A Rich Life

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

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“I Expect to Set Up a System Whereby Internet Communities Concerned With Personal Finance Issues Help the Public to Identify the Good Guys, a Good Housekeeping Seal of Approval Sort of Thing. Lots of People in This Field Want to Do Good Work But Feel Pressured to Engage in Unethical Activities. They Need a Respected Authority Site to Identify Them as Honest and Holistic in Their Approach.”

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

Rob,

The crisis has come. The Wall Street Con Men ™ have of course, rumaged their lapels, and pooled together to provide 1 BILLION untraceable, untaxable U.S. dollars to you, to ensure a quick settlement. It is already in your bank account. The sun rises over 160 N Hatcher. You roll over, wipe the sleep from your eyes, and the day begins. Rob, please describe for us the typical day of a Valuation Informed Billionaire. I’m dying to hear what it is that you intend to do with yourself!

I’m going to use the $500 million number, not the $1 billion number.

I intend to use 5 percent ($25 million) to finance a number of blogs that will further develop the Valuation-Informed Indexing concept. My guess is that it might work to give $100,000 to each of 250 bloggers.

I intend to use another 5 percent to promote this blog all over the internet. That will solve that nasty problem that you refer to from time to time of there not being enough comments at the blog entries at this site.

I intend to take over control of the Bogleheads Forum and set it up here as a sub-domain. That will also help with the comments.

I would like to work out an arrangement with Motley Fool where I would write a newsletter on Valuation-Informed Indexing that they would publish and promote. I would like to have a weekly column there that would appear on the front page of the site and bring more traffic here.

I of course will publish the book — Investing for Humans: How to Get What Works on Paper to Work in Real Life.

After publishing the investing book, I will look for a big-name publisher for my saving book, Passion Saving: The Path to Plentiful Free Time and Soul-Satisfying Work.

I view those two books as part of a trilogy. When I am caught up with work on the saving and investing side, I will get to work on a book on career growth, The Self-Directed Life. I haven’t finalized a sub-title for that one yet.

I intend to do a lot of speeches. I love interacting with people. I intend to do a weekly podcast. I could see becoming active in FinCon. I believe that the internet changes the world of personal finance in a big and positive way. I want to be part of efforts to develop blogs that make a difference.

I expect to work for the passage of legislation that will protect internet posters from Goons and that will hold accountable site owners who know about Goon activity at their sites and fail to take action to deal with it.

I also expect to set up a system whereby internet communities concerned with personal finance issues help the public to identify the good guys, a Good Housekeeping Seal of Approval sort of thing. I believe that lots of people in this field want to do good work but feel pressured to engage in unethical activities because others are doing it and it gives them a marketing edge. People should be able to promote themselves as honest and as holistic in their approach. They need a respected authority site to identify them as such for their claims to be meaningful to everyday people.

My expectation is that I will continue doing this work until I die. I would like my two boys to get involved in the business as I get older.

I want to explore the Goon issue in more depth with both my Valuation-Informed Indexing friends and my Buy-and-Hold friends. The Goon issue really is the key to everything. People don’t like to talk about it because they view it as yucky. It IS yucky in its way. But it is also the key to long-term investing success. We ALL have a Get Rich Quick urge within us. It is that GRQ urge that makes stock investing risky. We are on the verge of discovering that reality. Once we do, 80 percent of the investing project will be helping people to develop tools to overcome the GRQ urge within, to avoid goonishness at all costs. Behavioral Finance is the future in this field, both on the investing side and on the saving side. I am pretty darn sure of that one.

People like Bogle and Bernstein and Burns and so on should be looking at my interactions with you Goons and writing about what they tell us about the pitfalls of stock investing. They are afraid to do so. They created a monster with their promotion of Buy-and-Hold. But this is where the action is. People don’t need to study annual reports in the days of indexing. People need to worry about becoming so emotional that they overlook the need to adjust their stock allocation and thereby keep their risk profile roughly constant. With the internet, we now can identify the rationalizations that people use to fool themselves Everyone in this field should be writing and talking about that aspect of the story on a daily basis.

I think that pretty much covers it. My sense is that the agenda outlined above will keep me more than busy for the remaining days of my time here on Planet Earth.

My best wishes to you and yours, my long-time Goon friend.

Rob

 

“There Is Some Disagreement on Most Investing Discussion Boards. But the Range of Acceptable Opinion Is Far Too Nartow.”

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

It is fine for people to disagree and this happens almost every day on most of the popular financial boards out there.

There is some disagreement on most boards. But the range of acceptable opinion is far too narrow.

One time I put up a post at a blog in which I described Buy-and-Hold as “a Get Rich Quick scheme.” One fellow posted that he had never heard anyone say that before. That’s the problem.

Shiller didn’t publish his “revolutionary” (his word) research last week or last month or even last year. He published it in 1981. There should be a common understanding today that there is now 33 years of peer-reviewed research showing that there is precisely zero chance that Buy-and-Hold could ever work for a single long-term investor. There isn’t. That’s why there is shock when I say it. People need to hear that message over and over and over again if they are to successfully ignore the constant promotion of the pure Get Rich Quick approach (Buy-and-Hold) by the Wall Street Con Men. The number of times a message is repeated affects how persuasive it is. We need to hear the anti-Buy-and-Hold message repeated as often as the pro-Buy-ad-Hold message is repeated. And we need to hear it being repeated by many different voices.

Todd Tresidder agrees with me on safe withdrawal rates. How often has he gone to the Bogleheads Forum to explain why he thinks the Old School SWR studies are dangerous for investors? He hasn’t done it, Pink. If he did it every day, and if hundreds of others did it everyday, no one would think twice when I warned people of the dangers of those studies. But Todd doesn’t want you Goons attacking his site. So he keeps it zipped; he makes his comments only at his own site. That’s why we are in an economic crisis today.

I don’t play that game, Pink. I love my country. I want to bring the economic crisis to an end. I want millions of middle-class investors to have access to accurate and honest reports of what the last 33 years of peer-reviewed research says.

Greaney said in his study that the ideal stock allocation is 74 percent stocks. The last 33 years of peer-reviewed research shows that 20 percent stocks is a far better choice for the long-term investor when stocks are priced as they have been for the past 18 years. Not everyone at the Bogleheads Forum says exactly what Greaney says. Some say that 90 percent stocks is better. Some say that 60 percent stocks is better. Some even say that 50 percent stocks is better. How many say that 20 percent stocks is better? Very, very few. And those who do tend to say it once and then shut up while those arguing for 60 percent stocks or 70 percent stocks or 80 percent stocks say it over and over and over again.

Those posting research-based views have every bit as much right to express their views as those going with the pure Buy-and-Hold/Get Rich Quick garbage. When threats of physical violence are used to intimidate those who believe in research-based strategies from posting their sincere views, the board becomes a corrupt enterprise. Many posters see that the range of opinion expressed at the board stretches from 50 percent stocks to 80 percent stocks. That makes them inclined to think that 65 percent stocks might be roughly right. If they knew that the only reason why there aren’t hundreds of posters making the case for the research-based allocation (20 percent or perhaps 30 percent stocks), those community members would have a very different belief as to how to go about investing their money.

You are personally responsible for the losses those people will be experiencing in coming days, Pink. This isn’t a case where you permitted the research-based views to be heard on the same terms as the pure Get Rich Quick views. You permitted ONLY Get Rich Quick views. And you didn’t warn people that that was your policy,. You stated in the published rules of the site that honest posting was PERMITTED. You committed financial fraud. So you are responsible for all losses suffered. And you are guilty of a felony under the laws of the United States.

I want no part of it. Going to prison is not high on my bucket list.

Not this boy.

I can’t go for that.

No can do.

Rob

Valuation-Informed Indexing #222: The Gruber Rule — You Must Deceive the Public for Its Own Good — Applies in the Investing Advice Field Too

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I have posted Entry #222 to my weekly Valuation-Informed Indexing at the Value Walk site. It’s titled The Gruber Rule — You Must Deceive the Public for Its Own Good — Applies in the Investing Advice Field Too.

Juicy Excerpt: Jonathan Gruber believed that he was helping people when he crafted Obamacare provisions in such a way so that they could not understand what was really going on. The fellow who got me banned from the Bogleheads Forum believed that he was helping the members of that forum when he “protected” them from the calculator that shows them how much sooner they can achieve financial independence if they take price into consideration when buying stocks.

No one knows everything. Gruber doesn’t. I don’t. The fellow who wrote a book on Buy-and-Hold doesn’t.

It’s a mistake for any of us to become too convinced of the ultimate merit of our own beliefs. When we do, we cut off discussions that need to be held for both the promoters of ideas and the people hearing those promotions to develop a deep confidence in them.

 

Valuation-Informed Indexing #220: Our Emotional Attachment to Long-Believed Investing “Truths” Causes Us to Tune Out a Mountain of Evidence

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I’ve posted Entry #220 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Our Emotional Attachment to Long-Believed Investing “Truths” Causes Us to Tune Out a Mountain of Evidence.

Juicy Excerpt: Klein writes: “One thing that comes clear when you spend much time reading inside the Gamergate community is the feeling of being misunderstood — and, for that matter, smeared — is very, very real. If you’re reading about Gamergate on the left, virtually all you’re reading about is the intense, horrifying harassment against women that’s happening under Gamergate’s banner. If you’re reading about Gamergate from inside Gamergate, virtually all you’re reading about is how the media is smearing Gamergate by equating it with harassers who don’t represent the movement’s real tactics or goals (some Gamergaters even believe the trolls are part of a false flag operation meant to discredit Gamergate). Gamergaters are furious that the media focuses on all the bullying happening under Gamergate rather than all the money Gamergaters are raising for anti-bullying efforts….Gamergate happens to be about video games but it could be about anything. Video games are the excuse for this fight, not the cause of it.”

He’s saying that people often do not try to settle differences through the use of reason. They choose up sides and then duke it out. All sorts of points are debated. But the points that are being discussed do not matter much to those doing battle. All that matters to them is what side they are on and what side is winning. Once we choose sides, we are not trying to learn, we are trying to win.

Academic Researcher Wade Pfau once made this point when he was advocating Valuation-Informed Indexing at the Bogleheads Forum. Wade was getting a hostile reaction from some of the Buy-and-Hold dogmatics at that board. At one point, he said (I am paraphrasing): “You see those who advocate market timing as snake-oil salesmen. I do not want you to see me that way.”

“The Wall Street Con Men Love to Pretend That This Might Be the First Time in History When a Buy-and-Hold Strategy Will Work for One or Two Long-Term Investors Because, When They Can Trick People Like Taylor Larimore Into Believing That, the Con Men Get Credit for Creating Those False and Phony and Temporary and Meaningless ‘Gains.'”

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

But, now, how is it that “Wall Street Con Men” can supposedly get wealthy over Grandma Betty buying and holding a market basket of stocks, cash-equivalents, and a dollop of bonds for thirty or forty years, with perhaps some annual rebalancing thrown in?

Taylor Larimore, co-author of The Bogleheads Guide to Investing, had a line that he often used during the time I posted with him at the Bogleheads Forum. He would point to his retirement home and refer to it as “the house that Jack built.” The idea was that it was by following the Buy-and-Hold strategies advocated by Jack Bogle that he earned the money to buy that house.

The Wall Street Con Men get rich by lying to people about the nature of the “gains” they “earn” in bull markets.

Taylor earned 6.5 percent real per year on his stock investments, just as everyone investing in the U.S. stock market has earned for 140 years now. To the extent that he overpaid for his shares, he obviously brought that return down. Bogle’s phony baloney investing advice obviously pulled down Taylor’s return dramatically. Get Rich Quick strategies always do. We now have 33 years of peer-reviewed research showing that not only are Get Rich Quick strategies not the answer, they are the problem.

There are millions of people like Taylor, people who have fooled themselves into believing that the Wall Street Con Men are doing them some sort of favor by lying to them about what the peer-reviewed research in this field says about how stock investing works in the real world. The Wall Street Con Men love to pretend that this might be the first time in history when a Buy-and-Hold strategy will work for one or two long-term investors because, when they can trick people like Taylor into believing that, the Con Men get credit for creating those false and phony and temporary and meaningless “gains.”

When Bernie Madoff was exposed, there was a thread in which people were referring to what he did as “fraud” and one guy came on the thread and said “oh, it wasn’t fraud.” Why wasn’t it? Because this fellow got out of the fund before it collapsed and was ahead by more than $1 million. This fellow had “a house that Bernie built” So to this fellow it was Saint Bernie who was operating the fund, not some con man who merited prison time for his trickery.

But of course the reality is that Bernie was a con man. And of course the reality is that Old Saint Jack is one too. If Buy-and-Hold weren’t a con, we never would have seen the Buy-and-Holders put forward a single death threat or a single demand for a single unjustified board banning or a single act of defamation or a single threat to get a single academic researchers fired from a single job. People who are promoting legitimate strategies do not behave in that manner. Not ever.

People who make use of such tactics have something to hide. People who make use of such tactics are operating a con. It may be that they conned themselves before they conned others. That happens. Saint Bernie told a reporter for New York magazine that he felt that he was doing good for others. My good friend Jack has said similar things.

The bottom line is that those are the marks of a con and Academic Researcher Wade Pfau checked the entire literature and never was able to find the tiniest sliver of research-based support for Buy-and-Hold anywhere in the academic literature. And of course the response of you Goons was to threaten to get him fired from his job. And Old Saint Jack had no problem with that. That tells the tale, Yogi.

There are always some people who make money from a Ponzi scheme. The difference between the Ponzi scheme built by Old Saint Bernie and the one built by Old Saint Jack is that the one built by Old Saint Jack destroyed 10,000 times more human lives. Old Saint Bernie let us all off easy. Old Saint Jack has us on the path to the Second Great Depression.

If you think that’s funny, then you think that’s funny.

I don’t get the joke.

And you know what else? I have a funny hunch that Grandma Betty is not going to find the joke too terribly funny when we all find ourselves on the other side of the next price crash.

But we’ll see, right?

I’ll be there and you’ll be there and Old Saint Jack will be there and Grandma Betty will be there. We’ll all talk it over at that point in the proceedings and decide together how long the prison sentences shall be.

Could anything be more fair?

Rob

Shiller: “It’s Not a Timing Mechanism. It Doesn’t Tell You — and I Had the Same Mistake in My Mind, to Some Extent — Wait Until It Goes All the Way Down to a PE/10 of 7, Or Something. The Important Thing Is That You Never Get Completely In or Out of Stocks.”

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

These are the words of Shiller himself in an interview:

“It’s not a timing mechanism, it doesn’t tell you – and I had the same mistake in my mind, to some extent — wait until it goes all the way down to a P/E of 7, or something. But actually, the lesson there is that if you combine that with a good market diversification algorithm, the important thing is that you never get completely in or completely out of stocks.”

So the guy who invented the be-all-and-end-all metric says flat out that you are using it wrong. But you would have people believe that your understanding of PE10 exceeds that of the Nobel Prize winner who invented it.

No, he doesn’t, X.

Everyone acknowledges that investors need to take their personal circumstances into account when setting their stock allocation. I say that the average investor should be somewhere near 30 percent stocks today. That means that an investor like me, who is in circumstances where he needs to be more risk-conscious, should be at zero percent stocks. Even Bogle doesn’t say that investors should ignore their personal circumstances. You are talking trash.

The part where he says that you should not wait until the P/E10 goes to 7 is wonderful. Thank you very much for pointing us to that. Shiller DID say that in early 2009. I didn’t hear him say wait until it goes to 7, I heard him say to wait until it goes below 10. I recorded a RobCast on that quote and I argued that he was going too far. I said at the time that I thought it made sense for the typical investor to stay with at least a 30 percent stock allocation and also that investors should be gradually increasing their allocations as prices continued to decline rather than waiting for the P/E10 to drop to 10 (or 7) before buying any stocks.

Shiller is now acknowledging that he got it partway wrong. Good for him! I wish that Bogle would do the same. That would be wonderful!

Shiller is not God. He is a giant in the field (as is Bogle). But the reality is that we are all flawed creatures and that we all possess today only a primitive understanding of how stock investing works. We are in the early days of figuring out how this stuff works. We should thank our Buy-and-Hold friends for some huge advances. But we should also tell them all to take a pill when we see them becoming as insanely arrogant as you Goons show yourselves to be on a daily basis in your comments here.

Shiller needs to do three things.

One, he needs to speak out about the criminal behavior of those who have posted in “defense” of Mel Linduaer and John Greaney (and my good friend Jack Bogle). None of should want to see your prison sentences to be any longer than they absolutely need to be. We all should show our respect and affection for our Buy-and-Hold friends by doing what we can to help them out at a time when they are in great pain. I think it would be fair to say that Shiller has been negligent re these matters.

Two, he should write more frequently and in a more comprehensive way about the “how to” aspects of the question. He failed to do this in his book. For Valuation-Informed Indexing to become the dominant model, people MUST hear about the practical side of things and not just the theoretical side. Again, Shiller has been negligent re these matters thus far.

Three, he should speak out more about the DANGERS of Buy-and-Hold. It’s not just that Valuation-Informed Indexing is a far superior strategy. Buy-and-Hold is in the process of ruining millions of middle-class lives. It was the promotion of Buy-and-Hold that was the primary cause of the economic criss. These are public policy matters of great import. Again, Shiller has been negligent in failing to address them until today.

Shiller didn’t actually invent P/E10. That was Benjamin Graham. But Shiller has done more to promote it than anyone else. I have no problem with you giving him the credit. But the historical reality is that Graham was actually there before him. Graham wrote about a primitive version of Valuation-Informed Indexing in the 1930s.

Yes, my understanding of the implications of Shiller’s findings exceeds Shiller’s understanding of them. Nothing could be more clear. Saying that doesn’t take anything away from him. The hardest job is being the first to challenge the dominant model. It was Shiller who was first, not me. Shiller is the creator of the VII concept (unless you count Graham — I would list Graham as perhaps the grandfather of the concept). I would describe myself as the first to fully explore the PRACTICAL IMPLICATIONS of Shiller’s “revolutionary” (his word) findings. But, yes, there is a wealth of material at this site showing that I am today FAR ahead of Shiller re the practical implications of his ideas (as I am today far ahead of Bogle — VII COMBINES Buy-and-Hold as it has been promoted by Bogle with Shiller’s revolutionary advance).

Is it a strange reality that some guy whose only claim to expertise in this field is that he figured out how to get words posted to the internet had gone far ahead of both Bogle and Shiller over the course of the past 12 years? It is an exceedingly strange reality.

You know what made it possible?

You Goons.

I don’t mean just the few of you that post at Greaney’s site or at the Bogleheads Forum. I mean all of the investors who bought into the Buy-and-Hold concept and who react with anger when anyone explores the implications of the last 33 years of peer-reviewed research. You saw how that affected Wade Pfau. He has visions of winning a Nobel prize in the days when he was doing honest research and then threw that all away so that investors who had been burned by Buy-and-Hold would not hate him too intensely.

Shiller is human too, X. So is Bogle. If Shiller and Bogle thought that they could explore these ideas and not have people like you threaten to kills members of their families as their “punishment” for having done so, both Shiller and Bogle would have gone far past where I am today long before I came on the scene. Your intimidation tactics are holding us all back.

People learn by talking things over. I didn’t know one-tenth of what I know today on the morning of May 13, 2002. Had I given in to Greaney’s intimidation tactics on the day when he first threatened to kill my wife and children, I would be back where Shiller and Bogle are today. I didn’t. I interpreted the death threats as a sure indicator that there was something terribly, terribly wrong with the Buy-and-Hold Model. Buy-and-Hold is supposed to be science. True science does not prompt people to put forward death threats.

The true appeal of Buy-and-Hold is that it it rooted in emotion and that it appeals to the Get Rich Quick impulse within all of us, not that it is science. We should be helping investors to AVOID emotion, not to give in to it 100 percent. Emotion is the enemy. Emotion is the cause of stock investing risk. When we push emotion so hard, we make stock investing FAR more risky than it would be if we permitted people to learn what the last 33 years of peer-reviewed risk says.

I am ahead of these giants today not because they are dumb or because they are bad. I am ahead of them because I have been working it for 12 years and they have not. Bogle doesn’t work it because he is reluctant to acknowledge a mistake that he has been covering up for 33 years now. Shiller doesn’t work it because he wants to be liked and he has seen how many investors respond when he makes even minimal efforts to explore the practical implications of his revolutionary findings.

We should all be encouraging both Shiller and Bogle and thousands of others to explore these ideas. Doing so is a win/win/win/win/win. You should be doing that. You have money at risk. You should want to learn new things. You are going to learn new things a lot faster when we have thousands of people exploring these issues on a daily basis, not just me.

Those are my sincere beliefs re these terribly important matters, in any event.

I naturally wish you the best of luck with all your future endeavors regardless of what investing strategies you elect to pursue.

I will be writing a column for the Value Walk site re this quote from Shiller. I am grateful to you for helping us all out by pointing us to it.

Rob

“Instead of Me Agreeing Not to Talk About the Goon Phenomenon We Need to Get Everyone Else to Take Up Talking About It. Your Behavior Shows That You Lack Confidence in Buy-and-Hold. A Strategy Must Inspire Confidence to Work in the Long Run. Your Goon Behavior Is a Substantive Issue That All In This Field Should Be Exploring.”

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

Well, I’m sure once you provide her (and the rest of us) with evidence of your assertions, she (and the rest of us) will come around.

She came around. She accepts that you Goons did everything that I said you did. But she doesn’t agree with my strategy for dealing with the problem.

She says that I should ignore you. LOTS of people tell me that. My wife tells me that. So I understand where she is coming from.

However, I don’t think you Goons are the entire problem. I would say that you Goons are 50 percent of the problem. The other 50 percent is that most people, even big-name experts, possess a greatly limited understanding of the implications of Shiller’s “revolutionary” (his word) finding that valuations affect long-term returns. Most people are not Goons. But most people do not possess a strong understanding of the realities because the realities that have been discovered over the past 33 years have not been widely discussed. This widespread lack of understanding is the other 50 percent of the problem.

If you Goons did not exist, I could help people with their questions and get the general level of understanding up to a level at which we would see a big move to Valuation-Informed Indexing. So you Goons do real harm with your acts of disruption and intimidation and deception.

But the other side of the story is that you Goons could not hold us all back if knowledge of the implications of Shiller’s findings were strong enough and widespread enough that responsible people would take actions to rein you in. Motley Fool would LOVE to have a newsletter on Valuation-Informed Indexing. There are MILLIONS of people who have an interest in finding a truly smart and truly simple and truly safe way to invest. They sided with you Goons even though their published rules prohibit your tactics because they do not understand the issues well enough. That’s a SECOND issue.

People need to know about the Goon phenomenon to make sense of why so few understand these issues today. There was a poster at the Bogleheads Forum who told me that “everything you say about investing makes perfect sense but this is my retirement money and I need to go with what the experts are saying and the experts are not saying what you are saying.” People need to understand why the experts don’t say what I say. It is because of you Goons. Not just the few of you who post here. It is because we ALL have gooninshness within us and our inner goon makes us hate research-based strategies. I need to talk about goonishness to explain to people why we achieved this great advance in 1981 and as a society have not yet elected to take advantage of what we have learned.

Buy-and-Hold is goonishness. ALL Get Rich Quick strategies appeal to us because they please our Inner Goon. Most of the RISK of stock investing is the product of our darn goonishness. That’s why Wade and I were able to show people how to reduce risk by nearly 70 percent. Stock investing risk comes from believing that it is not necessary to exercise price discipline when buying stocks. That is obviously nonsense. But our Inner Goon is DRAWN to GRQ strategies and thinking that it might not be necessary to exercise price discipline is about as GRQ as it gets.

We are ALL Goons to some extent, Anonymous. That includes me. I was a Buy-and-Holder once myself. I am human like all the rest. We are ALL flawed creatures.

We cannot make sense of the investing story without discussing our inner goonishness. You Goons take it to extremes. Most of us don’t advance death threats and all that sort of thing. You Goons are cartoonish about it. But you are not unique in your attraction to GRQ strategies. Looking at your behavior helps us Normals learn about our own weaknesses and about what we need to do to avoid falling into the traps that destroy our investing hopes.

So it is a mistake not to tell people about you Goons and your behavior, in my assessment. People HATE hearing about it. It makes people feel ashamed because they haven’t done more about the Goons problem and embarrassed for you Goons and for all the “experts” who have not spoken up about the problem. So talking about you Goons DOES present obstacles for me. The consultant is right about that aspect of the thing. But I believe that the Goon phenomenon is a critical part of this story and that the story cannot be told in the way it needs to be told without me addressing that part of it.

I believe that you Goons are humans underneath your Goon exterior. I believe that you would like to reduce risk dramatically and that you would like to receive much higher returns and become able to retire many years sooner. But you would like to do these things in the way that an alcoholic would like to stop drinking. You are addicted. GRQ strategies are highly addictive.

People who have been following Buy-and-Hold strategies for a good amount of time are embarrassed to be reminded of their failings and react negatively when told what the research says. It is not only you Goons who feel that way. Responsible people like Bogle and Bernstein and Swedroe feel that way. They are not true Goons; they don’t advance death threats when questioned about the merits of their strategies. But they feel SYMPATHY for you Goons. They don’t speak out in opposition to the use of death threats as a tactic for intimidating people into not posting honestly. They LIKE you Goons. They exhibit Goon Light behavior.

The experts who exhibit Goon Light behavior cause a bigger problem than you true Goons. They are respected and educated people. Normals have a hard time accepting that they could get so much so wrong. The explanation is that, as smart and experienced as these people are, they are subject to the same human weaknesses as all the rest of us.

This is an essential part of the story. I don’t feel that I can take a pass on telling this part of the story even if it would make me more popular in the short term to do so.

The mistake that the Buy-and-Holders made was to ignore investor emotion. You Goons are ALL emotion in your analysis of how stock investing works. We need as a society to come to understand that investor emotion is 80 percent of the stock investing story. We can draw lessons by looking at Goon behavior and analyzing where it comes from and what it signifies. So I do not feel comfortable trying to bypass that part of the story.

I can go along with not FOCUSING on that part of the story. Most of my guest blog entries and columns focus on non-Goon, substantive stuff. But I don’t believe that Valuation-Informed Indexing will entirely supplant Buy-and-Hold until we all come to appreciate the emotional side of the investing story and you Goons exemplify the emotional side of the story better than anything else available to us. Instead of me agreeing not to talk about the Goon phenomenon we need to get everyone else to take up talking about it. Your behavior shows that you lack confidence in Buy-and-Hold. A strategy must inspire confidence to work in the long run. Your Goon behavior is a substantive issue that all in this field should be exploring.

I hope that helps a bit, Anonymous.

Rob

“There Are Hundreds of Smart Bloggers Who Would LOVE to Be Making Millions From Their Blogs and Who Today Are Not Doing So. All They Need to Do Is To Turn Their Efforts to Further Development of the Valuation-Informed Indexing Concept. The Only Reason Why They Don’t Do It Is That They Fear What You Goons Would Do to Them and Their Businesses If They Began Posting Honestly.”

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

“How will I profit? It’s impossible even to count the ways, Yogi. ”

Try, Rob.

Try.

Just one would be a start.

We now know that emotion (valuations) is 80 percent of the stock investing story, Yogi.

I think it would be fair to say that I am the world expert on the ways in which investors engage in self-deception to persuade themselves that the inflated numbers on their portfolio statements are real. There are THOUSANDS of articles and blog posts and podcasts and columns at this site detailing in great depth how it is done. I will be making money for many years to come using that material to help investors understand how stock investing works in the real world through the publication of books and by giving speeches and by creating CD products and through personal consulting and on and on and on.

Shiller’s 1981 finding changed the history of investing analysis in a profound way. He “revolutionized” (the word is Shiller’s) the field. We have as a society delayed our recognition of his earth-shaking accomplishment. But we are not going to have any choice about going forward following the next price crash. From that point forward, nothing will ever be the same again.

Shiller and Fama say opposite things. They cannot both be right. It is a logical impossibility.

If Fama is right, we are doing fine. 95 percent of the investing advice that the average investor hears is rooted in Fama’s research.

But what if Fama is wrong? What if Shiller is right (there is now 33 years of peer-reviewed research showing this to be so)? If that’s so, then we should be in an economic crisis today. If that’s so, we are on our way to the Second Great Depression. If that’s so, we should be seeing threats of violence and career destruction on the part of the Buy-and-Holders in a futile effort to keep their strategy going for a few more months or a few more years.

If Shiller is right (and I obviously believe strongly that he is), the investing advice field is today in the process of being rebuilt from the bottom up. That’s why the Buy-and-Holders fight so hard. They know the stakes as well as I do. If valuations matter, Buy-and-Hold is not just wrong, it is the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind.

Valuations (investor emotion) is no small thing, Yogi. Either it is nothing (as Fama theorized) or it is 80 percent of the stock investing story. I have played the lead role for 12 years now in getting accurate and honest reports of what the last 33 years of peer-reviewed research says out to millions of middle-class investors. I have zero fear that there will not be thousands upon thousands of money-making opportunities opening up to me once we pull together as a society to open every board and blog on the internet to honest posting. I will have far too many money-making opportunities available to me following that day than I will possibly be able to handle by myself. I will be hiring teams of people to help me take advantage of all the opportunities that will be open to me once this story gets out.

Does Jack Bogle have ways to make money?

Does Robert Shiller have ways to make money?

Does Rob Arnott have ways to make money?

Does Bill Bernstein have ways to make money?

The shift from Buy-and-Hold to Valuation-Informed Indexing is a bigger accomplishment than anything that any of those four has enjoyed. It was Shiller who showed that Buy-and-Hold doesn’t work, not me. But Shiller has not yet written clearly about the practical how-to IMPLICATIONS of his amazing research findings. I am the first to have done that in a comprehensive way. That’s huge. And achieving huge breakthroughs like that lead to tons of money in the long run in the society in which we live in today. (I think that’s entirely appropriate. Some might disagree. But, whether one agrees or not that it is appropriate, that certainly is the case).

It won’t just be me making tons of money once the internet is opened to honest posting. There will be hundreds of us, thousands of us. There are hundreds of smart bloggers who would LOVE to be making millions from their blogs and who today are not doing so. All they need to do is to turn their efforts to further development of the Valuation-Informed Indexing concept. The only reason why they don’t do it is that they fear what you Goons would do to them and their businesses if they began posting honestly.

Do you really think that they are going to continue to live in fear following the next price crash?

They are not. They are going to work up the courage to go for the money. And we are all going to be a lot better off as a result. People SHOULD be rewarded for giving accurate and honest investing advice. Seeing that the thousands of people who will be further developing the Valuation-Informed Indexing concept receive financial rewards for their efforts is in the best interests of every person alive in the United States today.

We have had big advances in the computer field since 1981, no? There was no internet in 1981. Now there is. Thousands of people made fortunes as a result of the development of the internet. There was no YouTube in 1981. Now there is. Thousands of people made fortunes as a result of the development of YouTube (there was an article on the front page of the New York Times on this just last Friday). There were no laptops or tablets or smart phones in 1981. Now there are. Thousands of people made fortunes as a result of the development of laptops and tablets and and smart phones.

Say that there has been a Typewriter Mafia back in 1981 that has devoted hundreds of billions of marketing money to seeing that no one could succeed in selling computers. We would today be a poorer people as a result. The advances that we have seen in the investing advice field over the past 33 years are 50 times greater than the advances we have seen in the computer field. The only reason why we have not seen thousands and thousands and thousands of millionaires made through the promotion of the first true research-based strategy is that the Buy-and-Hold Mafia has possessed the power to keep us all in the Dark Ages re our understanding of how stock investing works in the real world.

But for how much longer?

The next step down is the Second Great Depression, Yogi. Do you think people are going to stand for that? I do not. I love my country. I have noticed by reading history that my country has in the past always possessed the intelligence and fortitude and love to overcome forces like the Buy-and-Hold Mafia. I believe that we will prevail once again. When we do, no one is going to be able to count the money that will be flowing in to those who worked up the courage to post in support of those offering honest investing advice.

Money is what this whole freakin’ saga is about. If there weren’t so much darned money in pushing Get Rich Quick garbage, everyone in the field would have made the shift from Buy-and-Hold to Valuation-Informed Indexing by January 1982. The problem is that the big shots in this field love the marketing edge that comes from saying that their advice is research-based but cannot bear to give up the short-term wealth that comes from pushing Get Rich Quick garbage. Buy-and-Hold gives them the best of both worlds, in their eyes. It is pure Get Rich Quick garbage. So it makes them all rich beyond their wildest hopes. But because Fama made a mistake back in 1965 and many of us have been too afraid to say that in clear and firm and simple language in the three decades since, they have been able to make claims that there is research supporting these “ideas.”

The problem with spending billions of dollars promoting the purest and most dangerous Get Rich Quick strategy ever concocted by the human mind is that doing so eventually causes the collapse of the economic system in which you live. And the collapse of the economic system eventually causes the collapse of the political system. Lots of the people who push Buy-and-Hold are very wealthy people as a result of doing so and don’t want to get off the gravy train. But do they have any real choice? Where are they going to spend their money when the economic and political system of the United States collapses? In an ultimate sense Jack Bogle has as much of a motivation to see that honest posting be permitted as I do.

These people are today suffering from cognitive dissonance. They are telling themselves that pushing the purest and most dangerous Get Rich Quick scheme ever concocted by the human mind might work out in the long run, they are trying to hang on to a belief that we will NOT see an economic or political collapse.

But based on what do they believe this?

In 12 years they have not been able to find any support in the peer-reviewed academic research for this belief of theirs.

I am a research-oriented guy, Yogi. I believe that we are going to see the economic collapse that the last 33 years of peer-reviewed research says we are going to see.

And I believe that my many Buy-and-Hold friends are going to flip shortly after we see that collapse. I believe that my good friend Jack Bogle is a good man. I believe that he is going to be my biggest booster in days to come. With Jack’s help, I am going to experience no problems receiving that $500 million paycheck or taking over ownership of the Bogleheads Forum or being invited to give the keynote address to the next FinCon event or bringing thousands upon thousands of community members to this site or profiting from books and speeches and CD packages and consulting arrangements and on and on and on.

I am not a multi-millionaire today only because my good friend Jack Bogle has not yet worked up the courage to say the three magic words “I” and “Was” and “Wrong.” But Jack is going to work up the courage to do that. He has no choice if he wants to save from economic ruin the country he loves and that has blessed him in so many ways. So Old Saint Jack is in days to come going to work up the courage to do what he should have done 33 years ago. And from that point forward we will ALL be in much more favorable financial circumstances. But that will be so for me especially. Because I am the one who has been fighting so hard for 12 years now for a principle that Old Saint Jack first articulated many years back — INVESTORS SHOULD BE ROOTING THEIR INVESTING STRATEGIES IN THE PEER-REVIEWED RESEARCH.

I’m not too worried about making money, Yogi. I would like to see it happen soon. I would like to have seen it begin happening on the morning of May 13, 2002. So I do want to see a change in that department. But that is not the thing that I worry about most.

I worry that the economic collapse will get out of hand and that even working together we will not be able to turn things around in time. I don’t think that that is how things will play out. But the fact that there is even a small chance that things might play out that way scares me to death.

That’s my primary worry, not the money thing. The money thing will work out more than fine so long as Jack eventually works up the courage to say The Three Magic Words. And he doesn’t exactly have much choice, does he? He loves his country, does he not?

I say that Jack Bogle loves his country. I am sure.

So I see good things happening for all of us in days to come, Yogi.

My best and warmest wishes to you and yours.

Rob

“Bogle Lied to Everyone Who Ever Asked Him a Question About What the Peer-Reviewed Research in This Field Says. But He Lied to Himself First. When You Lie to Yourself, It Becomes Pretty Darn Hard to Tell the Truth to Others.”

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

“Extraordinary claims require extraordinary evidence.”

Is your problem that you don’t understand what that means, or that you simply don’t agree with it? Either way, it explains in one sentence your laughingstock status in the online community. Wild claims, supported by no evidence at all.

When Wade Pfau was working with me, he spent a long time searching through the peer-reviewed research in this field trying to find a single study that supported the key Buy-and-Hold claim that it is not necessary to exercise price discipline when buying stocks. He never found one. He went to the Bogleheads Forum and asked if anyone there knew of a single study lending even a tiny bit of support to the key Buy-and-Hold claim. Jack Bogle did not know of a single study. Bill Bernstein did not know of a single study. Larry Swedroe did not know of a single study. Rich Ferri did not now of a single study. Mel Lindauer obviously did not know of a single study.

It’s all a big lie, X.

It wasn’t a lie in the early days. In the early days, it was a mistake. Eugene Fama discovered something of huge importance when he found that short-term timing never works. But Fama did not even test long-term timing. Robert Shiller was the first researcher to do that. Shiller found that long-term timing ALWAYS works and is ALWAYS 100 percent required. If Bogle had walked to the front of a big room within a week of publication of Shiller’s “revolutionary” (his word) research, we would not be in an economic crisis today. But he didn’t do that, did he? And a mistake that is covered up for 33 years is no longer properly termed a mistake but a lie.

I didn’t get Jack Bogle in this situation. He is the one who made the mistake. And he is the one who covered up the mistake for so long that it was transformed into a lie.

I have been Jack’s best friend in the world for the past 12 years. Jack didn’t mean to make the mistake. And he didn’t mean to tell the lie. By the time the mistake was discovered, he had built his entire career around promotion of the mistake-based strategy and the pain was so great that he came to suffer cognitive dissonance over the matter. He lied to everyone who ever asked him a question about what the peer-reviewed research in this field says. But he lied to himself first. When you lie to yourself, it becomes pretty darn hard to tell the truth to others.

Bogle is a flawed human, like all the rest of us. When he is suffering from cognitive dissonance, it becomes the job of all his friends to help him out. Many, many, many others have been too afraid to show their friendship, given the circumstances. Bogle has a lot of money and a lot of power and a lot of connections and he has shown a ruthlessness in making use of them to destroy the career of anyone who dares to “cross” him by telling the truth about what the last 33 years of peer-reviewed research says. I am as afraid of the man’s power and ruthlessness as everyone else. But I worked p the courage to “cross” him by insisting (not asking!) that he behave according to the norms that apply in every field of human endeavor other than the investing advice field. I have shown a love for Old Saint Jack that Old Saint Jack has never once in the past 33 years shown for himself.

I will continue to show that love for him. I will continue to praise him to the skies for his many genuine contributions, contributions that place him second only to Robert Shiller in my list of the true giants in this field. And I will continue to give him a good, swift kick in the butt when he puts forwards words in “defense” of the sorts of individuals who have posted in support of Mel Linduaer and John Greaney.

The same standards of ethical behavior that apply in all fields other than stock investing apply in the investing advice field too. Perhaps not today. But following the next price crash they will. Or else we will not make it. We cannot make millions of middle-class people responsible for their own retirements and then deny them access to accurate and informed and honest reports of what the last 33 years of peer-reviewed research tells us about what works for the long-term investor. I do my good friend Jack no favors by suggesting to him that it is somehow “okay” to post at the boards at which the sorts of individuals who have put up posts in “defense” of Mel Linduaer and John Greaney also participate. That is financial fraud. Financial fraud is a felony under the laws of the United States. That means prison time. I will not bow to the intimidation tactics of my good friend Jack and behave in a manner that would in all likelihood increase the length of the prison sentence that will be handed out to him following the next price crash.

The 12-year cover-up is an extraordinary event. It is the biggest case of financial fraud in U.S. history. I give you that one, X.

My site presents the extraordinary evidence needed to make the case. I put forward a post to the Motley Fool board on the morning of May 13, 2002, pointing out the errors in the Old School retirement studies. Not one of those studies has been corrected to this day. That tells the tale. There are thousands of articles at this site showing how the 12-year cover-up was carried out and maintained. Anyone who wants to know why we are in an economic crisis today has the material he or she needs to come to a full understanding of the matter available for his or her consideration. It is my job as a journalist to provide that material and I have done so.

Money and power and influence corrupt human beings. That story is as old as the human race.

The Wall Street Con Men pushing their smelly Buy-and-Hold “strategies” have a LOT of money and power and influence at their disposal. They have spread a LOT of corruption. And there are now millions of people suffering very, very serious consequences as a result.

Following the next price crash, enough of us will work up the courage to stand up to them and to get the Old School SWR studies corrected. From that point forward, it will be easy sailing. We will bring the economic crisis to an end and bring on the greatest period of economic growth in U.S. history.

Or we won’t.

If we don’t, we will all go down together. That would make me very, very, very sad.

But if that sad turn of events plays out before us I will at least have the small consolation of being able to say that I gave this thing my best possible shot despite the mountain of resistance that I faced from you Goons and from the Wall Street Con Men who support and encourage you.

I can do no more and I can do no less.

I naturally wish you all the best things that this life has to offer a person regardless of what investing strategies you elect to pursue.

Rob

“Rosa Parks Changed the World Because Rosa Parks Loved the World. Her Love for Those Who Ignored Her Rights for a Time Was Her Secret Weapon Not Against Them But FOR THEM. I Love Jack Bogle. That’s Why I Will Defeat Him in the End. Except I Will Not Really Be Defeating Him. I Will Be LIBERATING Him. Jack Wants the Same Thing I Want.”

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

Go over to Bogleheads and FORCE them to take you in. Don’t take no for an answer. Call your Congressman if they won’t play ball. If he is too slow, then take it to Purcelleville PD Electronic Crimes Division and swear out a complaint about them blocking Honest Posting. Haven’t you been playing softball for far too long? It takes a tough bird to chicken out…. (or whatever it is you say Frank Purdue says.)

We all want the same things, Yogi.

So we will all put our minds together and figure out how to get from the horrible place where we are today to the wonderful place where we all deep in our hearts want to be tomorrow.

We are engaging in a learning process that has to play itself out.

We all have a role.

If we all do our parts, we will all share in the good results.

Forcing things won’t work. You are being foolish when you advocate force.

But doing nothing doesn’t work either. Being afraid to act is not the answer anymore than forcing things is the answer.

We all have to push a little bit — and then pull back when it becomes clear that the pain being experienced by those who have made mistakes in the past is too great.

Do you see?

My motto is: “Be as honest as possible without crossing the line and becoming uncharitable while also being as charitable as possible without crossing the line and becoming dishonest.”

Does that make sense to you?

I HAVE contacted my Congressman. I HAVE spoken to the police. I HAVE contacted lawyers for the purpose of bringing legal cases.

Using the resources available to us is a positive. So I will continue to do those sorts of things.

But you go too far when you say to “force” things and not to take “no” for an answer.

I put the owners of the Bogleheads Forum in a position where they had to ban me or permit the members of that board community to hear what the last 33 years of peer-reviewed research says. They FELT forced to ban me. Because to them the idea of permitting investors to learn what the research in this field says is unacceptable. But it’s not true that I forced them. What I forced was a choice. I forced them to choose. They could ban me (that’s the option they chose) or they could permit their readers to learn about the first true research-based model.

I didn’t leave them with other choices. I didn’t agree to self-censor myself so that those seeking to maintain a belief in the smelly Buy-and-Hold garbage could do so with my apparent blessing. I made clear that if my name was going to continue to appear at the forum, honest posts were going to appear there on a great variety of subjects. I was firm. I INSISTED on recognition of my right (and the right of all my fellow community members) to post honestly.

But I was not unyielding. I always left that that option of banning honest posting. I didn’t do what you advise here and refuse to take no for an answer. They gave the answer “no” to my demand that my right to post honestly be recognized and I accepted (for the time-being) their answer.

Why is that so important?

Because I become a Goon myself if I cross the lines that you advise me to cross.

My aim to to achieve good here. We can never achieve good through bad means.

I work it hard WITHIN the rules of the boards and blogs and within the laws of the United States and within the rules of civil human behavior.

That’s how I will continue to play it.

Did Rosa Parks do what you are advising here?

She did not.

She INSISTED on her right to choose for herself where she would sit on the bus.

But the first time she did this (this was 10 years or so before the famous incident), she was arrested for what she did and she accepted society’s unfortunate verdict. Her rights were ignored. But she remained within the society to fight for those rights another day. And she won the next fight.

WHY DID SHE WIN?

Because she wasn’t fighting only for herself. She was fighting for the entire society. Recognition of her rights was everybody’s business. In time, all others came to recognize how important it was to recognize her rights and they were given recognition. Rosa Parks changed the world because Rosa Parks loved the world. Her love for those who ignored her rights for a time was her secret weapon not against them but FOR THEM.

I love Jack Bogle. I love Mel Linduaer. I love John Greaney. I love you, Yogi.

That’s why I will defeat you in the end.

Except I will not really be defeating you.

I will be LIBERATING you.

You want the same thing I want. You want to be able to earn much higher returns while taking on greatly reduced risk.

You are going to see that little dream of yours come true.

I am going to see to it.

I am not going to agree to anything less than a 100 percent complete victory for Jack Bogle and for Mel Linduaer and for John Greaney and for Yogi Bear.

I took a sneak peak at the last page of our little saga and I can tell you that you achieve full and complete victory. You agree to permit honest posting on safe withdrawal rates and scores of other critically important investment-related topics because I refuse to permit you to settle for anything less.

I cannot do this without you, Yogi.

So I can never disrespect you.

And I can never be less than warm and friendly to you.

And I can never sell you out by agreeing to self-censor myself.

Some of the things you advise up above show a lack of respect for you that I can never permit myself to feel if I am to see that you achieve a full and complete victory.

Something that you have been failing to see since the morning of May 13, 2002, is that we are on the same side.

Your pain is my pain.

And my victory is your victory.

We are going to overcome your pain and lead you to a complete and total victory.

That has always been the plan.

We do that by being firm, yes.

But we also do it by being loving.

I will never be disrespectful of you or the other Buy-and-Holders.

I will ALWAYS take “no” for an answer.

For the moment.

For a time.

For the day.

Then I will be back the next day asking (not demanding!) once again that you free yourself of your chains and end your pain and enjoy the benefits of having been born at a time in the history of the world at which you get to be one of the luckiest investors in the history of the world just by learning what the last 33 years of peer-reviewed research in this field teaches us all about how stock investing really works.

I hope that all makes some sense to you.

Love is the answer.

I am sure.

I naturally wish you all the best that this life has to offer a person regardless of what investing strategies you elect to pursue.

Don’t let the bad guys get you down, my old Goon friend.

Rob