Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:
Just stating facts, Rob. Ty it sometime.
It’s a fact that the retirement study posed at John Greaney’s web site does not contain an adjustment for the valuation level that applies at the time the retirement begins, Sammy. Thousands of people have looked at the study and not one has been able to find a valuations adjustment in it. This despite 36 years of peer-reviewed research showing that valuations affect long-term returns.
It causes my Buy-and-Hold friends a great deal of pain to acknowledge this fact. But it remains a fact all the same. A related fact is that all of the other Buy-and-Hold retirement studies are designed in manner similar to that employed for the Greaney study; they don’t contain valuations adjustments either. The retirement calculator at my web site contains a valuations adjustment. But I don’t consider that a Buy-and-Hold calculator; I consider it a Valuation-Informed Indexing calculator.
I have not come across a single Buy-and-Holder who is willing to acknowledge publicly the need to include a valuations adjustment in a retirement study. I have known a good number who are willing to say this privately. And I have known a larger number who are willing to say it publicly one or two times and then retreat when they face the wrath of their Biy-and-Hold friends. And I have known a very large number who are willing to HINT that a valuations adjustment is needed. Even Jack Bogle, the King of Buy-and-Hold, does this. But it is an exceedingly rare thing to find a Buy-and-Holder who will openly declare in a public place that all retirement studies that lack a valuations adjustment are in error and are dangerous because of how they mislead the investors making use of them.
Why do you think that is?
Rob
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