Good Bye St Louis

I am sorry, but I find little to no value in Rob’s site. In fact, much of it seems silly. He spends the majority of his time talking about death threats and someone’s job being threatened, yet there is no proof offered, except for Rob linking to his own posts. When people do question Rob, he calls them a “goon” and tells them that he will sue them and that they will go to jail.

Rob continues to post about a group of people that follow “Buy and Hold” and what he describes as poor performance. However, he has been given significant data on various portfolios that have continued to perform exceeding well. Rob, on the other hand, gives his own investment advice that he admittedly hasn’t followed. Makes you wonder when someone preaches one thing, but does something different.

Bottom line is that he cannot tolerate anyone with a different opinion, despite his words to the contrary. It is not surprising he has been kicked off of so many boards.

Things are getting better.

When we get to the other side, I doubt that there will be one person who wants to go back.

The truth here is that we are the luckiest generation of investors ever to walk Planet Earth.

We just need to get past this one last obstacle.

Rob

And Fama won a Nobel as well even though he is the opposite of Schiller.

This is so. And I wrote a column at the Value Walk site saying that this was a good thing. Fama is the researcher responsible for Buy-and-Hold. I believe that he made mistakes. But I also believe that he made a huge contribution and that we all should feel respect and affection and gratitude to Fama and to ALL Buy-and-Holders for the good they have done. Can you say that same about the Valuation-Informed Indexers, Bob?

I am not going to respond to the argumentative comments you make, Bob. Those send us backwards rather than forward.

Here is an article that provides lots of background on what Valuation-Informed Indexing is all about as well as links to other articles that treat particular issues in more depth:

http://arichlife.passionsaving.com/about/

As for the portfolios, you are taking a moment in time in which stocks are dangerously overvalued, failing to make the necessary adjustment for the effect of valuation and then acting as if those portfolio amounts tell us something meaningful. The reasons why such a procedure cannot possible work are obvious to anyone who is open to considering both sides of the question.

The people who invested in Bernie Madoff’s fund thought the fund was AMAZING until they lost all their money. I think it would be fair to say that you won’t be pointing to portfolio values if we see the price drop of 65 percent that Shiller’s research shows is coming in the next year or two.

What matters (in my view!) is how you do over an investing LIFETIME. I am the co-author (with Wade Pfau, who holds a Ph.D. in Economics from Princeton) of research that was published in a peer-reviewed journal that shows that over the course of an investing lifetime Valuation-Informed Indexers ALWAYS enjoy FAR higher returns than Buy-and-Holders and always do so at DRAMATiCALLY reduced risk. The difference is usually enough to permit them to retire five to ten years sooner than they ever imagined possible in the days when they were following Buy-and-Hold strategies.

There’s only one difference between Valuation-Informed Indexing and Buy-and-Hold. VIIers practice long-term timing. That is, we consider the price at which stocks are selling when setting our stock allocations. Another name for that is “price discipline.” Are you able to name one other good or service on Planet Earth where you can do better not practicing price discipline than you can do practicing price discipline?

Common sense tells us that VII MUST provide far better long-term results than Buy-and-Hold. There is now 32 years of peer-reviewed academic research CONFIRMING that what common sense tells us must be so really is so.

We should permit honest posting on every board and blog on the internet.

Or at least that’s my sincere take re this important question, Bob.

My warmest wishes to you and yours.

Rob

Wade Pfau and I co-authored research that was published in a peer-reviewed journal that shows millions of middle-class investors how to reduce the risk of stock investing by 70 percent.

Anyone who cares to can go to site and read the entire story. I have reports on over 100 e-mails that Wade and I exchanged with each other. I have a link to the study we produced and to lots of positive commentary on it (some by people who were lifetime Buy-and-Holders until they read the study). I have reports on the threats that you Goons made and on how Wade told me how scared and he was about what you were doing to his career and all this sort of thing.

I just finished watching with my boys a documentary on the life of Steve Jobs. People rave about how Jobs improved all our lives. The thousands of people who have helped me develop the Valuation-Informed Indexing concept have helped us all to live richer lives to a greater extent than have the innovations we have seen in the computer industry. Once word on VII gets out, there will be no more economic crises. Once word on VII gets out, we will all be able to retire years sooner. And on and on.

There’s one problem. VII is such a huge advance over Buy-and-Hold that there are some (not all) Buy-and-Holders who cannot bear to hear about it. It hurts them too much to accept that there was a day when they did not know it all.

That’s very, very, very sad, Bob.

This is the greatest advance in the history of investing analysis. And all you can do is hate.

We will win. We will replace Buy-and-Hold. Not because of some sort of grudge I have against the Buy-and-Holders. We will win because deep in their hearts the Buy-and-Holders themselves want us to win. Bogle says in one of his books that, when someone learns he had made a mistake, he wants to know about it. I honored the man’s desire when I pointed out the great flaw in Buy-and-Hold to him. VII is what Bogle MEANT for Buy-and-Hold to be and VII is what Bogle deep in his heart has always wanted Buy-and-Hold to be. VII is a form of Buy-and-Hold that works in the real world.

I wish you all good things, Bob.

Rob

Anyone can also read the many e-mails Wade wrote describing me as the teacher and him as the student and understand that not only was I the co-author, I was the PRIMARY co-author, Bob.

I talk about the prison terms because the prison terms are an important issue, Bob.

Ideas have a life cycle. There is a time when they are rising and gaining new adherents by the day. There is a time when they are dominant. There is a time when they decline in influence. And there is a time when they die.

Buy-and-Hold was a wonderful idea in its early days. We wouldn’t have Valuation-Informed Indexing today if Buy-and-Hold hadn’t come along first.

But Buy-and-Hold died intellectually in 1981, when Shiller published his research showing that valuations affect long-term returns. For Buy-and-Hold to work, returns must be random. If returns are higher when valuations are lower (and they have been for 140 years now), then risk is higher when valuations are higher. If you fail to adjust your stock allocation when risk increases, you end up with a risk profile to which you are entirely unsuited.

That’s a disaster. We are spending an enormous amount of resources teaching millions of investors to do something (ignore price when setting their stock allocation) that dooms their efforts. We need to stop doing that.

Now —

There are millions of good and smart people who believe in Buy-and-Hold today. Nothing could be more clear. Those people obviously have every right to talk about what they believe on discussion boards and blogs.

BUT SO DO THE VALUATION-INFORMED INDEXERS!

When you Goons deny us that right, you place yourselves on the wrong side of an important line. You have employed death threats to silence Valuation-Informed Indexing. You have employed unjustified board bannings. You have employed tens of thousands of acts of defamation. You have employed threats to get academic researchers fired from their jobs.

That cannot stand, Bob. That is not what the Personal Finance Blogosphere is about. That is not what the United States of America is about. It is not all about you.

Shiller published the research founding the Valuation-Informed Indexing model in 1981. It’s been 32 years. In ordinary circumstances, everyone would know about every idea I have put forward, given that they have had 32 years to explore them. It’s not an accident that the vast majority of people don’t know about these ideas today.

The Buy-and-Holders have engaged in nasty tactics to block million of people from learning about what the research in this field really says. This sort of thing was obviously going on long before I came on the scene. But I have documented the last 11 years of nasty stuff. And a lot of what we have seen has been very, very nasty indeed.

Following the next price crash, are you going to be able to make whole the millions who have suffered huge financial losses because of your insanely abusive behavior? You cannot do it. There’s not enough money in the world to do it.

So those people are going to be angry.

And my site documents your many felonies.

So I believe you are going to end up in prison.

Not because of anything I say or do. I have zero ability to send you to prison and zero desire to gain any such abilities. So any threats you are hearing from me are empty threats.

What I am seeking to do is to get your prison sentence REDUCED. You were a friend to me in the days before I put up my famous post pointing out the errors in John Greaney’s SWR study and so I care about you. Aside from that, you are a human and the thought of any human going to prison because he didn’t like what someone else said on a discussion board or blog makes me want to be sick. So I want to see you come clean. If you come clean prior to the next crash, your prison sentence is obviously going to be a lot less than what it will be if you do not come clean until after the next crash. So that is something I advocate at my site.

I believe that every blogger on the internet should be pushing for an end to the Ban on Honest Posting. I have had thousands of people tell me that they want to see it come to an end. I have had academic researchers tell me that they dream of the day when they will be able to do honest research once again. I have had investment advisors tell me that they dream of the day when they will be able to give honest investing advice again. These people matter. These people have a RIGHT to do honest work. And they would be helping us all by doing it.

Once the ban is lifted we are going to see thousands of blogs writing about Valuation-Informed Indexing. Joe says up above that the problem with VII is that it takes a long time for prices to return to fair-value levels. That will never again be an issue following the lifting of the ban. There will be thousands of blogs offering people tools to help them understand when stocks are not worth buying. So there will never again be a sustained bull market. We will never again have to worry about overvaluation once we all feel free at last to speak honestly about what the last 32 years of peer-reviewed academic research in this field says.

If you truly don’t believe that you will be going to prison, please forget I said anything, Bob. I am no one to you. Ignore me with my blessing.

But I have a conscience. So I am going to continue to point out to people that that is where things are headed. I want to be able to say on the day that your prison sentence is announced that I did something to keep that prison sentence limited.

It is my job to pull people together. I want the Buy-and-Holders and the Valuation-Informed Indexers working together and learning together and laughing together and having a good time together. So I don’t turn away when I see one of my Buy-and-Hold friends in trouble. You are in trouble, my old friend. You have crossed lines. Not once, THOUSANDS of times. And there is a record of internet posts showing this. You need to take care of the problem.

Ignore me if you like. THAT’S on the right side of the line. But I am the one who has to live with himself as events play out. I knew on the morning of May 13, 2002, that I could no longer live with myself if I didn’t work up the courage to tell the truth about Greaney’s study. So I did it and I accepted the consequences that followed from that brave decision to “cross” my old friend. I know today that I will not be able to live with myself in future days if I do not do what I can to help my old friend Bob from landing himself in prison for a long, long time. So I am going to continue doing what I can to see that your prison sentence is shortened a bit.

The rest is out of my hands, old buddy.

My warmest wishes to you and yours.

Rob

Joe has enough material available to him to make a good judgement.

So does everyone else.

The entire 11 years of discussions have been conducted on the internet. So there are Post Archives that cover every question.

The trouble we have is that humans are not computers. They don’t analyze facts and then spit our logical conclusions. We are social creatures. There is a Social Stigma re pointing out the dangers of Buy-and-Hold in place today that stops us from saying things that we would say in two seconds if the Social Stigma were removed.

My strongly held belief is that the Social Stigma will disappear following the next price crash. It had better. We went to valuation levels this time that were far, far higher than the valuation levels that caused the Great Depression. If we do not agree as a society to open the internet to honest posting on the last 32 years of peer-reviewed academic research in this field, we all go down together.

The other side of the story is that, if we DO open the internet to honest posting on the last 32 years of peer-reviewed academic research, we gain the ability to tap into the benefits of being the luckiest generation of investors ever to walk Planet Earth. No one who came before us was able to enjoy stocks as a virtually risk-free asset class. That option is open to us. I believe that, once we are in the Second Great Depression, we will choose to enjoy our good fortune rather than to continue to engage in stupid arguments as to whether honest posting should be permitted or not (the answer to that one would be obvious to every last one of us, including Bob, if we were thinking clearly re these matters).

In any event, I certainly wish you all the best that this life has to offer a person regardless of what investing strategies you elect to follow, Bob.

Rob

That all sounds on the mark, Bob.

Truly outstanding!!!

Rob

We call all look at history and see if we just happened to trade a certain way, we can become rich

We can all also just consider how we have done over a relatively short period of time and conclude that we are following a genius strategy because we have obtained good results for 10 or 15 years. The typical investing lifetime lasts 60 years (age 25 through age 85). We need strategies that offer good results OVER THE LONG TERM. Buy-and-Hold has caused a financial wipeout for every investor who has followed it for 140 years now. VII has provided FAR higher long-term returns at DRAMATICALLY reduced risk for 140 years now.

If the market is efficient, Buy-and-Hold is the ideal strategy. You have never heard me say different, Bob.

The trouble I have with risking my retirement money on the claim that the market is efficient is the 32 years of peer-reviewed academic research showing that it is NOT.

If the market is efficient, returns should be random.The person who bought stocks in 2000 should have had just as good a chance of obtaining good long-term results as the person who bought stocks in 1982. A regression analysis shows that the most likely annualized long-term return on stocks purchased in 1982 was 15 percent real and that the number that applied in 2000 was a negative 1 percent real.

It’s not a close call. Valuations matter. And, if they matter, you must take them into account when setting your stock allocation. If you fail to do that, you are permitting your risk profile to go wildly out of whack when prices go wildly out of whack. That cannot possible be a good thing.

Jack Bogle is the lead advocate of Buy-and-Hold alive on the planet today. And even Jack says that the most important rule in stock investing is to “Stay the Course.” Is an investor who goes with a 70 percent stock allocation when the likely long-term annualized return is 15 percent real and who also goes with a 70 percent stock allocation when the likely long-term annualized return is a negative 1 percent real Staying the Course in a meaningful way? It sure does not seem so to me. When Jack Bogle implicitly says that Buy-and-Hold cannot possibly work, I think it’s fair to say that the time has come to give it up.

Investors who listened to the Buy-and-Hold advocates and bought an asset class promising a negative 1 percent real long-term return in 2000 hurt themselves in a very serious way. TIPS were paying 4 percent real at the time. Had they purchased the asset class carrying less risk, they would have seen a greater return of 5 percent real on average for every year, ten years running. That’s a total shortfall for the Buy-and-Holders of 50 percent of their starting-point portfolio value. That means retiring perhaps ten years later (especially when you consider the losses suffered as a result of the years of lost compounding returns on that differential).

What purpose is served by denying millions of middle-class people access to honest posting on these matters? We all should be allowed to report honestly on what the last 32 years of peer-reviewed academic research says and each investor should make his or her own choice as to whether to follow the strategies pushed by the Wall Street Con Men (who make millions when people are persuaded to buy overpriced stocks) or the strategies supported by the last 32 years of peer-reviewed academic research.

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

Rob

You have been given portfolios with long term results.

Buy-and-Hold performed well from 1982 through 1995. But not because of anything having to do with Buy-and-Hold. Buy-and-Hold performed well in those years because stocks were priced low or moderately and stocks ALWAYS perform well when priced low or moderately. ANY strategy calling for a high stock allocation did well in those years. VII calls for a high stock allocation when stocks are priced low or moderately. VII performed well from 1982 through 1995.

Buy-and-Hold performed poorly from 2000 forward. VII performed at least as well in those years. I give VII the edge because there is so much less risk for those following VII. But I think it would be fair to say that the two strategies generated numbers in the same general neighborhood in those years.

Buy-and-Hold KILLED VII in the years 1996 through 1999.

Stocks are priced today for a 65 percent price drop, according to the peer-reviewed academic research of the past 32 years. In the event that stocks continue to perform in the future at least somewhat as they always have in the past, VII will be far, far ahead of Buy-and-Hold following the next crash. Then it will go even farther ahead as the compounding returns on that differential grow larger and larger and larger.

That’s the story, Bob.

There are millions of good and smart people who think Buy-and-Hold is the way to go. I do not. But I certainly wish them well. I would never in my wildest dreams think of putting forward death threats or demands for board bannings or tens of thousands of acts of defamation or threats to get academic researchers fired from their jobs because I wanted to intimidate people who have different ideas about what works in investing into silence. I consider the Buy-and-Holders my friends.

And I know that I can make mistakes. I think that anyone who followed my advice just because I happened to put it forward would have to be drunk or dumb or loco or very, very young and inexperienced. I am some guy whose expertise re this subject matter is that I figured out how to get stuff posted on the internet. It is my hope that there will never be one person who will ever give the slightest thought to following the advice I offer solely because I put it forward.

I feel equally strong about the idea of posting dishonestly on all these questions. I said that I think of the Buy-and-Holders as my friends because of all the wonderful things I have learned from them and because of the good times I have had with them. The Buy-and-Holders earned something from me through their friendship. They earned my honesty. I intend to honor the debt I owe them. I have refused for 11 years in the face of the most relentless and brutal pressures that anyone has ever faced on the internet to post dishonestly re these matters. If I am true to myself, I will continue to refuse to post dishonestly for another 11 BILLION years. As Elvis once put it, if you don’t believe me, you can count the days.

I wish you the best of luck in all your future endeavors, Bob.

Rob

Like always, Rob, you avoid answering direct issues.

You cannot show any examples of portfolios that have successfully executed your strategy with YOUR prescribed long term timeframes.

You don’t say why you have not followed your own advice.

Instead, you try to create some boggie man out of the mysterious buy and hold “mafia” as you describe it as a way of justifying your positions.

Stop the lies, Rob.

Rob,

There you go again avoiding the questions.

All topics are open for free discussion. The problem for you is that you have been banned from many boards due to your behavior.

If you want honesty (as you say), stop lying.

There you go avoiding the questions. I will address your’s after you address my points

The fact that Shiller is a proponent of the approach takes it from a fringe view to mainstream,

Thanks so much for saying that, Joe. Your comment cuts right to the heart of things, in my assessment.

These ideas should be discussed at every site on the internet. People should be 100 percent free to reject them. But all bloggers should be sure that their readers are aware of the ideas and feel free to say whatever they please about them. Each of our readers has the right to make his or her own decision as to whether it is Fama or Shiller who ultimately will be proven right. The success of their retirement plans depends on the answer to that question. No blogger or site owner should be taking on the financial responsibility for the success of all of his or her readers’ retirement plans.

Rob

“I am the co-author (with Wade Pfau, who holds a Ph.D. in Economics from Princeton) of research that was published in a peer-reviewed journal”

This is an outright lie.
Joe, I’m shocked that you not only give this charlatan a platform to use on your site, but also that you seem to ENDORSE him and his tactics. Bizarre. I think the poster above did a good job of both debunking Rob’s claims, as well as illustrating that Rob simply will not answer direct questions about the methods he espouses, nor can he give examples of anyone who used them successfully, including himself! You may like Shiller, and you may like PE10, and/or timing the market, but those preferences should not blind you to the fact Mr. Bennett himself is a poisonous troll, who is using your site to further an 11 year campaign of making himself the center of attention, through any means at his disposal.

Joe made the essential point, in my view.

Rob

There is one absolute certainty here. Unless Joe bans him, Rob will have the last comment in this thread. Even if it goes on for years.

So, You don’t want to comment as to how Wade says you are wrong on SWRs and you don’t want to comment on why you don’t follow you own advice and you can’t point to any portfolio that has long term results using your strategy and you don’t want to give third part proof to your claim of death threats (only links to your boards), but you will throw out those nice little threats of prison time and lawsuits to those you disagree with. Did I get all of that right, Rob?

So, you are confirming my points. Thanks for doing so, Rob.

And thanks once again for confirming my points.

I will offer you up one concession. We should give you a bit of grace for not investing in the market as you probably couldn’t take the risk after retiring with only $400k while still have 2 growing kids at home to support, as we as a wife.

It seems you still struggle in responding to the points brought up Rob. Maybe you can answer them by typing the letter “g” just like you do on your hocomania board when you can’t provide an answer.

Joe- just to give you a heads up, Rob now seems to be referring to you over on the Hocomania board. Not sure why, as it seems to be odd responses.

http://www.s152957355.onlinehome.us/cgi-bin/yabb2/YaBB.pl?num=1383748938/15

Rob- like always, you have no real answers.

Another diversion tactic by Rob. Not surprised, given his background.

http://retireearlyhomepage.com/bennett.html

Answer:

None of the above. It was Wade when he said:

“Hi Rob,

I forgot that I was still saying things like this even 2 weeks after the initial incident.

This was more than a year ago now, but I am thinking that I was just trying to explain politely to you that I’d rather have you quit writing about me, or at least stop using my name. I suppose that I figured the only way you might understand why is if I explained it in terms of your favorite conspiracy theories.

I will make one more attempt at a reality check for you. You go on and on about how I allegedly lack personal integrity because I allowed the Goons to threaten me into silence.

The reality is that though I may have for a brief moment got a bit too caught up in YOUR drama, I do not have any fears about the Goons.

The reality is that you are causing me 1000x more career damage than the Goons ever could have by filling Google with so much nonsense about me, and sharing embarrassing private details such as my overly ambitious journal submission strategies, etc. Those in particular are highly private. People don’t publicly share where they submit articles to unless those articles are accepted. You’ve violated my trust in so many countless ways and yet you still proclaim to be my friend.

And the further reality is that if I *did* lack personal integrity, I could have made this all stop just by saying the meaningless sentence you want so desperately to hear: “I think the errors in the traditional safe withdrawal rate studies must be corrected by using Rob’s analytically valid method.”

But I don’t believe that. I do not believe you have offered a valid correction to the safe withdrawal rate question. And I believe that retirement income strategies go much further than the question of a safe withdrawal rate. And so that is why I’ve had to endure your ongoing harassment for months on end now.

Usually I can figure out the Rob-logic behind what you are thinking, but I really don’t know how you think you come out of this whole episode looking like the good guy. I guess it is because you think you are saving my soul and putting me back on the path of righteousness, or something, huh? If only you had the power to do a little bit of self reflection…

Now that the whole email history is on display, we have the reminder of how angry you got at the very beginning when I referred to you as dogmatic. Yet, look at the way you’ve treated me for disagreeing with you on something which you don’t even understand. You quote numbers from JWR’s statistical work, but I’m not sure if you can even distinguish a mean from a median. So how can you be sure his work is right? I don’t know either, as I never did get around to digging into it, and I doubt I ever will now. But I’m not sure how a properly calculated lower confidence bound for a 2000 retiree could have been higher than zero.

Rob, suppose the stock market does drop 65% as you are expecting. It might happen, who knows.

Step 1: Stock Market Drops 65%

Step 2: ??

Step 3: Rob wins $500 million settlement from the Goons, the Goons are sent to prison, the investing public learns about and adopts VII.

What is Step 2? There isn’t one. You will still be in the same position as you’ve been in for the last 10 years. Why didn’t something happen for you after the 2008 financial crisis? You are like the guy who keeps predicting new ends for the world as each previous prediction date passes by.

That is why I’m telling you, from one human being to another, that it is time to move on. You are a smart guy, and you could use your talents for something productive. While warning people about the 4% rule is helpful, the way that you go about doing it is rather “catastrophically unproductive” as one wise fellow said to you years ago. I provide a loud voice that is critical of the 4% rule, and so spending your days assassinating my character is counterproductive to your underlying cause. So perhaps you can start fresh with a new issue of social import that carries less baggage for you. What happened in the past is a sunk cost, but you still have a chance to turn things around and start afresh today. And you can do all of this while still being honest and true to yourself.”

Joe- just another heads up. You have become Rob’s new best friend. He is going to ride your name like a pony as you are now his favorite topic over at the hocomania board. You will soon understand why Wade made made the comments he did as Rob is going to make you his new poster child.

Good luck with that!

Rob,

With you, it is a mental illness. I am sure Joe will find that to be the case if he hasn’t already.