“Unless Taylor Larimore [Co-Author of the Book The Bogleheads Guide to Investing) Has Had Some Secret Discussions With Bogle That No One Knows About, He Is Mischaracterizing Bogle’s Position.”

Yesterday’s blog entry reported on an e-mail that academic researcher Wade Pfau sent me on January 20, 2011. My response is set forth below.


That’s super. I am grateful for your constructive efforts.

1) CJKing is an awesome poster, probably the best I have ever seen on this topic. If it’s possible to contact him through a private e-mail system there, he can probably be of help. He is extremely knowledgeable re this topic and also has spent
years thinking carefully through all the angles.

2) His recommendation to read Valuing Wall Street was a great one. Smithers uses a different valuation metric. John Russell did some research seeking to determine which metric worked best (P/E10 or Tobin’s Q). He ultimately went with P/E10 but my recollection is that he also had generally good things to say about Tobin’s Q.

3) John Russell wrote an article making the point you were making re the size of the data set. He certainly agreed with your intuitive sense re this. I will try to track down that article.

4) Richard’s point is the most important, in my view. People need to understand WHY long-term timing works but short-term timing does not. I struggled with this for a long time. Once I was clear on the premises of
the new model, I was able to understand all sorts of aspects to the question that I had been blind to before. If you want me to say more on this (now or later), please just let me know and I will expand on the point.

5) Norbert Schlenker’s behavior is inexplicable. He banned me from his board. However, I think his substantive comments on the thread where he supplied the graphic were perfectly fair. He expressed a certain skepticism but it was more a cautious skepticism than a rigid skepticism. And the one big negative he pointed to — the success of Buy-and-Hold in the late 1990s — no longer applies since the crash. It’s of course not his fault that he happened to prepare the graphic prior to the crash.

6) You described Benjamin Graham’s take properly. I will try to track down an article that quotes his words.

7) Bogle has said that Valuation-Informed Indexing can work:


Unless Taylor Larimore has had some secret discussions with Bogle that no one knows about, he is mischaracterizing Bogle’s position. In fact, Bogle warns about the effect of overvaluation in nearly every speech he gives. Bogle himself timed the market successfully! He has said in published interviews that he lowered his stock allocation to about 30 percent at the top of the bull partly because of valuation concerns. He obviously is ahead
today because of his decision to do that. Taylor is of course aware of this. These points were made dozens of times to him in threads that reside today in the Post Archives of the Vanguard Diehards board.

That’s a great thread! I am sure that that is going to help some people gain a better sense of the realities.



  1. Diversified Investor says

    Now you are taking pot shots at Taylor Larimore?!?!?!? Have you no shame?

  2. Rob says

    This reminds me of the reaction I got from some Greaney “defenders” when I put up my post pointing out the errors he made in his retirement study, Diversified. A good number reacted defensively. They said that no one should ever point out mistakes made by Greaney because a good number of us considered him a friend.

    I couldn’t possibly disagree more.

    If you like Greaney (I obviously do), you believe that he posted the study to help people. If he wants to help people, he doesn’t want them to suffer failed retirements. So the best way to show your friendship to him is to point out his mistakes and help him make the corrections to the study that are needed.

    The same applies with Taylor. Taylor obviously has made some big mistakes. Where are all these people who call themselves his “friend” when they see he has made mistakes? A good number of them can be found hiding under the bedcovers! Not Taylor’s true friend Rob. I have pointed out his mistakes. I will do so again. I will stand by the guy when his Sunday-solider friends will not.

    Please think it over, Diversified. You do Taylor no kindness when you encourage him to leave his mistakes out there uncorrected. Taylor will feel 50 times better about himself when he comes clean. So will you.

    And, since we’re on the subject of friends of ours who need to acknowledge and correct their mistakes, the same goes for John Bogle too. No?


  3. Diversified Investor says

    Let’s count your errors

    1. Continually claiming error exist in a study while never specifying them

    2. Continually making unsupported claims of death threats made against you

    3. Demanding errors be fixed in a study while never bothering to contact the authors

    4. Making a death threat against Dory and his/her grandchildren

    5. Being so obnoxious that hundreds of people deserted Morningstar’s Vanguard forum to create a new forum.

    and on they go…..

  4. Rob says

    Being so obnoxious

    I plead guilty to being the person who discovered the errors in the Old School safe withdrawal rate studies, Diversified.

    Please take good care.


  5. Rob says

    Making a death threat against Dory and his/her grandchildren

    Dory is a he.

    “Dory36″ is the screen-name used by my friend Bill Sholar. It is a boating term. Bill retired early so that he could spend more time on his boat. My recollection is that he lives on the boat.

    I met Bill in my Motley Fool days. He wrote one of the blurbs that appear on the back cover of my book “Passion Saving.”


  6. Diversified Investor says

    Sorry, I wasn’t aware of Dory36′s gender. I also noticed that you did not dispute my statement about your threatening him and his grandchildren.

    I also find Wade’s blog posting today fascinating. It seems you two are on the outs.

  7. Rob says

    Sorry, I wasn’t aware of Dory36?s gender.

    There’s nothing to apologize for, Diversified. Many people have been unclear about that.

    I also noticed that you did not dispute my statement about your threatening him and his grandchildren.

    You’ve got an eagle eye, Diversified. I shouldn’t even try to pull one over on you!

    I also find Wade’s blog posting today fascinating.

    The word I used in my comment to his blog (which has been deleted) was “shameful.”

    It seems you two are on the outs.

    The way I would say it is that the new ethically compromised Wade is on the “outs” with the old heroic researcher Wade. Too sad!

    I still love the guy and I still admire him for publishing the most important investment research of our time.

    Please take good care, Diversified.


  8. what says

    It is just too funny. Basically we have a math illiterate claiming that he can find the illusive SWR in data he can’t actually process or understand.

  9. Rob says

    The problem that the people who performed the Old School studies suffered from was not a math problem, What.

    Investing is not a math problem.

    Investing is an emotional problem. All the risks are emotional risks.

    There are people who think that, if they pretend that investing is a math problem, they can master it. They are fooling themselves.

    You either address the emotional issues or you fail at investing in the long-term.

    That’s my sincere belief, in any event.

    Please take good care.


  10. arty says

    Agreed with Rob that investing is primarily an emotional issue, especially if performed DIY.

    Contrariwise, a mathematical understanding of things like Sharpe and Sortino Ratios are fairly useless while promoted as being important tools.

    Knowing one’s own tolerance for risk, managing emotions, and adhering to a simple plan (percentages to allocate, where and when) is the uncomplicated answer to most investing problems as they are commonly discussed.

  11. Rob says

    Thanks for sharing your thoughts, Arty.

    I sometimes get the feeling that I am outnumbered even at my own blog!


  12. arty says

    Rob: You ARE outnumbered, even here! But that is often what happens when arguing against a popular view.

    In this case, however, you are in more popular company, as guys like Bogle and Swedroe and Shiller would likely agree on the potential primacy of emotions in investing.

  13. Rob says

    guys like Bogle and Swedroe and Shiller would likely agree on the potential primacy of emotions in investing.

    That makes me feel better.

    Kinda, sorta.


  14. arty says

    There are many places of agreement shared by the various “passive” camps (low costs, wide diversification, the role of emotions in investing, etc.) and at least one huge disagreement you have highlighted—valuations—and the times to be NOT passive. (By “passive” here, I mean those who don’t use active funds or individual stock-picking.)

    I wonder if the place of disagreement between the relevant camps is made more stark because of the other major places of agreement.

  15. Rob says

    I absolutely think that’s the case, Arty.

    People are able to dismiss views different from their own when they are advanced by people who have little in common with them. They don’t take such people seriously. So they don’t perceive a threat in the different viewpoint.

    Buy-and-Holders feel threatened by Valuation-Informed Indexers because we agree on so much that it is not possible for them to dismiss us as crazy people.

    Some have been known to take a good shot at it all the same, however!


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