Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
It looks like the people over on the City Data Forum are also saying you are wrong on SWRs. They point out the Michael Kitces work. You better get over there and straighten them out.
https://www.city-data.com/forum/investing/3160252-wade-pfau-4-rule-now-2-a.html
| Every last one of us should be trying to straighten them out, Anonymous. We all want the same things. We all need to know how to invest effectively. There are no different sides re this one. We should all be advocating that every discussion board and blog on the internet be opened to honest posting re the last 39 years of peer-reviewed research. We incorporate new knowledge into our understanding of how the world works by talking it over from all sorts of angles. We need everyone participating without fear because each person brings something different to the table.
The safe withdrawal rate is the product of a mathematical calculation. So this should not be even a tiny bit controversial. The reason why it is controversial is that Shiller is challenging the idea that investors are 100 percent rational. He is saying that they are highly emotional. That’s a game-changer. The Buy-and-Holders see it as an insult to have their rationality questioned. But the very fact that they get so upset shows that Shiller is right that they are emotional. If the Buy-and-Holders were as rational as they claim to be, we never would have seen a single criminal act engaged in as part of a “defense” of Buy-and-Hold. The battle is a battle of reason (research) versus emotion (death threats, etc.) 100 percent of the evidence supports the claim that valuations must be considered when calculating the safe withdrawal rate, 0 percent of the evidence supports the claim that it is is not necessary to take valuations into account. But reason and emotion speak different languages. When the Buy-and-Holders hear Wade Pfau saying that the 4 percent rule is dangerous nonsense, their response is to threaten to get him fired from his job. That doesn’t persuade me or anyone else who has not gotten caught up in a Get Rich Quick scam. But it shuts Wade up or at least causes him to be more careful about where he says out loud what he truly believes. But a death threat or a career destruction threat is not a good argument. It is just emotion evidencing itself. The entire Buy-and-Hold “idea” that market timing (price discipline!) is not required is just emotion evidencing itself. It’s like an alcoholic banging on the table and screaming that he can quit at any time. It is not a claim that should be taken seriously given the manner in which it is delivered. I believe that as a nation we are going to need to find a way to provide millions of investors access to honest and accurate reports of what the last 39 years of peer-reviewed research teaches us about how stock investing works, I believe that in the days following the next price crash enough of us will work up the courage to stand up to you Goons to help us all get us to where we need to go. But we will see, you know? I wish you all the best that this life has to offer a person, in any event. Sober Investing Advocate Rob |
Oh no, Rob. The media is telling everyone that the coming economic crash is because of the coronavirus.
https://www.cnn.com/2020/07/23/business/coronavirus-economy-recovery/index.html
No one will ever believe your story that buy and hold was the cause and you will never get your $500 million.
We should want to get it right. Everyone should want that.
If irrational exuberance is a real thing, then its disappearance would obviously cause an economic crisis. If Shiller is right, then 50 percent of the value of today’s stock market is just fleeting irrational exuberance and we will see trillions of dollars of consumer buying power disappear when it goes away.
I can’t control what anyone else says, Anonymous. If I were king of the world, we never would have seen a single abusive post. We all would have just been enjoying an amazing learning experience together, going back to the first day. It hasn’t played out that way. Perhaps an economic crisis will sober people up and we will all enjoy that amazing learning experience then. Even if we do not, I don’t see how I can do anything other than to give it my best shot. The potential upside is enormous. And the potential downside is zero.
We’ll see, you know? I think we are a good people. I think we are all going to pull together after the crash and take this thing to a very good place. But I do not say that I am infallible. I just know that I will not be able to pretend that the high stock prices brought on by the promotion of Buy-and-Hold strategies did not cause the economic crisis when I can look at Shiller’s book and see him describe how it works and know that he was awarded a Nobel prize for his “revolutionary” (his word) research findings.
Shiller’s work is revolutionary in a positive sense. I want to see the benefits that follow from discussing his findings at every site on the internet. And I want millions of others to enjoy those benefits as well.
The question you would be asking if you were thinking clearly is: How do we get CNN to begin writing different sorts of articles that recognize what Shiller showed in his research? We don’t get that by being afraid to speak out. We all need to be working up the courage to speak out re these matters.
My best wishes to you.
Rob
“ We should want to get it right. Everyone should want that.”
We do want you. To get it right, but you don’t listen. You better have a plan B as the $500 million is a pipe dream.
Not if irrational exuberance is a real thing. If irrational exuberance is a real thing, discovering that is the most important advance in our understanding of how stock investing works and in how our economy works in our nations’s history. And I am 18 years ahead of anyone else in getting to the bottom of the story of why it has taken us so long to begin reaping benefits from this amazing advance. If that ain’t worth $500 million, I have a hard time imagining what would be worth $500 million.
Mookie Betts got a contract today for nearly $400 million. Which do you think is more important work, playing baseball well or helping millions of people to avoid seeing their retirement plans fail? No offence to Mookie Betts, but I know which one I would rank higher.
Rob
If you knew more than others about how investing works, you would have more money in your account than any other person alive. I don’t think you have provided value worth $5, let alone $500 million.
It’s an all-or-nothing thing, Anonymous. Once I have earned $5 from this stuff, it will not be long until I will have earned $500 million. If the market is efficient, stocks work one way. If valuations affect long-term returns, stocks work another way. If I am permitted to speak, then we are all going to move from the one way to the other way. So as of today there is a block on my speaking. But if that block is brought down by the next price crash, then everything comes out and that adds up to a lot more than $500 million.
Rob