Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“ When that’s the situation, someone has to work up the courage and do what it takes to earn the $500 million. And, once he has earned it, why shouldn’t be plan his retirement on it?”
So if some guy has $6 million in his investment account, you don’t think he should plan his retirement on it, yet if you don’t have your $500 million, you think that you should plan your retirement on that, even if you haven’t collected one dime?
Yes.
If someone has $6 million of nominal value in his account at a time when half of the value of the stock market is irrational exuberance and not anything of real, lasting value, that guy should plan his retirement only on the $3 million of real value and disregard the irrational exuberance. That’s the entire point of Valuation-Informed Indexing — to get the numbers right by taking into consideration the last 40 years of peer-reviewed research as well as the stuff that was around at the time when the Buy-and-Hold strategy was being developed.
As for the $500 million, one should certainly take it into consideration. I think it would be fair to say that I have earned a whole big bunch more than $500 million with the journalism work that I have been doing for the past 20 years. Even Evidence-Based Investing, one of the lead Goons, now acknowledges that the Greaney retirement study lacks a valuation adjustment. If that doesn’t prove the case beyond any doubt whatsoever, I have a hard time imagining what would. And it wasn’t only Greaney who put forward the crazy 4 percent rule. That was cited in thousands of newspaper articles. That rule was used in the planning of millions of retirements. So discovering the error in the rule is a very big deal. Had we opened to entire internet to honest posting re the last 40 years of peer-reviewed research on the afternoon of May 13, 2002, as I proposed at the time, we would all be a lot better off now. I would obviously have a number far in excess of $500 million in my account today if you Goons had never engaged in any criminal acts to stop the discussions that so many of our fellow community members wanted to see go forward.
Would I prefer to have the $500 million in cash today? Sure. Of course. Obviously. Who wouldn’t?
But the cases that I have are real cases. If the laws of the United States are given respect in the investing advice field in the days following the next price crash, I will be collecting that money in days to come. That’s a good thing for all of us. From the day that I collect the $500 million, there won’t be one person who will be afraid to share his or her thoughts about how the far-reaching implications of Shller’s amazing, Nobel-prize-winning research findings “revolutionize” (Shiller’s word) our understanding of how stock investing works. I will be invited to be the keynote speaker at the FinCon event for 10 years running once I receive that settlement payment. LOTS of people have doubts re the Buy-and-Hold dogmas today. Most don’t speak up in clear terms because they want to be able to make money in this field and they have seen how the Buy-and-Holders react to discussions of the far-reaching implications of Shller’s amazing research. All of that fear of speaking honestly goes away when the primary advocate of Valuation-Informed Indexing, the first true research-based strategy, receives a check for $500 million for his efforts to get this stuff out to every investor on the planet.
I would have preferred that we all just played it straight from the first day. That would have been a lot easier on me and it would have saved us from both the 2008 economic crisis as well as the one that we should be expecting to see in the next year or two or three. Now, if we had been playing it straight going back to 1981, I wouldn’t have earned $500 million by working up the courage to post honestly. If we had been playing it straight going back to 1981, much of what I have said would have come out long before I came on the scene. There certainly would not have been any thought in anyone’s mind that the safe withdrawal rate is the same number at all valuation levels if we had all been playing it straight going back to 1981.
I didn’t ask for the realities to be covered up from 1981 through 2002. It’s something that happened that in one way worked to my detriment (all the abuse that has been directed at me) and that in another way worked to my benefit (because so few dared to post honestly it became possible for me to add a lot more than $500 million worth of value to the world’s understanding of how stock investing works). I didn’t even know about the 21-year cover-up on the day that I advanced my famous post saying that I didn’t believe that the Greaney study contained a valuation adjustment. That didn’t click for me until I saw the death threats on the evening of August 27, 2002.
Do you think it would have been better if I had never mentioned the error in the study? I sure don’t. Do you think it would have been better if I ignored the death threats and just remained a Buy-and-Holder despite it all? I sure don’t. We NEED to know how stock investing works. It’s important. To me, that is as obvious as obvious could be. And we cannot ever make progress if we all live in fear of what the Buy-and-Hold Goon squads will do to us if we work up the courage to post our honest thoughts. Opening up that possibility for everyone on the planet is just an amazing advance. The idea that doing that isn’t worth a whole big bunch more than $500 million is just silliness.
You Goons get that deep down inside. If you didn’t see how important this stuff is, you never would have advanced a single intimidation post much less any of the criminal stuff. If you thought this stuff didn’t matter much, you would just say “oh, let that Rob Bennett fellow say what he believes about safe withdrawal rates, what harm could it do?” Given your behavior over the past 20 years, I think that it would be fair to say that your secret belief is that permitting honest posting on safe withdrawal rates and scores of other critically important investment-related topics would produce far in excess of $500 million in value for millions of middle-class investors.
I think it would be fair to say that market timing is 70 percent of what it takes to become a successful long-term stock investor, The peer-reviewed research that I co-authored with Wade Pfau shows that. Yet we still have people today saying that there might be some mystical, magical alternate universe where market timing is not always 100 percent required for every investor. Huh? What the f? Opening up the entire internet to honest posting changes everything, It is a huge advance. It OBVIOUSLY is worth a lot more than $500 million to our nation if someone works up the courage to do that, That’s why we have laws ensuring that, when we see the sort of behavior we have seen from you Goons over the past 20 years, compensation is paid to the person at whom that abuse was directed. The laws that ensure that are good and necessary laws. They don’t make the person at whom the abuse was directed whole. Nothing could do that. But they take a stab at it. Which is probably the best that can be done in this imperfect world of ours.
So I support those laws. And I think that it would be fair to say that the people who adopted those laws are basically a good and smart people. So they are going to see that those laws are enforced in the days following the next price crash, when we will all be able to see up close and personal what it means for our country to have a pure Get Rich Quick/Buy and-Hold investing “strategy” promoted morning, noon and night for 40 years after the peer-reviewed research showed that there is precisely zero chance that it could ever work out for even a single long-term investor.
My sincere take.
Rob
Remember this advice from 2006:
mlebuf| 03-31-06 | 11:32 PM
“Rob, I hope you have a boatload of money saved up, win the lottery or hit it big as a writer. As a guy who’s been kicking around the publishing world almost 30 years, I can tell you that the odds are clearly not stacked in your favor.
Walking away from a six-figure paycheck with financial responsibilites such as yours doesn’t impress me as being so much lightweight as insane. Dreams have their place but dreams don’t pay bills. I’ve read a lot of self-help books and written a few. I get the impression you’ve been reading authors who tell you to throw caution to the winds and live your dreams because life is short. The authors I know who practice that philosophy fall into two categories: the very few who are lucky and the very many who are broke. Being broke isn’t a sin, but it’s damn sure no virtue either.
As for staying out of the stock market for long periods of time, that just compounds the risk of running out of money. You’ve already taken one bad risk by quitting your day job prematurely. I think an intelligent asset allocation plan and the discipline to stick with it is what you need.”
You should have listened back then as this was the common feedback on your retirement plan.
I believe that the author of that comment was one of the co-authors of “The Bogleheads Guide to Investing.” Is that so? If that’s so, then he is obviously both biased and compromised when it comes to these matters.
It’s not only John Greaney who is engaged in a massive act of financial fraud. If Shiller’s Nobel-prize-winning research is legitimate research (I believe that it is), then everyone who works in this field and who has not made a public statement that we should be talking about Shiller’s Nobel-prize-winning research findings is at least to a small extent involved in the massive act of fraud. Anyone who offers investment advice is obligated to keep up with the peer-reviewed research. no? Well, there is now 41 years of peer-reviewed research showing that market timing is 100 percent required for any investor who wants to keep his risk profile constant over time (to “Stay the Course” in a meaningful way). If valuations affect long-term returns, there ain’t no way on God’s green earth that the risk of investing in stocks is the same at all valuation levels. So we should be talking about this huge advance in our understanding of how stock investing works (comparing to the understanding that we possessed in the days when Buy-and-Hold was being developed, when it was widely believed that market timing was not always 100 percent required or might in some circumstances even work.)
I am not going to see millions of lives destroyed (which is what we will see in the next Buy-and-Hold crisis in the event that stocks continue to perform in the future somewhat as they always have in the past) and not even try to do anything about it. I mean, come on. I don’t see how a person could sleep at night knowing that he did that.
I guess you could say that Micheal has made a decision to do that, as have many, many orthers. Why do I have the funny feeling that Micheal would very much like to see every discussion board ans blog on the internet opened to honest posting re the peer-reviewed research of the past 41 years if only he didn’t have to be the one to make it happen (because he will see his career destroyed if he speaks honestly re these matters)? The normal thing would have been for us to have all started talking about these matters in 1981, when Shiller published bis Nobel-prize-winning research findings. I presume that there was some cognitive dissonance at that time because Shiller’s research findings were such a huge advance and people went into cover-up mode. And, now that the cover-up has continued for 41 years, there is a feeling that no one must ever, ever know. We are all, including Michael, trapped because of mistakes we made in earlier times.
I don’t want Michael to be trapped. I didn’t like seeing how Bogle was trapped when he was still around (Bogle clearly did not like the feeling of being trapped or else he never would have put forward that post saying that he could see how market timing could produce good results). I don’t like seeing how Bernstein feels trapped (it is not normal for someone to say in his book that the safe withdrawal rate studies are off by two full percentage points and then keep quiet about the matter when he is posting on discussion boars. I don’t like seeing how Rob Arnott is trapped when he tells me that everything I say is right on but he cannot help because he is dealing with enough harassment for the honest things he has said to engage in any more honesty re these matters. I don’t like seeing how Shiller is trapped when he writes the best book ever published in this field but leaves out any discussion of the how-to implications of his work.
We can’t go on like this forever, Anonymous. We just can’t. People make mistake. It happens. The Buy-and-Holders made a mistake when they looked at the research showing that short-term timing doesn’t work and jumped to the hasty conclusion that market timing in general isn’t always 100 percent required. Now that the far-reaching implications of Shiller’s Nobel-prize-winning research have been covered up for 41 years, we are all trapped. How do you think we are going to ever become untrapped if every last one of us worries what you Goons will do to us if we dare to “cross” you by posting our sincere, research-based beliefs on how stock investing works?
There is no way to get us untreapped other than to say the things that drive the members of the various Buy-and-Hold Goon squads bonkers. So that’s why I do it. I think we all need to become untrapped. Show me some other way to make that happen and I am all ears. But I couldn’t live with myself if I didn’t at least make an effort to spare us all from the ocean of human misery that we will see arrive with the next Buy-and-Hold crisis in the event that stocks continue to perform in the future at least somewhat as they have always performed in the past.
That way I can sleep at night, you know? Being able to sleep at night matters to me.
I truly believe 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. If you have doubts re that one, please ask Evidence what he thinks re the matter. He has offered some pretty strong words re the matter on more than one occasions.
My best wishes to you.
Rob
Michael has more experience than you as an author. He is pointing out the financial realities of being an author. We can see that the advice he gave in 2006 was right in the mark as we can see how it played out over the following 16 years. There is no debate in that as it is a factual observation. You should have listened.
If Michael had felt free to express his honest views, he would have sent me a different message. He would have said that he agrees with me that the Greaney study lacks a valuation adjustment and that Greaney should have corrected the error in the study within 24 hours of the moment that it was brought to his attention. And everything would have played out differently from that point forward.
You are talking as if the Ban on Honest Posting will remain in place indefinitely. I do not believe that. I believe that there are a number of people like Micheal who are going to work up the courage to post honestly after they see the horrors of the next Buy-and-Hold Crisis with their own eyes. I believe that deep down we are a good people.
Rob
Everyone agrees there was no adjustment because it wasn’t needed. Thus, there is no error. We are still waiting for you to be truthful, just as Michael is.
Do you believe that Robert Shiller’s Nobel-prize-winning research showing that valuations affect long-term returns is legitimate research?
Rob
Fantasy “I would obviously have a number far in excess of $500 million in my account today if you Goons had never engaged in any criminal acts to stop the discussions that so many of our fellow community members wanted to see go forward.”
Reality “$15,000 from one soapbox.com report”
That’s the reality today, Evidence. What will the reality be in the wake of the next Buy-and-Hold Crisis? In the event that stocks continue to perform in the future anything at all in the manner in which they have always performed in the past, we are looking at losses in the many trillions of dollars. We have today available to us 41 years of peer-reviewed research that would spare us all from suffering those many trillions of dollars in losses if only we were permitted to talk about it on every discussion board and blog on the internet, without a single exception. And you don’t think that the person who has fought for 20 years now to open every site to honest posting will obtain a settlement of $500 million for his efforts?
I believe he will. But we will just have to wait a bit to see how it all plays. It’s not like I have any choice. I couldn’t sleep at night if I didn’t at least give this a solid try. So, if I collect a settlement payment of $0, I am still way ahead of where I would have been had I agreed to say that OF COURSE I believed that Greaney included a valuation adjustment in his study.
I do wish you all good things.
Rob
“ In the event that stocks continue to perform in the future anything at all in the manner in which they have always performed in the past, we are looking at losses in the many trillions of dollars”
Wrong. With every drop, the market has always recovered and gone on to new highs. The only people losing money are market timers.
We disagree. When our economic system collapses, we all suffer. We now have 41 years of peer-reviewed research showing us how to avoid future Buy-and-Hold Crises. All we need to do as a society is to give ourselves permission to talk about it at every discussion board and blog on the internet. I say: Talk away!
Rob
“ We disagree.”
How can you disagree? It is just a fact. When did the market not recover and go on to new highs?
It’s a mathematical impossibility that the market wouldn’t eventually recover any lost ground and then go no to new highs. There’s enough productivity being generated each year to support 6.5 percent real gains.
The question is — When the market generates irrational exuberance, are investors better off to recognize that that is what is happening or are they better off pretending that the irrational exuberance is the same thing as true economic gains and base their retirement plans on that fantasy viewpoint? I think that we should permit investors to learn about the last 41 years of peer-reviewed research and thereby to become more effective long-term investors. The more informed investors are, the less price volatility we will see.
If the residents of a house all smoked in bed and the house caught fire and burned to the ground four times but each time it was rebuilt, would you say that it is very, very important that the residents of the house never stop smoking in bed because the house has always been rebuilt? I think we should be relieved that our economic system has recovered from the hour Buy-and-Hold Crises that it has endured but that we should spread knowledge of the peer-reviewed research that we can now use to avoid future crises. Is it possible that we will survive a fifth Buy-and-Hold Crisis? Anything is possible. But, given that there is no reason why we should want to endure another one, we should -permit honest posting re the peer-reviewed research at every site.
Rob