Message Font: Serif | Sans-Serif
No. of Recommendations: 31
The following lengthy diatribe is a self-indulgent chronology of my relationship with TMF given in a serialized soap opera format. Consider yourself warned.

1. Love at First Sight

As an individual raised by depression era parents on a cash poor farm with "The Millionaire Next Door" as our unread credo, my first impression of TMF and their philosophy was most favorable.

2. First Surprise

Since I was recently retired, I started with the Retirement Board at TMF. I was in the process of reconfiguring my portfolio that was heavily weighted with equities and was reading between the lines of such investment gurus as Warren Buffett and John Bogle on their warnings of the stock market bubble.

I was impressed with TMFPixie's professional handling of that board and his well written articles. Later I was very surprised to learn that he was using, as a retirement investment, a 4 stock portfolio named the F 4.2. To be fair to him, I must add that he used it in combination with a well thought out five year CD and bond buffer. I was further surprised to discovered that the F 4.2 was based on the BTD5 strategy that the author, Michael O'Higgins , had effectively refuted in his press releases and new book BTDWB. When I questioned the strategy at the retirement board, I was directed to this board.

3. A Pleasant and Not So Pleasant Surprise

I leapt right in when arriving at this board to debate O'Higgins change of heart and was not expecting much opposition to the F4 strategies. I was pleasantly surprised to find a number of critics talking about statistical analyses and engaging in some intelligent debate. All this debate and some interesting personalities got me coming back to this board.

Unfortunately, I needed to do considerable reading of many posts and threads to really understand the debates. I got much assistance from the critics and some of the neutrals in the debate. I felt that these people were truly interested in educating.

I asked for a summary of the debate from TMF to help myself, future newcomers and even current debaters better understand the premises of the debate. It took more than one post to smoke out a TMF responsible adult to respond to my request. I was becoming aware of some of the warts that were unseen at first sight.

4. Attempting to Reconcile the Differences

After many rounds of off-subject personality conflicts and emotional tiffs, I felt the real differences between the advocates and critics had been laid out into 2 areas:
(a) the use of multiple hypotheses in developing the strategies was clear and agreed upon by both parties of the debate with critics calling for an adjustment in the probability of strategy working by chance and the advocates stating that the reasonableness of the strategy trumps the statistics
(b) the critics pointed out that the evidence of out-of discovery poor performance and the January effect could readily be understood as manifestations of data mining while the advocates chose to explain these occurrences as coincidental changes in investment environments.

I sincerely thought and suggested that if the advocates were to back off the statistical claims to there strategies in the discovery period and simply promote them as being reasonable, the debate could end.

5. Promises, Promises

I was quite perturbed by the turnover of strategies and the seeming rapidity with which the progenitor strategies were forgotten and no longer tracked. I asked TMFSynchronicity if he would study the out-of sample results of the DDA strategies and found that he was in the process of doing just that. Ann Coleman announced the access to the CRSP database about the same time. To me the slow pace of the work in these two areas could be explained as a manifestation of a chaotic growing small business or it could have darker origins.

6. Looking for Answers in the Failed Relationship

When the debate did not end and the statistical claims were not refuted, I took a deeper look at this failure. I started by looking at the stake that TMF has in the claims of the strategies they promote. The strategies of the DDA, MI RB and RM all are mechanical in nature and claim that they can significantly beat the market.

These claims seem to me to be out of character with the TMF credo of save your money, work hard, stay out of debt, invest long term and if a scheme seems too good to be true it probably is. The claims of crushing the market with returns of 25 % per year (with claims of returns of 50 to 60% per year for some MI strategies) seemed to me to play to a get-rich-quickly mentality.

Why would TMF advocate these beat (crush) the market strategies and not take a neutral, more educational, stance in the debate on the validity of the strategies? The brothers Gardner certainly have made their views on the EMT clear from the beginning and one could argue that 2 healthy egos are not going to easily back off that stance. This may explain TMF's reactions but I'm not so sure.

This brings me to my two alternate reasons for the TMF reactions to the debate at this board:

(a) TMF has determined that the TMF message and product will not sell wrapped in a plain vanilla package with exhortations to an audience that saves less, appears to think short term and elects politicians (of both parties) who think short term. The crush the market claims are required as a hook to get the attention of this audience. Heck if I can get that kind of return, I can borrow money from my credit cards and still pay off my debts. No pain and all gain.

We see debate at the boards that never gets translated directly into a point/counter point discussion in TMF articles. The articles tend primarily toward promotion and advocacy of the strategies and are interspersed with vanilla pieces dishing out commonsense financial advice.

(b) The alternative explanation is that here we are truly dealing with a motley crew that has differing opinions on these matters, has been thrown together in a undisciplined (or open) forum and we must now patiently sit back and wait for a prevailing TMF stance to evolve from the chaos.


Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.