A Rich Life

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

“There Is Something Rude About Disagreeing With Me Repeatedly At My Own Blog”

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Set forth below is the text of an e-mail sent to me on October 27, 2009, by Mike Piper (author of the Oblivious Investor blog) in response to my e-mail to him set forth in yesterday’s blog entry.

Rob-

The fact that you disagree with me isn’t the point. I completely agree that diversity of opinion is a wonderful thing in general and that it’s an integral part of what makes our financial markets work. The issue is that you feel the need to continually bring up your disagreement and that you do so on my blog.

To illustrate, let me bring up Neal Frankle (aka Wealth Pilgrim). His investing viewpoints contrast my own far more than yours do. (He’s an advocate of short-term market timing using actively managed funds.) He invited me to write a guest post for his blog explaining my contrary viewpoint. I did so. He replied explaining why he disagreed. We talked it through in the comments. End result: Neal and I still disagree. Adamantly. Yet we don’t bring it up over and over at each other’s blogs.

What we do though is continually write about our own beliefs/philosophies/thoughts on our own blogs, putting forth the ideas that we’ve come to believe in. I write about why I think actively managed funds are a terrible choice. And Neal writes about why he thinks the opposite.

You wrote that “It makes me feel that there is something wrong or dirty or rude or not nice about challenging Passive Investing at your blog with the strongest arguments that I can muster against it.” There’s nothing wrong rude about disagreeing with me. And there’s nothing rude about disagreeing with me on my blog. But, frankly, I think there is something rude about doing so repeatedly on my own blog.

If you believe that you should repeatedly “make the strongest case” you can against what I’m recommending, then go for it. But, please, have the respect to do it on your own blog.

Thank you.

-Mike

“It Makes Me Feel There Is Something Dirty or Rude About Challenging Passive Investing at Your Blog”

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Set forth below is the text of an e-mail that I sent to Mike Piper (author of the Oblivious Investor blog) on October 27, 2009, in response to the e-mail that he sent to me that was posted as yesterday’s blog entry.

Mike:

The book The Wisdom of Crowds makes what I consider one of the most persuasive arguments that I have heard in favor of the idea that the market sets the price better than any one individual could set it. But the author advances a caveat on page 19 of the Introduction:

“Diversity and independence are important because the best collective decisions are the product of disagreement and contest, not consensus or compromise. An intelligent group, especially when confronted with cognition problems, does not ask its members to modify their positions in order to let the group reach a decision everyone can be happy with. Instead, it figures out how to use mechanisms — like market prices or intelligent voting systems — to aggregate and produce collective judgments that represent not what any one person in the group thinks but rather, in some sense, what they all think. Paradoxically, the best way for a group to be smart is for each person in it to think and act as independently as possible.”

The group that meets at your blog is a community. I have a role in that community. My role is to make the strongest case against Passive Investing that I am able to put forward. That helps the community in several ways. One, it helps those who have doubts about Passive Investing to develop their thinking about why they have doubts. Two, it helps some of those who in the past have had no doubts by causing them to experience the first stirrings of doubt, And, three, it helps those who have had no doubts before and who continue to have no doubts to gain confidence in their contrary views by seeing them challenged effectively and by seeing that challenge fail in their eyes.

Yes, I CERTAINLY view your earlier e-mail as an act of intimidation. It makes me feel that there is something wrong or dirty or rude or not nice about challenging Passive Investing at your blog with the strongest arguments that I can muster against it. Do you respond with that sort of e-mail to community members who agree with you on Passive Investing? Your role as a writer and commenter is also to make your case as effectively as you can make it. Your role as a MODERATOR is very different. Your role as a moderator is to play it straight down the middle, not to slant things in favor or against the Passives and not to slant things in favor or against the Rationals.

You shouldn’t be merely PERMITTING me to make a strong case against Passive at your blog. You should be ENCOURAGING  me to do so. You should of course argue effectively against me when you disagree. But you should never raise even a hint of a suggestion that there might be some sort of punishment to follow if community members put up posts not in agreement with your own views. Those comments help you more than the ones that say “attaboy!” on every word you put forward. It is those who challenge you who bring on your greatest learning experiences. Those who challenge your thinking often end up being your best friends, Mike.

You should be writing about the fact that you have community members who are upset to hear criticisms of Passive Investing. That’s part of the story. That’s news. Discussion of that reality is likely to bring on a learning experience for everyone concerned. To the extent that you share these feelings, you should say so. But you should NEVER indicate to anyone at the blog that you have given thought to punishing those with different viewpoints. That i so far over the line that I cannot even describe how far over the line it is.

You have indicated that you don’t believe that you could ever change your mind on these issues. I don’t think that’s right. There was a time when I thought Passive Investing was just peachy. I obviously changed my mind, right? I wouldn’t have predicted in advance that that would happen because I hadn’t yet worked through the changes that I needed to work through to get me to where I am today. You need to open yourself to arguments and ideas that you today cannot today imagine supporting because it is only by opening your mind to the possibility of changing your mind that you will even be able to hear the arguments with a fair mind.

The purpose of the First Amendment is not to protect majority viewpoints from criticism. Majorities can generally take care of themselves. The purpose is to protect minorities. Minorities NEED protection. Minority viewpoints are often hated. It is often the case that they are hated not because they are wrong but because they are right. Think slavery. The idea that slavery should be abolished was once hated with the same passion that a good number of people today feel for the idea that Passive Investing is dangerous investing. We have a First Amendment not because hearing the other side always feels good. We have it because we have learned from experience that it is in our long-term best interest to keep the door open to new ideas. The stomping out of minority viewpoints has in the past often ended up causing more harm to the majority than it did to the minority. We often cannot see how it could ever end up that way. But it has ended up that way many times in history. The First Amendment is there to protect us from our own worst inclinations to stomp out the voicing of minority viewpoints.

We need to bring about Normalization of these discussions. I don’t mean just at your blog, I mean across the entire internet. We don’t get there through further bannings or through further threats of bannings. You should put out of your mind even the idea of ever banning anyone for anything except abusive posting. Those of us who want to see the blog achieve its highest possible potential (that obviously includes both Mike Piper and Rob Bennett) should be working together to make that happen. It cannot happen by silencing the anti-Passive Investing viewpoint. There are probably lots of constructive things that could be done to further that objective and I am happy to work with you to advance any positive options. But I don’t think we can get to Step A until we banish even the idea that a ban on honest posting could ever be  good idea. Yes, the advancing of that idea intimidates. It poisons the atmosphere for any community member to feel that he might be excluded from a community solely because he puts forward his honest take on the subject under consideration.

I want to work to make your blog the best blog it can be. That’s why I share my thoughts on Passive Investing at your blog. I want to be able to feel that you WARMLY WELCOME my contributions regardless of whether they happen to be in agreement with your views or not. When we achieve that, I believe that the rest will be downhill sledding. I don’t put forward my words with the aim of winning popularity points (although I of course believe in interacting with others in a spirit of friendship and warmth). I put them forward with the aim of helping us all to learn more about the realities of stock investing. That should be enough to win a hearty endorsement from you for my continued active and honest participation, in my view.

Rob

“To Say That Any Market Collapse Is Caused By Passive Investing Doesn’t Make Sense to Me”

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Set forth below is the text of the e-mail that Mike Piper (author of the Oblivious Investor blog) sent me on October 27, 2009, in response to me e-mail to him set forth in yesterday’s blog entry.

Rob-

Here is where we disagree. I have seen many investors achieve very real success utilizing long-term passive investing strategies. I therefore disagree strongly with the statement that it doesn’t work and never works. I’ll freely admit that there are strategies which have earned higher returns in the past, some of which may likely earn higher returns in the future. But I cannot agree with the statement that it has “a zero chance of ever working in the real world.”

Further, as I explained in reply to your original guest post on my site, to say that any market collapse or market bubble is caused by passive investing doesn’t make sense to me. If literally everybody were to execute a passive investing strategy (i.e., buying and holding index funds, with only very gradual changes in asset allocation), there would be no sudden spikes or declines in demand for stocks–and there would therefore be no bubbles or collapses. (Not to say that everybody should follow a passive strategy, or that the world would be a better place if everybody did…I’m just pointing out that by its nature, passive investing cannot cause volatility.)

As to banning you, I will openly admit that I’d rather not. I’d rather not ban anyone, frankly. (I would hope this would be obvious given that I approached you about the matter openly and directly rather than simply banning you.) I sincerely hope that you don’t think that what I’m doing here could be described as “intimidation tactics.”

Also, I believe that you’re misunderstanding people’s motivations when you say that their emails are motivated by hurt feelings. I don’t think that’s the case. As I mentioned in a previous email to you, I believe it has much less to do with the actual content of your comments and much more to do with the frequency with which you bring the topic up. 

Again, as I mentioned in the prior email, I sincerely believe that you’d have more success with spreading your message if you brought it up less frequently and/or with less fervor. As it is, I think your methods tend to alienate people rather than win them over. If you’d like to publish this email, you may. But I have to doubt how constructive it would be to post it. It seems to me that the only thing it would achieve is sensationalizing the matter and further alienating people who are currently passive investors. (And after all, these are the people whom you would hope to persuade to be “value-informed investors,” correct?)

Sincerely,

Mike

“Having a Successful Blog Is Not Going to Mean Much If We See an Economic Depression”

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Set forth below is the text of my October 27, 2009, response to the e-mail from Mike Piper (author of the Oblivious Investor blog) set forth in Friday’s blog entry.

Mike:

Holy moly! Another one goes to the dark side!

I do not respect the viewpoint you express in this e-mail (although I of course respect the good things that you have done with your blog aside from your promotion of the long-discredited Passive Investing model).

Passive Investing is reckless investing. The academic research has shown for 28 years now that there is precisely zero chance of it ever working in  the real world. The continued promotion of this “idea” for three decades after we learned that it cannot work has caused the greatest loss of middle-class wealth in the history of the United States. We are now suffering through an economic crisis which stands a good chance of bringing on the second great depression. We have seen significant damage to our political system.

All of us who have enjoyed benefits from our economic and political system have a responsibility to do what we can to help get us out of this economic crisis as quickly as possible. The single most important step is to start shooting straight with middle-class workers about the failure of the Passive Investing model and to get about the business of building a new and more realistic one.

The very fact that you have received e-mails from readers expressing happiness that a post that reported on an important investing reality in an entirely appropriate and helpful way was deleted from the blog should tell you that something is terribly, terribly wrong with this model. Why is it that Passive Investors feel such shame about the damage that has been done by the reckless promotion of this model for years after it was discredited by the academic research? It is because humans have within them a desire for honesty and because we feel a natural compassion for our fellow investors (and for ourselves!) and feel a revulsion over our own bad behavior when it causes such human misery. I cannot support this kind of thing.

I of course agree that we should be taking the feelings of those who have endorsed Passive Investing or followed Passive Investing principles into account when making the transition to the Rational Investing model. It is critical to move forward in a spirit of charity. But it is also critical that we do indeed move forward. Allowing further promotion of Passive Investing (or, worse, allowing the promotion of Passive Investing while NOT permitting honest posting on the dangers of this “strategy”) helps no one. It makes a very bad situation worse.

You have responsibilities not only to those of your readers who are so emotionally damaged by their earlier belief in Passive Investing that they cannot bear to hear the realities publicly expressed. You also have responsibilities to those who today possess a desire to learn the realities. I know from long experience discussing these matters that there are such readers at your blog (I also know that there are indeed not a small number who are feeling real pain about the mistakes they made at earlier times). If it becomes a question of working with you to proceed in the most constructive and positive way possible for your entire readership and for the entire community of people who see the value in Bogle’s many good ideas, I am happy to do whatever I can to move the process forward. If it has become a question of pretending that there is some alternate universe in which the continued promotion of Passive Investing will not continue to do great harm to all involved, I am not able to participate.

There will of course be no problem with investors “latching on” to timing ideas that do not work if most personal finance blogs and most investment advisors simply unite in telling investors the straight story. There are millions of investors who today believe the nonsense claims that The Stock-Selling Industry has been pushing on us for three decades now. That reality has of course caused huge financial losses and made investors about 50 times more emotional about these matters than they would be if we were all reporting the realities accurately. The concern you express here is one of the many problems caused by the reckless promotion of Passive Investing. The obvious solution to the problem is to stop promoting Passive Investing and to made it a point to regularly point out the dangers of buying into the dangerous “idea” that valuations do not affect long-term returns.

I cannot say with certainty whether I would eventually change your mind or the minds of many  of your readers in the event that you continued to permit honest posting at your blog. I believe that you and your readers would eventually come around as the benefits of Rational Investing are so great and the downsides to Passive Investing are so great. I know one thing for certain. If more people do not work up the courage to report honestly on these questions, our chances of changing minds (and of thereby salvaging our economic and political system) are slim indeed.

If you looked at the history of what the promotion of Passive Investing has always done to us in the past and then considered how out of control things got this time, I think you would agree that, whatever are the odds of success, we have no choice but to put our best efforts to doing what we can. Having a successful blog is not going to mean much if the economy goes into  depression. If a world war follows, as it well might, I think it would be fair to say that having a successful blog would come to mean just about zero.

I will continue to post honestly at your blog until such point as I am banned from participating. People who threaten bans do not always follow through. I think that the right thing to do is to force you to push the button before saying publicly that you have banned honest posting at your site.

I would like to post both your e-mail and my response to it at my blog for the obvious news value they possess for those hoping to see the internet opened to honest posting on investment topics in days to come. If you object, please let me know and I will post only a summary of the points made in your e-mail.

I will be contacting numerous political blogs and policymakers in days to come in an effort to organize an effort to have legislation opening the internet up to honest posting on the failure of the Passive Investing model and on the intimidation tactics that have been used to mislead millions of middle-class investors about the realities of stock investing as revealed by the academic research and the historical data. In the event that you do indeed ban honest posting, I will of course be required to report that fact as part of the story and to urge those concerned about the future of our economic and political system to demand that you reopen your blog to honest posting (or else to at least expressly explain in the rules of the blog that honest posting on the failure of the Passive Investing model has been banned, so that people reading the blog understand that they are not hearing the straight story).

I will of course note in my comments re you that we had good dealings for a time, that I believe that your  personal belief in Passive Investing is sincere, and that I believe that you have done good work on many topics not related to the one of whether  honest posting should be permitted on the failure of the Passive model.

I hope that we will remain friends in the event that you do follow through with your plans to ban honest posting. If ever there comes a time when you have questions about what we have learned in the Retire Early and Indexing communities over the past seven years, please feel free to ask them. You are a fine writer and I sincerely believe that at least a part of you would like to take things to a better place than where they stand today. If ever I can be of help in giving more strength to the part of you that got you interested in investing issues in the first place many years ago, I want to do all that I can to make that happen. You are in a position to have a huge positive influence if you ever elect to take the other path.

Thank you for letting me know that the readers who wrote you believe that I proceed with the best of intentions and also for saying that you believe this yourself. It is a kindness for you and for them to say that given the circumstances that apply here. That sort of thing makes a difference. I see those words as a bright spot in an otherwise very dark message.

Rob

“I’d Rather Not Ignore Requests of What Appears to Be a Significant Portion of My Readership”

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Set forth below is the text of an e-mail that Mike Piper, author of the Oblivious Investor blog, wrote me on August 27, 2009.

Hi Rob.

Last week, after deleting your comment, I got multiple e-mails from readers thanking me for doing so. The message expressed in each email was that the reader was tired of hearing about Valuation-Informed Investing. Today, after your comment, I received another email from a reader asking me to request that you stop bringing it up.

Two of the emailers explicitly noted that you appear to have the best of intentions with your writings. I’d agree with that statement.

However, I’d rather not ignore the requests of what appears to be a significant portion of my readership. (I’ve always suspected that if a few people take the time to email about something, there are others who have been thinking the same thing, but don’t bother to say so.)

I’ve read Schiller’s “Valuation Ratios and the Long-Run Stock Market Outlook” as well as the 2001 update of that paper. I’m not trying to argue against the historical correlation between future price changes and current P/E 10 ratios. I wouldn’t fault you for integrating current P/E 10 ratios into your asset allocation plan, nor would I fault you for recommending that others do the same.

The primary reason I don’t actively recommend it is that I’m not convinced it’s worth the additional possibility for errors. The issue isn’t that I believe it would be particularly difficult to implement. I’ve just found that investors tend to latch onto the idea that it’s possible to beat the market, and once they latch onto that idea, they don’t have very good ways of separating reasonable methods from unreasonable methods. So they choose between methods by doing the obvious: They compare past performance, which can lead to all sorts of poor investment decisions. Instead, I suggest accepting market returns.

I fully encourage you to continue writing about Valuation-Informed Investing on your blog. I would, however, ask that you refrain from bringing it up on my own. You know where I stand on the topic, and I (and my readers) know where you stand. We discussed it pretty thoroughly in your guest post, and it’s been discussed to varying degrees in other comment threads. I respect your viewpoint on the matter, and I hope that you respect mine. However, I don’t think either of us is going to change the other’s mind at this point, and I’m doubtful as to whether anything would be gained by our continuing to discuss it.

Sincerely,
Mike

“Integrity Issues Are Always On-Topic”

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Tuesday’s blog entry set forth the text of an e-mail that I received from Mike Piper explaining his decision to delete a comment that I put to a blog entry at his Oblivious Investor blog reviewing the Bogleheads’ Guide to Retirement Planning. The comment pointed out the role of the authors in imposing a ban on honest posting on safe withdrawal rates and other important investment topics at the Vanguard Diehards board and at the Bogleheads.org forum. Set forth below is the text of my response to Mike:

Mike:

I believe that you are trying to take things in a positive direction. I applaud you

for that.  We need some people from “your side” taking more constructive and

reasonable positions.

If you do not object, I will run the text of your e-mail as a blog entry at my site

(if you do object, I will summarize it). Your e-mail is news. It tells people how

those among the Passive Investing advocates who are trying to take things

in a positive direction are handling these sorts of issues today.

I would be grateful if you would include a note in the comments section of

the blog entry saying that Rob Bennett posted a comment that you deleted on

grounds that it was not on topic and that I will be reporting on the matter at my

blog.

My view is that integrity issues are always on topic. Mel and Taylor would

not have a book contract but for the work done at those boards by thousands of

good and smart and honest people. The ban on honest posting is a betrayal

of those people and their intent in building the board. People thinking of

taking the retirement advice offered in the book into consideration need to

know whether the authors can be trusted. The fact that they favor a

ban on honest posting on safe withdrawal rates (SWRs) goes to this question.

I am happy to hear that there are few references to SWRs in the book.

That is obviously a good thing and I think it would be fair to say that it is

my efforts (supplemented by the efforts of the thousands of community

members who have expressed a desire that honest posting be permitted)

that are primarily responsible for that encouraging reality of today. The darker

reality is that Taylor and Mel have not learned what they could have learned

from their discovery that the Old School SWR studies got all the numbers

wrong. Everything that I have learned about investing over the past seven

years followed from my discovery of the errors in the Old School studies

and what I learned by thinking through the implication of the reality that

so many good and smart people could get their retirement planning advice

so terribly and dangerously wrong and fail to fix things for so many years

after the errors were brought to their attention.

Thanks for the tone evidenced in your e-mail. I of course do not agree

with your decision to delete the comment. I certainly understand why

the comment causes discomfort. I interpret your reasonable tone as

evidencing a desire to see these matters handled in a constructive and

positive way. If that happens, I am confident that every single member of

the Indexing community (including Taylor and Mel and John Bogle,

to be sure) will be feeling a whole lot better about themselves and about

their advocacy of the indexing concept in days to come.

Rob

“It Brings Up Things That Happened at Another Forum, Which Most of My Readers Don’t Seem to Care About”

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Thursday’s blog entry reported on Mike Piper’s decision to delete a comment of mine from his blog. Mike’s blog entry reviewed a book by Taylor Larimore and Mel Lindauer, The Bogleheads’ Guide to Investing. The deleted comment pointed out the role that Taylor and Mel have played in imposing a ban on honest posting on safe withdrawal rates and other important topics at the Vanguard Diehards board and at the Bogleheads.org forum.

Set forth below is the text of the e-mail that I received from  Mike explaining his decision to delete the comment. I will post the text of my response to Mike in Thursday’s blog entry.

Hi Rob.

I’m sorry, but I’m not comfortable publishing that comment. The reason has nothing to do with the “respectful” part of the comment rules, as you were clearly made an effort to be respectful.

The issue is that I really don’t see it as “on topic.” It brings up things that happened at another forum, which, frankly, most of my readers don’t seem to care about.

Also, for reference, the book really is about far more than just investing. “Safe withdrawal rates” has precisely two entries in the index.

The first is for a discussion of how to apply a “safe withdrawal rate.” For example, should a person select a percentage, and withdraw that percent every year? Or should they start with a percentage, and adjust that dollar amount upward every year to account for inflation? It explains that the first method is far less likely to result in the investor running out of money, but it’s not entirely practical for investors who can’t adjust their expenses on an ongoing basis.

The second is a very brief mention in the chapter on early retirement. Basically, it says that an investor who retires at age 40 will have a lower SWR than an investor who retires at age 65 (assuming they both intend to spend the majority of their money over the course of retirement, rather than leave a significant amount to heirs).

Surely both of those points are ones we can all agree on, no?

“It Is a Black Mark on All in That Community (Including John Bogle) That This Wrong Has Not Been Rectified”

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Mike Piper of the Oblivious Investor blog deleted from the comments section of yesterday’s blog entry (“Review: The Bogleheads’ Guide to Retirement Planning”) a comment that I advanced pointing out the role that Mel Lindauer and Taylor Larimore have played in maintaining the ban on honest posting that applies today at both the Vanguard Diehards board (at Morningtar.com) and at the Bogleheads.org forum.

Set forth below are the words of the deleted comment. I will set forth the text of Mike’s explanation of the deletion as next Tuesday’s blog entry (he has given me permission to do so) and I will set forth my response to Mike as next Thurday’s blog entry.

Here is the text of the deleted comment:

I’m going to say some good stuff about the book because that’s the charitable and proper way to proceed. And then I am going to say some bad stuff because I believe we are all obligated to speak honestly re matters that affect people’s retirement planning.

The authors were given a book contract not because they personally possess skills as retirement planners. They were given the contract because of the wonderful communities that they played a big role in building at Morningstar.com (the Vanguard Diehards community) and at Bogleheads.org. The communities truly are wonderful. I actively participated at Vanguard Diehards until I was banned (I was banned at Bogleheads.org before putting forward a post — the board was formed to escape me). And I link to discussions held at these communities frequently at the “Today’s Passion” feature of my site.

Taylor and Mel obviously deserve credit for the work they did building learning resources that benefit us all. There are thousands of people who love them for having done this and not entirely without reason. John Bogle is today’s leading investment authority and he has endorsed the work done by Taylor and Mel. I have not read the book but I am certain that there is a lot of good stuff in it.

People also need to know about the bad stuff. I am the person who discovered the errors in the Old School safe withdrawal rate (SWR) studies. It is because I reported the accurate numbers at the Vanguard Diehards board that I was banned both there and at Bogleheads.org. This is wrong. It is not a wrong done only to me. It is a wrong done to all of the thousands of community members who expressed a desire that honest posting be permitted there. It is a black mark on all who participate in that community (including John Bogle) that this wrong has not been rectified for over two years now.

This failure to address the SWR topic and resolve it successfully affects the integrity of the book. I don’t know precisely what is said in the book re SWRs. But I know with 100 percent certainty that the book does not say the same things about retirement that it would say if Taylor and Mel had permitted honest discussions of the flaws in the Old School studies and had learned from those discussions. The book as it exists today is not the book that would exist had board “leaders” acted with integrity in their board administration actions.

That’s the right word — integrity. The reason why discussions of the errors made in the Old School studies have been so contentious is that there are integrity issues involved in the failure of the community of Passive Investing advocates to address these issues for over seven years now. We are not going to be able to duck these issues indefinitely. Our integrity is part of what makes us human. We cannot continue to function as humans if we do not address challenges to our ability to act with integrity. None of us should be recommending without reservation Investing guides that lack integrity in their discussion of important topics (it is of course possible that guides that lack integrity on some issues may do good service on other issues).

These words are going to upset some people. That’s proper and right. The realities here are unpsetting. We all have a role to play in getting things back on the right track.

Rob

“These People — Good People — Have Described Your Comments as ‘Spammy’ & ‘Obnoxious'”

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Mike Piper, author of the Oblivious Investor blog, wrote me an e-mail in response to Tuesday’s blog entry (“Mike Piper of Oblivious Investor Bans Discussion of Lindauer’s Campaign of Terror Against Diehards“). Reading the e-mail was a painful experience for me (you will understand why when you read the words of the e-mail, set forth below [Mike had given me permission to post his words here]). However, I am highly confident that Mike’s words are honest and well-intentioned and brave words. I sent him a response e-mail expressing my gratitude. I hope that we can all read his words, consider their significance and act constructively in response to them.

Hi Rob.

I believe that:

a) You’re a genuinely good guy, and
b) You believe deeply in the validity and importance of your message, and are doing what you can to spread it.

I can appreciate that.

It’s my respect for you that’s spurring me to write this email to honestly inform you about something I’m not sure you’re aware of.

I’ve had multiple people ask me in the last week why I continue to allow you to comment on the blog.

(Note: These are not the “goons” to whom you refer. These are real-life friends and family members of mine. I can assure you with 100% confidence that they read no other investing-related blogs or forums. So their thoughts have nothing to do with what has occurred elsewhere on the web. Also, these people do not work in the investment industry, and they themselves follow a myriad of investment strategies, so they have no vested interest in one investment strategy as opposed to another. As far as I can tell, these people are about as impartial as anyone could be.)

These people–good people–have described your comments as “spammy”, “obnoxious”, and “like the guy in a town hall meeting who won’t shut up about something everybody else doesn’t care about.”

Note: none of these people have voiced any issues or arguments with your message. They take issue with the way you’re attempting to spread it.

I think what’s happening here is that:

  • To you, your comments are on-topic and essential whenever concepts such as asset allocation or expected return come up on the blog. That’s why you bring the topic up so frequently and with such fervor.
  • To others–to whom the connection is not so clear–your comments come across quite differently.

I encourage you–for the sake of your own success–to take a look at your methods. I suspect that in some cases, perhaps your being banned from various sites has more to do with the manner in which you go about spreading your message than it has with the actual content of your message. I genuinely believe that you would reach more people if you scaled it down a level.

As to my own website, my goal is to both help investors succeed and make the site a place that people enjoy visiting. I’m requesting that you limit your comments to 2 per thread and to ask yourself whether other readers would see a comment as “on topic” before you post it. If you call that “putting marketing considerations above his desire to inform his readers what works in stock investing” then so be it.

Sincerely,
Mike

Mike Piper of Oblivious Investor Bans Dicussion of Lindauer’s Campaign of Terror Against Diehards

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Mike Piper, owner of the Oblivious Investor blog, this morning imposed a ban on discussion of Mel Lindauer’s Campaign of Terror against the Vanguard Diehards board community. Mel is the author of The Bogleheads Guide to Investing. When the Vanguard Diehards community showed great interest in learning about the analytical errors made in the retirement studies widely cited by financial planners and in the Valuation-Informed Indexing strategy, he and his “defenders” engaged in viciously abusive posting on nearly every thread at which these topics were addressed. When Morningtar.com refused to ban honest posting, Mel urged community members at that board to abandon it and to move to the Bogleheads.org board, where honest posting on the effect of valuations on long-term returns has been banned from the first day of operation.

Juicy Excerpt: Several comments on this thread have now been deleted. For future reference, any discussions about what did or did not happen on somebody else’s blog or forum count as “off topic” and will be deleted. The place for those discussions is elsewhere.

The Campaign of Terror that has been led by Lindauer and John Greaney  (owner of the www.RetireEarlyHomePage.com site and the author of one of the now-discredited Old School safe withdrawal rate studies) is of obvious importance to middle-class investors trying to understand why they they have lost so much of their retirement money and why the U.S. economy is now suffering a crisis of confidence. Piper has made clear that he will continue to promote Passive Investing at his site even while permitting (and in some cases encouraging)  abusive posting aimed at silencing those who point out the grave dangers of this “strategy” and even while indicating that his mind is closed to the idea of informing his readers about the grave dangers of the Passive model. Mike said in response to my expression of hope that he would turn to the promotion of valuation-informed indexing strategies rather than passive ones that: “That is not going to happen.”

Mike said in an earlier blog entry that: “I do see (at least a potential) value in adjusting asset allocations as a function of current price levels. But to be honest, I see the misinformation spread by the financial services industry (about active management, picking stocks, etc.) as a far larger issue. And until that battle is won — which I doubt will ever completely happen — I don’t foresee myself taking on any other issues with my writings.”

My take on those words is that Mike has (at least for now) put marketing considerations above his desire to inform his readers what works in stock investing.  I do not believe that Mike possesses a full appreciation (or anything close to it) of the merits of the Valuation-Informed Indexing strategy. However, I also believe that he is aware of at least some flaws of the  Pasive model and has elected not to learn more primarily because of marketing considerations (with perhaps a good bit of cognitive dissonance thrown in).

Mike has not entirely banned honest posting on the grave problems with the Passive approach, according to my reading of his statement. My intent is to continue to post on these questions and others at his blog. If Mike continues to permit abusive posting by the Greaney Goons (both the poster named “Dylan” and the poster named “Linda” have long records of abusive posting at blogs and both appear to be associated with the Greaney Goons — John Greaney runs a discussion board at which those seeking to block honest posting at discussion boards and blogs meet each day to discuss strategies for destroying or compromising these communities), I will continue to object. In the event that his adoption of the new policy translates into a decision to take action against abusive posters, the new policy could end up being a positive step (most community members are more concerned with learning the realities of stock investing than in learning about the abusive practices used by Lindauer and Greaney to block knowledge of them and anything that helps middle-class investors learn the realities will ultimately help in the effort to get the various boards and blogs opened to honest posting once again).

I think it is fair to conclude that this development is one more demonstration of the reality that we have learned over and over and over again during the course of the first seven years of The Great Safe Withdrawal Rate Debate — there is no rational case that can be put forward in support of Passive Investing. There certainly was a time when many smart and good people believed that there was. But that was a long, long time ago. And the most important initiative for all indexers today should be to help us move to the next stage of The Indexing Revolution — the valuation-informed stage.

Addendum: Mike Piper has sent me an e-mail that combines frankness and kindness in a wonderful combination that impresses me greatly (although Mike is certainly not agreeing with all that I say in this blog entry). I will report on Mike’s e-mail in Thursday’s blog entry. If Mike gives me permission, I will run the full text of the e-mail. Mike is trying very hard and I am extremely grateful to him for his efforts at understanding the other point of view. He knows how to disagree with someone while remaining friendly to that person, an essential skill of the most successful long-term investors. The right stuff!