An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on November 24:
Rob,
I’ll have to see what I can do to try to listen to the Podcast. Life is hectic these days, and it’s tough to fit in a 70 minute podcast. 🙂 I don’t know what you cover in the podcast, but I do have to admit that the title sounds rather negative towards me. “My Conversations with Michael Kitces -The Experts Just Don’t Get It” would seem to imply that either I’m an expert who doesn’t get it, or that I’m not an expert, neither of which is exactly positive. Is this what you meant to convey? If not, would you consider adjusting the title to reflect a more constructive light on the conversation?
You can reach Bill Bengen by email at [e-mail address deleted] or via his website at www.billbengen.com.
As for the website discussions, I simply don’t have the time to participate actively in more message boards at this time. The number I try to keep up with as is feels a little mind-numbing when I track it. 🙂 Of course I’m interested in seeing these dialogues move forward, though, so I hope you’ll keep me posted on the progress.
With warm regards,
– Michael
John Walter Russell says
Shorter RobCasts would be a plus, especially during the week as opposed to the weekend.
Still, a topic requires the amount of time that it needs and doing less will not do.
Have fun.
John Walter Russell
Rob says
I agree, John. Thanks for sharing your thoughts. Feedback like that is obviously helpful.
I don’t want to offer too much hope that they are going to get shorter. This is an issue that comes up with the articles too, as you know. I tend to always go long.
What’s going on is that I only address a question if I feel that I have an ability to add something new. When I prioritize what topic to take up, I put those which seem most important (to me) at the top of the list. Those tend to be the ones that I have thought a lot about. And those tend to go long because I have a lot to say about the topics I have thought about a lot.
There are other topics re which I could produce shorter podcasts. I never get to those because I spend all available time on the more thorny ones, which requires more shading and more caveats and consideration of more points of view and all this sort of thing. The list of ones I would like to get to is very long. I would like eventually to get to topics that I could address in 30 minutes or less. But I don’t see that happening real soon.
The length bothers me too. And I know that it hurts me in efforts to market the site. I certainly am going to take your suggestion into consideration. I certainly do not mean to suggest that I am brushing it off.
One of the things that happens is that, when I record a podcast, I riff a bit on ideas that have been going around in my head. Sometimes, I come up with ideas for three new long podcasts when I am recording one current long one! Yikes!
My wife asked me the other day: “Is it ever going to come to an end?” It’s going to come to an end. But only when the picture is entirely clear. The photograph gets sharper with each passing month. I have hopes that I will soon be at a place where I can write the rest of the book straight out of my head. That will be a great place to be.
I think about things like this a lot. Ultimately, though, my decisions are set by instinct. I have a desire to produce shorter podcasts. But so long as I see value in the work product (I see considerable value in the podcasts produced thus far) and so long as new ideas are coming into my head as a result of the riffing, my inclination is to continue mining the gold and place my trust in the idea that it will pay off down the road.
I ain’t perfect. It could be that I am going about things all wrong. It wouldn’t be the first time. I am grateful for your feedback and for the feedback that comes from any others. I take that into consideration and then I go with what feels right to me. This investing stuff has been a strange business, of course. I think that our content is an A+. Our popularity ratings are not as high. That makes it tough to know whether you are doing everything right or doing everything wrong or something in the middle.
I think I am on the right track. But I cannot offer a guarantee. I think that I am open to making changes when I become persuaded that I am doing things wrong. That’s why I encourage feedback. It sometimes takes hearing a message from several different people coming at it from several directions to get it to click. So that’s very much a plus.
Anyway, that’s where I am coming from.
One more point. For those pressed for time, reading articles is quicker. One problem even here is that I get the feeling that people sometimes skip over the most important ones. I included a link in one of my e-mails to Michael to the article called “Investing Discussion Boards Ban Honest Posting on Valuations!” I think that’s the best article at the site. My guess is that Michael did not read it (he didn’t ask any questions about it). That sort of thing doesn’t strike people as techie enough to be “important” to an understanding of stock investing. I see it just the other way, of course. It’s our failure to give sufficient consideration to the non-techie stuff that is the cause of all our problems today. But how do you get people to appreciate that when they are used to the idea of being dismissive of that sort of thing?
My inclination is just to keep hacking away with stuff that seems to address the most important questions. Perhaps there will be an opening up to some new ideas after the conventional approaches continue to fail to do the job for a longer period of time.
Rob
JCL says
Rob
I am curious regarding Michael’s point – do you think he is an expert that doesn’t get it, that he isn’t an expert to begin with, or does he fall into some other category?
Rob says
do you think he is an expert that doesn’t get it, that he isn’t an expert to begin with, or does he fall into some other category?
That’s a great question, JCL.
My view is that there is no such thing as an “expert” in the investing field today.
There was a day when astrology was viewed as a science. Would you say that there were “expert” astrologists at that time? I say “no.” The people who viewed themselves as “experts” in those days possessed an enhanced understanding of gibberish. They were not experts. They were fools.
I mean no disrespect to these people. I view this as a point that needs to be made. Seeing how people who came before us messed up helps us maintain some humility, which is critical to realization of our desires to someday become experts re investing. By acknowledging that we are not experts today, we open our minds to the consideration of new ideas. By considering new ideas, we become experts over time. Humility is the key to making it all happen.
Most of today’s “experts” endorse Passive Investing. Most say that there is no need to lower your stock allocation at times of insanely high stock prices. Huh? What sort of “expertise” is that? That one does not even pass the common-sense test (and the historical data of course reveals it to be the nonsense that out common sense tells us it must be).
Michael is not an investing expert today, in my assessment. But I’ll tell you something else about Michael. He is a person with an open mind who is engaged in an effort to learn more about how stock investing works in the real world. That puts him a few steps ahead of some of the biggest names in the field. Michael is doing the things that one must do to become an expert. He is on his way. I think it is entirely possible that he will be doing some wonderful things to help us all out of this mess we are in today in days to come. Let’s hope.
Maybe we need a new term. Aspiring expert? Michael is moving in the right direction. That’s the exciting thing. He is a guy who can exchange e-mails with a fellow who says that he is not an “expert” and not get upset or defensive about it. What does that tell you? It tells you that there is certainly the potential for expertise there.
I think Michael has been a great help. I am grateful for all his contributions. I am always excited to see a new e-mail from him in my “in” box. I have learned important things from him. Perhaps one could say that he is as close to an expert as we are going to find for so long as we live in the last days of the unfortunate Passive Investing era.
The encouraging news is that I see signs that that era may be coming to an end in the not-too-terribly-distant future. Let us pray! The decline in belief of astrology as a science opened the door to all sorts of exciting breakthroughs that have helped us live better lives in hundreds of different ways. Bringing down a false science is often the first step to making it possible for people to learn about a true science.
Rob
Retire Later says
Check out this conference call with Rick Ferri – a nice synopsis of the factors that lead to the market downturn. I would be interested in your reaction/comments
http://www.portfoliosolutions.com/f-16.html
Rob says
I listened to the first seven minutes, Retire Later. I don’t have time to listen to more.
It sounded like it was mostly going to be a history of the price crash. I think he said that he would turn a bit near the end to a discussion of portfolio strategy. That’s the part that I would most like to hear. What did people do wrong that caused them to lose all this money? What should people be doing today? What can all stock investors learn from this? Those are the sorts of questions that I think are most important.
Did they advise a lowering of stock allocations from 1995 forward, when stocks were at their most dangerous valuation levels in history? If yes, then I give the presentation a thumbs up. If not, then my next question would be what have they learned? If they say that they learned that valuations matter and that Passive Investing does not work in the real world, then I would still give it a thumbs up.
I don’t see it as being such a major big deal that people have made mistakes. That’s been known to happen in the course of human events. I think that the key is that we learn from our mistakes. That’s how we regain confidence in stocks and prepare properly for the future.
Thanks for supplying us with the link.
Rob
John Walter Russell says
The relevant section is at 35 minutes into the audio.
Rick Ferri is sticking with traditional Modern Portfolio Theory, the Efficient Market Hypothesis and the mischaracterization of timing as if all timing were 0%-100% short term moves.
Later, he unnecessarily tosses out dividend ETFs because they are highly concentrated in the financial sector–never considering that they could be combined with other holdings for diversification.
Have fun.
John Walter Russell
Rob says
the mischaracterization of timing as if all timing were 0%-100% short term moves.
That sort of thing bums me out, as most of my readers and listeners know.
Rob