That's it – another website deleted from my bookmarks. Thanks, Bennett

Flat lies
1. The Efficient Market Theory tells us that prices don’t matter.
2. a doctored version of the SWR Research Group board
3. abusive posters
4. It's clear from a two-minute examination that the board material has been doctored. It is not clear to what extent it has been doctored.
5. The response of the Goons was to destroy his entire site with abusive posting.
6. So the board is no longer available in its non-doctored form.
7. his site was destroyed as his "punishment" for doing so.
8. It's not even possible for me to imagine a scenario in which this would no longer be so.
9. I am a journalist.
10. There's no one on Planet Earth more opposed to censorship than I am.
11. I know from personal experience that there is often more to be learned from those who disagree with us than from those who agree.
12. And i of course am especially happy when my ideas can be effectively challenged.
13. I like to learn from all this work I do too and I learn the most when I am being effectively challenged.

Misleading because context is omitted
1. the old studies fail to account for the effect of the valuation level that applies on the day the retirement begins
2. I have a calculator at my site that reports that the most likely 10-year return on stocks in January 2000 was a negative 1 percent. Was that information factored in?

Assertions unsupported by facts, arguments, or citations
1. There is a mountain of evidence today showing that stocks are sometimes the worst place to put your money for the long run, that some forms of timing not only work but are required for those who want to have a realistic hope of long-term success, that it’s not your stock allocation you want to hold to but your risk level and that doing that requires that you change your stock allocation in response to big price changes.
2. Common sense tells us that stocks cannot offer a strong long-term value proposition when they are selling at the prices that applied prior to the big price crash.
3. the historical stock-return data shows that [the valuation level] is the most important factor determining whether a retirement plan succeeds or not
4. created without permission of the site owner
5. extremely unlikely that he would pass along ownership to you.
6. commit theft of the archives of a discussion board
7. At times of insanely high prices (prices were insanely high from 1995 through the first part of 2008), you could beat the market by knowing that the prices were insanely high and that thus your stock allocation should be low. You wouldn't have beaten the market immediately. But you would have beaten it in the long run.
8. Those who have adjusted their stock allocations in response to big price changes have always been able to beat the market IN THE LONG TERM.
9. Long-term timing has ALWAYS worked.
10. we all would be a lot better off if we … focused our energies on helping as many people as possible learn what they need to learn to know HOW to beat the market.
11. The Passive Investing model has failed both in theory and in practice.
12. the blogosphere can play a big role in helping us to recover from the economic crisis.
13. The very fact that extreme overvaluation exists shows us that the market is not efficient.
14. We do not demand accuracy.
15. We demand happy talk.

What we see here is emotion.

It's incredible how much effort Phoenix has put into just this one post. Why? He cares.

That's undeniable. The question is — cares about what? What he cares about is defending the Passive Investing model of how stock investing works. He cares about this intensely.

The Passive Investing model does not stand up to scrutiny. The evidence that this is so is overwhelming. It's available to anyone who wants to check it out by doing a few Google searches. But many find this hard to believe. They say — there are so many smart people in the investing field, surely if the entire model we use to learn what to do were wrong, those people would fix it.

That's what you would intuitively think. What you would be missing is the reality that these smart people are HUMANS. Their take on all things investing is influenced by the same human emotions that influence all human thinking on all topics. Do smart people never become alcoholics? Do smart people never get into bad relationships? Do smart people never bet over their heads at Atlantic City?

We do these things all the time. But for some crazy reason large numbers of us have come to believe that, when the subject turns to investing, all of our human emotional weaknesses disappear. It doesn't work like that.

Do you want to know why we are living through the greatest economic crisis since the Great Depression? Because a lot of smart people who we all turn to to let us know how to invest our retirement money have their pride caught up in the Passive Investing model. The academic research showing that valuations effect long-term returns dates back nearly 30 years. If valuations affect long-term returns, the idea of staying at the same stock allocation regardless of the valuation level that applies makes precisely zero sense. But these people cannot bear the thought of acknowledging that they got some very, very important things very, very wrong and caused great human misery by doing so.

Phoenix is one of those people. He's told himself that Passive Investing works. He's told his friends. He's told his co-workers. He's told his neighbors. And he cannot bear now to admit that he was wrong. That's the problem in a nutshell. That's why we see the sorts of words that he has put forward here appear on numerous blogs and discussion boards.

In other circumstances, Phoenix and me would be friends. The leader of the smear campaigns is a fellow who praised me to the skies in the days before I posted about the errors in the Old School retirement studies. He liked everything about me. But on the day I did that, he began hating everything about me with an intense passion.

And that's not all. I asked this fellow a few weeks back how much he lost in the stock crash. He said that the number is "well in excess of $1 million." The guy liked me before, can you imagine how much he would have liked me after I saved him from losing well in excess of $1 million?

The reality of course is that my efforts didn't take. He didn't listen. So he remains mad at me. Is he really mad at me? Or is he really mad at himself and venting whenever my name comes up because he doesn't want to recognize what he did to himself?

It's all about emotion. All of the "experts" are playing intellectual word games and all that matters is the emotion that drives them to play the word games. We get out of the economic crisis when we acknowledge that. Even the most ardent defender of Passive Investing possesses common sense. And our common sense tells us that prices must matter. So even the most ardent defender knows on some level of consciousness that this stuff doesn't add up. And it drives him nutty.

Sooner or later, we all have to acknowledge what we did to ourselves. When we do, there's 30 years of academic research available to us telling us the realities of stock investing. The realities are known. It's just a question of us being willing to check them out. It will happen when the pain of not doing so becomes even greater than the pain we experience when we try to tell the truth to ourselves about the mistakes we have made.

I can't control when people reach the point where they feel that they have suffered enough pain. What I do is to put forward whatever words I can to help them get to that point. The reassurance that I can offer is to say that there is a far more effective way to invest available to all of us when we get to that point. All of the pain is unnecessary. We brought it all on ourselves.

The good news is that we also are responsible for all the good stuff that follows when we accept the need to move to the new model. The humans messed up big time. The humans (I certainly don't mean just me — there have been thousands) also did some wonderful work. Both things are so. We're screw-ups. And we're heroes. It's been that way since time began. It's the human condition.

Rob

*** REMOVED BECAUSE OF BAD EMAIL ADDY***

Best of luck with getting anything of value out of this "author."

This is an accurate description of what the Efficient Market Theory posits.

It is not true that all publicly available information is factored in. I have a calculator at my site that reports that the most likely 10-year return on stocks in January 2000 was a negative 1 percent. Was that information factored in?

It was not. Had that information been factored in, people would have been selling stocks like crazy. The mass selling of stocks would have brought the price down, and there no longer would have been a problem.

The very fact that extreme overvaluation exists shows us that the market is not efficient. In an efficient market, prices would self-regulate. In the market that exists, we were at three times fair value in January 2000. How efficient is that?

There is a great irony in all this. I am the one arguing for things that would MAKE the market more efficient. I am saying that the "experts" should have been warning us about the dangers of overvaluation in 2000. Had they done that, the market would have functioned far more efficiently than it did in fact function. The experts told us to ignore price, which meant that most of us were investing blindly, which meant that it was not possible for the market to function efficiently. We need accurate information to be able to invest in such a way as to make the market efficient.

Why do the experts encourage our worst emotional inclinations? Dallas Morning News Columnist Scott Burns told us in a column published in June 2005. He said that the reason why the media has not reported widely on the safe-withdrawal-rate findings of the Retire Early and Indexing communities is that "it is information most people don't want to hear." The "experts" see it as their job to tell us what we want to hear, not what we need to hear.

It's not possible for the market to achieve efficiency so long as that is so. Efficiency requires access to accurate information. Most of us believe that the "experts" are shooting straight. Scott is telling us that they are not. They see it as their job to persuade us to buy overpriced stocks, not to invest in such a way as to achieve financial freedom as early in life as possible. Is that not what Scott is saying in the words quoted above?

The Goon phenomenon plays a role here too. Goon posters make life extremely unpleasant for anyone who reports accurately what the historical data says about safe withdrawal rates or about Passive Investing in general. And most of us tolerate the Goon behavior for so long as stocks are insanely overpriced and we feel a great desire to hear soothing words about how it is all going to turn out different this time than how it has ever turned out before.

To a large extent, we get the investing advice that we demand. We do not demand accuracy. We demand happy talk. And that is what we get. We destroy ourselves by insisting that the "experts" give us happy talk re what to do with our retirement money.

Can it change? Can we make the market more efficient than it is today?

Yes. But it means being open to learning about the reality that investing is primarily an emotional endeavor and not primarily an intellectual one. The Efficient Market Theory is popular because it flatters us. It suggests that we are trying to figure out how to invest most effectively when really we are trying to justify NOT investing effectively (our emotions cause us to feel an affinity for Get Rich Quick schemes like Passive Investing).

We need to make some changes. The first step is acknowledging that flattery posing as scientific investing advice hurts us in the end. We need to know what the numbers really say, both on retirement and on all other questions. We need to develop the emotional maturity to devote some attention to the many studies issued during the past 30 years that show that valuations affect long-term returns and that the conventional investing advice is mostly dangerous nonsense.

Rob

I believe you have hit precisely the right balance with this statement, MJTM. I am a journalist. There's no one on Planet Earth more opposed to censorship than I am. I know from personal experience that there is often more to be learned from those who disagree with us than from those who agree. So I think you are right to be extremely wary of the idea of cutting people off.

But I also know from personal experience that there are times when people MUST be cut off so that the vast majority not pursuing personal agendas can engage in the civil and reasoned discussions that they want to engage in. I can tell you that the tactics employed by the Goons frighten many people. I have had blog owners tell me after I sent them guest blog entries that they think the entries are great but that they are too afraid of what will happen to them if they run them to go ahead and do so. Is that not a form of censorship?

These issues are going to be with us for a long time. The Passive Investing model has failed both in theory and in practice. But there are lots and lots of people who gained fame and fortune promoting Passive Investing and who are not going to easily give up on it (and there are millions more who sincerely believe that Passive Investing works, to be sure). These unfortunate frictions will continue to evidence themselves for so long as that remains the case. The need for people to learn about the realities is too great for questioning of the dogmas not to continue and the number with a vested interested in defending the dogmas is too large for us to have realistic hopes of a quick resolution of the matter.

I hope that we can stay in touch from time to time. I believe that the blogosphere can play a big role in helping us to recover from the economic crisis. The main problems today are emotional ones — people need to learn why they lost so much of their retirement money and what they need to do to be sure that it never happens again. There is no communications medium available to us today as well positioned for permitting an airing of the straight story as the personal finance blogosphere. So I hope that a number of us will be able to unite to do what needs to be done to give these topics a wider hearing.

There's a huge interest among our readers in learning the realities of stock investing. I have seen this at every single place at which I have discussed these matters. But there is also a great confusion in people's minds today. People need to be able to ask questions to come to feel comfortable in their understanding of the new ideas. This stuff cannot be put forward on a hit-and-run basis. We need to present and then hang around to explain and to take people through things point by point.

If at any time you have an interest in running additional guest blog entries on this topic, please let me know. I can generate an unlimited number of them. There are hundreds of investing topics that need to be reexamined in light of what we have learned in recent years. And i of course am especially happy when my ideas can be effectively challenged. I like to learn from all this work I do too and I learn the most when I am being effectively challenged. So if you ever develop an interest in offering criticisms of the ideas explored at my site, I think that would be a great thing for all concerned.

Thanks much for hosting the guest blog entry and for your effective handling of the "issues" that arose as a result of this challenge to yesterday's conventional wisdom.

Rob

Grow the F up people