A Rich Life

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

My E-Mail to Patrick Courrielche, Journalist at www.BigHollywood.Breitbart.com

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Set forth below is the text of an e-mail that I sent on January 12, 2010, to Patrick Courrielche, a journalist at the www.BigHollywood.Breitbart.com site.

Patrick:

My name is Rob Bennett. I write the “A Rich Life” blog (http://arichlife.passionsaving.com).
I enjoyed your article entitled “Peer-to-Peer Review — How Climategate Marks the Maturing of a New Science.” I would like to interest you in another story in which a flawed approach to peer review has played a big role — the promotion of Buy-and-Hold Investing and how it caused the stock crash and the economic crisis that followed from it.

Buy-and-Hold is the dominant model for understanding how stock investing works.
It is said to be “scientific” in that it is the product of academic research based on analysis of the historical stock-return data. The reality is that the academic research has shown for 30 years that the odds of a Buy-and-Hold strategy ever working in the real world for a long-term investor are precisely zero.

Rob Arnott, who for four years served as the editor of the Financial Analysts Journal, tells a story of when he asked a group of about 200 academic researchers how many of them still believed in the Efficient Market Theory (the intellectual framework of the Buy-and-Hold Model). Only a few hands were raised. Then he asked how many were going to use the Efficient Market Theory in the research they would be doing when they got back to the office. Nearly every hand in the room went up. Everyone in the field knows that the intellectual support for Buy-and-Hold Investing has collapsed. But it is career suicide to say this out loud today. The result is that far more effective investing strategies cannot be publicly discussed and the errors of the investing “wisdom” that may be discussed has put us in the worst economic crisis since the Great Depression.

The problem is that the “experts” who have advocated Buy-and-Hold for decades are
embarrassed to have the public learn how dangerous their advice has been. I put a post to a Motley Fool discussion board in May 2002 showing that the studies that financial planners use to help us all plan our retirements contain an analytical error that causes all the numbers to be wildly off the mark. My findings have been confirmed by numerous big-name experts. But I have run into a brick wall trying to get the findings publicized. Dallas Morning News Columnist Scott Burns told me that my efforts to get the word out to middle-class investors about the accurate retirement planning numbers would prove to be “catastrophically unproductive.” Scott explained that the general media will not report on this because: “It is information most people don’t want to hear.”

I have received positive feedback from hundreds of middle-class investors and from a number of financial planners (please take a look at the “People Are Talking” section on the left-hand side of the home page of my blog to see 50 linked comments praising my work). But I have indeed run into a brick wall trying to get the matter publicized. Honest posting on this matter has been banned at numerous discussion boards and blogs. The authors of the discredited studies and calculators and books  have even threatened physical violence on those who report accurately on these matters and the owners of the forums and blogs have in most cases raised no objection.

Buy-and-Hold gains its credibility from the fact that it is rooted in “science.” But a “science” that is not corrected when new research identifies flaws in the original theory is not true science. I am trying to get publicity for this matter with the hope of launching a national debate on what really works in stock investing.

Here is a link to a Google Knol that I have written explaining why Buy-and-Hold Investing can never work:

http://knol.google.com/k/rob-bennett/why-buy-and-hold-investing-can-never/1y5zzbysw7pgd/1#

Here is a link to an article explaining how the promotion of Buy-and-Hold caused the economic crisis:

http://www.passionsaving.com/cause-current-financial-crisis.html

Here is a link to an article setting forth links to 20 articles in which leading figures note that the Efficient Market Theory has been discredited by the academic research of recent decades:

http://www.passionsaving.com/buy-and-hold-investing.html

Here is a link to an article containing 101 snippets of posts put forward by middle-class investors expressing a desire that honest posting on these matter be permitted at investing discussion boards:

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

Please let me know if you have any questions or if I can supply further details that would help you determine whether to explore this in more depth.

Rob
http://arichlife.passionsaving.com

My E-Mail to New York Times Columnist Paul Krugman

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Set forth below is the text of an e-mail that I sent on January 18, 2010, to New York Times Columnist Paul Krugman:

Mr. Krugman:

I was struck by a reader comment to one of your recent articles re The Efficient Market Hypothesis that this theory “seems harder to kill than the undead.” I believe that there is more going on here than the typical reluctance of academics to acknowledge that better theories have come along to replace earlier ones.

I would be grateful if you would give a look to a Google Knol that I have written entitled “Why Buy-and-Hold Investing Can Never Work.” If the market is NOT efficient in the short term but IS efficient in the long term, it seems to me that Buy and-Hold is the WORST possible strategy. If the market is always in the process of moving in the direction of fair price, ignoring price when setting one’s stock allocation is a horrible mistake. Stocks were overvalued by about $12 trillion at the top of the bubble. This means that middle-class investors are in the process of losing that much of their life savings and that the reason why they are losing it is that The Stock Selling Industry has been pushing the Buy-and-Hold mantra so aggressively and for so long.

I believe that political pressure is going to be required to force the “experts” in The Stock-Selling Industry to acknowledge their error or this discredited theory is going to cause a mass loss of confidence in our economic and political systems.

I would love to hear any thoughts you have in reaction to the Google Knol (either positive or negative, of course).

Rob Bennett

http:.//arichlife.passionsaving.com

My E-Mail to Jason Zweig, Author of the The Intelligent Investor Column

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Set forth below is the text of an e-mail that I sent on January 12, 2010, to Jason Zweig, author of the The Intelligent Investor Column, which runs in The Wall Street Journal.

Jason:

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

I am a big fan of your work and particularly enjoyed your recent article entitled “Inefficient Markets Are Still Hard to Beat”.

I view it as a highly encouraging sign that many writers in this field are now openly acknowledging that the Efficient Market Hypothesis has been discredited. That’s a big step forward. However, I think you (and the other smart people who have adopted this take) are wrong in thinking that Buy-and-Hold Investing can work even in a world in which the market is inefficient in setting prices.

I recently wrote a Google Knol (“Why Buy-and-Hold Investing Can Never Work”) addressing this question. If you have any reactions to the Knol, I would be thrilled to hear them.

The key sentence in your article (in my view) is the one stating that: “Predicting the shifting emotions of tens of millions of people is no easy task.” This claim is both true and false, depending on the time perspective that applies. I agree that it is probably impossible to predict the SHORT-TERM emotion shifts of millions of investors. So short-term timing is out regardless of whether the market is efficient or not. However, predicting LONG-TERM emotion shifts is a very different matter. If the old view of market efficiency is rejected (as it should be), it becomes EASY to predict long-term emotion shifts. It therefore becomes easy to time the market effectively.

The market MUST assign proper values to stocks in the long run. The entire purpose of a market is to do this. So, even if we reject the idea that the market is efficienct immediately, we know that prices ultimately will reflect fair value. This means that, when prices are wildly off the mark, we can count on them returning to fair value within ten years or so. That is, we know the future direction of stock prices. We cannot say precisely when stocks will return to fair-value prices. But we know that the odds of good performance are far, far less when stocks are wildly overpriced (as they were from 1996 through 2008) than they are when stocks are priced fairly or underpriced. Thus, the riskiness of stocks is not a fixed thing but a variable thing. It follows that investors should NOT be sticking with a single stock allocation at all valuation levels. That is, investors should not be following a Buy-and-Hold strategy.

A calculator at my web site (“The Stock-Return Predictor”) performs a regression analysis of the historical stock-return data to reveal to investors the most likely 10-year return for stocks starting from the various possible valuation levels. The calculator shows that most likely 10-year annualized return in 1982 was 15 percent real and the most likely 10-year annualized return in 2000 was a negative 1 percent real. There is no one stock allocation that makes sense in both sets of circumstances. Rational investors must be willing to CHANGE their allocations in response to big price changes in an effort to keep their risk levels roughly constant. It is not the stock allocation re which investors should be “Staying the Course,” it is the risk level (and keeping the risk level constant requires a willingness to change one’s stock allocation in response to big price changes). We have been telling middle-class investors precisely the OPPOSITE of what works for long-term investing for 30 years now!

We CAN predict the shifting emotions of millions of investors. All that we need to do to do so is to look at valuation levels. When prices are at the insane levels that applied from 1996 through 2008, we know that prices are headed down hard in the long term (stock prices must reflect fair value in the long term). As prices drop hard, investor emotions are obviously going to sour (causing even bigger price drops). Thus, we know that long-term investors must be lowering their stock allocations at such times.

It gets better. We can PREVENT overvaluation (and the price crashes that follow from it) simply by making investors aware of this critically important information! Tools like the Return Predictor will make the market self-correcting if they are widely publicized. The Predictor shows investors that the long-term value proposition of stocks is poor when stocks are selling at high prices. Let investors know this and they will naturally lower their stock allocation at such times. This will causes prices to drop. Which means that stocks will be properly valued once again. And stock crashes (and the economic crises that follow from them) will be a thing of the past!

Markets work only when needed information is readily available. Critically important information is not available to most investors at times when Buy-and-Hold Investing is being heavily promoted. Think about it — Buy-and-Hold would not be possible in a world in which most investors possessed a proper understanding of the basics. If we provide investors the information they need to invest effectively, the market will work. The market can set prices properly. But it is up to those who educate the public about how stock investing works to inform people that valuations always affect long-term returns and that Buy-and-Hold is a poor long-term strategy.

If you have any reactions to these thoughts, I would be excited to hear them and would like to report on them at my blog. Thanks for listening in any event and thanks for the good work you do in your columns.

Rob

My E-Mail to Justin Fox, Author of The Myth of the Rational Market

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Set forth below is the text of an e-mail that I sent on January 11, 2010, to Justin Fox, the author of The Myth of the Rational Market:

Justin:

My name is Rob Bennett. I write the “A Rich Life” blog (http://arichlife.passionsaving.com). I am a big fan of your work and recently wrote a Google Knol (“Why Buy-and-Hold Investing Can Never Work”) which briefly refers to you. After finishing it, I thought that I should write you to let you know about it and to share my thoughts with you about one issue on which we do not agree (your belief that Buy-and-Hold makes sense even if the market is not efficient).

Here is a link to the Knol:

http://knol.google.com/k/rob-bennett/why-buy-and-hold-investing-can-never/1y5zzbysw7pgd/1

In the event that you have any reactions to it, I would be thrilled to hear them.

I do not agree with you that there is no way for investors to reliably beat the market even in the event that the market is not efficient. I believe that the confusion on this point stems from the history of the learning process we have gone through on these issues. There is not one possible explanation for why short-term timing does no work. There are two. The academics jumped to the conclusion that the explanation is that the market is setting the price of stocks properly. Another perfectly satisfactory explanation is that the market is entirely NON-efficient in the short term and BECOMES efficient only over time (after the passage of perhaps 10 years of time or so). If this is the explanation (I believe it is), Buy-and-Hold is the worst of all possible strategies and it IS possible for informed investors to beat the market reliably.

If market prices are set primarily by emotion in the short-term but are efficient in the long term, stock prices are always in the process of moving in the direction of fair value. This means that there is great danger in following a Buy-and-Hold strategy at times of extreme overvaluation (such as we saw for the entire time-period from 1996 through 2008). Here is a link to a calculator at my web site (“The Stock-Return Predictor”) that uses a regression analysis of the historical stock-return data to reveal the most likely 10-year return starting from all possible valuation levels:

http://www.passionsaving.com/stock-valuation.html

Please look at the most likely annualized 10-year return that applied in 1982 — 15 percent real. Now consider the most likely annualized 10-year return that applied in 2000 — a negative 1 percent real. An 80 percent stock allocation makes sense when the likely long-term return is 15 percent. A 20 percent stock allocation makes sense when the likely long-term return is a negative 1 percent. There is no one stock allocation that makes sense in both sets of circumstances. Buy-and-Hold can never work for the long-term investor. The risk profile for stocks changes with changes in the valuation level. An investor following a Buy-and-Hold strategy is letting his risk level change dramatically over time. This does not make sense.

Other calculators at the site (“The Investor’s Scenario Surfer” and “The Investment Strategy Tester”) permit investors to determine how much of an edge they gain by being willing to adjust their stock allocations in response to big changes in valuation levels (I called this strategy “Valuation-Informed Indexing”). The short answer is that investors doing this can realistically expect to be able to retire five years sooner than Buy-and-Holders. It often takes several years for Valuation-Informed Indexers to gain an edge. But the odds are extremely strong (about 90 percent) that eventually they will. Once they do, the magic of compounding kicks in to make their long-term portfolio values much, much higher than what could be achieved with a Buy-and-Hold strategy.

The beauty of indexing is that it permits the investor to reap the market return without having to study the prospects of the underlying companies. All that an investor needs to know to invest effectively is essentially “cooked in” to the market price, making it unnecessary for investors to even follow economic developments There is one big exception to this general rule, however. Overvaluation and undervaluation are never “cooked in” to the market price  By definition, the market cannot price in the extent to which it has failed to properly price itself. For indexing to work, investors must incorporate an adjustment for the effect of valuations to determine a true market price and then invest in the improperly priced market to the extent appropriate given the extent of the overvaluation or undervaluation that applies (a lower stock allocation than normal is appropriate at times of overvaluation and a higher stock allocation than normal is appropriate at times of undervaluation).

Imagine what would happen tools like The Stock-Return Predictor were widely publicized. The Predictor teaches investors an amazing lesson — each price change greater than the price change justified by the economic realities (that’s been a price increase of 6.5 percent real per year throughout the history of the U.S. market) has both a positive and a negative element to it. Overvaluation increases an investor’s portfolio size, which is a positive, but it also diminishes the likely long-term return, which is a negative. The net effect is a wash. The rational response by investors to overvaluation is to lower their stock allocations (because the likely long-term return has dropped). A lowering of stock allocations brings valuations back down to reasonable levels. The market price is self-correcting!

The question we should be asking ourselves is — Why did the market price not self-correct from 1996 through 2008? I think that the answer is that most investors are not able to gain access to the information they need to invest rationally. I have written about these ideas at numerous discussion boards and blogs over the past eight years and have consistently experienced intensely abusive posting by large numbers of Buy-and-Holders. Trying to believe that price does not matter (an idea at odds with common sense) makes investors insanely defensive. The result is that an antipathy to learning the realities of stock investing develops. Investors go to great efforts NOT to know how to invest rationally and effectively. At some point, the problem grows so great that the market is forced to correct itself through a crash.

If investors were encouraged at every step of the way NOT to follow Buy-and-Hold strategies but instead to keep their risk levels roughly constant (by adjusting their stock allocations in response to big price swings), this emotionalism would never become a problem, stocks would never become overvalued (the market would self-correct so that the P/E10 level would always remain somewhere near fair value), and we would eliminate the risk of stock crashes (and the economic crises that follow from them).

I would love to hear any reactions if you care to share any.

In any event, I wish you the best of luck in your future endeavors. Perhaps we will meet up on a blog at some point and be able to engage in some back and forth re these matters. Thanks much for listening to these thoughts.

Rob
http://arichlife.passionsaving.com

“Liberals Should Be Concerned About the Financial Damage Being Done to Middle-Class Investors”

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Set forth below is the text of an e-mail that I sent to Jane Hamsher, owner of the FireDogLake.com blog, on Saturday, December 19, 2009: 

Jane:

My name is Rob Bennett. I write the “A Rich Life” blog (www.arichlife.passionsaving.com). I was encouraged to read your article entitled Left/Right Populist Outrage Will Defeat Senate Health Care Bill at the www.huffingtonpost.com site. I am a supporter of Sarah Palin. So we obviously do not agree on many political issues. However, I want to make you aware of an issue on which I believe a combined left/right populist outrage could do a world of good for millions of middle-class people and to ask your help in spreading the word.

The issue is — Buy-and-Hold Investing. The Buy-and-Hold Model was discredited by the academic research nearly 30 years ago. Yet The Stock-Selling Industry continues to spend millions today promoting this model because it has brought in hundreds of millions in profits. I have spent the last seven years of my life trying to get the word out to people through posts to discussion boards and blogs and have had much success with a small group. However, the far larger group finds it hard to believe that The Stock-Selling Industry would continue to promote this model for so long after it has been discredited and the owners of the big financial sites and blogs have banned honest posting on this matter rather than permit people to ask the questions they need to ask before becoming persuaded that there are far more effective ways to invest their retirement money. There are now bans in place at Morningstar.com, at Motley Fool, at IndexUniverse.com, at Bogleheads.org, and at numerous blogs.

The reckless promotion of Buy-and-Hold is the primary cause of the economic crisis. Several financial planners have told me that their clients are begging to hear of more realistic approaches. But the planners feel trapped. To go public with what they know about the flaws of the now-dominant model would in all likelihood mean the end of their careers. The failure of the Buy-and-Hold Model is The Truth That May Not Be Spoken today in InvestoWorld.

If you have an interest in learning more about this issue, I hope that you will direct some questions to me. It’s not complicated. And this is NOT an economic issue. It once was. With the ban on honest posting that now applies at all the large internet investing sites that I know of, this is today a POLITICAL issue. Liberals and conservatives should be united in opposing a ban on honest posting on so important a topic. Liberals should be concerned about the financial damage being done to middle-class investors and conservatives should be concerned about the harm done to the functioning of the market when people cannot gain access to realistic investing advice. We all should be concerned about bans on honest posting re ANY issue of public policy significance.

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”:

http://www.passionsaving.com/cause-current-financial-crisis.html

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!):

http://www.passionsaving.com/buy-and-hold-investing.html

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!”):

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

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 I will hear from you in the event that you have an interest in learning more. I of course wish you the best of luck in your future endeavors in any event. Your Huffington Post article was top notch stuff, in the assessment of this Palin supporter.

Rob
http://arichlife.passionsaving.com

“It Is the Result of a Mistake, Not a Lie”

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Tuesday’s blog entry set forth the text of an e-mail that I recently sent to the owner of the Frugal Dad blog proposing an arrangement in which we would work together to publicize the findings of the Retire Early and Indexing discussion-board communities from the first seven years of our investing discussions.

Set forth below is the text of a follow-up e-mail that I sent following the posting of a blog entry at the Frugal Dad site entitled Have We Been Sold a Bunch of Lies About Money? I’ll offer commentary in next Tuesday’s blog entry.

Frugal Dad:

This is Rob Bennett. I sent you an e-mail last week re the extensive investing research that I have done. I have not received a response, and so I assume that you do not have an interest in the idea that I advanced. That is of course fine. But your blog entry today is on precisely the topic that I have explored, and so I felt a need to try one more time to get you interested in exploring this question in some depth.

You are not too far off in suggesting that we have been sold a bunch of “lies” re investing. I think that use of the word “lie” is not appropriate. But it is certainly true that we have been misled in terrible ways. I can explain the entire story and provide links backing up my conclusions on just about all of the important points. I very much want to get this story out to a wider audience and I would be thrilled to work with you in doing so if you have any interest in the idea.

What happened is that there was exciting research done in the 1960s and 1970s showing that short-term timing (changing one’s stock allocation in response to price changes with the thought that this would bring good results within a year or two) does not work. Many “experts” interpreted this to mean that ALL forms of timing (both short-term and long-term) do not work. The result was the investing advice that became the conventional wisdom for the past 30 years — always invest heavily in stocks, even when prices go to insanely dangerous levels. This is the worst possible advice that could have been offered. But it is the result of a MISTAKE, not a lie.

We need to fix the mistake. I have found this to be a tough business. Many “experts” are highly reluctant even to consider the possibility that they made such an obvious mistake that caused such great human misery. Still, the evidence is very strong that this is what happened. It is important that the mistake be corrected before too many more investors become so disillusioned with stocks that they take all their money out. Many people are coming to conclusions along the lines of your own, and this could cause stock prices to drop another 50 percent over the next few years. This could lead us to an economic depression. The stakes here are as high as they could possibly be,.

I hope you will not consider me a pest for writing again. I hope that you will give some thought to my idea. Your readers need to learn the realities. The “experts” have indeed let us down. But it is not right to conclude that they are liars and it is not right to conclude that stocks are a bad investment even when purchased at reasonable prices. If you change your stock investing strategy to one in line with the research of the past 20 years, you can obtain the benefits that stocks really do offer while reducing your risk to a fraction of what applies for those following the strategies that became popular during the past 30 years.

If you have doubts about anything that I am saying, please ask questions. I really can tell the whole story, it really is an important story, and it really is a story that you can understand if you spend just a little bit of time getting up to speed on realities that it took me years to uncover.

I am sorry about your losses. If you check my well-documented record, you will see that I have been warning about this stock crash for a long time. I have worked this incredibly hard for a long time. There IS a good deal to be said for the Your Money or Your Life approach (reading that book’s treatment of investing led me to asking the questions that sparked all of my research into these questions) but the YMYL approach has flaws of its own. I have been working with hundreds of people to come up with something a lot better and we have enjoyed a great deal of success in the work we have done. Our one big problem has been on the publicity side. You obviously could be a huge help in that area.

Rob

“I Want to Launch an Effort to
Publicize the Ideas on the Internet”

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Set forth below is the text of a e-mail that I sent to the owner of the Frugal Dad blog on January 14. I did not receive a response.

On January 19, Frugal Dad posted a blog entry entitled Have We Been Sold a Bunch of Lies About Money?  He stated in this blog entry that “My 401(k) has been demolished” and “family members’ 401(k)s have been demolished, even those in target retirement funds that should have been comprised of more conservative options based on their upcoming target retirement date.” He concluded that: “After watching these wild market swings, I’m starting to wonder if I really have the stomach for it” and indicated that he may move to a less risky investing strategy, one not involving the purchase of stocks. I posted a comment to the blog entry and responded to questions put forward by several community members (a few at the end of the thread are abusive, but several earlier in the thread raise reasonable points or ask good questions). I also sent a follow-up e-mail.

I will post the follow-up e-mail as Thursday’s blog entry. I will offer commentary in next Tuesday’s blog entry.

Frugal Dad:

This is Rob Bennett, publisher of the “A Rich Life” blog at www.PassionSaving.com. We exchanged e-mails a ways back in connection with your article re paying off the mortgage (you linked to an article of mine). I hope things are going well with you.

I am looking for a partner to help spread the word re some exciting investing ideas that have been developed in the Retire Early and Indexing discussion-board communities in recent years. Based on what I have seen from following your blog, I think you would be a great person to work with (I am looking for someone with an audience that is large and active but that is not comprised of people primarily interested in investing issues).

The investing strategies that are today conventional wisdom (“timing doesn’t work, “stocks for the long run,” “buy-and-hold,” etc.) have been increasingly discredited by the academic research of the past two decades. There is truth in all these ideas, but not complete truth; there is good in them but there is also danger in them. I have been reporting on these realities for close to seven years now and have produced  a wealth of material related to them (including three unique calculators, over 50 podcasts, scores of articles, and tens of thousands of discussion-board posts). I have communicated with hundreds of middle-class investors who showed great excitement to have found for the first time a description of how investing works that truly makes sense. Unfortunately, these ideas have also met with intense opposition among people who view themselves as “expert” in their understanding of the discredited, conventional ideas. Abusive posting by the defensive group has blocked the efforts of many to learn about these ideas (I call the strategy that I recommend “Valuation-Informed Indexing”) for years now.

There has been a big change in discussions of investing since the big price crash. There is greater interest now than before in new ideas and those inclined to dismiss new  ideas are feeling increasingly defeated by real-world events. I want to launch an effort to publicize the ideas on the internet. If you have an interest, your blog would be a great place to do this. My guess is that your readership is concerned about the recent stock-market developments and would love to hear informed and straight-talk answers to their many questions. But your readership is not comprised of the sort of people who would become defensive on being exposed to some unconventional takes on how stock investing works.

If you think this idea holds any potential, I propose that you explore it a bit by directing a question or two of your own to me. I would respond, using the research that I have done with John Walter Russell (owner of the www.Early-Retirement-Planning-Insights.com site) over the past seven years as the basis for my answers. If you found the discussion helpful to your understanding, you could share what you learned from it with your readers in any of several ways: (1) you could write up articles summarizing the discussions; (2) you could post the actual words of the discussions if you thought that a better approach; (3) you could invite your readers to put forward their own questions and seek responses from me re those questions; or you could follow some other approach of your choosing.

The goal would be to inform your readers of what is happening in the stock market, why it is happening (none of what has happened is the least bit surprising to those familiar with the literature of the past 20 years, much of which unfortunately is rarely discussed in the conventional media), and what they need to be doing to invest more effectively. Ultimately, I hope to see this debate over the future of investing spread to other blogs and other sites. I believe that we need a national debate on the errors that caused the greatest loss of middle-class wealth in the history of the United States. Your “promotion” of my work would obviously bring attention to my site. My belief is that it would also enhance the value of your blog by offering great benefits to your readers and ultimately would gets lots of other people talking about some issues that very much need to be talked about more at this time.

If you have no interest, I of course understand that this is an unusual request and one that you might for perfectly good reasons not see much appeal in; I’d be grateful if you would just send an e- mail saying “no thanks” so that I would know. If you have a limited interest but also have questions, please ask. I have all sorts of resources that I can point to in response to just about any question you can ask. And this project is my baby — I have been preparing for the launching of this initiative by working 10 hour days six days a week re this matter for close to seven years now. I am more than happy and prepared to point you to materials showing the legitimacy of all of the claims that I put forward.

I of course would not expect you to be willing to endorse any of these ideas unless you were confident that there was merit to them. My thought is that you might serve as a go-between for your readers. Your questions are probably to a large extent their questions. If you found my answers convincing, you could forward them (perhaps with your own take attached). If you did not, you could of course elect not to report on them or to report negatively on them.

Please understand that none of the questions that I address are complicated ones. I address the BASICS of investing, the stuff that the typical middle-class worker needs to understand. Unfortunately, it is at the basics level that the conventional advice is most flawed.

I’ll leave you with a few links that will give you a general sense of the issues involved:

1) This is the Podcasts section of my site:

http://www.passionsaving.com/personal-finance-podcasts.html

2) The Stock-Return Predictor is key to making the Valuation-Informed Indexing approach work:

http://www.passionsaving.com/stock-valuation.html

3) Here is a nicely balanced write-up of the Predictor by Felix Salmon that appeared at the Market Movers blog:

http://www.portfolio.com/views/blogs/market-movers/2008/07/08/a-look-at-long-term-stock-valuations#blogComments

4) “Elizabeth’s Story,” which appears at this link, provides a good indication of how these ideas have affected some typical middle-class workers (I can provide many more such stories if they help you make sense of all this):

http://www.passionsaving.com/finding-life-purpose-page-three.html

Rob