Set forth below is the text of a comment that I recently put to a discussion thread at this blog:
Did you come across as the expert you purported to be?
I’ll answer this one separately.
I don’t think that there can be such a thing as an investment “expert” today, Banned. We only started doing academic research on investing questions in a systematic way in the 1960s. So we are talking about a field with a history of about 50 years. We are still in the Pioneer days, when we are going to make lots of mistakes and track back and re-start and all that sort of thing. So I think it is dangerous for people to be taking too seriously the idea that they have developed some form of permanent “expertise.”
So I don’t really think of myself or anyone else as an expert. I don’t object if someone refers to me as an “expert” in an introduction because this is common practice in this field. If the question comes up in the discussion, I make the point I made in the paragraph above, that it would be best if investors appreciated that there is no such thing as an true investment expert in today’s world, the science is too young.
I am very proud of my accomplishments. I potentially saved millions of middle-class retirements by discovering the errors in the Old School SWR studies back in 2002. The discussions that followed from that discovery (“The Great Safe Withdrawal Rate Debate”) led us to all sorts of exciting places. I think it would be fair to describe Valuation-Informed Indexing as the first true research-based investing strategy (it obviously owes a great deal to the Buy-and-Hold pioneers). Nothing could be more exciting than the discovery I made with my friend Academic Researcher Wade Pfau that it is today possible for us to reduce the risk of stock investing by 70 percent by warning investors of the dangers of Buy-and-Hold strategies (dangers that we did not know about until Shiller published his revolutionary research in 1981).
Do I know more about what works in stock investing than any of the “experts” who advocate Buy-and-Hold strategies? I think that is certainly fair to say that that is so in a practical real-world sense. They know more about what is written in the textbooks. I know more about what works in the flesh-and-blood world. But not because I am smarter than my Buy-and-Hold friends! I know more because I abandoned Buy-and-Hold back in August 2002 (when Greaney advanced his first death threat and hundreds of Buy-and-Holders who saw him do it cheered him on). That told me that Buy-and-Hold causes those who follow it to become excessively emotional. So I have learned all sorts of amazing things about how stock investing works over the past 11 years that the Buy-and-Holders have closed themselves off from learning by virtue of their unwillingness to acknowledge the 30 years of peer-reviewed academic research showing that there is zero chance that a Buy-and-Hold strategy can ever work for a single long-term investor.
Do I want my Buy-and-Hold friends to join me in this amazing learning adventure? I do. Very, very, much. There’s nothing that would make me happier than to be working beside great and smart and good people like Jack Bogle and Bill Bernstein and Larry Swedroe and Scott Burns. Tell me what magic words I need to say to them to get them to drop the pose that they knew it all going back to the day they were born on Planet Earth, and I will say those magic words, Banned.
I am not working with these people today not because I am too good for them. I am not working with these people today because their puffed-up egos don’t permit them as of today to acknowledge that they got on the wrong track during the insane bull market and that we all become better informed about how stock investing works when we all work TOGETHER for the purpose of helping the people who look to us to provide effective guidance.
I love these guys, Banned.
Do they love me? That’s the question you should be asking.
Are they even able to swallow their pride enough to acknowledge that there’s a lot that they can learn from me? (I have certainly acknowledged on many occasions that I have learned a lot from them).
That’s where things stand today, Banned. There’s no issue on my end. The problem is with the Buy-and-Holders. The hand of kindness is extended to them. Can they work up the courage and grace to reach out and accept it before their investing advice brings on another stock crash and puts us in the Second Great Depression?
No, I am not an expert in the conventional meaning of that word. And, no, my good friend Jack Bogle is not one either. So Jack and I should be comparing notes, learning what we can from each other so that we can do a better job for the people who look to us to learn how to finance their retirement plans.
That’s my take re this important question, in any event.
My warmest wishes to you and yours, Banned.