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

Rob,

We have already experienced drops, including the 2008/2009 market, yet nothing changed for you. What would be any different in future market downturns?

There are little drops all the time, Anonymous. If a drop doesn’t take us below fair-value valuations levels, the Get Rich Quick stuff is still making people feel that they are ahead of the game.

There’s only one time in many, many years when we dropped slightly below fair-value valuation levels. That was in early 2009. Then we went to a P/E10 of 13, a wee bit below the fair-value number of 15. And we did indeed see attitudes changing at that time. That’s when we saw people working up the courage to call Mel Lindauer and Taylor Larimore liars at the Bogleheads board. We never saw people saying things that bluntly in the days when I was there.

The dissatisfaction was not strong enough to change ownership of the board. But prices shot back up far above fair-value levels within a few months. What will happen when we see the P/E10 level remain below 10 for several years? That’s what has happened in all earlier bull/bear cycles before the irrational depression that always follows irrational exuberance comes to an end. I believe that we will see the ownership of the board change hands at that time. And, yes, I believe we will see prison sentences announced at that time.

But again — I CANNOT PROVE THIS.

I am telling you what I believe will happen. I am NOT telling you what I want to see happen or what I will push to see happen. If anything, I intend to play it the other way. I intend to put forward some words aimed at getting your prison sentence REDUCED. I want to put the nasty stuff behind us. I believe that any energy wasted on retribution is a big waste of energy and even a dangerous use of energy. I want to see us all working together. I see it as my job to steer things so that we all begin working together to achieve goals that benefit all of us.

So what I am describing is not what I want to see but only what I expect to see. I think about how pissed I would be if people who called themselves “experts” had been lying to me about all this stuff for years. The answer is — I would be pretty darn pissed. The lies haven’t had any effect of me for a long time now. I saw on the evening of August 27, 2002, that Buy-and-Hold is just a con, a money-making thing, with zero support in the peer-reviewed research. So it hasn’t cost me any money (the “defenses” of it of course have, but that’s something different).

I am not going to hold people back from going nuts unless I have credibility in their eyes. That’s why I have worked so hard to get so many posts in my file showing that I have OPPOSED this massive act of financial fraud for 14 years running now in every possible way. Those thousands and thousands of posts will add to my post-crash credibility and help me to help you.

Or at least so I believe. It’s not possible for me to say precisely what will happen. I worry that people are just going to freak out and that nothing I say in your behalf will make much difference. I will give it my best shot, that’s all. I obviously cannot control results. All that I can do is to push for settling this matter BEFORE we see the massive crash and so that’s what I do.

This one will not be like any earlier crash. The amount of money lost in a crash is determined by how much overvaluation there was at the top of the bull market that caused it. In two of the earlier Buy-and-Hold Crises, the highest P/E10 level we saw was 25. The one time we went to 33 we created the Great Depression. This time we went far, far beyond the number that caused the Great Depression. This time we went to 44. So we will be losing an unprecedented amount of phony baloney wealth this time. The Wall Street Con Men have never before pushed Buy-and-Hold so hard as they did this time (for example, they never before told the lie that there is peer-reviewed research supporting the pure Get Rich Quick “strategy”) and so of course we all should be expecting them to cause more human misery this time than they have ever caused before (I am assuming here that stocks may continue in the future to perform at least somewhat as they always have in the past).

Please don’t mis-interpret any of my words here as “doom and gloom.” The reality could not be further from the truth. The last 35 years of peer-reviewed research provides the missing key to understanding how stock investing works that humankind has been looking to find for a long time. The good news here is 50 times more good than the bad news here is bad. Yes, we may go into a Second Great Depression. I hope not but that’s certainly a possibility. But the Second Great Depression should not last as long as the first one did.

We need to get one large web site to permit honest posting on safe withdrawal rates and scores of other critically important investment-related topics. It’s all downhill sledding from that point forward. We all want the same things. Bogle and the other Wall Street Con Men did not INTEND to cause the Second Great Depression. They BELIEVE the garbage that they have been pumping out for decades now. When they see the results of their trickery, I am 100 percent certain that they are going to come clean and flip to the research-based side.

Then it will be easy. We will be able to spread the word quickly re what really works when we have the money of the Wall Street Con Men behind us. We can outdo the damage of the past 35 years in perhaps one year when we are all working on the same side. I think it is entirely realistic to expect us to experience the greatest surge of economic growth in our history in the days following the onset of the Second Great Depression. This is big stuff. We now know how to reduce the risk of stock investing by 70 percent while increasing returns dramatically. It is impossible to exaggerate how big an advance that is. This is how we restore people’s faith in the capitalist system. When we show people that capitalism can work for ordinary people, not just Wall Street Big Shots, we change the political dynamic in a big way.

Anyway, those are my thoughts re these terribly important matters.

I naturally wish you the best of luck in all your future life endeavors regardless of how things play out, my old friend.

Rob

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

Rob,

Doesn’t it come down to perception? You don’t feel you were bitter, but they do. As they say, you must know your audience. Your intentions don’t matter as it is opinions that count.

There’s a good bit of truth in what you are saying here, Anonymous.

What does this say about what happens following the next price crash? When millions of people lose most of their retirement savings, will that change perceptions of Buy-and-Hold?

I say “yes.”

But we are going to have to wait until it plays out to know for sure.

Perceptions of Bernie Madoff sure changed after his con was exposed. Jack Bogle is Bernie Madoff times 500, in my assessment. I love the guy, as you know. I am his biggest fan. But still….

Rob

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

Was Jaime really sitting next to millionaires? If they are not following VII, then their money is all cotton candy, right Rob?

This is a 100 percent on-point observation, in my assessment, Anonymous.

In most cases, a large portion of the money they are counting on to finance their retirements is cotton candy. Absolutely. And that explains the behavior.

You often ask me “Is this all a massive conspiracy?” It is. But not in the way you suggest when you ask that. I call it a “Conspiracy of Ignorance.”

None of us understood how stock investing worked prior to 1981. Many possessed clues, to be sure. But no one had ever put the entire puzzle together. Then the Buy-and-Holders pushed the idea of using peer-reviewed research to develop a systematic way of developing knowledge of how investing works and generated a mass of hugely important insights, swinging and missing on the biggest issue of all, the importance of always including adjustments for valuations in one’s calculations. And then Shiller fixed the big mistake that caused Buy-and-Hold to go so wildly off the mark by showing in 1981 that valuations affect long-term returns and that therefore stock investing risk is variable rather than fixed. That of course changes everything.

So now we have it all. Now we’re set.

Except for this darn conspiracy that “defends” and even promotes Buy-and-Hold to this day. Huh? What the h? What’s that about?

It’s partly that there is so much darn money to be made with the promotion of Get Rich Quick schemes and the uncorrected version of Buy-and-Hold is the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind (unintentionally, to be sure — but still). Part of this is a money thing, a financial fraud thing. That’s real. And that’s a big problem.

But that is not the entire story. Not by a long shot.

There are millions of people whose lives are in the process of being destroyed by the continued promotion of Buy-and-Hold. The Buy-and-Hold Crisis is a huge economic issue and even a huge political issue. It is simply not possible that a bunch of Wall Street Con Men could pull something like this off by themselves. We live in a free country. There are lots and lots of smart people who love this country and who will step up to the plate and speak up against the Wall Street Con Men and their Internet Goon Squads when they see their country under attack. And yet they have not done so in this case. To understand this story, we have to come to terms with this important reality. This is not solely a money thing. How do we explain this additional aspect of the story?

I was on that stage when that speech was being delivered. I heard the reaction not only to my own speech but to all the other speeches. The reaction to my first slide, the one that contained the title of the speech [“How to Become the Most Hated Blogger on the Internet”] was the strongest positive reaction of the night. It wasn’t a close call. People LOVED the title. The crowd was eating out of my hand at that point.

The reaction to the second slide was also positive, but a bit less so. I would say that the intensity of the positive reaction was cut in about half with the second slide. Then it dropped off a cliff. The mood became cold for the remainder of the speech. There was no booing. But there was no further positive reaction. Perhaps a small smattering of applause here and there. I don’t recall there being much more laughter, again perhaps a small amount here and there.

Things got cold enough that I was worried that people would not cheer at the end of the talk. That would be very embarrassing because they cheered at the end of every other talk. I was very aware of how cold things had gotten and I just soldiered on, a bit concerned. They did applaud, no more and no less than for the other speakers. So I would say that most were not outright angry at me. But the crowd was certainly not eating out of my hand at the end like they were at the beginning. By the end of the talk, people were either neutral or probably in some cases borderline hostile.

There were four or five people who came running up at the end of the talk offering the most effusive praise imaginable. That small group loved me. We sat around and had beers for about two hours. But I don’t at all think that that group was representative of the group as a whole.

So I found Jaime’s comment very helpful. I need to understand why people react as they do. It is AMAZING that people told her that I seemed bitter. I 100 percent believe that she is telling the truth. Her comment is 100 percent consistent with other things I have been told or that I have seen with my own eyes. People think I am bitter. It’s not just you Goons who see it this way. You Goons are more vocal about it and more blunt about it. Most people are too polite to say out loud that they think I am bitter. But most people don’t think you Goons are nuts when you say it. They think you are a bit rude. But they get where you are coming from.

They generally do NOT get where I am coming from. They are fine with me saying to pay attention to valuations. They have heard that thousands of times and consider it a reasonable point. So they have no distaste for the expression of that general point. They don’t relate when I say that returns are highly predictable or that Buy-and-Hold caused the economic crisis or that retirement studies get the numbers wildly wrong or that financial fraud is being practiced or that people will be going to prison. That sort of language is a big turn-off to most people. I am sure. I have lots of experience with this. I know whereof I speak re these matters.

Even my wife feels this way. I read my Value Walk column at the lunch table each Tuesday so that my boys get to know what their dad does with his life. Every now and again, my wife will offer a sort of bitter (!) side comment. She will say something like: “You make good points in that column. I can’t help but notice that you didn’t call anyone a Goon in that one. Hmmm…” So this is an almost universal phenomenon.

My FinCon talk was NOT bitter!

I was very aware when I was preparing it that there was a risk that it would be perceived that way. So I went to a good bit of trouble to remove any hint of bitterness from the presentation. Every slide was humorous. There was one of a boy standing in a corner with a dunce cap on. That’s a humorous way of making a point, not a bitter way of making a point. Another was of a baby crying. Again, that’s a humorous way of making a point, not a bitter way of making a point. They were all like that.

People find the CONTENT of my message bitter. That’s what is killing me.

If Shiller is right (I obviously believe that he is), then the real value of every stock portfolio is about half of its nominal value. People hate hearing that. They hate it, hate it, hate it, hate it, hate it. Everybody hates it. Not just Goons, not just Buy-and-Holders, not even just investors. EVERYBODY hates it.

Journalists hate it because they did not speak up when the bull market was getting out of control. Policymakers hate it because they permitted forces to be unleashed that have costs millions of people their jobs. Economists hate it because it shows that their Rational Man assumption is bogus. Even Behavioral Finance advocates hate it because it puts them on the spot — they want to push new ideas but they don’t want to have to embarrass their friends in the process of doing it. Even Valuation-Informed Indexers hate it. John Walter Russell used to say that you Goons would hold up a red flag and that I would charge every time. He tried to doctor the numbers in the Retirement Risk Evaluator because he didn’t want to offend people by reporting the numbers accurately and honestly.

Nothing that I say is even the tiniest bit advanced in an intellectual sense, Anonymous. Everything I say is pretty much two plus two equals four if you believe that Shiller’s research is legitimate. But people don’t like hearing it. So people who are able to add two and two and get four avoid saying it. Except for me. I am different in that I am the first person stupid enough to just say this stuff out loud and thereby get people who once loved me to hate me with a burning hate. You don’t talk honestly about the damage that a society does to itself by permitting a bull market to get out of hand. It violates a Social Taboo to do what I have done. It is just not something that civilized people do.

I think that we all need to start discussing in an honest way what the last 35 years of peer-reviewed research shows. That’s what I truly believe. I don’t want to violate any Social Taboos. I don’t want to start any controversies. I don’t want to upset people. I don’t want to make people hate me. But I very, very much want to post honestly re safe withdrawal rates and scores of other critically important investment-related topics. I can’t even imagine playing it any other way. So I soldier on. I do the best that I can do given the cards that have been dealt me.

A good portion of the money that the people sitting next to Jaime have accumulated over the course of their lives is today invested in cotton-candy nothingness. That’s what Shiller showed with his research. It’s a big deal. People need to know the true size of their portfolios if they are to plan effectively for the future. These are smart people we are talking about; you don’t get to be a millionaire without possessing some smarts. And yet they ignore common sense when they invest their retirement money. That’s not smart at all. When I point that out to them, it makes them hate me. That’s the story here.

I think this will change following the next price crash. I think their anger will be redirected following the next price crash. I saw that happen with Bernie Madoff. The people invested in his fund LOVED him so long as his con worked its magic on them. Once they saw through the con, they hated the man. That’s what I think is going to happen with Bogle and with those who have posted in “defense” of him following the next price crash.

I am not God. I could be wrong. I have obviously been wrong about things in the past. It could be that it is happening again. I don’t have a time machine. I cannot take you into the future and prove this to you. I am just stating my sincere opinion.

That’s it, you know?

If you saw things from my perspective, you wouldn’t give two seconds of consideration to the idea of agreeing to post dishonestly to appease you Goons.

I suppose that, if I saw things from your perspective, perhaps I wouldn’t give two seconds of consideration to the idea of coming clean by the close of business today. That’s speculation. I am not able to see things from your perspective. So I cannot be entirely sure. I say that because it seems like something that perhaps I should say given what I said about how you would behave if you could see things from my perspective.

I cannot do other than what I am doing. So my intent and expectation is that I will just continue doing it.

I love you guys (and witches). I wish you all good things. I don’t see any benefit that follows from being nasty about any of this. So I make an effort to avoid taking that dark path.

I wish you all good things. But I intend to soldier on all the same. I believe that the reaction that we will see following the next price crash will tell the tale.

I believe that I will be friends with most of Jaime’s millionaire friends following the next price crash. And I believe that I will be friends with Bogle then. And I believe that I will be friends with you Goons then.

But this is all just one fellow’s opinion, you know? Nothing more and nothing less.

I hope that helps a tiny bit.

Rob

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

“My family should not be suffering at all.”

Given the size of your house and the vacations you’ve lamented you’ve had to skip, I’d say they most certainly are. No one escapes unscathed when Dad’s “job” is trolling the internet.

Meanwhile I’ve maintained a mostly stock buy and hold portfolio, remained gainfully employed, and given my family – and myself – the life we deserve.

And yet you are the one going to prison and not me, Anonymous.

There’s something messed up here.

The mess-up is that giving investment advice is not ONLY about turning a quick buck.

Honesty matters.

That’s why we have laws against financial fraud.

Those laws were adopted by the entire nation. Those laws are my protection. I have zero desire to give up the protection of those laws by putting up some words endorsing your massive act of financial fraud. Zero.

So we are just going to have to wait and see whether the price crash changes things. I believe that, when people lose most of their retirement money, they are going to be angry at those who tricked them out of their life savings. That’s what happened to Bernie Madoff (“Saint Bernie” in the days before his con was exposed) and I believe that that’s what will happen to Jack Bogle and those who have posted in “defense” of him.

You pretend to believe otherwise. I am not convinced by the act. If you really believed otherwise, you would drop it and get on with your life. But even if you really did believe otherwise, we still end up in the same place. There are no words that I can put forward that will convince you that Shiller is right and there are no words that you can put forward that will convince me that Fama is right. Fama got there first and so Buy-and-Hold is dominant for now and some crooked people have elected to use that dominance in ways not permitted by U.S. law to shut me out.

So be it. I don’t like it. It happened regardless of my feelings. I accept it.

Is there something you want from me?

I say that this matter is going to be decided following the next price crash. That’s when lots of people will work up the courage to join me in standing up to you Goons and prison sentences will be announced for you and then all the rest of us will live happily ever after.

Is that okay by you?

Is there something you want me to do (something that I CAN do — I don’t do financial fraud) to make it okay by you?

I have offered to spin things to put you in the best possible light. I’ve done it before, I think it’s the right thing to do in these circumstances, and I fully intend to continue to do it in the future. I ask nothing from you for that favor from me. But that’s as far as I go. I don’t cross the felony line. I don’t CONSIDER crossing the felony line. I work hard to get thousands and thousands of posts in the record showing that it has always been my uncompromising policy not to cross the felony line. I don’t think you are dumb, but even if I did think you were dumb, I couldn’t possibly think you were so dumb that you wouldn’t get this by now. So I have to believe you get it.

So what are you trying to accomplish with your posts here?

Do you ever ask yourself that question?

I get more posts in the record in which I speak out in strong OPPOSITION to the 35-year cover up. What do YOU get?

You get nothing. Feel free to continue. Most of your efforts will get deleted. But some will get through. Include a little joke and I will approve the post. Include a question that appears to me to possess a tiny bit of sincerity and I will approve the post. Approach something from an angle that hasn’t been explored 20 times before and I will approve the post.

But we both know my words are not going to change anything. I think it would be fair to say that that was clear to every single person involved at least 13 years ago, perhaps something close to a full 14 years ago.

I cannot post dishonestly re the numbers that my friends use to plan their retirements. I care about my plan. I want it to work. And that makes me feel for the people being tricked. And that makes it impossible for me to lie about this stuff. I am clearly an outlier. Most people are able to rationalize a million lies. I am not. I’m proud of this trait of mine, lots of others think I am a moron. So be it. I think what I think and other people think what they think. I believe that someday I will stand before my Creator and I want to be able to say that I did not lie to my friends about the numbers that they use to plan their retirements. So I will continue to do what I feel I need to do.

And you will continue to do what you feel you need to do coming at things from a very different perspective. Good luck with it, you know. I can’t say that I understand what you think you might accomplish by continuing to post here. It’s my job to figure these sorts of things out. That one remains a bit of a mystery to me. My best guess is that you are not at ease with your position and so you feel compelled to do something and yet you do not want to go to prison AT ALL and so you cannot bear to come clean and so you follow this crazy middle position of saying the same thing over and over again to no apparent purpose.

Whatever, I guess.

I hate that word “whatever.” I like to know why things happen. I don’t like to give up trying to figure things out. But after 14 years I believe that I may have to acknowledge that this one is beyond my reach. Feel free to do what you like. I don’t really get it. I get it halfway but not fully. If you truly have decided to roll the dice (I believe that you have), then it seems to me that you should just let it play out and not spend any more words on any more nonsense.

But it’s your call. I like jokes. So come up with even a little joke and you get past the line. And I obviously want to respond to any even partly sincere questions. That’s my job and, Goon or no Goon, I can learn from someone putting forward a partly or fully sincere question. So those go up.

The rest I will just have to accept.

Just don’t get any funny ideas in your head that you might someday say something that would cause me to consider crossing the felony line. Not this boy. Not gonna happen. No way, no how.

And please do take care. These warm ending lines of mine are sincere. You may not see it that way but they are sincere and its important to me that I make the effort to reach out and help someone whom I consider a friend even if he is a long-confirmed Goon. This is investing stuff, it should never have gotten personal on either side. The fact that the Buy-and-Holders take any mention of the last 35 years of peer-reviewed research in this field so personally is one of many things that tells me that this “strategy” is a big pile of smelly garbage.

That remains the dominant model for the time being.

But not for too much longer.

Or at least so Rob Bennett says.

The End.

Rob

Set forth below is the text of an e-mail sent to me on October 15, 2014, by Crystal, owner of the Budgeting in the Fun Stuff blog, followed by my response:

Intensity can be concise. 😉

Crystal

Crystal:

There’s caring behind the intensity. The matters we are discussing here affect millions of people in very serious ways. I want to get things right. I have found from years of experience that people jump to conclusions if I am not clear about what I am saying and what I am not saying. So I try to take things step
by step and help people understand as much of the background as possible. In this particular case, intensity (caring) translates into long comments.

In an earlier e-mail, you referred to the Goons as “assholes.” That’s fair. They do behave like assholes. But the biggest asshole of them all, the lead Goon, is John Greaney. He’s the guy who got the numbers wrong in the safe-withdrawal- rate study published at his site. John was a friend of mine for a good number of years. We joked around together on a daily basis for years. Is not part of this story why this man now hates me with such a burning hate?

He hates me because he cares about accuracy too. He was EMBARRASSED to have people learn that he got those calculations wrong. He is an engineer. He made his living (before he retired) getting numbers right and he was ashamed to have been publicly exposed as having gotten them wrong. That’s the driver
here. Greaney just copied the methodology he used for his study from other retirement studies. He ASSUMED that some earlier person had checked the matter out and gotten things right. When he found out that that was not the case, he became enraged. Not at the person who originally got the methodology
wrong, but at me. I was the one who in a direct sense made him look foolish, so he got angry at me rather than the person who made the mistake.

That’s the entire story here. Greaney is not alone. ALL of the Buy-and-Holders are good and smart people. They thought they were helping people by promoting this strategy. The entire academic world made a mistake back in the mid-1960s, when the Buy-and-Hold strategy was developed. When the error was uncovered in 1981, the entire academic world went into cover-up mode. They could not emotionally
accept that they had made such a huge mistake. So they suffered cognitive dissonance. They have been covering up this mistake for 33 years now. They caused the economic crisis by covering it up.

This isn’t just a story of research vs. research. It is a story of why large numbers of good and smart people elected to ignore or cover up critically important research for so many years. I have had people tell me that: “everything you say makes perfect sense but I cannot go along with it because that is not what the experts say.” That is a perfectly reasonable take. But those people are in the process of losing their life savings. We all should want to help them. We can help them only by telling the whole story, both the content-based part that we all would prefer to be talking about and the process-based part where we explain why the research that gets it right has been ignored for 33 years. The process-based part of the story must be told for the content-based part of the story to make sense.

I have the greatest respect and affection for the Buy-and-Holders that it would be possible to have. Valuation-Informed Indexing would not exist but for their many important contributions. The aim is not to make these people feel bad. But the reality is that they know on one level of consciousness that the strategy that they have been pushing for years is gravely flawed and they are ashamed for people to learn this. This is a reality that must be faced. It is a delicate reality and we all should be doing everything in our power to face up to this reality in a kind and charitable and loving  way. But we cannot just pretend that this elephant is not standing in our living room. None of the rest of this story makes even a tiny bit of sense unless we deal with the human element.

New research does not replace old research by some magical process. The human beings who devoted their lives to promoting the old research have to come out publicly and say the words “I” and “Was” and “Wrong” for the new research to become dominant. That’s what has not happened yet. We need to create an environment in which people on both sides of the debate feel safe making their points in a civil and reasoned way. Then all the bad stuff goes away and all the good stuff that follows from use of such a
process becomes evident.

There is not one person alive who would be hurt by this. It would help everyone alive on the planet today. There is no cost associated with this. Learning experiences enhance human lives for free. We are bloggers. This is a HUGE opportunity for bloggers. I know from the percentage of people exposed to this who expressed enthusiasm for hearing the full story that the market for this in in the MILLIONS of people. All the textbooks need to be rewritten. All existing calculators need to be reformulated. Thousands of new books need to be written to reflect the 33 years of research that has been treated as taboo for so long. This isn’t about making one person a millionaire. It is about making thousands of people millionaires. And all by helping millions of people. It’s a win/win/win/win/win.

If it were easy, it would have been done a long, long time ago. The reason why this opportunity exists is because of this delicate part where we need to keep the feelings of the people who made the mistake in mind when telling people what the last 30 years of research says. I am 100 percent in favor of keeping those people’s feelings in mind at all times. What I say is that we are hurting them more by stretching out their pain and keeping the cover-up in place. And that we cannot end the cover-up without telling people
that for a long time there has been a cover-up in place and why that has been so.

If Shiller has published his research last week, we wouldn’t have to talk about the  Goons/Assholes and the pain they are in. But that’s not the reality here. You can’t have something covered up for 33 years and not mention that fact. The pain of the Goons/Assholes is real and is a part of the story. We need to deal with it with charity. But we cannot get the job done without dealing with it in some way.

Those are my sincere thoughts, in any event. My response is long because I need to be careful in how I say things to get it right. And I need to get it right because there are big matters at stake, including the feelings of lots of good and smart and hard-working people who happened to make a mistake about something important a good number of years back. I didn’t cause any of this. I just found myself in a position where I think it would be fair to say that I was elected to be the one to tell the world about it. I am doing the best that I can do and I almost always elect to use more words than I would ordinarily use rather than take the chance of planting wrong impressions in the minds of the people reading my words because I left something out that would have helped them understand the full reality.

Rob

Set forth below are the texts of an e-mail sent to me by Crystal (owner of the Budgeting in the Fun Stuff blog) and Jackie (owner of the The Debt Stuff blog) on October 14, 2014, followed by my response:

You should totally respond to Evan. To get the word out there, you just need bloggers to post. To get bloggers to post, you just have to be a person we know that won’t get personal with the assholes of the blogging world. We weren’t saying that you shouldn’t post. Your posts just need to be informational and positive every time. Never put any focus on the goons at all. Don’t reply to the goons. Just reply to the Evans. That was our general point. Does that make sense?

Crystal

I would say reply in one (short) paragraph to Evan 🙂

And to keep all references to stuff that’s gone on in the past out of your posts/comments.

I haven’t gotten a comment on the one on my site, but that’s not at all unusual. I noticed some people did tweet/repin it though.

Crystal:

After I finish this response, I will put up a brief response to Evan.

What you say about the Goon matter almost makes sense to me but not quite. I 100 percent agree with the idea of always being informational and positive. And I know that people hate it when I talk about the Goons. But there are problems that come about from not responding to them.

The Goons are assholes. That’s fair to say. But on a lot of other issues a lot of them are NOT assholes. They believe in Buy-and-Hold. They lie about all sorts of things. But they are not lying about that. The reason why they act like assholes is that they are insecure in their beliefs. They have doubts in their own minds and, when I point out what the research says, I stir up their insecurities and they lash out.

There was one discussion board where they were having a debate as to whether I should be banned and one guy said: “Rob is the politest guy that I have ever met on the internet but he irritates me to no end!” That guy was not a Goon. He would not say something kind about me if he was a Goon. But he did vote for silencing me. My stuff really does bother even good and smart people. It is hard for people to accept that they have made a mistake with their retirement money. The Goons exploit that reality. But it is not only the Goons that are the problem.

I had a weekly column for a long time at the “Out of Your Rut” site. Kevin, the owner of the site, LOVED my stuff. He loved it so much that he told me that he wanted to start paying me even though I never asked for payment. Kevin has lots of friends in the social media and so the column would regularly get positive comments. I once wrote about how John Bogle caused the economic crisis (through his advocacy of Buy-and-Hold). One guy got upset about that. He likes Bogle and he didn’t like hearing that. I like Bogle too. He is one of my heroes. I wrote another column at the same site in which I praised Bogle to the skies. 90 percent of what Valuation-Informed Indexing is about is taken from Bogle. So the problem is not that I don’t like Bogle. The problem is that I am PERCEIVED as having something against Bogle even though that is not at all what I feel in my heart (I do believe that Bogle was the lead voice in favor of the investing strategy that caused the economic crisis but I do not believe that it was his intention to cause an economic crisis.).

It’s not my intent to be argumentative here. I appreciate that you are sincere and are trying to give me helpful advice. I am trying to be frank. I am trying to show the true nature of the problem. What is going to happen to people’s retirement money is a sensitive question. No one started out with bad motives. But people are in tough spots. Emotions are raw. The biggest problem that I have is that my case is research-based. If it were just my opinion, people could say “oh, that’s just that crazy guy saying crazy things again” and we could all be friends. But the Buy-and-Holders take pride in promoting a research-based strategy and it hurts them to hear that it is a very different strategy that is really supported by the research.

I will give one more example that perhaps will put a human face on the story. I had a friend named “Brian” when I worked at Ernst & Young. We used to go to lunch several times a week in the late 1990s.
Sometimes we talked about stock investing. He always said that I was “crazy” in a friendly and warm way. I would say “yes, I know that I am crazy, Brian, but that’s what I sincerely believe” and all was fine. A few years ago, the Wall Street Journal ran a story saying that I was right about safe withdrawal rates.
Brian knew that that was the issue that got me banned from numerous boards years ago. So he called me
on the telephone and said “How does it feel to be vindicated after all these years?” I said that I guessed it
felt good but that discussion of what the research says re SWRs is still banned at all those boards. He said
that he didn’t believe that and that he was going to put up a post repeating what the Wall Street Journal said at the Bogleheads Forum and see what happened. He bet me $5 that he would not be banned. He was banned within 30 seconds.

It’s hard for people to admit that they are wrong when they have invested years of their lives saying the wrong thing and telling others the wrong thing. That’s the real issue here. As a society we have to turn the boat around and it is a hard business because we have so much invested in the old way of thinking.

I’m not sure what my response adds up to. I am not trying to argue with you. I think I am just passing along thoughts gathered from 12 years experience trying to get the word out about these matters. I don’t think the Goons are the entire problem. I think that people tolerate behavior from them that they would not tolerate in other circumstances because they find it painful to hear parts of the message.

I will promise to ponder what you said a bit more. I will go back and re-read your e-mail several times. I don’t feel that I can promise not to talk about the Goons on an across-the-board basis because I feel that they are part of the story. But I of course acknowledge that I can get things wrong and that I need to try to be open to feedback from people who are obviously trying to help. So I will make some effort to challenge my own beliefs re all this.

Hopefully it will all work out for the best in the end.

Rob

Set forth below is the text of an e-mail sent to me on December 19, 2013, by Kevin Mercadante, owner of the Out of Your Rut site, followed by my response to him and then by the comment that he posted to the discussion thread at his site:

Hi Rob,

You’re wasting your time dignifying these clowns with responses, that’s just what they want. It’s the same wasted drivel that it was the last time. Hate tinged “commentary” with the sole purpose of degrading your ideas. It even looks like the same tag team using different handles. These guys need to get a life.

I’ll delete it all if you want.

Kevin

Kevin:

Please do what you think best. What I say below is intended as a suggestion only.

My view is that it would be better for you to say on the thread what you are saying here.

Our recovery from the economic crisis comes when as a society we work up the courage to stand up to these people.

We need to show by example how it is done. Each time one person stands up to them, others get the idea that it can be done.

Rob

Comment Posted by Kevin to the Out of Your Rut Site:

“Sensible Investor”, “Mr. Rational”, “RA”, and “Questions” – Any comments you make from this point forward will be deleted. You “guys” are the same jokers who have done this before, sparring with Rob over nonsensical issues on this site and others, leveling personal attacks, and you won’t even use your real names!

Rob is entitled to his opinion, but the fact that you challenge every jot and tittle of what he says makes it clear you have an unholy agenda. Please take it elsewhere as your comments are not welcome here.

You can see all comments on this post here:

Robert Shiller Pulls His Punches

Set forth below is the text of an e-mail that I sent to Jaime Tardy, owner of the EventualMillionaie.com site, on October 30, 2013:

Jaime:

This is a small addendum to the response I sent earlier today.

I reread your message to me. On second read, it sounded like you were seeking examples of the haters engaging in their hating. For that, I would refer you to this site:

http://www.s152957355.onlinehome.us/cgi-bin/yabb2/YaBB.pl

This site is owned by the fellow who got the numbers wrong in his retirement study. The lead
Goons meet here each day. They attack blogs that permit me to run Guest Blogs or discussion
boards that permit me or supporters of me to post. They are supported (implicitly) by Jack
Bogle and many other big names in the field, They have never been banned from any
major site no matter how abusive their tactics. What they say is at odds with the academic
research but popular (they are telling people that their retirement portfolios are bigger than
they are).

This is an article at my site where I set forth 101 comments of my fellow community members
expressing a desire that honest posting be permitted:

http://www.passionsaving.com/investing-discussion-boards.html

I hope that helps a bit.

Rob

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

It is interesting that you say “thanks ” and warm wishes here, yet you call people “goons” and tell them they are going to prison on your own blog. Why the two different personalities?

There’s only one personality, Sammy.

I love my Buy-and-Hold friends. The Buy-and-Holders were the pioneers. There would be no Valuation-Informed Indexing today had not Buy-and-Hold come first. Jack Bogle is properly seen as a hero by millions of middle-class investors. I learned to use the peer-reviewed research as my guide to how stock investing works from Jack Bogle.

I also learned about the errors in the Old School safe withdrawal rate studies from reading one of Jack’s books. He said that it is an “Iron Law” of stock investing that prices always revert to the mean. If that is so, then there is zero chance that the safe withdrawal rate could be a constant number (it was once thought that the SWR was always 4 percent). If Jack is right that prices always revert to the mean, then the SWR must VARY with changes in the valuation level; there is going to be more reversion (prices falling over time) when prices are insanely high than there will be when prices are only a little high. I could not have put up my famous post of the morning of May 13, 2002 (the post that kicked off the 14-year saga in which I have tried to spread the word about Valuation-Informed Indexing and in which I have connected with thousands of ordinary investors anxious to learn what I have to share and in which you Goons have engaged in brutally abusive posting to block them from learning what they want and need to learn) without having learned what I learned from Jack. Jack Bogle got this all off the ground. I rate Bogle as the second most important investing analyst of all time (second only to Robert Shiller).

I consider myself a Boglehead. I do NOT consider myself a Lindauerhead. It’s in the difference between Jack Bogle and Mel Lindauer (one of the leaders of you Goons) that the Goon part of our story enters the picture.

Shiller published his “revolutionary” (his word) research in 1981. If humans were perfect creatures Bogle would have at that time acknowledged that he made a mistake re valuations and we all would have quickly become Valuation-Informed Indexers and we would not be living through an economic crisis today. We are not perfect creatures. Bogle had a lot invested in the Buy-and-Hold concept as he originally envisioned it. He couldn’t accept what Shiller showed. He fell victim to cognitive dissonance. He went into self-denial. He ignored Shiller’s revolutionary findings. He continued to push the same old Buy-and-Hold stuff and he continued to make the no longer accurate claim that the peer-reviewed research supported Buy-and-Hold (Shiller’s finding that valuations affect long-term returns discredited Fama’s finding that the market is efficient — if the market were efficient, returns would play out in the pattern of a random walk).

In a practical sense, none of this mattered much in 1981. Valuations were at rock-bottom lows. It was hard for anyone to imagine that we would ever again see fair-value price levels, much less prices levels at double fair-value levels or at triple fair-value levels (which is what we saw in January 2000). So “experts” continued to push Buy-and-Hold and investors of course ate it up. The Buy-and-Holders were telling people that their bull market gains were real, that they were much farther along in the financing of their retirements than the peer-reviewed research showed them to be — We all are drawn to Get Rich Quick schemes! Buy-and-Hold — intended to serve as a research-backed strategy had been transformed into the polar opposite, the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind.

I entered the scene on May 13, 2002. I politely pointed out that, if what Bogle said was so, the safe withdrawal rate was not a constant number but a number that varied with changes to valuation levels (dropping to 1.6 at times of high valuations and rising to 9.0 percent at times of low valuations). What I didn’t know was that the investing advice game was no longer on the level. The experts in this field had been covering up Shiller’s revolutionary finding for 21 years at that time. I thought that I was doing something obviously good by applying Shiller’s finding to our understanding of how to go about planning our retirements. In the eyes of the experts in this field, I was doing something very bad and threatening, exposing a cover-up that was in the process of destroying millions of middle-class lives.

I oppose the cover-up, Sammy. And I of course oppose the insanely abusive practices that have been employed to keep the cover-up going for the past 14 years. I call those who employ such tactics “Goons” not because I feel some personal dislike for them. I call them Goons because it is my job to tell the story as accurately as I can and the word “Goons” conveys the point that needs to be made. The fact that Buy-and-Holders almost universally either engage in these tactics themselves or tolerate the use of these tactics by others shows that they lack confidence that their ideas can be defended in reasoned discussion. The Buy-and-Holders still follow Buy-and-Hold strategies. But they no longer possess confidence that they can defend their ideas in a fair fight. That’s telling. That’s something that every investor alive needs to know.

I have learned a great deal from my Buy-and-Hold friends and I continue to learn from them and I expect to continue to learn from them for many years into the future. Valuation-Informed Indexing is the realization of Bogle’s dream — it is the first true research-backed stock investing strategy. I am always going to be in debt to my Buy-and-Hold friends and I of course am always going to wish them well in all their endeavors. My expressions of warmth and friendship and gratitude toward my many Buy-and-Hold friends (including you!) are 100 percent sincere.

The Goon stuff HURTS my Buy-and-Hold friends. They need to incorporate the findings of the last 35 years of peer-reviewed research to make their strategy work in the real world. The Goon stuff makes people afraid to speak out about their true beliefs re how stock investing works. People do not want to see their loved ones threatened with physical violence. People do not want to see their careers destroyed. We are living in a strange Twilight Zone time-period where for the first time in history we know how to reduce the risk of stock investing dramatically but in which we don’t tell people about it because we fear the wrath of the people who got us on the right track in the first place but now engage in insanely abusive practices aimed at blocking us from spreading the word about what the peer-reviewed research really says. Humans!

There is no conflict between loving Buy-and-Holders and hating the tactics that a small number of Buy-and-Holders have employed to stop the idea of rooting one’s investing decisions in the peer-reviewed research from achieving its full potential. Permitted honest posting on all these matters is a win/win/win/win/win. It is not even possible to imagine how anyone could be harmed by learning more about what the research actually says. The Goon stuff is the OPPOSITE of what Buy-and-Hold stood for in its early days. Buy-and-Hold was about employing science in the investing realm. The Goon stuff is about BLOCKING the advance of scientific findings.

I hope that helps a bit, Sammy. I love it that you care about this stuff and that you once had an intense desire to learn as much as you could about it. I even love your skepticism. Your skepticism has made me work hard to sharpen my thinking and that of course helps me and all who read the words that I generate. I HATE the abusive stuff that you advance when you are stuck for responses to my references to the findings of the peer-reviewed research of the past 35 years. I call you a “Goon” when you stoop to becoming something lower than what I know from experience you are capable of being. I want you to be the best Sammy that you can be. As your friend, I want to discourage your Goon tendencies. I would feel that I had let you down as a friend if I failed to ever comment on them.

I naturally wish you the best of luck in all your future life endeavors, old friend.

Rob

Set forth below is the text of an e-mail sent to me by Jeff, the author of The Sustainable Life Blog, on October 25, 2013, followed by my response to him:

Hi Rob,

I just wanted to drop you a quick line and say how nice it was meeting you at fincon in St Louis this year. I don’t know about you, but I had such a great time hearing from all the speakers and meeting online friends (some for the first time).

It was great meeting you at Ignite Fincon and chatting with you about Value Index Investing. I thought it was really interesting, and I’d really like to know how you got started with Value Index Investing and what you enjoy most about it. I had such a great time meeting and talking to so many different people, I didn’t get much time to focus on the most interesting parts – like why they do what they do!

I remember that we chatted a bit about you being the most hated guy on investing forums and about you branding it as well. That was really great to hear about, and I think it’s so funny that people get so angry at you for those comments you left. Glad that you were basically proven right by the downturn though.

Please, don’t hesitate to email me if you’ve got any questions or need help with anything. I’ve been blogging for almost 5 years, and love to help out anyone that asks!

Once again, it was great meeting you..

Jeff

Jeff:

That’s super kind! Seeing your e-mail brought a nice measure of good cheer to my Saturday afternoon.

I got started with Valuation-Informed Indexing when I was putting together an early retirement plan in the late 1990s (I left corporate employment in August 2000 and our family of four has been living off our investments for the 13 years since). When you are handing in a resignation from a big-paycheck job (I was a Director at the Ernst & Young accounting firm), you need to be SURE that you have enough to make it on your own. So I investigated a concept called “Safe Withdrawal Rates.”

I discovered (ironically enough, I discovered this by reading John Bogle’s book — this is ironic because Bogle is the lead advocate of Buy-ad-Hold, the strategy that VII replaces) that the conventional SWR studies get the numbers wrong (they fail to consider the effect of valuations). I was posting daily at a Retire Early board at Motley Fool and a retired government engineer there named John Walter Russell became interested enough in what I was saying to spend the next eight years of his life researching questions related to VII. John did HUNDREDS of studies backing all this up and published them at his own site. John died a few years ago and the right to publish all his research passed to me.

At some point, I started posting at the Vanguard Diehards board at Morningstar.com. An academic researcher (Wade Pfau — he has a Ph.D. in Economics from Princeton) discovered my posts and wrote me to ask if I would be interested in doing some research with him. Our paper has been published in a peer-reviewed journal. I believe that it is the most important research published in this field in the past 30 years. It shows investors that simply by taking valuations into consideration when setting their stock allocations they can reduce the risk of stock investing by 70 percent. Once we reach a point where we can publicize these findings,  stocks will become essentially a risk-free investment class. This is a huge deal.

The thing that I like most about VII is not the investing benefits. I have made my living as a journalist pretty much my entire life (I was hired at Ernst & Young as a tax lobbyist because they learned about my work reporting on tax legislation on Capitol Hill — I also hold a law degree and a Masters in Tax Law). So I have a strong interest in public policy issues. VII is rooted in the research of Yale Economics Professor Robert Shiller (who won the Nobel prize a week or two ago). Shiller’s findings don’t just make stock investing a risk-free endeavor. They also have huge implications re stabilization of our economic system.

Shiller predicted the 2008 economic crisis in a book published in March 2000. Do you know how he did it?

Shiller’s research shows that EVERY economic crisis in U.S. history was caused by excessive stock valuations. There has never been a single exception. Take away excessive stock valuations and you take away economic crises and all the huge increase in unemployment that always follows from them. Shiller’s work has the greatest potential for easing human suffering of any research being done today. What he has found (and what I have been writing about for 11 years) is the financial sector equivalent of the cure for cancer.

How do we stop stocks from becoming overpriced? It is amazingly easy.

I have a calculator at my site called “The Stock-Return Predictor.” It applies a regression analysis to the 140 years of historical return data to reveal the most likely annualized 10-year return for stock purchases made at any possible price level. It shows that the claim you always hear from Wall Street that “you can’t time the market!” is 100 percent false marketing mumbo jumbo. It has ALWAYS been possible and easy and necessary to time the market.
There is a hyper-technical way in which what they say is so. It is NOT possible to engage in short-term market timing (guessing where stock prices will be in a year or so) effectively. However, it is VERY easy to engage in LONG-TERM market timing. You can know today (with a high but not perfect level of
accuracy) where stock prices will be 10 years from today. Using the calculator, you can know when stocks are worth buying and when they are not.  This permits you to retire as much as 10 years sooner than you ever before imagined possible.

The Stock-Return Predictor reveals the price tag of stocks. Middle-class people who don’t practice long-term timing are essentially making the most important purchase of their lives (we spend more in the course of a lifetime on stocks than we do on clothes or food or housing or cars) without knowing the price! It’s insane. Why do they do it? Every industry that exists would love to have its customers believe that its product is a good buy at any possible price. The Stock-Selling Industry is the only industry that has ever been able to persuade its customers that this is actually so. They get away with it because most investors are intimidated by the subject of investing. They defer to experts. And the experts in this field get paid depending on how effective they are in persuading people to buy stocks. The conflict overwhelms most people’s sense of right and wrong and they rationalize saying all sorts of things that have long been shown to be nonsense by the peer-reviewed academic research.

Once people understand that stocks are not worth buying at high prices, guess what happens? That makes it impossible for high prices ever to be seen again. As prices go up, people sell shares. The sales of the shares pull price down again. If they go too low, people start buying more and that pushes prices up again. Stock prices are self-regulating. So long as people are told about the research!

The trick today is getting the word out about what the research really says. Most of the people who work in this field have built careers around promotion of Buy-and-Hold. There are lots of powerful and wealthy people who very, very much do not want middle-class people to learn about Shiller’s research and its implications. So we face heavy resistance.

But things have changed in a big way since the crash. I couldn’t get a guest blog published anywhere on the internet in the old days. Today there are lots of blogs that welcome me. Shiller’s research shows that there will be another crash in a year or two. I believe that the gates will swing wide open then.

You probably know that many blogs have been hit hard by Google. I believe that VII is going to prove to be the salvation of the Personal Finance Blogosphere. Bloggers are not as beholden to the industry big shots as are most others in this field. We are at least capable of independence. If we can get a small group of independent bloggers writing about these ideas, they will spread and spread and eventually gain recognition everywhere. I have spoken with LOTS of people over these 11 years. Lots of the big names in this field want to feel free to tell their readers and clients what really works in the long run. But they are afraid. They need cover. The more people who speak the truth openly, the less afraid all the others who want to do so feel. So this thing will gain momentum fast once we get the fire started.

Please come back to me and ask questions about this at any time. My site is today the only site on the internet that explores the implications of Shiller’s research in an in-depth way. There is room for hundreds of blogs doing this kind of work. And we would be helping millions of middle-class people by doing it. VII is safe, smart, simple investing. I have had THOUSANDS of people encourage me to pursue this quest. People need this. They need it badly. And the demand is going to go through the roof following the next crash, which is likely coming= in not too long a time.

I hope that helps a bit.

Thanks again for your exceedingly king and encouraging note.

Rob