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A Rich Life

The Old Ideas on Saving & Investing Don't Work -- Here's What Does

  • "Valuation-Informed Indexing Is the Same Song We Sing. Glad You Belong to the Same Choir We Do."





    Carolyn McClanahan, Director of Financial Planning
    for Life Planning Partners, Inc.

  • "Retirees Now Frequently Base Their Retirement Decisions on the Portfolio Success Rates Found in Research Such as the Trinity Study.... This Is Not the Information They Need for Making Their Withdrawal Rate Decisions."




    Wade Pfau, Academic Researcher

  • "The P/E10 Tool Could Drastically Change
    How the Entire Investment Industry
    Operates and Measures Risk."





    Larry, A PassionSaving.com Site Visitor

  • "The Your Money or Your Life Book
    for a New Generation."





    Beatrix Fernandex, Book Reviewer
    for Dollar Stretcher Site

  • "A Newer School of Thought Believes That the Safe Withdrawal Rate Depends on How Stocks Are Priced at the Time You Begin Making Withdrawals."





    Scott Burns, Dallas Morning News Finance Columnist

  • "A Fascinating Retirement Calculator."







    Michael Kitces, Maryland Financial Planner

  • "The Evidence is Pretty Incontrovertible. Valuation-Informed Indexing...Is Everywhere Superior to Buy-and-Hold Over Ten-Year Periods."




    Norbert Schenkler,
    Co-Owner of Financial WebRing Forum

  • "Every Detail Shows Rob's Respect
    for His Information and His Reader."






    Audrey Owen, Owner of Writer's Helper Site

  • "You’ve Accomplished Something Radical
    With Your Idea of Passion Saving."





    Mark Michael Lewis,
    Money, Mission & Meaning Talk Show Host

  • "Big Moves Out of Stocks Should Not Be Done at All. But Strategic Asset Allocation Can Be Done At Very Rare Times, Maybe Six Times in an Investor’s Lifetime, Three Times When the Market Is Stupidly High and Three Times When Stupidly Low."



    John Bogle, Founder of Vanguard Funds

  • "Valuation-Informed Investing and Passive Investing
    Share More of a Common Ancestry
    Than It Might Appear at First."





    Jacob Irwin, Owner of Passive Investing Blog Carnival

  • "It Is Great to See a Finance Journalist Who Understands That Valuations Matter. Efficient Market Zealotry Is Rampant in the Journalism Community. I Just Love Your Valuation-Based Return Calculator."




    Rich Toscano, Pacific Capital Associates

  • "There Is Always An Unlimited Supply of Complainers Against Any Good Idea."






    Mr. Money Mustache Blogger

  • "Rob: This Has Been One of the Most Insightful and Helpful Comments I Think Anyone Has Ever Posted. Thank You for This Lesson and for Sharing Your Knowledge on This Subject!"




    My Money Design Blogger

  • "There Is An Extensive Literature About the Predictability of Long-Term Stock Returns. There Is an Extensive Literature About Short-Term Market Timing. My Question Is About Long-Term Market Timing. The Literature Seems Slim."



    Wade Pfau, Retirement Income Professor
    at The American College

  • "Your Ideas Are Sound."







    Rob Arnott, Financial Analysts Journal Editor

  • "For Years, the Investment Industry Has
    Tried to Scare Clients Into Staying Fully Invested
    in the Stock Market at All Times, No Matter
    How High Stocks Go. It's Hooey.
    They're Leaving Out More Than Half the Story."



    Brett Arends, The Wall Street Journal

  • "There Are Time-Periods Where Stocks Are a Terrible Addition to That Portfolio. Yet Inexplicably, We As Planners STILL tend to Suggest That It Is 'Risky' to Not Own Stocks When in Reality the Only Risk Is to Our Business."




    Michael Kitces, Maryland Financial Planner

  • "Valuation-Informed Indexing Provides More Wealth for 102 of 110 of the Rolling 30-Year Time-Periods While Buy-and-Hold Did Better in Eight of the Periods."






    Wade Pfau, Academic Researcher

  • "There Is a Growing Behavioral Economics Movement, But It So Far Has Had Limited Impact. Economists Are Not Fond of the Softness and Imprecision of Psychology. These Notions Are Considered Vaguely Unprofessional and Flaky."



    Robert Shiller, Yale University Economic Professor

  • "I Would Occasionally Get a Response Post
    Saying I Was 'the Best Since Rob Bennett
    Challenged Us to Think.'"




    A Popular Bogleheads Forum Poster Named "Retired at 48" Who Was Banned for Challenging Buy-and-Hold

  • "New Research by Rob Bennett Shows That
    Even a 4% Withdrawal Rate Could Cause Failure
    If You Start Retirement When
    Stock Market Valuations Are High.”




    Bernard Kelly, Consultant

  • "FuhGedDaBouDit!"




    William Bernstein, Author of
    The Four Pillars of Investing
    (When Asked Whether We Can Use the Old School Safe Withdrawal Rate Studies to Plan Our Retirements)

  • "This [The Stock-Return Predictor]
    Is a Very Handy Little Tool."






    Felix Salmon, Market Movers Blog

  • "A Much Simpler Way to Bring
    the Valuation Issue to Focus."
    (Referring to The Stock-Return Predictor)





    Karteek Narayanaswarmy, Blogger

  • "It's Informative, It's Based on Solid Data and It Provides Useful Results." (Referring to The Stock-Return Predictor)






    Political Calculations Blog

  • "Meet Three Couples Who Left the Corporate World to Do the Kinds of Work That Satisfied Them."






    Liz Pulliam Weston, MSN Money Columnist

  • "I Like Rob's Fresh Views and Tips
    on the Subject of Saving Money."






    The Digerati Life Blog

  • "A Very Solid Approach to Investing."







    Michael Harr, Founder of Walden Advisors

  • "Rob Bennett Has Been on a Tear With One Outstanding RobCast After Another."





    John Walter Russell, Owner of
    Early-Retirement-Planning-Insights.com Site

  • "It’s Time for a Different Way to Look at Investing, and Rob Is Onto Something Here."






    Kevin Mercadante, Owner of Out of Your Rut Blog

  • "My Afternoon Train Reading."
    (Referring to Rob's Article titled
    Why Buy-and-Hold Investing Can Never Work)





    Barry Ritholtz, Owner of The Big Picture Blog

  • "What Is It With Guys Named Rob?
    Longtime Index Agitator Rob Arnott Has Now
    Been Joined on These Pages by a
    Vanguard Diehard Agitator Named Rob Bennett."




    Jim Wiandt, IndexUniverse.com Publisher

  • "He Offers a Fresh New Perspective
    that Will Motivate You to Get on Track
    With a Solid Savings Plan."





    Lynn Terry, Click Newz Blog

  • "While Browsing at www.PassionSaving.com the Other Day, I Discovered an Article Featuring Ten Unconventional Money-Saving Tips. Each of These Offers a New Way to See Money."




    J.D. Roth, Owner of Get Rich Slowly Site

  • "Rob Has Ideas About Investing That Many Bloggers Find 'Interesting.' His Posts Are Often Controversial and Always Thought Provoking."





    Miranda Marquit, Planting Money Seeds Blog

  • "Is There a Way to Turn Saving Into Something Fun? If There Was, I Bet a Lot More of Us Would Do a Lot More Saving. I Found a Website Where This Basic Premise Is Explored in Great Depth."




    The Great WeiszGuy Blog

  • "I Have Much More Confidence in My Ability to Understand What Is Happening....I Thank You for Your Public Service, and, In Another Dimension, for the Personal Courage It Took to Make It Happen."




    Elizabeth, A PassionSaving.com Site Visitor

  • "I Was Hooked on the Idea of [Passive] Index Indexing, But Something Inside Made Me Wonder "Too Good to Be True?" and "What's the Downside?" I Happened on to Your Site and Valuation-Informed Indexing Seems to Make Sense."



    Coleen, PassionSaving.com Site Visitor

  • "Reads Like a Casual Conversation
    with a Likable Guy Who Wants Nothing More
    Than to Help Others Experience the Same Joy
    and Happiness He Has Found."




    Kara, Reader of Rob's Book

  • "Your 'Secrets' Are Exactly Like Magic Tricks: Once Revealed, They Look So Simple, Yet You Need Somebody to Show You How It Works."





    Kramerizio, Secrets of Retiring Early Reader

  • "Rob's Da Man! Never in the History of the Diehards Forum Has One Poster, Always Making Civil and Well Thought-Out Posts, Managed to Irritate So Many Without Anyone Being Able to Articulate a Good Reason As to Why."




    Mephistopheles, Bogleheads Forum Poster

  • "I’ve Been Surprised at How Controversial This Idea Is, but If Most People Are Buying and Holding, They Are Emotionally Invested in This Strategy."





    Jennifer Barry, Live Richly Blogger

  • "The Findings for [Long-Term] Market Timing Are So Robust That It Hardly Matters How We Do It."






    Wade Pfau, Asociate Professor of Economics

  • "The Elegant Simplicity of His Ideas Throughout Warms the Heart and Startles the Brain."






    Tom Gardner, Co-Founder of the Motley Fool Site

  • "Mr. Bennett Evidences an Unusual Skill....
    You'll Have to Buy a Copy....Extraordinary....
    A Massive Heap of Crap."




    John Greaney,
    Owner of the Retire Early Home Page Site

  • "By Reading All the Information on Your Website I Was Able to Develop a Part of Me I Didn't Know I Would Be Able to Become."





    Javier, PassionSaving.com Site Visitor

  • "Innovative Financial Thinking."







    No Limits, Ladies Blog

  • "Knowledgeable."







    Hope to Prosper Blog

  • "Holy Toledo! This Is Great Stuff!"






    Bill Schultheis, Author of
    The New Coffeehouse Portfolio

  • ""He Offers Down-to-Earth But
    Nevertheless Eye-Opening Insights About
    the Why and the How of Early Retirement."





    Secrets of Retiring Early Reader

  • "Challenges Unfounded Assumptions."







    Bill Sholar, Founder of the Early Retirement Forum

  • "Seminal."






    John Greaney, Owner of Retire Early Home Page Site
    (Pre-May 13, 2002 Version)

  • "It’s Always Good to Read Something New That Challenges Your Way of Thinking."






    Invest It Wisely Blog

  • "Rob, Thanks for All of Your Articulate, Well-Written and Well-Reasoned Commentary."






    Elle, a Poster at the Joe Taxpayer Blog

  • "Although Rob and I Don’t See Eye to Eye
    on Every Detail, His Site Is a
    Valuable Resource for Research."





    Ken Faulkenberry, Portfolio Manager

  • "Thanks, Rob. I Love Seeing So Many
    Personal Finance Bloggers Who Offer Such
    High Quality Content on Their Own Sites Come Here
    to Weigh In [on Your Ideas]."




    Married With Debt Blogger

  • "A Ton of Tremendously Useful Content."







    Network Abundance Radio

  • "Your Enthusiasm Is Infectious."







    Ruth, a PassionSaving.com Site Visitor

  • "I Woke Up at 4:00 am and Stared at the Wall for 20 Minutes....Thank You for Doing What You Do."






    Tasha, A PassionSaving.com Site Visitor

  • "It Might Just Give You
    a New Way of Looking at Saving."






    Kevin Surbaugh, Owner of Debt Free 4Ever Blog

  • "'Staying Too Long in a Job Where You Don’t Feel Relevant Takes a Toll,' Said Rob Bennett, Who Worked for Years in a Well-Paying Corporate Communications Job Where He Didn’t Have Enough to Do."




    The New York Times

  • "You Have Started One of the Most Interesting
    and Stimulating Discussions This Board has Seen
    in a Long Time."





    Poster at Motley Fool Site

  • "A Respected Author and Commentator, Mr. Bennett has Dedicated Himself to Educating Average Investors to Avoid the Most Common Errors."





    Liberty Watch Site

  • "I've Gone from Shattered Dreams of Early Retirement to Glimpses of Hope to Reassurance from Quantitative Research."





    Patricia, A PassionSaving.com Site Visitor

  • "Some of the Most Helpful and Insightful Market Discussions on the Web Take Place on These Pages."





    A Poster at the Safe WithDrawal Rate Research Group
    (Founded by Rob)

  • "Rob is the Only Person I Know (If Only via Message Board) Who has Completely Opted Out of Participation in the Stock Bubble. And You Know What? He Has Benefited Immensely from Doing So."




    Poster at Motley Fool

  • "Makes the Subject of Saving Edgy and Fresh."







    Maxine, A Reader of Rob's Book

  • "Rob Bennett, the Author of a Book Called Passion Saving, Thinks the Saving Problem Is Partly One of Packaging. So He Prefers to Couch it in the Language of Freedom."





    The Wall Street Journal

  • "This Tip Comes from Rob Bennett
    of the Finance Site PassionSaving.com."






    Lifehacker.com

  • "I LOVE This Article and
    Am Proud to be Publishing It!"




    Chuck Yanikoski, Executive Director of
    The Association of Integrative Financial
    and Life Planning

  • "Rob Bennett: Some People Disagree With Him, and He Rubs a Lot of People the Wrong Way. But He Has Interesting Ideas About Valuation-Informed Indexing, and He Delves Into a Lot of What Makes a Successful Investing Strategy."



    Miranda Marquit, Planting Money Seeds Blog

  • "Rob….Wow…..Your Response Sent Shivers
    Up the Ol’ Pilgrim Spine."






    Neal Frankie, Owner of the Wealth Pilgrim Blog

  • "I Have Counseled My Clients to Allocate a Percentage to Equities Based Upon Market Valuations....I Feel Like I've Found a Kindred Spirit. Fascinating Web Site."





    Tom Behlmer, Financial Planner

  • “A Simple Age-Based Asset Allocation Formula Is Not Appropriate, and Any Sensible Asset-Allocation Formula Should Combine Both Age/Investment Horizon and Market Valuation Levels.”




    RationalInvestor.biz

  • "Had a Guest Post This Week from Rob Bennett, Where He Discusses the Benefits of Value-Informed Indexing, Which I Find Very Intriguing."





    Sustainable Personal Finance Blog

  • "I Can Appreciate Rob's Comments.... Buy-and-Hold?
    For the Most Part, a Long Obsolete Theory."






    Neal Deutsch, Certified Financial Planner

  • "Utterly Brilliant!"







    Secrets of Retiring Early Reader

  • "Your Website Is So Enjoyable That It Is Keeping Me From My Research As I Am So Excited That I Have Found Such a Valuable Resource."





    Stuart, a PassionSaving.com Site Visitor

  • "What We're Talking About Here Really
    ...Is Empowerment."






    Motley Fool Poster

  • "The Return Predictor Is Based upon the Principle that Over the Long Term, Stock Market Prices Will Reflect the Ten-Years Earnings Growth of the Underlying Companies. Prices Return to a Common Growth Pattern."




    Links.com Review of The Stock-Return Predictor

  • "Rob’s Arguments in Favor of Value Investing Actually Make a Lot of Sense In a Way That Should Make Any Rational Buy-and-Holder Uncomfortable."





    Pop Economics Blog

  • "What I Don't Understand Is How Rob Can Correspond in Such a Sweet and Polite Way
    -- Yet He Irritates Me to No End!"





    Financial WebRing Forum Poster

  • "You Go About It in a Manner that is Catastrophically Unproductive by Adding Missionary Zeal that Inflates Your Importance and Demeans Others. The Whole Idea That There is a New School of Safe Withdrawal Rates Reeks of Personal Aggrandizement."



    Scott Burns, Dallas Morning News

  • "Inflammatory."







    Morningstar.com Site Administrator

  • “What Warren Buffett Did Was Essentially Quite Close to What Rob Bennett Has Written. Buffett Has in Fact Been Cleverly Incorporating Long-Term Market Timing Based on Valuation of the Market in His Allocation of Money to Stocks.”



    Investor Notes Blog

  • "This Report Offers A Fresh Perspective That Is Rarely Found In Other Financial Literature."






    Secrets of Retiring Early Reader

  • "Rob Bennett Says That Market Timing Based on Aggregate P/E Ratios Can Be a Far More Effective Strategy. This Claim Is Consistent With Shiller's Analysis and I Can See How It Might Be So."




    Rajiv Sethi, Economics Professor at Columbia Univeristy

  • "Retiring Early Was A Concept I Did Not Entertain. I Was Going to Retire at 65 After Putting in 40 Years. Now I Am Glad To Say That All That Has Changed."





    Secrets of Retiring Early Reader

  • "In a Couple of Days, I Had
    Devoured the Entire Book."






    Reader of Rob's Book

  • "FIRECalc May Not Be the Last Word
    on Safe Withdrawal Rates."






    Jonathan Clements, Wall Street Journal

  • "It Seems to Me That Some on This Board Feel Threatened by the Arrival of Rob and His Ideas. They Feel a Threat to Their Perceived Elite Status."





    Motley Fool Poster

  • "You've Got to Say One Thing for Rob. He Has NEVER Lowered Himself to Ad Hominen Attacks -- Subliminal or Otherwise -- on Any Other Person on This Board. Not Once. Ever. At Least Give Him Credit for That."




    Motley Fool Poster

  • "I Have Never Seen Rob Show Incivility. No Matter What. Truly Amazing. Either He Is Really the Output of an Artificial Intelligence Program, or the Man's on the Way to Becoming a Saint!"




    Early Retirement Forum Poster

  • "You're the Politest Guy on the Internet.
    Such a Soft Touch!"






    Jonathan Lewis

  • "Props for Keeping Your Cool in the Married with Debt Article. Best of Luck Combating Buy-and-Hold."






    Money Mamba Blogger

  • "I Caught Up [at the Financial Bloggers Conference] With a Fairly Controversial Financial Blogger
    Named Rob Bennett, Who Struck Me As the
    Nicest Guy Around. There -- I Said It!"




    Digerati Life Blogger

  • "In Rob Bennett's Case, He Was Banned for No Known Listed Forum Policy. Except His Viewpoint Was Different From Other Bogleheads and [He Was Perceived As] a Threat."




    Investor Junkie Blog

  • "Mr. Bennett, You Are Spot on About Integrating Some Type of Valuation Filter to One's Stock Allocation. Astute Investors Have Incorporated Some Type of 'Valuation Timing' Into Their Investment Decisions Since the Beginning of Time."



    Poster at the Psy Fi Blog

  • "His Insights Into What Is Really Going On In The Stock Market Are Quite Compelling."






    Future Storm Blog

  • "It Was an Epiphany...Valuation-Informed Indexing Beats Buy-and-Hold Over Most Long-Term Holding Periods at Much Lower Volatility."





    Sam, a PassionSaving.com Site Visitor

  • "I Am Intrigued By Your Ideas."







    Adam Butler, Portfolio Manager

  • "I Read the Book and I Loved It.
    The Philosophy Resonated with Me.
    I Am a Believer in Your Concept."





    Dr. Peter Weiss, Author of More Health, Less Care

  • "If Your Investment Ideas Can Do for Investing
    What Weston Price’s Ideas Did for Food,
    You’ve Got Our Attention."





    End Times Hoax Blog

  • "I Have Looked at His Website and Reviewed His Research and Find It Both Compelling and Completely Logical and Common-Sense-Based."





    Poster at Free Money Finance Blog

  • "If Investors Paid More Attention to Valuations, We Would Have Fewer Boom-and-Bust Cycles. The Investing Institutions Are Definitely Going to Avoid It Because It Affects Their Income."




    Hope to Prosper Blog

  • "The Calculators on Your Site Are Great Resources. It Amazes Me How So Many People Can Say 'Valuations Matter' Yet, in the Next Breath, They'll Say That We Should Ignore Valuations."




    John Marlowe, Logistics Analyst at Hess Corporation

  • "Must Read As Per My Viewpoint
    For All Value Seekers."






    Ajit Vakil, Value Investing Congress

  • "His Approach Is Both Mathematically Rigorous
    and Easy to Understand."






    Online Investing AI Blog

  • "There Is Nothing More Doubtful of Success Than a New System. The Initiator Has the Enmity of All Who Profit By Preservation of the Old Institution and Merely Lukewarm Defenders in Those Who Gain By the New One."




    Machiavelli

  • "Difficult Subjects Can Be Explained to the Most Slow-Witted Man If He Has Not Formed Any Idea of Them. But the Simplest Thing Cannot Be Made Clear to the Most Intelligent Man If He Believes He Knows Already What Is Laid Before Him."



    Tolstoy

  • "I Am Not Afraid. I Was Born to Do This."







    Joan of Arc

  • "I Certainly Have Seen the Academic Profession Squelching Unfashionable ideas and Have Often Been on the Wrong Side of It. Kuhn Shows How Most Pathbreaking Scientific Ideas Are Rejected at First, Usually for Decades.”




    Carol Osler, Brandeis International Business School

  • "First They Ignore You, Then They Ridicule You, Then They Fight You, Then You Win."






    Ghandi

  • "We Cannot Assume the Existence of Predictability Just Because There Are No Studies That Fully Reject It."






    Valeriy Zakamulin, Economics Professor

  • "I Am Also Extremely Grateful to Rob Bennett for Motivating This Topic and Contributing His Experience and Encouragement."





    Wade Pfau, Academic Researcher

  • "Rob Bennett Was an Early Pioneer in 3rd Generation Modeling by Advocating (Through Various Online Forums) that Withdrawal Rates Must Be Adjusted for Market Valuations Consistent with Research by Campbell and Shiller."



    Todd Tresidder, Financial Mentor Blog

  • "I Am Fascinated by the Growing Body of Research that Revolves Around the P/E10 Ratio by Robert Shiller, Doug Short, Wade Pfau, Michael Kitces, John Hussman, Crestmont Research, Jim Otar, Mike Philbrick, Adam Butler & Rob Bennett."



    Kay Conheady in Advisor Perspectives

  • "Rob Is an Enigma in the Personal Finance World. He Has Interesting Theories on Investing Based on Market Valuations. But He Weaves a Tale Which Makes the Stories of Alexander Litvinenko & Gareth Williams Seem Tame by Comparison."



    Don't Quit Your Day Job Blog

  • "In Recent Years, the 4 Percent Rule
    Has Been Thrown Into Doubt."






    The Wall Street Journal

  • "A Safe Withdrawal Rate Is Very Dependent
    on the Valuation of the Stockmarket
    at the Retirement Date."





    Economist Magazine

  • "I Have Read Everything I Can About Valuation-Informed Indexing. Buy-and-Hold Is Extremely Problematic. I Respect the Passion, Hard Work and Research That You Have Put Into This Very Important Issue. Your Work Has Huge Value."



    Carl Richards, Owner of Clearwater Asset Management

  • "The World of Personal Finance Blogging Needs More Rob Bennetts. He’s Passionate. He’s Intelligent. He’s Writing Things That Go Against the Grain."





    Financial Uproar Blog

  • "Beyond Awesome."







    Larry, a PassionSaving.com Site Visitor

  • "The Wealth Management Industry Seems Intent on Containing This Discussion for Fear Clients Might Discover that the Emperor Has No Clothes."





    Adam Butler, Portfolio Manager

  • "Recommended Reading."







    Jesse's Cafe Americain Blog

  • “All Who Are Still Holding Equities at Present Levels Because Their Financial Adviser Insists that Timing Market Cycles Is Impossible to Do -- Read This!"





    Juggling Dynamite Blog

  • "The Fact that Aggressive and Short-Term Market Timing Was Unproductive Did Not Mean That There Were Never Times When It Would Be Wealth-Maximizing to Get Out of the Market."



    Scott Burris,Director of the Center for
    Health Law, Policy and Practice

  • "The Amount of Return You Can Expect From a Diversified Equity Portfolio Is Inversely Correlated to the Market Valuation at the Start of the Holding Period. It Is One of the Most Robust Statistical Relationships in Modern Finance."




    Todd Tresidder, Financial Mentor Blog

  • "Why Would Your Job Be Jeopardized
    By Such a Sensible Claim?"





    Marcelle Chauvet, Econmics Professor
    at University of California

  • "Received Worrisome E-Mail from Rob Bennett. Warns of Risk with Buy-and-Hold Investing
    -- I Have No Clue."





    Vivek Wadhaw, Business Week Columnist

  • "As Attorney, Tax Expert and Financial Writer Rob Bennett Told Us, the Problem Is That, By the Time Shiller Published His Research, Many Big Names Had Already Endorsed Buy-and-Hold."




    ZeroHedge.com

  • "This Seems to Me to Be a Fundamental Challenge to Some of the Most Basic Tenets of the Boglehead Paradigm."






    Bogleheads Forum Poster

  • "You Want to be Very, Very Wary of Anything Connected with Rob Bennett, the Most Infamous Troll in the History of Investing Forums on the Internet."





    Alex Fract, Owner of Bogleheads Forum

  • “I’ve Had My Fill of Those Long-Winded Posts that Include Distortions, Unsubstantiated Claims, Misquotes and Comments Taken Out of Context.”




    Mel Lindauer, Co-Author of
    The Bogleheads Guide to Investing

  • "Haven't You Noticed Yet That NO ONE Discusses Your Ideas, NO ONE Mentions Your Name, NO ONE Goes To Your Web Site."





    One of the Greaney Goons

  • "I've Had Similar Experiences. I Know of Two Young Professors Who Wanted to Do Research on Fundamental Index and Reported to Me That Their Colleagues Advised Them That This Line of Research Could Derail Their Career Prospects."



    Rob Arnott, Financial Analysts Journal Editor

  • "As with Drug Studies Funded by Drug Companies, It Would Be Churlish to Suppose that the Chicago School of Business Was in the Bag. But It Would Also Be Idealistic to Assume That There Was No Funding Bias at All."




    Bogleheads Poster

  • "This Sort of Intimidation Is Not Acceptable. The Cigarette and Pharmaceutical Industries Found Research Supporting Their Products By Funding It. But That Was Big Money Supporting Outcomes, Not Dissuading Others."




    Lyn Graham, 25-Year CPA

  • "Financial Economists Gave Little Warning to the Public About the Fragility of Their Models. There Is No Ethical Code for Professional Economic Scientists. There Should Be One."



    Paper Titled The Financial Crisis and
    the Systemic Failure of Academic Economics

  • "The Situation [Referring to the Intimidation Tactics Used to Silence Academic Researcher Wade Pfau's Reporting of the Dangers of Buy-and-Hold Investing Strategies] Seems Well Below Any Professional and Academic Acceptable Standards."



    Albert Sanchez Graells, Law Lecturer

  • Many Academics Can Become Quite Strident When Their Views Are Challenged. Academia Is Often Subject to Self-Serving Bias That Obliterates Ethical Bounds."





    Ted Sichelman, Law Professor

  • "I Don't Like Too Much the Conspiracy Idea. I Am Not Pressured By Anyone in My Research."






    Roberto Reno, Economics Professor

  • "This Is What Investing Should Be -- Calculated, Deliberate, Confident, Informed and Simple."






    Aaron Friday, Owner of Aaron's Blob Blog

  • "It Is Obvious that Rob, in Attempting to Identify New Safe Withdrawal Rate Strategies...Is Goring Your Ox. If Rob Improves on [the] Safe Withdrawal Rate Methodology, the Implication Is Clear: You Are All, Metaphorically, Out of Business."



    Bogleheads Poster

  • "I Applaud His Effort to Inject Another Piece of Objectivity Into a Very Complex, Highly Subjective Topic -- Making Money in the Market."





    Bogleheads Poster

  • "Naturally, I Am Finding That Valuation-Informed Indexing Can Allow You to Reach a Wealth Target With a Lower Saving Rate and to Use a Higher Withdrawal Rate in Retirement Than You Could With a Fixed Allocation."



    Wade Pfau, Professor of Retirement Income
    at The American College

  • "A Careful Examination of Past Returns Can Establish Some Probabilities About the Prospective Parameters of Return, Offering Intelligent Investors a Basis for Rational Expectations About Future Returns."




    Jack Bogle, Founder of Vanguard Funds

  • "The Ability to Estimate the Long-Term Future Returns of the Major Asset Classes Is Perhaps the Most Important Investment Skill That An Indivisual Can Possess."




    William Bernstein, Author of The Four Pillars of Investing

  • "The Stock Market Resembles Roulette. In Both Cases, the Accuracy of Sensible Forecasts Rises Over Time."






    Andrew Smithers, Co-Author of Valuing Wall Street

  • "Returns Are for the Most Part a Matter of Simple Arithmetic...Much of Our Industry Seems Fearful of Basic Arithmetic of This Sort."





    Rob Arnott, Financial Analysts Journal Editor

  • "How Can It Be That One-Year Returns Are So Apparantly Random and Yet Ten-Year Returns Are Mostly Forecastable? In Looking at One-Year Returns, One Sees a Lot of Noise. But Over Longer Time Intervals the Noise Effectively Averages Out and Is Less Important."




    Yale Economics Professor Robert Shiller

  • "The Notion That Rich Valuations Will Not Be Followed By Sub-Par Long-Term Returns Is a Speculative Idea That Runs Counter to All Historical Evidence. It Is an Iron Law of Finance That Valuations Drive Long-Term Returns."




    John Hussman

  • "It's January and the Temperature Is Below Freezing. If You Asked Me Whether It Will be Warmer or Cooler Next Tuesday, I Would Be Unable to Say. However, If You Asked Me What Temperature to Expect on April 9, I Could Predict "Warmer Than Today" and Almost Surely Be Right."



    Michael Alexanfer, Author of Stock Cycles

  • "If the Response Is "Who Knew?", It Won't Be Much Comfort for Retirees in the Employment Line at Wal-Mart. This is Especially True Since a Rational Understanding of History and the Drivers of Longer-Term Stock Returns Can Help Retirees To Avoid That Surprise."




    Ed Easterling, Author of Unexpected Returns

  • "New of the Demise of the Random Walk Has Only Very Slowly Spread, In Part Because Its Overthrow Came as a Shock. If the Random Walk Hypothesis Were Correct, the Most Likely Return Would Be the Historic Average Return. The Evidence, However, Is Strongly Against This."



    Andrew Smithers, Co-Author of Valuing Wall Street

  • "I Don't Think We Can Debate the Merits of This Type of Forecasting [Referring to the Numbers Generated by The Stock-Return Predictor] Unless We Believe 'This Time It's Different.'"



    Poster at Bogleheads Forum
    (Before the Ban on Honest Posting Was Adopted There)

  • "I've Seen Absolutely Nothing From You That I Can Use in a Tangible Fashion to Formulate an Investment Plan. Your Ideas Are So Mushy That It's a Complete Waste of Time to Even Consider Them."




    Bogleheads Forum Poster

  • "Do You Really Think Your Tool
    [The Stock-Return Predictor]
    Is 'Wiser' Than the Market?
    If It Was That Easy,
    Everybody Would Be Doing It."



    Bogleheads Forum Poster

  • "The Expected Return of Stocks [As Reported By The Stock-Return Predictor] Needs To Be At Least the Treasury Inflation-Protected Securities (TIPS) Rate for Stock Investing To Make Sense."




    Bogleheads Forum Poster

  • "I Have Used Valuations to Adjust My Asset Allocation For Many Years With Very Favorable Results."





    Poster at Bogleheads Forum
    (Prior to the Ban on Honest Posting)

  • "I Don't Care If You Do or Don't Believe That the Market Will Behave Similarly in the Future As It Has in the Past. Either Way, This [The Stock-Return Predictor] Is an Excellent Way to Understand What the Market Has Done In the Past."


    Poster at Bogleheads Forum
    [Prior to the Ban on Honest Posting]

  • "My Role Is To Give People Who Don't Like What the Historical Stock-Return Data Says About the Effect of Valuations on Long-Term Returns Somebody To Yell At On Internet Discussion Boards."



    Rob Bennett at Bogleheads Forum
    (Prior to the Ban on Honest Posting)

  • "It Really Is a Shame and Indefensible That So Many Feel the Need to Jump Into It With No Interest of Posting on the Topic But Just to Disrupt. Are You That Insecure? Some on the Forum Have an Interest in This Topic. If You Don't, Stay Out!"



    Poster at Bogleheads Forum
    [Prior to the Ban on Honest Posting]

  • "Irrational Behavior Does Follow Patterns. But How Many Experts in Behavioral Finance Believe That Such Knowledge Can Be Used to Predict Markets? Basically, None. Your Model Cannot Attain the Level of Predictive Value You Claim."



    Poster at Bogleheads Forum
    [Prior to the Ban on Honest Posting]

  • "The Safe Withdrawal Rate Studies Are Based on History. This [The Retirement Risk Evaluator] Shows, Based on the Same History, What the Probabilities Are for the Future at Various Starting Points. If the First Has Value, Then Surely This Does Too."



    Poster at Bogleheads Forum

  • "There Are Hundreds of People Who Contributed to This. This Calculator [The Stock-Return Predictor] Demonstrates in a Compelling Way the Power of This New Internet Discussion-Board Communications Medium."




    Rob Bennett at the Bogleheads Forum
    (Prior to the Ban on Honest Posting)

  • "A P/E10 of'26' Is Bad. Now Look at the 30-Year Return Predicted by the Calculator -- 5.4 Percent Real. That's Not Bad. There Are All Sorts of Strategic Implications That Follow From Understanding That Stocks Provide Different Sorts of Returns Over Different Sorts of Time-Periods."




    Rob Bennett

  • "I Would Never Invest in Anything Without Having Any Idea What the Expected Return Is. For Instance, I Would Not Walk Into a Bank And Say "I'll Take One Certificate of Deposit, Please" WIthout Asking What Rate They Are Offering."



    Poster at Bogleheads Forum
    [Prior to the Ban on Honest Posting]

  • "I've Seen Things Said on Investing Boards That I Have Never Heard Said in Discussions of Any Non-Investing Topic. The Question of Whether Valuations Affect Long-Term Returns Is a Topic That Causes People More Emotional Angst Than Does Abortion or Impeachment Proceedings or the War in Iraq."



    Rob Bennett at the Bogleheads Forum

  • "It's Not Possible For Those Who Have Come to Believe That Stocks Are Always Best to Accept that Valuations Matter. The Two Beliefs Are Mutually Exclusive. If Valuations Matter, There Is Obviously Some Valuation Level At Which Stocks Are Not Best. The Two Paradigms Cannot Be Reconciled."


    Rob Bennett

  • "The Great Safe Withdrawal Rate Is Over. Rob Bennett Has Won.The Technical Evidence Supporting This Assertion Is Rock Solid."




    John Walter Russell,
    Owner of the Early Retirement Planning Insights Site
    [This Statement Was Put Forward on August 3, 2003.]

  • "I Am Afraid that the Emperor SWR [for "Safe Withdrawal Rate"] Has No Clothes."





    A Poster at the Early Retirement Forum
    [This Statement Was Put Forward on October 8, 2003.]

  • "I Cite You and John Walter Russell in My Paper as the Earliest and Strongest Advocates of This Approach [New School Safe Withdrawal Rate Research]."




    Wade Pfau, Professor of Retirement Income
    at The American College

  • "Dear Rob -- I Just Became Aware of Your Past Research in September. Since Then, I've Read Archives From Many Discussion Boards and Websites, and I Always Find Your Writing to Be Very Interesting and Intriguing."



    Wade Pfau, Professor of Retirement Income
    at The American College

  • "I Think Rob Bennett Did Provide An Important Contribution in Terms of Describing a Way for P/E10 to Guide Asset Allocation for Long-Term Conservative Investors. I Also Think He Was Right on the Issue of Safe Withdrawal Rates."


    Wade Pfau, Professor of Retirement Income
    at The American College

  • "What Studies Show This [That Long-Term Timing Doesn't Work]? In Particular, Are There Some Academic Studies That I Haven't Found Yet? That's All I Want to Know."




    Academic Researcher Wade Pfau at the Bogleheads Forum After His Own Search of the Literature Turned Up Not a Single Such Study

  • "Because the Precise Timing of This Mean Reversion Is Not Known in Advance, Expecting the Result to Happen in the Short-Term Will Not Be Possible. But Long-Term Investors Who Can Be Patient Can Wait for This Mean Reversion and Will Eventually Come Out Ahead."




    Academic Researcher Wade Pfau

  • "Your Work Is at Odds with the Ethos of the Board -- Here the Theme is John Bogle's Philosophy, Which Eschews Market Timing. This Board Came Into Existence to ESCAPE One Individual, the Very Individual With Whom You Have Openly Aligned Yourself."




    A Lindaurhead (to Researcher Wade Pfau)

  • "The Problem With Long-Term Market Timing Is That It Takes Too Long to Find Out If You Are Right or Wrong."






    A Poster at the Bogleheads Forum

  • "Why Is It Such an Odious Violation of the Tenets of Bogleheadism to Explore Whether Someone Who Has Enough Patience Might Be Able to Benefit from the Transitory Nature of Speculative Returns (the Idea That the P/E Ratio Eventually Ends Up Where It Started)?"




    A Poster at the Bogleheads Forum

  • "Let Me Explain Why I Posted About This Here. Valuation-Informed Indexing Has Had Critics for Years. But Until Norbert Did It In 2008, Nobody Seemed to Have Provided a Serious Investigation of It. I Couldn't Understand Why. That Bothered Me."



    Researcher Wade Pfau at the Bogleheads Forum
    (Prior to the Ban on Honest Posting)

  • "If You Really Don't Like Market Timing in Any and All Forms, You May Not See Any Point in an Empirical Investigation. You View Me as One of a Long Line of Hucksters Trying to Sell You Some Snake Oil. I Don't Want to Be Such a Person."



    Researcher Wade Pfau at the Bogleheads Forum
    (Prior to the Ban on Honest Posting)

  • "Having a Completely Ineleastic Demand for Equities Is a Bit Bonkers. No One Acts That Way with Life's Other Important Commodities. Campbell Advocates a Linear Valuations-Based Strategy so That You Wouldn't Be Making Big Changes. This Would Be Like Rebalancing But More Flexible."



    A Poster at the Bogleheads Forum

  • "The Whole Idea of Valuation-Informed Indexing Belongs to You. Do You Mind if I call the Paper 'Valuation-Informed Indexing'? I Would Give You Credit. I Have Been Toying With the Idea of Sending the Paper to the Journal of Finance, Which Is the Most Prestigious Journal in Academic Finance."


    Academic Researcher Wade Pfau, in an E-Mail to Rob

  • "I Definitely Need to Cite You as the Founder of Valuation-Informed Indexing, As I Have Not Found Anyone Else Who Can Lay Claim to That. Shiller Pointed Out the Predictive Power of P/E10 But Never Discussed How to Incorporate It Into Asset Allocation, As Far As I Know."




    Academic Researcher Wade Pfau

  • "I Tested a Wide Variety of Assumptions About Asset Allocation, Valuation-Based Decision Rules, Whether the Period Is 10, 20, 30 or 40 Years, and Lump-Sum vs. Dollar-Cost Averaging To Show That the Results Are Quite Robust to Changes In Any of These Assumptions."




    Academic Researcher Wade Pfau

  • "Yes, Virginia, Valuation-Informed Indexing Works!"




    Academic Researcher Wade Pfau
    (Wade Holds a Ph.D. in Economics from Princeton.)
    (The Buy-and-Hold Mafia Threatened to Get Wade Fired From His Job When He Reported His Findings.)

  • "I Wrote Up the Programs to Test Your Valuation-Informed Indexing Strategies Against Buy-and-Hold and I Am Quite Excited. You Say in the RobCast That VII Should Beat Buy-and-Hold About 90 Percent of the Time. I Am Getting Results That Support This."




    Academic Researcher Wade Pfau

  • "Never Underestimate the Power of a Dominant Academic Idea to Choke Off Competing Ideas, and Never Underestimate the Unwillingness of Academics to Change Their Views in the Face of Evidence. They Have Decades of Their Research and Academic Standing to Defend."




    Jeremy Grantham

  • "There's So Much That's False and Nutty
    in Modern Investing Practice."






    Warren Buffett

  • "Following Conventional Wisdom Has Led a Generation of Investors Down the Road to Ruin."






    Steve Hanke

  • "It Is Sad That the Idea That Price Doesn't Matter...Should Ever Have Been Seriously Considered".






    Andrew Smithers, Co-Author of Valuing Wall Street

  • "The Conventional Wisdom of Modern Investing Is Largely Myth and Urban Legend."





    Rob Arnott, Former Editor of
    Fianncial Analysts Journal

  • "Economics Is a Dog's Breakfast of Theoretical Ideas and Alleged Causal Relationships That Are At All Times Unproven and In Dispute."





    Terence Corcoran, Editor of National Post

  • "Since They Did Not Diagnose the Disease, There Is Little Popular Confidence That They Know the Cure. What If Economics Is, Actually, At the Same Level as Medicine Was When Doctors Still Believed in the Application of Leeches?"




    Gideon Rachman, Financial Times

  • "One of the Most Remarkable Errors
    in the History of Economics."



    Yale Economics Professor Robert Shiller
    (Referring to the Logical Leap from the Finding That Short-Term Price Changes Are Unpredictable to the Conclusion That the Market Sets Prices Properly)

  • "Everything Has Fallen Apart."






    Peter Bernstein, Author of Against the Gods
    (Referring to Old Views About How Markets Work)

  • "We Wonder Why Funds and Banks, Full of the Best and Brightest, Have Made Such a Mess of Things. Part of the Reason Is That We Have Taught Economic Nonsense to Two Generations of Students."




    John Mauldin, Thoughts From the Frontline

  • "Perhaps Most Scandalously, the Theory [Behind Buy-and-Hold] Remained Received Wisdom Long After Empirical and Theoretical Arguments Had Demolished It Within the Academic Community."




    John Authers, Financial Times

  • "I Love the Humans Dearly (the Title of the Book I Am Writing Is Investing for Humans: How to Get What Works on Paper to Work in Real Life) But They Can Be a Trial at Times. Hey! Helping the Humans Learn What It Takes to Invest Effectively Is Not All That Different From Being Married!



    Rob Bennett

  • "We Are Going to See Hearts Melt Following the Next Crash. I Will Be Working Side-By-Side With All of My Many Buy-and-Hold Friends to Rebuild Our Broken Economy."





    Rob Bennett

  • "Wow, I Did Not Realize You Had Achieved This Much Success and Had Many Devoted Believers/Followers. That’s Great, Then Ignore the Opposition. It Is Great to Have Opposition: That Means You Are Doing Something Right."




    Robert Savickas, Associate Finance Professor
    at George Washington University

  • "I Do NOT Believe I Know It All. I Believe That Shiller Discovered Something Very Important and It Appalls Me That More People Are Not Exploring the Implications of His Findings. My Aim Is To Launch a National Debate."




    Rob Bennett

  • "I Can See How Many Readers Would Be Put Off by the Somewhat Sensational/Scandalist Tone and Would Not Persevere to Read, Thinking You Are Losing Your Mind."




    Robert Savickas, Associate Finance Professor
    at George Washington University

  • "I LOVE Everything About Buy-and-Hold Other Than the Failure to Encourage Investors to Take Price Into Consideration When Setting Their Stock Allocations. That's a Mistake That Was Made Because Shiller’s Research Was Not Available at the Time The Strategy Was Being Developed."



    Rob Bennett

  • "Valuation-Informed Indexing Sounds Like a Real Thing. If It Is and I Can Thoroughly Understand It, Then It Will End Up In My Classrooms and in My Students' Minds (Of Course, With References to You and Wade)."




    Robert Savickas, Associate Finance Professor
    at George Washington University

  • "I Can Confirm Wade Pfau's Experience. Whenever I Send My Papers to the Financial Analysts Journal or Similar Traditional Journals, I Get Rejected."





    Joachim Klement, CIO at Wellershoff & Partners

  • "As a Fan of Thomas Kuhn's The Structure of Scientific Revolutions, I Know That Progress Can Be Frustratingly Slow and What Is Typically Needed Is Either a Crisis or the Ascent of a New Generation of Scientists Who Did Not Build Their Careers on the Old Models and Theories."




    Joachim Klement, CIO at Wellershoff & Partners

  • "We Trace the Deeper Roots [of the Financial Crisis] to the Economics' Profession's Insistence on Constructing Models That, By Design, Disregard the Key Elements Driving Outcomes in Real World Markets."




    Knowledge@Wharton

  • "Rob Gets Himself So Worked Up Over What Someone Else Is Doing With Their Own Money and Not Bothering Rob in the Least. As Long As They Aren't Knocking on Your Basement Door, What Do You Care? They Are Happy and Content. Leave Well Enough Alone and Focus on Your Own Account."


    Dab, One of the Greaney Goons

  • "I've Been on Forum Since the BBS Days and I Think Rob is Special. He Could Be an Internet Meme If He Put Some Effort Into It. Someday, He Will Realize That the Only Thing He's Good At Is Being an Epic Loser. He Just Needs to Embrace That Idea and Run With It. Watch Out, LOLCats, Here Comes Pathetic Guy!"


    Wabmaster, One of the Greaney Goons

  • "Your Lies Are Not Even in the Realm of the Possible, Much Less Actually Credible, Much Less Actually True."






    Drip Guy, One of the Greaney Goons

  • "I'm Your Friend. I Am Not a Boil on Your Ass."






    Rob Bennett, In a Response Comment
    to One of the Greaney Goons

  • "You Guys [the Greaney Goons] Are the Same Jokers Who Have Done This Before, Sparring with Rob Over Nonsensical Issues On This Site and Others, Leveling Personal Attacks, and You Don't Even Use Real Names! Rob Is Entitled to His Opinion, But the Fact That You Challenge Every Jot and Tittle of What He Says Makes It Clear You Have An Unholy Agenda. Please Take It Elsehwere."

    Kevin Mercadante,
    Owner of the Out of Your Rut Site

  • "Rob, Take This As Friendly Advice. You're a Smart and Articulate Guy and You Could Be Making Valuable Contributions to This Discussion. I've Dealt with the Mentally Ill Before and I've Found That They Sometimes Can Be Reasonable If Gently Redirected."



    Goon Poster

  • "Always Remember Others May Hate You, But Those Who Hate You Don't Win Unless You Hate Them, and Then You Destroy Yourself."





    Richard Nixon

  • "I’m a Numbers Guy. And I Believe I Understand Rob’s Thesis, that Future Returns, Over the Next Decade, Have a Tight Inverse Correlation to the PE10 for the Starting Point. Remember, Correlation Doesn’t Need to be 100%, Only That There’s a Bell Curve of Potential Outcomes that Shift Meaningfully Based on the Input."


    Owner of Joe Taxpayer Blog

  • "What a Difference a Threat to Get the Father of Two Small Children Fired From His Job Has on an Investing Discussion, Eh? Long Live Buy-and-Hold! It’s Science! With a Marketing Twist!"




    Rob, Referring to the Wade Pfau Matter

  • "I Respect Rob and His Analysis. He's Bright, Energetic and Passionate. [The Goon Stuff] Is Really Nonsense. I Enjoy a Thought-Provoking Conversation With People I Respect."





    Owner of Joe Taxpayer Blog

  • "The Fact that Shiller is a Proponent of the Approach Takes it from a Fringe View to Mainstream, in my Opinion."






    Owner of Joe Taxpayer Blog

  • "I Have had Academic Researchers Tell Me That They Dream of the Day When They Will be Able to do Honest Research Once Again. I Have had Investment Advisors Tell me That They Dream of the Day When They Will be Able to Give Honest Investing Advice Again."



    Rob Bennett

  • "Let’s Call a Spade a Spade, Shall We? Wade Pfau Stole Your Research and Put His Name on it, Throwing You Just a Tiny Crumb of Acknowledgement to Ward Off a Lawsuit. He’s Profiting Handsomely By His Theft, Leading a Charmed Life, Widely Published, Widely Respected. While Rob Bennett Continues to Toil in Total Obscurity. It’s So Incredibly Unfair, I Think If It Happened to Me, It Could Actually Drive Me Insane."

    One of the Greaney Goons

Navigation Menu 
  • About Us
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  • Blog
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    • 20 Dangerous Money Myths — They Think We’re Stupid!
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  • Valuation-Informed Indexing
    • Why Buy-and-Hold Investing Can Never WorkThe Buy-and-Holders are not evil people. They are smart and good people. They made a mistake. They were so excited about their early findings that they experienced cognitive dissonance when the mistake was revealed. They painted themselves into a corner and now don’t know how to get out. This article explains how the mistake was made and how we came to find ourselves in the trap we are in today.
    • About Valuation-Informed IndexingBackground, Basics and Links to Materials Giving More In-Depth Information
    • The Stock-Return PredictorStocks are NOT always worth buying. That’s a Wall Street lie! This calculator performs a regression analysis on the 140 years of historical stock-return data to reveal the most likely annualized 10-year return for stocks starting from any valuation level. It essentially tells you the price tag for stocks so that you can know whether they are worth buying or not.
    • The Retirement Risk EvaluatorRob pointed out the errors in the Old School safe withdrawal rate studies in May 2002. That post kicked off the biggest controversy in the history of the internet. Today, The Wall Street Journal, Smart Money and The Economist all acknowledge that Rob had it right all along. But they still don’t provide calculators that give the right numbers! The safe withdrawal rate is not a constant number but VARIES with changes in the valuation level that applies on the day the retirement begins. This calculator provides all the details you need for effective planning.
    • The Investor’s Scenario SurferI have run this calculator hundreds of time. it is in my assessment the most powerful tool for learning how stock investing works available today. You have the option of choosing a new stock allocation in each year of a realistic 30-year sequence of returns. You can compare your results with what you would have achieved with a Buy-and-Hold strategy. You will find that Valuation-Informed Indexing strategies yield larger portfolios in 90 percent of your tests of the concept. What matters is what happens in the long term! This tool tells you what strategies give the best results in the long term.
    • The Investment Strategy TesterIf you are worried about losses you have suffered in recent years, you can use this tool to learn what you need to do to get back on the track to early financial freedom. The Strategy Tester lets you design a strategy you want to check out. Then it runs the hundreds of Scenario Surfer tests to see how the strategy compares with other possibilities you identify. The color-coded graphic gives you a good idea of what the odds are of good and bad outcomes for up to four investing strategies at a time.
    • The Returns Sequence Reality CheckerWe all root for price gains in the stock market. Should we? This calculator says “no!” Today’s price increase lowers tomorrow’s price increase. This has been so for the entire history of the market. So the question is whether you should want to pay more for stocks now or later. You are far better off paying more later because that means you get to acquire more gain-producing goodness earlier in life and thus you will enjoy more compounding return magic. This one will blow your mind. It’s a very simple concept but a highly counter-intutive one and one that will someday soon change how we all think about stock investing.
    • Nine Valuation-Informed-Indexing Portfolio Allocation StrategiesThis is the most popular of the 200 hour-long RobCasts that I provide at the site. It explores the nuts-and-bolts aspects of Valuation-Informed Indexing — How often do you change your allocation and by how much?
  • The Buy-and-Hold Crisis
    • Academic Researcher Silenced by Threats to Get Him Fired From His Job After Showing Dangers of Buy-and-Hold Investing StrategiesMy aim is to get this story reported on the front page of the New York Times. On the day that happens, all the nastiness will stop. We will all be working together to bring the economic crisis to an end and to enter the greatest period of economic growth in our history.
    • Academic Researcher Silenced By Threats to Get Him Fired From His Job After Showing Dangers of Buy-and-Hold Investing Strategies — Teaser VersionThis is a briefer version of the same article, the article that I believe is the most important one that I have written in my 30-year journalism career. I believe that the story told at this web site is the most important economic and political story of any of our lifetimes and this article sums up the key points in one little package of dynamite. If Buy-and-Hold were a legitimate strategy, every Buy-and-Holder would be ashamed to learn that even one academic researcher was threatened. We cannot move forward so long as the intimidation tactics of the Buy-and-Holders dominate all discussions of what works in stock investing. I use this short version of the article in my e-mail campaigns aimed at getting researcher and stock advisors and bloggers and journalists and policymakers involved in our effort to open the internet up to honest posting on ALL investing topics. Please help get others involved if you can. We are all in this together!
    • Corruption in the Investing Advice Field — The Wade Pfau StoryThis article provides links to all of my reports on my 16 months of correspondence with Academic Researcher Wade Pfau, the collaboration that produced the research we co-authored that shows millions of middle-class investors how to reduce the risk of stock investing by 70 percent (Ssshh! The Wall Street Con Men don’t want this one getting out!) If you retain doubts re whether Valuation-Informed Indexing is a real thing, looking over the materials available at this page and then reading a few of the reports that strike you as particularly important will dispel them. I believe that Wade will someday win a Nobel prize for the work he did here. The reports show his own skepticism and his transformed into excited BELIEVER in the Valuation-Informed Indexing concept.
    • The Bennett/Pfau Research Showing Middle-Class Investors How to Reduce the Risk of Stock Investing by 70 PercentYou do not have to take on a large amount of risk to obtain good returns. Why should you? When you buy an index fund, you are buying a tin share in the productivity of the U.S. economy. The U.S. economy has been sufficiently productive to support an average annual stock return of 6.5 percent real for 140 years now. So that’s what you can expect if you invest in a sensible way. But you are not being sensible if you follow a Buy-and-Hold strategy. You MUST consider price when buying stocks just as much as you must consider price when buying anything else. This is the most important investing research published in 30 years. It frees all of us from dependence on Wall Street “experts.”
    • Buy-and-Hold Caused the Economic CrisisThe first step to curing an illness is coming up with a correct diagnosis. What we have been hearing thus far about what caused the economic crisis is Democrats yelling at Republicans and Republicans yelling at Democrats. This political attack-game gibberish will not cut it. We borrowed huge amounts of money from our future selves to finance the insane bull of the late 1990s. Now we are our future selves! Now we are paying the price! It hurts to know we caused this. Buy you know what? We never have to suffer through something like this again once we acknowledge the realities.
    • The True Cause of the Current Financial Crisis — Questions and AnswersYale Economics Professor Robert Shiller predicted the economic crisis in his book “Irrational Exuberance,” published in March 2000. How did he know? Shiller knows how stock investing works. He knows that the Pretend Money created during times of overvaluation ALWAYS disappears over the course of 10 years or so. When that money disappears from our portfolios, we cannot afford to spend as much. So tens of thousands of businesses fail and millions lose their jobs. We avoid economic crises by avoiding out-of-control bull markets. We avoid out-of-control bull markets by letting investors know the truth — When stocks are selling at insanely inflated prices, they offer a very poor long-term value proposition. The lies that Wall Street tells about stocks are destroying out free-market economic system.
    • Investing Discussion Boards Ban Honest Posting on ValuationsLots of people hate me. There was a time when I was receiving fresh death threats in my e-mail inbox on an almost daily basis. But lots of people love me too. Thousands of my fellow community members have told me that I am the first person who ever described how stock investing works in a way that truly hangs together. This article offers 101 comments of my fellow community members asking the Buy-and-Holders to knock off the funny business and permit civil and reasoned discussion of the last 30 years of peer-reviewed academic research. This article reveals the emotionalism of the Buy-and-Holders and it is the fact that Buy-and-Hold causes such emotionalism that tells me that it can never work in the long run.
    • Wall Street Journal Calls Buy-and-Hold a “Myth,” Endorses Valuation-Informed IndexingLot of smart people know that Buy-and-Hold is a big pile of smelly garbage. They are afraid to speak out today because they know what will happen to them if they do. But they try to position themselves for the post-next-crash period, when “Buy-and-Hold” will be an obscene phrase. Bret Arends tells us that the Wall Street Con Men “are leaving out half the story.” Precisely so. The purpose of this web site is to let you in on the half of the story that the Wall Street Con Men have been keeping from you for 32 years now.

“It Doesn’t Mean the New School is Absolutely Right and the Old School Should Be Summarily Dismissed”

November 4, 2008 By Rob

An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on October 23, followed by one that I sent to him on October 24.

Rob,

Just a quick email… yes, I agree pretty strongly with John’s comments below.

I’m extremely aware of the single-case sensitivity of the Old School studies, since by definition the actual safe withdrawal rate in the end hinges on a single time period that produces that worst case scenario data point. The only point I’ve been trying to make all along is that just because the New School extrapolates, and the Old School extrapolates, it doesn’t automatically mean the New School is absolutely right and the Old School should be summarily dismissed. They both have their flaws and risks with projections, and thus they both have relevance and need to be considered. Particularly since BOTH of them are particularly prone to extrapolation risk with P/E10 ratios significantly above 30, which of course is exactly the uncertain environment we’re trying to assess.

I’m not saying that New School is wrong. I’m just saying that I don’t think it’s appropriate to state that the New School has proven the Old School wrong to the point that the Old School should be utterly and completely dismissed. Especially since, when P/E ratios are NOT above 30, the data from the New School generally SUPPORTS the Old School results.

Respectfully,

– Michael

Michael:

Thanks for sharing your thoughts. I’ll share this with John.

I hope your trip is going well.

Rob

Related Posts

  • “The Old School Studies Have an Extrapolation Problem of Their Own” “The Old School Studies Have an Extrapolation Problem of Their Own”
  • “He Explores the Use of Timing Strategies<br> to Enhance the Safe Withdrawal Rate”“He Explores the Use of Timing Strategies
    to Enhance the Safe Withdrawal Rate”
  • “No One Can Attain True Expertise Because of the Taboo on Pointing Out the Flaws of Passive Investing””“No One Can Attain True Expertise Because of the Taboo on Pointing Out the Flaws of Passive Investing””
  • “Make Waves! Make Waves!<br>We Need More Wavemakers In InvestoWorld!”“Make Waves! Make Waves!
    We Need More Wavemakers In InvestoWorld!”
  • “All in the Investing Field are Struggling to Come to Terms with Newly Discovered Realities Today”“All in the Investing Field are Struggling to Come to Terms with Newly Discovered Realities Today”
  • “What We Need to See is for All Investors<br> to be Exposed to a Broader Range of Viewpoints”“What We Need to See is for All Investors
    to be Exposed to a Broader Range of Viewpoints”

Filed Under: Michael Kitces & VII Tagged With: Michael Kitces, SWRs

Comments

  1. John Walter Russell says

    November 4, 2008 at 6:45 pm

    The problem with the Old School studies was that advocates claimed accuracy as market valuations rose far beyond their range of applicability.

    Old School advocates froze research. There was much more to learn. Too many resisted all new investigations.

    Have fun.

    John Walter Russell

Browse Michael Kitces & VII

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    Their Passive Investing Beliefs"
    8 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on November 10. Rob, I will be having dinner with Bill [the reference is to Bill Bengen, an Old School SWR researcher] tonight, in advance of the panel session tomorrow. Although I don’t know how much we’ll be getting into this topic during the panel session itself, I’m sure it will be a part of…

  • Confidence, Not Defensiveness"" target="_blank">"A Sound Methodology Would Inspire
    Confidence, Not Defensiveness"
    7 Comments

    An earlier blog entry described the background of some recent e-mail correspondence between Michael Kitces and I on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Micahel on August 27. Michael: That all makes sense. I come from a journalism background. I think that makes a difference in how I take things in. Here's a blog entry that I wrote entitled "We Need a Tim Russert in…

  • "I'm Quite Encouraged...with John Russell's Results" 5 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on September 24. Rob, Very interesting! Thanks for sharing this material! I think this is the exact road that I would look to go down as well. From the financial planner's context, I don't think that Switching Strategy B is likely viable - the planning community would view those changes as…

  • "It's Not Hard to Figure Out Why Michael Kitces Would Be Happy to Point Out That the Safe Withdrawal Rate Changes in One Direction Because of Valuations But Not in the Other. That's Just Good Marketing!" 0 Comments

    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: Note that Michael states the following in the comments section: "The "good" news is that this doesn't really change SWR much, as the reality is that the SWR results all come from high-valuation environments in the first place. Actually, the key distinction is that if you retire and valuations are NOT high, the SWR is more like 5%-6%, not 4%! See…

  • "The Old School Studies Have an Extrapolation Problem of Their Own" 0 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on October 22. Michael: Thanks for your frank and helpful e-mail.  I shared the e-mail with John. He sent me the words below, which I thought you might want to take a look at. I hope to be able to get my own response out tomorrow. Rob,   A quick note. I will finish reading this…

  • " My Job Is To Get Everybody Talking To Each Other So That We Begin Reaping the Benefits of the Amazing Stuff We Have Been Learning for 30 Years" 0 Comments

    Set forth below is the text of a comment that I put to a blog entry a the Mint.com site titled Timing the Market Using Stock Valuations: I’m responding to the comment by Value RIch. He asks about my relationship with Michael Kitces and comments (with at least a small measure of sarcasm, I suspect) that I “must be quite the study to have bested all the leading figures into a whole new investing movement.” Here’s a link to the home page of my…

  • are Just Reporting What the Numbers Say"" target="_blank">"The Common Belief is That the Studies
    are Just Reporting What the Numbers Say"
    0 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on August 25 . Michael: Thanks so much for crafting that e-mail. We do not agree on everything, but we agree on a great deal. And on several of the points re which we do not agree, I think you are making points that need to be given careful consideration. As I mentioned earlier, I intend to…

  • to be Exposed to a Broader Range of Viewpoints"" target="_blank">"What We Need to See is for All Investors
    to be Exposed to a Broader Range of Viewpoints"
    2 Comments

    An earlier blog entry described the the background of some recent e-mail correspondence between Michael Kitces and I on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent my way on the afternoon of August 21. Michael: Thanks for another fine e-mail response. The words that jump out at me are: "I most definitely do NOT view the existing body of research on SWRs as the final conclusion. It is a body of research that is still developing and…

  • Michael Kitces Posts An Important Article Confirming Several of John Walter Russell's Breakthrough Insights From His Days at the Safe Withdrawal Rate Research Group Board 0 Comments

    My good friend Michael Kitces has posted an important article re safe withdrawal rates (and valuation-informed strategies in general) at his blog. It is called Should Equity Return Projections Be Reduced for Today's High Shiller CAPE Valuation? Juicy Excerpt #1: A look at the available market data suggests that realistically, it would be appropriate to reduce equity return assumptions by about 100bps (or 1 percentage point) over the next 30 years, to reflect the current valuation…

  • "I'm Interested in Seeing These Dialogues Move Forward" 8 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on November 24: Rob, I'll have to see what I can do to try to listen to the Podcast. Life is hectic these days, and it's tough to fit in a 70 minute podcast. :) I don't know what you cover in the podcast, but I do have to admit that the title sounds rather negative towards me. "My Conversations…

  • Apply at Different Valuation Levels"" target="_blank">"Different Worst-Case Scenarios
    Apply at Different Valuation Levels"
    3 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on August 24. Michael: Thanks again for being willing to engage in some helpful (I hope on your end as well as mine) back-and-forth discussion. I do not believe that the Old School SWR studies look at the worst-case scenario. This was so even before we got to the crazy valuation levels that…

  • Able to Help...Get the Word Out"" target="_blank">"I Have Hopes That You Might Be
    Able to Help...Get the Word Out"
    0 Comments

    Yesterday's blog entry set forth the text of an e-mail sent to me by Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of the e-mail that I sent in response on Wednesday, August 20. Michael: Thanks for your response. I apologize for not getting back to you sooner. I had a big computer problem (my logic board failed -- not my hard drive, so I did not lose data) on Saturday and I am now trying to catch up on a lot of e-mails that came in during the…

  • "No One Can Attain True Expertise Because of the Taboo on Pointing Out the Flaws of Passive Investing"" 0 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on November 25: Michael: I changed the title of the podcast to "My Conversations with Michael Kitces." The podcast itself still includes the discussion arguing that no one can attain true expertise today because of the taboo on pointing out the flaws of the Passive Investing model. But the…

  • "My Concern, Of Course, Would Be For All Those...Who May [Face] Some Painful Choices Ahead" 4 Comments

    An earlier blog entry described the background of some recent e-mail correspondence between Michael Kitces and I on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent my way on the afternoon of August 21. Rob, Thanks so much for the feedback! My deepest sympathies on your computer problems - I feel like I live and breathe by my computer and internet connection these days, so I definitely understand your pain! Feel free to draw from my email for…

  • If They Do Anything Besides Being Passive"" target="_blank">"A Large Number of People Will Harm Themselves
    If They Do Anything Besides Being Passive"
    4 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on November 25: Rob, Thanks for the follow-up on this. Just bear in mind that I don't think you're EVER going to see a "true" universal consensus on this issue, if only for the simple reason that many people invest so emotionally they WILL ALWAYS make terrible mistakes and do harm to…

  • "A Meeting Place for Financial Planners Looking for an Alternative to Passive Investing" 2 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on November 24: Michael: I hope things are going well with you. I posted a Podcast today summarizing in audio form our e-mail correspondence. I don't believe that there is anything shockingly new in it, but, since it includes your name in the title, I thought that I should let you know. Please…

  • " I Am...Shocked...That You Would Say I Don’t Think We Should Warn People About These Risks" 2 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent me on October 18. Rob, I wanted to touch base with you, because the following quote message board quote just came to my attention: "Michael Kitces also said something along these lines when he said that, while he agrees that many will suffer financial losses because of the errors in the Old School studies,…

  • Rob to Michael Kitces: "The Other Big Issue Here Is WHY Do Things Go As You Properly State They Do -- Why Do High Valuations Predict Different Things in 10 Years and in 30 Years? This Is Just What We Should Expect to See If Shiller Is Right That It Is Investor Emotions That Serve As the Primary Determinant of Stock Prices Rather Than Economic Developments. Investor Emotions Follow the Same Pattern Over and Over Again." 0 Comments

    Set forth below is the text of a comment that I recently posted to an article on safe withdrawal rates posted by Michael Kitces at his blog:  Michael: This is an A+++ article. You make some amazingly important points that have been generally overlooked by most in this field for years now. I write a weekly column at he Value Walk site on Valuation-Informed Indexing. I will be exploring this article in depth in one of my future columns there. The point you make re how high valuations…

  • Michael Kitces Writes a Fine Article on Valuation-Informed Indexing and the New School of Safe-Withdrawal-Rate Analysis 10 Comments

    Michael Kitces has written a fine article on Valuation-Informed Indexing and the New School of Safe-Withdrawal-Rate analysis. It is called Shiller CAPE Market Valuation: Terrible for Market Timing, But Valuable for Long-Term Retirement Planning. Juicy Excerpt #1: Nonetheless, the reality is that while Shiller CAPE has little predictive value in the short term, its correlation to market returns is far stronger over longer time periods; Shiller CAPE shows its strongest correlation to nominal…

  • "An Attitude Born of a Profession that Found Much of its Early Growth in the Middle of the 1982-1999 Era" 12 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on November 25: Rob, Thanks for your patience with me on the podcast title. This sounds like a fine solution. And I didn't mean to undermine your point about experts and expertise - you've posed an interesting theory that would be a good discussion (a conversation for another time), but it's…

  • One Worst-Case Scenario"" target="_blank">"By Definition, There's Only
    One Worst-Case Scenario"
    4 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent my way on August 23. Rob, My punctuation emphasis regarding the idea of predicting long-term returns by looking at initial market valuation was deliberate. The reality is that a significant portion of the financial planning community also still ascribes to the passive investing approach - thus the…

  • "If Michael Kitces Tried Being Fully Honest, I Would Back Him Up. And, If Michael and I Were Both Fully Honest, Wade Pfau Would Join Us. Then Rob Arnott Would Sign Up. Then Shiller. Then Bogle. And On and On. There's Safety in Numbers. And There Will Be Even More Money to Be Made Promoting Valuation-Informed Indexing As There Is Promoting Buy-and-Hold Today Once This Massive Act of Financial Fraud Has Been Widely Exposed. All of Us Who Long to Do Honest Work in This Field Need to Stick Together to Make Our Little Dream Come True." 0 Comments

    Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: “Michael is a super-smart guy and a super-nice guy ” So, is Michael Kitces going to jail, Rob? I don’t think that Michael will be going to jail. But it’s not me who decides the matter, Anonymous. It’s the millions of middle-class investors whose lives are in the process of being destroyed who will decide the matter. If I were in Michael’s…

  • "It Doesn’t Mean the New School is Absolutely Right and the Old School Should Be Summarily Dismissed" 1 Comment

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on October 23, followed by one that I sent to him on October 24. Rob, Just a quick email… yes, I agree pretty strongly with John’s comments below. I’m extremely aware of the single-case sensitivity of the Old School studies, since by definition the actual safe withdrawal rate in the end hinges…

  • My E-Mail to Michael Kitces, Director of Financial Planning at Pinnacle Advisory Group, Inc. 1 Comment

    My blog entry for last Thursday reported on recent research by Michael Kitces, Director of Financial Planning at Pinnacle Advisory Group, Inc., showing quite properly that valuations affect safe withdrawal rates (SWRs) in an upward direction but failing to report that valuations affect SWRs in a downward direction as well. Set forth below is the text of an e-mail that I sent to Michael on Friday. Michael: This is Rob Bennett. I am the founder of the Retire Early discussion-board…

  • "There Is No One Withdrawal Rate That Works in All Circumstances. I Have Been Saying That Since the Morning of May 13, 2002, and Now This Article Points Out That Michael Kitces Believes This As Well. Good for Michael." 0 Comments

    Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Uh oh. Michael Kitces says that you are wrong on the SWR. https://www.marketwatch.com/story/dont-cheat-yourself-with-the-4-rule-2018-05-04?siteid=yhoof2&yptr=yahoo We need you to correct your mistake by close of business today and end your campaign of fraud. Michael and I have had numerous conversations about safe withdrawal rates, as you know. I think…

  • "It's Still an Evolving Body of Research" 3 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on August 24 . Rob, I don't mean to understate the impact, but I think the essence of your disagreement with the Old School SWR research really boils down to nothing more than the implicit assumption of the original SWR research that "by definition" the worst case scenario that has ever occurred…

  • [that Today's Retirement Advice is Dangerous]"" target="_blank"> "At This Point, It's Reasoned Speculation...
    [that Today's Retirement Advice is Dangerous]"
    34 Comments

    Michael Kitces recently published a study of safe withdrawal rates (SWRs) that adopts a mix of the Old School and New School approaches. Michael pointed out correctly that the SWR for a high-stock portfolio can go a good bit higher than 4 percent at times of low valuations (Yes! Yes! Yes!) but failed to point out that the SWR for a high-stock portfolio can also go a good bit lower than 4 percent at times of high valuations (Boo, Baby!). I wrote a blog entry on the first Nold School study and…

  • It's the Best Assumption Framework We Have"" target="_blank">"While Most Find It (EMT) Discredited...
    It's the Best Assumption Framework We Have"
    2 Comments

    An earlier blog entry described the background of some recent e-mail correspondence between Michael Kitces and I on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on August 28. Rob, I will certainly be writing something about this discussion thread on my blog as well - I just haven't had an opportunity amidst a lot of travel for speaking engagements over the past week. Hopefully I'll get something out by early next week. The bottom…

  • "I'll Be Very Curious to See How It Comes Out!" 1 Comment

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on September 22, followed by the text of one that Michael sent to me later the same day. Michael: Thanks for letting me know. That's an extremely helpful and important blog post. I believe that that will do a lot of good for a lot of people. I've posted a number of the e-mails at my blog and…

  • SWR Must Change with Changes in Valuations?"" target="_blank">"Why Was It Not Understood From the Start that the
    SWR Must Change with Changes in Valuations?"
    5 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent Michael's way in the evening of Thursday, August 21. Michael: Thanks again for providing stimulating feedback. There's a punctuation mark that you use in your study that I found entirely appropriate in one sense and extremely odd in another sense. It comes at the end of the sentence in which you put…

  • "Note the Enthusiasm with which People Take to Discussions of the Realities of Investing" 0 Comments

    An earlier blog entry described the background of some recent e-mail correspondence between Michael Kitces and I on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on August 28. Michael: That e-mail is gold. You're telling the real story in those words. This is the stuff that people in the field need to be reflecting on as we chart a path taking us from where we are to a place where I believe we all in our hearts very much want to find the…

  • "For Purposes of Community-Building, It Is Dogmatism That Is the Enemy, Not Passive Investing" 1 Comment

    I recently posted a Letter to the Editor to the www.Early-Retirement-Planning-Insights.com site. It is entitled A Note to Wayne re "the Jerks." Juicy Excerpt: Those of us who believe that valuations matter and that the markets are not instantly efficient also need to be accepting of the reality that there are many smart and good people who continue to this day to believe in the Passive Investing model. In an intellectual sense, Passive Investing is the enemy. For purposes of…

  • "If We Were Starting with a Clean Slate...No One...Would Recommend...the Old School Studies" 0 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on October 19. Michael: Again, thanks for the frank and helpful response. We are ALL walking like lemmings to a cliff! That's my take. We have been doing so ever since the mid-1990s, when prices went to insane levels. We returned to reasonable price levels in the past month. But we have not…

  • "Those Who Retired Back in 2000 May Ultimately Find That the "4% SWR" Was Still Far Too Aggressive" 2 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on September 22. Rob, I finally managed to get a brief blog post up on this issue on my site. I thought you might be interested. I hope that all is well with you these days! Thanks again for the great dialogue on this! With warm regards, - Michael Juicy Excerpt: For those who already…

  • "I Am Unable to Make Sense of Your Lack of Alarm Over the Effects...on Real Live Investors" 3 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on October 19. Michael: Thanks for touching base. I am always glad to hear from you. As you note in your e-mail, I have always found your comments helpful and valuable. And, yes, we do agree on much re both the safe withdrawal rate (SWR) issue in particular and re the investing project in general. As…

  • "I [See] PassionSaving.com as the Meeting Place for People Losing Confidence in [Passive Investing]" 1 Comment

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on November 11. Michael: I was greatly cheered by your e-mail. I have been waiting to hear those wonderful words "A lot of planners are starting to question their Passive Investing beliefs" for a long time. That's the answer! That's the path out of this hellhole! I hope to make PassionSaving.com…

  • to Enhance the Safe Withdrawal Rate"" target="_blank">"He Explores the Use of Timing Strategies
    to Enhance the Safe Withdrawal Rate"
    0 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on September 23, followed by the text of an addendum that I sent the next day. Michael: Your safe-withdrawal-rate project is a great idea. You might want to take a look at the following two articles at John's site in which he explores the use of timing strategies to enhance the safe withdrawal…

  • "Under [a P/E10 Value of] 30, I Find It [the Old School SWR Methodology] Still to be Quite Analytically Valid" 8 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent me on October 18. Rob, Thank you so much for your response here. My apologies that my response will be relatively brief, but unfortunately I am wrapping up things here in the office because I am on the road for most of the week for speaking engagements. Ironically (in the context of this conversation), this…

  • "I Still Intend to Do More Research in this Area" 3 Comments

    An earlier blog entry described the background of some recent e-mail correspondence between Michael Kitces and I on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent my way on August 27. Rob, To me, wider readership is all about using the media for public awareness (thus my work with bot Financial Planning magazine and BusinessWeek to get my newsletter's research results out to other professionals and the general public, respectively). I don't…

  • "There are Significant Risks Inherent in the Passive Investing Approach that are Not Understood by Most" 2 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on August  26. Rob, A few quick thoughts, as unfortunately my time is a little constrained this morning but I did want to get back to you! -- As a general framework, yes I agree completely that new research builds on old research. I most definitely do NOT view the existing body of research…

  • "None of Us Can Aspire to "Expertise" in a Meaningful Sense Until All of Us Are Able to Talk More Freely" 0 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on November 24: Michael: Thanks for providing Bill Bengen's e-mail address. I'll let you know if anything significant comes from my communication with him. I of course understand re your time constraints. I did not really expect that you would have time to listen to the podcast. I just…

  • We Need More Wavemakers In InvestoWorld!"" target="_blank">"Make Waves! Make Waves!
    We Need More Wavemakers In InvestoWorld!"
    1 Comment

    An early blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on September 24, followed by an e-mail that he sent to me later the same day. Michael: I forwarded your e-mail to John. He suggested that I share two additional links that relate a bit to what you are…

  • "All in the Investing Field are Struggling to Come to Terms with Newly Discovered Realities Today" 0 Comments

    An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on November 24: Michael: I share all of your e-mails with John shortly after I receive them. Shortly before I completed my response to your e-mail of this morning (which I sent a few minutes ago), I received the following response from John re your comments. "Oops! He has a point." John is…

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  • “Few Want to Hear the Truth About Stock Investing at a Time When the CAPE Value is 37. Surprise! Surprise!”

    Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: You keep repeating the same old lines, but no one is buying it. Few want to hear the truth about stock investing at a time when the CAPE value is 37. Surprise! Surprise! Rob   Related PostsBuy-and-Hold Goon to Rob: “Buy-and-Hold-and-Rebalance People Buy When Stocks Are Going Up and When They Are Going Down.”“At the Very Bare Minimum, We Need to Make It a Practice to Tell Both Sides of the Story. Reasonable People Need to Absolutely Insist on That Much.”“If You Put Buy-and-Hold Above the Peer-Reviewed Research, Then the Peer-Reviewed Research Is Nonsense. If You Put the Peer-Reviewed Research Above Buy-and-Hold, Then Buy-and-Hold Is Nonsense.”“My Real Two Points Are: 1) Irrational Exuberance Is Real; and 2) Many People Don’t Want to Acknowledge That Irrational Exuberance Is Real at a Time When Stocks Are Insanely Overpriced Because Doing So Requires That They Acknowledge That Their Nominal Portfolio Value Is Not Even Close to Being Accurate.”Buy-and-Hold Goon to Rob: “What Is YOUR Definition of ‘Honest Posting’?”“There’s Risk in Long-Term Market Timing? Huh? Long-Term Market Timing Is Price Discipline. The Risky Thing Is to Exercise Price Discipline? I See It Just the Other Way Around. I Exercise Price Discipline With Every Single Good and Service I Buy. The Risk Is in FAILING to Exercise Price Discipline.”

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  • Buy-and-Hold Goon to Rob: “There Is No Such Thing As the ‘True Value’ of a Stock”

    Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: “their true value (x)” there is no such thing as the “true value” of a stock We disagree. It’s hard to identify the true value of an individual stock. Warren Buffett does a good job of it. But I would not feel comfortable trying to do it. It’s very different when you are talking about the value of the market as a whole. That can be identified with a high (but not perfect) level of accuracy. U.S. stocks have been generating a return of 6.5 percent real for as long as there has been a market. That’s a CAPE value of 17. We all should be working together to be sure that the CAPE value never rises too much above that. Today’s CAPE value of 35 is a national scandal. In the event that stocks continue to perform in the future anything at all as they have always performed in the past, our collective decision to tolerate a CAPE value that high is going to destroy millions of lives. I stand by the statement that I have been making consistently since the afternoon of May 13, 2002 — we need to open every discussion board and blog on the internet to honest posting re the last 41 years of peer-reviewed research in this field, without a single exception. My best wishes to you. Rob Related Posts“I Think It Would Be Fair to Say That Market Timing Is 70 Percent of What it Takes to Achieve Long-Term Investing Success. If That’s the Case, Then 70 Percent of the Advice in This Field Should Be Advice Aimed at Encouraging Market Timing. That’s Obviously Not What We Have Today. Which Explains Why Today’s CAPE Value Is a National Scandal.”“At the Very Bare Minimum, We Need to Make It a Practice to Tell Both Sides of the Story. Reasonable People Need to Absolutely Insist on That Much.”“No Society as Rich as Ours Should Ever Have to Endure an Annualized Stock Return of 3.0 Percent Real for 19 Years Running. That Number Is a Summation of the Horrors of What the Widespread Promotion of Buy-and-Hold Has Done to Us as a People. It’s a National Scandal.”“The Annualized Real Return for Stocks From January 2000 Through December 2016 Was 2.25 Percent Real. […]

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  • Buy-and-Hold Goon to Rob: “If Buy-and-Hold Doesn’t Work, Then Investing Doesn’t Work. There Is No Way a Market Timing Scheme Can Improve Returns for All Investors.”

    Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Buy and Hold = Investing Investors (as a whole) practice buy and hold, there may be trading between investors but as a whole they own 100% of available stocks at all time. If buy and whole doesn’t work then investing doesn’t work. There is no way a market timing scheme can improve returns for all investors. Investors as a whole determine the price for stocks. They can price stocks at their true value (x) or they can price stocks at 2x or they can price stocks at 1/2 x. When the price gets too high or too low, the only way to get it back to where it should be is through market timing. Market timing (price discipline!) is the magic by which the market goes about the business of getting prices right, which is its core function. If large numbers of investors come to believe that it might be possible to pass up on the market timing thing just this once, prices eventually get so out of whack that the market collapses, causing a huge economic contraction, which hurts us all in a very serious way. I would rather just permit honest posting on the critical role served by market timing. Living through a Buy-and-Hold Crisis possesses just about zero appeal to me. Rob Related Posts“We Just Have to Accept that Rationality Cannot be Assumed, We have to Work to Secure It.”“At the Very Bare Minimum, We Need to Make It a Practice to Tell Both Sides of the Story. Reasonable People Need to Absolutely Insist on That Much.”“It Appears That Just About No One Possesses Confidence in Buy-and-Hold. Not All Buy-and-Holders are Goons. Most Are Not. But the Buy-and-Holders Who Do Not Personally Engage in Goon Behavior Would Criticize the Goon Behavior When They Saw It If They Possessed Confidence in the Strategy. And Just About No One Does This. For So Long as Prices Remain High, Most Non-Goon Buy-and-Holders TOLERATE the Hostile or Even Abusive or Even Criminal Behavior of Goons Like You. What the H?”“Buy-and-Hold Is the Way That Pushes Risk Up to the Highest Levels Possible by Urging Price Indifference. With Buy-and-Hold, You See Stocks Selling at Three Times Fair Value at Market Peaks and at One-Half of Fair Value at […]

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  • “Market Efficiency Is Achieved Through Market Timing. There Is No Other Way That It Could Be Achieved.”

    Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: Market timing isn’t a strategy.  It is a scheme. Market timing is price discipline. Price discipline is what makes markets work. There’s never yet been a time in U.S. history when large numbers of stock investors came to be persuaded that price discipline was not required and we did not eventually see a collapse of our economic system. It’s not possible for the rational human mind to imagine such a situation ending any other way. Investing in stocks without engaging in market timing is like driving a car without brakes. All of the confusion that we are trying to overcome today comes from the idea that the market is efficient. If the market were efficient, there could never be any overvaluation. So there would be no need for market timing. The reality is that market efficiency is an aspiration that we should all be aiming to achieve, not something that is automatically handed to us without effort. Market efficiency is achieved through market timing. There is no other way that it could be achieved. Anytime someone suggests that market timing might not be 100 percent necessary for all investors, what they are really saying is that we should forget about market efficiency and let prices get so high that we bring on another economic collapse. The mistake was made because there was research showing that short-term market timing doesn’t work and the Buy-and-Holders jumped to the hasty conclusion that no form of market timing was required. That’s like saying that, since drunk driving is dangerous, no form of driving should be permitted. Shiller was the first researcher to examine whether long-term timing is required (by showing that valuations affect long-term returns). Every researcher who has looked at the question since has affirmed Shiller’s finding. The most in-depth research on the importance of market timing was prepared by me and Wade Pfau. We showed that, in Wade’s words, “Yes, Virginia, Valuation-Informed Indexing works!” Now we just need to reach a point as a nation of people in which we agree to stand up to you Goons to get the message as to how stock investing works out to every investor on the planet. I believe that it will happen in the days following the next price crash, […]

    (7 Comments)

  • Valuation-Informed Indexing #597: The Absurdity of Buy-and-Hold

    I’ve posted Entry #597 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Absurdity of Buy-and-Hold. Juicy Excerpt: Market timing is essentially the pressure valve for the stock market system. When a little irrational exuberance accumulates in the pipes, the proper thing to do is to apply a little market timing to deal with the issue before the problem gets out of hand. When large numbers of investors have come to believe that market timing is not required, the irrational exuberance and the pressure both grow and grow until – very bad things happen. Related PostsValuation-Informed Indexing #252: Our Beliefs About How the Stock Market Works Will Change Following the Next CrashValuation-Informed Indexing #261: Unlike Long-Term Returns, Short-Term Return Sequences Are Highly UnpredictableValuation-Informed Indexing #267: Take Valuations Seriously and You Will Discover Things That You Were Not Initially Even Seeking to DiscoverValuation-Informed Indexing #255: How Developments Like the Greek Debt Crisis Affect Stock PricesValuation-Informed Indexing #268: Chase Utley’s “Dirty” Slide and Robert Shiller’s “Dirty” ResearchValuation-Informed Indexing #270: A Critic of Valuation-Informed Indexing Offers a Concise Case for Why Buy-and-Hold Is Superior

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  • Valuation-Informed Indexing #596: Stock Prices Drift Upward Unless Most Investors Practice Market Timing

    I’ve posted Entry #596 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Stock Prices Drift Upward Unless Most Investors Practice Market Timing. Juicy Excerpt: What we see in the historical record is what I would refer to as a roller coaster pattern. Stock prices rise gradually over time for many years (with brief price pullbacks mixed in) until they reach shockingly high levels and then they fall sharply and remain low for a number of years before beginning a gradual trip back to crazy high levels. So investors clearly give in to their emotional desire to create pretend money for themselves. But they do not give in to those Get Rich Quick urges entirely. They seem to feel a need to maintain enough rationality to not cause themselves to lose confidence in the pretend prices that they want to believe are real. Prices go up over time. But it takes a long stretch of years for them to travel the path from crazy lows to crazy highs. Related PostsValuation-Informed Indexing #255: How Developments Like the Greek Debt Crisis Affect Stock PricesValuation-Informed Indexing #267: Take Valuations Seriously and You Will Discover Things That You Were Not Initially Even Seeking to DiscoverValuation-Informed Indexing #261: Unlike Long-Term Returns, Short-Term Return Sequences Are Highly UnpredictableValuation-Informed Indexing #258: It Is Critical to Distinguish Returns-Sequence Risk from Valuations Risk When Calculating Safe Withdrawal RatesValuation-Informed Indexing #262: The Unpredictability of Short-Term Return Sequences Masks the Predictability of Long-Term ReturnsValuation-Informed Indexing #268: Chase Utley’s “Dirty” Slide and Robert Shiller’s “Dirty” Research

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  • “It Takes Time to Let in That You Are Doing Work That Is Going to Change the World in a Very Positive Way. I Didn’t Think on the Morning of May 13, 2002, That Valuation-Informed Indexing Was Going to Replace Buy-and-Hold. I Didn’t Say on the Morning of May 13, 2002, That It Was the Relentless Promotion of Buy-and-Hold That Served as the Primary Cause of the 2008 Economic Crisis. I Didn’t Say on the Morning of May 13, 2002, that Bonds Are More Risky Than Stocks to the Informed Investor. These Are Things That Come to You After You Spend Some Time Studying This Stuff.”

    Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: When you told Wade this story about getting $500 million, he told you that it was crazy.  You ignored him as well. I told Wade that thought that the research that we did together would win him a Nobel prize. There’s a sense in which he dismissed that idea too. He certainly acted like he didn’t think it would happen. But the idea that the work was of huge importance was stirring around in his head. He said that there were time when he couldn’t sleep because he would lie awake thinking of all sorts of amazing implications to our work. He mentioned that he thought that Shiller really would be awarded a Nobel prize (this was before that happened). He didn’t say it the way that I said it. But he saw something of great importance there too. It takes time to let in that you are doing work that is going to change the world in a very positive way. I didn’t think on the morning of May 13, 2002, that Valuation-Informed Indexing was going to replace Buy-and-Hold. I didn’t say on the morning of May 13, 2002, that it was the relentless promotion of Buy-and-Hold that served as the primary cause of the 2008 economic crisis. I didn’t say on the morning of May 13, 2002, that bonds are more risky than stocks to the informed investor. These are things that come to you after you spend some time studying this stuff. That’s why I say that we need to open every discussion board and blog to honest posting re the peer-reviewed research. Learning is done by building one block of knowledge on top of another. For 20 years, we have as a society held back from acknowledging that errors in retirement studies need to be corrected within 24 hours of when they are discovered. If Greaney had corrected his study on the afternoon of May 13, 2002, LOTS of people would be saying today that bonds are the more risky asset class and that we can bring economic crises to an end by opening the internet to honest posting re the peer-reviewed research. We sure wouldn’t have a CAPE value of 35 today if Greaney had promptly corrected his study, as we […]

    (6 Comments)

  • “This Is Bigger Than Watergate. What Do You Think Most People Care More About — Who Is President or Whether Their Retirement Goes Bust or Not?

    Set forth below is the text of a comment I recently posted to the discussion thread for another blog entry at this site: “ If my work did not have great value, Wade Pfau would never have concluded that: “Yes, Virginia, Valuation-Informed Indexing works!” If my work did not have great value, we never would have seen thousands of our fellow community members put their lives on the line by saying that they love my stuff and that they believe that I should be permitted to post honestly. If my work did not have great value, Rob Arnott would not have said that my stuff checks out and that he hoped that I would stick to my guns. If my work did not have great value, John Bogle would never have advanced a post in which he acknowledged that he could see circumstances in which market timing would produce good results (he had earlier said that he did not think market timing could work). If my work did not have great value, you Goons would never have committed a single criminal act to keep people from being exposed to it.” None of that is work. It is a bunch of made up crap. Why didn’t you do something to make money? I am a journalist and I am involved today in the most important journalism project of my lifetime. This is bigger than Watergate. Do you know how much money the Washington Post has made as a result of Watergate. It put them on the map as one of the most important papers in the United States and they have been making money from having that reputation ever since. Well, this is bigger. Watergate brought down a President. What do you think most people care more about — who is President or whether their retirement goes bust or not? The vast majority care more about their retirement surviving. This is Issue #1 for most people. And we have had leading figures in the field show that they very much want to tell the truth about the matters but they are too afraid of what you Goons will do to them if they do so to do it. John Bogle is a giant in this field. He put up a post at Bogleheads saying that he could see how market timing could work in some circumstances. This is a guy who […]

    (2 Comments)

  • “Yes, I Have Some Concerns About My Failure to Provide Financially for My Family for Many Years. I Do Not Say That That’s Not a Concern. I Have Spoken to More Than One Priest re That Matter. I Have Had Long, Searching Conversations/Confessions With Them About it. I Have Had Two Who Felt That I Have Behaved in a Way That Is More Wrong Than Right and I Have Had Two Who Have Felt That I Have Behaved in a Way That Was More Right Than Wrong.”

    Set forth below is the text of a comment that was recently posted to the discussion thread for another blog entry at this site: So your fine with being disobedient to God’s word. I believe that, when I die and have to stand before God, I will be held to account for my behavior her on Planet Earth. Yes, I have some concerns about my failure to provide financially for my family for many years. I do not say that that’s not a concern. I have spoken to more than one priest re that matter. I have had long, searching conversations/confessions with them about it. I have had two who felt that I have behaved in a way that is more wrong than right and I have has two who have felt that I have behaved in a way that was more right than wrong. I have been referred to books and Bible passages and things like that and I have read those books and Bible passages in the most open and humble spirit that I was able to muster. Nothing that I have read or heard has persuaded me that it would be okay for me to know about the horrible suffering that millions of souls are likely to experience in the event that stocks continue to perform in the future somewhat as they have always performed in the past and to do nothing to help. The most basic commandment of all is to do unto others as you would have them do unto you. If the tables were turned and there we someone out there who had the knowledge needed to help me avoid that kind of pain, I would want that person to go to a little bit of trouble to get the message to me. So I do what little I am able to do to get the message out to the millions of lives that are today in the balance presuming that Shiller’s Nobel-prize-winning research is legitimate research. There’s a chapter in my book with the title “My Mother Speaks From the Grave About the Horrors of Buy-and-Hold Investment Strategies.” My mother was born in 1917. So the Great Depression had a big effect on her life. She had to drop out of school in the eighth grade so that she could go to work in a factory and her family would have money for […]

    (8 Comments)

  • Buy-and-Hold Goon to Rob: “You Can’t Risk Adjust Past Results”

    Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: You are not asking the right question.  The Greaney study does not need it, just like my car doesn’t need a microwave oven.  As we all learned in statistics class, you don’t risk adjust past results. So you’re saying that if someone drives drunk three times in his life and gets in a serious accident on each of those three occasions but doesn’t quite die on any of them that it becomes reasonable to conclude that driving drunk is “100 percent safe.” Hey! You can’t risk adjust past results! I don’t buy it. Once we learned that valuations are the most important risk factor (Shiller showed this in peer-reviewed research published in 1981), it became imperative to take valuations into consideration in any risk assessment analysis. So please mark me down as saying that we should open every internet site to honest posting re the past 40 years of peer-reviewed research. No drunk driving for this boy. Call me madcap! Rob Related PostsBuy-and-Hold Goon to Rob: “The Adjustment Is Not Needed. It Is Like Pointing Out That My Car Does Not Have a Microwave Oven Installed in the Dash.”“If My Famous Post from the Morning of May 13, 2002, had Been About Microwave Ovens, We Wouldn’t Have Seen Scores of Our Fellow Community Members Saying That I Had Launched the Most Exciting Discussion Ever Held in the History of That Board.”Buy-and-Hold Goon to Rob: “Bengen and Trinity Use the Exact Same Methodology [as Greaney]”“We Have As a Society Been for 40 Years Now Working Up the Courage to Begin Reaping the Benefits of That Revolutionary Advance in a Practical Real-World Sense. We Are Not Quite There Yet. But We Are Close.”“There Are Cases in Which Someone Drinks Six Cans of Beer and Does Not Get in an Accident. So Those Who Follow the Buy-and-Hold Approach to Data Analysis Say: ‘You Cannot Look at the Number of Cans of Beer Consumed to Know If There Is Going to Be an Accident or Not! The Data Doesn’t Tell You the Precise Number of Cans of Beer it Takes to Cause an Accident in Each and Every Case! So We Cannot Draw Any Conclusions From This Data!”“Shiller Showed Us That It Is Primarily INVESTOR EMOTION That Determines Stock Prices, […]

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  • “Cuz All Us Moooorons Are Jez Too Stoopid, Right?”

    Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: “ Those people wouldn’t be having the same thoughts if we permitted honest posting re the last 40 years of peer-reviewed research at every site on the internet. ” ……..Cuz all us moooorons are jez too stoopid, right? I knew about the error in the Greaney retirement study when I put my first post to the Retire Early board. I didn’t say anything until three years later. I guess I must be pretty darn stoopid too. A bull market is a liar’s market. When a large number of humans get together and say “why don’t we all pretend that we have a lot more money saved than we really do,” they call that a bull market. And the humans all have something inside them that makes them want to go along with the funny joke and not call out the b.s. Yes, the humans are stoopid in some important ways, Anonymous. But Shiller helped us advance in a huge way in our understanding of how stock investing works when he published his Nobel-prize-winning resesrch. I think we should give ourselves permission to talk about it and begin living far richer and better lives as a result. Sue me, you know? Rob Related Posts“If One Were in an Especially Charitable Mood, One Could Even Say That Greaney Was the Victim of an Exceedingly Odd Set of Circumstances in Much the Same Way That I Was.”“Peer Pressure Is a Huge Influence on the Human Mind. Bull Markets Are the Product of Peer Pressure. Buy-and-Hold Is the Product of Peer Pressure.”“We Don’t Accept the Phony Numbers. We Fear the Emotional Pain We Experience When Our Longstanding Game of Let’s Pretend Is Exposed to Daylight. We Are ASHAMED.”“If Greaney Included Language Describing the Retirement Risk Evaluator, No One Could Accuse Him of Deception, Could He? Greaney Would Be Shifting the Burden from Himself to the Person Reading the Study. It’s Very Different When Greaney Does Everything in His Power to Block People from Learning What the Last 34 Years of Peer-Reviewed Research Says. That’s the Sort of Thing That Will Sway a Jury to Vote to Put You Away.”Buy-and-Hold Goon to Rob: Just Because You Were Able to Browbeat Wade Into Emailing the Trinity Guys Doesn’t Mean I’ll Do Your […]

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  • “Investors Are Not Exposed to the Information They Need to Make Informed Stock-Buying Decisions. So the Market Has Become Dysfunctional. A Market Is an Information-Transmitting System. When Death Threats and Acts of Extortion Enter the Picture, Information Cannot Be Transmitted Effectively. So Eventually the Market Collapses and We All Suffer the Consequences.”

    Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site: “When the price that was offered me was too far above the fair price, I walked away. “ Was the type of car you were looking for available at any dealer at a price you though fair? Yes. That’s because the automobile market is FUNCTIONAL. A market sets prices by trying different possibilities and seeing which one attracts buyers. If an automobile dealer tried to get away with charging an insane price, he would be put out of business. Buyers would learn that he was offering bad deals and would avoid him. That’s how I would like things to work in the stock market. If we permitted honest posting re the peer-reviewed research, investors would understand that they need to lighten up on their stock allocation a bit when prices get out of hand. That lightening up would pull prices down until they were again at reasonable levels. So investors would always be able to purchase stocks are good prices. It is the criminal behavior of you Goons that has brought on the insane CAPE level that applies today. Investors are not exposed to the information they need to make informed stock-buying decisions. So the market has become dysfunctional. A market is an information-transmitting system. When death threats and acts of extortion enter the picture, information cannot be transmitted effectively. So eventually the market collapses and we all suffer the consequences. We all should want a functional stock market. We all should be speaking up in favor of the idea of opening every large investing site to honest posting re the past 40 years of peer-reviewed research in this field. My sincere take. Rob   Related Posts“Shiller Showed Us That It Is Primarily INVESTOR EMOTION That Determines Stock Prices, Not Economic Developments. So We All Need to Make a Switch to Talking Primarily About Investor Emotion. We Should Be Looking for Signs of Emotion and Then Trying to Explain Them.”“The Buy-and-Hold Stuff Is Just a Marketing Gimmick. It Is a Money-Making Thing. The Idea Is Just to Keep You Dumb So That You Will Do What You Are Told. If a Car Dealer Told Me Not to Ask About the Price of His Car Before Buying It, I Would Feel That He Was Insulting My Intelligence.”“I […]

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  • Valuation-Informed Indexing #595: The Most Important Choice That a Stock Investor Makes

    I’ve posted Entry #595 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Most Important Choice That a Stock Investor Makes. Juicy Excerpt: So I am largely in agreement with the claim that it is her stock allocation that is the most important choice made by an investor. But I am not in complete agreement. I think that there is another choice that is even more important. The most important choice that an investor makes is how much she is going to engage in market timing in response to valuation shifts. Related PostsValuation-Informed Indexing #261: Unlike Long-Term Returns, Short-Term Return Sequences Are Highly UnpredictableValuation-Informed Indexing #254: We Need to Be Reminded of the Effect of Valuations on a Daily BasisValuation-Informed Indexing #267: Take Valuations Seriously and You Will Discover Things That You Were Not Initially Even Seeking to DiscoverValuation-Informed Indexing #255: How Developments Like the Greek Debt Crisis Affect Stock PricesValuation-Informed Indexing #258: It Is Critical to Distinguish Returns-Sequence Risk from Valuations Risk When Calculating Safe Withdrawal RatesValuation-Informed Indexing #140 — Stocks Will Be Insanely Overpriced and Insanely Underpriced At Least Once in Your Lifetime

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What’s Here

  • Bennett/Pfau Research (60)
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Rob on the Internet

  • Rob's Weekly Valuation-Informed Indexing Column at the Value Walk Site.

  • Rob's Weekly Beyond Buy-and-Hold Column at the Out of Your Rut Site

  • Rob's Articles at the Financial Highway Site

  • Rob's Articles at the Balance Junkie Site

  • Rob's Daily Caller Articles: (1) Can We Handle the Truth About Stock Investing?; (2) How We Invest Is a Political Question; (3) The Economic Crisis Is Trying to Tell Us Something (and We're Not Listening); (4) Facts Don't Matter; (5) Going Google Stupid; (6) How Much Transparency Can We Handle?; (7) Confessions of an Internet Troll; (8) Conservatives Fall Into a Trap by Blaming Obama for the Bad Economy; (9) Meet the New Media, Same as the Old Media; and (10) How Restoring Honor Will End the Economic Crisis

  • Humble Money Experts Are the Best Money Experts, (Rob's Article in the Integrative Advisor, the Journal of the Association for Integrative Financial and Life Planning)

  • Articles on the Return Predictor, the RIsk Evaluator, the Scenario Surfer and the Strategy Tester

  • The Myth of Buy-and-Hold and Seven Other Guest Blog Entries

  • The Good Side of Stocks' Lost Decade and Seven Other Guest Blog Entries

  • A Better and Safer Way to Invest in Stocks and Seven Other Guest Blog Entries

  • The Economic Crisis Is the Best Thing That Ever Happened to Us and Seven Other Guest Blog Entries

  • The Bankers Did Not Do This to Us! and Seven Other Guest Blog Entries

  • Stock Volatility Kills! and Seven Other Guest Blog Entries

  • The Risks of Buy-and-Hold and Seven Other Guest Blog Entries

  • The Future of Investing and Seven Other Guest Blog Entries

  • What the Stock Investing Experts Don't Want You to Know and Seven Other Guest Blog Entries

  • What's the Best Age at Which to Experience a Stock Crash? and Seven Other Guest Blog Entries

  • Guest Blog Entry Compares Our Effort to Open the Internet to Honest Posting on Stock Investing with the Civil Rights Struggle of the Early 1960s

  • Our Monster Thread (153 Comments!) on Whether Bill Bengen Should Correct His Retirement Study Now That He Acknowledges the Errors He Made In It

  • Google Search Results for the Term "Valuation-Informed Indexing"
  • Favorite RobCasts

    • Bogle and Valuations

    • When Stock Losses Are True Losses and When They Are Not

    • There Is No Free Lunch! Or Is There?

    • Risk Tolerance in the Real World

    • Cash Is a Strategic Asset Class

    • Nine Valuation-Informed-Indexing Portfolio Allocation Strategies

    • Why the Stock Market Does Not Set Prices Properly (Even Though Other Markets Do)

    • Only Valuations Matter -- Everything Else Is Priced In

    • Low Stock Prices Are Better Than High Stock Prices

    • 30 Investment Myths in 60 Minutes

    Links That Matter

    • Ten Bogus Investing Truths

    • Study by Associate Professor Wade Pfau Showing That Long-Term Timing Provides Higher Returns at Reduced Risk

    • Study by Associate Professor Wade Pfau Showing That Valuation-Informed Indexing Beat Buy-and-Hold in 102 of 110 Rolling 30-Year Time-Periods in the Historical Record

    • Wall Street Journal Article Pointing Out That the Idea That Long-Term Market Timing Does Not Work Is a "Myth" of Stock Investing "That Will Not Die" Because "This Hoary Old Chestnut Keeps Clients Fully Invested" Even When It Is Contrary to Their Best Interests

    • Wall Street Journal Article Pointing Out That" "This Ratio (P/E10) Has Been a Powerful Predictor of Long-Term Returns" and That "Valuation Is By Far the Most Important Issue for Investors"

    • The Internet Blowhard's Favorite Phrase: Why Do People Love to Say That Correlation Does Not Imply Causation?

    • Michael Kitces (One of the Bravest of the Good Guys in This Field) Asks: "Who's Really at Risk When Avoiding Overvalued Stocks?"

    • Financial Mentor Article Reporting on How Our Knowledge of How to Calculate Safe Withdrawal Rates Has Grown During the First Nine Years of The Great Safe Withdrawal Rate Debate

    • Does the Trend Matter?

    • Improving RIsk-Adjusted Returns Using Market-Valuation-Based Tactical Asset Allocation Strategies

    • A Value Restoration Project Blog Post That Sums Up in Three Paragraphs All You Need to Know to Become a Highly Effective Investor

    • Year 20 Annualized, Real, Total Return v. P/E10

    • Year 10 Annualized, Real, Total Return v. P/E10

    • Valuation-Informed Indexing Always Superior to Buy-and-Hold Over 10-Year Periods

    • The Valuation-Informed Indexing Advantage

    • What P/E10 Predicted vs. What Actually Happened

    • Normal and Valuation-Adjusted Wealth Accumulation

    • Valuation-Informed Indexers Can Retire Five Years Sooner

    • Following Valuation-Informed Indexing Strategies Reduces Stock Investing Risk by 80 Percent

    • S&P 500 Tracked by P/E10 Level

    • Treasury Inflation-Protected Income Securities (TIPS) Table

    • Best, Average and Worst Returns Since 1871

    • Compound Annual Growth Rate Calculator

    • Investing Through Time

    • Mapping S&P 500 Performance

    • S&P 500 at Your Fingertips

    • S&P 500 Return Calculator

    • Russell's Research

    • Shiller's Data

    • Safe Withdrawal Rate Research Group