VII #86: Investing Experts Need to Distinguish Opinion From Truth

I’ve posted Entry #86 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Investing Experts Need to Distinguish Opinion From Truth.

Juicy Excerpt: So it doesn’t really bother me if people refer to my findings on safe withdrawal rates as opinion rather than truth. My findings are the product of mathematical calculations. But they are not the mathematical calculations you would engage in if you believed in the Efficient Market Hypothesis. It could fairly be said that it is my opinion that the market is not efficient that causes my  safe withdrawal rate findings to be what they are.

I do object to the double standard that applies re these matters, however. I have seen many references to the Old School retirement calculators, calculators whose numbers are rooted in a belief in the contrary opinion, the opinion that the market is efficient and that valuations thus do not affect long-term returns. I have never seen those calculators characterized as reporting mere opinions. Those calculators are promoted as being the product of science. Those calculators are marketed as putting forward not opinion, but Truth.

Comments

  1. Rob says

    I’ll continue to post honestly re safe withdrawal rates and other critically important investment-related topics, in any event.

    Rob

  2. Drip Guy says

    Why would anyone expect you to be honest when you are dishonest about the premise of the entire linked thread?

    Three little words Rob! Just three little words!

  3. Drip Guy says

    Rob,

    I’ll be anticipating your forthcoming article here, as you have explained elsewhere:

    Robert Michael “Hocus” Bennett said:

    “I just sent Wade a long e-mail with the title “Concerns That You Have Gone to the Dark Side.” I will post the text of the e-mail at my site but not for a few weeks. It is possible that he will respond in a constructive and positive and helpful manner and it would obviously be best for every last one of us if he did so. So I don’t want to put any words forward that might gum things up if there is any way to do so while still honoring my obligation to my readers to report on the entire saga in the most honest and complete and balanced way possible. The key two sentences in the e-mail state: “Are you insane? Think, man!” I make numerous other points, but those two sentences give you the general flavor. “

  4. Rob says

    I’ll be anticipating your forthcoming article here

    My hope is that I will hear from Wade and that I will not feel that it is necessary to post the text of the e-mail.

    If I don’t hear from him for a week, I will give it up as a lost cause.

    Then it would just be a schedule issue. It won’t go up for a week in any event. It could be a week or so longer than that before it goes up, depending on what else is in the mix.

    Thanks for your interest, my long-time abusive posting friend.

    Rob

  5. Rob says

    Still fun, Rob?

    Hot Fun in the Summertime, Drip Guy.

    It doesn’t get any better than this.

    Hoo boy!

    Rob

  6. Drip Guy says

    Hocus: “My hope is that I will hear from Wade and that I will not feel that it is necessary to post the text of the e-mail.”

    Speaking of Passive-Agressive, Rob, that (to my ears) sounds an awful lot like a threat/ultimatum. I did not think we did that to people we respected and admired.

  7. Rob says

    It’s not intended that way, Drip Guy. I do worry that he will hear it that way. I brought up that point in the e-mail. I asked that he not hear it that way. I of course cannot control whether he does or not.

    The way I see it is that letting people know what Wade has done makes him look bad. I don’t want him to look bad. So I am letting him know in advance of what I am going to report. If he comes clean, we avoid going down a dark road.

    Can I hold back on reporting the realities if he DOESN’T come clean?

    I don’t see how.

    This isn’t a game, Drip Guy.

    There are millions of people who are going to experience failed retirements because of the demonstrably false claims advanced in the Old School studies. We are in an economic crisis. Stocks are priced today to fall by another 65 percent over the next few years. A price drop of that size will in all likelihood put us in the Second Great Depression.

    There are responsibilities that follow from all this. For me. For you. For Wade. For everyone.

    The key here is that we need to get the word out to people. People have heard the “experts” push Buy-and-Hold and they think there is something to it. We need to tell them the straight story. The hardest part to explain to people is — If there is 30 years of academic research showing that Buy-and-Hold can never work for any long-term investor, why aren’t the experts telling us this?

    I need to answer that question for people. That’s my job.

    Wade’s behavior tells the tale. Not just his. As you have noted on many occasions, there are MANY people acting as Wade has. They know darn well that valuations affect long-term returns. But they are not willing to say in clear and plain words that the Old School studies need to be corrected before they cause more failed retirements.

    There are pressures being brought to bear on these people. Some of you Goons threatened to get Wade fired from his job when he wrote to the Trinity authors asking that they correct their study. He is scared. So now he is pulling back from doing research on valuations and taking my name off of posts that included my name. He is trying to get on the right side of the people who don’t want millions of investors to know what the last 30 years of academic research says about Buy-and-Holld.

    That’s a big problem. It is an investing problem. It is an economic problem. It is a political problem. It is a legal problem. We have a big mess on our hands here.

    I want to help people out. I want to clean up the mess. I want to help people who are on the hook get off the hook. I want to see us all moving forward to exploration of all the wonderful insights we have mined together over these past 10 years.

    But I can’t do that when people like Wade get too intimidated to speak the realities in public places. We need Wade telling the straight story, not participating in the cover-up. The cover-up is killing us all.

    I have no choice but to let people know what the story is. I will of course tell people all the positive things about Wade too. There’s a lot of positive stuff to say and I am going to say it. But I have no choice but to report on the non-positive stuff too. It breaks my heart to do that. I have a great affection and respect for Wade Pfau. We had fun times together (where have I heard that phrase before?). But I have not been offered any other options other than agreeing to post dishonestly myself and that is of course so out there that I will not even give the idea two seconds of consideration.

    Anyway, no threat intended. If I didn’t let him know in advance where things were headed, I would feel like a creep. This way I don’t feel like a creep. I still feel bad. It still breaks my heart. But I can go to sleep at night knowing that I did everything in my power to keep things from continuing in this horrible direction.

    I have been saying for 10 years now that I am super-motivated to help everyone out but that I need a tiny bit of COOPERATION to get the job done. I am not a miracle worker. I do not posses unlimited powers.

    Now it’s your turn. Come back with one of your moronic abuse posts. That will make everyone feel better about themselves.

    How much longer, Lord? How much longer?

    Rob

  8. Rob says

    You are one sick puppy.

    So long as people aren’t mad about their losses, I guess that’s the way it plays, Kimber.

    Once people get angry about their losses, it will turn and it will be a nasty turn.

    Integrity will count for something in those days, I believe. I sure am not tempted to throw the card away.

    Rob

  9. Drip Guy says

    Rob said: “I have been saying for 10 years now that I am super-motivated to help everyone out but that I need a tiny bit of COOPERATION to get the job done. I am not a miracle worker. I do not posses unlimited powers.

    Now it’s your turn. Come back with one of your moronic abuse posts. That will make everyone feel better about themselves.”

    Rob, I mean this next comment in the most sincere way possible — not as a mere casual poke at a narcissistic internet troll: It is my earnest belief that you are a real, honest-to-goodness sociopath, who lives only for your own pleasures, and that the tendencies of your particular enjoyments happen to veer toward the sadistic.

    I think that unlike similarly wired archetypes who might have become political (think Mussolini) or physical (think serial killer) in their outlets; that you are quite a low functioning intellect, so your own scanty emotional and mental toolkit keeps you stuck at mostly the verbal level while busy trying to pleasure yourself.

    I am frankly fascinated to watch you operate, and I have freely admitted that I often find your antics to be most humorous. But that humor stops dead in it’s tracks when I see you start actively trying to harm the lives of other, innocent people, Rob.

    It’s wrong. And you know it’s wrong (in the abstract).

    But true to your character, you just don’t care. This is the part of the story I dread. This is where I start thinking about Bruce Ivans, or Cookie Thornton or others who were unable or unwilling to cope with societal norms, and insisted the world bend to their own twisted wills.

    Earlier you said “It’s not a game.” At this point, I most certainly agree. Please reach out to try to get help Rob. I mean that in most heartfelt and sincere way possible.

  10. Drip Guy says

    Bennett fumed: “Once people get angry about their losses, it will turn and it will be a nasty turn. Integrity will count for something in those days…”

    Rob, more nasty over-arching threats from you. This is a very very bad thing. Please stop, and get a grip on yourself. People clearly don’t want to buy what you are selling. I’m sorry that’s the case. but get over it already, dude. A healthy person would just find another (healthier!) outlet for their energies.

    Please.

  11. Rob says

    It is my earnest belief that you are a real, honest-to-goodness sociopath, who lives only for your own pleasures, and that the tendencies of your particular enjoyments happen to veer toward the sadistic.

    It’s true that I posted the honest and accurate SWR numbers.

    I can see where you are coming from, Drip Guy.

    Rob

  12. Rob says

    Rob, more nasty over-arching threats from you. This is a very very bad thing. Please stop.

    It’s true that I have argued that we should let middle-class people know what they need to know to obtain far higher returns while taking on greatly reduced risk.

    I can see where you are coming from, Drip Guy.

    Rob

  13. Rob says

    People clearly don’t want to buy what you are selling. I’m sorry that’s the case. but get over it already, dude. A healthy person would just find another (healthier!) outlet for their energies.

    THere are some who don’t want to buy, Drip Guy. That much is indeed so.

    Those people of course have every right not to buy. That’s not an issue.

    There are others, a small number, who want to buy very much. It is important for those people that someone be around offering what I am selling. Even small numbers of people count.

    And there there are the Goons, who violently don’t want people even to hear what I am saying.

    Those people need to be prosecuted to the full extent of the law, Drip Guy.

    That’s the way the system works.

    It is a good system, I support it, and I will do my part to see that it continues working long into the future.

    And I will remain your friend even while holding you and the other Goons accountable for your behavior. I think that’s the right way to play it.

    Please take care, my long-time abusive-posting friend.

    Rob

  14. Rob says

    A healthy person would just find another (healthier!) outlet for their energies.

    I believe that we will flip it, Drip Guy.

    There is a tipping point at which we have enough people speaking up that others no longer feel intimidated to speak up and it starts getting better and better and better for everyone. It might be that we need 10 percent of the population to get to the tipping point and that we are at 8 percent today. I don’t know that. But I hope that and I think I could be right about that.

    One that I will give you is that it has been 10,000 times harder to get to the numbers I need that I anticipated it would be. Never did I imagine the reality to be what it has turned out to be.

    But I don’t think giving up is the answer.

    My view is that we are on the 99-yard line. We are on the threshold of achieving the greatest advances in the history of stock analysis. My job is to pull everyone together, distribute the credit widely, help everyone to forget the ugly stuff and give everyone the confidence and encouragement they need to enjoy and partake in the groovy stuff.

    I don’t see this as a dark story, Drip Guy. It has some exceedingly dark elements. But the good here greatly outweighs the bad. It has since the first day. It’s never been a close call.

    I wish that you (and many others) could see what I can see. It’s an amazing picture on the other side of The Big Black Mountain, my long-time abusive-posting friend.

    Rob

  15. what says

    Did you just call Rob an ‘idiot sociopath’? C’mon, he is more like a ‘circus clown sociopath’.

    I just find it amazing that in 10+ years Rob has managed to alienate anyone who did or didn’t agree with him and he still thinks he is behaving normally.

  16. Rob says

    “Normal” in InvestoWorld is very different from “Normal” in any other field of human endeavor, What.

    There’s a lot of money in this field. A lot.

    And we all have an emotional weakness for Get Rich Quick.

    And the best way to sell is to form an emotional connection to the customer.

    So there are intense pressures in this field to push Get Rich Quick and to pretend that it is somehow or other supported by research (telling people that the research supports Get Rich Quick helps people rationalize doing things that otherwise would make no sense to them).

    I make it tough for people by pointing out the realities.

    But that’s only in the short term. In the long term, we are going to bury all the Get Rich Quick garbage 30 feet in the ground. Then it gets easier for everyone. We all get higher returns. We all take on less risk. We all recover from this economic crisis.

    I feel respect and affection for each and every one of the people whom I have alienated, What. I believe that in time they will become able to say the same back to me.

    I sure hope so!

    Rob

  17. what says

    I am not sure what any of what you wrote has to do with you being unable to interact with people in a way that doesn’t make them want to avoid you.

    You seem to be doing the opposite of what you would need to do to be effective (i.e. raise support for your ideas). It is interesting, you are self destructive and then attribute your self destructive behavior as a necessity of the ‘mission’ at which you are clearly failing due to the same self destructive behavior. So, you have created a mission impossible where you will continue to fail indefinitely.

  18. Rob says

    I’ll try to get to this later today or tomorrow, What.

    No yelling at Goons on Good Friday! My religion forbids it!

    Rob

  19. Rob says

    You seem to be doing the opposite of what you would need to do to be effective (i.e. raise support for your ideas).

    The way to be popular in the investing field is to promote Get Rich Quick, What.

    You know what? There are tens of thousands of “experts” in this field doing that. You know what else? It’s killing us.

    Reporting honestly what the academic research says is potentially a very lucrative niche. Millions of people want to base their strategies in research. Millions of people want to avoid Get Rich Quick, not commit to the purest form of it. And no one else is working this niche today.

    The problem is that, when you report accurately and honestly what the research says, those promoting Buy-and-Hold scream bloody murder. You are invading their “turf.”

    I am invading their turf. Someone has to do it. We can’t go on like this.

    In the end, they will be happy I did it. There’s plenty of money to be made in this field giving honest advice. If Shiller had published his research in 1971 instead of 1981, we never would have had Buy-and-Hold in the first place. It would have been Valuation-Informed Indexing from the start. All I am doing is what Bogle tried to do in the first place, except that I am doing it at a time when a lot more research is available to us and we are much better informed.

    Bogle doesn’t want the economy to collapse. He didn’t get in this line of work to cause an economic crisis. As things continue to worsen, he is going to endorse VII and who will be the success then? With Bogle’s endorsement, we will have 100 sites promoting Valuation-Informed Indexing within two months.

    Get Rich Quick is the past. That’s what used to bring success in this field.

    Valuation-Informed Indexing is the future. We’re doing a lot better than we were prior to the crash (I was blacklisted at every board in the Personal Finance Blogosphere in those days). We will be doing even better yet after the next crash. Let’s just pray that it doesn’t take a Second Great Depression to get people to give up on Buy-and-Hold!

    Rob

  20. what says

    So your intention is to become as unpopular and disliked as possible to spread an idea. A strategy which clearly does not work (given your utter failure to date) and will never work.

    Good luck with that.

  21. Rob says

    I haven’t been a failure, What.

    I was saying on May 13, 2002, that the Old School studies get the numbers wildly wrong. At the time there were a number of people who expressed some skepticism. Today, there is a consensus in this field re this point. Getting something like that right 10 years before anyone else ain’t failure.

    I’d like to be the most popular poster on the internet. I would NOT like to achieve that goal by posting dishonestly on the numbers that my friends use to plan their retirements.

    I’m playing the cards that I was dealt, What. I don’t deal the cards.

    Rob

  22. what says

    You are the tree that fell in the forest that nobody cared about.

    And you are losing whatever card game you are playing because…you aren’t good at cards.

  23. Rob says

    Okay.

    I do my level best, What.

    I am not a perfect being. I have strengths and minuses.

    I am doing my best and that’s all I can do.

    I am grateful for the thousands of people who have offered me a hand over the years. I certainly could not have done one-tenth of what I have done without their help.

    I wish you the best, My Goon Friend.

    Rob

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