Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“My guess is that Shiller’s rationalization is that he can do more good saying things the way he does because at least he gets the message out”
What good is getting a message out if it’s the wrong message? MY guess is that your guess is pure speculation based on nothing more than wishful thinking. And that Shiller is saying exactly what he means. You would have us believe that Shiller will come out after the crash and say “I knew this would happen, I just didn’t want to be unpopular. But I’m telling the truth now. Really.”
What Shiller is saying is not the wrong message to the 10 percent of the population that has changed its investing behavior because of what he says. Take somebody like Microlepsis at the Bogleheads Forum. He was influenced by Shiller’s work. And he was an amazing poster. There were times when they took polls to see who the most popular posters were and Microlepsis was always at the top. Microlepsis helped lots of people. He was a goldmine of good information for all of us.
When the Linduaerheads took over, Microlespsis was banned. So none of us get the benefit of his thinking any more. I hate that. I want to change that. That’s what this is all about.
Some people tell me “oh, if you had just kept your mouth shut about the errors in the safe withdrawal rate studies, the Bogleheads Forum would still be at Morningstar and Microlepsis would still be posting and we would all be better off. I don’t see it that way. I agree that it would be good if we were still hearing from Micolepsis. But I want us all to be able to post honestly re safe withdrawal rates and scores of other critically important investment-related topics. So I cannot play it the Microlepsis way, which is essentially the Shiller way.
I want Shiller (and thousands of others) to speak out more clearly and more firmly and more boldly. There are lots of people who try to be kinda sorta honest to a limited extent and get away with it. I want more. I want to provide millions of people access to honest and accurate safe withdrawal rate studies. I want to bring the economic crisis to a full and complete stop. I want people to be able to retire many years sooner while taking on only a fraction of the risk that they were taking on in the days before we opened the entire internet to honest posting.
I get what Shiller is doing. I don’t endorse it. I urge him to speak out more clearly. But I get why he plays it the way he does. Maybe he is right, you know? I don’t think so. But I could be wrong. I sure believe that he has done a huge amount of good playing it his way. I can’t say different re that much. There would be no Valuation-Informed Indexing if not for Shiller’s willingness to put his neck on the line more than anyone else alive on Planet Earth has put his neck on the line re these matters. That’s no small thing.
I think that after the crash Shiller will probably say that he was worried that something like what happened might happen but that he didn’t focus on it too much because he was not sure and he did not want to upset people. And given all the good that he has done, I think that a lot of people will accept that. It may be that there will be some who will not accept it. That worries me. I will be urging people to accept it. But I cannot say whether my urgings will win the day or not. That one is not my call.
We are all in this together. Why don’t we all make clear to Shiller that we will impose no penalties for him speaking out clearly? We all play a role in this, each and every one of us. And we all will obtain the benefits that will follow from us making it together to the other side of The Big Black Mountain. And we all will suffer the negative consequences of further delays. Rather than single out Shiller or anyone else, I see it as the constructive route to just do what we are capable of ourselves to push things a tiny notch in the right direction. So that’s what I try to do each day when I wake up and come downstairs to see what appears on my laptop screen to kick off the new day.
Does all of that not make at least a reasonable amount of good sense?
Rob
Are you the only one posting honestly?
I’m certainly not the only one who includes ANY honesty in his posts. But I think it would be fair to say that I have shown more of an unwillingness to post DIShonestly than anyone else working in this field.
Take Bill Bernstein. He said back in May of 2002 that you need to subtract two points from the safe withdrawal rate of 4 percent reported in the Buy-and-Hold studies for the effect of valuations when they are where they were at the top of the bubble. Subtract 2 from 4 and you get 2 — and that is indeed what the safe withdrawal rate was at that time. So Bernstein was engaging in a heroic level of honesty. Good for him.
But when he saw the controversy over my honest posting raging at the Bogleheads Forum, did he step forward and say anything? He did not. There were times when there was insanely abusive posting going on and he was in the room (we know because he posted on other topics) and yet he kept his mouth shut about the errors in the Buy-and-Hold studies. Huh? What the f?
There are millions of people who will be suffering failed retirements in days to come because of the 16-year cover-up of the errors in the Buy-and-Hold retirement studies (I am assuming here that stocks may continue to perform in the future at least somewhat as they always have in the past). Bernstein has been heroically honest. He has also helped the cover-up continue by failing to speak up when it was his responsibility to do so.
I have not been 100 percent honest. I kept my mouth shut from May 1999 through May 2002 re the errors in the Buy-and-Hold retirement studies. So I am 100 percent sympathetic to Bernstein’s situation (and, indeed, the situation of every person who works in this field today). But I certainly think it would be fair to say that I have gone farther than anyone else in publicly urging that we all pull together and bring a full and complete stop to the Campaign of Terror against our board and blog communities. I’ve got the scars all over my body to prove it! I mean, come on.
I am not the only one posting honestly. But as I have seen the damage that we all have suffered as a result of the dishonestly, I think it would be fair to say that I have been more open and strong in my calls for opening the entire internet to honest posting re the last 37 years of peer-reviewed research in this field than anyone else around. And it’s not a particularly close call!
Fair enough?
Rob
And you are the person who determines who is honest and what is honest.
I certainly determine it for me, Anonymous. I have looked at Greaney’s retirement study hundreds of times. I looked at it scores of times before I even dared to put forward my famous post of the morning of May 13, 2002. I have never been able to find a valuation adjustment in it. And I have watched as thousands of others have looked at it and not been able to find a valuation adjustment either. If I say that I believe that he included a valuation adjustment in his study, I am guilty of financial fraud. I might be prosecuted for the crime or I might not be. But I would have no gripe if I were under those circumstances. If I don’t see a valuation adjustment, I am required to SAY that I don’t see one when the question comes up.
Can I determine whether others are being honest? I am certainly required to report what I see. I cannot see into other people’s minds. So there are cases where people might be suffering from cognitive dissonance and I might take note that in an objective sense they are posting dishonestly while it might be that they are not fully aware of their own dishonesty. I think that has happened on lots of occasions. I mentioned Bernstein up above and how he points out the error in the Buy-and-Hold retirement studies in his book but then is quiet about it when you Goons are in the room because he is afraid of what you will do to him if he speaks honestly re that matter in a public place. I think he rationalizes. I think he says “oh, surely I have done my part, how many others would dare to point out the error in a book like I did? Surely I cannot be expected to do even more!”
Others will determine whether that is acceptable or not. Our entire society is suffering from the 16-year cover-up. So we will all have to pull together as a society in the days after the crash and decide how we want to deal with this stuff. I favor being as lenient as possible. I want to see us all pull together and I want to see us get all the nasty stuff behind us as quickly as possible. So I am going to urge that we all bend over backwards to appreciate the pressures that people like Bernstein were facing and perhaps put ourselves in their shoes and aim to be a little more forgiving than we would be in different circumstances.
But, yes, I am certainly the person who determines what is honest for me. And I do not see how it would be even a tiny bit honest for me to just act like Bernstein was being consistent when he pointed out the error in his book and then said not a word about it when you Goons were in the room at the Bogleheads Forum. If I were to pretend that that is complete honesty, I would be contributing to the cover-up, I would be encouraging it. It’s because too many of us who see Bernstein’s dishonesty (and the dishonesty of lots and lots of others) that the dishonesty continues. If we all pointed out the dishonesty the first time we saw it, the Buy-and-Hold retirement studies would have been corrected long before I came on the scene. So I think it would be fair to say that those who came before me and kept quiet hurt us all. They made the dishonesty worse and thereby hurt each and every one of us, including you Goons.
Does all of that not make good sense?
Rob
“I have looked at Greaney’s retirement study hundreds of times… I have never been able to find a valuation adjustment in it.”
No one, including Greaney, ever said it had a valuation adjustment. So one look should have sufficed. Why would you keep looking, hundreds of times, for something that no one ever said was there? That’s just silly. And stupid. And entirely dishonest.
If the study does not contain a valuation adjustment, there is zero chance that it reports the safe withdrawal rate correctly. There’s 37 years of peer-reviewed research showing that valuations affect long-term returns. The long-term return obviously determines the safe withdrawal rate.
A failed retirement is a serious life setback.
Not this boy, you know?
I wish you all good things.
Rob