Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
So you want to hide the fact from investors that 4% worked every time and you don’t want to tell them that VII has never worked. Got it.
I want investors to know that there are times when a 4 percent withdrawal is super, super, super safe, when even a 9 percent withdrawal is perfectly safe. And I want them to know that there are other times when a 4 percent withdrawal is insanely risky, when no withdrawal rate above 1.6 percent is truly safe and when a retirement plan calling for a 4 percent withdrawal has only a 30 percent chance of surviving for 30 years.
And I want investors to know about the peer-reviewed research that I co-authored with Wade Pfau showing that practicing market timing permits them to retire many years sooner while taking on dramatically reduced risk. I don’t think that Wade ever should have been threatened. I think extortion of academic researchers hurts us all. It is a crime and we all should be working together to see that that crime is prosecuted. I believe that Wade hit it on the head when he declared: “Yes, Virginia, Valuation-Informed Indexing works!”
Rob
My net worth has now hit $7 million. How could that be? You told me 12 years ago that I would be broke by now. Isn’t 12 years long term?
I didn’t say that you would be broke. I certainly thought that there would be a price crash by now. That would have taken prices down by 50 percent. And, if irrational exuberance was transformed into irrational depression, as is usually the case at the end of a bull/bear cycle, that would have taken them down another 25 percent. That would be very bad. But that would not leave you “broke.”
Yes, 12 years is long term. This is the longest bull market that we have seen in U.S. history. We are in uncharted waters. That is not a good thing. It is a very bad thing. When irrational exuberance is out of control, we all make poor spending and saving choices because we do not know how much money we have. So, the longer a bull market continues, the greater are the number of bad decisions that are made. Which of course hurts all of us. To say “this is the longest bull market we have seen” is like saying “this is the longest pandemic we have seen.” Irrational exuberance is a curse and the curse has done more damage this time than at any earlier time in U.S. history.
Rob
So what you saying is that you were wrong. Got it.
I was wrong about when the price crash would occur.
I don’t think I was wrong about the existence of irrational exuberance. It’s possible that I was. In a theoretical sense, anyone can be wrong about anything. It’s often the case that a person who is wrong about something is the last one to see it. I don’t personally believe that I was wrong about the existence of irrational exuberance. But I think it is healthy for people who have doubts as to whether irrational exuberance exists to express those doubts so that people can hear both sides of the story.
But I don’t think that I should be saying that irrational exuberance doesn’t exist for as long as I believe that it does. I believe that my posts should reflect my sincere beliefs. It would be the worst of all possible worlds if irrational exuberance really does exist and yet those of us who believe that Shiller’s Nobel-prize winning research is legitimate research permitted ourselves to be intimidated by you Goons into going along with the Buy-and-Hold “idea” that market timing is not required.
Not this boy. you know?
My best and warmest wishes to you.
Rob
“ I was wrong about when the price crash would occur.”
You are pushing market timing, but can’t seem to get the timing right. Got it.
You are confusing short-term timing with long-term timing. Which you have done about 150,000 times now.
There is no way to identify the precise time when prices will crash. It cannot be done. I of course have been saying that since the first day.
But so long as you are not trying to do that, market timing always works. Market timing is required to keep your risk profile constant. How could that possibly not work? Surprise! Surprise! The historical record shows that it has been working for 150 years. Common sense tells us that it will continue to work for as long as there is a stock market to invest in.
The “idea” that, because short-term timing does not work, it is not necessary to engage in long-term timing, has caused more human misery than any other idea in the history of personal finance. That “idea” is the thing that caused Buy-and-Hold to go off track. That “idea” is killing us as a society.
It is not science to refuse to acknowledge a mistake that was brought to light by the peer-reviewed research 30 years ago. It is anti-science.
Rob
“ You are confusing short-term timing with long-term timing.”
You just said 12 years was long term.
“ There is no way to identify the precise time when prices will crash. It cannot be done.”
You say people need to time the market, but then you say that can’t time the market. Again, we have yet to see one successful outcome with market timing.
“ This is the longest bull market that we have seen in U.S. history. We are in uncharted waters.”
So what you are saying is that the market is not doing what you thought it would do, which then means your timing scheme didn’t work.
You just said 12 years was long term.
“ There is no way to identify the precise time when prices will crash. It cannot be done.”
You say people need to time the market, but then you say that can’t time the market. Again, we have yet to see one successful outcome with market timing.
Every market timing outcome has been successful. The peer-reviewed research that I co-authored with Wade Pfau showed that beyond any doubt whatsoever. All that you are doing when you engage in market timing is getting your risk profile back where you determined it should always be. It’s a logical impossibility that doing that could ever be unsuccessful. That’s why you threatened Wade. You saw how much people were excited to learn from the research.
12 years is long term. But there is no magic amount of time in which you can say that market timing will produce good results. The current time-period is very much an outlier. Say that stocks continue to perform in the future somewhat as they have always performed in the past. How many people do you think will be saying that market timing has not always been successful in the days following the next price crash?
You are treating today’s irrational exuberance as if it were real. That’s messing up your thinking re these matters. The entire point of research is to help you get beyond the current day and learn how stock investing works in the long term.
That’x my sincere take, in any event.
Rob
So what you are saying is that the market is not doing what you thought it would do, which then means your timing scheme didn’t work.
Market timing continued to work because it got the market timer’s risk profile back where he wanted it to be. Market timing achieves its goal on the day it is employed.
It hasn’t achieved dollars-and-cents results yet. No, the market has not yet done what it has done every time in the past when prices reached such insane levels. But are you willing to bet your retirement money that it’s all going to turn out different this time? I think it would be fair to say that that’s the longest of long-shot bets. I prefer to Stay the Course by engaging in market timing to get my risk profile back where I intended it to be. The Buy-and-Hold way is to keep your stock allocations constant and let your risk profile jump all over the place. Huh? Not this boy, you know.
My best and warmest wishes to you and yours.
Rob
“ It hasn’t achieved dollars-and-cents results yet.”
And there you finally admit it. It hasn’t worked and there are no successful cases.
“ But are you willing to bet your retirement money that it’s all going to turn out different this time?”
If I did what you did, I would be broke versus having $7 million in net worth. You bet your retirement and lost. You can’t make something out of nothing.
And there you finally admit it. It hasn’t worked and there are no successful cases.
It’s worked to an amazing extent throughout the entire history of the stock market. That was the entire point of the peer-reviewed research that I co-authored with Wade Pfau. It’s worked in the current day by getting the investor’s risk profile back to where it should be. No, it hasn’t worked in a dollars-and-cents way in recent years. That’s what you’re going to go by.
You’re free to go by that if it makes me happy. Expecting something to happen that has never before happened sounds like gambling to me. I wish you luck with it. But I can’t say that it strikes me as a sound strategy.
We’ll have to wait a bit and see how it all plays out.
Rob
If I did what you did, I would be broke versus having $7 million in net worth. You bet your retirement and lost. You can’t make something out of nothing.
Okay, Anonymous. I wish you the best of luck with whatever strategy you elect to follow in any event.
Rob
I had my wife read through some of your posts. She said she would never tolerate me doing the kind of crap you have pulled.
Do you think it would have been better if I had kept it zipped about the error in the study?
Rob
“ Do you think it would have been better if I had kept it zipped about the error in the study?”
Do you think the thousands of people that explained to you as to how you are wrong about Greaney and his work should all either lie about it or keep their mouths shut?
I think we should open every discussion board and blog to honest posting re the last 40 years of peer-reviewed research in this field, without a single exception.
That’s the answer.
I am sure.
Rob
“ It hasn’t achieved dollars-and-cents results yet.”
You need to read your own words over and over again and think about the impact of that. You have gone down this path for over 20 years. Any strategy that has failed like this for over 20 years has completely destroyed a retirement.
It hasn’t failed, Anonymous. This is a math question. You are just wrong about this.
The one thing that has “failed” is that we have not yet seen the crash. That’s all you ever thing about. Now, if the crash never comes, you would be right. That’s why I often say that, if the market truly were efficient, Buy-and-Hold would be the ideal strategy. I give you that one. But I don’t believe that the market is efficient. I believe that Shiller’s Nobel-prize-winning research is legitimate research, that irrational exuberance is a real thing. If that’s so, then Buy-and-Hold is the most dangerous investment strategy ever concocted by the human mind. So I steer clear of it and I urge others to do so as well.
You are never going to get to first base re understanding this stuff for so long as you count nominal returns as real at a time when the CAPE value is in the mid-30s. Your proof that Buy-and-Hold works is to assume that it works and then do all your calculations from that starting point. Stop doing that and you will come up with very, very different answers.
The purpose of the Bennett/Pfau peer-reviewed research was to compare how the two strategies performed historically. There is no comparison. Valuation-Informed Indexing trounced Buy-and-Hold for the entire time for which records are available. Now, it hasn’t trounced Buy-and-Hold yet for the current time-period because we haven’t seen the price crash yet. Is that even a tiny bit surprising? You’re counting the irrational exuberance as if it were real and observing that going with a pure Get Rich Quick approach looks really good until the inevitable crash takes place. Is that even a tiny bit surprising? Is that not what you would expect to see?
You are liked someone who builds a house in a flood area and discounts all warnings on the grounds that “there hasn’t been a flood yet.” Well, there’s going to be a flood in the event that stocks continue to perform in the future anything at all as they always have in the past. And it will be a little late to protect your portfolio after the flood has wiped it out. The time to be looking at the last 40 years of peer-reviewed research is now, before the flood hits.
That’s my sincere take, in any event.
Rob
“ It hasn’t failed, Anonymous. This is a math question. You are just wrong about this.”
You are just disagreeing with yourself. You admitted that your strategy hasn’t made money in the last 20 years.
You depleted your savings, I have $7 million. That is the score card, not your pretend math. I can spend my $7 million right now. What can you spend right now?
I haven’t committed any criminal acts and I have done journalism work that would have brought me more than $500 million but for the criminal acts that you committed. That puts me so far ahead of you that I cannot describe how far ahead it puts me. If you see the laws of the United States as “pretend math,: then you and I just see things differently.
I wish you all good things. But I have zero intention of joining you on the wrong side of the felony lines. I am going to continue to say that I do 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, It will be interesting to see how things play out in the days following the next price crash.
Rob
“ I haven’t committed any criminal acts and I have done journalism work that would have brought me more than $500 million but for the criminal acts that you committed. ”
Is there anyone other than you that believes on3 word of that?
Yes.
Lots of people believe it. There’s no one who knows things at the same level of depth that I do because no one has been there for every post like I have. But, yes, there have been people who have indicated that they understand the intimidation side of this or the substance side of this. It’s not hard to understand. But it is hard to accept. Peoples first inclination is to turn away, to not get involved, to go back to living their comfortable lives.
When I told the site owner at the Motley Fool site that Greaney’s behavior was driving away our best posters, he thanked me for my “thoughtful” email and expressed the view that it would be “ideal” if Greaney would permit honest posting. So he clearly got it in part. The other side of the story is that Greaney was bringing in money for Motley Fool. Greaney’s study led people to believe that they could retire many years sooner than what the peer-reviewed research showed was possible. People loved that. So they came to the site to hear what he had to say and told their friends. The more people there were at the site, the more money Motley Fool made with advertisements. That site owner’s job was to make money for Motley Fool.
He had two jobs. His job was to enforce the rules. And his job was to bring in money. The two jobs were in conflict. If he enforced the rules, he was going to cost Motley Fool money. What to do? What to do?
It is in the nature of the stock market to make us dishonest. There is no man in the sky with a long gray beard who sets stock prices. All stock investors collectively possess that power. We can set prices wherever we want. At one-half of their true value. At their true value. At two times their true value. At three times their true value. Whatever we please. And, if we set them very, very high, we can fool ourselves into thinking that we are eligible for retirement many years sooner than we really are. Believing that feels good. We all have access to that good feeling anytime we care to experience it.
All we have to do is to tell lies about the bull market prices. To keep those prices high, we have to pretend that we believe that irrational exuberance is not such a big deal, that it is perfectly fine to be price indifferent, to “stay the course” by keeping our stock allocation the same rather than by keeping our risk profile the same. I would turn the question around on you. Is there anyone other than you Goons who believes a word of the “oh, market timing is not really 100 percent required” garbage?
We all believe it and don’t believe it at the same time. We all want to know the true value of out stock portfolio. Our brains tells us to want that. And we all want to believe that the inflated claims about the value of our portfolio are real. Our Get Rich Quick urge wants us to believe that. It’s an inner conflict that goes on every second of every day that the stock market is in business.
We are all creeps. That’s what it comes to. We are all liars. We are all greedy cusses. That’s what the entire history of the stock market shows.
And we are all also angels. If we had no desire to tell the truth, Shiller would never have been able to get his research published. Or his book. He never would have been awarded a Nobel prize.
We are angels with a creepy side. We are creeps with angelic inclinations. We are both things. The way it is. And the stock market prices of a given day is determined by whether out creepy side or our angelic side is stronger or weaker on that day. It is a constant battle between our better nature and our weaker nature.
The forces of our better nature made a huge advance when Shiller published his Nobel-prize-winning research. And the forces of our weaker nature made a huge advance when the site administrator at the Motley Fool site elected to put Greaney up for the Poster of the Year award rather than to ban him from the site. Every one of us has a role to play in this drama and the decisions that each of us makes every day determine where stock prices go. That’s how it works.
I think that the next price crash is going to tip things in support of permitted honest posting re the last 40 years of research. I think people are going to be horrified by what they see and they are going to work up the courage to stand up to you Goons. Once we are able to talk about the research, the side that favors research-based strategies will develop a huge momentum and you just won’t be able to get the genie back in the bottle.
But we’ll see, you know. Yes, lots of people believe all of that. Nothing could be more clear. But lots of people don’t want to believe it and lots of people are afraid to say in public what they believe. That’s what needs to change. I think that it is in the process of changing. Otherwise, Shiller would never have been awarded a Nobel prize. But we are just going to have to let the process play out to find out for sure. Seeing all the human misery that persuading people to follow a pure Get Rich Quick/Buy-and-Hold “strategy” for investing in stocks always brings is part of the process. I believe today that we are going to have to see that next price crash to work up the courage to speak up and take us all to a far better place than we ever imagined we could live in during the Buy-and-Hold Era.
We’re almost there, Anonymous. The humans are on the verge of achieving some amazing advances. All we need today is a little bit of courage. I know how it feels. I didn’t quite have the courage that it takes to speak honestly about stock investing on the evening of May 12, 2002, I developed it on the morning of May 13, 2002. I have never looked back, I said that the Greaney retirement study lacks a valuation adjustment then and I still sat that today. Sue me.
Rob
Where is the link showing that someone else believes your allegations of criminal acts and your $500 million windfall?
The entire history of The Great Safe Withdrawal Rate Debate shows it. It’s not possible to offer a single link. The Great Debate has been conducted at multiple places.
If the Greaney retirement study truly contained a valuation adjustment, Evidence never would have said that “nobody” truly believes that it contains one. Evidence is one of the lead Goons.
And if Buy-and-Hold got the numbers that people use to plan their retirements wrong, then it got everything wrong. The primary purpose of a model for understanding how stock investing works is to help people to plan their retirements effectively.
My sincere take.
Rob
Is it any wonder why you sit here alone without any supporters?
I see it as a puzzle. I see it as my job to solve puzzles. So I am always trying to figure things out on a deeper level.
If we were all thinking clearly, there wouldn’t be one person who didn’t agree that people who put forward retirement studies need to make an effort to get the numbers right. The reality is that there is obviously a lot more than one.
But I do think we are as a people making progress. Shiller’s Nobel prize is as much a reality as the many bans on honest posting. We’ll get there.
I hope and pray!
Rob
There is no puzzle on investing, Rob. The facts speak for themselves. The outcomes speak for themselves. You created a story and then you just fit your own talking points around it just to keep it going.
The real puzzle is why you keep doing what you are doing. You have completely self destructed and now you are in your 60’s. You are at the age where most people are entering retirement and enjoying hobbies, grandkids, etc. Here you are with a failed retirement with no rational plan to salvage it and all you can do is just keep living in the same failed fantasy world that got you there. You are not saving the world. Instead, you are destroying the future for you and your wife. Why? What happened to you? Did you have some kind of breakdown at work and just couldn’t deal with it? Is there something else? This just doesn’t make any sense.
You probably won’t post this. It won’t matter to any of us out here. I just post this in some remote hope that you suddenly wake up and at least try and fix something given the very limited time left. I am only a few years behind you and I would be scared out of my mind if I was in that situation. Please read this a few times and give serious thought to this.
I think that the last 40 years of peer-reviewed research in this field speaks for itself, Anonymous.
Today’s stock price is not a final outcome. It is a temporary outcome. More than 50 percent of today’;s stock price is backed only by irrational exuberance, not by anything of real economic substance. When the irrational exuberance disappears (it always does), we will all be hurting.
We don’t need to go through this sort of thing anymore. Now that we have 40 years of peer-reviewed research showing us the dangers of going with a pure Get Rich Quick/Buy-and-Hold approach, we can do better. But of course we need to grant ourselves permission to talk about that Nobel-prize-winning research for it to do us any good.
I vote for permitting honest posting re the peer-reviewed research at every site.
My best wishes to you.
Rob
“ I think that the last 40 years of peer-reviewed research in this field speaks for itself, Anonymous.”
You merely ignored what I posted and just repeating your nonsense.
If you put Buy-and-Hold above the peer-reviewed research, then the peer-reviewed research is nonsense.
If you put the peer-reviewed research above Buy-and-Hold, then Buy-and-Hold is nonsense.
I’m a research guy. Whachgonnado?
Rob
Just more nonsense as you continue down the path of self destruction.
I’m so bad!
Why do I have to be so bad?!
Rob
Stop evading the question, Rob. What made you go off the deep end?
It was my love for my fellow community members that drove me to it.
The humans will do it to you every time!
Rob
What friends? No one talks to you.
http://www.passionsaving.com/investing-discussion-boards.html
Rob