Set forth below is the text of a comment that I recently put to the Joe Taxpayer blog:
Some debate these issues like religion.
99 percent of the world probably thinks that was so of me. I truly do not think it was. I knew about the errors in Greaney’s SWR study when I put my first post to the Motley Fool board in May 1999. I didn’t put forward my famous post pointing out the errors in the study until the morning of May 13, 2002. So getting those studies corrected obviously was not a religion to me in those days!
There’s one thing that really is like a religion to me. Free Speech. I’m a journalist. It’s all I ever wanted to be. It’s in my blood. So, yes, the idea that people use intimidation tactics to block a very important discussion that thousands of people have expressed a desire to have for 11 years rubs my fur the wrong way. Guilty as charged re that one!
The other one that might come close to being a religion with me is the idea that you don’t betray your fellow community members, no matter what. There were hundreds of us who worked together to build the Retire Early board at Motley Fool into the most successful board in the history of the site. Those people shared private stuff about their finances. I shared in their joy when they achieved important milestones. Those people became friends to me. You don’t betray your friends because some internet Goon makes clear what his Goon Squad will do to you if you refuse. You’re not the same person as you once were once you go along with something like that.
Hey! Motley Fool promised me in its posting rules that it would protect me from the sorts of individuals who have put up posts in “defense” of Mel Lindauer and John Greaney. If I had known that you had to show up with a Goon Squad to be able to say what you truly believe, I would have formed one of my own!
Actually, I probably wouldn’t have. I don’t think Goon squads are ever really going to be my thing. If I HAD a Goon Squad, I would probably post in opposition to my OWN Goon Squad. That’s how deep this Free Speech thing goes with me.
Here’s an interesting historical fact that few newcomers to this stuff know — I dropped out of the discussions on Friday, May 17, 2002. The Goons had become just too brutal and I had had enough and I announced that I was leaving the board and I had every intention of sticking to it.
God had other plans for me. The following afternoon, a retired government engineer (John Walter Russell) who had never posted to the board before put up a post doing a sensitivity analysis of the Greaney study to see whether I was truly off my rocker or not. John found that the sensitivity numbers for the retirement study were so bad that an aspiring retiree would have to be 100 percent loco to give two seconds consideration to the idea of using that study to plan a retirement. He wrote a post titled “Hocus Is Really Onto Something (and I Am Having a Ball!). About 50 of my fellow community members endorsed the post. Dozens of posters came forward to say that this was the most exciting discussion we had ever seen at that board.
I was back! What else are you gonna do in those sorts of circumstances? You can’t let all of your buds down and still look at the man in the mirror the next day.
John Walter Russell? He spent the next seven-plus years of his life (John died in October, 2009) researching my investing ideas. He became the most loved poster in the history of both the Retire Early and Indexing discussion-board communities. He ended up having so much wonderful research that he created a site of his own to share it with all the people asking about it (the site passed to me on John’s death).
Things sometimes work out for the best when you work up the courage to do the right thing.
Or so I am informed by one of those crazy hunches that I have been known to experience from time to time!
Rob
There go those crazy bogleheads discussing safe withdrawal rates again. Taylor Larimore even said he doesn’t use a number…when things are going well and takes out more and when things are down he takes out less.
http://www.bogleheads.org/forum/viewtopic.php?f=10&t=133147&newpost=1964936
I can believe that Taylor tells himself that safe withdrawal rates don’t matter, Trebor. That’s how cognitive dissonance works.
But actions speak louder than words. Taylor supports the Ban on Honest Posting. So something is obviously bothering him.
Adjusting your take-out after a price crash will not work. Stocks are priced today for a 65 percent price drop. Is he going to reduce his take-out by two-thirds? And, given that he has been taking out more than he can afford to take out for years now, he would really need to reduce his take-out by MORE than two-thirds. Is he going to reduce his take-out by 80 percent?
Why go about things in this convoluted fashion? The far easier and far more effective way to proceed is the OBVIOUS way to proceed — calculate the SWR accurately.
Please don’t tell me that I am the first person ever to come up with that idea. Taylor is perfectly capable of coming up with that one on his own. Two things stand in his way. One, he doesn’t want to acknowledge that his portfolio is smaller than he has long been pretending. And, two, he doesn’t want to acknowledge that he has been taken and that he has hurt himself and lots of others by promoting GRQ investing strategies.
Honestly matters, Trebor. Valuations matter. Accuracy matters.
It’s not a kindness for any of us to pretend otherwise. We hurt ourselves and others when we pretend otherwise.
That’s my sincere take re these terribly important matters, in any event.
I wish you (and my good friend Taylor as well) all good things.
Rob
There go those crazy bogleheads
I wish you meant the “crazy” part, Trebor.
All Bogleheads are human.
All humans have a crazy side to them.
Therefore, all Bogleheads have a crazy side to them.
If only they could acknowledge that and give up the pompous know-it-all garbage, they could learn more in the next 12 hours than they have learned in the past 12 years.
People who act like they know it all NEVER know it all. People who can acknowledge the possibility that they have it wrong offer far more reliable testimony.
It could be that I am wrong. I have been wrong about important things before. I would probably be the last to know if it were happening again.
My best and warmest wishes to you, old friend.
Rob
Taylor Larimore even said he doesn’t use a number
We’ve come a long way when it is the Goons saying that the safe withdrawal rate doesn’t matter.
I can remember a number of the Normals making that case back in the Motley Fool days and hearing the Goons laugh at them in response. It must have been the Wall Street Journal article!
Rob
I wonder if John Greaney agrees that safe withdrawal rates don’t matter anymore.
There are so many puzzles vexing us all!
Rob
Rob
“Adjusting your take-out after a price crash will not work. Stocks are priced today for a 65 percent price drop. Is he going to reduce his take-out by two-third”
Assuming all your hand-waving about stock prices is correct, do you really think Taylor is 100% invested in the stock market?!?! Unlike you, he has been fairly open about his investments. First of all, he holds a SPIA that provides for at least some of his current income needs. Secondly, I believe his portfolio is a 50-50 split between stocks and bonds. So even IF a 65% decline in the stock market is in the cards (and it is certainly NOT the guaranteed outcome you like to make it appear) his income will not need to drop anywhere near that level.
I don’t believe that Taylor is going with a 100 percent stock allocation. And I agree with you that a 65 percent decline is not a guaranteed outcome (although I would say that it is just as likely to be worse than that as to be better than that). So I can go along with saying that he won’t need to cut his spending by a full 80 percent or perhaps not even by a full 65 percent. But, if the crash is anything close to what the last 33 years of peer-reviewed academic research (based on 140 years of historical return data) says, he is going to need to make a very big cut in his spending. It is poor retirement planning to set thing up so that you are going to have to endure that sort of hit. That’s the point here.
Why did John Greaney bother to create his retirement study?
He wanted to be able to plan more effectively. He wanted to help others become able to plan more effectively. Is that not so?
If identifying the safe withdrawal rate helps retirees to plan more effectively, then why are we now hearing this nonsense that knowing the safe withdrawal rate doesn’t help? Huh? That’s crazy talk, Trebor.
Knowing the safe withdrawal rate matters.
We were right the first time.
The Buy-and-Holders are now playing this stupid game because the Wall Street Journal and the Economist wrote that they got the numbers wildly wrong (ten years after I told them the same thing in my famous post at the Motley Fool board).
If Taylor were not too proud to acknowledge his mistake, what would he be doing now?
He wouldn’t be saying that SWRs don’t matter. He would be fixing the darn mistake!
We don’t need to pretend that SWRs don’t matter. We need to calculate the SWR ACCURATELY.
I need to tell you that? You’re not smart enough to figure that one out on your own?
You’re smart enough. Your problem is that you are caught in a web of lies and you cannot figure a way out of it.
The way out of the web is the same as it was on the morning of May 13, 2002. The way out is coming clean.
That’s it. There is no other way.
I wish you well.
Rob
And here they go again, discussing failure rates in withdrawal studies.
http://www.bogleheads.org/forum/viewtopic.php?f=10&t=133192&newpost=1966272
I know you like to think that there is some sort of worldwide ban on discussing these kinds of things, but it seems its mostly just you who is banned, and for boorish behavior at that.
There was a fellow at the Vanguard Diehards board who put it well. He said that the method of the Buy-and-Hold Mafia is to make an example of those who are most effective at challenging the dogmas. I became Public Enemy #1 when I was the person to discover the errors in the Old School SWR studies. The fellow made the point that, once you make the example of the one guy, all the rest are afraid to speak out. He compared it to “the invisible fence for dogs.” Everybody worries about crossing the line and the things that most need to be said are never said.
There’s not one person on that board giving voice to their sincere beliefs today, Trebor. Or even one person in the investing advice field. Not one. Some have grave doubts about Buy-and-Hold, others have all their money invested pursuant to its principles. But none of them are being 100 percent honest. Bogle isn’t being 100 percent honest. Shiller isn’t being 100 percent honest. Arnott isn’t being 100 percent honest. You aren’t being 100 percent honest.
And we are all hurting as a result. We are all missing out on a wonderful learning experience as a result.
I will continuing posting honestly. And I will continue calling out others to post honestly. And I will win. And people like Jack Bogle and Bill Bernstein and Rob Arnott and Robert Shiller will thank me for sticking with it and for being so brave and balanced and caring in my approach.
And we will all live happily ever after. Until the next time the humans f things up for themselves!
Take good care, Goon buddy.
Rob
and for boorish behavior at that.
I let my good friend John Greaney know about the errors in his retirement study so that he could correct them 10 years before he had to experience the embarrassment of seeing the Wall Street Journal write an article about the errors that he had denied for 10 years. It doesn’t get any more boorish than that!
I’m bad to the bone, Trebor. Everybody knows it too. That’s the thing.
Don’t let the bad guys get you down, man.
Rob