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 enough put aside to pay the bills for some time.”
So now you say that you don’t really need to work? What changed?
I have always said that I would get a job after the book is finished.
It would be insane to throw away a $500 million payday to get s small amount of money coming in a few months sooner.
What matters here is getting every discussion board and blog on the internet opened to honest posting re the past 40 years of peer-reviewed research in this field, without a single exception. I do that and I am one of the richest people on planet Earth. I fail to do that and I am pretty much screwed. Everything else is of tiny significance compared to that.
And that’s always been the case. This is not a news flash. I never would have let things get to a place where I was banned from the Motley Fool board if I didn’t think that it was a matter of critical importance that millions of middle-class investors be provided access to accurate and honest information re the last 40 years of peer-reviewed research in this field.
Rob
“ It would be insane to throw away a $500 million payday to get s small amount of money coming in a few months sooner.”
Did you risk adjust that $500 million as you tell buy and holders to do? Well, let’s look at the benchmarks.
You have a 1 in 32.6 million chance of being President of the United States.
You have a 1 in 292.2 million chance of winning the Powerball.
You have a 1 in 500,000 chance of getting struck by lightning this year.
Now the odds of you getting your $500 million is even more remote versus those other situations, but let’s be generous and use the most favorable odds (being struck by lightning this year). That means your risk adjustment outcome of the $500 million is actually $1000. With an average household income, that is only a week’s worth of pay. The math states that you need to get the job immediately.
We couldn’t possibly disagree more, Anonymous.
There was a comment here a few weeks back in which Evidence-Based Investing acknowledged that he does not believe that the retirement study posted at John Greaney’s web site contains an adjustment for the valuation level that applies on the day the retirement begins. Evidence has been a general in Greaney’s Goon army going back to the early days. So he has no bias against Greaney. The one possible reason he would have for saying that the study lacks a valuation adjustment is that that is what he truly believes.
Now —
I said that the study lacked a valuation adjustment back on the morning of May 13, 2002. I think that it would be fair to say that, if that one proves out, that May 13, 2002, post of mine is the most important post ever put to the internet. People go to financial advisers to obtain advice on how to put together their retirement plans. If the vast majority of experts in this field have been getting the numbers in their retirement studies wildly wrong for many years now, getting those studies corrected is the most important advance in the history of personal finance. And I have been saying that we need to get those studies corrected for 19 years running now.
If that ain’t worth $500 million, I have a hard time imagining what would be worth $500 million. I mean, holy, moly!
When you’ve lost Evidence….
Rob
Where did Evidence say that a valuation adjustment was needed? Your basic premise is wrong to begin with. Now setting that aside, how would your interpretation ever result in $500 million. Wade asked that question years ago and you have still never answered it.
Nothing could be more obvious.
Eugene Fama did a study back in the 1960s showing that short-term timing doesn’t work. That one has stood the test of time. So — good stuff.
There were not studies of long-term timing at that time (Shiller’s work came later). So there were people who jumped to the hasty conclusion that no form of timing was required., That doesn’t follow. Saying that because short-term timing doesn’t work investors should not engage in any form of timing whatsoever is like saying that because driving drunk doesn’t work nobody should drive cars. It makes precisely zero sense.
Shiller got things back on the right track in 1981. But Shiller’s advance (showing that market timing is always 100 percent required) was so huge that cognitive dissonance kicked in among those who had bought into the Buy-and-Hold stuff. So, instead of celebrating the huge advance that permitted us all to live better lives from that point forward, a number of people who had made reputations for themselves promoting Buy-and-Hold went into cover-up mode. Their efforts to prevent millions of people from learning what the research says about stock investing have grown more and more desperate over the past 40 years. And here we are today with a CAPE value of 38 waiting to see if the fifth Buy-and-Hold Crisis destroys as many lives as the earlier four.
Those of us who have been advocating that honest posting re the peer-reviewed research be permitted are going to have a lot of work to do educating millions of people re the realities of stock investing after those millions of lives have been destroyed. Somehow I doubt that there will be even a single non-Goon voice saying at that time that I should not be awarded at a bare minimum a $500 million settlement payment. But we’ll see, you know.
I wish you all the best that this life has to offer a person regardless of what investment strategy you elect to follow. Does that help at least a tiny bit?
My best wishes.
Rob
“The one possible reason he would have for saying that the study lacks a valuation adjustment is that that is what he truly believes.”
The study also lacks training wheels. And a soft serve ice cream machine. Oh, and it doesn’t come with batteries. Those three observations are exactly as relevant as your one.
However despite my findings being three times as important as yours, I don’t think I’ll sacrifice 19 years of my life and my family’s financial security, just so I can spend all day every day harping on them.
I didn’t even mention the thing about the soft-serve ice cream machine. I thought that might be piling on.
Rob
“There was a comment here a few weeks back in which Evidence-Based Investing acknowledged that he does not believe that the retirement study posted at John Greaney’s web site contains an adjustment for the valuation level that applies on the day the retirement begins. Evidence has been a general in Greaney’s Goon army going back to the early days. So he has no bias against Greaney. The one possible reason he would have for saying that the study lacks a valuation adjustment is that that is what he truly believes.”
This is correct. No-one believes that Greaney’s study contains valuation adjustments. The other similar studies (Trinity etc.) also do not contain valuation adjustments. Again, no-one believes they do.
We are in agreement re all that, Evidence.
Do you believe that it is possible to calculate the safe withdrawal rate accurately without taking valuations into consideration? I do not. I believe that the idea that that was possible came about because there was a time when people believed that the market was efficient. If the market were efficient, the Greaney study would be accurate. But Shiller’s Nobel-prize-winning research shows that the market is NOT efficient. So a valuation adjustment is required.
Are we in agreement re that part as well?
If you do not agree that a valuation adjustment is required to calculate the safe withdrawal rate accurately, can you please explain why not?
Do you agree that valuations affect long-term returns? If valuations affect returns, then valuations must affect the safe withdrawal rate. Is that not so?
Rob
Looks like Rob wants Evidence to be his next JWR
“Do you believe that it is possible to calculate the safe withdrawal rate accurately without taking valuations into consideration?”
It depends on what you mean by “safe withdrawal rate”.
The Greaney study (and other similar studies) were very clear in what they were calculating. They calculated the inflation adjusted withdrawal rate that survived 30 year periods in the past.
The rate you are looking for (I believe) is what rate is going to survive in the future. Those are two different things.
The would be big shoes to fill, Anonymous.
Rob
“ The Greaney study (and other similar studies) were very clear in what they were calculating. They calculated the inflation adjusted withdrawal rate that survived 30 year periods in the past.
The rate you are looking for (I believe) is what rate is going to survive in the future. Those are two different things.”
Uh, oh. There goes the $500 million.
It depends on what you mean by “safe withdrawal rate”.
The Greaney study (and other similar studies) were very clear in what they were calculating. They calculated the inflation adjusted withdrawal rate that survived 30 year periods in the past.
The rate you are looking for (I believe) is what rate is going to survive in the future. Those are two different things.
I agree that the Greaney study and other similar studies calculated (properly, in my assessment) the Historical Surviving Withdrawal Rate (HSWR).
I agree that that is different from the Safe Withdrawal Rate (SWR). I generally agree with your description of what the safe withdrawal rate is. People want to put together retirement plans and they want to know what withdrawal rate will work even in a worst-case scenario in order to do so. Many of the people who posted at the Retire Early board were planning on leaving high-paying corporate jobs. They did not want to hang on too long because they were anxious to get on with their plans. But they also did not want to leave their jobs before they had saved enough to be virtually certain that their plan would survive for 30 years.
One small change that I would make in your language is to note that the safe withdrawal rate is not necessarily the withdrawal rate that will work in the future. There is no way to identify that number since no one knows the future. The purpose of safe withdrawal rate analysis is to identify the withdrawal rate that will work in the future in a worst-case scenario presuming that the market continues to operate in the future at least somewhat as it has always worked in the past. Since the valuation level that applies on the day the retirement begins has in the past always affected what withdrawal rate would work, valuations have to be taken into consideration to identify the withdrawal rate that is virtually certain to work in the future. A calculation that does not consider valuations is not a safe withdrawal rate calculation. You are saying there that you agree with that. But then I can’t help but wonder what all the fuss has been about.
Please recall that my famous post from the morning of May 13, 2002, did not say that the Greaney study was in error (I did say that later but not in the first post). That first post asked a question — Should we be taking valuations into consideration when calculating the safe withdrawal rate? I believe that we should be and hundreds of our fellow community members said that I started the most interesting and helpful discussion in the history of that board community by putting that question on the table. That’s the discussion that we need to have today at every discussion board and blog on the internet — Should investors be taking valuations into consideration when forming their stock investment strategies?
I say that they should. There is only one difference between Buy-and-Hold and Valuation-Informed Indexing. Buy-and-Holders never take valuations into consideration (because it was believed at the time that Buy-and-Hold was developed that the market was efficient and thus that valuations did not matter) and Valuation-Informed Indexers always take valuations into consideration (because valuations are always a critically important factor).
If you are okay with me saying that valuations must be considered to calculate the SAFE withdrawal rate accurately, we have no dispute. I of course agree with you that Greaney calculated the SURVIVING withdrawal rate properly. But I do not feel even a tiny bit comfortable saying that the SAFE withdrawal rate is always 4 percent. I believe that the safe withdrawal rate is a number than changes with changes in valuation levels. It can drop to as low as 1.6 percent and it can rise to as high as 9,0 percent. If I were to say that the safe withdrawal rate is always the same number, I would be engaging in fraud. I do not believe that. So I am not willing to say that I believe that.
Rob
“ The Greaney study (and other similar studies) were very clear in what they were calculating. They calculated the inflation adjusted withdrawal rate that survived 30 year periods in the past.
The rate you are looking for (I believe) is what rate is going to survive in the future. Those are two different things.”
Uh, oh. There goes the $500 million.
I don’t think so, Anonymous.
There have been many occasions on which people have visited our boards and asked if someone could tell them the safe withdrawal rate. I cannot recall a single time when someone asked to know the surviving withdrawal rate. It is certainly true that Greaney calculated that number accurately. But that number is not much more than a curiosity. What people need to know when planning a retirement is what withdrawal rate is safe. Greaney clearly understood that. He referred to the 4 percent number as the “safe withdrawal rate” on thousands of occasions. In fact, he often claimed that a 4 percent withdrawal rate is “100 percent safe” (he even said this when the safe withdrawal rate was 1.6 percent and when the odds of a retirement plan calling for a 4 percent withdrawal surviving 30 years were only 30 percent. When a fellow community member (BenSolar) suggested that we bring all the nastiness to a close by agreeing to refer to the 4 percent number as the “Historical Surviving Withdrawal Rate,” Greaney refused to even consider the idea.
Knowing the safe withdrawal rate is of huge value. In January 2000, the safe withdrawal rate for am 80 percent stock portfolio was 1.6 percent. The safe withdrawal rate for a 100 percent TIPS portfolio was 5.8 percent. Those are shocking numbers that would help every investor on the planet understand the dangers of following a Buy-and-Hold strategy (which would not call for market timing when stock prices reached insanely dangerous levels). We need to be discussing these matters in civil and reasoned and honest discussion.
My sincere take.
Rob
“ I don’t think so, Anonymous.”
I know it is not what you want to hear but it is the truth.
We’ll have to see how it all plays out.
I wish you the best of luck with it, if that helps a tiny bit.
Rob
We have seen it all play out, Rob.
That’s not what today’s CAPE value tells us.
Rob
“That’s not what today’s CAPE value tells us.”
That’s what the results say. All of our portfolio statements tells us who was right.
If you don’t adjust for irrational exuberance, you are only reading temporary results, not the real thing. That’s the point of Shiller’s Nobel-prize-winning research. I believe that we all need to begin looking at the real stuff. I think we are on the verge of a very important breakthrough in our nation’s history.
Rob
You can spend what you have on your statement. You can’t spend what you don’t have (like a $500 million fantasy scenario).
I wouldn’t feel comfortable counting on money that is only irrational exuberance wben doing my retirement planning. To me, that’s like counting on a feeling that you have when you are drunk that you can run red lights and not get hurt. The red lights are there for a reason. Shiller’s Nobel-prize-winning research is there for a reason.
Rob
“ I wouldn’t feel comfortable counting on money that is only irrational exuberance wben doing my retirement planning.”
Yet you are counting on getting a $500 million windfall.
i’m not counting on it. I’m expecting it. This is the way we handle matters like this in our system. If someone engages in criminal behavior to hold someone back who threatens to expose an error he made in his retirement study, we award the person who was harmed damages to compensate him for the profits he would have earned had the criminal behavior not taken place. There are millions of lives at stake here. If we open the internet to honest posting, we all get to live far better lives from that point forward than we ever thought possible in the Buy-and-Hold Era. If the Campaign of Terror led by Mel Lindauer and John Greaney against our board and blog communities continues, we all get to experience the horrors of another economic crisis, possibly a Second Great Depression. Gee, I wonder if z jury will determine that me doing what I could to help out is worth a whole big bunch more than $500 million.
It’s not like there is some reasonable alternative course of action available to me. Should I sell out my country to appease you Goons? Do you think that would help? Or is it too many good people selling out to appear the Buy-and-Hold Goons among us that put us in these circumstances in the first place? Some of this investing stuff is so darn hard to figure out!
Rob
You missed your calling. You should be writing fiction books. You are good at coming up with wild stories.
The most wild one that I have ever come up with is the one that I put forward on the morning of May 13, 2002. I said that the retirement study posted at John Greaney’s web site lacks an adjustment for the valuation level that applies on the day the retirement begins! That one caused quite the stir in its day.
Holy moly! Can you imagine the fix we would all be in if that one turned out to be so!
Rob
If anyone believed your stories, you would see support in the comments section of this board.
If there hadn’t been thousands of people who showed strong interest in what I had to say, you Goons would never have demanded that I be banned from even a single place.
Rob
If even a fraction of those thousands you claim actually showed interest and believed you, they would be posting here. There just isn’t any credibility to your story.
People get discouraged when they see that those who post honestly about the last 40 years of peer-reviewed research in this field have the lives of their loved ones threatened and people in positions of authority look the other way because to do anything about it would undermine the continued viability of the pure Get Rich Quick investing strategy. Who would have thunk it?
Rob
You can’t even muster up one person to support you. There is nothing credible in what you say.
That explains the bans. Truly outstanding!
Rob
“That explains the bans. Truly outstanding!”
That’s a different topic. You claim people support you, yet there is no evidence of that. I am not sure why you continue to answer a question with a different topic.
It’s the same topic. If you Goons hadn’t seen thousands of people express support for me in particular and for the idea of permitting honest posting re the peer-reviewed research in general, you never would have engaged in a single criminal act in hopes of shutting down the discussions. The criminal stuff is desperation stuff. Your own behavior shows that the “idea” that market timing is not always required for every investor is an idea living on borrowed time. I believe that a larger percentage of the population will work up the courage to stand up to you in the wake of the next economic crisis. Not long after that, we all will become free to live far richer and better lives than we ever imagined possible in the Buy-and-Hold Era.
My sincere take.
And my best and warmest wishes to you and yours.
Rob
No, it is not the same topic. We are talking about your claims that people support you, yet they don’t post here. It would only be on topic if what you are saying is that you are banning your supporters from posting here.
No one but you Goons posts here. That’s a fact.
The retirement study posted at John Greaney’s web site lacks an adjustment for the valuation level that applies on the day the retirement begins. That’s also a fact.
When we all pull together as a nation to insist that the error in the study be corrected, we will all be able to learn more about the realities of stock investing and live richer and fuller lives from that point forward. We cannot get it done today because the criminal stuff intimidates the people we need to hear from from speaking out. But what happens following the next price crash? I think more people will work up the courage to stand up to you Goons and then the floodgates will open.
We’ll see, you know?
I think we are a good people. I think that more of us are going to work up the courage to stand up to you Goons after we see the ocean of human misery that Get Rich Quck/Buy-and-Hold has brought on yet one more time. But we will have to wait to see how it all plays out to know for sure.
My best wishes to you.
Rob
“No one but you Goons posts here. That’s a fact.”
That should tell you something. In the last two decades you have probably posted more than anyone I know. Despite the volume of your messages, there is no signs of support. Instead, you have had your considerable share of critics and skeptics. Rather than try to learn from others, you have chosen just to call them all goons in order to make yourself feel better or justified. Nothing is going to change for you when you stick to living out some kind of fantasy instead of dealing with reality.
The only ones who have ever offered any criticism of me are you Goons. I have had Normals who have said that they do not agree with everything that I have said about stock investing but who have also said that they appreciated my stuff because it helped them to think things through more carefully and generated lots of great discussion. I can live with that.
And there is no one who has ever posted to the internet who has generated even a tiny percentage of the support that I have generated. I am the co-author (with Wade Pfau) of the most important peer-reviewed research in this field in many. many years. Wade devoted 16 months of his life to working with me on that research and told me that our findings so excited him that he couldn’t sleep at night. He concluded that: “Yes, Virginia, Valuation-Informed Indexing works!” That’s support! I think it would be fair to say that none of you Goons have ever enjoyed that level of support on anything that you have said.
Your acts of extortion employed to silence Wade just highlighted the point. If Buy-and-Hold were a real thing, you would never have even considered resorting to criminal acts to “defend” it. I mean, please give me a freakin’ break.
My sincere take.
My best wishes, etc., etc.
Rob