“Shiller Is a Liar in Some Circumstances, Like All the Humans.”

Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

Of course Shiller holds back (lies) because the goons got to him as well. Right?

Shiller is human like all the rest of us. He wants to be liked. He wants to be respected. He doesn’t want to hurt the feelings of his fellow humans. I would like to see Shiller advance a clear and simple statement that: “the Buy-and-Hold retirement studies are in error and are likely to cause millions of failed retirements unless they are correctly immediately.” That would be helpful.

He’s certainly holding back by not advancing that statement. Is he lying? I think so. He is telling the sort of lie that I told from May 1999 through May 2002, when I knew about the error in Greaney’s retirement study and I didn’t speak up. It’s a lie of omission, not a lie of commission. But if we were looking at any other field of human endeavor, we would certainly call that a lie . It’s hurting lots of people in a very serious way. The intellectual case for saying that the safe withdrawal rate studies are in error is rock solid. Why not say it?

The full reality, of course, is that Shiller has done more than any other human being alive to get us all to a place where none of us will need to lie about these matters ever again. He has told lots and lots and lots of truths about stock investing and he has demonstrated a lot of intelligence and a lot of courage and a lot of love in doing so. So, yes, he is a liar in some circumstances, like all the humans. But he is also a great man and, while calling him a liar out of honesty, we should be sure to emphasize that point in charity as well.

Does that answer your question? Shiller is like all the rest of us. I have done the same sort of thing. Bogle has done the same sort of thing. Pfau has done the same sort of thing. Bernstein has done the same sort of thing. Kitces has done the same sort of thing. Richards has done the same sort of thing. Shultheis has done the same sort of thing. And on and on and on and on and on.

Is it helping us to continue doing this thing, to continue pretending that there is some magical mystical way in which it adds something to the world for us all not to exercise price discipline when buying stocks, that it is okay to tell investors not to do so, to suggest that it might be a mistake to engage in long-term market timing? I sure cannot see how that could be so. I believe that every last one of us will be relieved when we all make it to the other side of The Big Black Mountain, when we all feel 100 percent free to speak openly and clearly and honestly about our views re stock investing just as we do when talking about hundreds of other matters that affect all of our lives.

The problem that we face is that the penalty that the Buy-and-Holders impose on those who speak honestly about the last 37 years of research is so severe and the reward for doing so is so slight that few of us can work up the courage to give voice to obvious truths. And of course the fact that so few do it makes things go a lot worse for the few who do. Once a certain percentage of the population is speaking honestly about how stock investing works, it will become the hip thing to do and then everyone will want to get in on the act and we will achieve advance after advance after advance. That will be super.

That’s obviously not where we are today. We need the penalty for posting honestly to be diminished and we need the reward for posting honestly to be enhanced. If Shiller is right, the constant promotion of Buy-and-Hold strategies is going to cause horrible life consequences for millions of people in days to come. Telling someone that “the safe withdrawal rate you are using was calculated in error and will probably cause your retirement plan to fail” is today upsetting enough to cause that person to vote in favor of banning the person saying that from an internet discussion board. But seeing the money in one’s retirement account drop by 50 percent changes things. I think that we are going to see a change in public attitudes when that happens.

I think that people are going to want to know what happened to their retirement money, they are going to want to know why their lives have been destroyed. I can tell them. That’s my job. I am a journalist and this is a big story. So I will tell them. And then we will have that national debate that I have been saying should have been launched many years ago. And we will sort out all these questions as a people.

I hope that we will engage on these questions in honesty. That’s critical. I also hope that we will engage on these questions in charity. That’s equally critical. I am reasonably confident (but not entirely so) that we will manage to take things to a good place, a place that each and every one of us wants to go to deep in our hearts.

I will be joking around with Robert Shiller in those days. I will say “Robert, you were kind of a liar re that safe withdrawal rate question for all those years, were you not, my good friend?” And he will say in return “Touche’, Rob, but no more so than you were from May 1999 through May 2002, right?” And I will laugh and we will embrace and we will both get back to the business of helping the flawed but generally good humans to overcome the Get Rich Quick urge that resides within all of us and to invest their retirement money more effectively.

Yes, Robert Shiller is a liar. Because he is one of those darned flawed humans. He is also a great man, one who has done more to advance our understanding of how stock investing works that any other human alive on the planet today. So I for one am willing to cut him a tiny bit of slack.

I hope that helps a small but, dear Goon friend.

Rob, Good Friend of the Great Liar Robert Shiller