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 I sent to Michael on November 24:
Thanks for providing Bill Bengen’s e-mail address. I’ll let you know if anything significant comes from my communication with him.
I of course understand re your time constraints. I did not really expect that you would have time to listen to the podcast. I just thought that the right thing to do was to let you know that it was out there.
I’ve changed the title for the podcast to “My Conversations with Michael Kitces — Even the Best-Informed “Experts” Just Do Not Get It.” I did not AT ALL intend to suggest that you are somehow deficient in the work you do. The reality is quite to the contrary. I applaud you for an understanding of the stock investing realities that I view as being a good bit more advanced than what is evidenced by many of the biggest names in the field.
The point that I am trying to communicate by usually putting the word “expert” in quotes is that there cannot be any such thing as an investing expert until a general consensus is reached re the flaws of the Passive Investing model. Humans learn through interactions with other humans (as is evidenced by your participation at the recent SWR conference, for example). It has become taboo to voice the flaws of the Efficient Market Theory/Passive Investing Model and especially to explore the implications of the realities learned by noting those flaws (that investors MUST engage in long-term timing if they are to have a realistic hope of long-term investing success). Until we get through this difficult transition period from the failed model to one that is more in tune with the state of knowledge possessed by the best-informed investors of today, I do not view it as possible for anyone to achieve the status of “investing expert” in a meaningful sense. Even people like Shiller, who possess a sure grasp of the significance of valuations, are not true experts for so long as they are not able to tap into the brain power of people like Bogle, who are limited in their ability to contribute at this point by their reluctance to abandon the Passive Investing model. We all need the input that the Passive Investing enthusiasts could provide if only they could explore the realities unfettered by continued reliance on the failed model. Until this happens, we cannot achieve our full potential as a community of investors. None of us can aspire to “expertise” in a meaningful sense until all of us are able to talk more freely about all sorts of topics (in my view!)
I hope that clarifies things a bit. I changed the title of the podcast because, after reading your e-mail, it did hit me that a newcomer to the site might not pick up on my intended point and be led mistakenly to think that I was making some sort of “dig” at you. No!
I had an exchange with a fellow at the comments section of the blog today that explores the expertise question a bit (Bogle and Bernstein are the focus of this discussion, not you). It’s something that comes up not infrequently. It’s a big deal, in my assessment.
There’s also an earlier podcast (#7) that explores the question as it applies to Bogle. That one is entitled “I Know More About Investing than John Bogle (and You Can Too!).
I will of course be thrilled to let you know of important developments as The Great Debate continues. I (and all community members) have benefitted a great deal from your generosity in offering so much constructive feedback.