Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“When my right to post honestly is recognized, EVERYONE’s right to post honestly will be recognized.”
You are the only one widely banned. I don’t know of anyone else in a similar circumstance.
I am the only one who played it the way that I played it, Anonymous. I took a position of “I am going to post with complete honesty regardless of any intimidation tactics, this stuff is too important to do anything less.” No one else does that. Everyone else looks for some sort of compromise that you Goons can live with.
So Jack Bogle says “Reversion to the Mean is an Iron Law of stock investing,” which means that there is zero chance that the safe withdrawal rate can be the same number at all times. If Reversion to the Mean is an Iron Law, then the safe withdrawal rate must be a lower number at times when valuations are high and when the effect of Reversion to the Mean is going to be strong. So Bogle gets us halfway there. But he doesn’t say “therefore, the Buy-and-Hold retirement studies should be corrected before they do more harm.” That’s the part that I leave in and that he cuts out. That’s the part that gets me banned.
And Bill Bernstein says (I am paraphrasing): “When valuations are where they are today, you need to subtract 2 point from the ordinary safe withdrawal rate of 4 percent.” Again, that gets us halfway there. I supply the other half of the story. I say: “So we need to warn people of the dangers of using the uncorrected 4 percent withdrawal rate reported as safe in the Buy-and-Hold studies so that we don’t cause even more unfortunate people to suffer failed retirements.” It’s that fuller and clearer and firmer and more simple form of honesty that gets me banned.
And Wade Pfau says: “The information contained in the Buy-and-Hold retirement studies is not the information that people planning retirements are looking for and it could be dangerous.” He leaves out the part about how it is financial fraud to fail to correct the errors so that more people can be taken in and so that more money can be made taking people in. And he leaves out the part about how the death threats are a sign of desperation and inappropriate and are going to get people sent to prison in the days following the next price crash.
Einstein’s definition of insanity was “doing the same thing over and over again and expecting different results.” We have been playing it this half-honest/half-dishonest way for 36 years now. Where has it gotten us? It brought us an economic crisis. It brought us political instability. It brought us the destruction of many fine discussion boards and blogs. It brought us upcoming prison sentences for you Goons. Something tells me that the half-dishonest/half-honest approach to investing advice has not been working out so hot.
So I play it a different way. I aim for COMPLETE honesty re safe withdrawal rates and re scores of other critically important investment-related topics. That’s the future, Anonymous. We have learned a lot of important stuff over these past 15 years because I elected to play it that way. I think it would be fair to say that we will be learning a lot more over the next 15 years. My guess is that we will do better over the next 15 years than we have over the past 15 years. The good stuff here is 50 times more good than the bad stuff here is bad.
The three people mentioned above and THOUSANDS of others very, very much want to join me in doing fully honest work in this field. First of all, they want to help people; that’s why they got into this field in the first place. And second of all, they want to make money. And there is a mountain of money to be made putting forward fully honest, research-backed investing advice. So, no, I am the first person to offer fully honest takes re the last 36 years of peer-reviewed research in this field but I am certainly not going to be the last. Once my right to post honestly is recognized, there will be an opening of the floodgates. I know that. You know that. Everyone watching knows that.
The problem is the transition. The many good and smart people who have been less than fully honest for 36 years now don’t want to go to prison. They don’t want to be sued civilly. They don’t want to see their reputations damaged. What to do, what to do?
I am open to anything that anybody comes up with that doesn’t require me to go to the wrong side of the felony line. We can put out articles pointing out how many of us suffered from cognitive dissonance because this new stuff is so “revolutionary” (Shiller’s words). We can point out the social pressures that many of us experienced because our readers and our clients want so much to believe that the numbers on their portfolio statements are accurate. We can work out some sort of amnesty program to be passed by Congress. We can do all sorts of things.
Our problem is that none of these things can be done by me alone. They are all things that can only be done by us working as a community. Others are afraid to join in because as of today they feel that posting with full honesty is career death. Again — What to do, what to do?
I am going to continue doing what I am doing. I am incapable of saying that I believe that Greaney’s retirement study contains an adjustment for the valuation level that applies on the day the retirement begins. I just cannot go there. So I am going to continue doing what I am doing today.I love my country. I believe that we are a good and smart people. I believe that we will all pull together following the next price crash. Then things that seem so difficult today will seem easy to all of us.
I obviously wish that it wouldn’t take a deepening of the economic crisis to get us there. Obviously. But it takes what it takes, you know? I am not Superman. The transition from Buy-and-Hold to Valuation-Informed Indexing is a big move. It is not something that can be achieved by one person. We are going to need at least 10 people to work up the resolve to stand up to you Goons. Once we do that and show people that it is safe to speak out honestly, we are going to see good stuff piled on top of good stuff piled on top of good stuff piled on top of good stuff and I am 100 percent confident that not a one of us will ever look backwards.
We all know where we need to take things. Now we just need to work up the courage to let things go there. Valuations affect long-term returns. We have all known that for 36 years now. Now we need to get down to the business of telling every investor alive on Planet Earth WHAT THAT MEANS in strategic terms.
I hope that helps a bit, Anonymous.