Set forth below is the text of an e-mail that I sent to Mike Piper (author of the Oblivious Investor blog) on October 29, 2009, in response to the e-mail correspondence described in yesterday’s blog entry and other recent blog entries.
Mike:
I have continued to ponder the issues raised in our recent e-mail discussions. I have come up with a slightly far-out proposal which would make me perfectly happy. It’s something that I have zero right to demand of you. I thought that I would put the idea forward just on the off-chance that you found it a satisfactory approach for satisfying both the Passives and the Rationals (a small group today, to be sure, but one that I hope will be growing with time!) among your readership.
My sense is that your biggest concern is that regular iteration of the idea that Passive doesn’t work antagonizes a good percentage of your readers. I believe you are right about this. My counter is that it is critical that the indexing community as a whole take Bogle’s ideas in a new direction and it is not possible to do this without having people regularly exposed to the new ideas. People are rarely convinced of something by seeing it argued one time. Ideas sink in and come to seem less “strange” only after repeat exposure. So I feel that it is critical that indexers have some means of hearing about the argument against Passive on a repeating basis.
My view is that the most natural way to give people regular exposure is by giving the Rational perspective each time you advance a blog entry giving the Passive perspective. It is not at all my intent to make people feel uncomfortable or to be disruptive or anything along those lines. As you have pointed out, it defeats my purpose if people have a negative reaction to seeing my name in the Comments section.
You asked two good substantive questions during our e-mail exchanges: (1) Why is it that I say that Passive can never work even though you can identify many people for whom it HAS worked?; and (2) Why is it that I say that Passive Investing CAUSED the bubble when Passives argue for remaining at a CONSTANT stock allocation?
My thought is — What if you gave me space on a once-per-month basis to write a Guest Blog Entry making the case for Valuation-Informed Indexing (the strategy I favor) or Rational Investing (the model I favor) in which I would address some question about the strategy or model put forward by you or by one of your pro-Passive readers? You could of course put forward introductory language saying that you do not endorse these ideas but are merely permitting them to be aired at your blog. Your readers could agree with the arguments or disagree with them or ignore them as they pleased.
If your readers were being exposed to the ideas in a high-profile way and on a regular basis, my concerns that they are not being permitted to hear about them in a meaningful way would be addressed. In those circumstances, I would be happy to agree to refrain from putting up comments finding
fault with your Passive claims on all the other days of the month (I would of course continue to put forward comments on the many aspects of Oblivious Investing re which we are in solid agreement).
Again, please do not think that I am making a demand. I am asking for an unusual arrangement for what I view as an unusual set of circumstances. My intent is to put forward a suggestion that makes sense only if it would make
you happy to proceed this way. I am trying to come up with an approach that leaves us both feeling that the Oblivious Investor blog community is being well served.
I would be grateful if you would let me know your reaction. You will not hurt my feelings if you respond simply by saing “no, thanks.” If you have alternate ideas along these lines, I of course would be happy to hear about them.
Rob
Give it up says
Rob
Mike’s blog is Mike’s blog. You have no inherent right to post anything at all there. You are his guest and have to live by his rules.
Rob says
You’re missing the point, Give It Up.
Mike benefits from learning the realities of stock investing. So do you. So do I. So do Mike’s readers. So does Bogle. So does Shiller. So does everyone else alive on Planet Earth today.
Opening the boards and blogs up to honest posting on important investing topics is a win/win/win/win/win with no possible downside.
So says Rob Bennett!
Rob
sadface says
The issue is not honest posting. The issue is Rob Bennett.
If you go to most of the finance boards you have been banned on – ‘your’ ideas, or equivalent ones, are brought up from time to time – mostly by people who have no idea what they are talking about. And these people are hardly ever banned.
You, on the other hand, are consistently banned. Hence, the boards are open to just about any kind of on-topic ‘honest’ posting, but are closed to Rob Bennett.
Rob says
mostly by people who have no idea what they are talking about.
The arrogance evidenced in that phrase is the entire problem, Sadface.
You don’t know it all. Neither does. Rob Bennett. Neither does Mel Lindauer. Neither does John Greaney. Neither does John Bogle. Neither does Robert Shiller.
When we can all acknowledge that none of us know it all, we will be on our way to overcoming this economic crisis and on our way to entering The Golden Age of Middle-Class Investing.
I look forward to the good times waiting for us all on the other side of This Big Black Mountain.
Rob
sadface says
Actually, the people I am talking about demonstrate in several ways that they have no idea what they are talking about – just as you do in nearly every bloated paragraph you write.
BTW, may I direct you to this thread where someone who probably has a lot less free time than you and has spent (wasted?) many less years (decade+?) than you on this topic actually took the time to clarify the meaning and intention of the Trinity Study. Maybe you should spend less time arguing (annoying?) with irrelevant bloggers and more time actually coming up with ideas that make sense? Unfortunately, I think you fall under the ‘clueless journalist’ category referenced by Professor Cooley in his quote below.
http://www.bogleheads.org/forum/viewtopic.php?t=53956&mrr=1271984699
Quote:
I recently posted this remark and I wonder if you’d care to comment on it, or if you have any papers or aticles that explain more about how you expected your study to be used.
If I’ve completely misinterpreted you, my apologies. Is the following remark more or less right?
——-
The more I read the Trinity study, the more I think people misinterpret it. The most important sentence is:
“The word planning is emphasized because of the great uncertainties in the stock and bond markets. Mid-course corrections likely will be required, with the actual dollar amounts withdrawn adjusted downward or upward relative to the plan. The investor needs to keep in mind that selection of a withdrawal rate is not a matter of contract but rather a matter of planning.”
What the “4% SWR” means is not that you can treat a portfolio as if it were a guaranteed annuity.
I think all the authors meant is that if it is late 2008 and your stocks halve in value, you don’t need to halve your spending instantly. It’s OK to cross your fingers and continue spending according to the 4%-then-COLAed plan, even though it means dipping into capital, and it’s OK to go on doing that for a while. They also meant to warn people against the much higher withdrawal rates that had been formerly recommended by people using simple amortization calculations that didn’t take account of the “order-of-returns” effect.
He replied later that day:
Philip L. Cooley wrote:
You have hit the nail on the head!
I’ve tried to explain that thought to journalists but they don’t seem to get it. You’ve got it.
Stay flexible my friend!, which is the advice we should give to retirees.
Philip L. Cooley, Ph.D.
Prassel Distinguished Professor of Business
Trinity University
Rob says
the people I am talking about demonstrate in several ways that they have no idea what they are talking about
Again, this is arrogance. When you close your mind to learning, you stop learning, sadface. If you happened to close your mind to learning back at a time when you believed in Buy-and-Hold, you have delayed your retirement by five years. There’s a price-tag attached to your decision to give in to your inclination to feelings of superiority over all others, sadface.
You have hurt both yourself and others by going over to the dark side. It is my strongly held belief that the job of investing “experts” is to help you to avoid doing so, not to encourage you to do so. In no field other than investing would this belief be viewed as “controversial.” The root problem here is the failure of the “experts” to let us know for 30 years about the academic research showing that there is precisely zero chance of a Buy-and-Hold strategy ever working for a long-term investor.
Stay flexible my friend!
The Old School retirement studies get the numbers so wildly wrong that being “flexible” for many retirees is going to mean getting by on half of the annual spending they had planned on getting by on when they built their retirement plans. It would be better just to permit honest posting on important investing topics on the internet. Then they would have had the accurate numbers available to them and would not need to be so “flexible” in their old age.
Rob
sadface says
Rob,
1) You are not “controversial”. You are simply irritating.
2) You do not grasp extremely basic concepts and demonstrate this on a daily basis. You provide absolutely no numbers to help anyone retire. You have a ridiculous calculator based on guesstimates where ‘probable’ returns vary across absolutely useless ranges.
3) I probably have more money at this one point in time then you earned throughout your life so if I am hurting – you must be already 6 ft under and/or living on the street.
4) The “old school” (your inane characterization, not anyone elses), simply report backtested data. They are not inaccurate. These types of mischaracterizations and lies are the primary reasons people find you so annoying and makes people see you as a charlatan (which you are).
If you believe they are inaccurate, I encourage you to go through the same calculations and see if they are wrong. However, I don’t expect that you will actually do this – instead you will create inumerable paragraphs of garbage instead.
In summary, you have fabricated a problem that does not exist and have made this fantasy the centerpiece of your life. This is why I chose the name ‘sadface’ to post on your site. It is just so sad.
There are no “millions” of middle class investors waiting for your advice. Nearly all ‘failed’ retirements fail because of the same reasons yours failed – because they just have no idea what they are doing. This is the primary reason why no one pays you any mind other than to get rid of you.
Rob says
You are simply irritating.
Lots of people feel otherwise, Sadface. Please take a look at the 80 comments I have listed under the “People Are Talking” section (at the left-hand side of this page).
We should have been allowing honest posting on safe withdrawal rates and other important investment topics all along. It is a national scandal that there is today a Ban on Honest Posting at all of the boards and blogs where the owners are heavily promoting Buy-and-Hold strategies.
you have fabricated a problem that does not exist
I think it would be fair to say that the millions who have suffered failed retirements and failed businesses and failed marriages do not feel the same.
If you believe they are inaccurate, I encourage you to go through the same calculations and see if they are wrong.
I have done so. The numbers are wildly off the mark — nowhere even in the right ballpark. There are millions of people who will be suffering failed retirements in days to come because the owners of the various boards and blogs were not willing to honor their promises to those who were posting honestly on these topics. There is a place for marketing and there is a place for reporting numbers accurately even when doing so reduces your short-term profits by a small amount. Personal integrity matters, Sadface.
My sincere take.
Rob
sadface says
1)I have looked at those comments. Nearly every one of them was made by a person who later became extremely irritated with you and joined in the stoning-of-rob. Those comments are sad in the fact that almost NONE of them are from people who agree with or can even stand you.
2) As I said, most of those failed marriages/retirements were due to people making extremely boneheaded choices such as yours – NOT due to following a bogle-like investment plan. Please find one boglehead whose retirement failed to substantiate your claims. I can find lots of jackasses who levered up 20x to flip condos or naive/misguided people like you who retired on far too little money or old folks whose stock allocation was not responsible(70%+) – but no bogleheads who report failed retirements.
3) Ok, please show exactly where the numbers displayed in the Trinity study are wrong.I have not seen you do so to this day. Instead I see a lot of fluffy words and unsubstantiated claims. In fact, there are no mathematical errors in the study. It does exactly what it says it does – which is display the results of backtested data over a certain time frame.
Personal integrity matters, yes. I love your style where you write a bunch of absolute garbage and then end with a statement like that. It is classic Bennett.
Rob says
“Those comments are sad in the fact that almost NONE of them are from people who agree with or can even stand you.”
Good point, sadface. That makes sense.
Rob