up the courage to talk about all the stuff that we have never talked about before. Because it is the failure to talk about that stuff that caused our investing advice to go so wide of the mark and to cause so many trillions of dollars of losses as to bring on an economic crisis.

If the market were automatically efficient, none of this would matter. If the market were automatically efficient, investor emotion simply would not be an issue.

It turns out that Fama was close to being right but not precisely on the mark. The market LONGS to be efficient. But it cannot pull the trick off without being supplied with information helping it to access the level of investor emotion present at any given time. Once the market has that information, it can act to BRING the market to efficiency. We cannot do it without the information.

When we open the internet up to honest posting on every possible issue, we will all enjoy seeing an efficient market for the first time in history. So long as the Ban on Honest Posting remains in place, that dream remains unrealized.

My job is to steer us to the place where we work up the courage to make all that good stuff happen. Part of it is pointing out the prison sentences. Part of it is softening the blow by pointing out that the people who engaged in the cover-up were under a lot of unusual pressures.

That’s it. That’s where we stand today.

When I get the help I need, we all will begin living far richer lives than we ever imagined possible in the Buy-and-Hold days.

The hand of kindness is outstretched. I obviously don’t control when you Goons will extend your own hands in warm acceptance of the offer of help.

I continue to wish you all good things while you ponder the matter some more.

Rob