Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
I have read your post from May of 2002. I have read all the responses as well. The whole history is different versus your portrayal. If you feel there is some error in the math, it is up to you to show the math and your correction.
All you have really done is tell people you think there is a problem, how great you think you are (telling us you think you and the post are famous), how people tell you that they support you (which we can’t find) and how you think there is some massive fraud and cover-up (which is also made up).
So, if you really want to convince people, here is what you can do:
Post the link to the thread with your post from 2002. Show the error and your mathematical corrections. Invite people to comment and debate. Very simple.
What I say is that the Greaney retirement study lacks an adjustment for the valuation level that applies on the day the retirement begins. It shouldn’t take 19 years to determine whether that is so or not. Greaney should have corrected the study within 24 hours of the moment that he learned of the error he made in it.
Rob
“What I say is that the Greaney retirement study lacks an adjustment for the valuation level that applies on the day the retirement begins.”
Everyone agrees.
No-one has ever claimed that the Greaney retirement study contains a valuation adjustment.
I am glad to hear that everyone agrees that the Greaney retirement study lacks a valuation adjustment, Evidence.
Can you please explain why Greaney has not to this day correscted the study?
Can you also please explain why everyone has not insisted that he do so?
People use retirement studies to plan retirements, do they not? It is important to use the right numbers in retirement planning, is it not?
After 19 years of this, I know that you are not going to give a straight answer. I ask anyway because it would be super helpful if you did. Those two questions are the entire deal. In every field of human endeavor other than the investing advice filed, experts make an effort to give correct answers and the people asking the questions appreciate that effort. I think it would be fair to say that we have not seen much appreciation for correct answers in this field over the past 19 years. There have been exceptions. About 10 percent of the population of investors has evidenced a GREAT appreciation for correct answers. But the other 90 percent either tolerates incorrect answers or endorses them enthusiastically. I believe that we all need to work together to see this change. I think that we need to apply the same cultural norms that work so well in all other fields of human endeavor in the investment advice realm as well.
That is my sincere take.
I naturally wish you all good things.
Rob
“Can you please explain why Greaney has not corrected to this day?
Can you also please explain why everyone has not insisted that he do so?”
Because there isn’t an error. You either don’t understand his work or you misrepresent his work. You don’t listen. You are like the kid that sticks his fingers in his ears and goes “la la la la la la la la”
Okay, Anonymous.
Please mark me down as someone who believes that, in a world in which valuations affect long-term returns (that’s Planet Earth, according to Robert Shiller’s Nobel-prize-winning research), it is a logical impossibility that the safe withdrawal rate could be calculated properly without taking the valuation level that applies on the day the retirement begins into consideration.
I naturally wish you the best of luck in all your future life endeavors.
Rob
I will mark you down as someone that won’t listen.
Okay.
Please take good care.
Rob
“Can you please explain why Greaney has not to this day correscted the study?
Can you also please explain why everyone has not insisted that he do so?”
The problem is that the number you are looking for is a different number that the one calculated by Greaney and the other studies. They all come to about 4% because they all do basically the same calculation. “What inflation adjusted withdrawal rate survived all 30 year withdrawal periods in the past and what stock percentage did that portfolio have?”
The answer turned out to be 4% from a relatively high stock percentage.
Now the data set used only had a small number of periods that started with very high stock valuations and even those valuations did not reach the level we saw in 2000. So it is reasonable to ask if we could see 4% fail for a 30 year period from 2000. It is also reasonable to ask what sort of lower withdrawal rate might be needed if from times of high valuations.
However those are different questions than the one that Greaney, Trinity etc. answered.
a) If they really had made a mistake then it would be incumbent upon them to correct their numbers.
b) If however the case is that they got their number right but there is a different better number that people should use then it is the duty of the people proposing the different number to calculate that number (or range of numbers), document how and why they chose their calculation method and argue why their number(s) should be adopted.
You found it easier to simply make the incorrect claim that “intercst got the number wrong” rather than do the heavy lifting required by proposing a new and better number.
What you should have stated instead is
a) intercst got the number right
b) however it is NOT a number you should use to plan your retirement
c) here is a better way to calculate a withdrawal rate
d) and here are the reason why it is a better way
However that would have required a lot of difficult work by you or others who support your position, work that you seemed incapable of doing and work that you were not able to get anyone else with credibility to do for you.
Therefore you went with
a) “intercst got the number wrong”
b) “intercst got the number wrong”
C) “INTERCST GOT THE NUMBER WRONG”
D) “INTERCST GOT THE NUMBER WRONG!!!!!!!!!!!!!!!!!!!!”
and so on ad infinitum.
And it hasn’t worked
And it won’t work.
Of course I believe that Greaney calculated the SURVIVING withdrawal rate properly. I have been saying that since the first day. Greaney claimed that a 4 percent withdrawal rate is “100 percent safe” regardless of the valuation level that applies on the day the retirement begins. I do not agree. I believe that the safe withdrawal rate CHANGES with changes in valuations (because valuations affect long-term returns).
If I were to say that a 4 percent withdrawal is always “100 percent safe” I would be engaging in financial fraud. I do not believe that. A failed retirement is a serious life setback. So I am not willing to post dishonestly re this matter. Each investor has a right to hear both sides of the story and to decide for himself or herself which withdrawal rate to employ in his or her own retirement plan.
My sincere take.
My best and warmest wishes to you and yours.
Rob