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

Hey Rob, I have a serious question. You say–falsely–that Buy & Hold is the dominant investment strategy. You also say that Buy & Hold has not nor can it ever work for a single investor. That presents quite the conundrum. If as you say your belief that Buy & Hold is the dominant investment strategy is true; that means millions of Americans have used it to acquire the funds for their retirements, then have retired and lived out their days in retirement until passing away to the great beyond. Seemingly that means that Buy & Hold did indeed work for far more than a single investor. Do you have some magic Bat$hit Crazy Hocomania Rationalization to account for the discrepancy between reality and HocoFantasy? Thanking you in advance for the MysticalMagicalHocoPixieDust which explains away this paradox.

There is no conflict, John.

There were many years when people typed out letters on typewriters and then mailed them. E-mail didn’t exist. So typewriters seemed like the way to go. Then computers were created and with them e-mail and that’s the more usual way of doing things today.

Now we have a choice. We can still find typewriters and use them if we please. Or we can be even less modern and write out our communications long-hand. Or we can go the modern way and send an e-mail. It’s up to us. The typewriter manufacturers do not threaten to kill our loved ones if we employ e-mail to communicate with others.

I don’t say that life did not exist on Planet Earth prior to 1981. We didn’t know how stock investing worked in those earlier days. We took on far more risk than was necessary. And we obtained greatly reduced returns. But, yes, we struggled on somehow. Buy-and-Hold hurt us. But we didn’t know any better. So we endured things we had to endure. And we survived.

Are you saying that because we survived with an inferior investing strategy that we should be forbidden for all time from ever discovering anything better? If that’s what you are saying, I disagree. The last 36 years of peer-reviewed research is the most exciting 36 years of peer-reviewed research in the history of investing analysis. I think we should make use of it to make our lives richer in every possible meaning of the word. I think we should tell all of our friends about it.

Typewriters do not “work” for me today because they are too much of a pain compared to e-mail. So I go with what works in a world in which human advances have been achieved over the course of time.

I hope that helps a small bit.

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:

Why doesn’t he post here?

I haven’t asked him. So I cannot say for certain.

My strong hunch is that it is because there are not other posters posting regularly here. The benefit of a community is that you are learning from lots of other people. He is happy to learn from me. But I am one guy. One guy can only provide a limited kind of feedback.

This is of course a general phenomenon. It’s not just Sam who feels this way. EVERYONE feels this way. I have had thousands of people tell me that they love my stuff. But they don’t follow me from boards where I get banned to this place. If they did this place would be as big as any of the places from which I have been banned.

And then of course there wouldn’t any problem. If this place were as big as the places from which I have been banned, the ideas would spread until we would see them being discussed even at the places when I have been banned. And then there would be no point in me being banned anymore.

There are people who believe that Shiller is on to something who do not get banned at the boards at which I have been banned. You Goons have pointed that out on numerous occasions. The difference between me and those people is that they pull their punches to remain on the good side of the Buy-and-Holders. When the Buy-and-Holders get annoyed by something they say, they send a little signal to them and they pull back a bit. They either don’t post as often or they say things not as strongly or whatever. Then the Buy-and-Holders don’t feel as threatened and they tolerate continued posting by these people even though they disagree with them.

I don’t play that game, Anonymous. I never say anything just to annoy the Buy-and-Holders. But I don’t hold back on saying what I believe either. I want Valuation-Informed Indexing to become more popular. I don’t think it should have taken 35 years for these ideas to catch on. The concept would become more popular if people would be more clear about its benefits and more clear about the dangers of Buy-and-Hold.

The things that the Buy-and-Holders find threatening are the things that I find exciting. I want to take these ideas to their limit. I want to explore all their implications. I want to argue the case as forcefully as I possibly can (while of course never breaking any published posting rules). That gets me into LOTS of trouble with the Buy-and-Holders. The Buy-and-Holders are not accustomed to seeing anyone behave that way. They freakin’ HATE it when I insist that those of us who follow Shiller possess the same posting rights as those who follow Fama.

I’ll tell you what the Buy-and-Holders hate more than anything else. They hate it when I say that they are wrong. I don’t say “here’s a different way to calculate the safe withdrawal rate.” I say “the Buy-and-Hold way of calculating the safe withdrawal rate is in error, here’s the right way to do it.” They feel that I am questioning their integrity when I say that. But they say that sort of thing about Valuation-Informed Indexers all the time. They say that we are on meds and that we don’t like math and all sorts of things along those lines. They think nothing of saying that Valuation-Informed Indexing is wrong and dangerous. But they become violent when a Valuation-Informed Indexer says that Buy-and-Hold is wrong and dangerous.

I have legal training, Anonymous. I went to law school not to learn how to practice law but to become a better journalist. I obviously didn’t know at the time I went to law school that I would end up doing the work that I am doing today. But it could be said that I am doing precisely the sort of work that I thought I would need to know how to do to become an effective journalist. I often feel like I am on trial when there are a bunch of you Goons shouting at me and trying to trip me up on some technicality. I don’t like the nastiness of some legalistic interactions. But I do think it is important that ideas be pushed with some degree of forcefulness and legal training helps a person do that. I don’t apologize for pushing these ideas hard. I do that by intent and I am proud that I do that. Doing that has helped me and lots of others to learn things that we otherwise would not have learned.

The vast majority of the population does not like the way that I push. I see that as clearly as you see it. I don’t want to speak for other people. I don’t want to put words in their mouths. But I do want to understand what is going on. The sense that I get is that people would prefer it if I handled things with a lighter touch. Greaney likes to say: “Oh, if you don’t think 4 percent is fully safe, just use a lower withdrawal rate.” That way of saying things doesn’t get the job done for me.

Everyone of course understands that anyone who wants to can take a lower withdrawal rate. The question I want answered is — What is the highest withdrawal rate you can take and still have a safe plan, presuming that stocks continue to perform in the future somewhat as they always have in the past? That’s the question that safe withdrawal rate studies were created to answer and I want to know the answer. I am not willing to duck the question just because it hurts some people’s feelings to hear the answer you get when you include a valuations adjustment. I want to know that number and I want to tell other people that number. I don’t want to hurt people’s feelings. I don’t enjoy hurting people’s feelings. But I really enjoy learning how stock investing works. And I feel that I need to calculate the numbers properly to do that.

I am giving a long answer to your question about Sam. But this is the true answer. Sam is like everyone else and I get the feeling sometimes that it is pretty much just me on the other side. This amazes me. I obviously have an outlier perspective on this particular aspect of the question. I didn’t know that going in. I have been surprised to see things play out the way they have over and over again. I don’t think I am wrong, though. To me what I am doing is very clearly needed and a good thing to do. It makes me pause when I discover that so few others see it that way. But I have never been able to come up with good reasons for playing it some other way that would make me more popular.

I am saying that the dominant model for understanding how stock investing works is not just off by a little bit but wildly off, wildly wrong. This upsets people. People have their retirement hopes riding on their belief in that model and they cannot bear to hear that they got it all wrong. I feel that, if it is true that they got it wrong, it would be wrong of me to wait until after they have lost most of their life savings to tell them why they are wrong. I feel that that would be a cowardly thing to do and not at all something that a friend would do. I feel that it would be a betrayal of my Buy-and-Hold friends for me to play it that way.

Others seem to be able to rationalize saying things the softer way. I often say that Wade Pfau stopped posting honestly when you Goons threatened him. I obviously don’t mean that he includes deliberate lies in his writings. I don’t think for two seconds that he does anything like that. He would never do anything like that in a million years. He is not being fully honest because he is holding back. He knows that the safe withdrawal rate studies don’t include a valuations adjustment and he knows that a valuations adjustment is required and he knows that the numbers are thus wildly off the mark and he just keeps his mouth shut about it. He understands that millions of people are going to suffer failed retirements because they built their plans on these phony numbers and yet he doesn’t say anything. He tells himself that he needs to make a living like everyone else and that it is someone else’s problem to correct the safe withdrawal rate studies and that he is at least advancing the ball with the things he does say (which is true) and he has been able to find peace with himself doing that. I could not find peace with myself doing that.

Do you know how I often say “I love my country”? One of the things that I love about it is that we advance knowledge by fighting hard for our respective ideas in the Marketplace of Ideas. There are people who thought the smart phone was a stupid idea when the idea was first advanced. The idea was tested and the idea prevailed. I love that. That’s how things should work, in my view. Shiller put forward an idea in 1981 that is 5,000 times more important than the idea to create a smart phone. And the idea has gone just about nowhere in 35 years. The vast majority of the population still believes in Buy-and-Hold to this day. We have wasted 35 years in which we could have been building on the first draft research-based strategy put forward by Bogle so many years ago. I can’t stand that! That drives me crazy!

Anyway, people don’t like the friction and controversy that comes with being associated with me. And when that friction and controversy makes me isolated, they don’t like it that I do not have a large community here discussing the ideas and so they find somewhere else to talk things over with people that are somewhat like-minded but not as “strident” as me in their presentation of the ideas. I do not view myself as “strident” at all but people whom I respect greatly (like Rob Arnott) have used that word to describe me. I think that’s how most people see me. I think that’s why people stay away.

I see it as a Catch-22. If everyone did what I do, there would be no controversy when I did it. If we all just accepted that there are two schools of academic research re how stock investing works, we would all just say what we believed and none of us would have any problem being friends with people on “the other side.” I would say precisely what I believed in every post I wrote and no one would have any trouble with that. And everyone else, both the Buy-and-Holders and the Valuation-Informed Indexers, would do that same. That’s how this should be handled, in my view. That’s the American way. That’s what works.

For all of us. The Buy-and-Holders get upset when I say what I truly believe. I see that as confirmation of Shiller’s position. Shiller is saying that investors are not 100 percent rational but in fact highly emotional and the Buy-and-Holders are responding to challenges to their beliefs in insanely emotional ways. That tells me that Shiller is right. That tells me that this stuff is even more important than I thought it was before that happened. Every time I get banned at a new place it tells me that this stuff is more valid and important than I thought it was before the banning took place.

I think it is the next crash that is going to change things. But that of course makes me sad. I don’t want to see people lose their money. I cannot bear to censor myself and thereby participate in the cover-up that is in the process of causing people to lose their money. I don’t like it that people hate me. But I would rather than people hate me for now and then love me when they see that I was the only one telling the full truth all along, that I was the one guy who stood up for the middle-class investor when thousands of those who put themselves forward as “experts” sold them out because they wanted to turn an easy buck exploiting people’s emotional weaknesses. I don’t want to go there. I can’t go there.

I do everything that I can think of to praise the Buy-and-Holders, to make them feel less angry and less threatened. Nothing satisfies them. I presume that they would be satisfied if I didn’t say that they got the numbers wrong. But that’s the thing that most needs to be said. It is because people have not been saying that for all these years that we are in such an economic mess today. That’s the thing that needs to change. When more people work up the courage to say that, the mistakes will get fixed and everything will be cool.

Bull markets are an emotional phenomenon. They come about when those who possess strong Get Rich Quick urges intimidate those who have doubts re Get Rich Quick strategies into silence. And the more out of control the bull market gets, the greater are the intimidation tactics that we see and the more pervasive is the self-censorship that we see. When we all suffer enough pain in the economic crises that follow, word finally gets out re the realities that have been silenced and we get about the business of rebuilding our broken economy. This will be the last time we will need to go through this awful cycle because this is the first time that we have 35 years of peer-reviewed research available to us showing us how stock investing really works.

Sam and most others don’t appreciate all the drama. That’s the short version. I don’t like the drama either. But I love the learning experiences that follow from saying things in a plain and simple and bold and clear way so much that I am willing to TOLERATE the drama that comes with doing so for the greater good that comes of the project. I cannot bear to pass up the huge learning experiences that I have enjoyed as a result of my insistence on posting honestly.

If you think that I have something against the Buy-and-Holders, you are holding onto a very wrong idea. I LOVE my Buy-and-Hold friends. None of the amazing work that I have done would have been possible without my making use of the foundation that was built by Bogle and my other Buy-and-Hold friends. I tell my friends when I think they got something wrong because that’s what I would want them to do for me. The Golden Rule is to treat others like you would like them to treat you. I believe in the Golden Rule.

Sam and all the others believe in the Golden Rule too. It’s the crazy circumstances of this particular case that make it hard for them to see that all I am doing is following the Golden Rule. They think that the kind thing to do is not to stir up trouble. I think that it is our failure to stir up trouble for so many years that caused this mess in the first place. And of course the mess gets bigger with each day that passes in which we once again fail to work up the courage to cause the trouble that we all need to live through to get to the much better place where we all want to end up.

That’s my take on why Sam does not post here. He probably doesn’t like the drama stuff that follows me wherever I go. And. even if he could deal with that, he probably doesn’t like it that so few Normals post here (because they don’t like the drama stuff).

Rob