Yesterday’s blog entry reported on an e-mail that I sent to Academic Researcher Wade Pfau on May 2, 2011. On May 16, 2011, Wade put a post to his blog endorsing the idea of permitting honest posting on safe withdrawal rates. He stated: ““Retirees now frequently base their retirement decisions on the portfolio success rates found in research such as the Trinity study. Studies such as those are fine for what they accomplish: they show how successful different withdrawal rate strategies were in the historical data. But it must be clear that this is not the information that current and prospective retirees need for making their withdrawal rate decisions.” I posted a comment to Wade’ blog expressing the view that: “This is the most important paragraph ever written about retirement planning, Wade.” I sent an e-mail to Wade that day. The text follows.
Wade:
Congratulations and thanks on your amazing SWR post!
I have gone into a bit more detail re my reaction in a comment that I just put to your blog
I would like to write this up at my blog tomorrow. Please let me know if you would prefer that I hold off or if there are any comments from your end (in addition to those that I can pull from your blog entry)
that you would like me to include in the write-up.
What a long, strange trip it’s been!
Rob
Wade responded later the same day. He thanked me but said: ” I don’t think I really said anything particularly new though. It is the kind of thing you’ve been saying for years.”
Re the issue of whether the time was ripe for me to write about his study, he said: Sure, it is okay to discuss the blog, paper, etc. in your blog now. But, perhaps, you do not need to emphasize my name so much, or even at all. It is okay to just refer to it as “a new academic study” etc. I do not wish to antagonize the “goons” too much, as I would like to reach a wider audience than them anyway, and I don’t want them working behind the scenes to derail me.”
He added that: “I did warn the editor of the Journal of Financial Planning that they may receive some “hate mail” after I mentioned your name in the safe savings rate paper. Maybe it didn’t happen after all, but it won’t be a big problem even
if it does happen now.”
Finally, he reported that Dan Moisand had just been elected to join the advisory panel of the Journal of Financial Planning. He noted that Dan had expressed an interest in writing a column for his “Financial Advisor” column on safe withdrawal rates and valuations.
Hi Rob,
I forgot that I was still saying things like this even 2 weeks after the initial incident.
This was more than a year ago now, but I am thinking that I was just trying to explain politely to you that I’d rather have you quit writing about me, or at least stop using my name. I suppose that I figured the only way you might understand why is if I explained it in terms of your favorite conspiracy theories.
I will make one more attempt at a reality check for you. You go on and on about how I allegedly lack personal integrity because I allowed the Goons to threaten me into silence.
The reality is that though I may have for a brief moment got a bit too caught up in YOUR drama, I do not have any fears about the Goons.
The reality is that you are causing me 1000x more career damage than the Goons ever could have by filling Google with so much nonsense about me, and sharing embarrassing private details such as my overly ambitious journal submission strategies, etc. Those in particular are highly private. People don’t publicly share where they submit articles to unless those articles are accepted. You’ve violated my trust in so many countless ways and yet you still proclaim to be my friend.
And the further reality is that if I *did* lack personal integrity, I could have made this all stop just by saying the meaningless sentence you want so desperately to hear: “I think the errors in the traditional safe withdrawal rate studies must be corrected by using Rob’s analytically valid method.”
But I don’t believe that. I do not believe you have offered a valid correction to the safe withdrawal rate question. And I believe that retirement income strategies go much further than the question of a safe withdrawal rate. And so that is why I’ve had to endure your ongoing harassment for months on end now.
Usually I can figure out the Rob-logic behind what you are thinking, but I really don’t know how you think you come out of this whole episode looking like the good guy. I guess it is because you think you are saving my soul and putting me back on the path of righteousness, or something, huh? If only you had the power to do a little bit of self reflection…
Now that the whole email history is on display, we have the reminder of how angry you got at the very beginning when I referred to you as dogmatic. Yet, look at the way you’ve treated me for disagreeing with you on something which you don’t even understand. You quote numbers from JWR’s statistical work, but I’m not sure if you can even distinguish a mean from a median. So how can you be sure his work is right? I don’t know either, as I never did get around to digging into it, and I doubt I ever will now. But I’m not sure how a properly calculated lower confidence bound for a 2000 retiree could have been higher than zero.
Rob, suppose the stock market does drop 65% as you are expecting. It might happen, who knows.
Step 1: Stock Market Drops 65%
Step 2: ??
Step 3: Rob wins $500 million settlement from the Goons, the Goons are sent to prison, the investing public learns about and adopts VII.
What is Step 2? There isn’t one. You will still be in the same position as you’ve been in for the last 10 years. Why didn’t something happen for you after the 2008 financial crisis? You are like the guy who keeps predicting new ends for the world as each previous prediction date passes by.
That is why I’m telling you, from one human being to another, that it is time to move on. You are a smart guy, and you could use your talents for something productive. While warning people about the 4% rule is helpful, the way that you go about doing it is rather “catastrophically unproductive” as one wise fellow said to you years ago. I provide a loud voice that is critical of the 4% rule, and so spending your days assassinating my character is counterproductive to your underlying cause. So perhaps you can start fresh with a new issue of social import that carries less baggage for you. What happened in the past is a sunk cost, but you still have a chance to turn things around and start afresh today. And you can do all of this while still being honest and true to yourself.
Thanks much for taking time out of your day to post your comment here, Wade. You help us all in a very big way by doing so.
There are no “sides” here. We are all on the same side. Bogle. Shiller. Lindauer. Greaney. You. Me. Every blessed one of us.
Sometimes our perceptions of things cause us to not see that reality for a time. The PRIMARY purpose of my work is to help everybody see that core reality clearly and plainly and deeply.
I cannot do the job by myself. I have the power to call up all sorts of words. But all of the words that I call up come from a person who possesses my particular background and my particular life experiences. So they are limited.
It helps when someone from “the other side” makes a genuine effort to tell THAT story. You have done that here. So you are helping a lot.
I do NOT mean to say that you are helping only your side. You are helping MY side. You are helping BOTH sides. You are helping everyone. You are helping out in a big way.
I thank you.
I applaud you.
I extend the hand of friendship to you.
Rob
I did not respond to the points you made in the comment you posted earlier this week. My feeling was that you deserved to have the floor to yourself and it wouldn’t be right to partially drown out your words with my own or to make you feel that you needed to get involved in a back-and-forth (which you indicated that you did not want to get involved in).
I do intend to respond to the points you put forward in that comment. I will do so in a separate blog entry or two that will appear after I am finished with the blog entries reporting on our e-mail correspondence.
I will do things differently this time. In this comment, I see lots of words that seem to me to demand an immediate response. So I am going to respond point-by-point.
One way in which I will follow the same practice that I followed earlier this week is that I will post your comment as a separate blog entry this afternoon.
Please understand that I would be happy if you responded to as many of these blog entries as you like with comments offering your side of the story. In any case in which you do that, I will post your comment as a separate blog entry so that it obtains roughly the same positioning as my own blog entry reporting on the same e-mail exchange.
If you would prefer that I not comment on your words here until the other blog entries have appeared, please let me know and I will hold off until then. Otherwise, I will go with what appears to me to be the right thing to do and will respond point by point below.
Rob
I forgot that I was still saying things like this even 2 weeks after the initial incident.
I get the sense that you forget that you were saying thing like this months BEFORE “the initial incident.” The full truth is that there was no one incident that changed you, Wade. You were ALWAYS afraid of the Goons. That was so going back to the day you put your first comment to my blog.
You posted on the Bogleheads Forum on the same day you put that comment to my blog. Your comment to my blog was kind and respectful and admiring of my work. Your comment to the Bogleheads Forum was defamatory. Huh? Why the crazy difference in your assessment of my contributions in two comments advanced by you ON THE SAME DAY.
I know the answer to this because you told me the answer when I called you on it. You apologized to me and posted a correction at Bogleheads. You explained to me that the reason you posted the defamatory comment was that you feared what the “leaders” of the Bogleheads Forum would do if you posted honestly in what you characterized as “a hostile environment.”
This is a problem. Wade. This is the core problem.
The Bogleheads Forum is used by people seeking to learn about what the academic research says about how they should invest their retirement money. There is no room at such a place for death threats and defamatory comments and smear campaigns and unjustified board bannings and so on. None of that stuff belongs.
You didn’t bring that stuff to the Bogleheads Forum any more than I did. BUT YOU LET IT AFFECT WHAT YOU SAY THERE. I did that too to a certain degree. But less and less as time went so. As I saw how big the problem was, I became less and less willing to post in such a way as to win the favor of the Goons. I want my words to help people trying to learn how to invest. I cannot do that if I am always worrying whether my words are going to get the seal of approval from Mel Lindauer.
You shouldn’t have to live in fear of Mel Lindauer, Wade. No one should.
Rob Bennett shouldn’t live in fear of Mel Lindauer. Wade Pfau shouldn’t live in fear of Mel Lindauer. John Bogle shouldn’t live in fear of Mel Lindauer. Bill Bernstein shouldn’t live in fear of Mel Lindauer. Larry Swedroe shouldn’t live in fear of Mel Lindauer. Mike Piper shouldn’t live in fear of Mel Lindauer.
None of us can do our best work for so long as we live in fear of this Goon. We must join forces and take action to deal effectively with the Mel Lindauer problem.
Oops! I’ve gone and said something “controversial” once again, haven’t I?
You know what? We cannot solve the problem until we first work up the courage to talk about the problem.
Mel Lindauer is the problem.
Mel and the people who post in “defense” of him.
Anyway, you didn’t start living in fear on the day that Greaney threatened to get you fired from your job. You were afraid of Mel and John and all the other Goons when you first contacted me. You’re in good company. We are ALL afraid of these people, I have never come across one person who is so filled with courage that he is not at least a little bit afraid of them.
So long as we stick together, there is not a thing that any of them can do to hurt any of us. It is because we show our fear of them that they possess the power they today possess. Like all bullies the world over, they melt when confronted by people of courage and decency. So that’s the way we need to take it.
There was not one incident that made you afraid to publicly tell the truth about your beliefs re stock investing and you are playing a game (perhaps with yourself as well as me) when you suggest that there was. I know different, Wade. It’s not one incident we need to discuss. It’s the entire “hostile environment” that Mel has created at that board that we need to discuss and overcome.
Once we do that, none of these other “problems” are problems anymore. We are never going to agree on every investing issue. That’s good news. We can both learn from talking over our differences and lots of others listening in can learn from hearing us talk over those differences. But we cannot generate fruitful discussions so long as we are afraid to speak frankly and plainly and boldly and honestly.
Neither of us (and there are many, many, many other good and intelligent people in the same camp) are going to be able to do that until Mel Lindauer and those who have posted in “defense” of him are removed from the Bogleheads board. We should all be united in our belief that his removal is Job #1.
I don’t want you to be afraid to tell us what you really think, Wade. I don’t want you living in a “hostile environment.” No academic researcher can do his best work living in a hostile environment. I want to free you(and lots and lots and lots of others) to do your best possible work. That’s the point of all this.
Rob
I am thinking that I was just trying to explain politely to you that I’d rather have you quit writing about me, or at least stop using my name.
But why?
Are you ashamed of the work you have done?
I want to have people shouting from the rooftops about your good and important work. I want to see a ten-part series about your work published on the front page of the New York Times. I want to be the first to shake your hand after you win the Nobel prize.
And you are concerned that your name appears too often at the A Rich Life blog?
There’s a disconnect here, Wade.
I say that you have nothing to be ashamed of about your finding that Valuation-Informed Indexing provides far higher returns than Buy-and-Hold at greatly reduced risk. The Goons obviously pretend to adopt a very different viewpoint on the matter. You have in recent days come to favor the Goon position, you have come to favor the idea of hiding your light under a bushel.
I am right about the value of your work, Wade. You are wrong about it. At least you are wrong when you pretend to agree with the Goons that it is nothing special.
I am sure.
Rob
your favorite conspiracy theories.
Excuse me?
Rob
I will make one more attempt at a reality check for you.
I detect a measure of sarcasm or at least annoyance in these words, Wade.
Allowing your negative emotions to evidence themselves in the words of your comments does not help our efforts to communicate in a productive manner re these important matters.
You need to try to rein that stuff in to the greatest extent possible. We all do.
Rob
You go on and on about how I allegedly lack personal integrity
There’s obviously a personal integrity problem when you put up a post at your blog in “defense” of Greaney, Wade.
Does it help if I note that you are in good company re this aspect of things?
Bogle is one of my heroes. I rank Bogle as the second most important investment analyst of all time (second only to Shiller). Bogle permits his name to be used to promote a board at which a good number of Lindauerheads post daily. I think it would be fair to say that any integrity problems you possess are possessed by good old Saint Jack in spades.
Does that make you feel better?
How about Rob Bennett?
I learned about the errors in the Old School safe withdrawal rate studies when I read Bogle’s book. This was in the Spring of 1995 (I believe) or (possibly) 1996. I began posting regularly to the Motley Fool’s Retire Early board in December 1999. I obviously knew about the errors in Greaney’s study on the day I first posted (that was in May of 1999). I gave Greaney’s SWR study a five-star review when it appeared in report form at Soapbox.com. I did more to draw people to Greaney’s work than anyone else alive on Planet Earth by putting forward the posts that built the Retire Early board to the most successful in the history of the Motley Fool site at that time. I put forward hundreds of posts praising Greaney’s work either directly or indirectly.
NOW do you feel better?
I wasn’t wrong to post in support of Greaney or his study. I continue to believe that his site had great value (it was the first site offering an in-depth look at the Retire Early question) and that his SWR study advanced the ball in a very significant way. I WAS wrong not to post my honest views from the very beginning. I behaved in a way that a person of integrity does not behave, to the lasting damage of those of my fellow community members who were taken in by Greaney’s demonstrably false SWR claims and are today in the process of suffering failed retirements as a result.
I can’t change that today, can I?
No more than you can change things you have said or Bogle can change things that Bogle has said or Greaney can change things that Greaney has said.
If I had a magic wand, I would wave it in the air and take us all back to May 13, 2002 (or perhaps to May 1999) and we could do it all over, this time behaving with the integrity for which we would like to become known. I don’t have a magic wand, Wade. You don’t have one either. We are going to have to make the best of the circumstances facing us. There’s no other way.
You have behaved at times in a manner not appropriate for a person of integrity. That’s a stone cold fact, my good friend.
Now —
You ALSO showed a lot of guts when you went into the lion’s den and apologized for your defamatory comments about me knowing that there were Lindaurheads in the room when you did it. That was integrity!
And you ALSO showed a lot of guts when you published research showing that Valuation-Informed Indexing has provided better results than Buy-and-Hold in 102 of the 110 rolling 30-year time-periods now in the historical record. That was integrity!
And you ALSO showed a lot of guts when you agreed to send an e-mail to the authors of the Trinity study telling them that they needed to correct the errors in their study before they did even more harm to even more middle-class investors. That was integrity!
You’re not an angel, Wade. You are one of the flawed humans. I hate to have to be the one to break the bad news to you.
If you are in need of some encouragement, I can tell you that being one of the flawed humans does not need to be so terrible a thing once you get the hang of it. The flawed humans have done some amazing things. A flawed human named “Bogle” brought us index funds and changed the history of investing by doing so. A flawed human named “Shiller” brought us research showing that valuations affect long-term returns and changed the history of investing by doing so. A flawed human named “Bennett” came up with the idea of creating a Stock-Return Predictor so that we would all know what stock allocation we should be going with when stocks were selling at all of the various price points possible. Flawed humans have done some very, very cool things.
A flawed human named “Pfau” once published some amazing research that showed us that considering the price at which stocks are selling before buying them lets us reduce the risk of stock investing by close to 70 percent. Wow. People are going to be talking about that particular flawed human for many, many years to come. What a heroic flawed human!
Unless he messes up. Unless he turns to the dark side. Unless he starts putting up posts “defending” Greaney as his way of winning the favor of the Goons.
Unless he does something cosmically dumb like that.
But why would he? Why would someone who is in ordinary circumstances so smart choose ever to engage in behavior so pathetically stupid? It cannot possibly happen. Can it?
The both sad and exciting reality here is — Only Wade Pfau knows for sure what Wade Pfau is capable of doing in the circumstances that today confront Wade Pfau. That’s the way it works down here in the Valley of Tears, Wade. I cannot change it for you. You and I both know what you need to work up the courage to do. But I don’t make the call.
You make the call.
I will pray for you.
Rob
The reality is that you are causing me 1000x more career damage than the Goons ever could have by filling Google with so much nonsense about me
My intent is to get your name on the front page of the New York Times and to see that you are awarded the Nobel prize that you have already earned fair and square with your work product, Wade.
That doesn’t happen until I get the internet opened up to honest posting on safe withdrawal rates and many other critically important investment-related topics. Do you have any bright ideas as to how I might pull that off without reporting honestly on the day-to-day developments of our little saga?
We know how stock investing works today. With Shiller’s research and your research and my explorations of the implications of Shiller’s research and your research, we know today how to reduce the risk of stock investing by 80 percent. That part of the job is done. We know that millions of middle-class investors hunger for the insights we have generated together. I have spoken to thousands of them over the past 10 years and I hear the same basic story over and over and over again. People love the idea of following research-backed strategies. People love the idea of obtaining much higher returns at greatly reduced risk. So it’s clear sailing re that one too.
There’s one hangup remaining. Most investors place their faith in the experts. Most investors don’t have the time to study this stuff for themselves. So they go by what the big names in the field tell them. The big names push Buy-and-Hold, the precise OPPOSITE of what the last 30 years of academic research supports.
That tells me what my job is.
My job is to tell the story of why the “experts” continue to push Buy-and-Hold 30 years after the academic research showed that there is precisely zero chance that it could ever work for any long-term investor.
The story of Wade Pfau going to the dark side illustrates in a compelling manner why so many “experts” are pushing such horrible investing advice today, does it not?
That’s why I report this stuff. Wade. Your suggestion that there is something personal in it is 100 percent wrong. I suppose it is possible that my reports may cause you some career damage. I can assure you that there is zero intent on my part to cause you any career damage. My intent is to tell the most important economic and political story of our day in the most complete and honest and fair and balanced and kind way possible.
I am a reporter, Wade. That's what I do. You are not a reporter. Maybe you don't care about stories and getting them right. Maybe it's just not a biggie for you. It is very, very much a biggie for me. I spent my entire life preparing for this story. I am going to tell it to the best of my ability or fall dead trying (don't get any funny ideas, John Greaney!). If you know anything about me, you know that.
Does it cause me pain to hear you appeal to me as a friend not to tell the story properly? You bet it does. I just ate a jar full of chocolate-covered almonds to suppress the pain I feel over the message contained in your words. Am I going to let that pain influence me not to tell the story in the way it needs to be told for millions of middle-class investors to learn what they need to learn to become able to invest effectively? There is zero chance. Zilch. Nada. It ain't gonna happen. No can do. You're talking to the wrong guy.
If you were around in earlier days, you would know about how deep my love was for the Motley Fool board. I saw Greaney burn that board to the ground. That crushed my heart, Wade, even more than you are crushing my heart today. I never flinched. Not for two seconds. I continued telling the story that I was put on earth to tell.
Greaney once threatened to get me sent to the electric chair for posting honestly on safe withdrawal rates. I of course understand that that sounds 100 percent insane. The fact that it sounds 100 percent insane doesn't mean that it will not happen. Greaney sounded 100 percent insane when he said that he would get me banned from the Motley Fool site (the owner of the site wrote one of the blurbs that appears on the back cover of my book!). I don't think it is likely that I will get the chair for posting honestly on SWRs. But I cannot in honesty say that I view it as impossible that he will carry out his threat. If he can get the person who loved the Motley Fool boards more than any other person alive banned from those boards, it is within the realm of possibility that he could get me sent to the electric chair.
I will take the chair before I will fail in my responsibility to tell this story as honestly and as completely and as fairly and as I can possibly tell it. Just so you know.
I want you to be the biggest star in this field, Wade. I want never, never, never, never, never to do harm to your career. I want to push you to #1.
The thing is —
Greaney doesn't feel the same way about you. You are a thing to him, not a person. He laughed on the day John Walter Russell died. If your career dies, he'll laugh at you too. He'll tell himself you had it coming if you were dumb enough to listen to him long enough for him to make his pitch.
I love you, man. But you are not bigger than this story. This story concerns everyone feeling the pain of today's economic crisis. I have got a lot of responsibilities weighing on these thin and weak shoulders of mine. I care about your career. But your career is not the only thing I care about. I can never permit your career to become the only thing I care about.
It's Wade Pfau who needs to start evidencing some concern re the future of Wade Pfau's career. You are the leak, Wade, not me.
Rob
and sharing embarrassing private details such as my overly ambitious journal submission strategies
I hope you don’t truly believe that your journal submission strategies were in any way, shape or form “overly ambitious,” Wade. I once dated a girl who was a little too beautiful for her own good (I got lucky — it happens). After she broke up with me (she was smart too!), we remained friends. One day she was having troubles and she suggested to me that she was suicidal. It was hard to hear. She was beautiful and smart and had a lot of other things going for he and it was hard to hear that she spent even one second not appreciating the gifts a loving God had given her. But she wasn’t lying to me. So I have to accept that perhaps you are not lying to me when you put forward the words above. All I can say is that it pains me to hear you say those words in the way it pained me to hear her say the idiotic words she said at that time (she went on to get married and have children and all that sort of thing).
You need to have more faith in your fellow humans, Wade. You are going to get the recognition you deserve if you just hang in there. You once said something highly insightful to me. You noted that research papers that win the Nobel prize always get rejected at least once. That’s true. And it’s no accident. Why do you think it works out like that?
It’s because papers that everyone appreciates the first time they look at them offer nothing special to the world.
People are scared of your research, Wade. Your research means that they need to rewrite all the textbooks. Your research means that they need to rejigger all the calculators. Your research changes our understanding of how stock investing works in a fundamental way. As I told you in earlier days, your research discredits all the research done pursuant to Modern Portfolio Theory.
Are you big enough to carry the burden of having published such powerful work? That’s the real question here.
Greaney’s job is to make you feel small. He wants to pull you down to his level. My job is to inspire you to great acts of intelligence and courage and love. I want to see you flying higher than any academic researcher in this field has ever flown before.
It’s scary flying at high altitudes. I get that.
Noted Portfolio Allocation Strategist Brice Springsteen once wrote: “Mama always told me not to look into the sights of the sun. Oh, but Mama, that’s where all the fun is!”
http://www.youtube.com/watch?v=yjxbOe7p8C0
Rob
if I *did* lack personal integrity, I could have made this all stop just by saying the meaningless sentence you want so desperately to hear: “I think the errors in the traditional safe withdrawal rate studies must be corrected by using Rob’s analytically valid method.”
That’s not the magical formula, Wade. As you well know.
I believe that my calculator (The Retirement Risk Evaluator) gets the safe withdrawal rate right.
I obviously do not demand that you or anyone else say that you agree unless you really do agree. If you really do not agree, I say that you have both a right and a responsibility to critique my work in any way you honestly deem appropriate. That’s all part of the wonderful game.
The magic formula is to say: “I think that both Buy-and-Holders and Valuation-Informed Indexer should be permitted to post honestly on every investing board and blog on the internet.”
No death threats. No defamation. No smear campaigns. No unjustified board bannings. No threats to get academic researchers fired from their jobs because they have published honest and accurate research.
That stuff doesn’t belong.
Speaking out against that stuff is magic.
I’ll tell you a little secret. John Bogle agrees with me re this one. So does Bill Bernstein. So does Scott Burns. So does Larry Swedroe. So do all the others.
They are afraid to say so, as you are afraid to say so.
They’re not going to destroy you if you work up the courage to speak honestly. The Goons are weak. The Goons are close to death. You speak honestly and the Goons go down. That means you (and me! — and Bogle and all those others too!) go up.
Being afraid doesn’t mean you do not possess within you what it takes to be a hero. All it means is that you are human. The thing that makes you a hero is when you work up the courage to overcome the forces that pull us humans down to the animal level and show us how we are capable for fleeting moments of time to rise to the level of the angels.
People love that sort of thing. Wade Pfau will go down in history if he ends up being the one who inspires us all to overcome the weakness that has caused us to feel so much shame and to get to the place where we can start feeling proud of ourselves again.
I already know that you are going to flip back, Wade. People forget that I read the last page of our little saga before I dared to put up that May 13, 2002, post. I’m not much of a risk-taker, you know.
It’s not a question of whether you will flip back or not. It’s a question of when. I vote for you doing it before the close of business today.
Wouldn’t that be something? Wouldn’t that make it a Father’s Day to remember for millions of us hoping that the next generation will enjoy better lives than those of us who came before them?
Rob
If only you had the power to do a little bit of self reflection…
I try, Wade.
None of us can see ourselves as others see us.
Not me. Not you. Not any of the others.
We all suffer from this deficiency together.
Rob
I’m not sure if you can even distinguish a mean from a median.
I took one course in statistics in college. I can balance a checkbook. I can complete my own tax forms.
That’s about as far as I want to push it. I ain’t no numbers wiz, that much is certainly fair to say.
Rob
So how can you be sure his work is right?
There are lots of things behind my confidence in John Walter Russell’s work, Wade.
There are thousands of people in the Retire Early and Indexing communities who are many times more skilled with numbers than I am. Not one every found a single flaw in his work. There were times when people found little mistakes. Guess what he did when that happened? He corrected them. Immediately. He was the most respected and most loved member of our community. Should that count for zero in my assessment?
John often disagreed with me. He often rejected research ideas I suggested to him. There were numerous times when he came around to my side. And there were numerous times when I came around to his side. But the fact that he wouldn’t put his name to something unless he was personally convinced of its merit, regardless of his personal friendship with me, speaks to the integrity of his work product.
The Goons would love to find some flaw in John’s work. They would be dancing on the ceiling if they discovered some flaw. They have spent 10 years trying to find one. So far, nothing. Does that not tell us something?
John’s research has been verified by numerous big names in the years since it was published. I was the first person to identify the errors in the Old School studies. John was the first person to publish research SHOWING the effect of those errors. There is now a universal consensus in this field that the Old School studies get the numbers wildly wrong. How did John get this one right many years before the big names if he doesn’t know anything about how to do research?
Is it possible that john made a mistake or two?
Of course.
It’s possible for anyone to make a mistake. But John never once asked that anyone cover up any of his mistakes. He did his research out in the open, in real time. He posted it daily at discussion boards where anyone who saw a flaw was free to point it out.
Does the peer review process used to find errors in your research possess one-tenth of the power to uncover mistakes that the process we used to check John’s work possesses, Wade? I say “no.”
I CHALLENGE anyone who has doubts about John’s work to argue that the internet be opened to honest posting so that we can find our for sure. I think it would be fair to say that there is precisely zero chance that any of the Goons are going to take me up on that challenge.
I wonder why.
John’s work has stood up to scrutiny for 10 years now. Can that be said of a single one of the Old School SWR studies, the “research” that you say today may never be corrected because that’s just not how things are done in InvestoWorld in the Buy-and-Hold Era?
When one of the researchers publishing Buy-and-Hold research shows a willingness to take on the same level of scrutiny that John submitted to with good cheer on a daily basis for eight years running, I will have the same respect for the Buy-and-Hold researchers that I hold today for John Walter Russell, the first researcher to show that Buy-and-Hold is the smelly garbage that those who have been paying attention to the first ten years of our discussions today know it to be.
Rob
I don’t know either, as I never did get around to digging into it, and I doubt I ever will now.
John Walter Russell’s research is arguably the most important research ever published in this field.
A case can be made that Shiller’s research gets the top prize. A case can be made that Pfau’s research gets top prize. But a perfectly reasonable case can also be made that Russell’s research gets top prize.
If you haven’t taken the time to study Russell’s research in depth in the 18 months since you learned about it, there’s something lacking in your judgment, Wade. There can be no excuse for such irresponsibility. What you say in your research affects the lives of real people. If you cannot be bothered to make time to study Russell’s research in depth, you are not qualified to write about retirement planning. No personal dig intended. I am stating my sincere take here, for good or for ill.
Too, too sad.
Rob
The blog said 13 people responded to this article, but it looks like two…one person once, and another 12 times in a row.
I’m still confused about how a few people have intimidated so many, especially the famed. I’m also curious how if someone says something in agreement with the author of this blog it is everlasting, but if they say something in disagreement it is a false statement made under duress.
It’s a fascinating story, sirs.
I’m not sure how a properly calculated lower confidence bound for a 2000 retiree could have been higher than zero.
Every safe withdrawal rate study I have seen is rooted in an assumption that stocks will continue to perform in the future at least somewhat as they have always performed in the past.
Given that assumption, the SWR you get for a retirement that began in January 2000 is 1.6 percent real.
Rob
Why didn’t something happen for you after the 2008 financial crisis?
Something did happen, Wade.
I was blacklisted at just about every personal finance blog on the internet prior to the onset of the crisis. I have been invited to speak at this year’s Financial Blogger’s Conference in September. That’s nothing?
We are still at very high P/E10 levels, Wade. Investor irrationality is today at one of the highest levels ever seen in U.S. history.
But things are a whole big bunch better than they were prior to the onset of the financial crisis.
Buy-and-Hold is the poison that kills investor portfolios. The Stock-Selling Industry has spent more money pushing Buy-and-Hold in recent decades than it spent doing so at any earlier point in time, including the years leading up to the Great Depression.
A society does not recover from that sort of assault in a day or a week or a month.
We are mending. There are hundreds of signs of this for those who have eyes to see them.
You first of all need to feel enough confidence in your fellow humans to report what the historical data says accurately and honestly and realistically. You then need to exercise a little bit of patience waiting for them to come around to see the wisdom of what the historical data that you report says. You do your part and your fellow humans will do theirs. They might act more slowly than what you and I would like to see. But they will come around.
If they don’t, it’s all over anyhow. If they don’t, it’s the Second Great Depression. How much work do you think there is going to be for those pushing Get Rich Quick strategies in the Second Great Depression?
We’ve become too rich a society for Get Rich Quick to remain a viable strategy, Wade. That’s the bottom-line practical reality here. Publishing honest and accurate and realistic research is not only the right thing to do. It is in the process of becoming the most profitable thing to do.
Rob
And you can do all of this while still being honest and true to yourself.
That’s not so, wade.
I have a reputation far and wide on the internet for being the person who discovered the errors in the Old School safe withdrawal rate studies. The Goons are never going to forget that.
There was a time when I was at the Early Retirement Forum when I stopped posting about investing and went back to posting only about saving strategies. The Goons disrupted every saving thread to which I contributed a word. Numerous community members begged them to permit me to post. No dice.
Consider the position of the Goons. Say that they permit me to post on subjects other than stock investing. How can they be sure that, once I become popular again by posting about other subjects, I will not once again return to posting honestly about safe withdrawal rates? There is no way they could ever enforce a guaranty from me that I will never again post honestly about investing even if I were willing to supply them with one.
Your proposal is not a realistic one.
Rob
I’m also curious how if someone says something in agreement with the author of this blog it is everlasting, but if they say something in disagreement it is a false statement made under duress.
Buy-and-Hold was a mistake, Not Wade. Once we learned this (in 1981, when Shiller published his research showing that valuations affect long-term returns), we knew intellectually if not emotionally that every study rooted in Buy-and-Hold thinking was in error. Nothing short of a finding that Shiller was wrong can make those studies appear accurate again in the eyes of anyone familiar with what the academic research says.
There has never been even a sliver of data suggesting that the Valuation-Informed Indexing model might be in error. It is possible that on some future day VII will be shown to be in error, just as Buy-and-Hold was in 1981. All that we can say is that as of today no such research has been put forward.
People are of course free to invest according to the precepts of Buy-and-Hold or according to the precepts of Valuation-Informed Indexing. I of course offer precisely zero guaranties that VII will work on a going-forward basis. If people want to, they can elect to follow NEITHER Buy-and-Hold NOR VII principles. The people who earn the money get to decide how it will be invested.
When I put a post to a board or blog, that post must report accurately my beliefs as to what works. Re that one, there can be no compromise. That’s the bottom line here.
And of course when Rob Bennett wins recognition of his right to post honestly re investing on the internet, so do all others, both Buy-and-Holders and Valuation-Informed Indexers. That’s been implicit in the discussions going back to the first day. That’s why the Buy-and-Holders fight it so hard.
Rob
I honestly think Rob can maintain his fantasies forever. Especially if Wade makes the ‘catastrophically unproductive’ move of posting at this sad website.
Wade – if you have any sort of brain in your head you should do what any other non-anonymous person does with Rob. Completely ignore him. He will find some other soft-hearted sucker to try to bring into his fantasy world in due time.
Um — Thanks for sharing your thoughts, What.
I think!
Rob
Run, Wade, run!