Rob:

Podcast #166 was superb. You did not cover anything that hasn’t already been said long before you arrived on the scene, and many times over, but you clearly said it with conviction (dare I say “Passion”?) and in ways that those who are likely not saving might take to heart and begin to save, in their own way, for their own reasons. That is really your message, isn’t it — Don’t save because you ‘ought to’ or were told to or for ‘old age’, but for a goal or dream that excites you.

Many of us got on the saving bandwagon early for very similar reasons that you did — your “Monkee Albums” were my “airplane models”. There was no way that my hard pressed parents were gonna plop down their own hard earned money, or even let me spend my own allowance on something as (in their eyes) ridiculous as little blobs of plastic that won’t last, and collect dust, and are frivolous, etc. But my heart was in building those models, and working odd jobs, then saving in order to buy and construct them was part of a love of aviation that continues to this day.

So kudos.

Now, stop here with reading, and/or with public posting of the message if you like, or aren’t prepared for what you will likely consider a ‘typical’ barb from a ‘hater.’

Rob, Saving is something you clearly know about, that is not too complex, and that you felt you could help others with. And, I tend to agree. Congratulations to you on that, although I have not read your book, and likely will not.

That said, IMHO, you seem to have made the all-too-human mistake of equating enormously positive feedback in that one area (sorry, the MF dialog on this was before my time, so I assume your characterization is accurate) and thought it gave you license in ‘similar’ or ‘related’ areas of withdrawal rates and/or investing. I have tried to listen to most of your nearly 200 podcasts, Rob, and this is the first and only one for which I can give any positive feedback whatsoever. The issue, Rob, is that in those more technical domains, your folksy homespun analogies are not sufficient. Saving, and altering a person’s individual perception of it, is a pretty easy matter, once approached. It doesn’t take formulae, it does not take math, it does not take analysis.

But I beg you, I implore you, that if you insist on continuing to publicly attempt to speak on and influence people on matters of retirement, investing, asset allocation, and other economic matters, PLEASE spend some of those ‘freedom dollars’ you supposedly have accumulated and educate yourself (preferably through a formal program leading to a degree or certification) and allow your mind and thinking to CHANGE to accept things that maybe you have entrenched yourself against. ONLY, of course, if they do eventually make sense to you, but you must open your mind, just as you encorage others to do about saving. I predict it will be a very slow process (if you decide to undertake it) due to two things:

* Your already entrenched resistance to anything smelling of ‘orthodoxy’ — Clearly, you love to be (or to pretend to be) a radical.

* Your patently obvious innumeracy, that you wear like a crown and love to show off. Sadly. And to your great detriment. “Sharpe ratio?” (laughter from Rob)Rob, the Sharpe ratio may not be important, but you are totally a buffoon to laugh at it or any other concept of finance until you have the intellectual capacity to understand and deconstruct them. And clearly, you do not. This, and not anything else, is what draws the ire of so many, whom you deem to be “goons”, but are in reality, only people who insist on intellectual honesty and competence.

Good luck on your journey, should you chose to take it.

That is really your message, isn’t it — Don’t save because you ‘ought to’ or were told to or for ‘old age’, but for a goal or dream that excites you.

Yes, this is my message on the saving side.

I strongly disagree with you that this is the conventional take today. I would estimate that 90 percent of the saving arguments we hear today contain some sort of guilt trip. That sort of thing is not my particular cup of tea. And I don’t believe it works.

What I believe works is what you describe above. I believe that most money management advice should be aimed at developing in people a strong MOTIVATION to save. Do that and all the rest just follows naturally, according to Rob Bennett. Fail to do that, and all the rest is just empty words, in my assessment. Motivation is everything, in my view.

Rob

The issue, Rob, is that in those more technical domains, your folksy homespun analogies are not sufficient.

Are you sure?

Rob

you are totally a buffoon to laugh at it or any other concept of finance until you have the intellectual capacity to understand and deconstruct them.

Yeah, yeah.

Rob

I would not dismiss what Rob has to say just yet. I’m the newcomer to the debate and am trying to take an objective look at Rob’s views on the P/E10. Remember, Rob may not be a numbers guy but John Walter Russell (his partner in the calculations) is a numbers guy and so is Dr. Shiller.

I am not endorsing any strategy yet but I can tell you that John has put a lot of work into the Valuation indexing model. I am in the process of reading every line of John’s site as well as the base data behind the calculation assumptions. Mr. Russell has done a lot of quality homework folks.

Again, I am not ready to offer an opinion on these matters just yet. However, read Mr. Russell’s site line by line and also the base assumptions in the Shiller studies. The P/E 10 project is is not a fly by night analysis project as some would pretend.

Mr. Russell has done a lot of quality homework folks.

Thanks in particular for sharing this observation, Larry.

I have often described John as the best loved and most respected Numbers Guy in the history of both the Retire Early and Indexing discussion-board communities. This is obviously the case if you go by the grateful comments of the 80 percent of our community members who come to our boards with a positive intent in mind.

The other side of the story of course is that there is a small gang of internet predators that have made it their life’s work to smear those who post in an honest and informed way on important investment topics at our boards. I think it would be fair to say that this group of “contributors” hates the fine work that John has put forward with a burning passion.

And, yes, there are a good number of Normals who have never seen such ugliness at any other time of their lives and who thereby have come to presume that humans are not capable of such viciousness and presume that there must be something to the nonsense smears we have seen put forward. We all do harm to these people by failing to speak up when we see the Smear Campaigns play out in front of us. Those who make efforts to correct the record a bit do us all a great kindness.

John’s work will stand the test of time. The “work” of the Goons will be blown away in the wind. We all should of course feel as much gratitude for the former as we feel contempt for the latter. How can the two emotions not go together? The more that we all feel that people should be given the help they need to learn to invest effectively, the stronger we inevitably feel that the thousands of community members who have expressed a desire that honest posting be permitted at our boards should have their rights to hold the conversations that they want to engage in respected by us all.

John is the tops! So are the thousands who have expressed a desire that honest posting on his findings be permitted at all of the boards we have built together!

My sincere take.

Rob

I am not ready to offer an opinion on these matters just yet.

Our entire community is grateful for the time and effort and patience that you have directed to this matter, Larry. It seems to me that you are going about things in precisely the right way.

Rob

he might have been right – just many years too early.

Check out Podcast #78, Hello World:

http://www.passionsaving.com/personal-finance-podcasts-page-ten.html

It addresses this precise topic. It is entitled “My Great Crime — I Predicted the Stock Crash 12 Years Too Soon.” If I had the power to tell people the day before it began that it was coming the next day, I would have done that. I do not possess that power.

I did not “invent” Rational Investing any more than John Bogle invented Emotional Investing. The two have been competing against each other since the first stock market opened for business. That doesn’t mean that there have never been changes in how things have been done.

The big change that Bogle brought to the scene was to use academic research to make the case for Emotional Investing. By doing that, he (and all other Passive Investing advocates) was able to make stocks more dangerous than they had ever been in any other emotional time for stock investing. There’s power in numbers. People believe things they see “proven” by numbers. In the Passive Era, people engaged in reckless strategies that they never would have been willing to follow had there not been numbers “support” for them.

All that I am doing is taking the Bogle innovation (using numbers to make the case) and arguing that it be put to use in a Rational context. What if instead of using the numbers to persuade people to invest more recklessly than ever before, we used them to persuade people to invest more effectively than ever before? We would be using the same power that made Passive Investing so popular for good purposes. That’s the idea. It’s numbers oriented. But the idea is this time to permit discussion of accurate reports of what the numbers say. That flips it.

I do not think Rob will be as fortunate – just equal to his ridiculousness.

I’ll be proven right, Hello World.

How can I be so sure?

Take a look at The Stock-Return Predictor and consider what it does. It reports on numbers that have already been revealed to us. How the heck could I be wrong in “predicting” something that has already happened? It’s like telling people that it rained last Tuesday or that it was sunny last Wednesday. It cannot be wrong. We already know what happened. The historical data is — historical!

People who don’t care to take into consideration how stocks have always performed in the past are of course free not to do so. I have of course said this on thousands of occasions. I don’t propose that any of this be forced down anyone’s throat. I propose that we permit those who have expressed an interest in learning about it the option of learning about it. How could providing an option possibly be a negative? The very idea is preposterous, especially in our culture, a culture that favors the pursuit of options (What is “the pursuit of happiness” if not a pursuit of options for improving one’s life?).

I know that I am right about this one because the claim that I am making is so incredibly modest that it is barely even a claim at all. I am saying that those who have expressed a desire to be able to learn what the numbers are if they are calculated accurately be permitted to hear that information. You are saying that you feel some doubt as to whether I will ultimately be proven right about this?

I don’t believe you. You’re too smart to believe such a thing. It may be that this is the lie you tell yourself today to ease your pain. But you don’t believe it on a deep level anymore than you believed seven years ago that there was some mystical planet on which the safe withdrawal rate was always 4 percent.

Middle-class people use the stock market to finance their retirements. We have to grow up in our understanding of how stock investing works. We need to get to a place where reporting the numbers accurately is no longer shocking but is just the ordinary course of business.

I personally don’t believe that there is any other way that our economic and political system can survive for too long into the future. The other side of the story is that, if we permit the good side of our humanity to influence our investing decisions again (their capacity to make rational decisions is one of the things that I like about the humans), there is nothing that can stop us from accomplishing things that today hardly seem imaginable to us.

Each morning we all are faced with the decision whether our actions of the day are going to turn this world into a place a little more dark and cold than it was the day before or into a place a little more bright and warm than it was the day before. The tricky part for “your side” is that John Bogle deep in his heart wants to turn the world into a place brighter and warmer. He’s going to turn on you one of these days, Hello World! Don’t say you hadn’t been warned!

And you too have that icky human stuff hiding somewhere within. You are going to turn in the end too. You’re not going to be able to help yourelf! You’re just too darn Rational to remain forever Passive!

My sincere take re all this.

Rob