A Rich Life

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

“The People at Zero Hedge Are 100 Percent Open to Accepting That Valuations Matter. But They Tend To Be On the Doom-and-Gloom Side. Their Comments Tend To Be Laced With Cynicism. My Work Is Aimed at Providing a SOLUTION To the Problem. I Try Hard To Avoid Saying That the People Pushing Buy-and-Hold Have Bad Motives.”

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Yesterday’s blog entry offered the text of an e-mail that I sent some time ago to a fellow who posts on the internet as “George Washington.” Set forth below is the text of the correspondence between us that followed from that e-mail:

Rob,

I don’t have any other leads right now, but will tell if you if I think of any.

I had hoped that the article would remain longer on the front page of Zero Hedge (which is actually a much more popular site than the Big Picture), but it was only there for an hour or so …

Best,
GW.

George:

Thanks much for your response. You are a hero!

I do understand that Zero Hedge is probably bigger traffic-wise.
Big Picture was a much better fit, though. I am very happy that
you thought to place it there.

The people at Zero Hedge are 100 percent open to accepting
that valuations matter. That’s a plus. But they tend to be on the
doom and gloom side. All of the comments I saw at that site
were intelligent. But they tended to be laced with cynicism.
My work is aimed at providing a SOLUTION to the problem.
I try hard to avoid saying that the people pushing Buy-and-Hold
have bad motives. I truly believe that in the vast majority of
cases they do not (even though some of the behavior I have
seen is off-the-wall stuff).

Barry Rithlotz followed up without me saying anything with
a link to an article at my site titled “Why Buy-and-Hold Can
Never Work”. He put that link up at 4:00 PM yesterday and
I saw the biggest traffic day in my blog’s history as a result
of the traffic from then until midnight. And I have several
e-mails in my box this morning from people who came in
through that link and who are trying to learn more about the
concept. So it is clear to me that Big Picture is the perfect
sort of place for my stuff.

I am going to write Barry and ask whether I can have any
sort of ongoing relationship with the site. Is there anything
you can suggest re how I proceed? I ask because I presume
that you have some sort of relationship with him and because
it would be huge for me if he were open to featuring some more
of my stuff in the days ahead.

If you are not able to offer any tips, I fully understand. You have
already helped me so much that I cannot tell you how big a deal
it is to me. I just don’t want to make any mistakes. So I feel that
I need to ask.

Please do keep in mind my offer to help you any time in the future
that I am able to. You really have made a big difference, more
than you can understand given your limited knowledge of what
is going on here (the story is one that you would not be able to
believe if you knew it all).

Rob

Rob,

I send Barry and some other folks links to my posts. He ran my post on your method after I emailed him the link, and he obviously took enough interest to post a follow-up link.

So my best advice is to send him your new posts, with a personal email.

Best of Luck!
GW.
P.S. I certainly understand about breaking through when people have been trying to hold back your work. I encounter that not only in financial areas, but also issues of war-and-peace-, the environment, etc.

George:

That makes perfect sense.

Thanks again for all of your acts of kindness.

Rob

My E-Mail to Mel Bryant at the Conservatives4Palin.com Site

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Set forth below is the text of an e-mail that I sent to Mel Bryant at the Conservatives4Palin.com web site on July 22, 2009.

Mel:

My name is Rob Bennett. I am the owner of the PassionSaving.com web site and the “A Rich Life” blog. I am a big Sarah Palin fan; I recently recorded a podcast about her, which will be posted at my site in a few weeks. I am also a big fan of the “Conservatives4Palin” site. It is giving lots of people hope during a troubling time.

I don’t write about politics. I write about personal finance. I am writing to ask if you have interest in me writing a blog post about the root cause of today’s economic troubles. This is a story that has not been told properly anywhere else, in my assessment. I believe that this topic strongly relates to the Palin phenomenon.

You have seen how much hate Palin inspires in those who see her emergence as a threat to their status as “experts.” There is a very similar phenomenon going on in the personal finance field. The academic research has shown for 28 years that the Efficient Market Theory, the theoretical support for today’s conventional investing advice, is entirely wrong-headed. I can quote many big-name experts who are aware of this; for example, Rob Arnott, former editor of the Financial Analysts Journal, has said that we are on the verge of a “revolution” in our understanding of how investing works and that the current advice is rooted in “myth and urban legend.” I have studied the problems in great depth and have worked with hundreds of people on the internet to develop more realistic and effective advice.

I have run into a big problem. The same sorts of smear and intimidation tactics that have been employed to stop people from hearing Palin’s message have been used to stop people all across the internet from learning about the realities of stock investing. Many, many people have expressed great enthusiasm for learning about the new ideas, but a good number have also insisted that fruitful discussion be banned at all personal finance sites and blogs (and have been largely successful doing so). I have come to the conclusion that it is going to be impossible to get the word out dealing only with sites and blogs that have an institutional interest in preserving the status quo. I need to reach out to political blogs run by people who may come to this with more of an open mind. The bad advice that we have been given on investing for many years now is the primary cause of the economic crisis and the economic crisis clearly has a political dimension to it.

I don’t view myself as being either a Republican or a Democrat (although I have been leaning more to the conservative side in recent years). I would prefer not to be associated with intensely partisan blogs. Part of the interest in Palin is that she appears to be someone interested in working around the partisan logjams to get sensible things done for ordinary people. Ordinary people have a crying need today to learn how investing works and it has become impossible for them to learn that from conventional sources of personal finance information. I hope to be able to interest you in a blog post that would tell a little bit of the story of what is going on in the economy and the stock market today.

I do not have anything to sell (I offer a book on saving, and am working on one on investing, but I do not currently have anything for sale in the investing area). I am not aiming to talk about some complicated strategy. My aim is to explain the BASIC investing realities, the ABCs. The primary reason why the basics are rarely addressed is that The Stock-Selling Industry sees it as being to its benefit for the average investor not to know that there are some times when it is a horrible idea to buy stocks and many media outlets need the advertising support they get from The Stock-Selling Industry too much to question the conventional advice too strongly.

If you have any interest, my thought is that I would write a blog entry hitting only the highlights and you would review it for suitability. The title might be something like “The True Cause of the Economic Crisis — The Biased Investing Advice We Hear from The Stock-Selling Industry.”  The root problem is that we all have been told to invest in wildly risky ways and this has caused such a huge loss of wealth that most of us are now properly cutting back on spending (which causes businesses to fail).

We could turn this around and restore faith in the economic and political system if we could get realistic advice out to ordinary people as to how to manage their personal wealth. This shouldn’t be so hard! If there were interest among your readers in me getting into more detail at a later date, I would of course be happy to write any follow-up pieces in which there were an interest.

I want to provide a few links to give you some idea of the background of the story:

1) The link below is to the home page of my blog. If you look down the left side of the page, you will see a section marked “People Are Talking.” That contains links to a sample of the many kind comments that have been offered re the work I have done over the past nine years both in the saving and investing area.

People Are Talking

2) The link below is to a calculator called “The Stock-Return Predictor.” This is the tool that every middle-class investor should be using to determine whether to put his or her retirement money into stocks. The thing that The Stock-Selling Industry fails to tell us is that stocks offer a very poor long-term value proposition when purchased at the sorts of price levels that applied from 1996 through 2008.

 The Stock-Return Predictor

3) The link below is to the text of an e-mail that I sent to my congressman (Rep. Frank Wolf) regarding the long-running smear and intimidation campaigns that have been used to block me from educating the thousands of middle-class investors who have expressed an interest in learning about the realities of stock investing:

 Hocus Goes to Washington

4) The link below is to an article containing snippets of posts by 101 community member who expressed a desire that discussions of the investing realities be permitted on the internet. I think that if you read a few of these snippets you will see why I see similarities between the Palin phenomenon and the efforts to block ordinary people from learning about the investing realities:

Honest Posting Is a Good Thing! 

I am grateful for any effort you can devote to considering this idea. I am of course happy to respond to any questions. Thanks for all your good work at the “Conservatives4Palin” site.

Rob

My E-Mail to Atlantic Monthly Associate Editor Matthew Yglesias

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Set forth below is the text of an e-mail that I wrote to Atlantic Monthly Associate Editor Matthew Yglesias on January 21, 2010.

Matthew:

Congratulations on your fine blog.

My name is Rob Bennett. I write the “A Rich Life” blog.

I would be grateful if you would check out a Google Knol that I wrote entitled “Why Buy-and-Hold Investing Can Never Work.” It argues that the reckless promotion of Buy-and-Hold for 30 years after the academic research showed that valuations affect long-term returns was the primary cause of the economic crisis.

Here is a link:

Google Knol on Why Buy-and-Hold Investing Can Never Work

Rob

http:arichlife.passionsaving.com

My E-Mail to James Surowiecki, Author of The Wisdom of Crowds

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Set forth below is the text of an e-mail that I sent on January 28, 2010, to James Surowiecki, author of The Wisdom of Crowds.

James:

My name is Rob Bennett. I am the author of the “A Rich Life” blog (http://arichlife.passionsaving.com).

 I recently wrote a Google Knol entited “Why Buy-and-Hold Investing Can Never Work”.

Your book The Wisdom of Crowds played a big part in the development of my thinking on the issues discussed in the Knol. I would like to share with you my take on why the crowd failed to evidence wisdom in the events leading up to the stock crash. I would of course be grateful to hear any reaction from you.

I believe that your idea of crowd intelligence playing a role in setting stock prices properly is of huge importance to the effort to come to a better understanding of how markets work. There is a wonderful line in your article in the Guardian entitled G20 Summit: How the Bandwagon Wrecked the Wisdom of Market Crowds in which you say that “the answer may not be necessarily to use the markets less but rather to do a better job ensuring that…diverse opinions can be easily registered.”

My belief is that there are HUNDREDS of compelling insights to be developed from those few words. I think those words hit on the core problem of the stock market today and suggest the way out of today’s economic crisis.

My take is that it is true that the wisdom of crowds can cause stock market prices to be set properly. However, this can happen ONLY if, as you suggest, diverse opinions can be expressed. In today’s environment (an environment in which Buy-and-Hold is promoted relentlessly), it has become IMPOSSIBLE for diverse opinions to be expressed.

Please consider what the market (which is of course us!) would have to do to keep prices at fair-value levels. It would need to note when stocks had become overvalued or undervalued and then RESPOND to the improper valuation by pushing prices a bit in the opposite direction to the direction in which they had been improperly trending.

Each time stocks became a bit overpriced, investors should be selling stocks as a way of pulling the market price back to fair value. Each time stocks became a bit underpriced, investors should be buying stocks as a way of pulling the market price back to fair value. This is entirely rational behavior as the long-term value proposition of stocks obviously drops when stocks become overvalued and the long-term value proposition obviously increases when stocks become undervalued. Market prices are self-regulating for so long as investors are encouraged to invest rationally.

Now — please consider what has happened in the Buy-and-Hold Era. Buy-and-Hold encourages investors NOT to change their stock allocations in response to valuation changes. Investors are told over and over and over again to stick to the same stock allocation at all times, to Stay the Course. 

Do you see the problem?

The market WANTS to set prices properly. But we have tied the market’s hands by taking away the MECHANISM by which proper pricing is achieved. There are always going to be times when a number of investors become emotional about stocks and engage in behavior that causes prices to go too high. This causes no problem for so long as other investors feel free to do the rational thing and lower their allocations, pulling the overall market price back to what it should be. But none of this good stuff can happen in a world in which millions of dollars are spent promoting Buy-and-Hold Investing, a strategy that urges investors to refuse the rational choice and to act as if no response to mispricing is needed.

The reckless overpromotion of Buy-and-Hold destroyed our market and caused the economic crisis. I believe that we can rebuild the market and our economic system (and repair the damage done to our political system as well) only by openly acknowledging that Buy-and-Hold is the OPPOSITE of what works in long-term investing, that instead of urging investors to stick to the same stock allocation at all times we should be encouraging them to stick to the same risk level at all times (which would require them to lower their stock allocations at times of extensive overvaluation).

I propose the replacement of the Buy-and-Hold Model with its opposite, a model that I call “Rational Investing.” I think this is a big deal. I think that the people who developed the Buy-and-Hold Model were very much on the right track in the work they did but that they made a mistake as to how market efficiency is achieved and that mistake sent thousands of smart and good people down a dark path. Today there is great resistance among many “experts” in this field to acknowledging the errors. The unfortunate consequence is that things keep going down, down, down and the reluctance to take the only steps that could help us take things to a better place grows ever stronger. We need a few thought leaders in this field (like you!) to step forward and call a halt to the defensiveness that has been evidenced in recent years by many Buy-and-Hold advocates.

You hit it on the head when you argue that the expression of diverse views must be permitted for the market to function. I can testify from personal experience that the belief in Buy-and-Hold has become intensely dogmatic, even cult-like, in recent years. In the event that you respond to this e-mail, I will in my next e-mail to you provide links that will let you see for yourself how big the problem has grown as Buy-and-Holders have become increasingly challenged by real-world events that undermine their confidence in their ideas and have responded not by acknowledging possible weaknesses but by denying the possibility of weaknesses and insisting in ever stronger terms that the public discussion of weaknesses be silenced.

That’s enough for one e-mail. Thanks for listening. I wish you well in all your endeavors and thank you for the learning experiences you have provided me as I have pondered the stimulating ideas advanced in your book. If any of what I say here or in the Knol connects with you, please let me know. I would love to see if we can work together to take things to a better place than where they stand today. I believe that if we could get a National Discussion launched on how stock investing really works, we could usher in the Golden Age of Middle-Class Investing. We are now caught in a dark time that could lead to something very positive if only some people could be persuaded to boldly speak out in support of the idea of switching to a different and more promising path forward.

Rob

http://arichlife.passionsaving.com

My E-Mail to Michelle Malkin, Author of the Michelle Malkin Blog

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Set forth below is the text of an e-mail that I sent to Michelle Malkin, author of the Michelle Malkin blog, on April 22, 2009.

Michelle:

My name is Rob Bennett. I am the author of the “A Rich Life” blog. I would like to interest you in writing about a story that I have been developing for seven years now, the cover-up of the true cause of the economic crisis. 

The true cause is that people invested recklessly in stocks for years, bringing prices to levels far higher than they have ever gone before. The primary reason why this happened is that The Stock-Selling Industry promoted an approach to investing called “Passive Investing,” which advises that “you can’t time the market.” This is a half-truth.

It is true that it is not possible to say how stocks will do over the next year or so. But there is a wealth of literature that shows that shows that huge price crashes always follow when we get to the price levels that applied in the years before the crash (there is not one exception in the historical record). The phrase “you can’t time the market” is a MARKETING slogan, a slogan aimed at making people feel comfortable engaging in reckless behavior that their common sense would otherwise warn them to avoid.

Until now, I have thought of this story as a personal finance story. I have learne through hard experience that it is not possible to write about this story at persona finance discussion boards or blogs.

The  story can be fully documented. The historical data shows that stocks are far more risky when prices are high and that the experts should have been advisin people to lower their stock allocations after prices got out of hand. I have spoken with a good number of experts and can provide on-the-record statements in which they acknowledge this. However, there is an intense institutional opposition in the personal finance field to permitting discussion of these realities and their implications. I am writing to you because I have come to the conclusion that the story can only be aired by those whose interest in the investing questions is secondary but who are deeply concerned about the economic crisis and about the cover-up of the story taking place among those whose focus is on the personal finance questions.

The extent of the cover-up is breathtaking. I have been banned at the following places for reporting on this matter: (1) the Motley Fool web site; (2) the Morningstar.com web site; (3) the Early Retirement Forum; (4) IndexUniverse.com and (5) The Money Bloggers Network.

Huge smear campaigns have been directed at me for telling the story, including death threats aimed at me and my family members, efforts to destroy my web site, and efforts to insure that bloggers in the personal finance field do not report on the story.

 I can provide extensive documentation of all that is said here. I can show that the studies that financial planners use to tell people how to structure their retirement plans get the numbers wildly wrong. I can point you to leaders in the field who have noted that the conventional advice has been shown to be wrong and that we are soon going to see a “revolution” (that’s Rob Arnott’s word — he served as editor of the Financial Analysts Journal for several years) in our understanding of how stock investing works.

The trouble is — the people who work in this field are embarrassed about the bad advice they have given for many years and concerned about what it will do to their reputations among other experts to tell what they know or even to permit others to discuss the issues. Because the errors at issue here are errors in numerical calculations (caused by reliance on a now discredited theory), there is great shame over the idea of letting these matters come to light. There is of course huge money made in this field and having solid connections is the key to making the huge money.

I believe that many would like to see the story told but that no one else today dares to be the one to try to bell the cat. 

If you are able to help, I am of course happy to respond to any questions.

Rob

http://arichlife.passionsaving.com

My E-Mail to John Ziegler, Producer of the Media Malpractice Video

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Set forth below is the text of an e-mail that I wrote to John Ziegler, producer of the Media Malpractice: How Obama Got Elected and Palin Was Targeted video, on November 19, 2009.

John:

My name is Rob Bennett. I am the author of the “A Rich Life” blog and a big fan of the work you have done relating to Sarah Palin. I am hoping that you may be able to help me get publicity for another press accountability issue, one relating to the conventional stock investing advice and its effect in causing the economic crisis.

In May of 2002, I put a post to a Motley Fool discussion board noting an analytical error in the studies that financial planners use to help people plan their retirements. The studies fail to consider the effect of stock valuations and thus get all the numbers wildly wrong. The likely result is that millions of middle-class investors are going to suffer failed retirements in days to come. My findings on this question have been confirmed by numerous big-name experts in the time since.

While the findings have been confirmed, the reaction among investing experts has been to avoid pointing out the error publicly for the seven-plus years since. I have reported on the error (and on other errors in the conventional investing advice that I discovered through follow-up investigations at numerous web sites and blogs. The result is that vicious smear campaigns have been directed at me and at people posting in support of me. These efforts have included death threats, organized efforts to destroy my business, web sites set up solely to ridicule me and intimidate those posting in support of me and contacts with reporters writing favorable articles in which defamatory claims have been advanced. I have been banned from numerous discussion boards and blogs despite never once having had a post removed on grounds that it was abusive (in each case the ban was demanded by those leading the smear campaigns).

The historical background is that the conventional investing advice (Buy-and-Hold Investing) was discredited by research done by Robert Shiller in 1981 and by a mountain of research confirming Shiller’s findings done in the years since. But Buy-and-Hold has brought in hundreds of millions to The Stock-Sellling Industry and so leaders in the field do not want the errors revealed. When you do that math, you realize that the poor investment advice that we have been hearing for the past 30 years was the primary cause of the economic crisis and that telling people what actually works would be the quickest means to getting out of the crisis. But I have not been able to find any influential figure willing to speak out candidly on this issue.

The general feeling is that this is just too darn explosive. The root mistake is the biggest mistake ever made in the history of personal finance and the feeling is that it does not “look good” for investing “experts” to acknowledge mistakes.

I will share with you one quote from a journalist in the field that tells the story succinctly. I sent e-mails to Scott Burns of the Dallas Morning News for close to a year trying to persuade him to write a story warning his readers of the dangers of the conventional retirement studies. He did eventually write such an article. But he gave it as little play as possible (placing it as a response to a reader question rather than as a separate article) and then went right back to endorsing the conventional studies the next day. Scott explained in his brief write-up why the media has not been willing to report on the flaws in the retirement studies and in the conventional model in general. He said: “It is information most people don’t want to hear.” 

Investing “experts” do not tell us what works but what it is popular to say, which is often just the opposite.  Almost all that is written in this field is governed by marketing considerations. The academic researchers made a mistake back in the 1960s and 1970s and then discovered it in the 1980s. But the marketing campaigns pushing Buy-and-Hold were so successful that there is now a widespread feeling that it would cause too much embarrassment to too many people to report the realities as known today. So we go on year after year after year giving bad advice and causing ever more financial misery.

I have spoken to financial planners who have indicated that they would like to speak more frankly on these questions and who told me that their clients are pleading for new approaches. But so far the vast majority are unwilling to speak frankly in public. We have a Tyranny of the Commons situation. Everyone would be better off if we could all learn and discuss the realities. But there is so much pressure not to spill the beans coming from those who endorsed the now-discredited ideas that few dare to say things in ways clear enough for middle-class investors to understand. And so the pressure from the people hearing the bad advice is for ever more bad advice. 

This is a circle that must be broken. Hundreds of people have expressed interest in learning more. But people need to be able to ask questions and consider these matters over time before they will feel comfortable changing their investment strategies. So I need to create a internet community where people will feel safe asking whatever questions they have and learning over time. To do that, I need to bring some publicity to this matter. My hope is either that you will be interested in exploring the matter or that you will be able to point me to someone who might be interested.

Everything that I say here can be documented with materials at my web site.

If you would like to check on what other people have said about me and my work in this area, I’d be grateful if you would look at the “People Are Talking” section of my blog (on the left-hand side of the home page of the blog) where 50 or so people offer highly complimentary reactions (each quote links to the page on the internet where the kind comment was advanced):

People Are Talking

Here is a page at which 20 authorities note that the Efficient Market Theory (the intellecutal framework for the conventional investment advice of the past 30 years) has been entirely discredited in recent years: 

Look, Ma — No Intellectual Framework!

Here is a page that makes the case that the failure of the “experts” in this field to change their advice after it was discredited by the academic research is the primary cause of the economic crisis:

Experts? What Kind of Experts?!!!

Here is a page at which 101 posters at various boards express a desire that the smear campaigns that have been used to block reasoned discussions be brought to an end and that honest posting on these matters be permitted:

Make It Stop! 

Please let me know if you have any questions. (I will be out of town and away from my computer from Monday, November 23 through Monday, November 30.)

Best of luck in your future endeavors!

Rob

http:arichlife.passionsaving.com

My E-Mail to Jay Cost, Author of the Horse Race Blog

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Set forth below is the text of an e-mail that I sent to Jay Cost, author of the Horse Race Blog, on December 21, 2009.

Jay:

My name is Rob Bennett. I am the author of the “A Rich Life” blog (http://arichlife.passionsaving.com). 

I am a fan of your column and particularly enjoyed “Democrats Risk Another Jacksonian Moment.” I want to make you aware of a matter that I have been working on for seven years now that I believe has the potential to stir up populist anger (on both the left and the right) in a serious way.

The Buy-and-Hold investing strategy was discredited by the academic research nearly 30 years ago. This critically important development has been kept from middle-class investors while continued promotion of Buy-and-Hold brought in millions to The Stock-Selling Industry.

Here is a link to an article at my site quoting 20 leading authorities addressing the problems with the Buy–and-Hold Model:

20 Authorities Dare to Question Supreme Scientific Truths

The quotes set forth in that article are amazing. Rob Arnott is the former editor of the Financial Analysts Journal, the most prestigious journal in the field. He says that the conventional investing wisdom of today is the product of “myth and urban legend.”

Jeremy Grantham says that the reason why we still tell people to practice Buy-and-Hold is that the academics who came up with the idea “have decades of their research and academic standing to defend” and are “unwilling to change their views in the face of evidence.”

A report published by Wharton says that the cause of the financial crisis is that the models we use to understand stock investing “by design disregard the key elements driving outcomes in real world markets.”

And on and on.

I have tried to help middle-class investors become aware of these realities in posts to discussion boards and blogs. Many have expressed great interest in learning more. Yet honest posting on these matters has been banned at numerous large boards, including ones hosted by Morningstar.com, by Bogleheads.org, by IndexUniverse.com and by Motley Fool. Big-name experts who participated at these boards (and who advocate Buy-and-Hold) failed to speak up when ruthlessly abusive posting practices (including threats of physical violence) were employed to force the bans.

As a journalist (I covered tax legislation for newsletters for many years before starting my internet business), I find this shocking. Do you?

Here’s a link to an article by Dallas Morning News Columnist Scott Burns that reveals well what is going on:

My Favorite Scott Burns Column

Scott wrote this column at my urging. I am the person who discovered the analytical errors in the Old School Safe Withdrawal Rate studies (these studies are used by financial planners to help people plan their retirements). Several big-name experts have confirmed that these studies are in error and the errors are likely going to cause millions of middle-class people to suffer failed retirements in days to come. I urged Scott to write the column because I have been trying for seven years to get publicity for this matter and to thereby get the Old School studies  corrected (not one of the Old School studies has yet been corrected). 

Please take a look at the first sentence of the fourth paragraph from the bottom of Scott’s column. He explains why so few know about all this today, even though their retirements are at stake. He says: “You don’t hear much about this because it is information most people don’t want to hear.”

Most of today’s financial planners tell us what we want to hear about stocks (that there is no need to lower our stock allocations when stock prices rise to insanely dangerous levels) rather than what we need to hear about stocks (that the academic research of the past 30 years tells precisely the opposite message. And the owners of many financial sites think this is fine!

The financial industry and the financial press is playing an extremely dangerou game, in my assessment. Investors are in the process of suffering the greatest loss of middle-class wealth in the history of the United States. All of this could have been avoided had we been straight with people re what the research has been showing for three decades. And it is inevitably all going to come out after it is too late to do anything to help people avoid the losses.

If you have an interest in writing about this or have suggestions re reporters who might be interested in the story, I would be grateful if you would contact me with questions or with suggestions of people that I might contact. 

Thanks for listening. I wish you the best of luck with your column!

Rob

http://arichlife.passionsaving.com

My E-Mail to Dan Riehl, Author of the Riehl World View Blog

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Set forth below is the text of an e-mail that I sent to Dan Riehl, author of the Riehl World View blog, on December 22, 2009.

Dan:

My name is Rob Bennett. I write the “A Rich Life” blog. I was encouraged by your recent blog entry entitled “Despite Vote, Last Night Left Me Very Optimistic” and wanted to let you know about a project that I have been working on for a long time that I believe could bear very good fruit if a populist uprising became a reality.

The primary cause of the economic crisis was the reckless promotion of the Buy-and-Hold approach to investing by The Stock-Selling Industry for 28 years after the academic research showed that valuations affect long-term returns and that Buy-and-Hold can thus never work for the long-term investor. The links below show that numerous investing experts know that Buy-and-Hold has failed. The problem is that The Stock-Selling Industry does not see it as being in its interest to let middle-class investors know this (all industries would obviously like to have people always buy their product regardless of price). 

I have tried to get the word out about this at numerous discussion boards and blogs and the usual result is that discussion of it is banned. Bans are today in effect at Motley Fool, Morningstar.com, Bogleheads.org and IndexUniverse.com, as well as at a number of personal finance blogs. This is not purely an investing topic anymore, in my assessment.

It has become a political topic given the devastating effect of the economic crisis, the effect that that crisis has had in souring political debates  and the bans on what middle-class investors can learn about how to invest effectively (many people have expressed to me a desire to be able to learn more).

Here is a link to an article providing background that is entitled “The True Cause of the Current Financial Crisis Is Buy-and-Hold Investing”:

Financial Crisis Article

Here is a link to an article that provides links to 20 articles in which leading figures in the field decry the financial harm that has been done to us through the reckless promotion of Buy-and-Hold and the failure of “experts” in the field to take action for so long now (It’s entitled “Buy-and-Hold Investing Doesn’t Work — These Links Prove It!):

Links Prove It!

Here is a link to an article giving brief snippets of 101 comments of my fellow community members expressing a desire that the smear campaigns that have been employed to block reasoned discussion of this matter be stopped and that honest posting be permitted (It’s entitled “Investing Discussion Boards Ban Honest Posting on Valuations!”):

“Boo, Baby!” to Ban on Honest Posting

If you want to check out my credibility, please go to the home page of the “A RIch Life” blog and scroll down to the section marked “People Are Talking” on the left-hand side of the page. There are a number of extremely kind comments about me and my work posted there along with links to the places where the comments were made. Some of the comments were made by ordinary people. Some were made by authorities in the field.

I hope that you will contact me in the event that you have questions and would like to learn more. I of course wish you the best of luck with your blog in any event.

Rob

http://arichlife.passionsaving.com

My E-Mail to New York Times Columnist David Leonhardt

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Set forth below is the text of an e-mail that I sent to New York Times Columnist David Leonhardt on January 20, 2010.

David:

My name is Rob Bennett. I write the “A Rich Life” blog (http://arichlife.passionsaving.com).

I enjoyed your column “Centrist and Not Yet Unified. I believe that the political atmosphere is being poisoned by the economic crisis. I also believe that the PRIMARY cause of the economic crisis is the relentless promotion of Buy-and-Hold Investing by The Stock-Selling Industry for 30 years after the academic research showed that the odds of it working for the long-term investor are precisely zero. This is a POLITICAL issue.

The Stock-Selling Industry is not going to engage in honest discussion of the flaws of the Buy-and-Hold Model unless political pressure is imposed from concerned parties who do not make their money encouraging people to invest heavily in stocks regardless of the price being charged for them.

Here is a link to a Google Knol that I wrote entitled “Why Buy-and-Hold Investing Never Works”:

Google Knol on Why Buy-and-Hold Investing Never Works

Please let me know if you would like to know more or if you have questions.

Thanks again for the fine work you do helping people learn about economic issues with your column.

Rob

http://arichlife.passionsaving.com

My E-Mail to Chicago Tribune Columnist Gail Mark Jarvis

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Set forth below is the text of an e-mail that I sent to Gail Marks Jarvis, a columnist for the Chicago Tribune, on January 31, 2010.

Gail:

This is Rob Bennett, author of the “A Rich Life” blog (http://arichlife.passionsaving.com). 

Your January 31 article on why Buy-and-Hold should not be applied dogmatically was fine stuff. You perform a public service in getting the word out on this, in my assessment.

Here is a link to a Google Knol that I have written on “Why Buy-and-Hold Investing Can Never Work”:

Google Knol on Why Buy-and-Hold Investing Can Never Work

Best of luck with your column!

Rob

http://arichlife.passionsaving.com