Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“My strategy is to open every internet site to honest posting re the last 40 years of peer-reviewed research in this field.”
Over the last 20 years approximately how many internet sites have you opened to honest posting about the last 40 years of peer-reviewed research in this field?
I haven’t opened any in a complete and permanent sense. But there have been THOUSANDS of amazing moments in which breakthrough insights on how stock investing works were advanced that no one would have heard if I had not worked up the courage to “cross” John Greaney and put forward my famous post from the morning of May 13, 2002, pointing out that his retirement study lacks an adjustment for the valuation level that applies on the day the retirement begins.
We never would have seen John Bogle’s post saying that he could see how it would make sense to engage in market timing six times in an investing lifetime if it has not been for my May 13, 2002, post.
We never would have seen John Walter Russell put forward the first honest and accurate calculation of the safe withdrawal rate, showing that for those who retired in January 2000 the number was not 4 percent but 1.6 percent if it had not been for my May 13, 2002, post.
We never would have seen Wade Pfau declare as the result of 16 months of in-depth research into these matters that “Yes, Virginia, Valuation-Informed Indexing works!” if it had not been for my May 13, 2002, post.
I think I’ll continue posting honestly and in accord with the last 40 years of peer-reviewed research in this field, Goons or no Goons.
My best wishes.
Rob
You are just like that Kim Blandino guy on YouTube. You are so sure you are right, but only making a fool of yourself.
I believe that I am right on the substantive issues. There’s the 40 years of peer-reviewed research. There’s Shiller’s Nobel prize. There are the thousands of our fellow community members who have expressed a desire that honest posting be permitted. There’s the behavior of you Goons, which lends support to Shiller’s position that investors are sometimes highly emotional (in contrast to the Buy-and-Hold belief that investors are 100 percent rational and that therefore market timing does not work because no one can be smarter than a 100 percent rational market).
All of that makes me think that I am probably right. The other side of the story is that we are all capable of self-deception. I think that Bogle was a genius. If Bogle could get market timing wrong, as I believe is the case, then surely Rob Bennett could get market timing wrong. We all see what we are able to see and miss what we are not able to see. I am one of those darned flawed humans. So it seems to me at least possible that I am missing something important and am wrong on something but am just not able to see it. So I don’t claim 100 percent certainty re the substantive issues.
The process issue (whether or not honest posting re the last 40 years of peer-reviewed research should be permitted) is different. If I am wrong re that one, then my entire life has been a waste. I have devoted my entire adult life to journalism. If permitting both sides to speak is a mistake, then all of my work efforts have been directed to no good purpose. If letting both sides speak is a mistake, then the entire U.S. democracy project is a mistake. Letting both sides speak and enjoying the progress that follows is what this country that I love is all about. So I am just not able even to entertain the possibility that letting both side speak is a mistake. That one goes too deep.
If I am right about the process question and wrong about the substantive question, I won’t be collecting the $500 million settlement payment. But I will still feel that I did right by my fellow community members and re my country. If I am wrong about the substantive question, permitting both sides to speak would ultimately lend further support to the Buy-and-Hold Model, which is what we all should want to see happen if Buy-and-Hold really is a good model. So I feel that asking that both sides be permitted to speak is 100 percent the right position in the event that I am wrong re the substantive issue.
So on that one I don’t just believe that I am correct, as I do re the substantive issue. Re the process issue, I KNOW that I am correct. It is my belief that permitting honest posting would work to the benefit of everyone if market timing really does always work and that permitting honest posting would also work to the benefit of everyone if market timing never works. That’s all the possibilities. So I believe that we should be permitting honest posting. I don’t just believe that. I KNOW that.
That’s where I am coming from in any event, Anonymous.
Rob
“If I am right about the process question and wrong about the substantive question, I won’t be collecting the $500 million settlement payment.”
I’ll bet you $500 million that you won’t be getting a $500 million settlement.
You’re on!
If I end up owing you, you won’t be able to collect anyway!
Rambling, Gambling Rob
“If I end up owing you, you won’t be able to collect anyway!”
Right back at yah 🙂
What if another 10 years goes by and you still don’t have one dime of that $500 million? What will you do for money?
What if stocks continue to perform in the future somewhat as they always have in the past and we see another Buy-and-Hold Crisis within the next few years? What if that crisis turns into the Second Great Depression and millions of lives are ruined?
There are all sorts of hypotheticals out there. I had become friends with a good number of people at the Motley Fool board and I didn’t feel comfortable pretending that I believed that Greaney had included a valuation adjustment in his retirement study. I still don’t. The rest follows from that.
We all will have to struggle by somehow. I will at least be able to say that I did everything in my power to get every site on the internet opened to honest posting and to avoid that Second Great Depression. I feel 500 times better in the position that I am in than I would feel if I had been living in fear of you Goons all this time and holding back from posting honestly as a result.
Does that help?
How are you going to feel when Mel Lindauer and John Greaney are led away to prison cells and you have to live with knowing that you played a big part in making it happen? How do you think that is going to feel? Not this boy, you know?
Rob
“I didn’t feel comfortable pretending that I believed that Greaney had included a valuation adjustment in his retirement study.”
No-one pretends that Greaney had included a valuation adjustment in his retirement study.
You have said outright that you do not believe that the Greaney retirement study contains a valuation adjustment, Evidence. I give you credit for that. You have said that “nobody” truly believes that the Greaney retirement study contains a valuation adjustment, including Greanry himself. That nails it. Good for you.
But there are several problems.
One, you have only said that within the last few months. You could have saved lots of people a lot of time by saying it in May 2002. Why didn’t you? Why did it take you over 19 years to spit that one out?
Two, you don’t quote Greaney when you say his study lacks a valuation adjustment. Why haven;t we heard Greaney himself say that? It’s pretty basic. He should know whether his own study contains a valuation adjustment or not, yes? You speak for Evidence, not for Greaney. Why haven’t we heard from Greaney? And why doesn’t it bother you that we have not heard from Greaney?
Three, when I have asked the obvious follow-up question — when did you first ask Greaney to correct the error in his study? — you have responded with gibberish. You said something about hot-dog stands. For Greaney to tell people that he has a study that reveals the safe withdrawal rate and then not include a valuation adjustment in it is like the guy at the hot dog stand taking your three dollars and handing you in return a wrapper with a bun inside that has a slice of cheese on it and and some relish but no freakin’ hot dog! All of the side stuff is nice enough but no one pays three dollars for that stuff. Where’s the freakin beef?
I think it would be fair to say that the valuation level that applies on the day the retirement begins is the most important element of a safe withdrawal rate study and the Greaney study lacks one. It’s a hot dog with no hot dog in it. Not good. People have a right to be disappointed with the lack of effort. People have a right to call the consumer protection people in a case like that.
I like it that you have implicitly acknowledged that the Greaney study is in error. That gets us perhaps halfway there. But this Greaney fellow is no known for picking up on subtle messages. If we are going to get his dangerous study corrected, we are going to have to be a bit more blunt. We are going to have to ask him straight out — Where’s the freakin’ beef?
My sincere take.
My best and warmest wishes to you and yours.
Rob
“One, you have only said that within the last few months. You could have saved lots of people a lot of time by saying it in May 2002. Why didn’t you.”
Because it was obvious to everyone taking part in the conversation that there was no valuation adjustment.
If it’s so obvious, why hasn’t the study been corrected to this day?
Today’s CAPE is 35. That’s an obvious threat to the smooth functioning of our economic system. But how many of the experts in this field are actively involved today in getting that CAPE value down?
Sometimes it is the most obvious things that are most important. For an alcoholic, the most obvious thing that he needs to do to make his life better is to start attending A.A. meetings. The fact that this is obvious doesn’t mean that you shouldn’t say something if you think of this person as a friend.
Rob
“ If it’s so obvious, why hasn’t the study been corrected to this day?”
No correction was needed. You have been told that. Why do you keep asking the same question when you already know the answer?
Say that there is a one-in-a-hundred chance that the Greaney retirement study really does lack a valuation adjustment — just as I indicated in my famous post of the morning of May 13, 2002. If that’s the case, then we should be discussing the matter at every discussion board and blog on the internet. It’s not even possible to imagine a public policy concern of greater import. This affects every last one of us.
The next Buy-and-Hold Crisis is 100 percent avoidable. Not today, i suppose. We are going to experience a big recession any way you look at it (presuming that Shiller’s Nobel-prize-winning research is legitimate research). But, had Greaney corrected his study on the afternoon of May 13, 2002, we would have put the Get Rich Quick/Buy-and-Hold stuff behind us a long time ago.
And, even now, we could diminish the horrors of the next Buy-and-Hold Crisis by opening every site to honest posting by the close of business today. Prices don’t usually drop only to fair-value levels at the end of a bull/bear cycle. Irrational exuberance is replaced by irrational depression and prices drop to one-half of fair-value levels. If that happens, we are all in the soup. But if we get the word out about the last 40 years of peer-reviewed research, people will know that they should be buying stocks like crazy when prices drop to such insanely low levels and that could very well be the thing that turns the situation around. But we need to begin getting the word out now if we are going to expect people to act on it in the days following the next price crash.
My feeble human brain is not able to imagine any downside.
Rob
“Say that there is a one-in-a-hundred chance that the Greaney retirement study really does lack a valuation adjustment”
There is a hundred-in-a-hundred chance that the Greaney retirement study really does lack a valuation adjustment
We are 100 percent on the same page re that one, Evidence.
Now we just need to work out whether a valuation adjustment is required to calculate the safe withdrawal rate. To do that, we need to open every discussion board and blog on the internet to honest posting re the far-reaching implications of Shiller’s amazing, Nobel-prize-winning research showing that, no, the market is not efficient, no, investors are not 100 percent rational, no, stock investment risk is not stable but is variable, and yes, market timing is always 100 percent required for every investor who wants to keep his risk profile constant over time.
I naturally wish you all the best that this life has to offer a person regardless of what investment strategy you elect to follow.
Rob
“Now we just need to work out whether a valuation adjustment is required to calculate the safe withdrawal rate.”
If only there was someone who could put together a convincing argument that a valuation adjustment is required.
If valuations affect long-term returns, as Shiller showed in his Nobel-prize-winning research, then it’s a logical impossibility that the safe withdrawal rate is the same number at all valuation levels.
That’s my sincere take, in any event, Evidence.
I naturally wish you all good things.
Rob