Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Matt Lauer? Someone needs to teach you how to do a proper analogy.
I think it’s a good analogy.
Lots of people knew about Lauer. They kept their mouths shut out of fear.
The problem with using intimidation tactics to keep a cover-up going is that, once a small number of people overcome their fear and speak out, the rest work up the courage to speak out too. Things can turn fast.
Lots of people understand that Shiller is saying something different from what Bogle is saying. Lots of people understand that, if valuations affect long-term returns, there is zero chance that the safe withdrawal rate is the same number at all valuation levels.
I think that it is a shame what happened to Matt Lauer. It is of course a shame for the women involved. But it is also a shame for Lauer, in my assessment. If he had never been led to believe that he could get away with such behavior, he would in all likelihood have engaged in less of it. So those who led Lauer to believe that he could get away with his outrageous behavior contributed to the problem.
So it is in the investing advice field. Everyone who follows the peer-reviewed research in this field has known since 1981 that the safe withdrawal rate is a number that changes with changes in the valuation level. People should have spoken up when the Trinity study (on which the Greaney study was based) was published in the mid-1990s. The Trinity study should never have passed peer review. The people on the committee knew about Shiller’s research. They should have spoken up.
We all played a role in creating the climate in which the things Matt Lauer did could happen. And we all played a role in creating a climate in which the errors in the Buy-and-Hold retirement studies could be covered up for 15 years.
When we want to know the realities of stock investing, we will come to know them. The peer-reviewed research we need to learn to realities has been available to us for 36 years now. We just need to give ourselves permission to talk about it on every investing discussion board and blog on the internet. I believe that we will make the change in the days following the next price crash, when it will become clear to all of us that we can no longer afford to pretend not to know what we all on some level of consciousness do know — valuations really do matter, in the calculation of safe withdrawal rates and in every other strategic question facing long-term stock investors.
My sincere take.
Rob
“The Trinity study should never have passed peer review. ”
Who says it was ever peer reviewed? If your answer is anything more specific than “everyone knows it was peer reviewed”, I’ll be utterly astonished.
Anyway, they were too conservative. The actual father of the 4% SWR, Bill Bengen, now says the SWR is 4.5%: http://www.aaii.com/journal/article/insights-on-using-the-withdrawal-rule-from-its-creator
So Greaney and the Trinity guys are villains for saying 4%. Never seen you say anything about Bengen’s 4.5%. Just another example of what it’s like to be Rob.
Thanks for providing the link, Anonymous.
Do you actually believe that the SWR is 4.5 percent or are you just being argumentative?
I believe that the SWR is a number that varies with valuations, that it can drop as low as 1.6 percent or rise as high as 9.0 percent. Is that okay by you?
If it is okay by you that Bengen says it is higher than 4 percent, is it okay by you that I say that it is sometimes a lot lower than 4 percent and sometimes a lot higher than 4 percent? Or is everyone who suggests that it might be something other than what Greaney says it is truly a villain in your eyes?
I don’t think that Bengen is a villain for saying that it is 4.5 percent and I don’t think that Greaney is a villain for saying that it is 4 percent and I don’t think that I am a villain for saying that it is sometimes 1.6 percent and sometimes 9 percent. But I do think that Greaney is wrong to engage in criminally abusive behavior to stomp out the discussions that thousands of our fellow community members have indicated that they would like to have re the 36 years of peer-reviewed research showing that it is sometimes 1.6 percent and sometimes 9.0 percent. I consider Greaney a friend and I don’t like to see my friends going to prison. So I worked up the courage on the morning of May 13, 2002, to let him know that I thought he had wandered onto a very, very, very negative and self-destructive and other-destructive path. Good for me, right? Or do you not agree?
My best wishes to you, old friend.
Rob
No, you said your beef with Greaney is that he got the SWR numbers wrong. You’ve been hammering that for years. “Personally responsible for millions of busted retirements”, you said. If so, then Bengen’s numbers are even wronger. And he is well known, unlike Greaney. So why are you not at least posting a comment to that linked article? Don’t you have any convictions at all?
I haven’t read the Bengen article. I am going to read it. It is the sort of piece that I often write Valuation-Informed Indexing columns on. It is possible that I will do that in this case. I need to read the article to decide whether it is a good fit for that or not.
The issue is not how far off the mark the numbers are. Peter Lynch was at one time saying that the safe withdrawal rate was 7 percent. He was a lot more off the mark than Greaney was and is. But Lynch responded to criticism of his numbers very differently than Greaney. Lynch was informed of his mistake by Scott Burns. He acknowledged the mistake and thanked Burns for pointing it out to him and then hired Burns to write a column for a magazine that he owned. That’s the right way to go about things.
I 100 percent think that Greaney got the numbers wrong. But I also believe (I wrote this in an article that I posted at this site years ago) that Greaney personally believes that his numbers are not in error. The way that I wrote it was that, if Greaney’s best friend asked him what the SWR is, Greaney would tell him that it is 4 percent. Another way of saying it is that, if Greaney took a lie detector test and was asked if the SWR is always 4 percent, he could answer “yes” and pass the test. I do not believe that the objective evidence supports this belief. But I also believe that he is suffering from cognitive dissonance — as we all [including Old Farmer Hocus!] do from time to time. I believe that Greaney believes that the number is always 4 percent.
Is it possible that Bengen believes that the number is 4.5 percent? I believe that that is possible. If that is the case, I believe that Bengen is wrong. But of course it is possible that I am wrong. The way that we resolve matters like this in our society is that we let both people speak and then people interested in the subject listen to both sides make their case and try to figure out the realities for themselves. I have had a few interactions with Bengen. They have been pleasant. My view of Bengen is that he got something wrong but that he is HONESTLY wrong. That’s very, very, very different from Greaney, who I believe will be going to prison for a long, long time in the days following the next price crash.
You of course know the difference. Greaney has advanced death threats in an effort to cover up his mistake. He has demanded unjustified board bannings. He has put forward thousands of acts of defamation He has advanced threats to get academic researchers fired from their jobs. Greaney has destroyed millions of middle-class lives with his insanely abusive behavior. Those people obviously have a right to bring civil suits against him to recover their losses. Those losses are in the trillions. Greaney is obviously not going to be able to make them whole. They obviously have a right to seek criminal prosecutions. I believe that, when this story is written up on the front page of the New York Times, Greaney will be prosecuted in a criminal action and will be placed in a prison cell for the remaining days of his life. I would be very surprised if the same thing happened with Bengen. So the two cases are very different.
In the event that Bengen makes strong points in his article, he could help us all. I can write a response piece and then interested parties can look at both articles and form their own conclusions as to who has the best of it. That’s how our system works. It is my strongly held view that it is a very good system indeed. So, presuming that Bengen is sincere (as I believe he is), he is doing a good thing for all of us by making his case. I think it is wonderful and, if I can advance the ball a bit by responding to his article, I will do so.
Greaney has done that sort of thing from time to time. All of you Goons have. The reason why I am writing these words is that I want to encourage you to do more of that. I learn from you when you challenge me. I could be wrong. If I am wrong, I want to learn that and I am more likely to learn it from people who challenge me than from people who tell me that my every word is gold. So thanks for that. And I of course am grateful to my good friend John Greaney for the times that he has challenged me and thereby taught me and helped me.
But I did not build that Motley Fool board into the #1 most successful board in the history of the Motley Fool site for the purpose of seeing any of my friends thrown in prison cells. I consider Greaney a friend. So, when I saw him walking a very dark path, I got about the business of working up the courage to call him out on his b.s. and thereby to help him set things right before he destroyed his own life and the lives of millions of other middle-class people. I believe strongly that the site administrator at Motley Fool should have booted him from the board long before Greaney found himself in circumstances where he would be going to prison down the line a bit. The site administrator was more concerned about the dollar bills that Greaney brought in with his relentless promotion of the pure Get Rich Quick investing strategy than he was with keeping John out of prison. I think he was wrong to fail to execute his job responsibilities reasonably and thereby to ruin John’s life for the sake of a few crummy dollar bills. Not this boy, you know? I am proud to say that I tried very hard to take things in a very different direction. I asked the site administrator to do his job and, when he failed to do so, I asked my fellow community members to join together and to demand of him that he do his job. That is all in the Post Archives.
I see all the difference in the world between the behavior of John Greaney and the behavior of Bill Bengen. John has taken himself and the rest of us down, down, down, down, down, Bill has been helping us all out. You couldn’t have a bigger contrast. I only wish that all of my fellow community members felt the same measure of friendship towards John that I still feel to this day and would thus join me in trying to make the best of his very bad situation.
Does all of that not sound at least pretty much on the mark, my old friend?
Rob
It seems you just want revenge on Greaney as he has humiliated you in a public forum. Maybe you should just get over your hurt feelings.
That makes sense, Anonymous.
Please take good care.
Rob
It makes perfect sense. You despise Greaney. You just won’t say that, so you blindly attack his work.
Do you know how many Google hits there are out there for “rob bennett” “millions of busted retirements”? Lots. And the cause of all those busted retirements? The 4% rule. Now, magically, you have no problem with it. 4%, 4.5%, whatever, it’s all good, let’s just get along.
Today you say “Greaney has destroyed millions of middle-class lives with his insanely abusive behavior.” Which is absurd, but it clearly shows your problem with him is personal. Until someone says it’s personal. Then the problem is back to the 4% rule.
I don’t despise John as a person even a tiny bit. I had a lot of good times with the guy. I never would have had those times if he had not started that Retire Early board. When I was starting work on the book that became “Passion Saving,” I asked John to be my co-author. Why would I do that if I despised him? This claim makes no sense.
And it’s not right to say that I blindly attack his work. I reviewed his retirement study when he published it as a report at the Soapbox.com site. I gave it a five-star review. I felt a little funny about doing that because I knew at the time (but had not come out publicly and said so) that he got the numbers wrong in his study. I rationalized what I did on grounds that his study was a significant advance on the retirement literature that was in place before he came on the scene. I still believe that to be the case. Peter Lynch was the manager of the Magellan fund. He was a pretty big deal. Lynch said that the safe withdrawal rate was 7 percent. Greaney said it was 4 percent. Greaney was a lot closer to the mark than Lynch was. Not bad for a guy whose only qualifications to write about the subject were that he (like me) had figured out how to get his words posted to an internet site.
So I like the guy as a person and I admire his work.
But, yes, you are right that I believe that Greaney has caused millions of failed retirements. And that’s a big deal in a negative way jheust as the other stuff is a big deal in a positive way. What would you have me do, keep quiet about it? If Greaney were thinking clearly, he would want me to make that claim at every site on the internet. Once upon a time, he tried to help people achieve early retirements. If he knew that there was a study that was in the process of causing millions of failed retirements, he would want the flaws of that study exposed. The only reason why he doesn’t want that in this case is that the study in question has his name on it. That’s not a good reason.
We all make mistakes, Anonymous. I do. You do. Bogle does. Shiller does. Greaney does. Everybody does.
And we all live in communities. Different people have different sets of life experiences. And so they see things that we are not able to see ourselves. If they are our true friends, they help us to see our mistakes earlier than we would otherwise see them so that we can correct them sooner and cause less harm with them. That’s what I did with my friend John Greaney. I pointed out his mistake while also noting his good work, giving him an opportunity to correct the error before it caused him any significant embarrassment. And I did it in the most gracious way possible. I suggested that John and I work together developing what became The Retirement Risk Evaluator, the first safe-withdrawal-rate calculator that contains an adjustment for the valuations level that applied on the day the retirement began. John could have had his name on that calculator. His site could be the most popular and most important personal finance site on the internet today. He chose to get on this dark path that he is on today instead. I advised him against that choice. In the strongest language possible.
I like the guy. I appreciate his contributions. I 100 percent oppose the acts of self-destruction and the acts of destruction of millions of other middle-class people.
Do I have a problem with someone saying that the safe withdrawal rate is always 4 percent or always 4.5 percent or whatever? I have an INTELLECTUAL problem with it. I don’t believe it’s accurate. I believe that the 36 years of peer-reviewed research showing that valuations affect long-term returns is legitimate research. So I believe that claims that the safe withdrawal rate is always the same number are false claims. False claims about a number that many, many people are using to plan their retirements do serious, serious damage in this world. I don’t like to see millions of people suffering failed retirements. So, yes, I make it my business to speak out about those false claims. I would like to see the entire world move on to Valuation-Informed Indexing, so that we would never again have to worry about people making those false claims or falling for those false claims and ruining their financial futures by doing so.
But none of that changes the reality that those false claims are being put forward by human beings and that human beings make mistakes from time to time and that the people making these false claims have also helped us all in very important ways and that they have earned our respect and affection by doing so. Am I a perfect being? I was a Buy-and-Holder on the morning of May 13, 2002. I now say that Buy-and-Hold is a big pile of smelly garbage. I was either very, very wrong on the morning of May 13, 2002, or I am very, very wrong today. So I think it would be fair to say that it is a logical impossibility that I have gotten them all right. If I get some of them wrong, it might be a good practice for me to evidence a measure of charity toward the good and smart people whom I come to conclude are getting some of them wrong in this realm. You think?
I think Greaney is wrong. I think Bengen is wrong. I think that I have a responsibility to say so. Partly to myself. Partly to the millions of middle-class people who are in the process of seeing their lives destroyed. And partly to my friends Bill Bengen and John Greaney. So I say what I believe. And I offer precisely zero apologies for doing so. The one time during this saga where I did something wrong was in those three years from May 1999 through May 2002 when I did not possess the courage to speak out even though I suspected that the numbers in Greaney’s study were in error.
We all should be saying what we truly believe in the discussions that we hold on the internet about how stock investing works. That’s how we learn together. Learning together is a wonderful and amazing thing. It is the entire freakin’ purpose of our boards and blogs. If we truly have reached a point where our mistakes are so horrible to contemplate that we just cannot bear to permit honest discussions anymore, we should just shut down every investing discussion board and blog. Any discussion board or blog that does not permit honest posting is a corrupt enterprise. I want no part of such boards or blogs. Not this boy. I would be truly grateful if you could try to find somebody else.
The human race was not put on Planet Earth knowing everything there is to know about how stock investing works. We figured out some things over the years. By the time that 1981 came around, we knew a lot but we were missing one huge piece to the puzzle — it hadn’t yet clicked for us that valuations affect long-term returns. Now we know. We are all part of the lucky generation that happened to be walking the planet when the last big piece of the stock investing puzzle snapped into place. My job is to spread the word. Knowing for the first time how stock investing works in the real world helps every last human being on the planet. It is a win/win/win/win/win, with no possible downside. I am going to get the job done. I pledge you that much. As Elvis once put it, if you don’t believe I’m going , you can just count the days I’m gone.
My preference is to do this wonderful work in union with my many Buy-and-Hold friends, good and smart people for whom I feel much respect and affection and gratitude. But you know what? I don’t make decisions for my Buy-and-Hold friends. They have free will. They get to make their own decisions. I will accept with sadness the reality if they elect to follow a darker path. These sorts of things happen in this big old goofy world of ours from time to time, I have been told. I cannot force you to do anything that you do not care to do, Anonymous. I wish you well in all your travels, in any event.
Love is the answer. Re that one, I am 100 percent sure.
Take good care, man.
Rob
“I think Bengen is wrong. I think that I have a responsibility to say so.”
And so you do. Here, behind his back. But you won’t express your math-free gut-feel opinion in a comment section where he might see it. How is that living up to your responsibility?
No. I engaged in an e-mail conversation with Bengen a number of years back. I told him that I think he is wrong re safe withdrawal rates.
Set up a debate at the Bogleheads Forum. We can have Bengen there. We can have me there. We can have Bogle there. We can have Shiller there. We can have Greaney there. We can have Linduaer there. We can have Pfau there.
See how it goes. No death threats. No demands for unjustified board bannings. No thousands of acts of defamation. No threats to get academic researchers fired from their jobs.
We’ll make history.
Rob
Just because you were able to browbeat Wade into emailing the Trinity guys doesn’t mean I’ll do your bidding too. Set up your own damn forum. But I promise I’ll read the historical transcript.
Okay.
Rob
“I believe that Greaney has caused millions of failed retirements.”
Exactly how? You’re still waffling on that. If it’s his 4% rule you should forget about nobody Greaney and focus on famous Bengen, who says 4.5%. If Greaney busted millions of retirements, Bengen certainly busted billions. If it’s Greaney’s abusiveness, how does his abuse bust the retirements of millions of people who never heard of either of you?
It’s his abusiveness.
Greaney didn’t come up with the 4 percent rule. He is not responsible for the intellectual mistake.
I don’t think it would be fair to blame the people (like Bengen) who ARE responsible for the intellectual mistake for the millions of failed retirements. People made mistakes. That’s just one of those things. There is no evidence that the mistake was intentional, that the aim was to cause millions of failed retirements. So I don’t see that there is any blame to cast there.
Greaney’s abusiveness IS intentional. That’s why I cast blame on him in a way that I do not cast blame on Bengen or lots of others.
You suggest that Greaney’s abusiveness has not hurt the millions of people who have never heard of him or me. I disagree. I built the Retire Early board at Motley Fool into the #1 discussion board at that site with a purpose in mind — I wanted to teach millions of people how to achieve financial independence early in life. It was my intent to spread the word about what we learned about safe withdrawal rates to everyone on the planet. Greaney blocked that process from moving forward with his criminally abusive behavior. Wade Pfau and I intended to work together to get our grounds-breaking study showing that Valuation-Informed Indexing is superior to Buy-and-Hold featured on the front page of the New York Times. Greaney stopped that from happening by threatening to get Wade fired from his job if he continued doing honest work in this field. He destroyed millions of middle-class lives with that criminal act.
Has anyone ever been more deserving of a long prison sentence? Valuation-Informed Indexing is a pure good. It’s all upside and zero downside. And millions of middle-class people who very much need access to honest and informed reports of what the last 36 years of peer-reviewed research teaches us about how stock investing works in the real world have been denied such access because this guy is embarrassed for people to learn about a mistake of his that he learned about 15 years ago? Huh? What the f?
I believe that our laws against financial fraud are good and necessary laws. I believe that they need to be enforced in a reasonable manner and I believe that in the days following the next price crash they will be enforced in a reasonable manner. I could be wrong. We will have to wait a bit to see how it all plays out, you know? But that is certainly what I believe we will see happen.
Do I still care about my old friend John Greaney and do I still want to help him out any way I can? I do. And I believe that there are things that I will be able to say at the time that will indeed help him out and I intend to say those things.
Do I believe that the things I will say will be enough to keep him out of prison altogether? I think that they will probably not be enough. I think they will help. This is a strange case. I don’t think that anything like this has ever happened before. So I don’t think it is possible to make predictions with any high degree of confidence. If I manage to keep Greaney out of prison altogether, that’s 100 percent okay with me. If I could snap my fingers and get him a Get Out of Jail Free card, I would do it. But I don’t have that power. This thing is bigger than me. I will do what I can while staying on the right side of the felony line myself and then I just need to let it go and accept what happens.
Does that help?
Rob
“It’s his abusiveness.”
Really? Here are just a few of your quotes from those pesky Post Archives.
“The “4 percent rule” has caused millions of busted retirements”
“When you calculate the SWR accurately, you find that the withdrawal rate that is described in the Old School studied as “100 percent safe” has only a one in three chance of working out for those who retired at the top of the bubble. That means that there are going to be millions of busted retirements resulting from just this one error”
“I think the Old School safe withdrawal rate studies caused millions of busted retirements by getting the numbers so wildly wrong.”
“There are going to be millions of busted retirements resulting from the demonstrably false claims put forward in the Old School safe-withdrawal rates studies.”
There’s no conflict between those statements and what I am saying here.
The 4 percent rule will have caused millions of failed retirements in the days following the next crash (we obviously will not have any problem if it turns out that the last 36 years of peer-reviewed research is not legitimate research).
Who is responsible for those millions of failed retirements? If it was all a mistake, no one was responsible. If it all was a mistake, then we all just have to be careful not to repeat the mistake.
But that’s not the situation that we are dealing with. I pointed out the mistake in a post that I put to the Retire Early board at the Motley Fool site on the morning of May 13, 2002. Thousands of our fellow community members expressed excitement over the post, saying that they saw it as the most valuable post in the history of the board. Big-name experts like Rob Arnott endorsed the post, saying it checks out with what the last 36 years of peer-reviewed research says in every way and that it opens up the way to hundreds of big advances in our understanding of how stock investing works. A fellow with a Ph.D. in Economic saw how excited people were over the things they were learning in the debate that followed the post asked me if I would be willing to co-author research showing that this post led us to the future of investing analysis and to get it published in a peer-reviewed journal and to get it featured on the front page of the New York Times. All good stuff, right? So what’s the problem? Why would we be seeing millions of failed retirements when so many wonderful people helped us out in so many wonderful ways to accomplish so many wonderful things?
Death threats. Demands for unjustified board bannings. Thousands of acts of defamation. Threats to get academic researchers fired from their jobs. A 15-year Campaign of Terror against our board and blog communities led by Mel Lindauer, John Greaney and Jack Bogle. Criminally abusive acts. By the thousands. A level of abusiveness never seen before in the history of the United States. Over the pointing out of an error in a mathematical calculation that could have been checked out in five minutes.
No one goes to prison when a hurricane destroys millions of lives. Because hurricanes are not man-made. But if some scientist had an advanced technology that permitted him to see a hurricane coming 15 years in advance and he tried to warn people and some evil genius devoted 15 years of his life to stopping the word from getting out, that evil genius would be sent to prison for a long, long time, no? Is there any possibility whatsoever that he would not?
Does all of that not sound at least roughly right even to your Goon-impaired ears, my good friend?
Rob
You just love talking in circles. Fun fun fun, isn’t it? Full of glee. Let’s recap:
“I believe that Greaney has caused millions of failed retirements.”
“Exactly how? (what caused the failed retirements, the 4% rule or abusiveness)”
“It’s his abusiveness.”
“The “4 percent rule” has caused millions of busted retirements”
“There’s no conflict between those statements and what I am saying here.”
You know, I appear to be about your last commenter, but when you play such childish games, it’s tedious even for me. I need to find a better pastime. Take care, Rob.
That sounds good, Anonymous.
You please take good care too. my old friend.
Rob