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:
Again, you try your typical diversionary tactic. You cannot support any of your comments with facts.
The bottom line remains this:
1. There has never been a successful case of VII implementation, including your failed track record.
2. Numbers buy and hold strategies have had long track records of success
3. There has never been a 30 year period in which a 4% withdrawal rate has not worked.
The biggest joke is that your plan (which you have listed hundreds of times on your website) is that your entire retirement plan relies on a big stock market crash, followed by having your name splashed on the front page of the New York Times, those that don’t agree with you all going to prison and John Bogle helping you cash in on a$500 million windfall of settlement payments you think that unnamed Wall Street people owe you.
If you answer the question above, we will know where we stand, Sammy.
Of course the question is rhetorical. I know the answer. You do not divide by two.
If the market is efficient, there is no need to divide by two. If the market is efficient, Buy-and-Hold is the ideal strategy. If the market is efficient, the safe withdrawal rate studies are accurate.
But if valuations affect long-term returns, the safe withdrawal rate studies are in error and the market is not efficient and all investors need to divide the numbers on their portfolio statements by two to know the true, lasting values of their portfolios.
Shiller’s 1981 findings truly were “revolutionary,” just as he said. Shiller deseved his Nobel prize. There was a time when we did not know that we need to divide by two when stocks are priced at two times fair value. Now we do. At least we today know this intellectually. 90 percent of us still do not accept it emotionally.
We’re working on it! We’re working on it!
We are as a nation working our way through a process that will take us from Buy-and-Hold to Valuation-Informed Indexing. It’s scary for Buy-and-Holders to let in that their portfolios are only worth one-half of the amount that they have thought they were worth. But the benefits of letting in that research-proven reality are huge. So we will get there. It’s just a matter of time.
My job is to make the transition go as smoothly as possible for every single person involved. I cannot deny the reality that we all need to divide by two, no matter how uncomfortable it makes people feel to hear that. But I need to do what I can to help make the medicine go down as easily as possible. That’s what I always try to do.
I hope that helps a small bit, my long-time Buy-and-Hold friend.