Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“ Where you go seriously off track is in blocking millions of others who would like to hear both sides of the story and then make their own decisions re what they are comfortable doing.”
Millions want to hear your story? Really? You can’t even get one person to come here asking you for information/advice. Also, why should any other board owner have an obligation to let post whatever you want? Every board owner controls their content. What is do special about you versus the other 300+ million Americans.
All of the sites have published posting rules. They should follow them. Most sites prohibit death threats. So, if one group of posters advances death threats with the aim of blocking discussion of the last 40 years of peer-reviewed research in this field, the site owner should remove the group advancing the death threats, not the people posting their sincere views at whom the death threats are aimed.
John Walter Russell referred to the current state of play at investing sites as “mob rule.” The Buy-and-Holders got there first. Buy-and-Hold was developed in the 1960s and Shiller did not publish his Nobel-prize-winning research showing that valuations affect long-term returns until 1981. If everything is decided by majority vote, then the Buy-and-Holders can block people from learning about the new research indefinitely. That hurts us all. We all need to know how stock investing works in the real world. We need to know about both the pre-1981 research (Buy-and-Hold) and the post-1980 research (Valuation-Informed Indexing).
When posting honestly re the last 40 years of peer-reviewed research is banned at the behest of the Buy-and-Holders, people viewing the boards to gain a sense of what works in stock investing get a distorted view of the realities. Since they never hear about the new research, they come to believe that everyone who has examined these matters has come to believe that Buy-and-Hold (no market timing!) is a reasonable strategy. Nothing could be father from the truth. People need to know the realities. They need to hear both sides of the story to be able to form reasonable assessments of their own.
Even Evidence-Based Investing (one of the generals in Greaney’s Goon Army) now acknowledges that the Greaney retirement study lacks an adjustment for the valuation level that applies on the day the retirement takes place. People should be pointing that out every time someone refers to the Greaney study’s claim that the safe withdrawal rate is always 4 percent. When people don’t hear that objection, they assume that the study might be legitimate research. No site owner should be supporting such deceptions on so important a matter. A failed retirement is a serious life setback.
If Motley Fool would have banned Greaney on the day he advanced his first death threat (August 27, 2002), the world would today be 19 years ahead of where it in fact is in its understanding of how stock investing works in the real world. That would be a very, very, very good thing for each and every one of us. The site should have followed its published posting rules rather than just have gone with the easier way to turn a quick buck (Buy-and-Hold and indeed all Get Rich Quick “strategies” are highly popular at times when stock valuations are at dangerously high levels).
That is my sincere take re these terribly important matters, in any event, my dear Goon friend.
My best wishes to you.
Rob
“Even Evidence-Based Investing (one of the generals in Greaney’s Goon Army) now acknowledges that the Greaney retirement study lacks an adjustment for the valuation level that applies on the day the retirement takes place.
People should be pointing that out every time someone refers to the Greaney study’s claim that the safe withdrawal rate is always 4 percent.”
Given that no-one thinks that the Greaney study contains valuation adjustments that would be a complete waste of time.
I couldn’t possibly disagree more. Greaney on thousands of occasions falsely claimed that a 4 percent withdrawal is “100 percent safe” for retirements beginning at all valuation levels, Nothing could be further from the truth. He didn’t even include a valuation adjustment in his study! And he has covered up the error for 20 years now. There were thousands of community members who were taken in by his deceptions. There were people who used his crazy 4 percent number to plan retirements at times when the true safe withdrawal rate was nothing even remotely close to 4 percent. All of those people have both civil and criminal cases to bring in future days, presuming that stocks continue to perform in the future anything at all as they have always performed in the past.
I believe that we should be working as a society to compensate those who have been done harm by this massive act of financial fraud, by far the biggest in the history of the United States. Million of people have invested in stocks to finance their retirements. They need to know what the last 40 years of peer-reviewed research says about how the stock market works in the real world. The sooner we get the word out far and wide, the better for each and every one of us, including you Goons.
That’s my sincere take. in any event.
I naturally wish you all the best that this life has to offer a person, regardless of which investment strategy you elect to follow, Evidence.
Rob
“And he had covered up the error for 20 years now”
There was no coverup. His methodology was documented on his website.
Did he know at the time that he developed the methodology that Shiller had published research showing that it is not possible to identify the safe withdrawal rate without taking valuations into consideration?
Rob
“Did he know at the time that he developed the methodology that Shiller had published research showing that it is not possible to identify the safe withdrawal rate without taking valuations into consideration?”
It is absolutely possible to calculate what withdrawal rates survived in the past without taking valuations into consideration.
And Shiller’s research had nothing to do with withdrawal rates.
You are here engaging in the same deception that Greaney engaged in. You say: “It is absolutely possible to calculate what withdrawal rates survived in the past without taking valuations into consideration.” Of course it is. But doing that wouldn’t reveal the safe withdrawal rate, would it? Why the deception? When you calculate the Historical Surviving Withdrawal Rate instead and then tell people you calculated the Safe Withdrawal Rate, you are engaging in deception. Greaney said THOUSANDS of times that he had calculated the Safe Withdrawal Rate. Which of course he did not. He should have corrected the error within 24 hours of the moment it was brought to his attention. Instead he went into freakout mode and engaged in criminal behavior (death threats, acts of extortion) to keep people from learning about the error. Not good.
And Shiller’s research obviously affects the calculation of safe withdrawal rates. Shiller showed that valuations affect long-term returns. A change in long-term returns causes a change in the safe withdrawal rate. The safe withdrawal rate is a risk assessment tool. Shiller showed that risk is not constant (as the Buy-and-Holders believe) but variable. This is why market timing is required for all investors seeking to keep their risk profile constant over time (to Stay the Course in a meaningful way).
My best wishes to you and yours.
Rob
The Bengen study and the Trinity study also used the “what survived in the past” method. And not surprisingly came up with just about the same result.
If you want to see that methodology replaced you need to come up with a better way.
And convince others that your way is better.
I will leave it as an exercise for the reader to decide if you have been successful.
i agree that Greaney employed essentially the same methodolology as the Trinity study and the Bengen study. Both of those studies are in error as well. As you note, they look at what survived in the past. That’s part of the story but not the entire story. You need to look at what survived in the past in similar conditions (that is, at similar valuation levels).
If someone drives a car 150 times and gets in accidents that nearly kill him but don’t quite do so on four of those occasions and those four occasions happen to be the four times he drove drunk, those experiences do not show that driving drunk is “100 percent safe.” What they show is that driving drunk is extremely dangerous.
That’what Greeaney’s study (and Trinity and Bengen) show re retirements using a 4 percent withdrawal rate for a retirement beginning when valuations are where they were at the top of the bubble. Someone who retired in 1929 and used a 4 percent withdrawal had only $1 left in his account at the end of 30 years. At times when valuations were reasonable, the portfolio grew in size. It was super, super safe. But retirements at a CAPE of 33 barely squeaked by. Barely squeaking by indicates risk, not safety. And of course the CAPE was far higher in 2000 than it was in 1929. So those retirements were even more risky than the 1929 ones that left the retiree with $1 in his account. Those were insanely risky retirement plans, not “100 percent safe” (Greaney’s words) ones.
I want to see that long discredited methodology replaced. And, of course, working with John Walter Russell and Wade Pfau and many others, I came up with a better one. There have been thousands of our fellow community members who have expressed a desire that honest posting be permitted so that people can learn about the better methodology. Numerous big-name publications, like the Wall Street Journal and the Economist, have noted that the 4 percent rule does not apply when valuations reach the levels that we saw at the top of the bubble and that apply today. Yet there are still people promoting this long-discredited methodology today. And there are still investors who are tricked into placing their confidence in it because they do not get to hear the criticisms of it that people like me would put forward if it were not for the criminal behavior (death threats, acts of extortion. etc.) that you Goons have employed to keep people from hearing the straight story.
I believe that this will change in the days following the next price crash. I think that people will be pissed when their “100 percent safe” retirements fail. We’ll see. You obviously would not have behaved in the manner in which you have behaved if you thought that the methodology employed by Greaney could convince people in a community in which honest posting re the last 40 years of peer-reviewed research was permitted.
A con relies on deception to convince people. Something real can win support even in an environment in which challenges to its logic are permitted. Your own behavior shows that the Greaney study cannot survive challenges. You have hurt millions of people in very serious ways. I am confident that I will indeed be successful in the days following the next price crash, when the on-the-ground realities show people how dangerous it is to tolerate a con of this magnitude. Please mark me down as saying that Greaney should have corrected his study within 24 hours of learning of the error he made in it and that he never should have engaged in a single criminal act in “defense” of his “100 percent safe” retirement claims.
A failed retirement is a serious life setback.
My sincere take.
Here is a small sample of the comments that our fellow community members have advanced:
http://www.passionsaving.com/investing-discussion-boards.html
Rob