Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“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
Here is my response from the time
———–
Evidence Based Investing says
September 21, 2021 at 5:12 pm
“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.
—————
And I still stand by comment in a different thread
“If you wish for a different set of calculations to be performed either perform them yourself or find someone to do it for you.”
It’s something that every investor on the planet should feel free to discuss at every discussion board and blog on the internet, without a single exception. This is no place for death threats in discussions of what works in stock investing. There is no place for demands for unjustified board bannings in discussions of what works in stock investing. There is no place for thousands of acts of defamation in discussions of what works in stock investing There is no place for acts of extortion aimed to silence academic researchers who “cross” the Buy-and-Holders by doing honest work in this field. We are all in the same boat. We all benefit from learning how stock investing works in the real world.
My sincere take.
Rob
It’s been so long since you even tried to participate in external investing forums that you’re not banned from most of the biggest ones. Aside from the Bogleheads forum, there’s a whole world of investing forums for you to spread the Gospel of Valuation Informed Indexing to (as long as you follow the rules). Quit your whining, Rob!
I’m one person. I am not the issue here. We need to have discussion of Shiller’s Nobel-prize-winning research NORMALIZED. That doesnt happen when one site permits honest discussion. It happens when EVERY site permits honest discussion. The human brain is constructed such that it believes what it hears repeated over and over and over again. We all hear Buy-and-Hold dogmas repeated endlessly and repeated in such a way that the suggestion is made that there is not even any controversy about them. People notice that. Every now and again, there is some outlier person who says something rooted in a belief in Shiller’s research. Those claims do not click for people. If they were heard every day by roughly 50 percent of the people discussing these issues, that would be a very different story.
If the Buy-and-Holders wanted everyone to consider Shiller’s research, we would be where we need to be. The Buy-and-Holders should want that. I believe that they had a sincere desire to create a research-based approach when they started out. They didn’t know at that time that Shiller was in 1981 going to publish research discrediting the Efficient Market Hypothesis, Their reaction when he did that should have been: “Wow. this is really a surprise. We need to launch a national debate. We need to figure out what is really going on here. If we made mistakes, we need to correct them. If Shiller is wrong, we need to develop a good articulation of the case that that is so.”
That of course is not the way it played out. I believe that Shillers advance was so huge that it caused cognitive dissonance. They just couldn’t believe that thet got the market timing question so terribly wrong. So their minds blanked it out. They developed an aversion to Shiller’s idea. Obviously it was only a tiny percentage of the Buy-and-Hold community that participated in criminal acts to keep discussion of the peer-reviewed research suppressed. But all Buy-and-Holders came to experience feelings of sympathy for those who did engage in criminal. So those acts came to be tolerated even in places in which most people could not imagine that criminal acts would be tolerated. Today it is not the mistake that is causing the Buy-and-Holders to feel uncomfortable. It is the cover-up of the cover-up of the cover-up of the mistake. Mention the error in the safe withdrawal rate studies and people go nutso. The insane stuff that follows disrupts the conversation to the point where a learning experience cannot be enjoyed for any by a few. The longer the cover-up goes on, the worse the problem is.
I don’t believe that we can solve this problem without big-name Buy-and-Holders speaking up about it. It is not going to be some guy on a discussion board who ushers in a new era. Bogle was the perfect person to do it. It is sad that he is no longer with us. Bernstein (who was already said that the 4 percent rule is in error) could be a big help. Shiller of course could be a big help (he needs to speak more directly to the how-to-invest issues, not just the theory). Wade Pfau will be a big help when he tells his entire story clearly and honestly. The feeling that he experienced when he was working with me (increasing amazement that the entire model that most people use to know how to invest in stocks is in error and no one is talking about it) are the feelings that everyone else needs to work through, so hearing from him what he went through would help thousands of people come around). And on and on. There are of course lots of experts in this field who today have doubts about Buy-and-Hold but who are afraid to express them because they have seen people’s careers destroyed for speaking out and they don’t want it to happen to them.
Several academics told me that it is going to take a crisis to change this. I think that is right. In the event that stocks continue to perform in the future anything like they always have in the past, that crisis is coming. If we see the CAPE drop from 39 to 8, there are going to be millions of failed retirements. Hundreds of thousands of businesses will go under. Millions of people will lose their jobs. Political frictions will worsen. At that time, I believe that a number of our big-name Buy-and-Hold friends will feel compelled to speak out. And millions of ordinary investors will be primed for the message at that time. They will want to know what the heck happened to their retirement accounts. So the long-delayed national debate over the far-reaching implications of Shiller’s amazing research findings will finally take place.
I hope to have my book completed at that time. My role will be to offer the most complete treatment of the problem since I have been doing this for 19 years now and have interacted with many, many people on both sides of it. It is of course a terrible tragedy that as a nation was have placed ourselves in circumstances in which we need to experience an ocean of human misery to give ourselves permission to discuss the most liberating investment research ever published in history. But I think it would be fair to say that that’s the unfortunate reality. The other side of the story is that the good stuff here is 50 times more good than the bad stuff here is bad. I sincerely doubt that there will be even one person (including you Goons) who will ever wish we could return to the Buy-and-Hold days once we have made it together to the other side of the Big Black Mountain. The economic crisis will be scary as heck, But we will all be living far better lives than we ever imagined possible once we make it together to the other side.
Wish us luck!
Rob
So what you are saying is that people need to agree with you.
I am saying that people need to agree with themselves. As a society, we have adopted laws against death threats and against demands for unjustified board bannings employed for the the purpose of covering up errors in retirement studies and against the use of thousands of acts of defamation employed for the same purpose and against the use of extortion aimed at silencing academic researchers who have “crossed” the Buy-and-Holders by doing honest work in the investment advice field. We need to apply those laws in the investment advice field in the same manner as we apply them in all other fields. Satisfying our Get Rich Quick urge by imagining for a time that there might be some alternate universe in which market timing (price discipline!) isn’t required for every investor doesn’t alter the realities. It just hurts us all in the end.
That’s my sincere take, Anonymous.
My best and warmest wishes to you.
Rob
“I am saying that people need to agree with themselves.”
Everyone agrees with themselves. Problem solved. You can move on now.
Evidence-Based Investing doesn’t agree with himself. He said in a comment advanced here a few weeks ago 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. He said that “nobody” truly believes that that study contains a valuation adjustment. He said that that includes Greaney himself. I asked if he would please specify the date on which he first called on Greaney to correct the study. He said that he has not done that to this day.
Rob
“Evidence-Based Investing doesn’t agree with himself.”
Can you provide evidence of where I disagreed with myself. I have been consistent in my statements that the Greaney study does not contain valuation adjustments and that no one believes it does.
You said that you have not called on Greany to correct the error in the study. There were people at the old Motley Fool board who used that study to plan their retirements.
Rob
“You said that you have not called on Greany to correct the error in the study.”
Correct, I have not and I have never claimed that I have. I have never disagreed with myself on that issue.
I have explained why I don’t believe that a study that sets out to calculate what withdrawal rates have survived in the past needs to have a valuation adjustment.
Greaney called it a safe withdrawal rate study on thousands and thousands and thousands of occasions. Hundreds of community members there called it that. When I advanced my famous post suggesting that we might want to consider valuations when calculating the safe withdrawal rate, scores of people rushed forward to thank me for starting the most exciting and helpful debate ever held at that board. That’s when Greaney freaked out and started up with the disruption aimed at bringing the debate to a close.
Greaney calculated the Historical Surviving Withdrawal Rate properly. But he wanted people to believe that he had calculated the Safe Withdrawal Rate, which of course he had not. To calculate the Safe Withdrawal Rate properly, one must take valuations into consideration. And doing that leads you to very, very different conclusions.
It’s similar to what the Buy-and-Holders do when they claim that market timing doesn’t work. It’s a lie that can fool people who have not focused on the question because there is indeed peer-reviewed research showing that one form of timing, short-term timing, doesn’t work. It is a lie because the other form of market timing, long-term timing, always works and in fact is always 100 percent required for investors seeking to keep their risk profile constant over time (that is, to Stay the Course in a meaningful way).
Wade Pfau held a Ph.D. in Economics from Princeton. His e-mails to me reveal his astonishment as he slowly came to realize that there is not an iota of evidence in the peer-reviewed research that market timing might ever not be required. He assumed, because he had head the claim that market timing does not work so many times that there must be some support for this claim. But of course there is none. Wade went so far as to ask himself “am I missing something?” Ultimately, he concluded that what 100 percent of the research showed must be correct and that what 0 percent of the research showed must be in error. (Until you Goons threatened to destroy his career if he continued doing honest work.)
Timing always works and it is not possible to calculate the safe withdrawal rate accurately without taking valuations into consideration. Or so says Rob Bennett, in any event.
My best and warmest wishes to you, Evidence.
Rob
“The economic crisis will be scary as heck, But we will all be living far better lives than we ever imagined possible once we make it together to the other side.”
So Rob Bennett is going to save the entire US/Global economy with VII?
Your posts come off as if you are some kind of messiah.
“The economic crisis will be scary as heck, But we will all be living far better lives than we ever imagined possible once we make it together to the other side.”
So Rob Bennett is going to save the entire US/Global economy with VII?
I am just a mild-mannered journalist who will be doing everything in his power to help spread the word.
All of the researchers who worked on they peer-reviewed research of the past 40 years played a big role. As did the thousands of out fellow community members who expressed a desire that honest posting be permitted. Heaven help us all, but there have been times when you Goons have advanced posts that made helpful points mixed in with all the Goon garbage. We are a good people. We are flawed. The Get Rich Quick/Buy-and-Hold urge is a real thing and it has been holding us back for a long time. But the bottom line is that we are a good people and we always get ourselves onto the right path sooner or later.
My sincere take.
Rob
Your posts come off as if you are some kind of messiah.
My intent is for them to come off as written by a guy who loves his country and who sincerely believes 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.
Rob
But what you are saying is that if people follow what you say, your VII strategy will save the economy and without it will fail, correct? That means that it is you saving the economy.
Not me personally. It is Shiller’s Nobel-prize-winning research that will be doing that. I will be playing an important role by helping to get the word out to millions of people. Hence the $500 million settlement payment. But my role is strictly a journalistic one. I got into this field because I think it is important that people know as much as possible about how the world around them works. I think it would be fair to sat that no journalist has ever had an opportunity to do as much good for the world as I have had in aiding the transition from Buy-and-Hold to Valuation-Informed Indexing. Lucky me!
Rob
You said before that you should get paid $500 million for your work. Now you are saying that you didn’t do the work and that you are merely a reporter of the work. If that is the case, you didn’t earn the $500 million
Since Shiller did the work, I guess he is the one that gets the $500 million payment.
You said before that you should get paid $500 million for your work. Now you are saying that you didn’t do the work and that you are merely a reporter of the work. If that is the case, you didn’t earn the $500 million
Shiller is a giant. I certainly don’t say different. But what practical effect has his work had? The CAPE today is 39. That’s a good bit worse than the CAPE that brought on the Great Depression. Shiller’s work achieves nothing if people do not feel free to talk about it at every site on the internet. It is by engaging in discussion of it that we gain the ability to overcome the Get Rich Quick/Buy-and-Hold impulse that resides within all of us. The journalistic role here is very, very, very important. That’s why I soldier on. I have the weight of millions of retirements on my shoulders. I have no choice but to give this my best shot. My catch phrase is — I can do no more and I can do no less.
Rob
When Elon Musk/Tesla produce a new vehicle, there are a number of people that report on the developments. Elon Musk and Tesla make the money, not the reporter. Similarly, Shiller did the work, so he should get the $500 million.
Since Shiller did the work, I guess he is the one that gets the $500 million payment.
I believe that the day that we open every investing site on the internet to honest posting re the last 40 years of peer-reviewed research will be declared a national holiday, a second Independence Day. We will be shooting of fireworks and like that for many years afterwards. Most of us devote many years of out lives to accumulating the funds we need to finance a retirement. And now for the first time in U.S. history we will have access to research-based discussions of how to protect that money. Could anything be more important?
Lots of people will be receiving big payments in those days. And look at what those of us trying to post honestly have had to deal with. Death threats? Demands for unjustified board bannings? Thousands of acts of defamation? Acts of extortion aimed at silencing academic researchers who work with us? This is not just astoundingly important work for millions of people and for out very economic and political system. It is astoundingly dangerous work, given the lengths that you Goons are willing to go to to block millions of people from learning what they very much need to know. If we want to see people continue to work up the courage to do this work — and as a people we obviously do — we are going to have to compensate them well for taking it on. If this sort of work is not worth $500 million plus a whole big bunch more, I have a hard time imagining what would be worth that much!
We should be paying anyone who cares to help out whatever it takes to insure that they are willing to do that. This one is for all the marbles. Living through a Second Great Depression is on no one’s best interest.
Rob
When Elon Musk/Tesla produce a new vehicle, there are a number of people that report on the developments. Elon Musk and Tesla make the money, not the reporter. Similarly, Shiller did the work, so he should get the $500 million.
You are describing the ordinary case. If some competing car dealer threatened to murder the loves ones of anyone who told people about a superior car and thereby kept that car off the market for 40 years, the person who exposed the massive act of fraud would be entitled to compensation for the good that he had done for all people in the market for a good car. Millions and millions are in the market for a better way to invest. When I have opened every site on the internet to honest posting re the last 40 years of peer-reviewed research in this field, they will have it.
That’s worth a whole lot more than $500 million. Your own behavior shows that. Why would you put so much effort into keeping the ban on honest posting going if you didn’t think this was a super big deal? I mean, please give me a freakin’ break.
Rob