“Journalists Change the World for the Better By Daring to Tell Important Truths that People of Power and Money Want Covered Up. I Did the Thing That All Journalists Aim to Do in a Very Big Way When I Worked Up the Courage to “Cross” John Greaney By Telling the World About the Errors He Made in His Study.”

Set forth below is the text of a comment that I recently put to another blog entry at this site:

You put things out there that provoke people and then act like a victim.

Did my famous post of May 13, 2002, pointing out the errors in John Greaney’s retirement study provoke people?

It did.

I know because I was there. Lots of people who I consider friends used that study to make decisions as to when to hand in resignations from high-paying jobs and then live only on their savings for the rest of their lives. Those people’s lives were ruined by the trust they put in that now-long-discredited study.

I did provoke them, Reality. You’ve got me re that one.

I’m proud of it.

I’m proud that I worked up the courage to tell the truth re that important matter despite what I knew about how John Greaney would react. Today we have the Wall Street Journal saying that those studies are in error and the Economist saying it and Smart Money saying it and Financial Mentor saying it and Wade Pfau saying it and the Journal of Financial Planning saying it and lots and lots of other people saying it.

Journalists change the world for the better by daring to tell important truths that people of power and money want covered up. I did that. I did the thing that all journalists aim to do in a very big way when I worked up the courage to “cross” John Greaney by telling the world about the errors he made in his study.

If you think that I am someday going to apologize for the wonderful thing I did, you don’t know me. It hasn’t happened in 11 years. It won’t happen in 11 billion years. I gave more back to this world on the morning of May 13, 2002, than I had in earlier days even imagined as a remote possibility.

Do I like to see the people who placed their retirement hopes in that garbage study hurting so bad?

I do not.

If the question becomes “how can we help the people whose lives were destroyed by all the lies that were told to them PRIOR to May 13, 2002?” I am in.

For so long as the question remains “how many fresh lies can we make up to cover up the lies we used to cover up the lies we used to cover up the errors in those retirement studies for 11 years?”, I would be grateful if you would try to find someone else to do your dirty work.

The post provoked people.

For a very good reason.

Buy-and-Hold is a lie. The numbers in the Buy-and-=Hold retirement studies are wildly off the mark from the numbers you get from using analytically valid methodologies.

There will be a day in the future when we will ALL feel comfortable posting honestly about safe withdrawal rates and scores of other critically important investing-related topics. I very much look forward to that day.

On that day, we will all see the good side of provocative posts. Reports on huge advances always sound provocative on first hearing. Huge advances are wonderful.

It was once provocative to say that humankind would one day be able to fly above the clouds.

It was once provocative to say that some day in the future people with black skin would have the same civil rights as people with white skin.

It was once provocative to say women should be able to get jobs as doctors and lawyers.

My May 13, 2002, post was provocative as all get-out.


No apologies.

None whatsoever.

My warmest wishes to you and yours, Reality.


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  1. The Pink Unicorn says

    Yyyyyyyyyaaaaaaawwwwwwwnnnnnnnnnn……….another post where reference another one of your old topics that you have done time and again, relating the same lies and distortions.

    Try and get some new material, Rob. While you are at it, find some REAL facts to support it as well.

  2. Evidence Based Investing says

    My favorite piece of your May 13th 2002 post is the following

    “The data that turned up for 1969 concerned me. As I read the data, it appeared to me that had I made an 80 percent stock allocation in 1969, I would now (31 years later) have lost all of my investment and be bankrupt. Is that true? It’s possible that I don’t understand how the calculator works, but that result was disturbing to me. The actual portflio figure that the calculator gave was that I would now have a negative $31,035. I don’t understand the concept of a negative portfolio value. That’s what makes me a little uncertain as to whether I am reading the results correctly.”

  3. Rob says

    The negative-portfolio-balance-thing still troubles me, Evidence.

    Say that you have a negative portfolio balance in Year x. Then you have gain that more than make up the difference in Year y. Are you back in the game?

    Common sense tells me “no.” Once you have a negative portfolio balance, you are out.

    The calculator suggests otherwise. Is it right to do that or is it wrong to do that? My view is that going bankrupt is a loss from which you can never recover.

    This is not a trivial point. It goes to one of the issues at the core of all this.

    The thing that makes Valuation-Informed Indexing so superior to Buy-and-Hold is that you never experience devastating losses. The worst percentage loss the Buy-and-Holders have seen is about 60 percent. The worst percentage loss that the Valuation-Informed Indexers have seen is about 20 percent. That’s a loss reduction of something close to 67 percent. That’s huge.

    Now —

    Stocks are a high-return asset class. If you ignore the effect of experiencing those sorts of losses (bailing out of stocks when prices are low), you can make a numerical case that Buy-and-Hold can kinda, sorta work, even in the long term. Over many years, the losses are recovered because stocks are usually not priced at insanely high levels and thus usually provide very good returns.

    If you look at things more realistically, you get very, very different answers to your questions as a result of your analysis. The Buy-and-Holders will be seeing a loss of 5/6 of their money from the time (January 2000) when stocks were priced at three times fair value to the time when they will be priced at one-half of fair value (sometime in the next few years). How many Buy-and-Holders will stick to their high stock allocations after losing 5/6ths of their portfolio value as a result of following this “strategy”? I think it would be fair to say that the correct answer to that one is “a number very close to zero.”

    Buy-and-Hold is fantasy investing, Evidence. There has never once in the historical record been a time when Buy-and-Holders stuck with their high stocks allocations through an entire bull/bear cycle. Yet the Buy-and-Holders swear that it is all going to be different this time. It would be fair to say that I have my doubts.

    I think it is a telling point that even the Buy-and-Hold calculators show negative portfolio balances for those who insist on following this strategy at times when prices have reached insanely dangerous levels. It’s not for me. And I don’t feel even a tiny bit comfortable recommending it to any of my friends either.

    I naturally wish you all the best that this life has to offer a person regardless of what investing strategies you elect to follow.


  4. The Pink Unicorn says

    “Buy-and-Hold is fantasy investing, Evidence”

    So Shiller is living in a fantasy world? He just said he is holding his stock.

    What you have described as a fantasy has built me a nice net worth, allowing me to pay off my home and that fantasy account pays me out $128,000 a year in interest and dividends. Since I am at the age of 50, I am not yet done adding to that.

    Shall we talk fantasy? How about retiring way too early, with a poor level of savings, kids still at home and relying on home equity and a non-existent writing/financial advice business to bridge a gap, with no margin of error.

  5. Rob says

    So Shiller is living in a fantasy world? He just said he is holding his stock.

    MOST Valuation-Informed Indexers are holding stock today, Pink. My circumstances are unusual. You of course have known that for 12 years now. The fact that you feel a need to engage in deception re such points speaks ill of the investing strategy you favor. A legitimate strategy could be defended through legitimate means.

    Shiller considers price when setting his stock allocation. Shiller is a Valuation-Informed Indexer. not a Buy-and-Holder. Good for him.


  6. Rob says

    What you have described as a fantasy has built me a nice net worth

    The net worth you refer to is not real. A portion of it is. But a good part of it is cotton-candy nothingness that will be blown into the wind when the next price crash arrives. What good does it do you?

    You would like me more if I told you that your net worth is all real. That’s obvious. But would that be a kind thing for me to do to my friend? You still have options available to you to protect your net worth. I think it would be fair to say that a true friend would encourage you to educate yourself as to what the last 33 years of peer-reviewed academic research says about how stock investing works and then to take advantage of the good options that remain available to you before the next price crash takes them away.

    You see me as your enemy. I say that I am your friend. I say that anyone who helps you learn what the last 33 years of peer-reviewed academic research says is your friend.

    It is the Wall Street Con Men that you should be having doubts about, You don’t see me engaging in the word games that they regularly engage in, do you? What does that tell you about who is shooting straight here and who is just looking to put a few bucks in his pocket?

    The heads of the tobacco companies told their customers that smoking did not cause cancer when research came out showing that it did. That’s what the customers wanted to hear. So the heads of the tobacco companies were “saints” to those people. A lot of those people died early and painful deaths as a result of what the heads of the tobacco companies told them. Were the heads of the tobacco companies true friends to the people whose lives they destroyed?

    Sometimes a salesman for a product is not the most objective person to turn to for advice on when that product is worth buying.

    These are my sincere thoughts re this terribly important matter, Pink.


  7. Rob says

    Shall we talk fantasy? How about retiring way too early, with a poor level of savings, kids still at home and relying on home equity and a non-existent writing/financial advice business to bridge a gap, with no margin of error.

    Every word you put forward here is false, as you of course have known for 12 years now.

    But let’s put that to one side.

    Even if it were all true, it wouldn’t change what the last 33 years of peer-reviewed research says about Buy-and-Hold.

    Your problem is not Rob Bennett, Pink. Your problem is the 33 years of research. I am just the person who reported on that research and explored the implications of that research and thereby made you aware of the mistake you made.

    I didn’t trick you into making the mistake. That was the other guy. Please don’t shoot the messenger.


  8. The Pink Unicorn says

    Cotton candy nothingness??? So you happen to know all of my holdings?

    Also, you are talking in circles. If you are saying that valuation informed investors are holdings, , just like Shiller, then you are saying that valuation informed investors net worth is not real. You cant have it both ways.

    As to your own retirement description, I am justo sting what you described. You have been asked many times to clarify and update, but you have chosen not to. I am just commenting what you described when you went into retirement. Feel free to update us all right now as to what is different. Otherwise, we will all assume nothing has changed.

  9. Rob says

    I don’t know all your holdings, Pink. If you have a superior ability to pick stocks (as I think it would be fair to presume that someone like Shiller might at least have a realistic chance of possessing), it might be that you will not get burned. The research shows that stock prices are headed downward hard. So, unless you possess an ability to pick stocks that few possess, you are in trouble and you should be adjusting those net worth numbers downward so as not to fool yourself.

    As for “we will all assume nothing has changed,” the “we” you refer to is a group of Goon posters. Nothing EVER changes for Goon posters, no matter what they see. That’s what makes them Goons in the first place! Holy, moly!

    Hang in there, man.


  10. Evidence Based Investing says

    The calculator suggests otherwise.

    No is doesn’t.

    The calculator reports that in the scenario you described, you would have fully depleted your portfolio in year 31.

  11. Rob says

    Which means that your withdrawal rate was not even close to being safe, Evidence.

    A safe withdrawal rate is not a withdrawal rate that might leave you with one dollar in your portfolio when you are in your eighties. A safe withdrawal rate is a withdrawal rate that allows for some slack so that in the event we see an less-than-lucky returns sequence you still have a whole big bunch more than one dollar in your portfolio.

    If you did a study that showed that drinking a certain amount of alcohol was likely to kill you if you drove a car afterwards but that there was a one in three chance that you might end up paralyzed for life but alive, would you say that it is a “100 percent safe” (Greaney’s phrase) thing to do to drink that much alcohol and then drive a car?

    I would not.

    The data shows that a retirement that began in 2000 and that called for a 4 percent withdrawal had a 30 percent chance of surviving 30 years.

    Not safe.

    Not close.

    Studies that look into what is safe in a legitimate way would not be showing large negative portfolio balances at the end of 31 years. They would be showing lots and lots and lots of slack.

    What Greaney produced was an Insanely Risky Withdrawal Rate (IRWR) Study.

    It’s not the same thing.

    My take.


  12. Evidence Based Investing says

    You can adjust the withdrawal rates in the calculator to leave you what ever residual amount you want at the end of the period in question.

  13. Rob says

    Why not adjust it enough so that you have a withdrawal rate that is safe?

    Then you are not engaging in financial fraud and you don’t cause millions of failed retirements and you don’t end up going to prison.

    Make sense?


  14. Evidence Based Investing says

    Why not adjust it enough so that you have a withdrawal rate that is safe?

    You can.
    The calculator allows you to adjust the withdrawal rate to whatever you feel comfortable with.

  15. Rob says

    I feel comfortable with a withdrawal rate that is safe according to the last 33 years of peer-reviewed academic research in this field, Evidence.

    Does it work for you if, when I am posting at a board or blog and someone asks me what withdrawal rate I am comfortable with, I respond by identifying the withdrawal rate that is safe according to the last 33 years of peer-reviewed academic research in this field?

    I prefer doing that to committing the felony of financial fraud by pretending that I believe that the Old School safe-withdrawal-rate studies get the numbers right. The idea of going to prison has very, very little appeal to me.

    Does all that work from your end?



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