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“My Guess Is That About 10 Percent of the Population Follows Research-Based Strategies Today. I’d Like to Make It 90 Percent!”

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

Roger Wohlner, owner of the The Chicago Financial Planner blog: Rob, interesting stuff, but it doesn’t address my question. Can you point to investment results in the real world supporting the valuation approach to investing you advocate? Is their somebody actually achieving superior results using this approach?

Roger:

Here are some people who I would talk to if you want to talk to real live people who have followed valuation-informed strategies and who obtained good results from doing so:

1) Rob Arnott — He told me that my ideas on investing are “sound.” I am sure that Rob has clients who follow his advice. He would have many more of them if academic researchers felt free to do research showing how successful his strategies are. Rob told me that two young researchers who wanted to do research on his ideas were taken aside and warned that they would be doing damage to their careers if they published such research. That’s the problem that I am always talking about. But if all you are looking for is people to say “I did this and it works,” I am confident that Rob can give you names of people to call.

2) Robert Shiller — Shiller is of course the grandfather of Valuation-Informed Indexing. He has some sort of financial advisory business now in addition to his academic work. He could point you to people. Like Rob Arnott and myself, Robert Shiller has faced pressure from Buy-and-Holders to keep it zipped. He has referred to these pressures in oblique ways in a number of his public comments. I have a theory that Shiller may have already written a follow-up to “Irrational Exuberance” in which he spells out the practical, how-to implications of his research findings and that he is just waiting until after the next price crash to publish it because he believes that it will get a better reception at that time.

3) Bogleheads Forum Posters — I met a good number of people at the Bogleheads Forum who follow valuation-informed strategies. People would say things like “I have been doing what Rob advocates for many years and obtaining very good results.” It would be nice if you could just go to the forum and ask for people who have followed this strategy to identify themselves and then talk to them. I don’t think the owners of the forum would permit that. But you might be able to run some searches that would identify those people and then send them e-mails. They keep quiet. They know what will happen to them if they share their experiences in plain, easy-to-understand statements. But these people are like all other people. They want to help their friends. So, if you listen carefully, you will see them trying to work around the limits that the site owners place on them and trying to help out their fellow community members with the real story from time to time.

4) Brett Arends at the Wall Street Journal — Brett writes about the problems with Buy-and-Hold frequently. He wrote a column saying that Buy-and-Hold is “hooey” because “they’re leaving out more than half the story.” I am sure that he got lots of letters from readers of the paper telling him that they followed true research-based strategies. Again, his editors need to be careful re how much they let him say or the Wall Street Con Men will remove their advertising from the Journal as punishment. But I am confident that Brett can give you names of real live people who follow research-based strategies.

5) Michael Kitces — Michael is a Maryland financial planner. Michael told me shortly after the 2008 crash that a lot of financial planners were talking privately about whether they should start telling the truth about what the research says. Clients were leaving their advisors because the long-term results under Buy-and-Hold were so bad that it was scaring them that they would never be able to retire. If you read Michael’s blog you will see that he is always trying to sneak honest stuff into it without being too obvious. Michael knows the story. I am sure that he has many clients who follow a research-based approach.

6) Adam Butler — Adam is a portfolio manager at Butler, Philbrick & Associates. He told me that the industry is trying to contain the discussion of what the research in this field says because if the truth gets out clients will know that the Buy-and-Hold emperor is wearing no clothes. He can give you some names.

7) Wade Pfau — Wade of course no longer publishes fully honest research since the Buy-and-Hold Goons threatened to get him fired from his job if he continued doing so. But Wade was very excited to learn how stock investing really works (I reported on a good number of his e-mails to me and I can provide you links to those reports if you think they would help) and he is a good guy. He now travels in circles where people talk privately about the dangers of Buy-and-Hold (Wade is friends with Michael). So I am sure that he now knows people who follow research-based strategies and who obtain good results.

8) Todd Tressider — Todd writes the Financial Mentor blog. He wrote an in-depth article pointing out the errors of the Old School safe withdrawal rate studies and he has been selling a report on Amazon on how to do retirement planning in a research-based way. I am sure that he has heard many good stories from readers of his report.

9) Rich Toscano with Pacific Capital Associates in San Diego told me that “you are doing a great service.” Rich obviously gives honest investing advice to his clients. He could let you know about some success stories.

10) Carolyn McClanahan, the Director of Financial Planning for Life Planning Partners, told me that her firm advocates Valuation-Informed Indexing. So she could put you in touch with some people.

People have been following research-based strategies for a long time, Roger. People get into this field for the same reasons that people get into other fields, because they want to do good work and feel good about themselves. So there naturally are people who give honest advice rooted in the academic research. If you go looking for them, you will find them. They are out there. My guess is that about 10 percent of the population follows research-based strategies today.

I’d like to make it 90 percent!

I could use your help!

The members of the Buy-and-Hold Mafia have big and scary Goons doing their dirty work!

But I’ll let you in on a little secret. Those big and scary Goons cannot do a thing to us if we stick together. Their intimidation tactics work only if the good people react in fear to them. If we stand up to them and just go about our business, they go down. In some cases, they land in prison! Once prison sentences are announced, that will go viral and I have a funny feeling that we won’t be hearing too much anymore about the use of Goon tactics being used by the Buy-and-Holders to spread their “ideas.”

Anyway, those are some names to get you started. I believe that you will find that the closer you look into this, the better you will feel about it. I have been developing the Valuation-Informed Indexing concept for 11 years now and I can tell you that it has never once let me down. This is good stuff.

Take care, man.

Rob

“What Makes Buy-and-Hold Different Is That its Advocates Claim That It Is Rooted in Peer-Reviewed Academic Research. For Buy-and-Hold to Survive, Buy-and-Holders MUST Engage in Criminal Acts. Otherwise, There Are Going to Be Thousands of People Telling the Truth About What the Academic Research 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:

we can clearly look at the Internet and see that all those opinions are out there, including yours.

I am not aware of a single case in which the advocates of any other investing strategy behaved in the manner in which I have seen Buy-and-Holders behave for 11 years now. Never have I seen a non-Buy-and-Holder make use of death threats or board bannings or tens of thousands of acts of defamation or threats to get academic researchers fired from their jobs.

These are criminal acts, when employed as part of an 11-year cover-up of errors made in retirement studies. That’s why only Buy-and-Hold advocates will be going to prison following the next price crash and not the advocates of any other investing strategy.

The Buy-and-Holders are in a unique position. The claim that it is not necessary for investors to consider price is of course 100 percent absurd. THere has of course never been even a tiny sliver of support for this absurd claim anywhere in the peer-reviewed academic research. Wade Pfau, who holds a Ph.D. in Economics from Princeton searched the literature and confirmed that this is so. Just to be 100 percent sure, he went to the Bogleheads Forum and asked if anyone there knew of a single study that supported the Buy-and-Hold “strategy.” John Bogle was not able to come up with anything. Neither was Bill Bernstein.Neither was Larry Swedroe. Neither was Rick Ferri.

That’s because there is no such study. The claim that there is is a lie. It is a lie that has put hundreds of billions of dollars in the pockets of the Wall Street Con Men. But it is also a lie that has put millions of middle-class people out of work.

Those who committed felonies in support of that lie will go to prison as a result. What else would you expect?

What makes Buy-and-Hold different is that it is one of only two investing strategies (Valuation-Informed Indexing is the other one) that claim to be rooted in peer-reviewed academic research. Millions of middle-class Americans like the idea of basing their investment decisions on the findings of peer-reviewed academic research. The problem, of course, is that there is zero support in the academic literature for a pure Get Rich Quick approach. To make the claim that there is research supporting a pure Get Rich Quick approach, you HAVE to lie. There is no honest research-based claim that can be made in support of pure Get Rich Quick strategies. This is why Valuation-Informed Indexing is viewed by Buy-and-Holders with such alarm. Valuation-Informed Indexing is the first TRUE research-based strategy.

For Buy-and-Hold to survive, Buy-and-Holders MUST engage in criminal acts. Otherwise, there are going to be thousands of people telling the truth about what the academic research says. But those criminal acts will lead to prison sentences following the next price crash. People do not take kindly to seeing their retirement accounts destroyed by the tactics employed by the sorts of individuals who have posted in “defense” of Mel Linduaer an John Greaney.

For obvious reasons.

Rob,the Fellow Who Believes That the “Experts” in This Field Should Be Telling the Truth About Stock Investing to the Millions of Middle-Class People Who Need to Know It (Or at a Very Bare Minimum Permitting Others to Tell the Truth)

“We ALL Are Affected by What Our Peers Say About Us. And the Buy-and-Holders Are So Vicious and Ruthless in Their Hateful Comments About Those Who Recommend Research-Based Strategies That There Is Not One Person Alive Today Who Has Demonstrated a Willingness to Take Them On.”

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

On what basis do you think there will be Congressional hearings over your disagreements with the Bogleheads? Other types of investors such as the Graham disciples have been able to espouse their views openly and without the sort of harassment that you allege.

NO ONE is speaking with 100 percent honesty on stock investing matters today, Goon. NO ONE.

I even apply that statement to myself. I TRY to say what I truly believe. I try very hard. But I know from experience that I do not always manage to pull it off.

We ALL are affected by what our peers say about us. And the Buy-and-Holders are so vicious and ruthless in their hateful comments about those who recommend research-based strategies that there is not one person alive today who has demonstrated a willingness to take them on.

That includes Robert Shiller, the Yale Economics Professor who published the research discrediting the Buy-and-Hold strategy 32 YEARS AGO. Shiller pulls his punches ALL THE TIME.

I am the person who discovered the errors in the Old School SWR studies over 11 years ago. That was one of the most important discoveries in the history of personal finance. Millions of middle-class retirements are at stake. NOT ONE OF THE DISCREDITED STUDIES HAS BEEN CORRECTED to this day.

Academic Researcher Wade Pfau worked with me for 16 months to correct this problem. He saw the need for the studies to be corrected. He wrote to the authors of one of the studies. The response of the Buy-and-Hold Mafia was to threaten to get Wade fired from his job. NO ACADEMIC RESEARCHER SHOULD EVER BE INTIMIDATED IN THAT WAY. We are talking about the biggest case of financial fraud in the history of the United States.

My job is to see to it that as few people as possible go to prison. The key to that task is getting some of the leading figures in this field (people like my good friend Jack Bogle) to come clean. When Bogle speaks out about the 11-year cover-up of the errors in the retirement studies, it is all over. The next day, we will see articles in every major newspaper letting people know that informed people in this field have known for YEARS now that Buy-and-Hold is a big pile of smelly garbage.

But Bogle is very afraid to speak out. He worries that, if he does tell the truth, the same sort of tactics that were used against Wade Pfau will be used against him. We are in a Catch-22. We are ALL afraid to post honestly. But we will all remain afraid to post honestly only so long as we all remain afraid to post honestly. Once a small number of us work up the courage to tell the truth about what the last 32 years of peer-reviewed academic research says, NONE OF US WILL BE AFRAID ANY LONGER. Because we all will see that the Buy-and-Hold Mafia cannot do a thing to a group. Their power to intimidate us comes to an end when a group of us vow to stick together and protect each other when the Buy-and-Holders attack us.

The Graham disciples don’t think that death threats are appropriate in discussions of stock investing. They don’t think that board bannings not justified by the published rules of the investing sites are appropriate. They don’t think that tens of thousands of acts of defamation are appropriate. They don’t think that threats to get academic researchers fired from their jobs are appropriate.

Do you hear the Graham disciples speaking out on those important issues?

Neither do I.

The Graham disciples are afraid to take on the Buy-and-Hold Mafia and all its power and wealth and connections.

All of us are.

But we cannot bring the economic crisis to an end without working up the courage to do so.

Please do all you can to help us all work up the courage.

Take care, my old (Goon) friend.

Rob, the Graham Disciple

“The Presumption Is That Those Who Are Expert in Investing Know the Most About Investing. People Are Properly Going to Wonder — If There Really Is 32 Years of Peer-Reviewed Academic Research Showing that Valuation-Informed Indexing Is Superior to Buy-and-Hold, Why Isn’t Valuation-Informed Indexing Being Actively Promoted at Every Investing Site?”

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

I heard the goons have built up a strong hold on social media sites like reddit. Have you checked them out yet?

I had a thread once on Reddit. My recollection is that someone saw one of my “Beyond Buy-and-Hold” columns and posted it there. It was a good discussion, there were posts on both sides of the issue and there were comments that didn’t take sides, that just asked questions.

Being on Reddit every day would be a huge plus. If Valuation-Informed Indexing became popular on Reddit, the ideas would spread to other sites. Eventually, that would create pressure for the investing sites to discuss research-based strategies as well. So your idea is certainly a good one.

There are two problems.

One, the Buy-and-Hold Goons obviously are aware that word will spread if they let Valuation-Informed Indexing become popular on a large social media site. Before that happens, they will come in and disrupt the threads. We have seen this happen at scores of sites that are not primarily investing sites.

Two, once the disruptors come in, the people who are being persuaded at the social media sites will need to decide who to believe. Their presumption is that those who are expert in the field of investing are the people who know the most about investing. They are properly going to wonder — If there is really 32 years of peer-reviewed academic research showing that Valuation-Informed Indexing is superior to Buy-and-Hold, why isn’t Valuation-Informed Indexing being actively promoted at every investing site?

What do we tell them? That the Buy-and-Holders are so worried about the prison sentences that are going to follow as a result of their 11-year cover-up of the errors in the Old School safe withdrawal rate studies that they have vowed to destroy the career of any academic researcher who posts honestly on any question relating to stock investing? That puts us right back where we were before we took our cause to Reddit, does it not?

The economic crisis affects everyone living in the United States today, Goon. That obviously includes people posting on Reddit. So, yes, it makes all the sense in the world for us to spread these ideas on Reddit. But it also includes people posting on the Bogleheads Forum and the Early Retirement Forum and Motley Fool and Index Universe and every other investing site. We need to be posting daily on the dangers of Buy-and-Hold at BOTH sorts of sites.

And of course those trying to “defend” Buy-and-Hold in the Year 2013 (32 years after the peer-reviewed academic research in this field showed that there is precisely zero chance that a Buy-and-Hold strategy could ever work out well for a single long-term investor) know that there is a danger in permitting honest posting re the academic research at ANY sort of site and respond appropriately when they learn that people are having honest discussions re the massive financial losses they have caused millions of us.

We need honest posting on the last 32 years of academic research at non-investing sites. We also need honest posting on the last 32 years of academic research at non-investing sites. The key to opening the entire internet up to honest posting on safe withdrawal rates and scores of other critically important topics is announcing prison sentences for those who have posted in “defense” of Mel Lindauer and John Greaney. When people see that there are personal consequences that follow from committing acts of financial fraud, they will stop doing it. That is why we adopted the laws against financial fraud in the first place. We need to start enforcing those laws in a reasonable manner if we all want to see the Buy-and-Hold Crisis brought to an end.

My best wishes to you, Goon.

Rob the Goon Destroyer

“EVERYONE In This Field Wants the Ban on Honest Posting Lifted. Bogle Has an Inkling that Buy-and-Hold Is a Big Pile of Smelly Garbage. So Does Bernstein. So Does Burns. So Does Swedroe. They Are Scared and Ashamed.”

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

And how exactly will a ‘mafia’ crush those who try to post anonymously here?

You are making a legitimate point with your use of the word “anonymously” here, What. I have said on earlier occasions that people don’t speak up about the trickery of the Buy-and-Hold MAfia because they are afraid of what will be done to them and to their careers if they do. You are making the point that anyone who is afraid of what will happen to his or her career could post anonymously here. That’s so.

It is fair to say that it is not ONLY fear that is holding us back.

I’ve made the parallel before to the situation that applied in the days when people with black skin could not choose any seat on a public bus, but were required to move back to the section of the bus reserved for them.

Why didn’t millions of people speak up about that? They knew it was wrong. It’s not exactly hard to figure out that that sort of thing is wrong. So how did we as a society “get away” with that sort of thing for so many years?

Many were afraid to speak out, just as many are today afraid to speak out against Buy-and-Hold.

But many didn’t speak out against racist laws even to their own friends. They weren’t afraid of their own friends, were they? Why didn’t they speak out?

THEY WERE ASHAMED.

They were too afraid to go public. They felt that racism was so ingrained in our legal system that there was zero chance that it could ever be overturned. So they rationalized. They told themselves that speaking out publicly was not going to do any good. That made them feel ashamed. Given their feelings of shame, they didn’t want to talk about this stuff with their friends any more than they wanted to go public. They kept it zipped.

And many who agree with me that Buy-and-Hold is a big pile of smelly garbage keep it zipped today.

We need an act that gets everyone’s attention. An “I Was Wrong” speech by Jack Bogle would obviously do the job. An announcement of your prison sentence would do the job. A front-page article in the New York Times about the Campaign of Terror would do the job.

EVERYONE in this field wants the Ban on Honest Posting lifted, What. I learned about the errors in the Old School SWR studies by reading Jack Bogle’s book. I think it would be fair to say that he has at least an inkling that Buy-and-Hold is a big pile of smelly garbage or he never would have put the language in the book that taught me what I needed to know. But he also obviously does not feel comfortable coming clean today.

It’s the same with Bernstein. Bernstein told us in an e-mail many years before the Wall Street Journal published an article on the errors in the Old School studies that anyone who was giving thought to using one of those studies to plan a retirement would be well-advised to “FuhGedDaBouDit!’ I think it would be fair to say that he at least suspects that Buy-and-Hold is a big pile of smelly garbage.

It’s the same with Burns. Scott’s first words in response to my first e-mail to him were “You’re right.” He asked me for my telephone number because he wanted to do an interview with me and then write up the story in his column. Someone obviously reached him before that column was put to print. But I think it would be fair to say that our friend Scott Burns too suspects that Buy-and-Hold is a big pile of smelly garbage.

It’s the same with Larry Swedroe. He was kicked off the Bogleheads Forum because he posted honesty there and Mel Lindauer did not take kindly to it. Then he came back with his tail between his legs and promised never, ever, ever to do it again and now he gets heavy promotion for all his books there. I think it would be fair to say that Larry has more than a rough idea as to why I say that Buy-and-Hold is a big pile of smelly garbage.

The biggest reason why people don’t speak up is that they are scared.

But, yes, there is more to it than that.

Once people don’t speak up (either because they are scared or because they just flat-out don’t know – there are millions of ordinary people who have NO IDEA that there is 32 years of peer-reviewed academic research showing that there is precisely zero chance that a Buy-and-Hold strategy could ever work for a single long-term investor), they become ASHAMED that they have failed to speak out.

Posting anonymously doesn’t help those who feel ashamed of having failed to speak out for so long, does it?

Many people believe that we cannot win this battle. They believe that the Wall Street Con Man are just too rich and too powerful for anyone ever to get away with posting honestly on investing-related issues.

Perhaps.

But you know what?

If those people are right, we are all going down anyway!

So it doesn’t matter.

If those people are right, the Wall Street Con Men are going down in the same Second Great Depression that is going to take What and that is going to take Rob. So it doesn’t matter!

What matter is that we do have a chance DESPITE the power and wealth of the Wall Street Con Men.

And what gives me hope is all the signs that I have seen that the Wall Street Con Men themselves want to see all this ugliness brought to a close.

No one held a gun to Jack Bogle’s head and forced him to include in this book the words that showed me that the numbers in the Old School SWR studies were wildly wrong.

No one held a gun to Scott Burns’ head and forced him to respond to my e-mail to him by saying “You’re right” and by asking me for my telephone number.

No one held a gun to Bill Bernstein’s head and forced him to respond to Ataloss’s e-mail by saying that anyone using one of the Old School studies to plan a retirement would be well-advised to “FuhGedDaBouDit!”

No one held a gun to Wade Pfau’s head and forced him to co-publish with me the most important research published in this field in 30 years, research that shows us all how to reduce the risk of stock investing by 70 percent.

Rosa Parks refused to go to the back of the bus 10 years before the incident that made her famous as a symbol of the Civil Rights Movement.

People were still too afraid and ashamed to come to her support in those days. We had to wait for another 10 years to pass.

After the passage of another 10 years, people were ready. Then things happened.

I won’t change the world of investing on my own power, What. It is going to be a community event.

We are not ready as a community today to take this amazing step forward.

We will be soon.

My guess is that it is going to happen following the next price crash.

I sure hope so!

My best wishes to you and to yours, my old friend.

Rob, the Rosa Parks of Personal Finance

 

Bogle and Bernstein and Burns and Swedroe Got Into This Field Because They Wanted to Do Good and Honest Work. After They Serve Whatever Prison Sentences We As A Society Determine Are Appropriate, They Will Be Able to Do It.”

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

Isn’t that what you are trying to do here? How’s that working out for you?

It’s certainly what I am trying to do, Pink.

I have not succeeded in building the community I want to see in place as of this moment in time.

Thanks to you Goons! And your pals in The Buy-and-Hold Mafia!

The investing advice that “works” for those giving investing advice is the opposite of the investing advice that works for those hearing the investing advice. Those giving advice receive a short-term financial benefit from going with a pure Get Rich Quick approach. We all are drawn to GRQ approaches and the appeal is intensely emotional. All salesmen know that the way to make a sale is to form an emotional connection with the sucker — er, the customer!

The problem with Get Rich Quick is that, while it feels wonderful in the short term, it wipes you out in the long run. What works for the salesmen doesn’t work AT ALL for the customers. That’s why today’s investing advice is so poor. That’s why we are in an economic crisis today.

The answer is to get the case for the true research-based approach (Valuation-Informed Indexing) well-known enough that anyone who calls himself an “expert” would be ashamed to be seen promoting Buy-and-Hold “strategies.” The peer-reviewed academic research has shown for 32 years now that there is precisely zero chance that a Buy-and-Hold strategy could ever work for a single long-term investor. The trouble is — most people do not know this! And the Buy-and-Hold Mafia very, very much wants to keep it that way! The Buy-and-Hold Mafia is on the hook for trillions in legal liabilities once people learn what has been done to them.

My job is to get the word out.

Today, we have a Catch-22. People are afraid to tell the truth about stock investing because the Buy-and-Hold Mafia will destroy them if they do. But the thing that gives the Buy-and-Hold Mafia the power to destroy them is that very few know the realities. If people knew what the research said, those who engaged in the tactics engaged in by the Buy-and-Hold Mafia (death threats, board bannings, tens of thousands of acts of defamation, threats to get academic researchers fired from their jobs) would be put in prison for these acts of financial fraud. But not enough know today to make an effective stand. And those who do know are destroyed if they speak up because they don’t have enough others speaking up for them.

So, yes, we need a community where people openly speak the truth about what the academic research says without fear of what the Buy-and-Hold Mafia will do to them. Once we have a community, there’s not a thing the Mafia can do. They will have to flip themselves and start giving research-based advice. Which of course is exactly what deep in their hearts they very much want to do! So everyone wins once that community is in place. It’s a win/win/win/win/win.

The hard part is — How do we get the darn bell on the cat?

We need some people with influence speaking up. That’s it. Once we get an article on the front page of the New York Times, it’s over. We all win! Or once Bogle gives his “I Was Wrong” speech. Or whatever. It all comes to the same thing.

I am sending 50 e-mails each day letting people in various fields (economists, academics, policymakers, bloggers, investing professionals, journalists, etc) know about the threats that were made by the Lindauerheads and the Greaney Goons to get my buddy Wade Pfau fired from his job because he published honest research in this field. Once that story gets big play, it’s over. The economic crisis comes to an end. We enter the strongest period of economic growth in our history. We all are working together to develop the first true research-based model and to mine more and more powerful insights from it.

I want a big, honest community here. Just as I wanted a big, honest community at Motley Fool. JUst as I wanted a big, honest community at Early Retirement Forum. Just as I wanted a big honest community at Bogleheads. And on and on. That’s been the idea going back to the first day.

It needs to be a community that is not controlled by the Wall Street Con Men. So long as what we all say is controlled by the Wall Street Con Men, our communities are negative forces rather than positive ones. The Bogleheads Forum today is encouraging Buy-and-Hold rather than warning people of its dangers. We obviously don’t need any more of that.

So, yes, I am trying to build a community here, and yes, it has been a very, very, very, very hard thing to pull off.

You know what?

It’s worth it.

When the community is in place, we will all be able to live richer lives than we ever dreamed of being able to live before.

That includes you Goons.

And that includes all of my good friends in the Buy-and-Hold Mafia. People like Jack Bogle. And Bill Bernstein. And Scott Burns. And Larry Swedroe. And on and on and on.

All of those people got into this field because they wanted to help people. They wanted to do good and honest work. They cannot do it today. After I get this community off the ground (and after they serve whatever prison sentences we as a society determine are appropriate), they will be able to do it.

It’s good stuff piled on top of good stuff piled on top of good stuff. It’s not even possible for the rational human mind to imagine any possible downside.

So, yes, that is the goal.

Do I wish it were an easier goal to pull off?

I sure do. You got me re that one.

But what’s the alternative?

Engage in financial fraud myself? Huh?

I wish you all the good things that this life has to offer a person, Pink.

Rob the Community Builder

Rob Bennett’s Response to a Goon Claim that “We See Time and Again by Countless Studies That Market Timing Has Been a Failure” — “Please Show Me the URL of ONE.”

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

We see time and again by countless studies that market timing has been a failure.

Please show me the URL of one.

Wade has a Ph.D. in Economics from Princeton. He spent a good deal of time trying to find ONE legitimate study showing that long-term timing is not required. He found nothing.

This so shocked him that he did not trust his own finding. He went to the Bogleheads Forum and asked if anyone there was aware of a single study showing that there is no need to engage in long-term timing. Not one member of that community had ever heard of a single such study.

Not John Bogle.

Not Bill Bernstein.

Not Larry Swedroe.

Not RIck Ferri.

Not anyone.

Rob, the Fellow Who Sees a Subtle Difference Between There Being “Countless” Studies Showing Something and There Being “Zero” Studies Showing That Something

“Lots of People WANT to Tell the Truth About Stock Investing. Wade Does. Bogle Does. Bernstein Does. Lots of My Blogger Friends Do. But Everyone Is Afraid to Be the One to Pin the Bell to the Cat. Whoever Speaks Up Is Destroyed. They Have All Seen What Has Been Done to Me for 10 Years Running Now.”

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I have been contacting numerous people to let them know about my article reporting on The Silencing of Academic Researcher Wade Pfau by The Buy-and-Hold Mafia.

Yesterday’s blog entry  reported on my correspondence with Robert Savickas, Associate Finance Professor at George Washington University Business School. Set forth below is the text of the response I sent to the e-mail by Robert described in the earlier blog entry:

Robert:

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I know that you took back some of the words below after you took a look at the “People Are Talking” section of the site. That was kind. But I want to respond to the point you made in the e-mail below because it is an important one and one that is directed to me by lots of good people who are sincerely trying to help me out,
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Yes, it is 100 percent true that in ordinary circumstances it works better to use a moderate tone. The types of people who I am trying to reach are indeed turned off by the sensationalist/scandalist tone. I hear this a lot. I believe that there are particular circumstances that apply in this case that require me to report things as they have happened, even when those realities cannot be expressed through a tone that is not sensationalist/scandalist.
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Buy-and-Hold is a research-based strategy. Millions of people believe in it. There is now 30 years of research showing that Buy-and-Hold can never work for a single long-term investor.
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That’s the reality. Shiller showed that valuations affect long-term returns. So the risk/reward profile for stocks CHANGES with changes in valuation levels. Even the Buy-and-Holders acknowledge that the investor’s choice of a stock allocation is the most important choice he makes. Yet they urge investors to follow practices that insure that they will rarely be going with the stock allocation that is right for them. How could this be?
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How does an alcoholic react when a friend tells him that he has a problem?
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He reacts with defensiveness, right? He says that he has no problem, that he can quit any day.
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Does that means that he really has no problem, that he really can quit any day?
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It does not. The alcoholic knows on one level of consciousness that he has a problem. He knows this better than anyone else knows it. But he is desperate to suppress this knowledge. He cannot cope with it emotionally. So he lives in denial of it. Those who remind him of the important truth he is trying desperately to suppress incur his wrath. He is not angry at them because he suspects they are wrong. He is angry with them because he knows with certainty that they are right and he cannot bear to have this truth spoken out loud.
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So it is with the Buy-and-Holders. They know on one level of consciousness that it is foolish to stick with a single stock allocation at all times. They know that they have set their retirements back many years by following foolish investing strategies. They know they have hurt their friends by recommending that they follow the same strategies. They know that collectively the Buy-and-Holders caused the economic crisis by failing to sell stocks when prices began rising to insanely dangerous levels. They know all these things and they are desperate not to have to cope with all these realities. So they respond with hate and anger and contempt when they hear someone mention the realities. The anger becomes even greater when the person mentioning the hated realities explains that there is 30 years of peer-reviewed academic research showing that Buy-and-Hold can never work for a single long-term investor.
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It’s not just the ordinary investors who are suffering emotional pain. The “experts” are too. The experts possess great knowledge of all the things about stock investing that can be understood intellectually. But they possess very limited knowledge of the emotional side of stock investing because this side of the story is ignored under the Buy-and-Hold Model. So the experts too become defensive when the realities of stock investing are mentioned. In many cases they become MORE defensive. They have more to lose if the realities become widely known. They have built their reputations during the Buy-and-Hold Era. If Buy-and-Hiold is dangerous, their investing advice was dangerous for all those years. If word gets out about what the research really shows, they will lose status and perhaps even be subject to lawsuits (Shiller’s research is public knowledge).
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The is the source of our economic troubles today. We are in a transition period from Buy-and-Hold to Valuation-Informed Indexing. I want to spread the word about what works. But the Buy-and-Hold Mafia very, very much does not want me to succeed.
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They cannot stop me by pointing to research. There is no research that supports Buy-and-Hold. Wade checked this. He searched the literature trying to find a single study suggesting that long-term timing (the exercise of price discipline) might not be required for long-term investing success. He was not able to find a single study. He went to the Bogleheads Forum and asked if anyone there had ever heard of a study. Bogle and Bernstein and Swedroe all post there. No one at the board knew of a single study. The core claim of Buy-and-Hold (that market timing is not required) is supported by exactly nothing. There is indeed research showing that short-term timing does not work. But there is none showing that long-term timing (the exercise of price discipline) is not required. If short-term timing does not work and long-term timing is required, it is a false claim to say that timing is not required. One form of timing always works and is always required.
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We were intellectually ready to move on to Valuation-Informed Indexing in 1981. People didn’t immediately comprehend the implications of Shiller’s revolutionary findings. So the transition got held up. We had a huge bull market and there was little interest in learning about a new model for understanding how stock investing works until the crash in 2008. Now there is interest. But the Buy-and-Holders have been engaging in highly abusive tactics to cover up the errors in the Old School safe withdrawal rate studies for 10 years now. I put a post to a Motley Fool board pointing out the errors in these studies on the morning of May 13, 2002. The Buy-and-Holders at the time denied that there were errors and demanded that I be banned from every significant discussion board and blog at which I tried to tell the story. There is now a universal recognition in the field that the Old School studies get the numbers wildly wrong. This has been reported in every leading periodical in the field.
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But the studies still have not been corrected! If the studies were corrected, there would be a discussion of WHY the errors were made and that would be the end of the Buy-and-Hold Model. So for now we are in this strange twilight zone. It was when Wade sent an e-mail to the authors of the Trinity study (one of the Old School SWR studies) suggesting a correction of the errors in it that the Buy-and-Hold Goons threatened to get him fired from his job. Bogle did not speak up. Bernstein did not speak up. Swedroe did not speak up. Wade has seen the Goons destroy people’s careers. He has financial responsibility for two small children. So he buckled. He wasn’t happy about it. He felt that he had no practical choice.
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That’s where things stand today. Lots of people WANT to tell the truth about stock investing. Wade does. Bogle does. Bernstein does. Lots of my blogger friends do. But everyone is afraid to be the one to pin the bell to the cat. Whoever speaks up is destroyed. They have all seen what has been done to me for 10 years running now.
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Or problem is not an intellectual one. it is a POLITICAL one.
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I have tried to interest political bloggers in the story. But political bloggers defer to the “experts” in the field. They of course do not appreciate the level of corruption that applies today in this field. They have no way of knowing. And they do not have confidence in their own knowledge of how investing works. So the political bloggers too keep their mouths shut.
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I have great respect and affection for the Buy-and-Holders. I view them as pioneers and heroes. I want to work with them constructively. I appreciate that they are suffering from cognitive dissonance, which is a very real phenomenon written up extensively in the psychological literature. But the Buy-and-Holders feel so threatened by reports of what the last 30 years of research really says that they cannot bear to hear me make those reports. And the new internet communications medium has made it easy for someone like me to file such reports and to have them heard by the people who need to hear them. So the Buy-and-Hold Mafia has felt it necessary to engage in insanely abusive and even criminal behavior. THIS IS THE STORY. If I don’t tell this aspect of the story, I am not doing my job as a journalist. I try as hard as I can to place the Buy-and-Holders in the best possible light. But there are things that I need to say to tell the story in a way that makes sense. It just wouldn’t make sense to say that there are all these amazing things that we now know about stocks but that I am the only one that knows them.
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I am not the only one that knows them. Shiller knows. Shiller has said that he has never dared to tell us all he knows because he knows that he would be branded “unprofessional” if he were to do so. Lots of others SUSPECT that there are flaws in the Buy-and-Hold Model. But they have never explored these doubts with any great care because the subject rarely comes up. The subject rarely comes up because the Buy-and-Hold Mafia has made the price that is paid by those who bring it up so high. We all learn from talking things through. So long as the discussions are not held, we all remain in ignorance of all sorts of important investing truths.
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We live in the best time to be a stock investor in the history of Planet Earth. But we cannot benefit from what we “know” because we cannot discuss what we know and thus we cannot share what we know. And the economic crisis caused by the promotion of Buy-and-Hold strategies threatens to put us in the Second Great Depression (stock prices will fall another 65 percent in the not-too-distant future if Shiller is right).
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It’s a mess!
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I always try to speak as charitably as I possibly can about the Buy-and-Hiolders without engaging in outright dishonesty or failing to tell the story that very much needs to be told. My motto is: Be as charitable as possible without crossing the line and becoming dishonest while also being as charitable as possible without crossing the line and becoming dishonest.
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Anyway, that’s where I am coming from. I wish that the story I tell were not so “out there.” But the good in it is 10 times more good than the bad in it is bad. It is the advance in our understanding of how stock investing works that people will be talking about 100 years from now. I hope that all these words make at least a tiny bit of sense to you.
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Rob

“I Believe That What I Have Done in the Investing Field Can Be Done in Lots of Fields By People Possessing a Reasonable Amount of Intelligence (All That I Possess) Who Take Advantage of Opportunities Created by the Creation of the Internet”

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Set forth below is the text of a comment that I recently posted to the Suckers Buy It! forum:

The purpose of this thread-starter is to offer some ideas on how blog and site owners can obtain big-name endorsements for their work. The obvious benefit of doing so is that big-name endorsements give you the credibility you need to persuade customers to buy your products and services. They can also help you obtain citations in big-name media outlets, which can generate traffic gains.

I have a slide show at the upper right-hand side of my home page that sets forth my 15 most important endorsements:

http://www.passionsaving.com/index.html

A more complete collection of them is set forth at the “People Are Talking” section of my “A Rich Life” blog, which runs down the left-hand side of each page of the blog:

http://arichlife.passionsaving.com/

I need to tell a little of the story of where the state of knowledge of how stock investing works stands today to explain how I obtained these endorsements. There are two models for understanding how stock investing works: (1) The Buy-and-Hold Model, which is rooted in the research of University of Chicago Economics Professor Eugene Fama and which has been the dominant model for several decades; and (2) The Valuation-Informed Indexing Model (I gave it that name), which is rooted in the research of Yale University Economic Professor Robert Shiller. The allocation strategies that follow from the two models are VERY different.

Few people have ever heard of the new VII model or are able to appreciate quickly how it works. But there is now 32 years of peer-reviewed research supporting it. In contrast, there is no research supporting the Buy-and-Hold Model. Lots of smart and good people think there is. But if Shiller is right, the Buy-and-Hold Model was rooted in a mistaken interpretation of the historical return data. Interpreted properly, none of the data available to us today supports Buy-and-Hold ([presuming that you believe in the VII Model).

Shiller is a well-respected figure. He wrote the book Irrational Exuberance, which was a best-seller and which was reviewed at most of the top-name publications. I discovered some years back an amazing reality: No one has ever explored the practical implications of Shiller’s findings. Shiller discusses only theory in his book; it contains not a word on how to invest effectively. And there is not one web site today other than my own that explores the practical significance of his findings. I have had this field to myself for 11 years now.

That’s why I have been able to obtain all these powerful endorsements. I believe that what I have done in the investing field can be done in lots of fields by people possessing a reasonable amount of intelligence (all that I possess) who take advantage of opportunities created by the creation of the internet.

What I do is bounce ideas off people. I started with things that seemed to be obviously true. For example, I found that a calculation (the safe withdrawal rate) that millions of people have used to plan their retirements is in error. I went to discussion boards and blogs and asked people whether they were able to explain why the studies were set up the way they were (they excluded from consideration a key factor — the valuation level that applies on the day the retirement begins). At first, I assumed that I must have missed something. But when I saw lots of smart people were not able to respond effectively to my inquiries, I came to accept that I really was on to something.

Then I went higher. I started writing to columnists at major newspapers and that sort of thing. Sometimes I got hostile responses. Again, that told me that I was onto something. Other times I got helpful feedback. That of course helped me to put pieces of the puzzle together. Never did I obtain reasonable explanations of why the valuations factor was excluded from consideration. So I grew more and more confident that there was some strange stuff going on.

I now believe that strange stuff like this probably is going on in all sorts of areas. We are cowed by “experts.” Lots of times experts are just people who learned to repeat back what they read in a book written years ago. We are learning new things all the time. But the new knowledge often does not get put to use because people do not see any immediate financial benefit in putting it to use (that is the issue in the investing realm — I am virtually certain today that Shiller is right but people have not wanted to say so because for the time being there are marketing benefits associated with going with the Fama model).

My biggest success came as a result of posts that I put to the Bogleheads Forum. A researcher named Wade Pfau never posted to the forum at the time but he was as a lurker reading my posts with great interest. He eventually wrote to me to ask if I would be willing to work with him to develop research that he and I believe may someday down the road win a Nobel prize. We worked together for 16 months and the research paper has been published in a peer-reviewed journal. We showed that by adjusting their stock allocations in response to valuation changes investors can reduce the risk of stock investing by 70 percent. If that finding holds up (all signs are that it will), it is going to change all that we know about stock investing in a fundamental way.

The trick here is to come to the subject you write about with the perspective of a journalist rather than a marketer. Marketing is what generally wins on the internet. I made my living as a journalist for years before starting my site — So I have the head of a journalist. Journalists don’t tend to look for what is popular or what sells. We look for what is important in a long-term sense. We have an inclination to ask lots of annoying questions. We don’t buy it when authority figures try to give us the run around. We drill down until we figure things out, until we can put a narrative together that solves all the puzzles that trouble us.

I couldn’t have done what I have done in pre-internet days. The internet allows me easily to contact people all over the globe. When I was in communication with Wade, we would often send several e-mails back and forth to each other in a single day. Things would have moved forward at a deadly slow pace if we hadn’t been able to do that. Also, I have had a level of access to big names that I would not have had in earlier days. I announced one day that I was going to appear at the next annual meeting of the Bogleheads community to ask John Bogle some questions. The leaders of the board took the entire board down from the Morningstar site so that they could ban me and “protect” Bogle. That told me that Bogle does not believe that he can give effective answers to my questions.

That’s the basic idea. If anyone has questions, I am happy to help in any way that I can.

Rob

“There Have Been Numerous Articles in Big-Name Publications Picking Up on My 2002 Finding That the Old School Safe Withdrawal Rate Studies Get the Numbers Wildly Wrong. None of Them Describe the Death Threats and Board Bannings and Tens of Thousands of Acts of Defamation and the Threats to Get Academic Researchers Fired From Their Jobs.”

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

Another key is acting within the limits of the statute of limitations, i.e. one year in Virginia.This is an ongoing act of financial fraud, NFS.

There have been numerous articles in big-name publications picking up on my 2002 finding that the Old School safe withdrawal rate studies get the numbers wildly wrong.

That’s of course a good thing in itself.

But there is an obvious oddity about every one of those articles.

None of them report the number accurately. None of them (the article by Todd Tresidder was an exception) give credit to me for being the person to discover the errors and for having done it 11 years ago. None of the articles describe the death threats and board bannings and tens of thousands of acts of defamation and the threats to get academic researchers fired that have been relied on by The Buy-and-Hold Mafia to keep millions of middle-class investors from learning what they need to learn to invest effectively.

Why?

Because the entities who publish these articles and the journalists who report on them are afraid of what The Buy-and-Hold Mafia will do to them if they file honest and complete reports. This all comes through clearly and plainly in the Wade Pfau Matter. Wade was thrilled to learn how stock investing really works. He showed great excitement in his many e-mails to me. He said that he couldn’t understand why no one had done the research that he and I produced together. Why? Was he missing something? He checked his numbers over and over again. They really said what they said! How could this be? How could this powerhouse stuff have been ignored for all this time? He even went to the Bogleheads Forum to see if anyone there could make sense of it. No one could. No one (including Jack Bogle!) had ever heard of a single study showing that price discipline is not required when investing in stocks. The entire Buy-and-Hold “strategy” is built on sand. And there is not a sliver of evidence pointing in the other direction. But lots and lots and lots of smart people are careful not to say this in public.

Because they are scared of what will happen to them if they do. They have seen how ruthless the Buy-and-Hold Mafia is. They know what is good for themselves and they keep their mouths shut. As Wade learned to do when you Goons threatened to send defamatory e-mails to his employer with the aim of getting him fired from his job and my good friend Jack Bogle raised not a peep of protest about it.

That’s fraud, NFS. Anyone who participates in it is part of the fraud. And anyone who fails to speak when he sees the fraud play out in front of him is part of the cover-up of the fraud

The fraud is ongoing. The statute of limitations will not begin to run until Jack gives his “I Was Wrong” speech and it is reported on the front page of the New York Times.

I will be sure to get the papers filed within 12 months of that day.

The full truth is that I am not going to need to file papers. Once Jack gives his speech and it is written up on the front page of the New York Times, we will all be working together to keep our economy from falling into the Second Great Depression. Every one of the people involved in the fraud wants to come clean and to be able to do honest work again. Once one big name makes the jump, all the others will follow within days. I doubt that I am going to need to file legal papers to get the money that I earned with my work of the past 11 years. These things can be handled easily once the will to handle them is present.

We’ll see. But I am not expecting to have to file papers. And, in the unlikely event that I am forced to file papers, I can assure you that I will file them within 12 months of Jack’s big speech.

I wish you all good things, old friend.

Rob