Set forth below is the text of the e-mail that I sent on November 14, 2009, to Carl Richards, author of the Behavior Gap blog, in response to the e-mail from Carl to me described in yesterday’s blog entry.

Carl:

Thanks for your response.

Re #1 and #2: You didn’t ask that your e-mails be “off the record” and I did not agree to treat them as “off the record.”

Re #3:  I am not going to misrepresent the “banning.” You explained what happened and I will report what you said. I find your account entirely credible and I will of course indicate that. I understand that the e-mail bounced. These things happen, and I don’t see this as any big deal. I was glad to hear that there was not an actual banning in effect. Putting a one-post “ban” in place so that the conversation would not be held at your blog was perfectly reasonable. I see nothing wrong in that.

Re #4: My goal is precisely the opposite of what you are saying here, Carl. I want to AVOID fights. I am concerned that, the next time I comment at your blog, we are going to see frictions evidence themselves. I obviously still do not believe in Buy-and-Hold Investing. There’s a good chance that my next comment will reveal this reality in some way (whether valuations affect long-term returns is such a core issue that it comes up in some way re just about every topic) and that there will be a Buy-and-Hold believer among your readers who will object. Then what?

I would like to be able to comment in an atmosphere in which I do not have a sword hanging over my head. My guess is that there may be others among your readers who would be happy to put forward similar comments if they felt that they would be protected in the event of attacks from Buy-and-Hold dogmatists. I think it would be fair to say that your reactions have encouraged those making the attacks and not reassured those who would like to be able to post critically of Buy-and-Hold. It’s that imbalance in the blog’s administrative policy that tends to cause hostilities to grow, in my assessment (of course, the far bigger effect is one re which you played zero role — the relentless promotion of Buy-and-Hold Investing for 30 years now).

Re #5: I am presenting the message in the only possible way in which it can be presented, Carl. There is no soft way of saying that Buy-and-Hold is dangerous to people who have staked their retirements on it. That sort of statement causes people who have followed Buy-and-Hold to feel considerable pain. What would you expect? It’s the message that is the problem. Or, more precisely, it is the SHOCK of hearing this message after 30 years of believing a contrary message that is the problem. The pain people are feeling is real, the shock is real. But the answer is not to silence this most important and helpful message. The answer is for all involved in the investment advice business to begin making serious efforts to ease and quicken the transition to a place where this message will no longer be shocking or painful.

You are blaming me for something that I had nothing to do with. I did not promote Buy-and-Hold for 30 years. I am trying to help people recover from the effects of what was done to them (unintentionally, to be sure) for those 30 years.

Re #6: I have a great deal of respect for your work. I am confident of your good intent. My sense is that we don’t agree on the best way to advance the transition, probably because we come from different sets of life experiences and have come to believe in different approaches as a result. I certainly don’t expect you to be like me in every way. But I also don’t think it is reasonable for you to expect me to be like you in every way.

When you post a blog entry which contains some claim that I see as being rooted in a misplaced belief in some idea that became popular during the Buy-and-Hold Era (that returns cannot be predicted, or that stock investing risk cannot be avoided, or something along those lines), what would you have me do? My sense is that you would like me to just be quiet. How does that help you or anyone else in your blog community?

That’s my problem here. If I agree not to report on the things I have learned as a result of the work I have done, there’s nothing left for me to say. For you to indicate that you don’t want me to say anything that will “drive away” Buy-and-Holders is for you to indicate that you don’t want me to say anything at all. How does it help matters if those who have learned the realities continue to keep quiet about what they know? That’s the sort of behavior that caused the problem in the first place!

The problem here is that there are people who react so negatively to criticism of Buy and Hold that they are “driven away” by it. I don’t say that this is not a reality and I don’t say that this should not be a concern for the owner of an investment blog. I  say that you have not hit on the right solution. I think you need to keep insights from all directions coming and think about how to make community members coming from all perspectives feel comfortable working together. I feel 100 percent friendly toward all community members who believe in Buy and Hold. Is there any reason why they cannot feel 100 percent friendly toward me? Are there not things that you could do to help?

I think that doing those things would take your blog on a far more positive course. I think that it is by making all constructive contributors feel comfortable that you open the door to lots of wonderful learning experiences that will end up generating insights that cannot even be imagined today. I see community interaction as a huge plus. I do not believe that there can be effective community interaction if one “side” feels that it cannot express its views frankly and not be punished for doing so.

You are of course entitled to have a different viewpoint re how best to package the message. Perhaps you are right re this one and I am wrong. But can you really be 100 percent sure that you are right? Can you say that your approach has worked? This problem has been going on for 30 years now and millions have suffered very serious financial setbacks as a result.

It’s not my desire to upset one soul on the planet. But the lines have been drawn at such absurd places that it is just not possible today to say what needs to be said WITHOUT upsetting some. I have been banned at numerous boards solely for reporting accurately what the historical data says about safe withdrawal rates. Where we are today we are not permitted to report the results of numerical calculations accurately. That’s a bad place. I have come to believe because of the things I have seen that there is a need to exercise a little firmness in insisting on at least the right to post HONESTLY. I am ALWAYS friendly, I am ALWAYS polite. When we compromise honesty on the numbers that people use to plan their retirements, I think we compromise too much.

That’s where I am coming from, Carl. You didn’t draw these crazy lines. You have done more than most to get them redrawn to someplace more sensible than where they are drawn today. All that is understood and appreciated. But I object strongly when you  say that I am trying to start a fight by insisting on my right to post honestly. That’s a very modest demand. Insisting on the right to post honestly is not trying to start fights. It is an attempt to restore some SANITY to discussions of how to invest. Today’s circumstances are so crazy that doing a little more than most others may not be good enough to get the job done. It’s not your fault that we are in this crazy place. But we are here. And we are all going to need to work together in a positive spirit  to figure out how to dig our way out.

I am not a flamethrower by nature, Carl. People described me as “a puppy dog poster” in the days before I posted about investing. The craziness is something that I walked into, not something that I created. If there is any way that you and I can work together, I am going to try to make that happen. But there are minimal things that I feel I simply must insist on. The bare minimum for me is that I feel that there is enough honesty evidencing itself that I can feel that things are moving forward at a pace sufficiently fast that I can convince myself that we might be able to keep our economy from going over a cliff. I am 100 percent sure that you want to see that same goal achieved. If you have constructive ideas, I will certainly listen. But I do feel that I am bound by conscience to insist on at least the minimum needed to get the ball moving forward a bit. I do not see us (I do not mean just you and me, I mean the larger community of people in the investing community) being there today. Whatever is being done today is just not enough.

Rob

Yesterday’s blog entry set forth the text of an e-mail that I sent to Carl Richards, author of the Behavior Gap blog, last November.  Carl sent me a response on November 14, 2009. Carl has not given me permission to post the full text of his e-mail. So I have provided only a summation of its contents below.

Carl started by saying “every journalist I know respects ‘off the record’ conversations.” He then declared that all of our e-mail conversations, both those held in the past and any to be held in the future were “off the record.” He claimed that I was “completely misrepresenting” his intentions. He said that he did not ban me from his site because of my message but because the way in which I was presenting the message was driving people away from the site. In Carl’s words, “You seem intent on causing fights so you can claim that your message is being censored.”

Carl said that it was his goal to challenge conventional investing assumptions “In a way that leads to dialog instead of fighting.” He asked that I not quote any part of any e-mail from him or any content from his site “without explicit permission from me, which I will deny.” He concluded by imploring me to “consider changing the way in which you deliver the message so you don’t kill it.”

On November 14, 2009, I sent a follow-up to the e-mail to Carl Richards (author of the Behavior Gap blog) described in yesterday’s blog entry. The full text of the follow-up e-mail is set forth below.

Carl:

I have given more thought to our recent e-mail exchanges since last night.

Part of my job as a journalist is to inform middle-class investors of WHY it is that the “experts” in the investing field have not let them know of the dangers of Buy-and-Hold Investing for 28 years since the academic research showed that it cannot work in the real world for the long-term investor. Your handling of the matters discussed illustrates the problem well. You have great knowledge. You do great work. You have a good appreciation of the biggest problems. Yet you hold back from telling people in frank and plain language WHY it is that investing has become so intensely emotional an endeavor (because most of us are staking our retirements on an approach that our common sense tells us can never work). This is a news story that I need to report.

I am going to write a blog entry describing your take on things to the best of my ability. I expect that I will be using a number of sources to inform my writing of the piece: (1) material at your blog; (2) material you have posted as comments at other blogs; (3) your decision to tentatively ban me and then to lift the ban (I will of course describe the circumstances as fairly as I am able); and (4) our e-mail correspondence. So I WILL be reporting on the material in your e-mails.

As indicated in my e-mail from yesterday, I will generally NOT be quoting your precise words (although I probably wil report the precise words of parts of my responses). The part of your e-mail correspondence that I most need to quote are your views on the work that I have done developing the Valuation- Informed Indexing concept and your views about the problem with the Buy-and-Hold approach. I don’t think it is proper to quote these comments in full as you were making them in a private e-mail and might have stated things differently had you been thinking that they would be published. If you had agreed to be quoted, I would quote you. But you have indicated that you would prefer that I refrain from quoting this material, and I view that as generally being a reasonable request.

I say “generally”  because I do see a need for a brief quote providing the color needed to make clear to my readers that it is not just me saying that you see merit in my work but you. The seven words “what you are doing has huge value” does the trick. Part of the news story here is that someone who sees huge value in the work  reacts with at least a measure of hostility to blog comments rooted in the understanding of investing that follows from completion of that work. It is my intent to quote those seven words of yours in my blog report and then at the “People Are Talking” feature (with a link to the full blog entry) of my site.

There is a possibility that you did not mention reservations that you hold re my work in the e-mail to me. If you have reservations that you feel should be included in the blog report to put in context your seven words or any of your positions that I will be describing using only my own words, I am of course fine with that. I will make note in the report any reservations you have either in your words or by a description using my words, at your preference.

If you would like to see the text of the blog report before I post it (my guess is that it may take me a few weeks to be able to get to this item), I am happy to send you the text of the blog entry before posting it for your review. I cannot give you a veto over what appears. But if there are points where you persuade me that my account is either not accurate or not fair, I would certainly remain open to making whatever changes are needed to construct the most accurate and fair report possible.

Rob