Set forth below is the text of the e-mail that I sent to Mike Piper (author of the Oblivious Investor blog) on November 6, 2009, in response to the e-mail from Mike described in yesterday’s blog entry.

Mike:

I have contacted law enforcement authorities, Mike.

And I have contacted lawmakers.

And there are thousands of community members who have expressed a desire that honest posting be permitted.

And I have contacted several lawyers for the purpose of bringing civil actions, and will continue to do so as our efforts to get the internet reopened to honest posting on safe withdrawal rates and other important investment topics continue.

And you know enough about this today to know that there is a big, big problem with the conventional investing advice of today.

These matters have been discussed at you own blog. Your yourself have received e-mails from readers of your blog in which they asked that posters who report accurately what the historical data says be banned from commenting. That alone tells you that there is something exceedingly strange going on here, does it not? It sure should. It is of course not possible for me to know precisely to what extent you are suffering from cognitive dissonance re these matters, but I think it is fair to say that those sorts of e-mails would cause warning bells to ring in your head if you were thinking even a little bit straight.

You are part of a community, Mike. When someone in a community of which you are a member engages in the type of behavior that Mel Lindauer has engaged in, that person has a responsibility to disassociate himself from that behavior in every possible way. You have failed to do this. You endorsed Lindauer’s book even after being made aware that he engaged in a Campaign of Terror against the Vanguard Diehards community when it expressed a strong desire to learn more about the realities of safe withdrawal rates and other important investment topics.

It’s not all about marketing, Mike. Marketing comes second. The most important thing is getting the investment advice right. When you have done all that you can to get it right, THEN you focus on marketing. For so long as you ban honest posting on the flaws in the Passive Investing “idea” that were revealed by the academic research 28 YEARS AGO, you will have things in the wrong order.

I will not publish this particular correspondence with you on my blog (it is still my intent to publish the earlier correspondence for which you gave an okay — but please let me know if you have changed your mind about that). I will instead publish a summary of your comments and then the actual words of my responses to you.

I will of course remain open to engaging in any constructive conversations that you elect at any future date to pursue. We are going to need to see people who have advocated Passive Investing in the past take a more positive role if we are to prevent our economic and political system from going over a cliff. I believe that you are well-positioned to serve in this role as you have evidenced both a keep intelligence and a willingness to try to understand the other side of the story that is greater than what I have seen among many other Passive Investing enthusiasts.

I wish you the best, Mike. That is of course part of the reason why I would like to see you disassociate yourself from the ugliness. I think your blog has great potential. I think you are harming its future growth potential by banning honest  posting on these important questions and by failing to bring your thinking on these topics up to date with the academic research of the past three decades. But I still see great potential there and I continue to harbor hopes that you will see your way to taking the steps needed to realize that potential.

I’m your friend. If you ever see benefit in speaking to me as a friend re these matters, I will be there for you. It’s the voice that tempts you to put marketing considerations above all else that is your enemy, according to my assessment of the realities that apply here. Bogle’s wonderful innovation was bringing elements of science to our understanding of how stock investing works. His grand mistake was letting marketing considerations overrule the demands of science when the academic research showed that his First Draft understanding of how markets work turned out to be in error. My view is that you are making the same mistake today. My aim is to persuade both John Bogle and Mike Piper (and many, many other good and smart people who were taken in by the Passive Investing “idea”) to get themselves off the dark path and back onto The Bright Side of the Road, where I strongly believe that people of their talents and compassion for others belong.

Rob

Mike Piper (author of the Oblivious Investor blog) sent me an e-mail on November 6, 2009, in response to the e-mail described in yesterday’s blog entry. Mike had given me permission to quote the entire texts of earlier e-mails. But in this case he asked that I not quote the entire e-mail. So I will summarize his response and include quotes only when they are needed to provide helpful context or color.

I included more quotes from the e-mail than is my usual practice in cases in which I am paraphrasing rather than quoting an entire e-mail. The subject matter here is delicate and in reporting on Mike’s take re several matters I did not feel comfortable using my words rather than Mike’s in letting people know of the message he communicated. In the event that Mike asks me to modify this report to use more paraphrasing and less of his own words and suggests to me an approach to paraphrasing that does the job that needs to be done here in a reasonably effective way, I will do so. I have  not contacted him about this because my strong suspicion is that he would prefer to put the matter behind him to the extent that it is possible for him to do so. My belief is that Mike would prefer that he not be quoted on this matter at all. But I believe that the public policy matter at issue here — the public’s need to learn about the academic research showing that Buy-and-Hold does not work and The Stock Selling Industry’s efforts to keep knowledge of it bottled up for thirty years — is sufficiently important that a report is required. I have made a serious effort to balance the competing interests at play here. It is my belief that Mike will generally agree even though his personal preference is not to be quoted at all re this particular matter.

Mike said that “honestly, I have no idea what you’re talking about” re the threats of physical violence and other intimidation tactics used by Mel Lindauer (co-author of The Bogleheads Guide to Investing) and John Greaney (author of the safe withdrawal rate study posted at the www.RetireEarlyHomePage.com site) and their “defenders” as part of their effort to block honest posting on safe withdrawal rates and other valuation-related topics at the Retire Early and Indexing discussion-board communities and in the personal finance blogosphere. He explained that “I write a blog about investing” and assured me that “no death threat have ever been made on my blog, nor will any be permitted in the future.”

Mike added: “Please, if somebody has been making death threats to you, contact law enforcement authorities.”

He stated that “I refuse to become involved in any of this. Your bringing this stuff up with me makes me terribly uncomfortable. It has nothing to do with me.”

Finally, he said that: “I’m not comfortable continuing correspondence with you or having you comment on my blog. I believe that you mean well. But your involvement apparently brings all sorts of things that I just don’t want anything to do with.”

In explaining why he did not want his entire e-mail quoted, he said that “I do not want to be linked to this topic in any way.”

Set forth below is the text of an e-mail that I sent to Mike Piper (author of the Oblivious Investor blog) on November 6, 2010, in response to the e-mail set forth in yesterday’s blog entry.

Mike:

Thanks for letting me know where you stand.

I’d be grateful if you would link to the article next week. It is of course the substance that people most need to know about (whether they find themselves being persuaded or not).

I am of course sympathetic to your unease about being involved in the nastiness. I know that there are many good people with an interest in this subject who feel as you do. For a long time I felt that way myself. I’ll write a few words here trying to explain why I feel that those of us trying to take things in a positive direction ultimately have no choice but to get involved in small ways re the nastiness as a means of bringing it quickly to a final and complete stop.

There of course was no “back and forth name calling” in that thread. All of the name calling came from one direction. What I did was to stand up (in a perfectly civil way, given the vileness of the attacks at issue here) in defense of a friend of mine who just happens to be the most valuable contributor in the history of both the Retire Early and Indexing discussion-board communities.

John had just retired when our discussions of safe withdrawal rates began. So he was able to devote himself full time to doing the research we needed to learn some very important things about how investing works in the real world. He elected to spend 50 hour weeks for over seven years helping his fellow community members with their questions without receiving one dime of compensation.

We all have a responsibility to protect people like that when they are under attack. We all form friendships on the internet when we interact with people for a long time. It is unnatural for us to fail to speak up when the hateful things that have been said about John are said about someone we care about. When we fail to speak up (and, yes, I too was afraid to speak up for a long time), we become sub-human. I want no part of it after what I have seen it do to many friends of mine. And I have a strong confidence that, if you look at your behavior everywhere except on the internet, you will see that you do not tolerate this degree of ugliness in other areas of your life either.

The internet is a powerful communications medium of the future. We can use it to learn things we could never learn before (because humans learn from talking things over and the internet permits a level of sharing of ideas that was never possible before). However, the very thing that is good about the internet (the learning process it  enables) is viewed as a threat by the small number who feel such intense envy when others learn that they are willing to twist themselves into very ugly shapes to block such learning processes from going forward. The 90 percent of us who have a desire to use the internet for positive and constructive purposes have a decision to make. Are we going to let this dark side of human nature destroy all the good that could be achieved through this new communications medium? Or are we going to insist that the rules of human interaction that were developed during the first several thousand years of civilized human life apply on the internet as they have applied everywhere else during those many centuries?

I believe that we are going to need to permit the rules of civilized life to apply on the internet as well. There are laws that protect people from death threats in all other places in which humans engage in discourse. Those laws need to be made applicable to the internet. There are laws that protect people from defamation in all other place in which humans engage in discourse. Those laws need to be made applicable to the internet. There are laws that protect people’s businesses from attack in all other places in which humans engage in discourse. Those laws need to be made applicable to the internet.

I understand that you would be prefer not to “be involved.” I would prefer not to “be involved” too. So would the thousands of members of the Retire Early and Indexing discussion-board communities who have expressed a desire that honest posting be permitted on our boards. We are all “involved” whether we happen to like the idea or not.

I put forward the post that pointed out the errors in the Old School Safe Withdrawal Rate Studies on May 13, 2002. There are thousands just in our community whose retirements could have been saved if the research that John did in response to the community’s strong positive reaction to that post had promptly been given the publicity that it obviously merited. There are millions in the larger community of investors in the same circumstances. Many, many. many people were done huge financial harm.

My guess is that there are going to be thousands of lawsuits filed in coming days as a result of the cover-up of the research that showed that Passive Investing does not work in the real world, research that would have been widely publicized in the Summer of 2002 had there not been Goon posters threatening physical violence on anyone who posted honestly on these matters as a means of destroying the wonderful board community at which these findings were first brought to light.

There is also the matter of the reputations of the “experts” involved in the discussions. John Bogle has told us that he looks at the Vanguard Diehards board on an almost weekly basis. The most vicious Smear Campaign in the history of the internet was waged at that board for nearly two year running. There were hundreds of threads destroyed by Mel Lindauer and his Goon Squad. Do you not think that learning about this is going to enrage people whose businesses have failed or whose marriages have failed or whose retirements have failed because they could not for many years gain access to the information they needed to save their businesses or their marriages or their retirements? You write about these topics on a daily basis, Mike. You make reference to John Bogle in your writings, you make reference to Lindauer in your writings. You are involved.

I don’t want you to be involved. So our ultimate goal is the same. Our difference is over how to get things to where we both want things to be.

I believe that the answer is to bring the ugliness to a quick and immediate stop. That cannot happen until the Goons come to discover that there are CONSEQUENCES that follow from engaging in the sort of behavior that they have engaged in. That’s the missing element in the story. That is what needs to change to make life 100 times better for each and every one of us (including the Goons themselves, to be sure).

The idea that we could permit death threats without having any consequences apply was an INSANE idea. When we elected as a community to permit death threats without having any consequences apply we elected to live in hell forever after. We made a terrible, terrible, terrible mistake. We need to reverse that terrible mistake. That is the way to a better and more fruitful and more loving and more human path.

I want the ugliness brought to a quick and immediate stop. I wanted that on the afternoon of May 13, 2002. I said so publicly at that time and I have said so on numerous occasions since. My take had always been that those of us who want the ugliness brought to a quick and immediate stop should reach out the hand of kindness as far as we can possibly reach it without crossing the line that we may never cross and agreeing to post dishonestly on safe withdrawal rates or other important investment topics. We need to mix as much charity as possible with as much honesty as is absolutely demanded of us. I don’t see any other way that this ugliness can be brought to an end without causing even greater damage to our entire economic and political system.

We’re all involved, Mike. Anyone with any interest in the subject of investing is involved. Anyone who cares about John Bogle’s many wonderful contributions and the reputation he is going to have in future days is involved. Anyone who has a blog (on investing or any other topic) is involved. Anyone who wants to see the U.S. economic and political system survive its current troubles is involved.

Anyone who is human or cares about other humans is involved. A man is not an island. We all benefit from our connections with others. When we stop caring about the others to the extent we need to stop caring about the others to permit this sort of ugliness to continue, we sacrifice what makes us human in doing so.

You are in a position to influence the future of investing in a very powerful and very positive way, Mike. That’s the good news. The bad news is that it will be a scary thing to do. I have sympathy for you re that reality but I do not have the power to change the reality. It is what it is. That’s so for all of us.

There is no escape from this for anyone who has elected to use the internet to help people learn the realities of stock investing. I have learned this lesson over and over and over again over the course of the past seven years.

I will always stand ready to work in a spirit of cooperation and mutual respect and affection with anyone who tries to deal with these matters in a constructive and positive way. That’s what I can contribute, I have been offered “deals” in which I would agree to post dishonestly on safe withdrawal rates in return for a lifting of the Campaign of Terror. No can do. I think of many of the people who I have met on the boards and blogs as friends. A failed retirement is a serious life setback. I am going to continue to post honestly on what the historical data says about safe withdrawal rates.

If that one is worked out, all the rest follows. All of the wonderful insights that our communities have developed over the past seven years become available to us because of our willingness to accept what the historical data says about safe withdrawal rates. If we tell the truth about that one thing, we will end up telling the truth about many, many things. It may well be that I will learn as a result of the national debate on the realities of stock investing that will follow that I have gotten some things wrong. If that is how it goes, I will of course express gratitude to those who taught me what I needed to know. If those on the other side approach the upcoming national debate in the same spirit, we cannot lose. This will become a win/win/win/win/win. It’s rare when one of those comes along. We should not pass up the golden opportunity that has presented itself to us.

Please let me know if you have any questions or concerns either now or at any later date.  In the event that you elect to take a pass on the process issues, I of course understand and remain grateful for your willingness to let your readers know about the article linking to the 20 studies. I would love to see some reaction to them. I know that we may not see that but I cannot help but be excited about the possibility that we might. It’s by generating such reactions that we take our ever developing understanding of the realities of stock investing to new places and thereby become empowered to learn even more in the days that follow.

To learning experiences!

Rob

Set forth below is the text of an e-mail that I sent to Mike Piper (author of the Oblivious Investor blog) on November 5, 2009, as a follow-up to the e-mail conversation that was described in earlier blog entries.

Mike:

Here is a link my blog entry for today:

http://arichlife.passionsaving.com/2009/11/05/buy-and-hold-is-dead-these-studies-prove-it/

It announces the posting of an article at my site that I view as being of considerable significance. The article provides links to and Juicy Excerpts from 20 studies showing that valuations affect long-term returns and that Passive Investing can therefore not work for the long-term investor.

Rob

Mike responded with the words set forth below.

Hi Rob.

Thanks for emailing me the link. I’ve got to say that I’m reluctant to link to that post. All the stuff going on in the comments is precisely what I want no part of. All the back and forth name calling (and worse) is something I don’t want to be connected with in any way.

That said, I wouldn’t have anything against mentioning the actual article itself (or the studies linked to). The “agree/disagree” roundup is planned for next week. I’ve been busy with behind-the-scenes work on the blog this week, so I ended up punting and going with my normal roundup style.

Thanks,
Mike

Set forth below is the text of an e-mail sent to me on October 29, 2009, by Mike Piper (author of the Oblivious Investor blog) in response to the e-mail that I sent to him that was set forth in yesterday’s blog entry.

Hi Rob.

I’ve been pondering this for the better part of the day. I think my answer still has to be no thank you.

My reasoning is that, when people sign up for my blog, I think they do so with the assumption that what they’ll be receiving are articles about various aspects of my investment philosophy. I think that’s why I receive emails complaining about your comments–people feel that it’s not what they signed up for, so to speak.

That said, my goal (believe it or not!) isn’t to squelch opposing viewpoints. (And frankly, if I were going to attempt to squelch other viewpoints, it’d be ones like picking stocks and investing via high-cost active funds.) I sincerely encourage you to continue writing–and disagreeing with me–on your blog. And feel free to shoot me an email from time to time pointing out articles of your own, especially if/when you post something in reply to an article of mine. I’ll do my best to fit them into my roundups. (I can’t promise to always include them of course. There’s enough good writing on the web that I try to mix it up between bloggers.)

…perhaps I could even periodically categorize my roundups as “posts from people who agree with me” and “posts from people who don’t.” Could be entertaining as well as a way to highlight posts that, while they don’t mesh 100% with my own recommendations, are certainly worthy of discussion.

-Mike

Set forth below is the text of an e-mail that I sent to Mike Piper (author of the Oblivious Investor blog) on October 29, 2009, in response to the e-mail correspondence described in yesterday’s blog entry and other recent blog entries.

Mike:

I have continued to ponder the issues raised in our recent e-mail discussions. I have come up with a slightly far-out proposal which would make me perfectly happy. It’s something that I have zero right to demand of you. I thought that I would put the idea forward just on the off-chance that you found it a satisfactory approach for satisfying both the Passives and the Rationals (a small group today, to be sure, but one that I hope will be growing with time!) among your readership.

My sense is that your biggest concern is that regular iteration of the idea that Passive doesn’t work antagonizes a good percentage of your readers. I believe you are right about this. My counter is that it is critical that the indexing community as a whole take Bogle’s ideas in a new direction and it is not possible to do this without having people regularly exposed to the new ideas. People are rarely convinced of something by seeing it argued one time. Ideas sink in and come to seem less “strange” only after repeat exposure. So I feel that it is critical that indexers have some means of hearing about the argument against Passive on a repeating basis.

My view is that the most natural way to give people regular exposure is by giving the Rational perspective each time you advance a blog entry giving the Passive perspective. It is not at all my intent to make people feel uncomfortable or to be disruptive or anything along those lines. As you have pointed out, it defeats my purpose if people have a negative reaction to seeing my name in the Comments section.

You asked two good substantive questions during our e-mail exchanges: (1) Why is it that I say that Passive can never work even though you can identify many people for whom it HAS worked?; and (2) Why is it that I say that Passive Investing CAUSED the bubble when Passives argue for remaining at a CONSTANT stock allocation?

My thought is — What if you gave me space on a once-per-month basis to write a Guest Blog Entry making the case for Valuation-Informed Indexing (the strategy I favor) or Rational Investing (the model I favor) in which I would address some question about the strategy or model put forward by you or by one of your pro-Passive readers? You could of course put forward introductory language saying that you do not endorse these ideas but are merely permitting them to be aired at your blog. Your readers could agree with the arguments or disagree with them or ignore them as they pleased.

If your readers were being exposed to the ideas in a high-profile way and on a regular basis, my concerns that they are not being permitted to hear about them in a meaningful way would be addressed. In those circumstances, I would be happy to agree to refrain from putting up comments finding
fault with your Passive claims on all the other days of the month (I would of course continue to put forward comments on the many aspects of Oblivious Investing re which we are in solid agreement).

Again, please do not think that I am making a demand. I am asking for an unusual arrangement for what I view as an unusual set of circumstances. My intent is to put forward a suggestion that makes sense only if it would make
you happy to proceed this way. I am trying to come up with an approach that leaves us both feeling that the Oblivious Investor blog community is being well served.

I would be grateful if you would let me know your reaction. You will not hurt my feelings if you respond simply by saing “no, thanks.” If you have alternate ideas along these lines, I of course would be happy to hear about them.

Rob