Set forth below is the text of an e-mail sent to me on April 20, 2009, by J.D. Roth, owner of the Get Rich Slowly blog, in response to my e-mail to him described in an earlier blog entry and the subsequent e-mail by the owner of the Lazy Man and Money blog and my response to it.
Thanks for writing.
I’ve actually been following your discussion over at the MBN forums, but I haven’t participated because I have nothing meaningful to add. I understand that this is something about which you feel strongly, and I admire your devotion and persistence. I wish you well in your crusade. HOWEVER, there are many many things wrong with conventional financial advice, and the debate over the safe withdrawal rate is but one small example. I’m not willing to focus on this at the exclusion of other topics.
From my experience, most reasonable financial advisers arleady understand that the 4% withdrawal rate is not set in stone. They use it as a guideline. Why? Because, in general, it WORKS in order to provide guidance for clients. But every reputable source I’ve read makes it clear that the safe withdrawal rate does indeed vary depending on economic conditions. Some authors may use 4% when speaking broadly, but if they do a detailed examination, they always include caveats. I do this myself.
That said, I have some other thoughts and comments:
1. You wrote: “The owners of personal finance blogs should organize to prevent Goon posters from destroying our property and from intimidating our readership.” To be honest, this seems unnecessary to me. I’ve been writing about personal finance for three years, and though I have to deal with an occasional nut and occasional hostility, I’ve seen no evidence on GRS (or anywhere else, for that matter) of “Goon posters” intimidating readership. If you’re feeling threatened by Goon posters and nobody else is, ask yourself why this might be the case.
2. You wrote: “This shows that the core premise of the Passive Investing model — that allocation changes are not needed in response to big price changes — does not hold water.” I don’t agree with you. For one thing, passive investing requires periodic rebalancing, so there *is* a response to big price changes. For another, I don’t think that the safe-withdrawal rate question has anything to do with passive investing. You may as well argue that it shows that the core premise of active investing doesn’t hold water. Both arguments are equally incorrect.
3. Your approach to this is damaging your objective. You mean well, I know, but as others have pointed out, you come across as crazy. I’m not joking. If you want to be taken seriously, then write SHORT persuasive articles that address this subject. In the thread that Lazy Man locked, you are writing enormous epistles belaboring even minor points. You’re flooding people with words. Even if some, like me, might be inclined to agree with you, we have difficulty taking you seriously because you take offense at the slightest provocation, and you seem hell-bent on this crusade. You are tilting at windmills.
My number one recommendation for you is this: Write less. Write fewer posts/articles, and when you do write, make them shorter. This will increase your credibility immeasurably. If you want to get the word out on this subject, write a SHORT article that makes your point WITHOUT loaded terms like “goon squad” and “old school”, etc. Submit it to a pfblogger. (Hell, you could even submit it to me.) If the blogger rejects it, don’t take offense. Listen to why they rejected it.
Right now, Rob, you are your own worst enemy in this matter. *YOU* are what is causing people not to listen. People in the MBN thread tried to tell you this, but you ignored them. Until you are able to come to terms with this, you’re going to continue to struggle to be heard. And that’s a shame. I think you have something worth hearing.
Now here’s an unfortunate truth: I do not have time to devote to a long, rambling discussion on this subject with you by e-mail (or any other source). I have work to do. I’m perfectly willing to exchange short e-mails on this subject, but if you respond with long epistles, they will likely be ignored — not out of any malicious intent on my part, but because I simply don’t have time to deal with it. I barely have time to get the things done that need doing without adding this to my plate. Hell, I just spent 30 minutes writing this reply when I should have been researching bonds for my afternoon post.