Valuation-Informed Indexing #183 — What Others Around You Believe About Investing Affects What You Believe About Investing

I’ve posted Entry #183 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called What Others Around You Believe About Investing Affects What You Believe About Investing.

Juicy Excerpt: At the close of the third day of discussions, I put forward a post saying that I now saw that I was wrong and apologizing for the trouble I had caused. My views on safe withdrawal rates have since been confirmed by some of the biggest names in the field. So I am often asked today what the story was with that crazy apology. Did I really believe that I was mistaken? Was I pretending? Or lying? What the heck was going on?

I still have good recall of the confused thoughts that were jumping around in my brain that night. I was confident that the studies were in error. It just isn’t possible that a study that doesn’t include a valuation adjustment could get the numbers right given that we know that valuations affect long-term returns. But logic wasn’t all that was in my head. There were lots of people whom I liked and respected who were very, very, very sure that the studies were just fine and that I was the one who was in the wrong. When you hear numerous people saying the same thing, it gives you pause.


  1. Anonymous says

    Rob, you used to post regular updates on your anti-Wade email campaign – responses, phone calls, etc. Yet we’ve heard nothing in months. Can we get updates on your recent correspondences and advances in this area of your career?

  2. Rob says

    It’s a pro-Wade campaign, not an anti-Wade campaign. When I am able to post honestly at every board and blog on the internet, so will everyone else. That will include Wade.

    I keep all the responses I receive to my e-mails in a file. I will post reports on them at the blog when I am caught up with the other stuff. In recent months, there have been a ton of reports on Goon-related business. I give that stuff first priority. My second priority is to stay up to date with entries of the Value Walk column. Third comes reports on the Wade stuff.

    I haven’t had any of those for some time. And it doesn’t look like I will be able to get back to them real soon. But there are lots of responses to report on when space opens up. I expect to get to those sometime early in 2015.

    I hope that helps a bit, Anonymous.


  3. Y says


    What else you got to do with your time? You’ve got no life, no job, no other interests. Yet, you have your rants planned out until2015?

    Lol. At least you gopive me a laughs. Lol

  4. Anonymous says

    In recent months, there have been a ton of reports on Goon-related business. I give that stuff first priority.

    I see. Yes, I guess with matters developing so quickly on the Goon front, there’s really no time for Wade related updates. There are only so many hours in the day, after all.

  5. Rob says

    The Goon stuff is the only thing holding us back, Anonymous.

    Take the Goon stuff out of the picture and we would all have been making the transition from Buy-and-Hold to Valuation-Informed Indexing back in May 2002 and instead of enduring an economic crisis today we would be enjoying the greatest period of growth in U.S. history. That sounds good to me.

    So, yes, I think that making everyone aware of the Goon stuff is key.

    There are lots of people who go out of their way to AVOID talking about the Goon stuff. They think it is ugly. They think it is smelly. They think it is embarrassing. They think it is shameful. They think that investing should be about numbers. So they talk about numbers. They don’t talk about death threats. They don’t talk about demands for unjustified board bannings. They don’t talk about tens of thousands of acts of defamation. They don’t talk about threats to get academic researchers fired from their jobs.

    That explains why it was possible for Wade Pfau and I to co-author research showing millions of people how to reduce the risk of stock investing by 70 percent. It shouldn’t be possible to do that three decades after Nobel Prize Winner Robert Shiller published the research making it possible. Someone else should have published the findings discovered by Wade and I a long, long time ago.

    Why didn’t they? They didn’t because they think it is yucky to investigate this nasty Goon stuff. We become Goons when we give in to our Get Rich Quick urge. We ALL have a Get Rich Quick urge within us. So we are all always at risk of becoming Goonish. And there is a lot of money to be made telling us that it is just fine to give in to that Get Rich Quick urge, that there is some mystical, magical research showing that this will be the first time in the history of the market when heavy promotion of the Buy-and-Hold strategy will not cause an economic collapse. Yeah, sure.

    Goonishness is where it’s at, Anonymous.

    It’s embarrassing to us for us to recognize that we all possess a Get Rich Quick urge. So perhaps talking about Goonishness isn’t the easiest way to turn a quick, smelly buck in this field.

    But the Get Rich Quick urge is responsible for 70 percent of the risk of stock investing. So telling people how to overcome their Get Rich Quick urge (their inclination to believe advertising slogans telling them that we have entered a fantasy world in which Buy-and-Hold “strategies” might for the first time in history work for one or two long-term investors) helps people in a very, very, very big way.

    I like making money. But I like making money helping people to achieve financial freedom earlier in life a whole big bunch more than I like making money pushing smelly Get Rich Quick garbage that destroys millions of middle-class lives.

    You do your thing, I’ll do mine.

    I believe that you are going to have to find someone else to help you tell lies about the numbers that millions of people have used to plan their retirements.

    In any event, I wish you all the best that this life has to offer a person, my long-time Goon-talking friend.


  6. Rob says

    Did you know 1990 was the year the P/E 10 stopped working?

    If you and the other Buy-and-Holders had confidence in the arguments made in the article, there never would have been a single death threat or a single demand for a single unjustified board banning or a single act of defamation or a single threat to get a single academic researcher fired from his job.

    If you and the other Buy-and-Holders lack confidence in your strategy, why should I — the lead critic of Buy-and-Hold alive on Planet Earth today — possess confidence in it?

    I’m with you. I believe that Buy-and-Hold cannot be defended in civil and rational discussions held among people educated about what the last 33 years of peer-reviewed research says.

    And you know what? The fellow who wrote the article has his doubts too.

    He doesn’t know about everything that the Buy-and-Holders have done over the past 12 years. But he knows enough to know that it is a problem. Bret Arends talked about The Great Cover-Up in an article published in the Wall Street Journal. This fellow probably reads the Wall Street Journal. Yet he says nothing about The Great Cover-Up in his article.

    I wonder why.


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