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 you told Wade this story about getting $500 million, he told you that it was crazy. You ignored him as well.
I told Wade that thought that the research that we did together would win him a Nobel prize. There’s a sense in which he dismissed that idea too. He certainly acted like he didn’t think it would happen. But the idea that the work was of huge importance was stirring around in his head. He said that there were time when he couldn’t sleep because he would lie awake thinking of all sorts of amazing implications to our work. He mentioned that he thought that Shiller really would be awarded a Nobel prize (this was before that happened). He didn’t say it the way that I said it. But he saw something of great importance there too.
It takes time to let in that you are doing work that is going to change the world in a very positive way. I didn’t think on the morning of May 13, 2002, that Valuation-Informed Indexing was going to replace Buy-and-Hold. I didn’t say on the morning of May 13, 2002, that it was the relentless promotion of Buy-and-Hold that served as the primary cause of the 2008 economic crisis. I didn’t say on the morning of May 13, 2002, that bonds are more risky than stocks to the informed investor. These are things that come to you after you spend some time studying this stuff.
That’s why I say that we need to open every discussion board and blog to honest posting re the peer-reviewed research. Learning is done by building one block of knowledge on top of another. For 20 years, we have as a society held back from acknowledging that errors in retirement studies need to be corrected within 24 hours of when they are discovered. If Greaney had corrected his study on the afternoon of May 13, 2002, LOTS of people would be saying today that bonds are the more risky asset class and that we can bring economic crises to an end by opening the internet to honest posting re the peer-reviewed research. We sure wouldn’t have a CAPE value of 35 today if Greaney had promptly corrected his study, as we all should have insisted he do.
There were people who said that I was “crazy” to say that the Greaney study was in error when I first said it, You don’t hear too much of that today. Even Evidence, one of the lead Goons, now says that “nobody” truly believes that the Greaney study contains a valuation adjustment, including Greaney himself. People’s views change as they learn more about a subject. To get the learning process going the way we all need it to go, we need to open every site to honest posting.
That’s my sincere take, in any event.
Rob
Anonymous says
Your no so famous post is now 20 years old. Your version of the story has grown much like stories old men tell about stories big fish that got away back in their youth. It starts off where the fish is 6 inches long. As time goes on, the fish is later described as being as big as a whale.
Rob says
Okay, Anonymous.
Rob
Evidence Based Investing says
We missed the anniversary!
Here is a link to that post that received 12 Recommendations
https://boards.fool.com/price-adjusted-safe-withdrawal-rates-17209214.aspx?sort=whole#17209214
Rob says
And 20 years of discussion at countless discussion boards and blogs.
Rob
Anonymous says
All we need to do is read that last post:
Author: hocus Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won’t see their posts anymore)
Number: 66804 of 888931
Subject: Re: Price-Adjusted Safe Withdrawal Rates
Date: 5/15/2002 11:45 PM
Post New | Post Reply | Reply Later | Create Poll
Report Post | Recommend it!
No. of Recommendations: 2
If you retired on January 1st 1929 or 1966 or 1969, a 4% inflation-adjusted withdrawal rate would allow your money to last for 30 years. You’d be broke in year 31.
I was wrong and intercst was right. Please read my apology to him and to the board in general at this link:
http://boards.fool.com/Message.asp?mid=17225279
Rob says
If you want to get the full story, you need to combine my apology post with the recent posts by Evidence acknowledging that the Greaney study really does lack a valuations adjustment. If the study really was in error, what the heck was I apologizing for?
I was apologizing because I didn’t want to see the board torn apart. There never was any rational case for the 4 percent rule or for Buy-and-Hold in general. The value proposition of stocks CHANGES with changes in the price that is paid for them, just as the value of anything else we purchase changes with the price being paid. The 4 percent rule and Buy-and-Hold in general defy everything that we know about every market that exists.
So why are there millions of smart people who believe that Buy-and-Hold is a real thing? All humans are born with a desire to get something for nothing. And stocks offer us a huge opportunity to do just that. All we need to do is to pump prices up to crazy levels and to silence anyone who points out the craziness and we have what we want — Pretend Money! We can have a much of it as we want! Irrational exuberance is an amazing deal.
Except that it disappears when the bull market ends and millions of people suffer an ocean of human misery. Will people continue to believe in the crazy stuff when that happens? I don’t think so. But we’ll see, you know?
We are talking two different languages, Anonymous. I keep citing the peer-reviewed research because I am talking the language of rationality. You keep talking what people are willing to say on public discussion boards because you are talking the language of emotion. Get Rich Quick/Buy-and-Hold is POPULAR for the length of a bull market. You need to suppress rationality for emotion to rule and I want the emotional stuff to be reined in enough for people to connect with the rationality.
The key is going to be what happens when the CAPE is 8 instead of 32. Will that change open people up to hearing what the last 41 years of peer-reviewed research says? I believe that it will. But we are just going to have to wait to see how things play put to find out for sure.
My best wishes.
Rob