Set forth below is a comment that I posted in response to a comment by a community member named “What” on the discussion thread for the blog entry titled It Breaks My Heart When People Don’t Comment on My Investing Posts.
All you did was point out some underlying assumptions and limitations of the study that any educated reader already knew and understood.
I was at the Motley Fool’s Retire Early board in the years when people were putting up threads on a daily basis about Greaney’s safe withdrawal rate study and how they were using it to plan their retirements. These were people who possessed enough intelligence and self-discipline to be able to accumulate the assets needed to retire in their 50s or in some cases even in their 40s (my recollection is that Greaney himself retired in his early 40s). Are you telling me that these people were not “educated” re personal finance issues?
They were plenty educated, What. They were emotionally addicted to Buy-and-Hold, which means they were emotionally addicted to Get Rich Quick. An emotional addiction to a Get Rich Quick strategy cancels out the benefits of any education or intelligence you possess. Once you become emotionally addicted to a Get Rich Quick approach, all of your mental energies are directed to coming up with rationalizations for why it might all turn out different this time and this might be the first time in history when Get Rich Quick actually pays off in the long term.
Bogle doesn’t lack education, What. Bernstein doesn’t lack education. Swedroe doesn’t lack educations. Burns doesn’t lack education. What these people lack is an appreciation of the dangers of Get Rich Quick investing strategies and a lack of appreciation that a belief that it is not necessary to change your stock allocation in response to big price swings transforms any investment strategy you are following into a Get Rich Quick strategy. These people are blind to the realities of stock investing not because they lack intellect but because their emotional attachment to Buy-and-Hold renders them unable to let in to their consciousness all data points revealing the dangers of this strategy. These are highly intelligent and highly educated people suffering from cognitive dissonance on all topics relating to stock investing.
If the people who developed and promoted these studies had known that they were going to cause millions of people to suffer failed retirements, they never would have developed them or promoted them in the first place. Nothing could be more obvious to any halfway reasonable person. If you don’t see that causing millions of failed retirements is a bad thing, you either are suffering from cognitive dissonance yourself or are a psychopath. There is no third explanation of the words you put forward in this comment, What.