A Rich Life

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

“Jack Bogle Owes Every Investor Who Has Followed a Buy-and-Hold Strategy an Explanation of Why He Did Not Correct the Errors He Made Promptly Following Shiller’s Publication of Research Showing Them to Be Errors”

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Set forth below are the texts of six comments that I recently put to a discussion thread at this blog:

There is no conspiracy.

Former Financial Analysts Journal Editor Rob Arnott copied Jack Bogle on his e-mail to me saying that my investing ideas are “sound” and sharing with me his own experiences with intimidation being employed to stop academic researchers from doing the research that we all need to see to learn how stock investing really works. Jack did not respond.

I don’t think “conspiracy” is precisely the correct word to describe what is going on here. But there is certainly some sort of funny business going on when Jack Bogle does not offer a public response to an e-mail of that nature. No?

Please explain Bogle’s failure to respond to Rob Arnott’s e-mail from your perspective that there is no “conspiracy” going on re these matters.

Rob

 

You are delusional.

You were one of the ones saying that on the morning of May 13, 2002, when I put up my famous post pointing out the errors in the Old School safe withdrawal rate studies.

In the past year or two, every major publication in this field has acknowledged that I was right.

Is it Rob Bennett who is delusional? Or is it the “experts” who continue to try to “defend” Buy-and-Hold in the face of 32 years of peer-reviewed academic research showing that there is precisely zero chance that this strategy can ever work for a single long-term investor?

Rob

 

You have been banned from a large number of boards.

And I have seen a good percentage of the site administrators who banned me write me notes APOLOGIZING for the bans and telling me that they see great value in my work.

Odd?

Rob

 

As to not getting responses, no one owes you anything.

Jack Bogle owes every investor who has followed a Buy-and-Hold strategy (and they number in the millions) an explanation of why he did not correct the errors he made in development of the strategy promptly following Shiller’s publication of the research showing them to be errors, Sparky.

With great influence comes great responsibility.

Rob

 

Name any crackpot idea and you usually find that 2 or 3% of the population will support that position. That is really not a great percentage.

No one employs death threats and board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs to “defend” their ideas from the challenges raised by crackpots, Sparky. Your own behavior tells the tale here.

Rob

 

you seem to be viewed as a nuisance.

I am viewed as a nuisance and a lot worse by people who are still turning a buck through the promotion of Buy-and-Hold strategies 32 years after the peer-reviewed academic research showed that there is precisely zero chance that such a strategy could ever work for even a single long-term investor. That much is certainly fair to say, Sparky.

Rob

“Where Did My Good Friend Jack Bogle Get That 15 Percent Number? He Pulled It Out of His Backside.”

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

Rob said,in February 22nd, 2013 at 2:47 pm edit

Find any investor, or any ‘stripe’, of any ‘school’, who ever purported that “Valuations don’t matter to overall returns”. Rob, there is no such person.

There are millions of such persons, Banned.

We call them Buy-and-Holders.

Jack Bogle is the King of Buy-and-Hold. I have a quote from my good friend Jack in the “People Are Talking” section of the site. He says that there are circumstances in which it is okay for an investor to change his stock allocation by 15 percent in response to extreme valuation levels.

Where did my good friend Jack get that 15 percent number? I think it would be fair to say that my good friend Jack pulled it out of his backside.

That’s blunt language.

But it is a fair statement, is it not?

Buy-and-Hold is a research-based strategy. So, if you are going to tell people how much they need to change their stock allocations at times of extreme valuation levels, you need to consult the research. The research shows that the most likely annualized 10-year return in 1982 was 15 percent real and it was a negative 1 percent real in 2000. That calls for a change of perhaps 60 percentage points (say, from 90 percent stocks to 30 percent stocks). Jacks says 15 percent. He is off by a factor of four. He is nowhere even remotely in the right neighborhood.

Why is my good friend Jack so wildly off re this one, Banned?

I say it is because he is not hearing the voices of all the many people who understand valuations (and investor emotions!) far, far better than he does. He needs to hear from Microlepsis. He needs to hear from John D. Craig. He needs to hear from Wade Pfau (and Wade needs to be permitted to post his honest beliefs). He needs to hear from Rob Bennett.

The Ban on Honest Posting is hurting Jack Bogle. It is making him appear to be dumber than he really is. He is capable of giving better advice than he gives today. But he needs to hear from the people who understand things that he does not understand to be able to achieve his potential.

Rob

“John Bogle Is Drunk, You Know? He’s Suffering From Cognitive Dissonance. That’s Like Being Drunk. He Is Not Capable of Thinking Clearly and Making Good Decisions.”

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

Say that you were Bernie Madoff’s best friend in the days before he was sent to prison. You came to understand that he was engaged in fraud.

You mention it to him. He freaks.

Now what?

The easy thing is not to say anything else. The downside with taking the easy way is that your friend ends up serving a long prison sentence.

The hard way is saying stuff that causes your good friend to freak. The upside with the freak-out is that, once he gets over the freak-out, you can work with him to bring things to a better place.

John Bogle is a friggin’ genius, okay? I rank him as the second most important investing analyst in history. If someone wanted to argue that he should be first, I wouldn’t object too strongly. A reasonable case could be made that he ranks first. So you cannot be any more of a John Bogle fan than Rob Bennett. Are we clear re that much, Sparky?

Now –

John Bogle is also human.

John Bogle has made mistakes.

John Bogle played the lead role in pushing the investing strategy that caused the economic crisis.

What to do?

What we need to do is to help our friend John Bogle understand the realities so that he can take things to a better place both for himself and for all the rest of us.

John Bogle did not wake up one morning and say to himself:”You know what would be fun? Why don’t I start the biggest economic crisis in U.S. history, maybe we’ll get lucky and it will turn into the Second Great Depression.” That’s insane. That never happened. Are we still clear?

The guy is a friggin’ genius. He has done an amazing amount of good work. He’s also human. He made a mistake (that thousands of other smart and good people also made, to be sure). So what do we do now?

You say we leave our good friend Jack Bogle to the wolves. We let the economy collapse. We let our friend Jack ruin his reputation. We watch millions of people’s lives get destroyed as we fall into the Second Great Depression.

THAT”S NOT WHAT JACK WOULD WANT US TO DO IF HE WERE CAPABLE OF THINKING STRAIGHT RE THIS STUFF TODAY, SPARKY.

It’s not.

He’s drunk, you know? He’s suffering from cognitive dissonance. That’s like being drunk. He is not capable of thinking clearly and making good decisions. It’s like our friend is drunk and wants to drive home and he is reaching for the car keys.

A friend doesn’t say: “Have a nice ride!”

A friend says: “Give me those keys, you are sleeping in my guest room tonight!”

Please tell me you get it this time, Sparky.

We don’t let our friends destroy themselves.

WE DO NOT.

If our friend Jack feels that he must continue to advocate Buy-and-Hold, that can be an okay thing or even a good thing.

BUT NO MORE DEATH THREATS.

AND NO MORE DEFAMATION.

AND NO MORE BOARD BANNINGS.

AND NO MORE THREATS TO GET ACADEMIC RESEARCHERS FIRED FROM THEIR JOBS.

Why? Because we are meanines?

No. Because we are nicies.

Friends do not let friends drive drunk. And friends do not let the pioneers in development of research-based investing strategies destroy themselves through the use of death threats and defamation and board bannings and threats to get academic researchers fired from their jobs. Any case that our friend Jack Bogle is going to make for Buy-and-Hold he is going to make pursuant to the published rules of every one of our boards and blogs. Jack Bogle is going to follow the rules of discourse that apply among all civilized people of the world.

Now –

Please do not make the mistake of thinking that I am offering a suggestion here and seeking your input.

No.

I AM TELLING YOU HOW IT IS GOING TO BE.

You dig, man?

Valuation-Informed Indexing is the future. If you want to say that civilized discourse is the future, it’s fine if you say it that way. It takes us to the same place. Say it the ideal way or say it the cautious and tentative and only minimally acceptable way. But drop the know-it-all attitude. That doesn’t fly. Not in the face of millions of ruined middle-class lives.

Please reach deep into your heart and respond with all the love of which you are capable. Love is the answer here, my old friend. I am not guessing. I am SURE.

Rob

“Bogle Associates with People Who Make Death Threats and Fails to Speak Up About It. That’s What Gives the Goons the Power They Possess Today.”

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

do you really think any reputable university would pay any heed to anything anonymous individuals we’re saying about one of their employees? 

Wade didn’t say that he thought that the officials at his University would necessarily believe everything that you Goons said. He said that he was concerned that his career would be done harm all the same because they just wouldn’t like the controversy and they wouldn’t like having to deal with the crazy situation. Since it was his work creating the problem, he would be punished.

Yes, I find that believable. I once compared Greaney’s behavior threatening a woman at Motley Fool to the behavior of a rapist. The others at the board wanted to help their friend but they didn’t want to report Greaney. Why? It was for the same reason that many women don’t want to report rapes. There are intense social pressures not to do so. Rape is such a horrible crime that all in society affected by it are ashamed about what happened. So we look to blame the victim — she must have done something to bring this on. Wade was afraid that he would be blamed for having brought on the smear campaigns against him. There are Buy-and-Holders (and perhaps even some Valuation-Informed Indexers) who would have said: “Wade must have done something.” I don’t think Wade is entirely wrong about that.

It was not solely the threats made by the Goons that caused Wade to flip. Six other factors are: (1) the lack of a positive reaction to his research by the majority of posters at Bogleheads; (2) the charges by Mel Linduaer that he had engaged in unethical research practices and the failure of other community members to stand up to Mel; (3) the feelings of envy that Wade knew he would inspire in his peers if he were put up for a Nobel prize at his age; (4) the failure of Bogle to speak up about Mel’s attacks and about the threats made by the Greaney Goons; (5) Wade’s experiences seeing what had happened to other Valuation-Informed Indexers, including myself, and the intense, burning hate that had been directed at them by Buy-and-Holders; and (6) Wade’s lack of understanding of many aspects of the Valuation-Informed Indexing model.

It was the combined effect of all these factors that caused the flip. The threats were the trigger and the threats tell the most compelling story. It is amazing to hear that such threats were made in public and that Wade did not call the police when they were made. It is a compelling part of the story and the threat element of the story suggests the other elements because Wade’s failure to call the police informs the listener that something exceedingly odd is going on.

You ask whether what the Goons did could have mattered. He flipped, didn’t he? And Shiller to this day holds back on telling us all he knows about stock investing, doesn’t he? And the bans at the 15 boards and blogs remain in place to this day, don’t they? And Mel Lindauer and John Greaney retain posting rights to this day, don’t they? And the economic crisis continues to this day, doesn’t it? And there are still people to this day who recommend Buy-and-Hold strategies, are there not? And the Old School safe withdrawal rate studies remain uncorrected, do they not? And Wade now buries the valuation question in the research he publishes so that it will not attract too much attention or controversy, does he not?

Yes, what the Goons do matters.

Not because of the inherent power of the Goons. The Goons have little inherent power. If Bogle spoke up about Lindauer when I sent my first e-mail to him, there obviously would never have been any threats made against Wade. But Bogle didn’t speak up, did he? That’s the story here.

When Bogle speaks up, it is over. For so long as Bogle fails to speak up, his silence is interpreted by millions of people as an implicit endorsement of the Goon behavior. People trust Bogle and the other experts in this field. They need to see Bogle and the other experts take action to feel confident that what their common sense tells them is so really is so. They need to see Bogle take action against the Goons to understand and accept that the rules of social intercourse that apply in every other area of human endeavor apply in the investing realm as well.

Bogle doesn’t make death threats himself. But Bogle associates with people who make death threats and fails to speak up about it. That’s the problem. That’s what needs to change. That’s what gives the Goons the power they possess today. When Bogle speaks up, all the rest of us will feel comfortable speaking up. When Bogle speaks up, the fever will break and we will all make it together to the other side of The Big Black Mountain and a thing that has brought us a lot of bad over the course of 10 years will begin very quickly bringing us a lot of good and will continue doing so for a long, long time.

Bogle needs to call out Mel Linduaer and John Greaney in the way that I have called out Mel Linduaer and John Greaney. It doesn’t matter much what Bogle says about Valuation-Informed Indexing. He needs to behave re the Lindauer/Greaney matter in the manner in which Arnott said he has always behaved in the presence of Arnott. He can disagree on substance. He must act like a gentleman on process questions. He must come out strongly in opposition to death threats and defamation and board bannings and threats to get academic researchers fired from their jobs. When he does that, the substance questions will take care of themselves.

We can handle the substance questions so long as normal process rules apply. We cannot handle Jack Bogle attending functions with people who have put up posts in “defense” of Mel Linduaer and John Greaney and saying nothing about their behavior. That failure to speak up sends a signal that imprisons us all. It is so far outside of our social norms that we cannot process it. People fear what a John Bogle, with all his connections and influence and money, can do to them if they “cross” him. People need to know in no uncertain terms that Bogle is on the side of those who want the sorts of individuals who have put up posts in “defense” of Lindauer and Greaney serving prison terms rather than posting on our boards. Only Jack himself can change the public perception that has grown over the past 10 years that he is ethically compromised re this matter because of his own feelings of personal pride over having developed the Buy-and-Hold concept.

Yes, the Goons matter. They shouldn’t, that’s certainly fair to say. But today they do. Because people who do matter have failed to disassociate themselves from the Goons in the matter in which they would if we were talking about any subject other than the errors that were made in the development of the Buy-and-Hold concept (because all the research needed to get it 100 percent right was not available at the time the concept was initially formulated).

Rob

“People Fear What a John Bogle, With All His Connections and Influence and Money, Can Do to Them If They ‘Cross’ Him…Only Jack Himself Can Change the Public Perception That Has Grown Over the Past 10 Years That He Is Ethically Compromised.”

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

do you really think any reputable university would pay any heed to anything anonymous individuals we’re saying about one of their employees? Wade didn’t say that he thought that the officials at his University would necessarily believe everything that you Goons said. He said that he was concerned that his career would be done harm all the same because they just wouldn’t like the controversy and they wouldn’t like having to deal with the crazy situation. Since it was his work creating the problem, he would be punished.Yes, I find that believable. I once compared Greaney’s behavior threatening a woman at Motley Fool to the behavior of a rapist. The others at the board wanted to help their friend but they didn’t want to report Greaney. Why? It was for the same reason that many women don’t want to report rapes. There are intense social pressures not to do so. Rape is such a horrible crime that all in society affected by it are ashamed about what happened. So we look to blame the victim — she must have done something to bring this on. Wade was afraid that he would be blamed for having brought on the smear campaigns against him. There are Buy-and-Holders (and perhaps even some Valuation-Informed Indexers) who would have said: “Wade must have done something.” I don’t think Wade is entirely wrong about that.

It was not solely the threats made by the Goons that caused Wade to flip. Six other factors are: (1) the lack of a positive reaction to his research by the majority of posters at Bogleheads; (2) the charges by Mel Linduaer that he had engaged in unethical research practices and the failure of other community members to stand up to Mel; (3) the feelings of envy that Wade knew he would inspire in his peers if he were put up for a Nobel prize at his age; (4) the failure of Bogle to speak up about Mel’s attacks and about the threats made by the Greaney Goons; (5) Wade’s experiences seeing what had happened to other Valuation-Informed Indexers, including myself, and the intense, burning hate that had been directed at them by Buy-and-Holders; and (6) Wade’s lack of understanding of many aspects of the Valuation-Informed Indexing model.

It was the combined effect of all these factors that caused the flip. The threats were the trigger and the threats tell the most compelling story. It is amazing to hear that such threats were made in public and that Wade did not call the police when they were made. It is a compelling part of the story and the threat element of the story suggests the other elements because Wade’s failure to call the police informs the listener that something exceedingly odd is going on.

You ask whether what the Goons did could have mattered. He flipped, didn’t he? And Shiller to this day holds back on telling us all he knows about stock investing, doesn’t he? And the bans at the 15 boards and blogs remain in place to this day, don’t they? And Mel Lindauer and John Greaney retain posting rights to this day, don’t they? And the economic crisis continues to this day, doesn’t it? And there are still people to this day who recommend Buy-and-Hold strategies, are there not? And the Old School safe withdrawal rate studies remain uncorrected, do they not? And Wade now buries the valuation question in the research he publishes so that it will not attract too much attention or controversy, does he not?

Yes, what the Goons do matters.

Not because of the inherent power of the Goons. The Goons have little inherent power. If Bogle spoke up about Lindauer when I sent my first e-mail to him, there obviously would never have been any threats made against Wade. But Bogle didn’t speak up, did he? That’s the story here.

When Bogle speaks up, it is over. For so long as Bogle fails to speak up, his silence is interpreted by millions of people as an implicit endorsement of the Goon behavior. People trust Bogle and the other experts in this field. They need to see Bogle and the other experts take action to feel confident that what their common sense tells them is so really is so. They need to see Bogle take action against the Goons to understand and accept that the rules of social intercourse that apply in every other area of human endeavor apply in the investing realm as well.

Bogle doesn’t make death threats himself. But Bogle associates with people who make death threats and fails to speak up about it. That’s the problem. That’s what needs to change. That’s what gives the Goons the power they possess today. When Bogle speaks up, all the rest of us will feel comfortable speaking up. When Bogle speaks up, the fever will break and we will all make it together to the other side of The Big Black Mountain and a thing that has brought us a lot of bad over the course of 10 years will begin very quickly bringing us a lot of good and will continue doing so for a long, long time.

Bogle needs to call out Mel Linduaer and John Greaney in the way that I have called out Mel Linduaer and John Greaney. It doesn’t matter much what Bogle says about Valuation-Informed Indexing. He needs to behave re the Lindauer/Greaney matter in the manner in which Arnott said he has always behaved in the presence of Arnott. He can disagree on substance. He must act like a gentleman on process questions. He must come out strongly in opposition to death threats and defamation and board bannings and threats to get academic researchers fired from their jobs. When he does that, the substance questions will take care of themselves.

We can handle the substance questions so long as normal process rules apply. We cannot handle Jack Bogle attending functions with people who have put up posts in “defense” of Mel Linduaer and John Greaney and saying nothing about their behavior. That failure to speak up sends a signal that imprisons us all. It is so far outside of our social norms that we cannot process it. People fear what a John Bogle, with all his connections and influence and money, can do to them if they “cross” him. People need to know in no uncertain terms that Bogle is on the side of those who want the sorts of individuals who have put up posts in “defense” of Lindauer and Greaney serving prison terms rather than posting on our boards. Only Jack himself can change the public perception that has grown over the past 10 years that he is ethically compromised re this matter because of his own feelings of personal pride over having developed the Buy-and-Hold concept.

Yes, the Goons matter. They shouldn’t, that’s certainly fair to say. But today they do. Because people who do matter have failed to disassociate themselves from the Goons in the matter in which they would if we were talking about any subject other than the errors that were made in the development of the Buy-and-Hold concept (because all the research needed to get it 100 percent right was not available at the time the concept was initially formulated).

Rob

“The Only Way It Could Be “Off-Topic” for Me to Try to Help My Friend Jack Bogle Learn About the Mistakes He Has Made and To Get on the Right Track Is If Bogle Was a 100 Percent Corrupt Individual Going Back To the First Day”

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Set forth below is the text of a comment that I recently put to the Investor Junkie blog:

And yes Mr. Bennett, that very much and emphatically includes you.

Thanks for including me, Hogie. The questions we are discussing here are of huge importance. I am confident we agree on that. The points made in your first comment are obviously sincere and intelligent. So I see considerable value in that comment and want to respond to it. I don’t see the point made in the second comment (that I posted off-topic — something I would never do in a million years) as being quite so obviously sincere. My take is that it is the product of cognitive dissonance. You believe it because you must believe it to maintain confidence in Buy-and-Hold. And so you have been able to persuade yourself that you really do believe it. Humans do this kind of thing ALL THE TIME in areas other than investing. I wish that we all could accept that it is likely that they do it in the investing realm as well.

You don’t say what it is that you believe that I ever said that is “off topic.” I can come up with only one guess — the majority of the board believes in Buy-and-Hold and I say that Buy-and-Hold doesn’t work. Is that it? My view is that Bogle himself doesn’t hold as a primary belief a belief in Buy-and-Hold. Bogle’s primary belief is that investing strategies should be rooted in the academic research. This belief led him to a belief in Buy-and-Hold because once upon a time the academic research really did support Buy-and-Hold. Now that the research supports Valuation-Informed Indexing (call it Buy-and-Hold 2.0 if that makes it easier to accept), Bogle should be disowning Buy-and-Hold and shifting to support of VII instead.

And he would! If only he would tolerate discussion of the research findings that show him to have been wrong in his early beliefs! My aim is to make him aware of how he got on the wrong track (and of course to make all other Buy-and-Holders aware of the same). How do I do that without describing what the research shows? I MUST do that to achieve my goals. And yet it is precisely my descriptions of what the academic research of the past 30 years shows that causes the Buy-and-Hold dogmatics to lose their cools and to dismiss me as “off-topic” and “abrasive” and worse. Do you see the problem I face?

I noted up above that I formed my friendships with Academic Researcher Wade Pfau as a result of my postings at the Bogleheads Forum. Wade found VII exciting and wanted to learn more about it for the purpose of doing research. He found that VII checks out in every possible way. He was so excited about his findings that he expressed a belief that he might win a Nobel prize in Economics as a result of it (I am personally convinced that he will). He told me that he was amazed that no earlier researcher had looked into the things he looked into. He marveled at his finding that we know today (by examining the data that our mutual friend John Bogle has been advising us for years to study for guidance) what we need to know to reduce the risk of stock investing by 70 percent! While greatly diminishing risk!

Here’s a link to an article at my site that tells the Wade Pfau story:

http://arichlife.passionsaving.com/the-buy-and-hold-crisis/academic-researcher-silenced-by-threats-to-get-him-fired-from-his-job-after-showing-dangers-of-buy-and-hold-investing-strategies/

I find it more than a little hard to believe that you could read that article and read Wade’s research (a link is provided in the article to the underlying research) and conclude that the work Rob Bennett did at the Bogleheads Forum was “off-topic” to the purpose that John Bogle intended to pursue when he began his career, Hogie.

It may be that those findings upset Bogle today, now that he has spent 30 years telling people a very different story. It hurts him because he wanted to do good work and because he is human and made a mistake and that mistake hurt millions of people who Bogle intended to help. But who is Bogle’s real friend — the people who continue the cover-up and thereby aid him in causing even more financial losses for the people he intended to help or the guy who has worked unceasingly for 10 years and without receiving a dime in compensation to get Bogle and all his followers back on the track that he and they had intended to pursue going back to the first day — using research and data to learn WHAT REALLY WORKS IN THE LONG RUN.

I am not an off-topic poster, Hogie. I’m not anything close. You’ve got the wrong guy re that one.

And I ain’t anti-John Bogle either. I rate John Bogle as the second most important investing analyst in history (I rank only Robert Shiller higher). The only way it could be “off-topic” for me to try to help my friend Jack Bogle learn about the mistakes he has made and to get on the right track is if Bogle was a 100 percent corrupt individual going back to the first day and never even intended to help a single middle-class investor but just to get rich himself exploiting their weaknesses. I don’t believe that for two seconds and I am 100 percent confident that you don’t believe that for two seconds either.

So our only difference of opinion is whether Bogle was wrong in saying that it is not necessary for investors to practice long-term timing. Wade’s research shows that he was very. very. very wrong. There would be no problem here if you had any confidence that Wade messed up. If you thought Wade had messed up, you could hold a view different than mine and we could still be friends. The problem is that somewhere in your consciousness you entertain at least a small belief that perhaps Wade (And Rob! And the hundreds of our fellow Bogleheads who have written warm and enthusiastic endorsements of my work!) is on the right track. I have a funny feeling that, once you work up the courage to give those thoughts the serious consideration they merit, we are going to be working together to discover some very exciting truths about how stock investing actually works in the real world.

I wish you all good things, Hogie. It would make me feel greatly encouraged if you could say in your next comment here that you feel the same way about me and about the hundreds of our fellow Bogleheads who have said that they found great value in my thousands of “off-topic” posts at the Bogleheads forum. Take care, man.

Rob

“I Cannot Put On a John Bogle Mask and Say the Words He Needs to Say and Have That Act Achieve the Effect We Need to Achieve Here. I Need Bogle’s Help. I Need Your Help in Securing Bogle’s Help.”

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Set forth below is the text of a response post that I put to the blog entry titled Retired at 48: “I Would Occasionally Get a Response Post Saying I Was “the Best Since Hocus Challenged Us to Think'”

What happened is that I pointed out the errors in the Old School safe withdrawal rate studies in a post that I put to the Motley Fool site on the morning of May 13, 2002. The point that I made was undeniable. Either the studies contain a valuation adjustment or they do not. Anyone who cared to could check. The studies do not contain a valuation adjustment.

This means that Buy-and-Hold has failed. Most people invest specifically for the purpose of financing their retirements. If the Buy-and-Hold Model gets the retirement numbers wildly wrong, Buy-and-Hold has failed us and needs to be replaced. Valuation-Informed Indexing is the obvious replacement. It contains all the elements of the Buy-and-Hold Model that have stood the test of time but deletes the Get Rich Quick element (the idea that investors need not engage in long-term timing) that has caused so much economic destruction.

Lots of people are emotionally addicted to Buy-and-Hold today. This point has been well-established by the 10 years of discussions. So our discovery that Buy-and-Hold has failed caused many people a good deal of emotional pain. I get that. It obviously was not my intent to cause people pain but it is obviously the case that large numbers of people felt such pain and continue to feel it to this day. The question is — What to do?

I say we need to move forward. We need to ACKNOWLEDGE that Buy-and-Hold has failed and move on to the model that actually works — Valuation-Informed Indexing. We are the luckiest group of investors who ever walked Planet Earth. We know what we need to know to reduce the risk of stock investing by 70 percent. We are fools if we do not take advantage of the huge opportunities that have been presented to us.

But the key that turns the lock is the Buy-and-Holders saying The Three Magic Words. For so long as there are people trying to rationalize not taking price into consideration when setting their stock allocations, there are going to be people feeling great emotional pain every time we discuss what the academic research of the past 30 years tells us about how stock investing works. We all need to be united in getting Bogle and other leaders in this field to publicly acknowledge that Buy-and-Hold has failed and that it is time to move on.

The turmoil we have seen on the boards is not the result of me telling the truth about what the academic research says. That is a wonderful thing. I need to be sure to never, never, never stop doing that. The turmoil has been caused by the failure of the Buy-and-Holders to say The Three Magic Words.

I have done everything I can think of to encourage them to take this step. I need help. I need you doing what you can do. I need Bogle’s help. I need Bernstein’s help. I need Obama’s help and Romney’s help. I need the New York Times writing all this up on the front page. I need my fellow bloggers uniting in an effort to open every blog on the internet to honest discussion of these issues.

When we get there, there is no more turmoil. There is no down side to learning the realities of stock investing. There is no down side to bringing the economic crisis to an end. There is no down side to reducing the risk of stock investing by 70 percent. The shift from Buy-and-Hold to Valuation-Informed Indexing is a win/win/win/win/win.

All the turmoil comes from the failure of the Buy-and-Holders to acknowledge the mistake they made. I cannot do this for them. I can advise. I can encourage. I can implore. But I cannot put on a John Bogle mask and say the words he needs to say and have that act achieve the effect we need to achieve here. I need Bogle’s help. I need your help in securing Bogle’s help.

Please help, What.

I of course wish you the best of luck in all your future endeavors in any event. Take care, old friend.

Rob

“I Only Hope that the Day Will Soon Come When Old Saint Jack Will be Working Beside Me”

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One of the Goons recently asked me if I “hated” John Bogle. Set forth below are the words of my response:

Old Saint Jack is the second most important investing analyst in history (I place Robert Shiller in the top spot).Valuation-Informed Indexing reduces the risk of stock investing by 70 percent and there obviously would be no Valuation-Informed Indexing if there were no indexing. Guess who has done more than any human being alive to promote indexing over the past 35 years?

John Bogle will go down in history as a Hero to the Middle Class for what he has taught us all about how stock investing works in the real world. I will see to it.

But I won’t lie about his association with Mel Linduaer, Yip. I shouldn’t have to. Old Saint Jack is a grown-up. He knows the rules of civil human behavior. He’s been around long enough to know that people in positions of responsibility don’t associate with the sorts of people who put up posts in “defense” of a Mel Lindauer.

I will do everything in my power to see that John Bogle’s important and powerful investing insights receive the credit they merit in days to come. I only hope that the day will soon come when Old Saint Jack will be working beside me instead of cowering in fear over what Mel Linduaer might say about him if he dares to say clearly and firmly and plainly what he knows about the message of the last 30 years of academic research.

I love John Bogle, Yip. I only wish that John Bogle loved John Bogle half as much as Rob Bennett loves John Bogle.

Rob

“I Am Hated by Many Buy-and-Holders for the Same Reason That John Bogle Was Hated by the Pre-Indexers”

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Set forth below is the text of a post that I put forward Wednesday at the Goon Central board:

The entire benefit of free speech is that it lets us become exposed to views that the majority views as foolish, Drip Guy.Any idea supported by the majority does not need free speech protections. Popular ideas will always be heard.

The purpose of free speech is to protect unpopular ideas. Those ideas need protection. Those ideas can lead to great things. But they first must be heard.

The price of free speech is that you have to be exposed to dumb stuff. There is no other way to insure that the good stuff will eventually gain a following.

Shut down the stuff that is perceived by the majority as dumb and you cut yourself off from all growth. A society that permits expression only of majority viewpoints stagnates and eventually dies.

Yes, it hurts the Buy-and-Holders to hear what I have to say about their strategy. I get that loud and clear. I want to see them hurt. That’s how we learn. Suffering a little hurt in the present can help you avoid a great deal of hurt down the road.

I like the Buy-and-Holders and I respect the Buy-and-Holders and I consider the Buy-and-Holders my friends. That’s why I show them the respect of believing that they can take criticism and overcome the hurt that comes with it.

I believe in the Buy-and-Holders. I have confidence in the intelligence and good will of the Buy-and-Holders. I have more belief and confidence in the Buy-and-Holders than you do, Drip Guy.

You say you believe in Buy-and-Hold. Your actions don’t back up the words. I don’t have any confidence in the first draft effort of the Buy-and-Holders. But my actions show huge confidence in the long-term Buy-and-Hold project of using academic research to learn the realities of stock investing.

I am what the Buy-and-Holders were in the 1960s and 1970s. I am hated by many Buy-and-Holders for the same reason that John Bogle was hated by the pre-indexers. Bogle upset the applecart and the people who profited from the applecart didn’t want to see it upset. We are all better off today because of Bogle’s determination and we will all be better off on a day not too far in the future because of my determination.

Buy-and-Hold is today all about Get Rich Quick. But that wasn’t the original idea. The original idea was to be all about research. I am in my soul 10 times the Buy-and-Holder that Mel Lindauer is. I am the guy taking Bogle’s ideas to a better place so that he can achieve his original vision. Bogle didn’t start out pushing GRQ.

Rob

“Bogle Would Love to Be Able to Start Over and to Advocate Valuation-Informed Indexing Rather Than Buy-and-Hold”

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Set forth below are some words that I posted in a comment to the Goon Central board last Thursday:

Do you think I’m in it for the money? OR the other ‘Goons”

I certainly don’t think you are in it for the money, Drip Guy. I don’t think Greaney is. I don’t think Lindauer is.

I don’t think Bogle advocates Buy-and-Hold for money reasons. I think he advocates it because he believes in it.

But I certainly think that money considerations have played a big role in the 30-year cover-up of the academic research showing that Buy-and-Hold can never work in the long term.

I think Bogle and lots of others would love to be able to start over and to advocate Valuation-Informed Indexing rather than Buy-and-Hold. But they are afraid of the trillions of dollars in legal liabilities they have taken on by continuing to advocate Buy-and-Hold for 30 years after research was published showing that it can never work. I believe that they painted themselves into a corner and are now feeling desperately trapped.

I see it as my job to help them and to help us all achieve the transition we need to make. The biggest obstacle I face is the lack of support I get from people like Bogle. Bogle could turn this thing around with one speech that he arranged to have written up on the front page of the New York Times. Putting it off doesn’t make it easier. Putting it off makes it harder.

Money is a big part of the problem there. Money considerations are one of the primary things holding us back. Another is pride. Another is genuine ignorance. Another is complacency. There’s more than one thing holding us back. But, yes, I am certain that money is a big factor here.

Rob