I’m some guy who posts stuff on the internet.
Some people think that I should learn my place. Some people think that I should stop talking back to my betters.
I can’t do that. I think of my fellow community members as my friends. When you learn things that can help out your friends in a big way, you let them know. I will continue to report the safe withdrawal rate accurately. I will continue to post honestly on what the historical stock-return data says about the effect of valuations on long-term returns.
I’ll continue to get flak for doing so too. I think that much is more than fair to say.
The fellow who runs the Clever Dude blog came up with a great solution to the abusive posting problem a few weeks back. There were some abusive posters posting comments on a guest blog entry that I wrote for that blog and the guy who runs it said: “I’d like to invite any and all of you to submit guest posts as well (go to my Contact page) to counter Rob’s article or to write about any other topic you like.”
That’s the right stuff. Civil and reasonable humans work out their differences by talking them over, not by participating in never-ending smear campaigns. I followed by putting forward a similar invitation of my own. I said: “I extend the same offer re space at my blog. I would love to see people contributing guest blogs that offer ideas counter to my investing views. I of course have strongly held views and I of course am obligated to state my sincere views. So I see the biggest weakness of the Financial Freedom Blog [now the A Rich Life blog] being the lack of balance in perspectives being shared. I get some comments putting forward other points of view, but not enough of them. So if Schroeder or others would like to make some points in a guest blog, I very much encourage them to send me some words.”
There have been no takers. None of the Passive Investing enthusiasts who have terrorized the Retire Early and Indexing communities over the past six years have written up any words explaining their case in civil and reasoned language. Surprise! Surprise!
I say “Surprise! Surprise!” because I have made similar offers on a number of earlier occasions. I asked Greaney to participate in a debate of the safe-withdrawal-rate topic at the Motley Fool board in which only he and I would post and members of his Goon Squad would not be permitted to disrupt. No dice. I offered to appear on a radio show with Greaney at which he would argue in support of the Old School SWR studies and I would argue in support of the New School SWR studies. No dice. I included in an article that I posted to the web site several years back an offer to provide space for Greaney or Sholar or any of the other “defenders” of the Old School studies to make their case. No dice.
I want dice!
I want dice because it is important to be fair and balanced. I say that the demonstrably false claims advanced in the Old School studies are likely going to cause millions of busted retirements in days to come. That’s a startling claim. If it is true, I have absolutely no choice but to advance it. To fail to try to get the word out to millions of people whose retirements are likely to fail would be an unforgivable dereliction of my responsibilities to the community. On the other hand, if there is something wrong with the claim, I have a responsibility to let people know that and to correct my words. So I should be doing all that I can both to publicize the flaws of the Old School studies and to learn of any flaws in the New School concept (the New School argues that it is impossible to calculate the SWR accurately without including an adjustment for the valuation level that applies on the start date of the retirement).
How are we all to learn whether the “defenders” of the Old School studies have any justification for not calling for the correction of them unless they tell us what it is? I believe that the reason why they have not offered any justification is that there is no possible justification. Still, I don’t think it hurts to open this blog space to anyone willing to take a stab at defending the Old School methodology. Hence — the Rob Bennett Challenge to Passive Investing Enthusiasts.
I hereby challenge any defender of the Old School studies to write up a blog entry explaining why he or she thinks it is a good idea not to include an adjustment for the effect of valuations in an SWR study. Send it to me (please note the “Contact Rob” tab at the left-hand side of this page) and I will schedule it for posting at the A Rich Life blog.
We’ve gone well beyond discussion of the flaws of the Old School SWR studies in recent years. So I would like to make the Challenge broad enough to cover more than the topic that kicked off The Great Debate. I believe that the truly core issue is the Passive Investing issue. Does it make sense to urge investors to stick with a stock allocation elected when prices were reasonable when prices have reached dangerously overvalued levels? I say “no way!” If you say “yes, way!” please give some thought to writing up some words and passing them along for posting where your fellow community members can read them and learn from them.
I will not comment on any blog entries submitted within the text of the blog entries themselves. I may or may not comment in a subsequent blog entry posted under my own name. I won’t offer the first comment to any blog entry posted as part of The Rob Bennett Challenge. If others comment, I may or may not offer my views in response to those comments, as I would re comments posted in reaction to my own blog entries.
I’m not expecting to receive any blog entries in response to the challenge. I would love to be surprised.
There’s no deadline. I’m happy to see your reasoned defense of either the Old School SWR studies or the Passive Investing concept whenever time opens up in your schedule for you to do us all the favor of writing one up.
As Clint Eastwood nearly said:
Ya feeling challenged today, Goon?
Well, are ya?
Note: I am of course with the references to “Goons” having a little fun with those good friends of mine who have been terrorizing the Retire Early and Indexing boards for six years now. Non-Goon submissions are both welcomed and encouraged. They will be pushed to the top of the list! They are preferred!
Today’s Passion: When I’m not caught up in the important business of challenging Goons, I often spend my time coming up with saving advice sayings. My favorites are collected in an article entitled Rob Bennett’s Favorite Saving Advice Sayings.
“the New School argues that it is impossible to calculate the SWR accurately without including an adjustment for the valuation level that applies on the start date of the retirement”
This over-sells the New School methodology for two reasons. First, the data doesn’t support any degree of accuracy for the numbers it generates. You need bunches and bunches of data points for today’s P/E10 levels in the historical record. How many data points are there? One? Two? This is not enough. As I said, you need bunches and bunches of data points.
Second, the data itself doesn’t give any statistical basis to perform a valid regression analysis. The r-squared is 0.18. This is very weak.
And I’ll add a third reason you are over-selling New School results. Your partner, John Walter Russell, says he uses “eye ball estimates” of the data. Several Community Members on Vanguard Diehards and elsewhere have pointed out that “eye ball estimates” are not an accepted method to use in statistical analysis.
Now as far as defending Old School studies. You and I agree that they report the Historical Surviving Withdrawal Rate. That is all it does.
Schroeder
Is it possible that your opponents think that you will censor or delete comments they prepare, and thus prefer to post on one of the many other boards devoted to personal finances?
Perhaps faith in your behavior is reduced when you simultaneously ask for civil discourse and also calling your opponents “goons”.
Now as far as defending Old School studies. You and I agree that they report the Historical Surviving Withdrawal Rate. That is all it does.
I certainly agree that the Old School studies report the Historical Surviving Withdrawal Rate accurately. I think it is helpful to add that the Old School studies were a major advance over what was available before they came along. Bill Bernstein describes the Old School studies as “breakthrough research.” That puts things in the proper context, in my assessment.
All three of your comments about the New School studies are false claims, Schroeder. Given that you have participated actively in our discussions for a long time, it cannot be said that these are false claims put forward by someone who does not know that they are false. These three claims are acts of deliberate deception.
Those who would like to develop an accurate understanding of the New School claims should review The Retirement Risk Evaluator (see tab to the left) and the articles that appear at that section of the site. Those who would like to check out the technical details of the methodology by which the numbers are generated by the Risk Evaluator should check out the material at John’s site.
http://www.Early-Retirement-Planning-Insights.com
Rob
Is it possible that your opponents think that you will censor or delete comments they prepare, and thus prefer to post on one of the many other boards devoted to personal finances?
It’s possible that they tell themselves this to justify their behavior in their own minds, Toona. The reality is of course that I have a long record of encouraging civil and reasonable comments by those endorsing either the Old School SWR studies or the Passive Investing approach while honoring my promise to my fellow community members to protect them from the hatefully abusive trash posting we have seen put forward by “defenders” of Lindauer and Greaney.
The other reality is that “defenders” of the Old School studies and of the Passive Investing approach have not offered any civil and reasonable defenses since effecting bans on honest posting on these topics at the boards at which they continue to post. I think it is fair to conclude that the reason is that there are no civil and reasonable defenses available to them. Valuations affect long-term returns as a matter of “mathematical certainty,” just as Bill Bernstein says. Bernstein nailed it and the “defenders” of the Old School studies and of the Passive Investing approach should have acknowledged this a long, long, long, long time ago.
We all lose by their failure to do so, Toona. Yet another reality is that many of the “defenders” of the Old School studies and of the Passive Investing approach have made many wonderful contributions to our discussions on other topics. Were they to begin posting honestly on these two topics, I am confident that they could make wonderful contributions on these topics as well. They would feel a lot better about themselves and we all would learn from their contributions.
There is no reasonable justification for making false claims re numbers that people use to plan their retirements, Toona. None whatsoever. The Old School studies should have been corrected when the errors in them were first brought to the attention of the authors of the studies.
The Passive Investing question is a far broader one. I certainly would not expect that every book that argues for Passive Investing would be corrected in 24 hours. What I do ask for is that those who advocate Passive Investing acknowledge that there is a wealth of evidence supporting Bernstein’s claim that valuations affect long-term returns as a matter of “mathematical certitude” and that, given the high level of confidence we can have in this claim, all community members who participate at the various Retire Early/Indexing boards should be permitted to post their honest views as to how to take this reality into consideration in the formation of their investing strategies.
I am highly confident that the end result of those discussions will be that most community members (and indeed most investors in the much larger world outside of our boards) will abandon Passive Investing (investing as if valuations did not matter) for Rational Investing (investing that acknowledges that valuations always have mattered and always must matter). That’s a long-term goal, one that can only be achieved after extensive discussion of the flaws of the Passive Investing approach.
The key re the bigger goal is the opening of the boards to honest posting. For so long as honest posting is banned, the boards remain corrupt enterprises. For so long as honest posting is banned, it is impossible for us to get to first base. We cannot attract many posters of honesty and integrity to corrupt enterprises. And even those who are willing to participate because of the many wonderful discussions that are held on topics other than those for which the ban applies are generally not willing to post honestly on the topics on which bans remain in place and re which vicious smear campaigns have been employed to punish those who have “crossed” the self-elected “”Board Generals” of these communities.
All of the boards have rules that protect us from the tactics that have been used to shut down our discussions of the realities of investing. All of the Goon posters clicked “I Agree” re those rules. We should not be overly concerned re the feelings of those who refuse to honor our community norms. If they feel “censored” by our demand that they respect the promises they made as a condition of being given the ability to post at our boards, that’s really just too bad for them. The future of the community as a whole is more important than the feelings of a small gang of thugs determined either to shut down our discussions or destroy the boards at which we are seeking to have them.
We were right to extend the hand of friendship to the Goons. We were right to do what we could to explain to them why we had to insist that they follow the communty norms. We were wrong to give up our own personal integrity as the price of keeping these individuals in the community. That’s a price too high to pay. We should honor our promises to the vast majority of community members, which has made clear on numerous occasions that it would like to see the published rules honored and the ban on honest posting lifted.
My sincere take.
Rob
So, you put forth a “challenge” to civil discourse, but include in it name-calling, and immediately call Schroeder a liar when he responds.
If I put some effort a preparing an argument, I’ll post it at the Boglehead’s Board, where I can actually engage in civil discourse.
Perhaps faith in your behavior is reduced when you simultaneously ask for civil discourse and also calling your opponents “goons”.
There’s no question but that the use of terms like “Goons” is a turnoff to many community members. It is a certainly a big-time turnoff to me.
That’s why I checked the rules at the Motley Fool board (the board where the Retire Early movement was born) to assure myself that it prohibited the tactics that have been employed by the Lindauer and Greaney “defenders” before I began building up that community. Had Motley Fool honored its promises to us, Greaney would have been banned from that board long before he put forward his first death threat and there never would have been any need for a discussion of The Goon Phenomenon.
There is a reason why every board bans the tactics that have been used to block our investing discussions, Toona. It is because every site owner knows that the vast majority of people using their boards hates these sorts of tactics with a passion. We have all seen the destruction they cause on numerous occasions. We have every right to ban those who engage in these tactics. We shouldn’t need to talk about it. We shouldn’t need to ask for help in banishing the Goons. The site owners who have tolerated the trash tactics should have addressed the problem without any of us having to get involved.
That obviously did not happen. That’s why we have the problem we face today. The Goons exploited the confusion that many of today’s investors feel about how stock investing works in the real world to gain a dominate say over what can be discussed at our boards. Given that that’s the most important reality applying at our boards today, we can hardly refrain from discussing it, can we?
No one wants to talk about Goons. I certainly do not. But no one wants to talk about garbage either, you know? What do you think happens if no one takes out the garbage and nothing ever happens because all are too timid to mention the horrible smell? If no one says anything and no one does anything, the smell gets worse and worse and worse. Yucko!
I draw attention to The Goon Phenomenon because it is a reality at our boards and because it needs to be addressed if we are to learn what it takes to achieve successful early retirements. The Retire Early topic is a wonderful one. It is only the unfortunate connection between the Retire Early topic and the Goon topic achieved by the failure of the site administrators to honor their promises to us that has required us to talk about this matter.
The larger question is the effect of Goonishness on investing decisions made outside of our internet board communities. We all have an Inner Goon, Toona. Any time we engage in self-deception about the effect of valuations on long-term returns, we engage in a goonish sort of behavior, one that causes harm to ourselves, our loved ones, and our fellow community members. So that issue will always be with us.
I don’t see that one being nearly as devisive, however. If we deal with the primary Goon matter, the ruthlessly abusive posting that has been employed to burn so many of our boards to the ground in recent years, I am confident that we will be able to handle the secondary Goon matter without too much trouble. If we get the first one out of the way, the second one will seem like a breeze, in my estimation.
The bottom line here is that so long as goonishness is a big issue we cannot fall to address it and still hope to see our boards achieve their potential. But we are all right to believe that the world would be a better place if we addressed The Goon Matter by the close of business today and put discussion of it to rest once and for all. We are not a community of goons. We are better than that. We should all work hard to put the problem behind us sometime within the next 24 hours.
How does that sound, Toona? Are those words encouraging enough to the part of you that would like very much to be able to go to bed tonight knowing that it will never hear the word “goon” again? I sure hope so! That’s certainly the intent!
The people to contact are the site owners. Please do not ask that the Goons be removed, insist on it. I think it would be fair to say that the time for putting this sort of thing in the form of a question passed a long, long time ago. We’re aspirng early retirees, not Jeopardy finalists!
Rob
So, you put forth a “challenge” to civil discourse, but include in it name-calling, and immediately call Schroeder a liar when he responds.
To be fair, I did not say that Schroeder had engaged in deliberate deception until I had read the words of his post, Toona.
If I put some effort a preparing an argument, I’ll post it at the Boglehead’s Board, where I can actually engage in civil discourse.
I would of course prefer to see your argument posted here. But if you feel more comfortable posting it as the Bogleheads board, I of course understand. I certainly view that as a constructive step.
I would be grateful if you would let us know when it appears. If either your post or the comments made on the thread that follows contain any constructive words (I ask that you reach down deep and try extra hard, Toona!), I would like to provide a link to it.
Rob
I cannot image that anyone will come up with a reasonable defense of the old studies. Not now that we have the tools to extend them.
I have not seen anything close to a defense. What I have seen are word games and indoctrination techniques.
Have fun.
John Walter Russell
I have not seen anything close to a defense.
If I stretch my mind as far as I can stretch it, I can come up with a way in which someone could justify in conscience having his or her name on an Old School study. It’s not something that I would feel confortable doing myself. But it might be argued that it is just slightly on the right side of the ethical divide.
If someone possessed very little confidence that future returns could be predicted, I could imagine that he or she could possess a desire to share with people what the Historical Surviving Withdrawal Rate is for purposes of use in retirement planning. Given the wealth of evidence that at least some predictability is possible, that person would be under an obligation to at a minimum explain in the text of the Old School study the purpose of the New School studies and to point those readers interested in knowing about the New School approach to where to find more information on them. An Old School study that noted its own limitations and pointed to studies not so limited might satisfy minimal ethical standards.
It is analytically invalid to think of the Historical Surviving Withdrawal Rate as the Safe Withdrawal Rate. Still, it is clear that there are people today who choose to think of the Historical Surviving Withdrawal Rate as the Safe Withdrawal Rate regardless of the evidence that has been put forward showing that this is a bad idea. These people have a right to invest as they please and those who are inclined to encourage them to do so by providing studies that encourage this inclination of theirs are possibly justified in supplying them with studies if they point out the arguments against use of those studies and make their readers aware of how to learn more about the other point of view.
If someone put a gun to my head and insisted that I come up with a defense of the Old School studies, that’s the best that I could do. I am not able to offer any justification for those who are aware of the New School criticisms of the Old School studies putting forward Old School studies without making their readers aware of those criticisms. I find that unconsionable behavior. It’s an act of deception to refer to such an effort as a “study” given that the purpose is obviously not to share knowledge of what the historical data says about safe withdrawal rates but to suppress it (this of course does not apply to those who are not yet aware of the New School claims — in those cases the failure to make the reader aware of the flaws of the study is just one of those things since the study author himself is not aware of them).
I think it is possible to offer criticisms of the New School studies that would be persuasive to reasonable people. That’s something very different. The fact that the New School studies can be effectively criticized does not in any way justify going with the Old School studies because all effective criticisms of the New School studies apply to the Old School studies as well (for example, the argument that the historical data tells us nothing about the future is a criticism of both the Old School and New School studies). The only distinction between the types of studies is that the New School studies take valuations into account and, given that there is a virtually universal consensus that valuations affect long-term returns, there is no possible justification for ignoring the valuations factor and then failing to tell one’s readers that one has ignored it and that the ignoring of it can cause the numbers generated in the study to be wildly off the mark.
Rob
Let me add this:
Rob’s Favorite Savings Advice Saying (link at the bottom of the post) are great.
Have fun.
John Walter Russell
The offer is still open at my site (no takers yet). The only time I delete or edit comments is when curse words are used or the comment adds no value to the discussion. It happens pretty rarely as I have pretty civil commentators.
The offer is still open at my site (no takers yet).
It’s good to hear from you, Clever Dude. Thanks for stopping by.
We’ve had some bad experiences in the Retire Early and Indexing communities. The vast majority of community members are wonderful people and we have had some great times and some great learning experiences. But we’ve pulled a few bad cards too I am afraid. Hopefully that business will pass in time. Let us pray!
Rob