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 25:
Thanks for the follow-up on this.
Just bear in mind that I don’t think you’re EVER going to see a “true” universal consensus on this issue, if only for the simple reason that many people invest so emotionally they WILL ALWAYS make terrible mistakes and do harm to themselves if you ever give them “permission” to not simply hold passively and strategically (or otherwise find a way for them to move active investment control out of their own hands). In other words, it is a reality that a large number of people will continue to do harm to themselves in investing as long as they do anything besides being passive and strategic, because THEIR version of active is counter-productive due to the emotional transactions that take place.
That’s not to say all of this conversation isn’t good, and that we shouldn’t try to move forward – but there IS a very real human reality to acknowledge here. You’d be shocked if you saw the kind of harm I’ve seen people do to themselves as a financial planner by the time they come to our firm, that all would have been avoided if they had simply been passive and strategic and taken their hands OFF their own portfolio. Obviously, I don’t believe that’s a universal prescription – in our firm itself we are active, tactical managers, who believe there’s significant benefit to incorporate valuation into evaluations of investments – but likewise that doesn’t mean that a personal implementation of valuation-driven investment risk management is necessarily going to be effective for everyone either.
As for the podcast title – I appreciate your efforts, although ironically I don’t think the new one is any improvement. 🙂 Now it just sounds like you’re taking a bigger dig at me – that you’re implying I’m not even an expert (by putting “expert” in quotes), AND that I just don’t get it. A reader without context would probably read it as the equivalent of “My conversations with Michael Kitces, showing that even a well-informed expert like him is just an “expert” who just doesn’t get it”. If these are supposed to be separate, you might clarify that for certain. Something like “My Conversations With Michael Kitces — Also, a look at how even the Best-Informed “Experts” Just Do Not Get It.” I know it’s long, but at least it makes the point that these are separate statements, and that the second isn’t supposed to be a negative reflection on the first. 🙂 In any event, thanks for your efforts to not make this sound like a slam against me. 🙂
With warm regards,