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

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“It’s Emotionally Painful Pointing Out People’s Mistakes to Them. We All Want to Be Liked. Telling People the Truth About Stock Investing at a Time When Prices Are High and They Don’t Want to Hear It Is Hard Word. That’s Why So Few People Are Willing to Push Too Hard re This Stuff.”

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

I think even as late as last year you were taking your “career” somewhat seriously, with website redesigns and videos. Your recent lack of effort shows complete capitulation.

There’s some truth to that, Anonymous.

I haven’t given up. I see this as the most important economic and political story of my lifetime. I know by the reaction I have seen over the first 12 years that there are millions of people who would like to be able to learn about a smart and simple and safe way to invest in stocks. I know that there are many, many investment advisors who would like to be doing honest work. I know that there are many academic researchers who would like to be doing honest work. I know that there are many personal finance journalists and bloggers who would like to be doing honest work. There are people who would like to be creating calculators that report accurate numbers and there are people who would like to be creating books that explain what the last 33 years of peer-reviewed research says and on and on and on.

So there’s huge interest. And there’s huge need. And I believe that as a society we will work up the courage and love it will take to overcome this problem. I believe that that is going to happen following the next price crash, which according to the research is not too far away. So intellectually I am a bigger believer in the importance of pushing the Valuation-Informed Indexing message than I have been at any time in the past. If you intended to suggest that I have somehow “capitulated” on the need for honest posting about investing questions, then you couldn’t possibly be more wrong.

But if you are intending to suggest that there has been a change in my level of public activity re these matters in the past year or two, you are right.

It’s painful for you Goons to acknowledge having made mistakes in your investing choices. That’s why as a society we are in the fix we are in. Guess what? It’s painful on my side too. It’s emotionally painful pointing our people’s mistakes to them.

There is something in human nature that makes this hard. We all care what our friends and neighbors and co-workers and fellow community members think of us. A simple way of putting it is — We want to be liked. If you want to see how that affects what people who are informed about the peer-reviewed research talk about it, take another look at the blog entries describing the e-mails that I exchanged with Wade Pfau.

Wade LOVED exploring this stuff. The 16 months he spent working with me were the happiest 16 months of his life. He used to stay up late just thinking about this stuff and plotting out new ways to help millions of people by exploring all of the many powerful insights we have mined but kept secret over the past 33 years. He was talking about winning a Nobel prize. He couldn’t believe his good fortune in having stumbled upon a research topic that would do so much good for so many people, a research topic that would liberate millions to live far richer lives and one where all of the data was on one side so the findings were clear and sharp and pointed to hundreds of exciting real-world implications. After you take that stuff in, investigate why Wade flipped to the Goon side.

Part of it is the obvious stuff. He wanted to be successful in his career. He has financial responsibility for two small children. He didn’t want you Goons destroying his means of making a living. He saw that Jack Bogle supported you and that scared him. He knows that Bogle has money and power and connections and he knows that he doesn’t hesitate two seconds to put those advantages to use destroying anyone who dares to “cross” him by telling the truth about what the last 33 years of peer-reviewed research in this field tells us about how stock investing works. Wade’s fears over what the Buy-and-Hold Mafia would do to his career were the primary reason why he agreed to stop doing research on Valuation-Informed Indexing and to stop promoting the research he had already published with me at the time he flipped.

But there was also another factor at play.

Wade thinks of himself as a good person and for good reason — he IS generally a good person (I of course believe this to be so of all of my many Buy-and-Hold friends). So it wasn’t an easy thing for him to do to make that flip; Wade isn’t in the habit of going along with massive acts of financial fraud that are likely to destroy millions of middle-class lives. When people engage in behavior like that, they need to rationalize the decisions they make as representing something more than the advancement of their self-interests. If you listen closely to the things that Wade was saying when he felt pressures being brought to bear on him, you will hear what he was telling himself. He was telling himself that it is important to be part of the club, not to be an outsider, not to say things that stir up trouble or that makes people feel uncomfortable with choices they have made for themselves or have encouraged others to make.

This comes across clearly in one of the quotes from Wade that I use in the slider at the top of all the pages at this blog. Wade said at the Bogleheads Forum one time something to the effect of: “You see people who push market timing as slimey sellers of snake oil. I don’t want to be seen as that sort of person.” Wade wants to fit in. We ALL do. I’m like all of the other humans. I want to fit in too. So I feel pain just like Wade and just like all of the others when I am painted as some sort of promotor of snake oil or something along those lines.

I’ll tell you something that I find odd that I have seen play out numerous times. I sometimes have people show skepticism over the ideas that I advance and I sometimes have people show a good deal of acceptance of those ideas. Guess which type of experience hurts the most?

It hurts more when people show acceptance.

Not because I don’t want people to accept the ideas — I obviously do want that. But because of all the social pressures that people feel not to tell the truth about how stock investing works, I usually do not gain much traction even among people who accept the ideas. A perfect example is the blogger named “Mr. Money Mustache.” I had dinner with Mr. Money Mustache at one of the financial blogger conferences. We had a great and long conversation about all sorts of things. He’s a super guy and he has a hugely successful blog. He found great merit in Valuation-Informed Indexing and would obviously love to share it with all his readers. And if he promoted the idea, this would be over. He has a huge number of readers and they would share it at other places and The Great Wall of Corruption would come tumbling down.

Mr. Money Mustache elected not to write about Valuation-Informed Indexing at his site. He didn’t offer me much of an explanation of why he made that choice. He said something about how, no matter how great an idea is, there are people who will find ways to criticize it. There clearly is something that causes him to hold back. This is not a fellow who is afraid of offending corporate interests. He once let go of an advertiser who was bringing him thousands of dollars per month because it insisted that he stop using obscenities in his articles. He not only told the advertiser to go to hell, he told the story on a stage at the financial bloggers conference. So he is not the type whom you would expect to be afraid to go up against the big money boys who push all the smelly Buy-and-Hold garbage.

So why did Mr. Money Mustache not blow the whistle on this massive act of financial fraud?

I think it’s that concern about not being liked that affected Wade and that affects all the humans, including me. Mr. Money Mustache wants to be liked. And he IS liked. His readers LOVE it that he includes obscenities in his articles. His attitude toward that sort of thing is the secret to his success. People don’t read him just because he is intelligent. They read him because they LIKE him. And lots of his readers are Buy-and-Holders (how could it be otherwise when honest posting about what the last 33 years of peer-reviewed research says is banned at every large investing site?). So, if Mr. Money Mustache spreads the word about what works in stock investing, he is going to face social disapproval. There’s no getting around it. He doesn’t want to face social disapproval. So he holds back, at least for the time being.

It hurt me more to be rejected by Mr. Money Mustache than it hurt me to be rejected by bloggers who believe in Buy-and-Hold. I believe that both types of bloggers should be permitting honest comments at their sites. But the rejection hurts more when it comes from someone who is not emotionally invested in Buy-and-Hold and who is capable of appreciating the arguments for Valuation-Informed Indexing on an intellectual level. It’s because things seem more hopeless when it happens that way. When I am rejected by a Buy-and-Holder, there is always the hope that that person can be convinced by the arguments and come around in time. When I am rejected by someone who sees the merits of the arguments, the natural question in the back of my mind is — What can I ever hope to do to change this?

I have seen more of that sort of thing in recent years. In the early days, most of the rejections seemed to be the result of intellectual disagreements or misunderstandings. Lots of people really believed in Buy-and-Hold back in 2002. Doubts about the strategy have been growing since the onset of the economic criss in late 2008. So today more of the rejections that I face are rooted in these concerns about social disapproval and fitting in. So the rejections have become harder for me to take than they were in earlier days.

So, yes I have cut back the public work that I do promoting the VII concept. I still do things. I obviously respond to questions and comments from you Goons. I am giving a presentation at FinCon14. I had a blogger write to me last week and request a Guest Blog Entry. I of course supplied that within 24 hours. I work on the book when I have time to do so. I review old articles and run the calculators to sharpen my thinking and my arguments. I keep busy with this stuff.

But I am less inclined to show up at blogs and enter comments pointing out the dangers of Buy-and-Hold. I know that it is important that I do so and I know that I have a responsibility to force myself to do as much of that sort of thing as I am able to do. But it hurts to feel social rejection over and over and over again. So I have cut back. It has become hard for me to face the negative emotions that follow from telling people the truth about stock investing and causing them to feel the pain that comes from seeing that they have made terrible mistakes that have done great harm to their financial futures.

Does that help, Anonymous?

I continue to see great value in the VII concept and I continue to feel a responsibility to spread the word far and wide. But it hurts to do so. And in recent days I have been inclined to give myself a bit more of a pass re doing the hardest parts of the job. I feel that I have done a lot and that I deserve a bit of a break. I expect to get back to that sort of work in days to come. I have hopes that that sort of work will become easier following the next crash. But, yes, for the time-being I have “capitulated” in certain respects. I still believe in the concept as strongly as I ever have. And I of course possess zero willingness to post dishonestly re any aspect of the stock investing experience. But I have taken a lot of blows over the past 12 years and they hurt and I am not today in a mood in which I feel too much excitement over the prospect of taking on too many more. I have pulled back because it hurts too much emotionally to be as out there as I have been for most of the past 12 years.

Teling people the truth about stock investing at a time when prices are high and they don’t want to hear it is hard work. It’s obviously not hard work in a physical sense. And I wouldn’t say that it is all that hard in an intellectual sense either — perhaps it is moderately hard in an intellectual sense. But this is VERY hard work emotionally. It’s draining. It takes a lot out of you. That’s why so few people are willing to push too hard re all this stuff.

I hope that makes at least a small bit of sense to you, Anonymous.

I wish you all the best that this life has to offer a person.

Rob

“Why Didn’t the Wall Street Journal Article Reporting that the Wall Street Con Men Who Push Buy-and-Hold Strategies ‘Leave Out Half the Story’ Go Viral on the Internet?”

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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,

What could a non-goon possibly discuss on this site? Unless they agreed with you 100% and just regurgitated your nonsense you would label them a goon. This site certainly doesn’t need anymore long winded ramblings from “non-goons” you fill that niche more than enough.

Here are some possible topics:

1) Why does Jack Bogle say that there is never a need for an investor to lower his stock allocation by more than 15 percent, even when valuations reach insanely dangerous levels?;

2) Why hasn’t Jack Bogle done something about the terrorist tactics that were used to silence Wade Pfau, the co-author of the research that I did that showed that investors can lower the risk of stock investing by 70 percent by abandoning Buy-and-Hold strategies?

3) Why didn’t the commission that was appointed to identify the cause of the economic crisis assign most of the blame to the continued promotion of Buy-and-Hold strategies for 33 years after the peer-reviewed research showed that the relentless promotion of such strategies ALWAYS caused an economic crisis?;

4) Why didn’t the Wall Street Journal article reporting that the Wall Street Con Men who push Buy-and-Hold strategies “leave out half the story” go viral on the internet?;

5) Why didn’t Wade Pfau learn at Princeton that there is zero support in the peer-reviewed research for the key Buy-and-Hold claim that there is no need to practice price discipline when buying stocks?;

6) Why does Shiller often fail to make the critical distinction between long-term timing (which always works and which is 100 percent required for every investor hoping to have anything more than a zero hope of long-term investing success, according to Shiller’s research) and short-term timing (which the peer-reviewed research in this field indicates can never work)?

7) Why haven’t all of the Old School SWR studies been corrected in the 12 years since the errors in them became public knowledge?;

8) Why haven’t sites like Motley Fool and Morningstar and Index Universe and Early Retirement Forum and Bogleheads Form and Oblivious Investor and Monevator honored their promises to protect us from you Goons?;

9 How long should the prison sentences assigned to those who have put up posts in “defense” of Mel Lindauer and John Greaney and my good friend Jack Bogle be, given the circumstances that apply?; and

10) Why don’t all the people who would like to be making money on the internet take advantage of the huge opportunity that has been presented to them to become pioneers in teaching millions of middle-class people about the first true research-based strategy?

I hope that helps a bit, Anonymous.

Rob

“My Guess Is That Jack Bogle’s Confidence Level in Buy-and-Hold Is Something in the Neighborhood of 70 Percent. Enough to Permit Him to Rationalize That It Is Okay to Continue to Promote the Concept. But Not Great Enough to Justify Him Not Telling Every Person Who Comes to That Board About His Doubts.”

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

I suspect you are implying that the bogleheads thread is missing your input. Is that correct?

No, that’s not correct.

The thread is missing the honest input of THOUSANDS of good and smart people who should be contributing to that board community in an honest way but who today do not feel safe doing so.

Let’s take one hugely important example — my good friend Jack Bogle.

Jack obviously knows that Yale Economics Professor Robert Shiller has published research showing that there is precisely zero chance that Buy-and-Hold could ever work for a single long-term investor, right? WHY THE HECK ISN’T HE TELLING PEOPLE THAT AT THAT BOARD IN PLAIN AND SIMPLE AND CLEAR AND DIRECT LANGUAGE?

Has my good friend Jack gone fuckin’ insane?

Has he?

That’s a fair question, isn’t it?

Jack should have come out in 1981 and gave a speech saying that there was new research that cast doubts on the Buy-and-Hold strategy as it had been developed in its first-draft form by Bogle and the other Buy-and-Hold Pioneers. Had he done that, there would be no problem today. Had he done that, we would all be Valuation-Informed Indexers today.

Jack didn’t do that. He is one of the flawed humans. He messed up.

Okay.

So what do the rest of us do about that?

We could cover up for Jack, right? That might work for a few years, right?

But there’s a downside, isn’t there?

If we engage in a cover-up, we are engaging in financial fraud, a felony under the laws of the United States. We land in prison somewhere down the line. Perhaps the cover-up idea is not our best thought! Just perhaps!

Are there any other options?

There are.

The other option is to come clean.

That’s what I proposed on the morning of May 13, 2002.

Would there have been prison sentences had we opened the entire internet to honest posting on the morning of May 13, 2002?

I don’t think so. It is possible that there were some terrible things that happened before that date that I don’t know about and that I am wrong about this. But, going by what I know, there would not have been prison sentences if we all had come clean on the morning of May 13, 2002.

How about today?

I don’t see any way to avoid prison sentences today. But I am not God. Perhaps I am wrong. It has been known to happen.

Does it even matter?

We are all obviously better off if we come clean today than we will be if we come clean tomorrow. So let’s make it happen today, you know? Why the f not?

I don’t know how much confidence Bogle has in Buy-and-Hold.

My confidence is zero. I don’t believe that his confidence is zero. If it were zero and he continued promoting it, he would be The Frank Underwood of Personal Finance, a monster. I do not think of my dear friend Jack as a monster. So I do not view it as even remotely possible that his confidence is zero.

How about 100 percent? Could Jack’s confidence level in Buy-and-Hold be 100 percent?

No, that’s not possible. If it were 100 percent, he would be happy to hear people express contrary views and he obviously is not even a tiny bit happy to hear people express contrary views. So we can rule out 100 percent.

It’s not 0 percent and it’s not 100 percent. It’s something between those two.

Could it be 50 percent?

Perhaps.

I don’t know.

I cannot see into Jack’s mind.

My guess is that Jack’s confidence is something in the neighborhood of 70 percent. Enough to permit him to rationalize that it is okay to continue to promote the concept.

BUT NOT GREAT ENOUGH TO JUSTIFY HIM NOT TELLING EVERY PERSON WHO COMES TO THAT BOARD ABOUT HIS DOUBTS!

My good friend Jack has to tell us about his doubts. He MUST do this. Or he will go to prison too. And that is just too, too, too sad.

Do you see, Anonymous?

We don’t just need Rob Bennett contributing honestly to the Bogleheads Forum. We need Jack Bogle contributing honestly to the Bogleheads Forum.

And Bill Bernstein.

And Wade Pfau.

And Larry Swedroe.

And Scott Burns.

And J.D. Roth.

And Mike Piper.

And Carl Richards.

And Michael Kitces.

And Bill Schultheis.

And on and on and on and on and on.

We need EVERYONE contributing their honest thoughts to every investing board and blog on the internet.

Do you see?

Rob

“There Are Thousands of Researchers Who Would Love to Be Doing Honest Research Today. But, Like Wade, Many of Them Have Families and, Thus, Do Not Dare to ‘Cross’ My Good Friend Jack Bogle and the Other Wall Street Con Men Trying to Keep the Buy-and-Hold Fantasy Alive Another Week, Another Month, Another Year.”

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

who exactly is in the buy and hold mafia and how did they get so much power? do you have any real names of people who wield this type of influence over the universe?

Jack Bogle.

Bill Bernstein.

Larry Swedroe.

Scott Burns.

The owners of the Motley Fool site.

The owners of the Index Universe site.

The owners of the Morningstar.com site.

The owners of the Bogleheads.com site.

And on and on and on and on.

They got their power legitimately. There really was peer-reviewed research published in 1965 that appeared to many good and smart people to support the Buy-and-Hold concept. That wasn’t fraud. That was good stuff. I can go a step farther than that. I can say that that was heroic stuff. The Buy-and-Hold Pioneers took us out of the dark ages re our understanding of how stock investing works. Their huge insight — that short-term timing never works — is the second most powerful insight ever developed in the history of investing analysis. We all owe a great debt of gratitude to the Buy-and-Hold Pioneers.

It became fraud sometime between 1981, when Yale Economics Professor Robert Shiller published his “revolutionary” (his word) research showing that, while it is indeed so that short-term timing never works, long-term timing (price discipline) ALWAYS works and is ALWAYS 100 percent required for investors hoping to have any realistic hope of long-term success, and the morning of May 13, 2002. On the morning of my famous post pointing out the errors in the Old School SWR studies, the Buy-and-Holders responded with an insane level of defensiveness. So they obviously were aware on at least one level of consciousness that the research showed that Buy-and-Hold could never work. I have seen no evidence that they were aware of that in 1981. It appears to me that their confidence that Buy-and-Hold could be defended in civil and reasonable debate gradually declined over those 21 years until things got to the point where they stood on the morning of May 13, 2002. I can obviously only give personal testimony as to events that took place after that date.

They keep their power through the use of brutal intimidation tactics. The most obvious case is where they threatened to get Academic Researcher Wade Pfau fired from his job if he continued to publish and promote honest research. There are thousands of researchers who would love to be doing honest research today. But, like Wade, many of them have families and, thus, do not dare to “cross” my good friend Jack Bogle and the other Wall Street Con Men trying to keep the Buy-and-Hold fantasy alive another week, another month, another year.

The con men want to come clean. It was an honest passage in Bogle’s book that taught me that the Old School SWR studies were in error. Bernstein gave a partly honest response when one of you Goons sent him an e-mail asking if the methodology used in the Old School studies is analytically invalid. Swedroe stood up to Linduaer once and got himself banned from the Bogleheads Forum. Pfau wrote to the authors of the Trinity study and asked them to correct the errors in their study. And on and on and on.

The problem is that the Wall Street Con Men know that, if they come clean, they go to prison. Bogle should have acknowledged his mistake when Shiller first published the research discrediting the Buy-and-Hold Model. He rationalized not doing so. I presume that he told himself that it would all somehow work out. And now that 33 years has passed, it is 1,000 times harder for Old Saint Jack to work up the courage to say the Three Magic Words.

Everybody who works in this field knows that his career will be destroyed if he tells the full truth re these matters. So everyone keeps it zipped.

But keeping it zipped re financial fraud only causes the financial fraud to spread. Financial fraud is a cancer. The longer it continues, the more lives are ruined. The more lives that are ruined, the longer are the prison sentences that are ultimately assigned to those participating in the massive act of fraud.

My job is to bring it to an end and get us back to the original Buy-and-Hold idea — rooting one’s strategies in the peer-reviewed research.

I hope that helps a bit, Laugh.

Rob

“I Don’t Seek to Take Over Any Discussions. It Just Happens. The Reason Why It Happens Is That the Things I Say Make So Much Sense to Most People and Most People Have Never Before Heard Anyone Say These Things. So They Naturally Are Interested and Want to Learn More. So They Naturally Ask Lots of Questions. And the Next Thing You Know One of the Buy-and-Holders Feels Bad That I Have Yet Again ‘Taken Over’ a Discussion.”

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

What they take issue with is the way you seek to take over every discussion and make it about yourself and your views.

I don’t seek to take over any discussions, Sensible.

It just happens.

The reason why it happens is that the things I say make so much sense to most people and most people have never before heard anybody say these things. So they naturally are interested and want to learn more. So they naturally ask lots of questions. And the next thing you know one of the Buy-and=Holders feels bad that I have yet again “taken over” a discussion.

There is a solution to this problem. The solution is to open the entire internet to honest posting on the last 33 years of peer-reviewed research. Then there will be hundreds or perhaps thousands of people saying all the same things that I say. No one will need to ask lots of questions because they will have had all their questions asked and answered many, many times. People will have access to all the information they need and they will decide for themselves what to believe and there will be no problem.

The problem today is that there are just not enough people advocating Valuation-Informed Indexing. So it shocks people when I advance perfectly natural and understandable claims like “the Old School SWR claims get the numbers wrong” or “the promotion of Buy-and-Hold strategies caused the economic crisis” or “we will likely see a price crash of 65 percent within the next year or two or three.”

There’s nothing odd or radical or extreme about these claims. They follow logically from an understanding of the last 33 years of peer-reviewed research. But they SOUND odd and radical and extreme to most people because they have never heard such claims before. The claims scare people because they have their retirement money invested pursuant to Buy-and-Hold principles. So these claims are always going to attract a lot of attention until we reach a point at which everyone has heard them and understands what is behind them.

To get to that place, we need to open every site to honest posting. There is no other way to get the job done.

I have been advocating this for 12 years now. Stop opposing me and support me instead and we can make this happen together. That’s the answer. If you don’t want people to be shocked when they hear research-based stuff, you need to stop supporting the Ban on Honest Posting. People are not shocked by claims they hear on a daily basis. Let’s work together to insure that every investor on the planet hears about Valuation-Informed Indexing on a daily basis and therefore no longer feels the tiniest bit of shock when these ideas are advanced at internet boards and blogs.

This came up just the other day. One of you Goons made a good point by saying that I wouldn’t be banned at any site if I limited myself to expressing these ideas only on rare occasions rather than on every thread at which they are relevant. I want to express them on every thread! That’s how we will all get to a point where no one will be shocking by the ideas. We all want that. You don’t want the discussions to be about me and I don’t want the discussions to be about me. Let’s get to work! Let’ get THOUSANDS of people talking about these ideas.

People need to be incentivized to advance these ideas. You Goons punished Wade Pfau for publishing honest research showing the dangers of Buy-and-Hold. Let’s take it in the other direction. Let’s applaud him for the research that he co-authored with me. Let’s award him a Noble prize. Let’s invite him to post honestly re what he really believes at the Bogleheads Forum. Let’s write threads about his e-mail to the authors of the Trinity study asking them to correct the errors in their study and ask the Trinity authors to respond.

Let’s change the world! For the better!

I’m ready to get started today.

Are you?

If you’re not, then stop complaining that I get so much attention when I put forward these ideas. The only reason why I am not sharing the attention with thousands of others is that you Goons have intimidated the thousands of others into silence. STOP DOING THAT!

Rob

“The Valuation-Informed Indexers Have Been Placed in a Ghetto. It’s a Ghetto in Which They Do Not Possess the Same Rights as the Buy-and-Holders. It’s a Ghetto in Which They Keep Their Most Powerful Insights to Themselves. It’s a Ghetto in Which They Do Not Say “Buy-and-Hold Is Dangerous” or “That Claim Is Wrong” or “Bogle Is Contradicting Himself.” It Is a Gheto in Which They Watch Their Step and Are Careful Not to Offend Their Betters. Not This Boy.”

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

Let’s play Jeopardy.

Answer: the peer-reviewed research of the past 33 years needs to be discussed in every THREAD in which Buy-and-Hold “ideas” are advanced.

Question: Why has Rob Bennett been banned from every major finance board?

That’s a super comment, X. You cut through a lot of b.s. and got straight to the heart of things with that comment. Good for you.

I understand the point you are making.

And I stand by what I said.

The findings of the last 33 years of peer-reviewed research need to be discussed in EVERY FREAKIN’ THREAD in which they are relevant. That is indeed the Rob Bennett position.

And, yes, I think it would be fair to say that that is a big part of the explanation of why I am banned at every major finance board. What you are saying is true enough in that it explains the reality. But I am right on the ethical matter.

You Goons are correct in a hyper-techncal sense when you say that Shiller’s ideas are discussed at the Bogleheads Forum. There are people there who believe in Shiller’s ideas. And they post. And the posts stay up. And people read them. All of that is so.

But the comments they make are superficial. When the comments go deep (as they must if people are to be persuaded of the merit of Valuation-Informed Indexing strategies), the Buy-and-Holders step in and send out signals that these posters have “gone too far.” If the poster pulls it back, he remains to post another day. If the poster ignores the warning, he is removed. That’s the way it works.

The Valuation-Informed Indexers have been placed in a ghetto. It’s a ghetto in which they do not possess the same rights as Buy-and-Holders. It’s a ghetto in which they keep their most powerful insights to themselves. It’s a ghetto in which they do not say “Buy-and-Hold is dangerous” or “that claim is wrong” or “Bogle is contradicting himself.” It is a ghetto in which they watch their step and are careful not to offend their betters.

Not this boy, X.

Not ever. Not by a long shot.

Do Buy-and-Holders feel free to post in every freakin’ thread?

Has that ever been in question? Has there ever been any controversy about it?

Then why are there questions and controversies about whether Valuation-Informed Indexers should be permitted to do the same?

You have hit the mark with this comment. The question you raise here is the question that has been on the table for 12 years now.

I post honestly or I post not. If I see someone asking for a link to a retirement calculator and then I see some Buy-and-Holder link to FIRECalc, I am going to respond with a link to The Retirement Risk Evaluator. I’ll do it every time. I will never offer any apology whatsoever. If asked, I will explain that the reason why I post honestly re these matters is that I do not want to see my friends suffer failed retirements. I will add that I look forward to the day when we ALL post honestly and when Buy-and-Hold has been buried 30 feet in the ground, where it can do no further harm to humans and other living things.

No apologies whatsoever. None.

Now —

The Buy-and-Holders have the same right. The Buy-and-Holders believe what they believe and they have every right to share what they believe with others.

So what do we do?

Both sides have to respect the other side.

That’s how this ends.

The reason why it upsets people when I post about Valuation-Informed Indexing insights on every thread on which they are relevant is that many investors HAVE NO IDEA that there is 33 years of peer-reviewed research showing that Buy-and-Hold cannot work. I know this to be so because I had no idea of this myself prior to May 13, 2002. People don’t even know that there is a controversy. So it upsets them to find out that there are DOUBTS about this Buy-and-Hold stuff that they are using to finance their retirements.

The Buy-and-Holders are playing a very, very, very dangerous game. They are tricking people. They are leading people to believe that there is a consensus that Buy-and-Hold works when in reality there is now 33 years of peer-reviewed research very much cutting the other way.

EVERY INVESTOR ON THE PLANET NEEDS TO KNOW THAT THERE ARE TWO ACADEMIC SCHOOLS OF THOUGHT AS TO HOW STOCK INVESTING WORKS, NOT ONE.

When that is out in the open, we won’t see the ugliness that has characterized the first 12 years of our discussions. At that point, Valuation-Informed Indexers will be commenting on every thread at every board and no one will blink an eye about it. Everyone will understand that that’s just what we all should expect given the 33 years of peer-reviewed research supporting the new model.

And that’s when we will start to see the popularity of Valuation-Informed Indexing grow by leaps and bounds. People are not going to risk their retirement money on a strategy until they have heard it explored from many angles and in great depth. It is when as a society we acknowledge that those promoting research-based strategies have EVERY RIGHT IN THE WORLD to post at every thread on every board and blog on the internet that VII will take off on its way to becoming the dominant model for understanding how stock investing works.

Bogle has to give an “I Was Wrong” speech. Or, at the very least, he needs to give an “I’m Not Sure” speech. That will get written up on the front page of the New York Times. And then the ugly side of this comes to an end. From that point forward, it’s good stuff piled on top of good stuff piled on top of good stuff. For every last one of us. We are all on the same side in the final analysis, to be sure.

Every freakin’ thread, X.

That’s what I ask.

And that’s what I will get.

The length of your prison term will be determined by how long it takes me to pull it off. I vote for the close of business today, the timing choice that produces the shortest possible prison sentence for you and your Goon pals.

Don’t let the bad guys get you down, man.

Rob

 

“The Wall Street Con Men Make Out a LOT Better If We Permit Honest Posting. They Want to Sell Stocks. That’s How They Make Money. We Can Now Tell People How to Reduce the Risk of Stock Investing by Nearly 70 Percent. The Biggest Objection People Have to Buying Stocks Is the Risk and We Can Pretty Much Eliminate It! That’s Huge.”

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

I see we’ve inflated up to five wins. Each new “win” strengthens your argument – is that how it works?

There are five real wins:

1) When I take over the Bogleheads Forum, all posters (both Valuation-Informed Indexers and Buy-and-Holders) will feel safe posting their honest views. That provides a great learning experience for every one of us;

2) Once we open up the internet to honest posting, we can bring the economic crisis to an end. A 65 percent price crash is going to hurt a lot. But that 65 percent crash is optional. It is crazy for investors to value stocks at one-half of their fair value. We should tell people the truth about what the last 33 years of peer-reviewed research says. Then it would be impossible for the P/E10 level ever to drop much below 15. We would still suffer a price drop. But not anything near as devastating as what we will see if the Ban on Honest Posting remains in place;

3) The prison sentences for those who have put up posts in “defense” of Mel Linduaer and John Greaney are obviously going to be shorter if they come clean prior to the crash. It is the extent of the anger felt by the millions of middle-class people who are seeing their financial futures destroyed that will determine the length of the prison sentences. People are obviously going to be a lot less angry if we avoid a big price crash;

4) The Wall Street Con Men make out a LOT better if we permit honest posting. They want to sell stocks. That’s how they make money. The last 33 years of peer-reviewed research is the biggest boon to those trying to sell stocks ever seen. We can now tell people how to reduce the risk of stock investing by nearly 70 percent. The biggest objection people have to buying stocks is the risk and we can pretty much eliminate it! That’s huge.

5) Bloggers benefit big time if we open the internet to honest posting. There are huge opportunities to write articles on the 33 years of research that we so far have not been permitted to discuss and to develop accurate calculators and on and on and on. We will be seeing many millionaires made because of these huge advances. That’s a good thing, no?

It’s a win/win/win/win/win.

If anything, I undersold it. If I spent some time on this, I am confident that I could ADD some wins to the count. Perhaps it is an 8-win thing or a 12-win thing. It’s a five-win thing at a minimum!

This is truly good stuff, truly exciting stuff.

That’s my sincere take, in any event.

Rob

Goon Poster: “Rob, If You Actually Had Evidence of Financial Fraud, I’m Sure You Would Have Brought It to a Court of Law By Now.”

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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, if you actually had evidence of financial fraud I’m sure you would have brought it to a court of law by now.

Why did Madoff get away with his fraudulent fund for so long, Sensible?

Do you think it was hard to see that it was fraudulent? It wasn’t. There was a CPA who did the numbers and showed with 100 percent certainty that the Madoff fund was fraudulent. He wrote to the SEC and told them. They did nothing.

Then the fund collapsed. People lost most of their retirement money. THEN the authorities acted.

I am 100 percent in favor of having this matter addressed in a court of law TODAY. That’s better for every single person involved. Doing it today would mean your prison sentence would not be as long. Doing it today would mean that all the Wall Street Con Men could move on to doing productive work again. Doing it today would mean that we could bring this economic crisis to an end and enter the greatest period of economic growth in our history. Doing it today would mean that I could get my $500 million settlement check in hand and take over ownership of the Bogleheads Forum and all that good stuff. It’s a win/win/win/win/win.

Guess what?

IT IS NOT UP TO ME.

I can say that I think it would be better to do it today. And I do. But I cannot make it happen by myself. We need to get lawyers involved. We need to get prosecutors involved. We need to get journalists involved. And on and on.

For that to happen, people need to feel safe about posting honestly.

Wade Pfau almost made it happen. Wade and I together could have gotten this 12-year saga written up on the front page of the New York Times. That would have been the end of Buy-and-Hold. The entire Get Rich Quick house of cards would have come tumbling to the ground in six months.

But it turns out that Wade is one of those darn humans! He is responsible for two small children. He didn’t take to the idea of losing his job. He noticed how brutally abusive you Goons are and how unwilling Bogle is to get involved and he took a pass on seeing his career destroyed for the “crime” of co-authoring the most important piece of peer-reviewed research published in the last 3o years.

I am 100 percent in favor of going to court TODAY, Sensible. It’s not my call.

That’s not how Get Rich Quick schemes work. Get Rich Quick schemes are POPULAR until they bust. That’s what pulls people like you in! You are in the process of losing most of your money. But it does not make you happy to lose most of your money. You are lying to yourself. You are deceiving yourself.

You will be mad like everyone else when the bubble bursts. Perhaps you will demand your own imprisonment! That would be a Twilight Zone twist, would it not?

I wish that I could spare you the pain. I wish that I could spare Bogle the pain. I wish that I could spare millions of middle-class investors the pain.

But I am not superman, my old friend. I am some guy whose only claim to expertise in this field is that I figured out how to get my words posted to the internet.

I am going to bring the thing to court on the day it becomes possible for me to do so successfully. I am not going to lollygag. I am going to act with great dispatch. But I need freakin’ lawyers who will take the case on a contingency basis to proceed with the civil suits. And I need freakin’ prosecutors to proceed with the criminal actions.

I get your point. The cases should have been brought YEARS ago. I am 100 percent with you re the core point. I contacted lawyers in September of freakin’ 2002!

But it is not my call.

The Buy-and-Hold Crisis hurts everyone alive on the planet today. We all need to pull together. This is not a one-man job. I didn’t see that in September of 2002. I sure as heck see it today.

I will do my part to get this thing going as soon as humanly possible. You have my pledge.

But there are limits to what I can pull off. This is bigger than just me.

I will continue to seek people willing to help out. But I cannot do this alone. It is just too big.

So you are going to need to be a bit patient, whether you like the idea or not and whether that makes sense to you or not. It’s one of those darn realities that we all just have to accept.

I hope that helps a bit.

My best wishes to you and yours.

Rob

“It Is All Going to Flip Following the Next Crash. If You Want to Experience a Taste of What That Is Going to Mean for You Goons, I Urge You to Enter the Word ‘Phillies’ Into a Search Engine and Then Read What the Fans Say About the General Manager Today Compared to What They Were Saying a Few Years Back. It’s a Thin Line Between Love and Hate.”

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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,

If you continue this pattern of hate and anger, you will spend your remaining years in misery. Instead, find something of real value to do with you life versus this fantasy you have with “goons”.

I obviously feel otherwise, Anonymous.

We are the luckiest generation of investors ever to walk Planet Earth. No earlier generation has had 33 years of peer-reviewed research available to them showing them how to reduce the risk of stock investing by 70 percent while also increasing their returns enough to permit them to retire five to ten years sooner. That’s exciting stuff.

You Goons are the only thing standing in our way.

Wade Pfau is not the only academic researcher who would like to be free to do honest work. There are THOUSANDS of academic researchers who would like to be spending their life energies helping us all out. That was their dream when they began their Ph.D. work. That was the driver behind their years of hard study. When ONE academic researcher is freed to do honest work, ALL academic researchers are freed to do honest work. I cannot wait to see what these guys and gals come up with!

It’s the same story with the Wall Street Con Men. They would LOVE to be doing real, honest, important work.

Why the heck do you think Jack Bogle included language in his book showing me that the numbers in the Old School safe-withdrawal-rate studies are wildly off the mark?

Why the heck do you think Bill Bernstein devoted an entire chapter of his book to honest reporting on what the last 33 years of peer-reviewed research tells us while obviously being very, very aware of just how ruthlessly he would be attacked by his peers if he was perceived as having gone “too far” by including an entire chapter of honest reporting rather than just a few paragraphs here and there, as is the usual custom among the “experts” of today?

Why the heck do you think Larry Swedroe was honest enough in his postings at the Bogleheads Forum to bring on Mel Lindauer’s ire and get himself banned from the forum for a time?

Why the heck do you think that the Wall Street Journal took the risk of publishing an honest column pointing out that the Buy-and-Holders have been “telling only half the story” for all these years and telling sick and twisted Get Rich Quick lies about the other half?

We have learned something important during the Buy-and-Hold years, Anonymous. We have learned that millions of middle-class investors are VERY interested in knowing what the peer-reviewed research says. It’s the claim that the Buy-and-Holders make (falsely, but still…) that their strategy is rooted in peer-reviwed research that made it so popular in the first place. All that I am saying is that we now need to take it to the next step. I think it would be fair to say that lying about what the research says has not been working out so great in recent years. Why not take the idea of rooting one’s strategies in the peer-reviewed research to the next step? Why not permit HONEST AND ACCURATE reporting of what the research says? I think that would make a big difference. I think that would be a big positive.

We have seen that 80 percent of all of our communities like the idea of permitting honest posting. Why not give them what they want? It would not only help the millions of middle-class investors whose lives have been destroyed by the reckless and relentless and ruthless promotion of the Buy-and-Hold garbage. it would allow us to recover from this economic crisis and thereby put millions of middle-class people in a mood in which they might be willing to reduce the prison sentences assigned to you Goons a bit. Is that not so? Is that idea not more than a little bit appealing to you, Anonymous? Tell the truth.

We need to overcome you Goons.

There’s not getting around it.

We have the tools that we need available to us. Every site has rules prohibiting the tactics that you have employed to block millions of people from learning what the peer-reviewed research says. We have adopted laws making financial fraud a felony, which means prison time for those found guilty of it. Why not enforce those site rules and U.S. laws for the benefit of everyone involved? My feeble brain is not even able to imagine any downside. Has your far superior Goon brain ever been able to come up with anything?

I believe that it is all going to flip following the next crash, Anonymous. If you want to experience a taste of what that is going to mean for you Goons, I urge you to enter the word “Phillies” into a search engine and then what the fans say about the general manager of the club today compared to what they were saying a few years back. It’s a thin line between love and hate, my old friend. Pushing Get Rich Quick garbage makes you the toast of the town for so long as the Get Rich Quick garbage appears to be paying off. When the debt comes due, it’s a very, very, very different story.

We are as a nation of the verge of the biggest breakthrough in our understanding of how stock investing works ever attained in our history. I view that as a super cool reality. I am proud to be playing a big part in bringing it about.

I wish you all the best things that this life has to offer a person, my long-time abusive posting friend.

Rob

“All the Other Stuff (the Substantive Stuff) Follows Easily Once We Come to Terms With the Massive Act of Financial Fraud. People Don’t Like to Talk About the Financial Fraud. We All Have Participated in it in at Least Some Small Way. We Are Ashamed of Ourselves and of Our Institutions. So We Try to Pretend That Shiller’s Research Was Never Published or Doesn’t Matter or Doesn’t Say What It Says.”

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

Your only regular interaction on this subject is with the “goons” and therefore a large percentage of your output is designed to provoke a reaction from the “goons”.

You’re wrong, Evidence.

The stuff I write today is written to show millions of middle-class people how their financial futures were destroyed. We need as a society to make peace with what has happened. That’s the first step. All the other stuff (the substantive stuff) follows easily once we come to terms with the massive act of financial fraud.

People don’t like to talk about the financial fraud. We all have participated in it in at least some small way (for example, I was afraid to post about the errors in Greaney’s study for the first three years in which I posted at Motley Fool). We are ashamed of ourselves and of our institutions. So we try to pretend that Shiller’s research was never published or doesn’t matter or doesn’t say what it says or doesn’t imply what it implies or whatever.

I don’t even put the primary blame on you Goons. I obviously don’t approve of your behavior. But Goon posters are a common reality on the internet. The usual way to deal with them is to ban them. Had Motley Fool banned Greaney when he made his first death threat, none of us would have travelled this dark road. Motley Fool screwed up. Big time. Motley Fool does not employ Goons. But Motley Fool voted for Get Rich Quick when they failed to ban the fellow putting forward the death threats and instead banned the fellow who discovered the errors in the Old School retirement studies. The site administrator at Motley Fool is more to blame for what has happened than any of you Goons, in my assessment.

I have had people say to me: “Rob, every thing that you say about investing makes perfect sense. But I just cannot follow your advice because my retirement is important to me and what you say is the opposite of what the experts in this field say.” That’s a pretty darn sensible statement, is it not?

The problem here is not that there is anything that I am saying that is wrong or that anything that I am saying is not supported by 33 years of peer-reviewed research or that anything that I am saying is not easy to understand. The problem is that every expert in the field is not saying what I am saying. Shiller published his research in 1981. He won a Noble prize for it. What the heck is going on?

The problem is that this stuff is TOO important for people to feel good about saying something unless they are absolutely sure. Shiller’s stuff was such a breakthrough that people were properly skeptical about it. They held back, waiting for more information.

Then they started to feel funny about reporting on it because there had been such a long delay in discussing all the amazing implications of what Shiller found. In 2002, it had been 21 years since the peer-reviewed research has shown that there was zero chance that a retirement study containing no adjustment for valuations could get the numbers even remotely right. What are you going to say at that point? “Oopsi! Sorry we destroyed your hopes for a decent retirement by giving you wildly wrong numbers all these years!”

Everyone in the field wants to see the Ban on Honest Posting lifted. Bogle wants that or he wouldn’t have included the language in his book showing that the Old School studies get the numbers wildly wrong. Bernstein wants that or he wouldn’t have included Chapter Two in his book; Chapter Two is the best short description of Valuation-Informed Indexing that has been published. Larry Swedroe wants that or he wouldn’t have put forward the honest posts that got him banned at the Bogleheads Forum until he promised Linduaer that he would go back to posting dishonestly. Wade Pfau wants that or he wouldn’t have put so much effort into the research he co-authored with me in the days before he learned that his career would be destroyed if he dared to “cross” the Buy-and-Holders by posting honestly. And on and on and on and on.

The trouble is that lots of Buy-and-Holders will be going to prison if the truth about what the last 33 years of peer-reviewed research says gets out. And lots more will be getting sued by billions and billions and billions of dollars.

So the Buy-and-Holders stick together and respond in a ruthlessly abusive way when they find someone like me posting honestly about the last 33 years of peer-reviewed research.

If our economic system is going to survive, we are going to have to find some means of getting accurate and honest information about how stock investing works out to millions of middle-class people, Evidence. The posts that I put to this site are aimed at helping people come to terms with what we were up against all these years, with why it took so long to get these wonderful advances out to all the people who need to learn about them.

I am anti-Goon. Very, very, very much so.

But the deeper reality is that being anti-Goon shouldn’t cause me any problems. We ALL are anti-Goon. That’s why we have laws against financial fraud in the first place.

The question here is — Why as a society have we made an exception to our usual ant-Goon policies to permit the Buy-and-Holders to continue to shove their smelly Get Rich Quick garbage down our throats and cause us all even more economic ruin that we have already suffered?

When we answer that one, we are on our way to enjoying all the wonderful advances we have achieved in recent decades. The articles at this site aim to help us all come to understand the answer to that one.

Take care, man.

Rob