Set forth below is the text of a comment that I recently put to another blog entry at this site:
He [Scott Burns] says no such thing. What’s jumbled and confused is your basic reading comprehension. Here is what he said:
“Whether starting from current stock and bond yields or from more modest return expectations, the latest portfolio survival exercises show that withdrawal rates should be lowered to 3 to 3.5 percent.”
It couldn’t be any plainer. He says 4% is unsafe. You say 4% is unsafe. Yet you rip away, saying he is “wrong”. Why, because he didn’t mention your name? If this is how you treat people who agree with you, small wonder that yours is such a lonely quest.
The safe-withdrawal-rate is a data-driven concept, Miasma. It’s not something based on opinion. It’s not something you just make up in your head.
The safe-withdrawal-rate in 2000 was 1.6 percent. The safe-withdrawal-rate in 1982 was 9 percent. Are you saying that that is what Scott is saying? If you are, you are wrong.
Of course Scott should have mentioned my name. I am the person who discovered the errors in the Old School safe-withdrawal-rate studies. This was in May 2002, nearly ten years before theWall Street Journal reported on those errors. I think that it would be fair to say that that gives me a level of credibility on SWR questions that no one else possesses. No?
I am of course happy that Scott now acknowledges that the Old School SWR studies get the numbers wildly wrong. That is obviously a plus.
But is that all he is going to do?
How about writing a column urging that all the studies that are in error be corrected?
How about writing a column reporting on the first ACCURATE SWR calculator (The Retirement Risk Evaluator)? Wouldn’t that help the millions of people on their way to suffering failed retirements because they were taken in by the demonstrably false claims in the Old School studies that have remained uncorrected for the 12 years since the errors in them became public knowledge?
How about writing a column about how he was taken in by those false claims? There was a time when Scott was writing positive things about the Old School studies, no? He puts himself forward as an expert in this field by writing about it regularly, no? Why not tell people how he was fooled? Would that not be a helpful thing to do?
How about writing about the 12-year Campaign of Terror led by you Goons to punish anyone who dared to write honestly about this subject? The 12-year cover-up is the biggest case of financial fraud in the history of the United States. Do people not need to know about that?
How about writing about how big names in the field like Jack Bogle and Bill Bernstein and Larry Swedroe have known about the errors in these studies for years now and have participated in the cover-up rather than expose it? I have had many middle-class investors tell me that Valuation-Informed Indexing makes perfect sense but that they do not feel comfortable investing pursuant to a research-based approach so long as the “experts” in this field so adamantly oppose doing so. Wouldn’t it be a good idea for Scott to let his readers know that most of the “experts” in this field are engaged in a massive act of financial fraud? Do ethics not matter in the investing advice field?
How about writing about all the other things besides SWRs that the Buy-and-Holders got wrong? Buy-and-Holders don’t include valuation adjustments in ANY of their calculations. Does Scott not have a responsibility to tell his readers this?
How about Scott acknowledging to his readers that he was handed this huge story on a silver platter NINE YEARS AGO and at first showed great enthusiasm about it but then was intimidated into silence? Is that not relevant to a nation of people suffering from the worst economic crisis in U.S. history, a crisis brought on by the reckless and relentless and ruthless promotion of Buy-and-Hold strategies for 33 years after they were discredited by the peer-reviewed research?
On the morning of May 14, 2002, a column by Scott Burns pointing out that the Old School studies got the numbers wildly wrong would indeed have been much welcomed, Miasma. Twelve years down the road, it’s shockingly weak tea.
There are responsibilities that go with setting yourself up as an expert in this field. One of those responsibilities is to keep up with the peer-reviewed research. Nobel Prize Winner Robert Shiller published research showing that there is precisely zero chance of a Buy-and-Hold strategy ever working for even a single long-term investor 33 YEARS AGO. I think it would be fair to say that our good friend Scott Burns needs to pick up the pace of his reporting on new developments just a wee bit.
That’s my sincere take re this terribly important question, in any event.
My best wishes to you.