Set forth below is my response to a comment that was put to the blog last week charging me with having advanced a “screed” re Academic Researcher Wade Pfau:
You Goons say this sort of thing all the time, Trebor.
I am the biggest Wade Pfau booster alive on Planet Earth. Wade did the research showing that Valuation-Informed Indexing dramatically increases returns while also dramatically reducing risk. I am the person who developed the VII strategy. Why the heck would I want to destroy the credibility of the academic researcher who has done more than any other to advance the investing strategy that I believe is going to pull us out of the economic crisis? That’s insane.
What you are getting at, of course, is that I have argued that Wade made a terrible mistake to sacrifice his personal integrity and flip to the Goon side. He did. That’s going to follow him around for the rest of his lifetime. He will likely have lawsuits filed against him in days to come. He could land in prison. Is the popularity he has achieved by agreeing to side with the Goons and keep the Buy-and-Hold Tragedy going a few more months or a few more years worth it? I certainly do not think so.
Wade has two small children to worry about. I think in fairness that that should be mentioned. That’s a bit of an explanation. But it is not an excuse. If Wade does not possess the courage to stand up to the Goons, he needs to find another line of work. An academic researcher needs to report his findings honestly and accurately. People look to the academic research to learn the realities. You cannot let internet Goons intimidate you into saying things you do not believe.
Here is my grand summing-up article reporting on the many blog posts I wrote on my 16 months of e-mail correspondence with Wade:
I love Wade, Trebor. I loved the work we did together. I miss working with him. I respect him and admire him. It breaks my heart to think about what he has done both to himself and to the many people who look to him to give helpful guidance on stock investing. I implored him not to go down the path he has gone down. Is there anything you can think of that I could have said that I did not say? If you suggest anything that makes sense, I will say it.
I will always be Wade’s friend. Any time he wants to contact me, he will get a warm welcome. You call that a “screed”.” I call it friendship. As far as I am concerned, Wade and I remain friends to this day. Wade doesn’t see it that way because he is ashamed of his betrayal. That’s something he needs to work out on his own. If he reaches a point where he wants to reestablish contact, I can promise you with 100 percent certainty that I will be there for him. Nothing would make me happier.
Please take good care. If you happen to be in contact with our friend Wade, I hope you will send him my warm regards.
Rob
Is there anything you can think of that I could have said that I did not say?
You could have respected his wishes regarding your email correspondence with him. You chose not to.
That’s so.
But I cannot respect Wade’s wishes that I participate in the 10-year cover-up of the errors in the Old School SWR studies while ALSO respecting Wade’s wishes that he be permitted to do honest research that helps investors know how to invest, can I?
None of us should have to make that choice, Evidence.
I didn’t run the e-mails prior to the learning of the threats that were used to silence Wade because THE E-MAILS WEREN”T NEWS PRIOR TO THAT TIME.
Once we had a bunch of internet Goons threaten to get an academic researcher fired from his job for the “crime” of publishing honest research on the dangers of Buy-and-Hold AND BIG NAMES LIKE JOHN BOGLE AND BILL BERNSTEIN DOING NOTHING ABOUT IT, we had a major news story on our hands and as someone who cares about the future of this country I had NO CHOICE but to report that news.
I didn’t like saying that John Greaney was engaging in deliberate deception re the retirement numbers back in the Summer of 2002, Evidence. John is my friend. No one likes to say that sort of thing about a friend. But John left me no more choice than Wade did. If I appear at a retirement board on a daily basis where a guy is making obviously false claims about mathematical calculations on a daily basis, I am guilty of a form of deception myself. If I see an academic research abandon his love for honest and helpful research because some of the biggest names in this field participate in a campaign to intimidate him into silence, I am guilty of corruption and financial fraud myself.
I ain’t going there, Evidence.
I have fond feelings for Wade. I have fond feelings for the two Johns, Greaney and Bogle. I have fond feelings for Bill. I have fond feelings for you. I am not evidencing those fond feelings by encouraging any of you to continue the cover-up and thereby to increase your financial liabilities and your prison sentences. I am your true friend, Evidence. I am telling you that, when you learn that someone got an important number in a retirement study wildly wrong, you need to insist that he correct that number by the close of business that day or resolve never again to have any dealings with that person.
That’s my sincere take re this important matter, in any event. There are hundreds of things you could ask of me that I would be happy to do for Wade or any of the others mentioned above. Agreeing to post dishonestly on the numbers my friends use to plan their retirements is not one of them. Re that one, you (and Wade, and the others) will have to soldier on without my assistance. It gives me the creeps 100 percent for me to see the cover-up cause more financial devastation. I don’t tell my friends lies that I know will one day destroy them. I would be grateful if you would try to find somebody else.
I can’t go for that.
No can do.
Rob
I am your true friend, Evidence. I am telling you that, when you learn that someone got an important number in a retirement study wildly wrong, you need to insist that he correct that number by the close of business that day or resolve never again to have any dealings with that person.
And yet you comment at John Greaney’s board on a daily basis.
I do indeed post there daily, Evidence.
I’ll make you a deal. You Goons arrange to have every board and blog where honest posting has been banned reopened to honest posting and I will stop posting at the Greaney site.
That’s the way it should be.
There have always been Goons in this world. There have always been losers.
Because we humans know this, we have adopted social norms that protect us from their destructive intent. People of the stature of a John Bogle do NOT in ordinary circumstances associate with the sorts of individuals who put up posts in “defense” of Mel Lindauer and John Greaney.
I was the lead force in the success of the Retire Early board at Motley Fool. I played a big role in building up the FIRE board and the Early Retirement Forum and the Bogleheads Forum. I was the founder of the SWR Research Group. There are responsibilities that go with playing a leadership role, Evidence. I owe the people who helped me build those boards whatever efforts I can put forward to protect them from the types of interest sewer rats who have put up posts in “defense” of Lindauer and Greaney.
Give us those boards back, give us the internet back, and, sure, you can have that wretched stinkhole that Greaney owns. I will shake the dust off my feet and you will never see my face no more.
Until then…
I have a responsibility to figure out why it is that my fellow community members have not taken action against the Goons. We cannot accomplish the work that these boards and blogs were established to accomplish until we make a collective decision to again permit honest posting on SWRs and on many other critically important investment-related topics.
I post at the Greaney site because I am trying to gain a better fix on what the appeal of the Get Rich Quick garbage is in the minds of the millions of middle-class investors who in ordinary circumstances would have precisely zero to do with the types of individuals who employ death threats and defamation and board bannings and threats to academic researcher to advance their “argument” in favor of GRQ investing strategies.
You have a perfect right to set up boards and blogs that only permit posting on GRQ strategies. You have no dispute with me over this point. The problem is that YOU DO NOT INCLUDE MENTION OF THE BAN ON HONEST POSTING at the boards you have destroyed. That’s dishonest.
John Bogle posts at the Bogleheads Forum. Bogle is a highly respected expert in this field. I rank him as the second most important investing analyst that ever lived (I rank Robert Shiller first). To have Bogle posting at a forum that banned honest posting on SWRs as its foundational act is a big, big problem for this country, Evidence. How do you think people are going to feel when the next price crash comes and people see that they have been taken?
We all should be doing all that we can to address this problem. I implore you to do so. I understand that you probably will not do what I ask. But I implore you all the same.
I don’t control you. I do control me. Believe me, there is nothing in this world that I would like to say more than the words “I will never again need to post at the Greaney Stinkhole.” I cannot say that today. If there is something to be learned from interaction with the Goons, I need to get about the business of learning it. So I will put in another day there today and pray for the best.
Please set up whatever stinkholes you want wherever you want on the internet to establish them. Please clearly identify them as stinkholes and NOT as places where discussion of the last 30 years of academic research in this field is permitted. Please leave all of the boards and blogs that contain a ban on the tactics you have used to silence those posting honestly on SWRs and other critically important topics to the Normals who established them and built them not to destroy the lives of middle-class investors but to help them learn the realities.
Do we have a deal, old friend?
Rob
I played a big role in building up the FIRE board and the Early Retirement Forum and the Bogleheads Forum
You have never posted on the Bogleheads Forum and your first post on Morningstar’s Vanguard Diehards forum was over seven years after it had started.
The Bogleheads Forum would not exist if it were not for my discovery of the errors in the Old School SWR studies, Evidence. All of the “leaders” of that forum openly acknowledge this. I posted about the errors at the Vanguard Diehards board, Mel demanded that Morningstar ban honest posting because it made him look bad (Mel had included a positive reference to the Greaney “study” in his book), Morningstar refused to violate its published rules, and Mel asked everyone to move to the new board, where he could ban anyone posting honestly on SWRs by pushing a button.
You are right that Vanguard Diehards was going strong before I came along. But my posts on Valuation-Informed Indexing were the dominant point of discussion at that forum for close to two years. There were days when there were seven or eight threads discussing VII at a single time. There has never been any other topic discussed at that board or at the Bogleheads board that generated even a tiny fraction of that level of interest among community members. There are other topics that were hot for a day or two. Nothing else has dominated all discussions for close to two years.
I have responsibilities to the many friends I made at that forum. I intend to honor them.
I of course wish you well in all your future endeavors.
Rob
Rob
You are quite delusional. I was there when you completely infected the morningstar boards with your rantings, taking every thread off-topic.
SWR rates are discussed frequently and openly at the bogleheads forum. Even the most casual observer would come to that conclusion after reviewing the topic lists there.
You have reached a new level of paranoia branding everyone as goons and then saying, who me…I am his greatest supporter.
You are quite delusional.
If you are going to be delusional, it’s important that you be lucky as all get-out, Trebor.
I was the person who discovered the errors in the Old School SWR studies. I first posted about them on May 13, 2002. It is only in the past year or so that all of the Big Shot “experts” in this field have acknowledged that I was right.
Sure, I’m delusional. But at least I was lucky enough to get that one right ten years before any of these Big Shots. That’s got to count for something.
No?
Rob
your rantings, taking every thread off-topic.
To the Buy-and-Hold Goons, any comment pointing out the dangers of following a Buy-and-Hold strategy are “off-topic,” Trebor.
I think it would be fair to say that it is because of our cowardice as a society in not standing up to them that we are in an economic crisis today.
If Buy-and-Hold were a legitimate strategy, we would not be seeing this kind of behavior on the part of its advocates. I mean, come on.
Rob
SWR rates are discussed frequently and openly at the bogleheads forum.
I pointed out the errors in the Old School studies on the morning of May 13, 2002, Trebor.
How many of them would you estimate have been corrected as of today?
I’ll give you a hint: It’s a number that you can count on the fingers of one finger and still have one finger remaining to point into the sky.
Not good.
Rob
branding everyone as goons and then saying, who me…I am his greatest supporter.
Both things are so, Trebor.
I love what the Buy-and-Holders set out to accomplish. They were the ones who said we should make investing analysis a scientific endeavor. That’s what opened the door to all the amazing discoveries of recent decades. We now know how to reduce the risk of stock investing by 70 percent. We wouldn’t know that if the Buy-and-Holders had not started us down this path of discovery. So why shouldn’t I give them credit for all the good they have done and express my gratitude for all the wonderful advances that they helped put in place?
The other side of the story is equally true. The Buy-and-Holders did not have all the research in hand in the late 1960s and early 1970s, when Buy-and-Hold was being developed. The most important findings came from 1981 forward, when Shiller and those who explored the implications of his work discovered that long-term timing always works and in fact is required for long-term success.
The valuations factor is 80 percent of the game. Get that one right and it’s almost impossible to get poor results in the long term. Get that one wrong and it’s almost impossible not to get good results in the long term. I want the research-based approach to work! I want the Buy-and-Holders to delete the Get Rich Quick garbage that they included by mistake and replace it with research-supported stuff, stuff that really works.
You say that I both love and hate Buy-and-Hold. That’s so. I love what it was meant to be, I hate what it has become during this period in which the Buy-and-Holders have become so resolute about not acknowledging their mistakes. Could you not say the same about the Buy-and-Holders? They say they love Buy-and-Hold. But they are destroying it by refusing to take the steps needed to make it workable in the real world. They profess love for Buy-and-Hold but by their actions they are destroying it.
Wouldn’t it be better for everyone if we could all unite in support of a Buy-and-Hold that actually worked? It sure seems so to me.
I am the one saying that the changes that are needed to make Buy-and-Hold workable should be made. If you want to say that that makes me anti-Buy-and-Hold, feel free to call me that. My take is that I am Buy-and-Hold’s biggest fan, I am the one who wants to see the Buy-and-Holders achieve their deepest hopes and most important dreams.
I think it would be fair to say at this point that I care more about the long-term success of Buy-and-Hold than John Bogle does. It breaks my heart to say that. But I think it is a fair statement. I have written to Bogle several times asking his help. I have not received responses to those e-mails. What does that tell us about the state of Bogle’s mind re these matters today?
Please take good care.
Rob
I pointed out the errors in the Old School studies on the morning of May 13, 2002, Trebor.
To be slightly more accurate, you realized that a withdrawal rate that survived for 30 years would leave you with no money in year 31. Everyone else who had used the calculator already understood that.
No.
I pointed out that the Old School studies contain no adjustment for valuations.
The 140 years of historical data show that the valuation level that applies when you begin your retirement is by far the biggest factor affecting the SWR.
Leave out that factor and you get the numbers wildly wrong and cause millions of people to suffer failed retirements.
How is that a good thing? A failed retirement is a serious life setback. I don’t want my name associated with such garbage.
Please try to find someone else.
It’s not my particular cup of tea, Evidence.
Not this boy.
Rob
No can do.
Rob
Here is the relevant portion of your post that day “The data that turned up for 1969 concerned me. As I read the data, it appeared to me that had I made an 80 percent stock allocation in 1969, I would now (31 years later) have lost all of my investment and be bankrupt. Is that true? It’s possible that I don’t understand how the calculator works, but that result was disturbing to me. The actual portflio figure that the calculator gave was that I would now have a negative $31,035. I don’t understand the concept of a negative portfolio value.”
It wouldn’t have mattered if there was an adjustment for valuations. If you take a 30 year worst case withdrawal rate then you will be out of money in year 31.
You’re wrong, Evidence. It makes all the difference in the world.
If the study had some slack built in, the failure to consider valuations might not be so horrible. It does not. It tells us what will work in the best possible scenario. The legitimate studies show that there was a 30 percent chance that retirement plans based on that study would survive. That’s not safe. It’s not even close.
You either need to add slack (the study contains none) or consider all the factors (the study ignores entirely the single most important factor). Get it wrong at both ends and you cause millions of failed retirements.
The error was just a mistake. No biggie. We all make mistakes.
The 10-year cover-up was not a mistake. That’s financial fraud. That will lead to prison sentences down the road. Bernie Madoff is in prison today and he didn’t cause a tiny fraction of the harm that these bogus studies caused. I am proud to be able to say that I spoke out in favor of correcting the studies 10 years before any of the Big Shots in this field even worked up the courage to acknowledge the errors in them.
Please take good care.
Rob
It does not. It tells us what will work in the best possible scenario.
It tells us what happened in the worst case in the historical record.
No.
It tells us what WOULD work in an alternate universe in which valuations have no effect.
That number does not come close to matching up to number that applies in THIS universe.
That’s why we are today in the process of seeing millions of middle-class retirements fail. That’s why we are in an economic crisis. That’s why we are one price crash away from going into a Second Great Depression.
That’s why you are headed to a prison cell.
I don’t say that to hurt your feelings, Evidence. I say it because I am your friend and because I want your prison sentence to be as short as is possible given your behavior over the past 10 years. The prison sentence will be a lot shorter if we avoid the next price crash than it will be if we experience another crash and end up in the Second Great Depression.
Madoff couldn’t explain why people didn’t see how great a guy he was. He was the toast of the town before he was sent to prison. People who got out of his fund before it imploded praised him to the skies. They said he wasn’t committing fraud because they had made millions investing with him.
It’s not what happens in the short term that determines whether something is fraud. It’s whether the numbers add up. The numbers don’t add up in the Old School studies. That’s why there is a universal consensus today that they got the retirement numbers wildly wrong.
I wish you well, old friend.
Rob
It tells us what WOULD work in an alternate universe in which valuations have no effect.
It reports what happened in the past. Stop pretending you don’t understand this. In your post of May 13th 2002 you specifically reference the year 1969. This shows that you understand that the calculator is reporting on specific periods in the past.
It reports what happened in the past. Stop pretending you don’t understand this.
It does NOT report what was safe in the past or what is safe today.
In 1929, prices were at a level where a 4 percent withdrawal had a 50 percent chance of succeeding and a 50 percent chance of failing.
Is that safe?
It is not.
Did a 4 percent withdrawal work for a retirement that began in 1929? It did.
But not because it was safe. Because it was lucky.
If Greaney called it “a study that identifes a withdrawal rate that might work if you get lucky,” that would be honest.
He doesn’t call it that. He says it identifies the withdrawal rate that is safe.
I will not be a part of this act of financial fraud that is likely to cause horrible suffering for millions of middle-class people in their old age.
Please find someone else, Evidence.
I was not cut of for this kind of work.
Rob
“The table below assumes a $1,000 initial portfolio value and shows the maximum initial inflation adjusted annual withdrawal (as a percent of assets) that allows the portfolio to survive to the end of all pay out periods examined.”
If the study had some slack built in, the failure to consider valuations might not be so horrible.
You can build your own slack in at firecalc
http://firecalc.com/
“Leave some money in the portfolio for my estate
There should be a minimum of $X left in the portfolio at all times, including at the end.”
Where you can put whatever value of X you wish.
“The table below assumes a $1,000 initial portfolio value and shows the maximum initial inflation adjusted annual withdrawal (as a percent of assets) that allows the portfolio to survive to the end of all pay out periods examined.”
If a study concludes that “smoking two packs of cigarettes a day will extend your life by 10 years” but includes a statement saying “cigarettes contain tobacco,” is the study honest or dishonest?
Putting one honest statement in a dishonest study does not transform the study into an honest enterprise.
Thousands of people have looked at the Greaney study over the past 10 years. Not one has been able to identify a valuation adjustment.
There’s a reason, Evidence.
Rob
You can build your own slack in at firecalc
Or I can create a calculator that reports the numbers honestly and then I don’t have to go through that step. I don’t want to adjust the numbers in dishonest studies. I want to use honest studies.
Why is it so important to you that these dishonest studies not be corrected? That’s the question you should be asking yourself.
What emotional benefit do you get from knowing that the dishonest studies have not been corrected?
That’s what’s at the root of all this.
You want to pretend. I do NOT want to pretend. I believe that further pretending is dangerous.
We are in an economic crisis. The time for pretending is over.
Rob
But you didn’t create any calculator. The calculator you have is made up of make believe numbers – as admitted by its creator.
That makes a lot of sense, What.
Rob