A Rich Life

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

Search Results for: boglehead

“If You Post Claims About Retirement Planning at Your Blog That You Know To Be False and Millions of People Experience Failed Retirements As a Result, That’s Obviously Financial Fraud. Are You Excused If the Most Abusive Poster in the History of the Internet Threatens to Destroy Your Business If You Post Honestly? WHO THE HECK KNOWS?”

by

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

Out of curiosity — I know you say that those who support Greaney or Lindaur, or Pfau, or Bogle, or Burns, etc are all felons, who will be going to prison. Super.But, putting aside those that are just supporters of the GRQ terrorists, how many people have actually made death threats related to their defense of the corrupt evil of buy and hold investing?I think I’ve seen you name at least four or five, is that right? But, is it more like a dozen? Even more? Could you please list them? And provide links to the actual threats? Do you think these horrible criminals will get more prison time than those whose crime is just read Bogleheads casually, or to have bought a book on Passive Investing, or merely quietly practice the dark art of non-Lucky Seven investing in secret on their own? Or is everyone who ever even toyed with buying and holding indexes without using PE10 going down, Rob? Curious to hear your take on these specific matters.

There are millions of good and smart people who follow and believe in Buy-and-Hold strategies. I was of course one of them and I don’t see that these people have anything whatsoever to worry about. I think they are mistaken. But their mistake is understandable. There really is academic research showing that short-term timing doesn’t work. We really did not have available to us the research needed to come to an understanding of how things really work until 1981. Shiller’s research findings were truly “revolutionary.” So it is not hard to see why it would take some time for people to come to see the implications that follow from his work.I believe that it is the people who have in some way participated in the 11-year cover-up of the errors in the Old School safe withdrawal rate studies who are in danger of going to prison.

There are four categories of people that I believe are in danger: (1) those who advanced death threats or other threats of physical violence; (2) those who demanded unjustified board bannings or who agreed to such bannings; (3) those who engaged in tens of thousands of acts of defamation; and (4) those who threatened academic researchers or who were aware of threats made to academic researchers and who failed to do anything about it.

The number of people at risk is in the hundreds or perhaps in the thousands. I do not feel able to give a list of who will be sent to prison and who will not be sent to prison. That’s something we have to decide as a society. I am confident that my role will be to argue for fewer prison sentences and for shorter prison sentences that what most others are calling for.

The issue is just too big and too novel for me to feel up to giving any kind of a precise count.The best way to understand it is to look at a particular case. I think Mike Piper is a good case to look at. Mike is a fine blogger. He is smart. He is hard-working. He is helpful. He HATED the idea of banning honest posting at his blog. He directed a lot of energy to finding some other means of dealing with the situation. All that obviously counts AGAINST a prison sentence.

The other side of the story is that we will be seeing millions of people’s financial futures ruined because of the 11-year cover-up and Mike played an important role in keeping that cover-up going. He obviously knows that the Old School SWR studies don’t contain a valuations adjustment. He knows that Mel Linduaer is one of the leaders of the cover-up. He has acknowledged thinking that Mel is a jerk and has said that he doesn’t speak up against Mel only because he is afraid of him. All indications are that that is indeed so.

If you post claims about retirement planning at your blog that you know to be false and millions of people experience failed retirements as a result, that’s obviously financial fraud. In ordinary circumstances, you obviously risk going to jail by doing that. Are you excused if the most abusive poster in the history of the internet threatens to destroy your business and if you know from personal experience that this individual is capable of going through with his threat and if big names in the field indicate that they are going to side with the abusive poster? WHO THE HECK KNOWS?

No one has ever seen a case of financial fraud as big as this one, Anonymous. Perhaps Mike is going to prison, perhaps he is not. Perhaps it will be a short prison term, perhaps it will be a long one. No one knows.

I’ll tell you what I think. We are the luckiest generation of investors who ever walked Planet Earth. The peer-reviewed research that I co-authored with Wade Pfau shows us how to reduce the risk of stock investing by 70 percent. We shouldn’t be talking about how long Mike Piper’s prison sentence is going to be. We all should be working together to tap into the benefits of the amazing research findings of the past 32 years. We should all be working to bring the economic crisis to an immediate stop and to bring on the greatest period of economic growth in U.S. history. What’s the downside?

If Mike is not sent to prison, I expect to be working with him for many years to come. That one is easy. If Mike IS sent to prison, I obviously won’t be able to work with him. But I am going to feel bad about him being sent to prison despite being such a nice guy and such a smart guy. So I want there to be lots of posts in the record when Mike’s prison sentence is announced showing that I did everything in my power to bring his potential prison sentence to the attention of Mike and his friends and to implore them to do everything they could to see either that there is no prison sentence for Mike or that his prison sentence is as short as it can possibly be given today’s circumstances.

We all are going to have to live with ourselves following the next crash, Anonymous. I don’t think it is even a tiny bit responsible to hold off on talking about the prison sentences until the events that lock them into place have already taken place. I think the responsible thing to do is to talk about those prison sentences NOW and to do what can be done to get them reduced a bit NOW. So that’s what I do.

The only way to answer the questions you are posing is to look at history and see how things have gone down in the past. We know that Bernie Madoff is in prison. We know that with the 11-year cover-up of the errors in the Old School safe withdrawal rate studies we are looking at an act of financial fraud that makes what Madoff did look like a drop of water in the Atlantic ocean. So there is clearly a problem here.The other side of the story is that we have never seen a case of financial fraud as big as this. So we just cannot give details of what is going to happen with a high degree of confidence. We are in 100 percent uncharted waters.

I hope that helps a bit.

My best wishes.

Rob

“Mike Piper’s Problem Is That He Really Did Have Readers Tell Him That They Would Abandon His Blog If My Posts Continued to Appear at His Site, Causing His Readers to Experience Doubt re the Strategies Mike Was Advocating and They Were Following. Mike Was Put in a Position In Which He Could Either Make Money or Run His Blog in an Honest Manner.”

by

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

“Mike told me that “there’s nothing I would like more” than to see this matter resolved. Why do you think Mike said that?”

Because, as usual, you take his meaning at cross purposes, probably on purpose. What he clearly meant, and the entire convo in context would likely prove, is he hoped that YOU would ‘resolve’ your own irrational and illogical “issues” in terms of berating and besmirching and disparaging good honest knowledgeable people who have done nothing more than share their knowledge and interest with the world. But sionce you see anyone else’s success as an obstacle to your own pie in the sky dreams, you lash out and attack, thinknig this will somehow elevate yourself. Mike knows it won’t, of course, so that is what he means by ‘hoping to see it resolved’. IT has nothing to do with prison for others who disagree with your nutty approaches, or big speeches from notables publicly saying “I was wrong, let me introduce you to Rob Bennett…,” or truth commissions set up with Hocus as sole trier of fact, etc.

You are loony, AND you are a liar. Do this: ask Mike to send you an email confirming your version of dialog, then print that email IN IT’S ENTIRETY, right here. I double-dog dare ya to do so. Trust me, that’s a post you will not ever make here, because the confirmation simply will not happen.

You are living in a dream world.

So long as Mike does not feel that it is safe for him to post honestly, we cannot go by what he says, Anonymous. So your idea is not helpful. If Bogle gave an “I Was Wrong” speech or, at the very least, an “I Don’t Know for Certain” speech, then, yes, the idea of listening to Mike’s take would be a good one. But we are not there yet.

You can go back to things Mike has said at earlier times. He has provided important clues. Mike did not want to ban me. We engaged in a long e-mail correspondence before he did so. Read those e-mails. Those e-mails tell the story. Mike believes in Buy-and-Hold. Mike does not in his heart believe that he is destroying people’s lives. But Mike also believes that the Ban on Honest Posting is wrong. He is extremely uncomfortable with the ban. That’s where Mike really stands re all this.

I can help provide more context for the things Mike told me when we spoke at the Financial Bloggers Conference. After he said that there is nothing more he would like to see than a resolution of the matter, I asked him to describe practical steps that could be taken. He said that I needed to take down two articles at my site, the article that focuses on Mel Lindauer and the article that focuses on Taylor Larimore. I told him that that was a trivial demand, that I of course would be happy to take those two articles down if doing so would bring about an end to the Ban on Honest Posting.

But I also said that I did not believe that there was any chance that taking down those two articles would really solve the problem. I pointed out that, once the Ban was lifted, I would be posting daily at the Boglehead Forum. And that the safe withdrawal rate issue comes up there frequently. And that, when the SWR issues comes up, I would be posting that the Old School studies get the numbers wrong. I asked Mike what he thought would happen at that point?

That’s when he said that he agreed with me that Mel Linduaer is a “jerk.” He made clear that he wa afraid of Mel and that he would not be giving public voice to his belief that Mel is a jerk. So we both saw that he was not willing to participate in an effort to bring the matter to a successful close.

The Buy-and-Holders believe in Buy-and-Hold, Anonymous. They follow it. That’s an indication of belief.

The problem is that they lack CONFIDENCE in it. There is a voice in their heads that tells them that any strategy that is rooted in a belief that price doesn’t matter cannot possibly work in the real world. I didn’t put that voice in their heads. But I sure do all that I can to support the message being told by that voice. That’s why I am hated by many Buy-and-Holders. Not because they are sure that I am wrong. Because there is a part of them that suspects that I really might be right.

That’s the true story here, Anonymous.

Mike wants to tell the truth. For him, telling the truth means writing articles saying “Buy-and-Hold is the answer.” He believes that and he has both a right and responsibility to say that he believes it. But Mike ALSO believes that he should be permitting posting by people who believe in Valuation-Informed Indexing and it pains him that he has betrayed his deeply felt beliefs re this issue. Mike knows that he has made a terrible mistake.

His problem is that he really did have readers tell him that they would abandon his blog if my posts continued to appear at his site, causing his readers to experience doubt re the strategies that Mike was advocating and that they were following. Mike was put in a position in which he could either make money from his blog or he could run the blog in an honest manner. He was not able to see a way in which honesty and making money could be combined. So he made the choice he made.

Wade Pfau is in the same position. He wants to be honest. He also wants to make a buck doing the work he loves. He should be able to achieve both goals. But the world as it exists in December 2013 does not permit him to achieve both goals, at least not according to his assessment of the realities.

Jack Bogle is in the same position.

Larry Swedroe is in the same position.

Bill Bernstein is in the same position.

Motley Fool is in the same postion.

Index Universe is in the same position.

Early Retirement Forum is in the same position.

Morningstar is in the same position.

We need to solve the problem.

There’s one way that we conduct affairs that applies to every issue other than what the academic research says about how stock investing works. And there is a different way we conduct affairs that applies to our handling of discussions of the last 32 years of peer-reviewed academic research re stock investing. We need to decide what kind of society we are and then apply rules that make sense given our decision to our handling of stock investing issues as well as our handling of every other issue that comes up.

This is not optional. This is mandatory.

The only thing that is optional is the timing. We can act today or we can delay our decision to act. Delay will cause us all great pain while acting today will cause us all to live far freer and richer lives than we ever before imagined possible. But it is our choice whether to act today or to delay. It doesn’t make any sense to consider any choice other than acting today. But the other choice is available to us whether we decide to act on it or not.

I am not living in a dream world. Unless you consider the entire history of the United States to be a dream world. Some do indeed believe that our economic and political systems are dream-like in their perfection. In that sense, yes, I am living in a dream world. I am saying that the laws of the United States that have made this such a wonderful country for such a long time should be made applicable to the world of investing advice. But our political and economic systems only SEEM like a dream to those who have never lived under them. Those of us who have experienced their great wisdom and beauty know that the riches that follow from having confidence in our political and economic systems to work things out for us are not the product of mere dreams. Those riches are a dream come true to many of us. And I believe that there will be many who will work to defend those dreams once the threat to them becomes clear enough for them to see what is at stake here.

Anyway, we have the context of Mike’s comments available to us. He does believe in Buy-and-Hold. He does believe that comments rooted in the last 32 years of peer-reviewed academic research should be permitted at his blog and at all other blogs on the internet. He does fear Mel Lindauer and his Goon Squad and what they would do to him and his blog if he were to work up the courage to permit honest posting at his blog. And he hates himself for his lack of courage. If Bogle were to speak out in a clear and honest way re the Lindauer matter, there is every reason in the world to believe that Mike would open his blog up to honest posting again. I have zero doubt in my mind that this is so.

Every citizen of the United States who wants to see the economic crisis brought to an end should be writing to Jack Bogle and imploring him to give that speech. That speech is the thing that turns things around. That speech is the thing that takes us from the Second Great Depression to the greatest period of economic growth in our history.

I’ll let you in on a little secret. There is a part of John Bogle’s heart in which he would prefer to be known through history as the person who took us to the greatest period of economic growth in U.S. history over being known as the person who took us to the Second Great Depression.

How do I know?

I know because Jack said in his book that, when one of his friends saw that he got something wrong, he wanted that person to tell him about the error rather than cover it up.

I think it would be fair to say that I am the #1 Boglehead in our community, Anonynous. And I think it would be fair to say that Mike Piper deep in his heart is a Boglehead as well. I am an optimistic enough person to believe that even Anonymous has a soft spot somewhere in his heart for Old Saint Jack.

That soft spot is what makes you human, my pretend-Goon friend.

My best and warmest wishes to you.

Rob

“There’s Obviously a Huge Amount of Money to Be Made Telling the Truth About Stock Investing. We Are Going to Need to Replace 95% of the Books Written in This Field. Why Not Get About the Important Business of Doing All That Good Stuff and Make Lots of Money Doing It?”

by

Set forth below is the text of a comment that I recently put to the Joe Taxpayer blog:

If he (like so many others) eventually decides to ban you, will that make him an apostate?

I’ll tell the truth.

Carl Richards, who writes a blog for the New York Times, said that my site was the best investing site he has ever seen. He said that he has read everything about Valuation-Informed Indexing that he can get his hands on. He said that my work has “huge value.” And he banned me from his site.

Jack Bogle is the fellow who told me what I needed to know to understand why the Old School safe withdrawal rate studies get the numbers wildly wrong. Jack didn’t lift a finger when Mel threatened physical violence against anyone who dared to “cross” him by posting honestly at the Bogleheads Forum.

Bill Bernstein said in response to an e-mail from one of you Goons that “of course the methodology used in the Old School SWR studies is analytically valid.” In the same e-mail, he said that anyone who gave consideration to using one of those studies to plan a retirement was out of his gourd. That’s what I meant when I said that the studies were “analytically invalid”! The term “analytically invalid” is my shorthand way of saying that those studies got the numbers so wildly wrong that anyone who used one to plan a retirement would have to be out of his or her freakin’ gourd.

So me and Bill were saying the same thing in slightly different ways.As were me and Bogle. As were me and Richards. As were me and lots of people.

Why do all these people say things in a slightly different way than I do?

I don’t see what purpose is served with all the deception. We all agree that there has never been a sliver of support in the peer-reviewed academic research for Buy-and-Hold, right? We all agree that the ruthless promotion of Buy-and-Hold strategies by the Wall Street Con Men has caused four economic crises, right? We all agree that millions of our friends and neighbors and co-workers will be seeing their retirements fail because of the 11-year cover-up of the errors in the Old School retirement studies, right?

Why not just say that? Isn’t saying it clearly and plainly and frankly the quickest way to solve the problem?

There’s obviously a huge amount of money to be made telling the truth about stock investing. We are going to need to replace 95 percent of the books written in this field and 95 percent of the calculators published in this field and 95 percent of the current experts in this field. Why not get about the important business of doing all that good stuff? and have lots of fun doing it and make lots of money doing it?

Are we waiting for someone to ring a bell? Is there some advantage to be gained by holding off for a bit? If there is, my feeble human brain is sure not able to imagine what it might be.Maybe your far superior Goon brain has come up with something. If so, I would be grateful if you would fill me in.

We have filled millions of people’s heads up with Get RIch Quick nonsense. Those people are hurting. They don’t want to hear what the research says. It makes them very, very angry for people to report honestly what the research says. I get that part loud and clear.

But aren’t we just making things worse by holding off?

We are going to have to tell them the truth eventually, no? We don’t really want to live through the Second Great Depression, do we?

Are they not going to be ten times MORE angry if we tell them the truth AFTER they lose another 65 percent of their life savings as they would be if we told them today?

I am not out to “get” Bogle or Lindauer or Greaney or Phau or anyone else. I am trying to SOLVE A PROBLEM that every single one of us should want solved.

To solve the problem, we need to tell people the truth. So that’s what I do.

Do I say that Jack Bogle is a genius and that he discovered dozens of the powerful insights around which I built the Valuation-Informed Indexing concept? I do. Why? Because I want to flatter the big guy? No! I do it because it is the truth.

So why do I ALSO mention that Jack has permitted his name to be used at a discussion board at which the sorts of individuals who have put up posts in “defense” of Mel Linduaer and John Greaney are permitted to post? Same reason. It’s the truth!

I am just a mild-mannered reporter, you know? I report stuff. I report good stuff and bad stuff, whatever happens. I PREFER to report good stuff about my Buy-and-Hold friends. I am human. How could I not prefer to report good stuff about them?

But I cannot just make stuff up. I need them to DO good stuff for me to be able to REPORT good stuff. They need to give me some material to work with. When they do — bam! — you see that good stuff reported on at old Rob’s site, just like I always promised.

I HAVE reported bad stuff about people whom I admire greatly. That HAS happened.

I WOULD like it to stop.

But I do not CONTROL whether it stops or not.

I can realize my great desire to stop filing these negative reports when all these people I admire and respect and even love STOP PUTTING UP POSTS IN “DEFENSE OF MEL LINDAUER AND JOHN GREANEY.’

Do you see?

I report what happens. We need to have these good people STAND UP TO YOU GOONS for good things to happen. So I always urge everyone with whom I come into contact to stand up to you. But I do NOT control the behavior of other people. People do what they do. People do not always listen to what I say. Go figure.

Rob the All-Powerful (Not!)

“Why Do All These People Who in Ordinary Circumstances Are Perfectly Happy to Make a Buck Not Have Much Interest in Making a Buck re This One? It’s the Social Stigma. The Woman Told Me That the People Sitting Around Her During My Ignite Talk Felt That I Was ‘Bitter.’ She Doesn’t Want People Saying That About Her. It’s Not Our Fight, We Tell Ourselves. Let Someone Else Take on the Haters.”

by

Set forth below is the text of a comment that I recently put to the Joe Taxpayer blog:

More of Rob’s fantasy that it is a vast conspiracy.

How about a vast cognitive dissonance, Bob? Or a conspiracy of ignorance?

Humans had the ability to fly for many years before the first airplane was put in the sky. Was the reason we did not fly for so many years that there was a conspiracy or was it just that we did not know it all.

Humans had the ability to harness of the power of electricity for many years before we made use of it. Was it a conspiracy or was it just that we did not know?

Humans had the ability to cure many diseases before we did so. Was it a conspiracy or was it just that we did not know?

We did not understand the fundamental rules of how stock investing works in 1980.

In 1981 the research was published that took us where we all deep in our hearts long to be.

We now know what we need to know. Intellectually.

But we can’t talk about what we know. Because it hurts the feelings of those who went with what we once thought we knew to do so. So knowing by itself doesn’t do us a whole lot of good, does it?

I contacted someone I met at FinCon12 to see if she would like me to hire her to help me get my message before more people. She likes me. She hasn’t said precisely what she thinks of the message but she has certainly never demonstrated any hostility towards it. She is smart. She is particularly strong in some areas in which I am particularly weak. Sounds like a good match, right?

She has shown interest in the idea of working with me. But she doesn’t think I can succeed unless I stop talking about “the haters.”

I don’t agree. THE HATERS ARE THE ENTIRE FREAKIN’ PROBLEM.

I am not some investing genius. I saw that the Old School SWR studies get the numbers wildly wrong ten years before the Wall Street Journal saw it. Do you know how hard it was to see that? It was like seeing that 2 plus 2 does not equal 22. The studies don’t include an adjustment for valuations! There’s 32 years of peer-reviewed academic research showing that valuations is the most important factor in ANY investing analysis. So the numbers HAD to be wildly wrong! In ordinary circumstances, a five-year-old child could see that.

So why didn’t Jack Bogle and all these other Big Shots see it?

They didn’t see it because they do not want to see it.

That’s all.

That’s the entire story.

This is not a numbers story or an intellect story or a research story. This is an EMOTIONS story.

The fact that the Buy-and-Holders have spent 11 years engaging in hate rather than in sharing with millions of people all of the amazing breakthrough insights we have come up with together is THE ENTIRE STORY.

If I don’t discuss the hate, I am not telling the story. That IS the story. Our hate is the holdup. Our burning hate for what the last 32 years of peer-reviewed academic research tells us about stock investing was the primary cause of the economic criss. We have bankrupted tens of thousands of businesses with our hate. We have put millions of people out of work with our hate. And we are just getting started! We are still in the early days of this ultimate Buy-and-Hold Crisis.

We are on the 99-yard line. Our society works. Because it is a dynamic society. When people do things wrong, our social systems have ways of figuring that out and getting those wrong things replaced with right things. We are very, very close to doing that in the investing realm. There is one thing that stands in our way.

The people who have spent decades of their lives either promoting Buy-and-Hold strategies or following Buy-and-Hold strategies very, very, very, very, very much do not want us to go forward. It hurts their feelings to acknowledge that they have been taken. It hurts their feelings to know that they are going to need to rebuild their Big Shot status in a world in which lots of other people will be competing with them for that Big Shot status.

That’s it.

There is nothing else.

Wade Pfau researched this question. He wanted to know if there had ever been a single study published backing up the key Buy-and-Hold assertion that there is no need to engage in long-term timing. He searched and he searched and he searched and he never found a single study.

He went to the Bogleheads Forum and asked f anyone there knew of a single study supporting the key Buy-and-Hold claim. Jack Bogle did not know of a single study supporting Buy-and-Hold. Bill Bernstrein did not know of a single study supporting Buy-and-Hold. Larry Swedroe did not know of a single study supporting Buy-and-Hold. Rick Ferri did not know of a single study supporting Buy-and-Hold.

Do you want to know what I think?

I think none of these people knew of a single study because there has never been a single study. I think Wade was right. I think that’s why they threatened to get him fired from his job if he continued to publish honest research.

And I think the cover-up is doomed.

Perhaps no one on the internet will be willing to take on the Goons. I find that an amazing reality. But perhaps it is so. It has certainly been largely so for 11 years.

But there’s this other thing.

The next stock crash. The 65 percent price drop. The Second Great Depression.

People are going to notice that.

It’s going to be written up in all the papers.

THEN people are going to work up the courage to speak out.

Aren’t they?

If they don’t, we all go down together. If we all think it is such a horrible, horrible thing to say out loud that Old Saint Jack dropped the ball re this one, then it’s out of my hands. At least I will have the small consolation of knowing that I gave it my best shot.

It wasn’t a conspiracy when it started. Had Shiller published his research in 1971 instead of 1981, the famous book would have been called “A Valuation-Informed Walk Down Wall Street.” The Buy-and-Hold Pioneers were trying to do what I am trying to do, They are trying to help people.

It’s SORT of a conspiracy now that we are in the cover-up stage. But it’s not all people trying to make a buck. The woman I contacted to help me get my message out stands to make a buck by taking it the other way. Hundreds of my blogger friends could make a buck taking it the other way. They could build blogs explaining how Valuation-Informed Indexing works and after the next crash hits, they would become famous because they would have one of the few blogs that tell the truth about how stock investing works in the real world.

Why do all these people who in ordinary circumstances are perfectly happy to make a buck not have much interest in making a buck re this one?

It’s the Social Stigma.

The woman told me that the people sitting around her during my Ignite talk felt that I was “bitter.” She doesn’t want people saying that about her. None of us want lots of other people saying that sort of thing about us. So when we have doubts, we keep it zipped. It’s not our fight, we tell ourselves. Let someone else take on the haters.

I expect to make many hundreds of millions of dollars from this.

And I expect to feel good making it. Because this is the biggest advance in our understanding of how stock investing works in the history of investing analysis.

I don’t like having the hate directed at me. Obviously. But I don’t like posting dishonestly about what the research says either. So I have never given two seconds of consideration to playing it the other way.

Either we will all win (which means I will win most of all) or we will all lose (which means my loss is no worse than anyone else’s loss). Those are the only two possible outcomes.

It’s not a conspiracy in the sense in which that word is usually used. There were not a bunch of evil people who got together in a smoke-filled room to do us in. But there WERE humans. And those humans DID make the sort of mistakes that humans have since the beginning of time been known to make. And those human mistake-makers HAVE been engaging in brutally abusive behavior to cover up their mistakes for 11 years now.

Why are these so intense?

Because it matters so much. Because the mistake was so darn big.

Is that a bad thing?

It is not.

It is a good thing.

Correcting a huge mistake takes us forward in a huge way.

I can’t wait to see all the human enrichment that will follow when we get down to the business of CORRECTING the mistake.

Do I need to tell people about the haters to get the mistake corrected?

I do.

There is no other way to explain to people why we didn’t reduce the risk of stock investing by 70 percent back in 1981, when we first learned intellectually how to do it.

I believe we will survive. I don’t believe that I am the only person alive who appreciates the good things that our economic and political systems have brought us all. So I think there will come a day when I will be able to persuade others to help out. It won’t take many. We have 32 years of peer-reviewed academic research behind us. When we have ten people standing by each other so that the Goons can no longer destroy us one by one, it will be over.

In ordinary circumstances, Buy-and-Hold would have died gradually, a little bit at a time year by year by year. Because of the 11-year cover-up, things have been set up so that it will die all at once, once we get those 10 people willing to stand up for each other in the face of the brutal assaults of the Buy-and-Hold Goons.

It’s getting better. I have had a front-row seat to all this going back to the first day, and I can tell you that there are lots and lots of signs that it is getting better.

When I get those 10 people assembled in one place (my site!), it’s going to get a LOT better very, very quickly. There will be HUNDREDS of blogs promoting Valuation-Informed Indexing in days to come. They will be the most popular blogs on the internet. Their owners will get very, very rich. And they will feel rich inside too because they will know how many human lives have benefitted from their courage.

Yours in eternal bitterness,

Rob

“Say That Buy-and-Hold Were a Legitimate Strategy. In That Case, We Wouldn’t Have to Tell Lies to Defend It, Would We? There Is Something Seriously Wrong with an Investing Strategy That Compels Those Seeking to “Defend” It to Destroy Their Own Lives and the Lives of Their Friends.”

by

Set forth below is the text of a comment that I recently put to the Joe Taxpayer blog:

That is Robert Shiller’s thesis (not Rob Bennett’s). I don’t think there is any disagreement about it. It’s an established empirical observation. The disagreement is about whether investors can change their asset allocation to take advantage of this. Open and honest debate takes place about this at the Bogleheads site and other places, as you can see from Bob’s link. Again, please don’t be confused by the idea that it is Rob’s ideas that are controversial. He is banned because of his boorish behavior. And as others have pointed out to you, once you finally grow weary of Rob spamming your comments or fail to give him a guest blogger spot, you will instantly join Rob’s list of goons who will be given long prison sentences for financial fraud. At least you’ll be in good company when that happens with people like J.D. Roth and Mike Piper.

Both J.D. and Mike are friends of mine.

J.D. played a role in me getting the interview with ABC News that appears on the home page of my site. When I went to the first financial bloggers conference (FinCon11), I was worried about what sort of reception I would receive. When I was getting my badge, J.D. saw me from across the room where he and a group of my fellow bloggers were sitting and called out to me and invited me to join them. That was a very kind thing to do and I much appreciated it. One time when J.D. was going on vacation, he invited me to write a guest blog entry on saving strategies at the Get Rich Slowly blog, which was the biggest finance blog on the internet at the time. J.D. and I had a long talk at this year’s conference in connection with a book that he is writing about early retirement.

Mike gave me a guest blog entry at his site PRIOR to the 2008 crash. Not many people were willing to do that in those days. He offered an introduction to it that I thought was perfect. He told a joke! He asked (I am paraphrasing): “How can I resist an opportunity to have someone come to my blog and tell people that everything I say about stock investing is wrong?” Mike HATED the idea of banning me from his blog. We exchanged DOZENS of e-mails about it. I once put forward the idea that I would not post any further comments at his blog on a daily basis but that he would give me one guest blog entry per month to tell the other side of the story. He rejected that idea but only after giving it serious consideration. I had a long talk with Mike at FinCon11 and he told me that there was nothing he would more like to see than an end to the Ban on Honest Posting and the Campaign of Terror and that he agreed that Mel Linduaer is a cosmic jerk. He also said that he was afraid of what Mel would do to him and his blog if he raised any objections to his behavior in his postings at the Bogleheads Forum. Mike and I gave a joint presentation on retirement planning at FInCon12. He was 100 percent cordial in all the work we did together planning for that event.

So I like J.D. and Mike and J.D. and Mike like me. Everything is groovy, right?

Everything is not groovy.

Mike banned me from his blog. Not because I broke any of the rules that apply there. He banned me because I posted honestly on what the peer-reviewed academic research of the past 32 years says about how stock investing works. He feels that he will no longer be able to persuade his readers of the merit of his investing claims if they are able to hear the other side of the story. Yes, that is financial fraud. If stocks perform in the future somewhat as they have always performed in the past, Mike’s readers are going to lose most of their life savings. They are going to be looking for someone to hang from a tree and Mike is going to be an obvious choice given that he banned honest posting at his site. I am Mike’s friend and so I care about what happens to Mike. So, yes, it is so that I have said both to Mike personally and in public comments that he has committed financial fraud in an objective sense and that I think that this was a terrible, terrible, terrible choice for my good blogging friend to make.

J.D. did similar things. He feels very funny about bans. So he never went quite so far as to ban me from Get Rich Slowly. But he did direct Goon language at me. He said that I was obviously “mentally ill” to think that there was anything wrong with the Old School safe withdrawal rate studies (this was before the Wall Street Journal and the Economist magazine and Smart Money and about a dozen other major publications all reported that I was right all along about this issue). When I posted at a thread at his discussion board, he sent e-mails to every other poster participating on the thread asking them not to respond to my comments. I once had another blogger suggest that I ask J.D.’s help in resolving the problem with the Greaney Goons since he is a leader in the personal finance blogosphere and since there are responsibilities that go with that role. I thought that was a good idea and I asked for J.D.’s help. I asked him to speak out in opposition to the death threats and the tens of thousands of acts of defamation and the board bannings and so on. J.D. elected not to help out.

So am I friends with these people or am I not friends with these people?

We’re friends as long a the subject of the last 32 years of peer-reviewed academic research doesn’t come up.

We should be friends on EVERY issue.

Why should J.D. and Mike be friends with someone who doesn’t share their views on stock investing?

Because if is often the people who do not share your views on a subject who provide the most help to your efforts to come to a better understanding of it.

Yes, Mike Piper’s readers get upset when I post comments at his blog. He’s telling the truth re that one. It is BAD MARKETING for Mike to permit me to comment at his blog.

But it is GOOD SCIENCE. And Buy-and-Hold is supposed to be rooted in science. Academic researchers are not supposed to over-educated marketing assistants.

If Buy-and-Hold is real, Mike’s readers will be able to handle anything I say in stride.

If Buy-and-Hold is Get Rich Quick garbage DISGUISED as science, their reaction to reports of what the academic research really says will be a massive freak-out. If we see a massive freak-out (we obviously have — that’s why Mike reluctantly banned me), we know that there is something seriously wrong with this Buy-and-Hold “idea.” When we learn that there is something seriously wrong with this Buy-and-Hold idea, the proper thing to do is to INVESTIGATE, not to cover up.

J.D. and Mike (and many, many others — we are obviously only referring to these two particular individuals as examples of people engaging in behavior that we have seen from the vast majority of those advocating Buy-and-Hold strategies) are playing a very dangerous game. Buy-and-Hold has been tried four times in U.S. history. On every one of those four occasions, it made the people following it very, very happy when it filled their minds with Get Rich Quick fantasies while prices were going up to unsustainable levels. And on every one of those four occasions (we are still in the early stages of the fourth ride down, but we are already beginning to see the same pattern play out), people became very, very angry when following Buy-and-Hold caused them to lose most of their life savings, as it always does and as basic common sense tells is it always must. “Widespread and intense anger” translates into “lawsuits for civil damages and prison sentences for repeated acts of financial fraud” in today’s world.

I don’t say that J.D. and Mike have committed financial fraud in an objective sense because I view them as enemies. I say this because I view them as friends.

And of course I say that same thing about Jack Bogle and Bill Bernstein and Larry Swedroe and Scott Burns and Rick Ferri and lots and lots of my other Buy-and-Hold friends.

We have a way of handling differences of opinion that does not involve people being sued for civil damages and people being sent off to prison.

It is called “letting the other fellow have his say.”

It is no crime to believe in Buy-and-Hold with all your heart and mind and soul and for it to be proven wrong at a later date. It IS a crime to advance death threats and demands for board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs as part of an 11-year effort to keep millions of people from learning about errors that were made in studies that those people used to plan their retirements.

I didn’t create this messed-up situation.

I am the fellow who built the Retire Early board into the most successful discussion board in the history of the Motley Fool site. There were responsibilities that fell to me as the leader of that board community. When we saw a fellow coming forward with posts threatening to kill family members of any poster who dared to “cross” him by posting honestly on the subject of retirement planning (at a retirement planning board!), I had zero choice but to call this fellow out and demand his removal from the site.

Had Motley Fool removed him when I sent my first e-mail to them demanding his removal (this was in June of 2002), J.D. and Mike and Jack and Bill and Larry and Scott and Rick and all the rest of us would obviously be in a very, very different place today than the messed-up situation we find ourselves in.

I will continue to show my love for my Buy-and-Hold friends.

NOT by rationalizing to myself that it somehow doesn’t matter if my friends destroy themselves and their lives and their blogs and their financial futures. I will show my love by following the rule that I have followed from the first day of this seemingly endless saga — Alway Be as Charitable as It Is Possible to Be Without Being Outright Dishonest While Also Always Being as Honest as It Is Possible to Be Without Being Outright Uncharitable.

Say that Buy-and-Hold were a legitimate strategy.

In that case, we wouldn’t have to tell lies to defend it, would we?

And we wouldn’t have to advance threats of physical violence to defend it.

And we wouldn’t have to destroy the reputations of our long-time friends to defend it.

And we wouldn’t have to threaten to get academic researchers fired from their jobs to defend it.

And we wouldn’t have to subject ourselves to huge lawsuits to recover financial damages suffered and to prison terms to defend it.

There is something seriously wrong with an investing strategy that compels those seeking to “defend” it to destroy their own lives and the lives of their friends in the way we have seen so many destroy their own lives and the lives of their friends during the first 11 years of our discussions of the realities of stock investing.

That’s my sincere take re this important matter, in any event.

I continue to feel deep feelings of friendship for J.D. and Mike. That’s why I intend to continue to do all I can do to make the millions of middle-class investors whose financial futures are in the process of being destroyed aware of what the Buy-and-Holders did to stop Wade Pfau from reporting to them on the most important research in this field since Shiller’s “revolutionary” (his word) findings of 1981.

More hate is not the answer.

Love is the answer.

I am sure.

Rob

“What a Difference a Threat to Get the Father of Two Small Children Fired From His Job Has on an Investing Discussion, Eh? Long Live Buy-and-Hold! It’s Science! With a Marketing Twist!”

by

Set forth below is the text of a comment that I recently put to the Joe Taxpayer blog:

he will use your name. He perceives your comments as validation of everything he says. The comments by Wade referred to early is just a small taste of what is in your future. You will soon come to understand.

Here are some comments that Wade Pfau made about his good friend Rob Bennett in the days before Bob and his fellow Goons threatened to send defamatory e-mails to his employer in an effort to get him fired from his job (and Jack Bogle and lots of other big name Buy-and-Hold advocates signaled that that was just fine by them):

1) “If you read Rob Bennett’s stuff carefully, I think he did provide an important contribution in terms of describing a way for PE10 to guide asset allocation for long-term conservative investors. I also think he was right on the issue of safe withdrawal rates.”

2) “I am also extremely grateful to Rob Bennett for motivating this topic and contributing his experience and encouragement.”

3) “You deserve much of the credit as the whole idea of Valuation-Informed Indexing belongs to you.”

4) “I definitely need to cite some of your work as the founder of Valuation-Informed Indexing, as I have not found anyone else who can lay claim to that. Shiller pointed out the predictive power of PE10 but never discussed how to incorporate it into asset allocation, as far as I know.”

5) ”Any data mining that I am doing is in favor of buy-and-hold, not in favor of market timing.”

6) “The findings for “market timing” are so robust anyway, that it hardly matters how we do it.”

7) “What you see in the top part of the graph for each year is the amount of wealth accumulated after 30 years for someone following Buy-and-Hold against someone following Valuation-Informed Indexing….Valuation-Informed Indexing provides more wealth for 102 of the 110 rolling 30-year periods, while Buy-and-Hold did better in 8 of the periods.”

8) “I will take steps in my final paper to test a wide variety of assumptions about asset allocation, valuation-based decision rules, whether the period is 10, 20, 30, or 40 years, lump-sum vs. dollar-cost averaging, and so on, and to show that the results are quite robust to changes in any of these assumptions.”

9) “On a risk-adjusted basis, market-timing strategies provide comparable returns as a 100 percent stocks Buy-and-Hold strategy but with substantially less risk. Meanwhile, market timing provides comparable risks and the same average asset allocation as a 50/50 fixed allocation strategy, but with much higher returns.”

10) ”If everyone increased exposure after a market fall and vice versa, then this would dampen out the big swings in the market aggregates, and we might get shallower boom/bust cycles.”

11) “Yes, Virginia, Valuation-Informed Indexing Works!”

12) “I wrote up the programs to test your Valuation-Informed Indexing strategies against Buy-and-Hold, and I must say that the results look very promising…. I am quite excited about the findings so far. As you say in the podcast, Valuation-Informed Indexing should beat Buy-and-Hold about 90 percent of the time, and I am getting results that support this for various strategies.”

13) ”It makes complete sense to have an equity allocation that is in some way flexible. Having a completely inelastic demand for equities is a bit bonkers; no-one acts that way with life’s other important commodities.”

14) “I have been toying with the idea of sending the paper to the Journal of Finance, which is the most prestigious journal in academic finance.”

15) “Now that I am accounting for risk, I am even more amazed by how well Valuation-Informed Indexing works.”

16) “My idea is to show many different tables with results over the whole period for returns and risks. Valuation-Informed Indexing always provides more returns for often less risk.”

17) “No matter what I try, Valuation-Informed Indexing will still perform better in 85-95% of cases for 30 years.”

18) “The traditional approach to retirement planning (as described on pages 10 and 11 of The Bogleheads’ Guide to Retirement Planning, for example) is counterproductive and possibly damaging.”

19) “Retirees now frequently base their retirement decisions on the portfolio success rates found in research such as the Trinity study…. This is not the information that current and prospective retirees need for making their withdrawal rate decisions.”

20) ”Though I was only trying to do an Old School safe-withdrawal-rate study, all that I ended up doing was showing in a different way what you had been saying all along: the safe withdrawal rate changes with valuations.”

21) “Valuations are the driving factor. ”

22) “Naturally, I am finding that Valuation-Informed Indexing can allow you to reach a wealth target with a lower savings rate, use a higher withdrawal rate, and also have a lower “safe” savings rate, than a fixed allocation.”

23) ”I think I should stay publicly quiet for a while, as I really don’t want anyone sending messages about any topics to officials at my university.”

24) “I don’t want them [the Goons] working behind the scenes to derail me.”

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

What a difference a threat to get the father of two small children fired from his job has on an investing discussion, eh?

Whatever could I have been thinking when I said that lots of my Goon friends will someday be serving long prison sentences as a result of the 11-year cover-up?

Long live Buy-and-Hold! It’s science! With a Marketing Twist!

Rob

“If You Goons Want to Sign Off on a Deal in Which I Agree to Never Say Anything Negative About Buy-and-Hold and Only to Promote Valuation-Informed Indexing, I Will Sign in 10 Seconds. IF You Agree Not to Make Claims That Timing Doesn’t Work. It’s Because You Make Such False Claims That I Am Required to Point Out Their Falsity.”

by

Set forth below is the text of a comment that I recently put to the Goon Central site:

he’d spend about 80% of his waking hours wailing against Chocolate Cake, with a few mentions of the merits of cherry cake.  but mostly against Chocolate. 

I agree with you that this is a bad idea strategically, Dab.

I had a fellow come up to me at the Speed Networking Event at FinCon13 who said that he has checked out my blog on several occasions. He noted that he saw something about “a Buy-and-Hold Mafia” and presumed that he must have missed out on some background. I thought that was both very funny and very telling re my marketing difficulties. People lose confidence in anyone who talks about a Buy-and-Hold Mafia. I am not so dumb that I do not get that. I get that loud and clear.

The other side of the story is that The Buy-and-Hold Mafia is a reality and the tale must be told for that reality to come to an end.

I put up my famous post pointing out the errors in the Old School safe withdrawal rate studies on the morning of May 13, 2002. I didn’t know it at the time but discovered later that Bill Bernsteinzzz had published “The Four Pillars of Investing” on April 1, 2002, and wrote (in a confusing and hard-to-follow way) about the errors in the Old School studies in that book. So an argument can be made that I was not first, that Bill beat me by six weeks!

Now —

Say that there was no Buy-and-Hold Mafia.

The natural thing for Bill to do would have been to talk about the errors in the Old School studies in all his speeches and talks and thereby help make his book famous and sell millions of copies. If he had played it that way, nothing I starting saying on May 13, 2002, would have been considered even a little bit controversial. Things would have worked out better for me AND for Bill AND for Greaney AND for millions of middle-class investors. So why the heck didn’t Bill (who is obviously a very smart dude) not play it that way?

He didn’t play it that way because The Buy-and-Hold Mafia would have eaten him alive and he knows it. He wouldn’t have been able to post at the Bogleheads Forum any more. Bogle wouldn’t provide blurbs for his book jackets anymore. He wouldn’t be interviewed for articles in Smart Money anymore. His career would have come to an end. So he made a determination that it was better to write about the errors in a gobblygook manner that wouldn’t offend those still trying in the year 2013 to make a living pumping the Buy-and-Hold garbage. You Goons love Bill Bernsteinzz today. You hate Rob Bennett with a burning passion. The difference is that I stated things clearly and Bill used enough gobblygook to remain on your good side.

We need to change that. We cannot change it without having a national debate about the Buy-and-Hold Mafia and all the financial devastation it has brought to millions. If there were another way to do this, I would choose the other way. There is no other way. So, yes, I have elected to play it the way I play it, knowing that that means that I take a big marketing hit.

If you Goons want to sign off on a deal in which I agree to NEVER say anything negative about Buy-and-Hold and to ONLY promote Valuation-Informed Indexing, I will sign that piece of paper in 10 seconds. IF it contains a provision that you won’t come to my threads making all sorts of claims about how there are “studies” showing that timing doesn’t work and all your other garbage. It’s because you make such false claims that I am required to point out the falsity of such claims. Wade Pfau researched the question carefully. There has never been a single study showing that long-term timing doesn’t work. So the claim that timing doesn’t work is 100 percent deception without a tiny grain of truth to it. If no one makes the claim, I don’t need to mention that reality. If someone makes the false claim, I am left with no other ethical choice, marketing considerations be damned.

The background here is that the Buy-and-Holders achieved huge advances. And they personally practice what they preach. But had Shiller published his “revolutionary” (his word) research in 1971 rather than in 1981, there would not be a single Buy-and-Holder today, every last one of us would be Valuation-Informed Indexers. That’s the entire problem. The Buy-and-Holders have their pride wrapped up in a strategy that has long been discredited by the academic research. So they engage in these insanely abusive tactics to keep the word from getting out.

I LIKE the Buy-and-Holders. I called myself a Buy-and-Holder until the evening of August 27, 2002, when Greaney threatened to kill my wife and children and 200 Buy-and-Holders endorsed the post. It was made clear to me on that day that the reasons why people follow Buy-and-Hold strategies TODAY are emotional and not intellectual, that Buy-and-Hold has become the OPPOSITE of what it was originally intended to be (a research-based approach). So I had to move on, give a name to the first true research-based approach and further develop that approach to the best of my abilities.

I am 100 percent happy to talk ONLY about Valuation-Informed Indexing and to never mention Buy-and-Hold again for the remaining days of my life.

But how the heck do we get from where we are today to that magical place without Jack Bogle getting up on a stage and saying the words “I” and “Was” and “Wrong” (or at the very bare minimum “I’m” and “Not” and “Sure”)?

I personally do not see any other way it can be done. Buy-and-Hold must be destroyed for Valuation-Informed Indexing to become the dominant model.

If someone has some bright ideas re another way it can be done, I am all ears.

My AIM is to advance Valuation-Informed Indexing, not to destroy Buy-and-Hold. But it’s pretty darn hard to achieve that aim when I have Buy-and-Hold Goons threatening to kill family members of any poster who puts up a post reporting honestly on what the peer-reviewed academic research of the past 32 years says about these matters.

So, yes, I get it that I hurt myself from a marketing perspective by calling out the Buy-and-Hold Mafia. And I will continue to do so. Because there is no other way to get us all from this awful place where we find ourselves today to the wonderful place that deep in out hearts we all want to reside tomorrow.

Tell me another way it can be done and I am your guy.

If there is no other way, then we continue on the path that ends with you Goons being put in prison cells for a long, long time following a price crash that in all likelihood puts the rest of us in the Second Great Depression.

We all want the same things. We have a legal system that permits us to achieve them together. And then we have you Goons and your terrorist tactics for keeping millions of people from learning about the errors in the Old School studies, why they were made, and what the correct SWR numbers are.

I am a Teddy Bear-type poster, as Petey Person once pointed out.

I put on my Frank Perdue act because I have been given no other options.

Do you and your Goon friends have some new options to suggest, Dab?

If you have something positive and constructive and life-affirming in mind, now would be a good time to work up the courage to spill it.

But then Goons never do that sort of thing, do they?

My best wishes

Rob

“We Need to Permit People That Possess Personal Integrity to Work in This Field. We Need Their Input. We Need to Let the Many Thousands of People Who Work In This Field And Who WANT to Evidence Personal Integrity that, Starting Here, Starting Now, It Is Okay to Do That.”

by

Set forth below is the text of a comment that I recently posted to the Goon Central board:

Hey, Rob — is this “Free-n-Open” enough for ya?
Dave Ramsey, Christine Benz, Mike Piper, Wade Pfau, et al mix it up with some pretty vigorous words and thoughts over on Money™! I thought the Buy-n-Hold mafia had this kind of ‘off-the-reservation’ chatter all clamped down!  GOONS: To the Gooncopter! LOL
>
Did they talk about how Mel Lindauer uses threats of physical violence to block honest posting on safe withdrawal rates at the Bogleheads Forum and about how Mike Piper keeps it zipped about that, Drip Guy? That’s something that people need to knowto assess both what they are hearing from Mike Piper’s blog and from the Bogleheads Forum and from the Big Shot “experts” who promote their books at the Bogleheads forum.Personal integrity matters, Drip Guy.I have been saying that since Greaney put forward his first death threat.Personal integrity matters.

Yes, even in the investing advice field.

When we all agree on that, we all move forward to the greatest period of economic growth in U.S. history.

I think it would be fair to say that every last one of you Goons would play it a different way if we could all go back to the morning of May 13, 2002, and have a do-over.

We cannot do that. There is no reverse time machine.

The best we can do is to bring the Campaign of Terror to a complete and total stop at the close of business today and then work together to bring about the transition from Buy-and-Hold to Valuation-Informed Indexing.

I will help in any way possible.

I will NOT post dishonestly on safe withdrawal rates. I will NOT. I will NOT say that those studies are analytically valid. Please get that idea out of your head.

To aid the 11-year cover-up of the errors in those studies is to participate in an act of financial fraud. That’s a felony. That’s prison time. I am NOT interested.

Could I make it any more clear where we stand?

No, the discussion you point to was not an honest discussion. Mike should have been talking about the intimidation tactics he has seen at Bogleheads. Dave should have offered to help us all out with that. Wade should have been talking about the threats that were made to get him fired from his job because he co-authored the most important research paper in this field in the past 30 years. He should have told Dave about how Jack Bogle has been informed about those threats and failed to DO SOMETHING about them.

Personal integrity matters, Drip Guy.

How many ways can I say it?

All of the studies in the world don’t count for squat once you give up your personal integrity.

We need to permit people that possess personal integrity to work in this field. We need their input.

We need to let the many thousands of people who work in this field and who WANT to evidence personal integrity that starting here, starting now, it is okay to do that, that the Buy-and-Hold Era has come to an end and we are now working together to develop and promote Valuation-Informed Indexing, the first HONEST and ACCURATE research-based approach.

We all want the same thing, Drip Guy. We don’t get it by failing to speak up when we see death threats and board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs.

Personal integrity matters in the investing realm just as much as it matters in all other realms.

Really.

Seriously.

For true.

I naturally wish you the best of luck in all your future endeavors, my long-time dishonest posting friend.

Rob

“Following the Next Crash, We Will See All Kinds of Things Come Out That We Can Barely Imagine Today. I Believe That We Are Going to Hear Shiller Say That He Has Been Intimidated FOR YEARS. Until We Hear Testimony Taken Under Oath, We Won’t Be Able to Say How Many Will Be Going to Prison.”

by

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

Rob,

How many people are going to prison. Who will be paying you the 500 million?

I’ll offer you my impressions, Anonymous. That’s the best that I can do given the unique circumstances that apply. We have never as a nation been in a situation like this before. These are entirely uncharted waters.

There are millions of good and smart and hard-working people who believe that Buy-and-Hold works and who naturally share that belief with friends and neighbors and co-workers and fellow community members. These people have obviously never done anything wrong and have zero chance of going to prison. I was one of these people myself until the night of August 27, 2002, the night that John Greaney threatened to kill my wife and children if I continued to post honestly on safe withdrawal rates. It was when I saw 200 people endorse his post that I saw how emotional a strategy Buy-and-Hold was and knew that it was not for me.

The next layer down is people who participated at discussion boards at which the Buy-and-Hold Goons employed intimidation tactics to drive away those with an inclination to post honestly about the last 32 years of peer-reviewed academic research and who failed to speak up about it. That’s dishonorable behavior. Those people helped the 11-year cover-up of the errors in the Old School safe withdrawal rate studies in an indirect way. A case could be made that those people were in some small way engaged in an act of financial fraud. But I would be very surprised if any of those people were prosecuted. Prosecutors need to allocate limited resources in an intelligent manner. Limited resources are not going to be directed to people whose only “crime” is that they kept quiet. Those people will not be going to prison.

The next layer down is people who actively participated in the cover-up by putting up intimidation or deception posts but only on a small number of occasions. I believe that no one will be prosecuted for doing this sort of thing on a small numbers of occasions. Again, there are bigger and more important fish to fry.

Going down another layer, we have people who participated in long-running smear campaigns aimed at keeping middle-class investors from learning about the errors in the Old School SWR studies and about the dangers of Buy-and-Hold investing strategies in general. These are the people most likely to be prosecuted, in my assessment. People have sympathy for those who make one or two mistakes. Sympathy wanes when people make a career out of the destruction of human lives. It is to protect ourselves from these sorts of individuals (The Lindauerheads and the Greaney Goons) that as a society we adopted the laws against financial fraud in the first place. I am highly confident that the Lindauerheads and the Greaney Goons will be spending many years in prison cells.

Then we have people like Mike Piper, at the Oblivious Investor blog, and Carl Richards, at the Behavior Gap blog. Both Mike and Carl have done a great deal of top-notch work. They are both friends of mine and they have both been highly complimentary of my work. They’re both smart. They’re both good guys. It pains me to think that there is anything more than a zero chance that either Mike or Carl (or any of the many others in similar circumstances) will be going to prison. Yet it is a stone cold fact that both Mike and Carl (and the many others) provided HUGE help to the 11-year cover-up of the errors in the studies that are in the process of causing millions of middle-class people to suffer failed retirements. They committed the act of financial fraud as that crime is defined in the statute books.

Will Mike and Carl (and the others) go to prison? I don’t feel that I can answer that question. I am too close to all this. I have personal friendships with these people and I naturally hate the thought of seeing my friends carted off to prison cells. On the other hand, I also care about the millions of middle-class people whose lives are in the process of being destroyed. I think it is fair to say that after the next price crash those people are going to be very, very, very angry to learn that the errors in the Old School studies have been public knowledge since the morning of May 13, 2002, and that these people engaged in multiple acts of financial fraud to keep people from learning this. I can with my heart hope that Mike and Carl (and the others) will not go to prison while acknowledging with my head that my heart may not rule the day re this one.

Then we have all the people who have known about the dangers of Buy-and-Hold for many years and kept it zipped because they didn’t want to see their careers destroyed by the Buy-and-Hold Mafia. Rob Arnott reported that, when he asked a convention of academic researchers whether they thought Buy-and-Hold could work, only a tiny number of hands went up. Yet when he asked the same researchers whether they rooted their research in a belief in Buy-and-Hold, nearly every hand in the room shot up in the air. That’s obviously not the way in which academic researchers are supposed to behave. That’s obviously not ethical behavior. I believe that these people will be held to a far higher standard than non-experts. These people are paid to know this stuff. They can’t say “Oh, I haven’t been able to find time over the past 32 years to keep up with any new developments in the field.”

There are thousands of cases of this kind. Shiller published his “revolutionary” (his word) research in 1981. I didn’t come on the scene until the morning of May 13, 2002. I saw intense hostility evidence itself following my first post. So the cover-up had obviously been going on for a long time before I came on the scene. I believe that, following the next crash, we will see all kinds of things come out that we can barely imagine today. I believe that we are going to hear Shiller say that he has been intimidated FOR YEARS. Lots of others will be saying similar things. Until we hear testimony taken under oath on all that has been going on, I don’t think that any of us will be able to make fully informed statements about how many will be going to prison or for how many years.

Finally, there are cases like the cases of my good friends Wade Pfau and Jack Bogle. I love these guys. There would be no Valuation-Informed Indexing if not for the huge contributions of Jack Bogle and there would be no peer-reviewed academic research with my name on it showing millions of middle-class investors how to reduce the risk of stock investing by 70 percent if not for the huge contributions of Wade Pfau. So I am biased.

The other side of the story, of course, is that both Jack and Wade are in circumstances in which they could bring the economic crisis to an end with very little effort on their part. Wade just needs to get that study written up on the front page of the New York Times and Jack just needs to address the Lindauer matter so that the hundreds of posters who have expressed a desire that honest posting be permitted at the Bogleheads Forum can see that desire given recognition in the real world.

I believe that whether Wade and Jack go to prison or not will likely depend on the answers they give to questions put to them under oath. People are going to want to know how deep their fears were. Were family members threatened? How did they rationalize their behavior to themselves? How deep was their cognitive dissonance? All this kind of thing.

As for the $500 million, that’s just a number that I put forward as part of an effort to provide an incentive for the Wall Street Con Men to seek a settlement prior to the next crash. Any person who has participated in the cover-up is liable to me for the financial damages I have suffered as a result of the damage done to my business. The amount of the damages is obviously a number far bigger than the number I put forward as a possible settlement amount. I did that because I don’t want us to go into the Second Great Depression. I am happy to settle for $500 million if it brings the economic crisis to an end and helps us on our way to the greatest period of economic growth in our history. I am far better off getting $500 million to spend in a thriving economy than I would be to receive a far larger amount in a society that is in a state of collapse. No one wins if we fail to bring this matter to a successful conclusion prior to the next price crash, in my assessment.

Rob

“Michael Kitces and Wade Pfau Do Wonderful Work. And Their Work Is Of Course PARTLY Honest. But Fully Honest? No Way, No How. Both Michael and Wade Know About You Goons. Why Don’t They TELL People About These Things?”

by

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

Michael Kitces and Wade Pfau continue to post honestly on investing in retirement!

http://www.bogleheads.org/forum/viewtopic.php?f=10&t=123070&newpost=1802104

I don’t agree with you, Trebor.

Both Michael and Wade of course do wonderful work. And their work is of course PARTLY honest.

But fully honest?

No way, no how. Not a close call.

Both Michael and Wade know about you Goons. They know about the death threats. They know about the board bannings. They know about the tens of thousands of acts of defamation. They know about the threats to get academic researchers fired from their jobs.

Why don’t they TELL people about these things?

These are the things that people need to know about for us all to join together and bury the smelly Buy-and-Hold garbage 30 feet in the ground, where it can do no further harm to humans and other living things.

When we have done that, we will have THOUSANDS of academic researchers producing good work on hundreds and hundreds of important topics that we are not seeing today because they are afraid to step forward.

Acts of financial fraud are news, Trebor. The fact that the Buy-and-Holders feel that there is no way to “defend” their strategy without engaging in acts of financial fraud tells us all something about the level of confidence that the Buy-and-Holders themselves have in their ideas.

I applaud Michael and Wade for the good work they do. But I believe that the work that I am doing is far more important. We need to bring the Campaign of Terror to an end. We need to bring the Ban on Honest Posting to an end. We need to launch a national debate on what really works in stock investing. We need to bring the economic crisis to an end. We need to bring on the greatest period of economic growth in our history.

To the extent that the work that Michael and Wade are doing causes people to question Buy-and-Hold, it is of course valuable work. But we will make MUCH quicker time once EVERYONE feels free to do honest work on ALL investing-related topics. I want to hear my good friend Jack Bogle tell us what he really believes today about how stock investing works. I want to hear the same from Bill Bernstein and Larry Swedroe and Scott Burns and lots and lots of others. The paper you point to is not going to get us there. The paper you point to does not go to the most important issue — the need for all of us working in this field to demand recognition of our right to behave in a manner fitting people of integrity.

Integrity trumps everything else, Trebor. That’s why the first 11 years of our discussions have been so contentious. We are not really talking about whether Greaney should correct his study or not. Everyone knows that he should have corrected it within 24 hours of the time he learned of the errors he made in it. What we have been talking about is whether we are going to as a society insist that the same ethical standards that apply in every field other than the investing advice field apply in the investing advice field as well.

We are going to conclude that they must.

As humans, we are not capable of coming to any other conclusion and continuing to survive. Humans are flawed creatures. But they have something within them that can be temporarily but never permanently denied that compels them to at least try to behave in an ethical manner.

We have been denying that important something within us for 11 years now. To our great financial misfortune. But we all know inside that we cannot permanently deny what we are. So we will one day open the internet to honest posting on safe withdrawal rates and many other critically important investment-related topics.

That will be a wonderful day for all of us. For Michael. For Wade. For Jack. For Bill. For Larry. For Scott. For Rob. Even for you Goons (your prison sentences are a small concern in the grand scheme of things — you are far better off being in prison in a society that is flourishing than being free in a society that is collapsing).

We’re getting there, Trebor. It’s been a wild ride. But we are getting there slowly but surely.

Please hang in there, my long-time abusive posting friend.

Rob the Optimist