Yesterday’s blog entry reported on an e-mail that I sent to Academic Researcher Wade Pfau on March 1, 2011. He sent his response later that day.
Wade said that he shared my view that using 30-year rolling time-periods to make the case for Valuation-Informed Indexing was “compelling” and that “I’m definitely going to be using tables like the one I showed at Bogleheads with all the risk measures.” He explained that: “My idea is to show many different tables with results over the whole period for returns and risks. Valuation-Informed Indexing always provides more returns for often less risk.” Wade’s e-mail continued: “I also want to read more about the “information ratio” measure, as I think it may be the most important of all the measures in that table. But I need to better explain its full power.”
He stated: ” I will pick some of the cases where VII did least well and show the 30-year rolling periods for those. This is to help avoid data mining. But the fact will remain that no matter what I try, VII will still perform better in 85-95% of cases for 30 years, and the times that it does worse are those in which buy and hold was doing its best in history (which is always right around the peak of the bubble in 2000), and so VII is not more risky. I have a new figure for showing this as well. And a nice figure showing the outperformance percentages across rolling periods of lengths between 1 and 40 years. I think it is all quite persuasive.”
Diversified Investor says
Wade continues to add to the discussion on retirement planning
http://www.fpanet.org/journal/CurrentIssue/TableofContents/CanWePredicttheSustainableWithdrawalsNewRetirees/
While for reasons known only to you, you choose to continue to regurgitate year-old emails
Rob says
People need to be able to retain their personal integrity when they come to work in the investing advice field, Diversified.
Wade is an exceedingly talented fellow. I have every confidence that he is putting forward helpful insights in the article you cite.
But, unless we open this field up to people with personal integrity, we all go down. That’s the obvious reality.
We are going to see millions of failed retirements in days to come because of the errors that were made in the Old School safe withdrawal rate studies. I know that. Wade knows that. You know that. Everyone knows that. The first order of business is getting those studies corrected by the close of business today.
That’s my priority. It’s Wade’s priority too. He just doesn’t happen to see it that way at the moment.
I am confident that there will come a day when I will be doing wonderful work with Wade again. That will be the happiest and most productive time in both of our lives.
I certainly wish him every happiness in the days leading up to that wonderful time.
And I wish you every happiness too. Diversified.
Rob
what says
Of course, when you are crazy, you are the only one who has personal integrity.
Rob says
Okay, What.
That is indeed the alternative explanation of what we have seen appear before us on our computer screens over the past 10 years.
My best wishes to you and yours.
Rob
Diversified Investor says
“It’s Wade’s priority too. He just doesn’t happen to see it that way at the moment.”
Priceless
Rob says
You Goons always try to make it sound as if we are on different sides.
We’re not. We’re all on the same side. We all want to see an end to the economic crisis. We all want to learn all we need to learn to become the most effective investors we possibly can become. We all want to do good work and help those who rely on our work to live richer lives.
The bad news is bad. But the good news is so good that it cancels out all the bad news twenty times over.
Hang in there, Diversified.
Rob
Diversified Investor says
“You Goons always try to make it sound as if we are on different sides”
There you go again, labeling anyone who disagrees with you a goon. Now who is trying to make it sound as if we are on different sides?
Rob says
I like this question. In ordinary circumstances, I think it would be a terrible thing to call someone a “Goon.” So I relate strongly to the feeling behind this.
My answer is that it is not because you disagree with me that I call you a “Goon,” DIversified. I obviously do not support Buy-and-Hold. But I love having Buy-and-Holders participate here. Never in a million years would I call someone a “Goon” because he or she believed in Buy-and-Hold Investing.
I call you a “Goon” because you pretend that there is no need to correct the Old School safe-withdrawal-rate studies. There is a consensus in the investing field today that these studies get the numbers wildly wrong. Millions of people relied on advice rooted in the findings of these studies to plan their retirements. Those millions of people are likely going to suffer one of the worst life setbacks imaginable in days to come. And you believe that there is no need to correct the studies?
You don’t really believe that. You are pretending. And the pretending is causing great human misery, That’s why I say you are a “Goon.”
A Buy-and-Holder who acknowledges the need to correct retirement studies is an honest Buy-and-Holder. A Buy-and-Holder who plays games with other people’s retirements is a Goon. The Goon makes himself look bad while also making all Buy-and-Holders look bad. In the end, the Goon makes all human beings look bad. We all have feelings of embarrassment and shame that our human nature is so flawed as to permit this sort of behavior in some circumstances.
Goons have been disrupting our conversations about stock investing for 10 years now. They obviously don’t do that because they feel that they have a strong case. They do that because they understand that they have a very weak case and yet their pride does not permit them to admit that they made a mistake in believing in the Old School studies at one time. I have sympathy for the emotional pain felt by the Goons. But I don’t feel that I do them any favor by pretending that even minimal levels of honesty are not required in discussions of investing.
Minimal levels of honesty are required. We fail to meet this requirement when we fail to urge corrections in retirement studies that we all know get the numbers wildly wrong.
I hope that explanation helps you to understand a bit better where I am coming from re all this, Diversified. I care too much about the people who read my stuff to agree to post dishonestly re the numbers that they use to plan their retirements. You are going to have to try to find someone else.
Please take good care.
Rob
Diversified Investor says
I have never said one thing or another about the SWR studies
I have never interrupted a conversation. How could I? It is a complete ghost town here.
You throw around honesty and ethics, yet you consistently make unsubstantiated claims and shriek “Goon, Goon” if asked to provide the slightest evidence to back up your claims.
I watched as you hijacked discussion after discussion at the Morningstar boards. By your own standard it is you that is the Goon, not I
Rob says
I watched as you hijacked discussion after discussion at the Morningstar boards.
http://www.passionsaving.com/investing-discussion-boards.html
My best wishes to you, my old friend.
Rob
Diversified Investor says
ohhh, thanks, that clears it all up for me. Be well my Goon friend
Rob says
Backatcha, Diversified.
Rob