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

Rob Arnott never said he was afraid. Wade Pfau never said he was afraid. You are making it up.

Wade Pfau: “I was trying to pay tribute to your accomplishments in what I knew would be a hostile environment.” Why a hostile environment, Anonymous? Why would it make Buy-and-Holders hostile for someone to question whether there is a valuation adjustment in a retirement study if they truly believed that there was one there and they could point it out?

Wade Pfau: “Valuations and long-term investors is a somewhat controversial topic.” Why is it controversial? We have seen hundreds of community members express their excitement over discussions of this topic. Why not have the discussions without any controversy if there is truly a valuations adjustment in the Greaney study or if there truly is peer-reviewed research showing that it is not necessary for investors to practice market timing (price discipline!)? The controversy results because the Buy-and-Holders don’t want to admit a mistake they made many years ago that was revealed by Nobel-prize-winning research published in 1981.

Wade Pfau: “I was discouraged when I first received the “desk reject” by the editors of the same journal that published the Fisher and Statman paper. I realized that I didn’t have a chance with one of the top journals.” Wade believed that the paper that he co-authored with me was worthy of publication in the most prestigious journal in the field. So why was he rejected anywhere? Our research is the most important piece of research published in this field in 30 years. Investors have been told thousands of times that market timing does not work. And someone prepares research showing that one form of market timing (long-term timing) has always reduced risk dramatically while also always increasing returns dramatically and a journal concludes that that is not worthy of publication. Huh? The entire point of journals is to advance new knowledge. This advance benefits every investor alive. It is intimidating for a researcher to see a journal elect not to publish a study of this nature. Wade should have been celebrated by that journal, not turned down. And the only way to change this is to get this information out to millions of investors, so they can all understand when they lose 50 percent of their life savings in the next crash why it happened.

Wade Pfau: “I think I should stay publicly quiet for a while, as I really don’t want anyone sending messages about any topics to officials at my university.” Wade was intimidated by the behavior of you Goons at the Bogleheads Forum.

Wade Pfau: “I don’t want them [the Goons] working behind the scenes to derail me.” Same.

Wade Pfau: ““I did warn the editor of the Journal of Financial Planning that they may receive some ‘hate mail‘ after I mentioned your name in the safe savings rate paper.” Same.

Rob Arnott:”I’ve had similar experiences to those you describe; so, I can empathize with you for your travails.”

Rob Arnott: “My work has often triggered overt hostility from the guardians of the status quo. And, as one of the “godfathers” of Tactical Asset Allocation and of the Fundamental Index® concept, which are kissing-cousins to your work on Valuation-Informed Indexing, it’s clear that you and I both think the markets are inefficient in much the same way.” Overt hostility is inappropriate. Why not engage in civil and reasoned discussions with someone who offers new ideas?

Rob Arnott: “I’ve also had difficulties getting some of my more controversial ideas published. For instance, I’m having a dickens of a time getting any journal to publish my work with Harry Markowitz, Jason Hsu and Jun Liu, which shows that a modest amount of error in stock prices would create – and fully explain – the Fama-French size and value effects. Journals turning down a Nobel Laureate? Yep, it happens. And the journals that published some of my more controversial papers did get “hate mail” for doing so.” We all need to know what Nobel Laureates think re these matters. And journals should not be getting hate mail in response to articles on stock investing. Hate is an emotion. It is an intense emotion. If the market were efficient, investors would be 100 percent rational in their thinking re these matters. It is Shiller who says that investors are being highly emotional during times of high prices. The fact that journals are receiving hate mail from Buy-and-Holders shows that Shiller is right in his understanding of how stock investing works.

Rob Arnott: “I also know of two young professors who wanted to do research on Fundamental Index® and reported to me that their colleagues advised them that this line of research could derail their career prospects. Outrageous? Not necessarily: in the early days of Fundamental Index®, people weren’t yet sure whether this was the investing equivalent of “cold fusion!” I find the story outrageous. I can believe that there were people who genuinely believed that Fundamental Index was the investing equivalent of cold fusion. Skepticism is a healthy, scientific reaction. But scientists need to be encouraging the exploration of new ideas. If Fundamental Index is really the investing equivalent of cold fusion, that will come out when the research is reviewed. The important thing is that the research be published so that lots of people can consider the merits of the new idea. I understand that there are millions of good and smart people who sincerely believe that even long-term market timing is a mistake. But I sincerely believe that those people are wrong and that their views would change if they were exposed to the other side of the story. The intimidation tactics block that from happening. So we all need to be working to bring the intimidation tactics to a full and complete stop. I believe that we all will be working on that project together in the days following the next price crash. It breaks my heart that that is what it will take for us to move forward in our understanding of how stock investing works. The thing that I once loved about Buy-and-Hold is that it was once rooted in science. Intimidation is anti-science. Buy-and-Hold today is the opposite of what it was in its early days, in my assessment. Intimidation has no place in these discussions.

Rob Arnott: “I’m too embroiled in my own controversies to magnify them further with collaboration. Your ideas are sound.” Rob Arnott has offered many important contributions. He should not be embroiled in any controversies. He should be happy to engage with those with similar ideas in an effort to gain those ideas a wider hearing. It is the intimidation that has been directed at him by Buy-and-Holders that causes him to feel “embroiled.” That intimidation is hurting everyone alive in the United States today. I believe that people will see that more clearly in the days following the next price crash, when we will all be able to see in very real and concrete ways what happens when as a society we permit irrational exuberance to get out of control. Intimidation re these matters is going on on a daily basis and it is in the process of causing millions of people great pain. I love people. So I oppose the use of intimidation tactics to block the discussion of how stock investing works in the real world according to the last 39 years of peer-reviewed research in this field.

Intimidation Critic Rob

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

Can’t you post without lying? You even documented on your own website an email in which Wade said you cause 1000x more harm to him than any goon could.

Of course, you want to talk about Wade as a distraction to avoid your continued lies about comparing portfolios (which you didn’t), the death threat claims you made up as well as the job threats claims you made as well.

Wade did indeed say that in an e-mail, Sammy. I do not deny that.

What I say is that he wouldn’t have said it had there never never been any efforts made to intimidate him. Wade loved exploring Valuation-Informed Indexing and then telling people what he learned about it. That’s why those 16 months were the happiest days of his life. He did not love hearing that his penalty for continuing to do honest work would be to see his career destroyed. He had family responsibilities. He wanted to be able to fulfill those responsibilities. No one should ever be placed in the circumstances in which he was placed.

I don’t want anyone ever again to be placed in those sorts of circumstances. If Shiller had published his Nobel-prize-winning research last week, every last one of us would be excited to learn what it teaches us and we would be talking about Valuation-Informed Indexing on every web site on the internet. Because he published it 39 years ago, we are all afraid that talking about it makes our Buy-and-Hold friends look bad because of the long cover-up.

I do not want to make anyone look bad. But there is no way to talk about this stuff without making some people feel funny. Shiller changed our understanding of how stock investing works in a fundamental and far-reaching way. We are not going to ease the discomfort by having the cover-up stretch on for another year or two or three. We need to all pull together and bring it to an end by the close of business today. Doing that is in the best interest of every single person affected by these matters, and that is every last one of us.

That’s my sincere take, in any event. I do wish you all good things, dear friend.

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:

“Because they are afraid to say these things, Anonymous. They are afraid that what happened to me will happen to them.”

And there is no link to them making a statement like this, so we just have to take your word for it, right. Just like the death threats and job threats.

No.

There are scores and scores of places where all kinds of people who work in this field say that they are afraid to tell the truth about Buy-and-Hold. That’s the entire story. The fact that the Buy-and-Holders made a mistake re market timing is trivial. Who cares? We all make mistakes. We say “sorry” and move on. That hasn’t happened re the mistake re market timing for 39 years. That’s why we had an economic crisis in 2008. That’s why we are likely going to see another in the next year or two or three. That’s the entire story. Drop the intimidation stuff and we all enjoy an amazing learning experience and we all move forward together. It’s all upside and zero possible downside.

I have that list of 45 comments by Wade Pfau that I post frequently in response to your comments. He has several comments in that group in which he says that he is afraid of what you Goons will do to his career if he continues doing honest work.

Rob Arnott wrote me an e-mail telling me that the stuff at my site is “solid.” He also said that he has seen the same intimidation tactics that I have reported on. He said that academic researchers who were planning to do research backing up his ideas were taken aside by Buy-and-Holders and told that publishing such research would be a career limiting move.

Carl Richards wrote to me to tell me that my stuff is amazing. He congratulated me for doing work of huge importance. And he banned me from his site. Because his Buy-and-Hold readers said that they would stop reading his stuff if he did not ban me. He sees great value in the work. But he is afraid of the Buy-and-Holders.

Shiller doesn’t include any how-to information in his book. It is not possible that that is not because he is afraid of what the Buy-and-Holders will do if he calls them out on their b.s. The first thing that an editor of a book on investing would look for is the how-to stuff. That’s what people buy investing books to see. So why the heck would you leave that out of a book on stock investing if you were not afraid that the people following the old model would freak out? It’s the only possible explanation.

And on and on and on and on and on. Remember Scott Burns? I told him about the errors in the Buy-and-Hold retirement studies and he said that he was going to write an article about it. He did write an article but he did not mention my name and he did not offer his own view as to whether the studies are in error. Huh? I wrote to him to ask what the deal was and he said that it was “catastrophically unproductive” of me to point out the error. Isn’t the idea to get the numbers in retirement studies right and not wrong? There’s nothing catastrophically unproductive about pointing out an error in a retirement study. That’s what we all are supposed to do. Scott didn’t like it because he did not himself have the courage to point out the error and it made him look bad someone else to do it.

We will have to decide as a society whether we are going to permit honest posting after the next price crash. I think that will end this. People will not feel threatened to hear about the dangers of treating irrational exuberance as something real after the irrational exuberance portion of their portfolios has disappeared. So we will be able to move forward in our understanding of how stock investing works at that point. And we will never again see one of these horrible bull markets that end up destroying so many lives.

We’ll see, you know? I am not capable of saying that I believe that Greaney included a valuations adjustment in his retirement study. So I am just going to continue walking down the path that I have been on for the past 18 years and see how things play out. I believe that we are a good people deep down inside. So I believe that we are going to end up in a good place. And at that point I do not believe that there will be any controversy any more as to whether honest posting re the last 39 years of peer-reviewed research should be permitted or not. But, again, we will just have to wait and see to find out for sure.

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

How about this one — Brett Arends in the Wall Street Journal:

“For years the investment industry has tried to scare clients into staying fully invested in the stock market at all times, no matter how high stocks go. It’s hooey. They’re leaving out more than half the story. Anyone who followed the numbers would have avoided the disaster of the 1929 crash, the 1970s or the past lost decade on Wall Street…. I wonder how many stayed fully invested because their brokers warned them ‘you can’t time the market’.”

Why wasn’t that on the front page? The editors of the Wall Street Journal have consciences. They want to do what they can to get the word out that Buy-and-Hold is a scam. But they don’t put it on the front page because they fear the reaction they will get from the millions of people who have been taken in by this Get Rich Quick garbage and have their retirements riding on it.

It’s never been a problem getting people to acknowledge privately that Buy-and-Hold is a big pile of Get Rich Quick garbage, a dishonest strategy that does a good job of turning a quick buck. The trouble comes with persuading them to state things clearly and not to back down in the face of death threats and demands for unjustified board bannings and extortion.

My best wishes.

Hooey Free (I Hope!) 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:

But I still don’t understand how this all comes back to you, as you know, there are millions and millions of comments on boards out there. Almost anyone can find 10% or more that agree with their position on almost every subject. Everyone will also say that normal people agree with them or will come around to their position. Again, how does this all come back to you in which some lawyers seek you out?

This issue is unique in that there is 39 years of peer-reviewed research showing that it is impossible to calculate the safe withdrawal rate accurately without taking valuations into consideration. There is zero research showing that market timing is required. Wade Pfau spent a lot of time checking that one out. And he concluded that there is zero support for the key Buy-and-Hold claim. And this fraud affects every working person in the United States. We all have to invest for retirement. We are all going to suffer the consequences of this massive act of financial fraud.

The real issue is not whether Greaney included a valuations adjustment in his study or not. That one is silly. It takes all of 10 minutes to check out the study and to see that I was right to say that he did not. The real issue is — How the heck did the cover-up of that error continue for 18 years after I pointed it out. That is the one that we all need to deal with if we are going to get this stuff right.

There is a reason why my book is titled “Investing for Humans.” John Bogle was in an objective sense committing fraud when he told people that it is not necessary for them to practice market timing. That is an absurd claim. Market timing is price discipline. If anyone told people that they did not need to practice price discipline when buying cars or sweaters or bananas, they would be laughed out of the room. So Bogle’s position is on its face preposterous. But he sincerely believed it. If someone had given Bogle a lie-detector test and asked him if he believed that market timing is required, he would have said “no” and he would have passed the test.

So this is a funny kind of fraud. It’s fraud in which the people advancing the fraud deceive themselves about how stock investing works before they deceive anyone else. That’s not usually how fraud works. So this is an exceptional thing.

I have studied how this weird form of fraud works more than anyone else alive. I have been on the case for 18 years now. One chapter of my book will examine the safe withdrawal rate issue. But that is only a small part of the story that I have to tell. The remaining chapters will look at what it is about human psychology that makes it possible for so many truly smart and truly good people to deceive themselves so completely about so important an issue for so long a time.

I have something totally different to say about this subject that no one has said before me. Not even Shiller. And it is not possible to explain what has been happening for 18 years now without taking into account the things that I have to say about this subject. So I believe that I have something of great value to offer to the world. And that that value will be recognized in the days when millions of people are suffering failed retirements and hundreds of thousands of businesses are going under and millions of workers are being thrown out of work and political frictions are worsening on both the left and the right.

We’ll see, you know? It hasn’t happened yet. But I believe that it will happen in the days following the crash. I don’t believe that our political system can remain stable if we continue to ban discussion of the last 39 years of peer-reviewed research. If we are not going to permit honest discussion of peer-reviewed research, we shouldn’t even have peer-reviewed research. If we want to see Buy-and-Hold remain dominant for all time, we should just shut down all the Ph.D. programs, you know? That would be a more honest and more direct way of achieving the goal.

I don’t believe that we are going to shut down all of the Ph.D. programs. I believe that, when we see with our own eyes how much human misery the Get Rich Quick/Buy-and-Hold stuff always causes, we are going to take a step back and reconsider the idea of banning honest posting on the peer-reviewed research. Then we are all off to the races. And I have an 18-year head start or anyone else trying to make sense of this massive (and exceedingly odd in nature) case of financial fraud.

That’s my sincere take, Anonymous.

Front-Runner 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:

Can we trust anything you say when Wade said this:

“ The reality is that you are causing me 1000x more career damage than the Goons ever could have by filling Google with so much nonsense about me….”

Each person is going to have to make up his or her own mind re that one, Anonymous.

Wade really did say the words that you quote him as saying. I give you that one And he really did say the words that I quote him as saying. You are not willing to give me that one. But the reality remains that he really did say all those words.

I think that the bottom line is that people’s willingness to look at both sides will increase following a price crash in which millions of people will lose half of their life savings and hundreds of thousands of businesses will go under and millions of workers will be thrown out of their jobs and political frictions will increase. We know how stock investing works today. Those who follow the peer-reviewed research in this field have known for 39 years now. We just cannot talk about it publicly because it causes the Buy-and-Holders too much pain to hear their beliefs challenged. Will the next price crash cause more of us to come to believe that the pain of experiencing more economic crises is worse than the pain felt by the Buy-and-Holders to hear their beliefs challenged? I believe that it will. But I am not God, I could be wrong.

We are just going to have to wait and see how things play out.

I naturally wish you all the best that this life has to offer a person, in any event.

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:

I don’t see fraud. I don’t see death threats. I don’t see job threats. I don’t see anyone that is afraid (maybe you are afraid?). Until people see actual evidence of what you say, your words are “catastrophically unproductive” as someone once said.

I pointed out that the retirement study posted at John Greaney’s web site lacks an adjustment for the valuation level that applies on the day the retirement begins in a post that I put to a Motley Fool discussion board on the morning of May 13,2002. Today’s date is January 29, 2020. The study has not been corrected to this day.

Please mark me down as saying that that constitutes fraud, the biggest case of financial fraud in the history of the United States by a long shot.

I will continue doing everything in my power to EXPOSE this massive act of financial fraud. I can do no more and I can do no less.

If pointing out financial fraud and seeking to have it corrected constitutes catastrophically unproductive behavior, then please make me down as pleading 100 percent “guilty as charged.” And please feel free to tell everyone on the internet that that is my plea.

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

Catastrophically Unproductive 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:

A little blast from the past from Wade Pfau:

“Hi Rob,
I forgot that I was still saying things like this even 2 weeks after the initial incident.
This was more than a year ago now, but I am thinking that I was just trying to explain politely to you that I’d rather have you quit writing about me, or at least stop using my name. I suppose that I figured the only way you might understand why is if I explained it in terms of your favorite conspiracy theories.
I will make one more attempt at a reality check for you. You go on and on about how I allegedly lack personal integrity because I allowed the Goons to threaten me into silence.
The reality is that though I may have for a brief moment got a bit too caught up in YOUR drama, I do not have any fears about the Goons.
The reality is that you are causing me 1000x more career damage than the Goons ever could have by filling Google with so much nonsense about me, and sharing embarrassing private details such as my overly ambitious journal submission strategies, etc. Those in particular are highly private. People don’t publicly share where they submit articles to unless those articles are accepted. You’ve violated my trust in so many countless ways and yet you still proclaim to be my friend.
And the further reality is that if I *did* lack personal integrity, I could have made this all stop just by saying the meaningless sentence you want so desperately to hear: “I think the errors in the traditional safe withdrawal rate studies must be corrected by using Rob’s analytically valid method.”
But I don’t believe that. I do not believe you have offered a valid correction to the safe withdrawal rate question. And I believe that retirement income strategies go much further than the question of a safe withdrawal rate. And so that is why I’ve had to endure your ongoing harassment for months on end now.
Usually I can figure out the Rob-logic behind what you are thinking, but I really don’t know how you think you come out of this whole episode looking like the good guy. I guess it is because you think you are saving my soul and putting me back on the path of righteousness, or something, huh? If only you had the power to do a little bit of self reflection…
Now that the whole email history is on display, we have the reminder of how angry you got at the very beginning when I referred to you as dogmatic. Yet, look at the way you’ve treated me for disagreeing with you on something which you don’t even understand. You quote numbers from JWR’s statistical work, but I’m not sure if you can even distinguish a mean from a median. So how can you be sure his work is right? I don’t know either, as I never did get around to digging into it, and I doubt I ever will now. But I’m not sure how a properly calculated lower confidence bound for a 2000 retiree could have been higher than zero.
Rob, suppose the stock market does drop 65% as you are expecting. It might happen, who knows.
Step 1: Stock Market Drops 65%
Step 2: ??
Step 3: Rob wins $500 million settlement from the Goons, the Goons are sent to prison, the investing public learns about and adopts VII.
What is Step 2? There isn’t one. You will still be in the same position as you’ve been in for the last 10 years. Why didn’t something happen for you after the 2008 financial crisis? You are like the guy who keeps predicting new ends for the world as each previous prediction date passes by.
That is why I’m telling you, from one human being to another, that it is time to move on. You are a smart guy, and you could use your talents for something productive. While warning people about the 4% rule is helpful, the way that you go about doing it is rather “catastrophically unproductive” as one wise fellow said to you years ago. I provide a loud voice that is critical of the 4% rule, and so spending your days assassinating my character is counterproductive to your underlying cause. So perhaps you can start fresh with a new issue of social import that carries less baggage for you. What happened in the past is a sunk cost, but you still have a chance to turn things around and start afresh today. And you can do all of this while still being honest and true to yourself.”

If Wade had gone with me to the New York Times and told them the story about fraud and corruption in the investment advice field that he saw with his own eyes for 16 months, I think that we could have gotten this story written up on the front page. And from that time forward, no one would have been afraid to post honestly. That would have changed the world in a very, very, very positive way. The way to end corruption is to EXPOSE it, not to appease those practicing it.

Wade agrees that the Greaney retirement study is in error.Has his appeasement approach gotten the study corrected? It doesn’t work, Anonymous. If Greaney were worried about the harm he has done to people with his study, he would have corrected it on the day he learned about the error in it, May 13, 2002. Asking him “pretty please” isn’t going to get the job done. Wade’s way doesn’t work. When you see fraud, you have to call out the fraud. Otherwise you become compromised yourself and it becomes harder for the people who come after you to call out the fraud because it has been going on for an even longer time.

That is my sincere take re these terribly important matters, in any event.

Corruption Exposing 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:

I can link to multiple studies that show that the inflation adjusted withdrawal rate that survived all 30 year periods in the past out of a high equity portfolio is about 4%.

Can you point me to I cthe study that shows that the safe withdrawal rate was 1.6% at some point?

The inflation-adjusted withdrawal rate that survived all 30-year periods in the past out of a high equity portfolio really is 4 percent. So you are going to have a hard time finding one that says otherwise.

That’s not the dispute. The dispute is over whether all ethical people should be speaking up to correct John Greaney when he claims that 4 percent is the SAFE (not the SURVIVING) withdrawal rate. I have been saying since the first day that it would be fine if Greaney said that that is the historical SURVIVING withdrawal rate. But why the dishonesty? There were people at the Motley Fool board who believed Greaney when he said that 4 percent of the SAFE withdrawal rate. A failed retirement is a serious life setback. A good number of those people had become friends of mine over the years. Not this boy, you know?

John Walter Russell did the math to determine what the true safe withdrawal rate was at the top of the bubble and showed that it was 1.6 percent. His work was not published in a peer-reviewed journal. But several experts have checked his work and found that it is solid stuff. Wade Pfau did that. Michael Kitces did that. Rob Arnott did that. Others have done that.

Someone should have done peer-reviewed work reporting the safe withdrawal rate accurately and honestly a good number of years ago. Why haven’t they? Because you Goons have not yet been placed in prison cells, where you belong, and they are afraid of you.

The Buy-and-Holders made a mistake in thinking that the market is efficient and that thus there is no need to consider valuations when calculating the safe withdrawal rate. So what? The only people who never make mistakes are people who never stick their necks out and try to accomplish new things. So the mistake is trivial. The problem that everyone in our nation is suffering from today is that the mistake they made is so big and has been covered up for so long that there is a group of internet Goons committing criminal acts to keep people from learning the accurately calculated safe withdrawal rate. The Buy-and-Holders didn’t just get important things wrong. They have engaged in a brutal cover-up aimed at making sure that no one ever gets those things right because the Buy-and-Holders would look so bad if word about the extent of the mistake got out.

This situation cannot continue indefinitely, in my assessment. Continuation of the cover-up hurts us all. It hurts me because I cannot earn a living in this field unless I agree to post dishonestly, which I will never do. It hurts the millions of investors who have been denied access to honest and accurate safe withdrawal rate studies that they need to be able to plan their retirements effectively. It hurts the owners of the hundreds of thousands of businesses that will go under when the economy contracts as a result of the next price crash. It hurts the millions of workers who will lose their jobs when those businesses go under. It hurts you Goons because your prison sentences will be longer the longer the cover-up goes on and the more lives it destroys. Continuation of the 39-year cover-up is a lose/lose/lose/lose/lose. It is not possible for any rational person even to imagine any possible upside.

My sincere take.

My best and warmest wishes to you and yours.

Upside-Seeking 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:

If all you are doing is confirming Shiller’s work why would he have anything to fear? Why would Pfau have anything to fear if you are just confirming his famous paper?

It’s a perfectly reasonable question that gets right to the heart of things.

We are as a society living in a twilight zone. We know intellectually how stock investing works. We have known for 39 years now. Shiller’s book is carried in most libraries. His research was published in a peer-reviewed journal. The New York Times reported on the awarding of a Nobel prize to him. So Buy-and-Hold is in the past, right? There is no respectable person today who questions the merit of market timing, right?

Those things are not so. We know how stock investing works. But we do not want to know. The humans have ways of not knowing things that they do not want to know. Alcoholics know on one level of consciousness that their drinking is doing them harm. But they want to continue with the drinking. So they persuade themselves that they can quit at any time and, yes, they really believe that on one level of consciousness. Humans are not just the rational animal. They are also the rationalIZING animal.

The last 39 years of peer-reviewed research is a threat to the Buy-and-Holders/Get Rich Quickers. And to some extent that’s all of us. I was once a Buy-and-Holder. I once liked the feeling of pretending that my stock portfolio was worth more than it really was worth. We are fighting a battle of reason vs. emotion, Anonymous.

I believe that reason is going to prevail in the end. But I would, wouldn’t I? I believe that Buy-and-Hold/Get Rich Quick will not seem quite so magical after we have seen millions of failed retirements and hundreds of thousands of failed businesses and millions of people thrown out of work and increasing political tensions. But we’ll see, you know?

Shiller and Pfau both obviously continue to do honest and good and important work. They are helping. But they don’t cross that line that causes the Buy-and-Holders to go nuts. There were people on our boards who believed that Shiller’s Nobel-prize-winning research was legitimate research and who were not banned. They did not point out that Greaney’s study lacked a valuations adjustment and thus got the numbers wildly wrong. So they were permitted to hang around. I crossed a line that cannot be crossed, in the eyes of the Buy-and-Holders. I explored the far-reaching IMPLICATIONS of Shiller’s research. The brings on the death sentence.

If Shiller was not afraid to cross the Buy-and-Holders, there would be a sentence in his book saying: “Given my research finding that valuations affect long-term returns, there is zero chance that the safe withdrawal rate is the same number at all times, so the Buy-and-Hold retirement studies should be corrected immediately before they cause more harm.” No such sentence appears in his wonderful, amazing, breakthrough book.

We are as a society working our way through a difficult transitional process. We have achieved some amazing advances over the past 39 years. But we would have achieved a lot more if we had been following in the investment advice field the procedures that we follow in all other areas of life endeavor. My job with my book is to tell the story of why it is so important that we all begin doing that. It is a win/win/win/win/win, with no possible downside. But, yes, it is hard even for great people like Shiller and Pfau to say out loud that “the numbers in those retirement studies are in error and should be corrected immediately.” Saying that causes pain for the Buy-and-Holders and all of us feel a reluctance to cause our fellow humans pain.

The question is — Does the pain get better or worse as the length of the cover-up stretches to longer time-periods?

You know what I think.

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:

Buy and hold wins again.

https://fourpillarfreedom.com/heres-how-18-different-portfolios-have-performed-since-1970/

Not a single market timing scheme made the list.

That’s the problem, Anonymous. There’s 39 years of peer-reviewed research showing that market timing is the key to long-term investing success. So why not include market timing among your options? The peer-reviewed research that I co-authored with Wade Pfau shows that incorporating market timing into your strategy does two things: (1) it increases return; and (2) it diminishes risk. That’s a bad thing how? It sounds like a very, very GOOD thing to me.

All that you need to do to understand why market timing is so essential is to recognize that it is by market timing that we practice price discipline when buying stocks. Price discipline is what makes markets work. So it is perfectly silly to think that market timing might not be required when buying stocks. How did the idea that market timing is not required ever gain any credence? It was that crazy Efficient Market Theory that did it. If the market was efficient, market timing would be a bad thing. But of course Shiller showed that the market is NOT efficient 39 years ago. If we were all thinking clearly, this “controversy” over whether market timing is required would be ancient history by now.

The article notes several times that there is a trade-off between volatility and return. But of course again that is an idea associated with the Efficient Market Theory that should have been left in the dust many years ago. The Bennett/Pfau research shows that there is no trade-off. Following a true research-based strategy increases return while also diminishing risk. Surprise! Surprise! Is it really so odd that going from a pure emotion-based approach (price indifference) to a true research-based approach (market timing) would help in every possible way?

I have never had any problem making the case on the merits for Valuation-Informed Indexing.The case on the merits is overwhelming. The case on the merits blows people away. The problem that I have faced is that the case is so strong that it shocks people who have only heard about Buy-and-Hold strategies. People just cannot believe that we have known about a superior stock investing strategy for 39 years and that it is not talked about at every site on the internet every day. You are giving a perfect illustration of the problem with this article. The author lists a good number of possibilities and failed to even include the first true research-based approach (the belief that the market is efficient is not research based, that was just an assumption that turned out to be false when tested by Shiller). Huh? What the f? What possible reason could there be for listing all possibilities except the one supported by the research? That’s an emotional call, not a rational one.

I looked to see if the author of the article supplied an e-mail address. If he had, I would have sent him my article “Buy-and-Hold Is Dangerous.” I think there’s a good chance that, if we got into a conversation, he would become a Valuation-Informed Indexer in time. Or, if we posted at the same board, I think he might come around in time. People do not become convinced by hearing about a new idea one time. They need to see it discussed multiple time by different people and ask questions about it on numerous occasions before they are able to gain confidence in it. Please note that the Valuation-Informed Indexers have no fear of having Buy-and-Hold discussed in our presence. But a large percentage of Buy-and-Holders are so terrified of the idea that people might learn about Valuation-Informed Indexing that they do not include any research-based portfolios in their lists of how different types of portfolios perform over time. Gee, I wonder why.

None of this is rational, Anonymous. You can’t make the realities of stock investing disappear by putting your fingers in your ears and ignoring the clear message of 39 years of peer-reviewed research. If Shiller’s Nobel-prize-winning research is legitimate research, there will be another price crash within the next year or two or three. Millions of people will suffer failed retirements, hundreds of thousands of businesses will fail, millions of people will loses their jobs, political frictions will increase. I believe that at that time there will be people who will be concerned enough about what the Ban on Honest Posting has done to us as a nation that they will stand up to you Goons and we will all pull together and enjoy the greatest learning experience ever achieved in the personal finance realm. We’ll see.

Market timing is required. It always has been, it always will be. The only reason why many people don’t like acknowledging the importance of market timing at a time when stocks are priced at two times their real value is that it would require them to acknowledge that the value of their stock portfolio is only half of what they have been led to believe it is. That will no longer be an issue after prices have fallen by 50 percent or more. So we’ll see what happens then.

I wish you all good things. But I think that the Ban on Honest Posting is hurting us all in very serious ways. So I cannot sign on to it.

If there was any evidence that market timing is not required, you would present that evidence and we never would have seen a single death threat or a single unjustified board banning or a single act of defamation or a single effort to get a single academic researcher fired from a single job. I mean, come on.

The peer-reviewed research matters. My sincere take.

Market Timing Schemer Rob