A Rich Life

The Old Ideas on Saving & Investing Don't Work -- Here's What Does

Comments

  1. Irrational exuberance? You mean like the expectation of a $500 million windfall?

  2. When I receive my $500 million settlement payment, it won’t be a windfall. I will have earned every penny of it. Actually, I will have earned a lot more than that. I am willing to settle for that amount because it is such a large number that I see it as silly to delay the receipt of it seeking even more. But the value that I will have added to our society by opening every site on the internet to honest posting re the last 41 years of peer-reviewed research in this field is obviously far in excess of $500 million.

    Leave aside for the moment the millions of middle-class investors who would like to know how stock investing works in the real world, as revealed by Shiller’s Nobel-prize-winning research, which I believe to be legitimate research. Think of the many fine people who work in this field who do not feel comfortable doing honest work today because of the reaction that they will see from Buy-and-Holders trying to continue the cover-up.

    I was at my brother’s house on Memorial Day. He had a book by William Bernstein on his coffee table. That caused me to tell the story of how Bernstein said in his book “The Four Pillars of Investing” that the 4 percent rule is in error, that at the top of the bubble the safe withdrawal rate was only 2 percent, which is of course exactly what I said in my famous post from the morning of May 13, 2002, Bernstein could have changed the world of stock investing forever and in a very positve way had he publicizing that correct claim as a way of promoting his book, Instead, out of deference to you Goons, he kept it zipped. Huh? What the f?

    How do you think that made him feel?

    I think it would be fair to say that there will not be one non-Goon who express any objection whatsoever to me receiving a $500 million settlement to drop my civil actions against those who have either engaged in efforts in support of you Goons or who have tolerated your behavior at their web sites. I mean, come on.

    My best and warmest wishes to you and yours, Anonymous.

    Rob

  4. Okay, Anonymous.

    I continue to 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.

    My best and warmest wishes to you and yours, in any event.

    Rob

  5. “ I continue to 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.”

    Evidence, and many others, have already addressed this. You just don’t like the answer.

    There won’t be a windfall and that is why you should get a job.

  6. I appreciated Evidence acknowledging that the study lacks a valuation adjustment. That was an advance. It came 19 years later. But still….

    What I don’t like is that the study has not been corrected to this day. Evidence acknowledging the error does not get the job done. We need to hear Greaney acknowledge it. Evidence is an important member of Greaney’s Goon Squad. But he is not Greaney hinself.

    And I don’t like it that we have not yet seen every discussion board and blog opened to honest posting re the last 41 years of peer-reviewed research. I think that that’s the ultimate answer to our problems.

    I’m sure of it!

    Rob

  7. Rob, you have admitted that Greaney’s study (and Trinity and Bengen) accurately calculate the inflation adjusted withdrawal rate that survived all time periods in the past.

    That is a tremendous admission, it is just a pity that it took you so long to make it.

  8. That’s not a tremendous admission at all. It is obvious to anyone with eyes that Greaney properly calculated the inflation-adjusted withdrawal rate that SURVIVED all time-periods in the past. The question that I put on the table with my famous post from the morning of May 13, 2002, is whether that withdrawal rate — 4 percent — is “100 percent safe” for aspiring retirees of the current day. Whether it is or not depends on the valuation level that applies on the day the retirement begins. The SAFE withdrawal rate varies from 1.6 percent at times of insanely high valuations to 9.0 percent at times of insanely low valuations.

    People planning retirements need to know that. To keep that information from them through abusive posting and acts of intimidation is fraud. Greaney’s massive act of financial fraud will cause the loss of more dollars than every earlier act of financial fraud in the history of the United States in the event that stocks continue to perform in the future anything at all as they always have in the past. Count me out, you know? Not this boy.

    Are you prepared to cover those losses from your own pocket? They will end up being in the many trillions of dollars. So you obviously will not be able to do so. That’s why I believe that this story is going to end with long prison sentences for a good number of you Goons. Again, count me out. I notified Motley Fool that Greaney and his Goon pals were advancing death threats at the time they were advanced. Had Motley Fool taken effective action, we would not be looking at millions of failed retirements and prison sentences for a significant percentage of the Goon population. We all have a responsibility to see that Get Rich Quick/Buy-and-Hold investment strategies do not ever become so popular as to become a threat to the functioning of the economic system that we all share.

    My best and warmest wishes to you, in any event.

    Rob

  9. Do you really believe is safe retirements? If so, why did you take the most risky route by not getting a job? See the irony?

  10. There’s no irony whatsoever. I am a journalist. That’s my job. For the last 20 years, I have been working on the most important journalism project in the United States today. When I succeed in opening every internet site to honest posting re the past 41 years of peer-reviewed research, we all get to live better lives from that point forward and all the people who work in this field get to help people instead of destroying their lives from that point forward. Honesty is as important in the investment advice field as it is in every other field.

    If you believed in safe retirements, you would not be engaging in criminal acts that will eventually land you in a prison cell. I mean, come on. It’s not posting honestly re the error made in a retirement study that is the outlier behavior. It is leading a 20-year Campaign of Terror against various discussion board communities to insure that the thousands of people who expressed a desire to be able to learn about the realities of stock investing will not be able to do so.

    That’s my sincere take, Anonymous.

    Rob

  11. “I am a journalist. That’s my job.”

    A flute with no holes is not a flute. And a job that pays no money is not a job.

    “The SAFE withdrawal rate varies from 1.6 percent”

    That’s just silly. Even 100% TIPS paying zero percent real can support withdrawing 3% plus inflation for 30 years. Of course that plan falls apart when the retiree spends WAY more than that every year. You know, like you did.

    Of course you would eventually run out of money. So it’s not “safe” by your squishy vague undefined notion of that term. But then neither is 1.6%. Or zero percent. Any scenario that could potentially leave you broke at any time in the future, for any reason, is by your definition not safe. So the only prudent course of action for anyone is to never quit your job, especially with ridiculously inadequate savings. You know, like you did.

    It’s June, your latest book deadline. Where’s the book?

  12. Your point about TIPS is correct and very important. An asset class that provided a return of zero would have a safe withdrawal rate of 3.3 percent. But the safe withdrawal rate for stocks in 2000 was only 1.6 percent! That’s shocking. That;s just astounding, But that’s what the numbers show when they are calculated honestly and accurately.

    That’s why it is so important that someone tell this story clearly and fairly and completely. That’s why this is the most important journalism story of our time.

    Market timing is price discipline. Markets determine the correct price for the thing being sold. That’s their purpose. And they do that because buyers and sellers test different prices until they find the one that works best. The Buy-and-Holders have created a market in which price discipline doesn’t exist. Stocks are always worth buying regardless of the price! A market without price discipline is like a car without brakes. It might feel like it;s a good car while it is zooming down the highway but the moment will come when you are going to really, really, really wish that you had insisted that brakes be installed before you took it out on the highway.

    In ordinary circumstances, stocks could never have gotten so overpriced that they offered a negative long-term return But the Buy-and-Holders pulled that off with their relentless injunction to avoid market timing (price discipline!). If our economic and political systems are going to survive, we are going to have to find some way to get accurate and honest information on how stock investing works out to millions of investors. There’s just no other way. It is going to take good journalism to pull that off. So, once I saw that people in positions of responsibility were failing to take effective action to rein in the criminal behavior of you Goons, I got on the job.

    I think we are going to make it. There’s going to be an ocean of human misery on the road to the promised land. I wish that we had just opened every site to honest posting on the afternoon of May 13, 2002, as I proposed at the time. But I do believe that we are a good people and that we will work up the courage to do what needs to be done when we see that we really have no other options. We’ll see.

    If valuations affect long-term returns, then there is zero chance that the safe withdrawal rate is the same number at all possible valuation levels. My sincere take. Everyone needs to know that. And, since the humans were designed with a seemingly limitless desire for Get Rich Quick/Buy-and-Hold strategies, we need to be reminded of it on a daily basis each time people get together to talk about stock investing. Honest posting re what the research says should be permitted. Everywhere and at all times.

    I do wish you all good things, Anonymous.

    Rob

  13. Since you ignored the question, obviously your book is nowhere near completion, and you will miss yet another self-imposed deadline.

    That book would be done by now if you had put in just five minutes of serious work every day. Clearly any amount of serious work on anything is too much to expect from you.

  14. I’ll probably miss the June 30 self-imposed deadline. But I put in work on the book every day, And it is going to be an amazing book. I believe that it will be the most important book ever published in the field of personal finance. I certainly wish that it had been finished years sooner. But I am extremely proud of what I have accomplished and will be even more proud when it is finished.

    The delay is because of the social isolation. It is an extremely painful experience. No one else has written this book. Why do you think that is? Shiller’s Nobel prize-winning research has been publicly available for 41 years and no one (including Shiller himself) has written a full exploration of the far-reaching implications of his Nobel-prize-winning work. Even you Goons have acknowledged that nowhere in his book does Shiller start in clear and direct terms that the Buy-and-Hold retirement studies need to be corrected immediately. Huh? What the f?

    This was a hard book to write. Very, very, very, hard. That slowed me down. But it did not stop me. I am not at the finish line. But I am very close. The fact that it was so hard to write makes it that much more important that someone do the job. And in a short amount of time I will be able to say that I pulled that off. Good for me, you know? It’s certainly not something that as a young man I had any realistic expectation of being able to pull off. Life sometimes takes funny turns on you.

    My best wishes.

    Rob

  15. “ No one else has written this book. Why do you think that is?”

    Because it has no value. We know this because you admitted it is the same story as what you hav3 posted here. It is just more of the same, which has been a complete waste of time.

  16. It’s obviously the same story as I post here. I think that the value is enormous. You don’t agree with words but you show that you agree with your actions. If you didn’t believe that there are millions of people who would like to know what the research says, you never would have advanced a single abusive post to block them from hearing about it.

    We’ll see. I’m betting my life on the value of the peer-reviewed research, not on the power of the Get Rich Quick/Buy-and-Hold impulse that resides within all of us. The rational/common sense impulse that makes us want to take the research into consideration is real too. I believe that it will have its day in the time following the next Buy-and-Hold Crisis.

    Rob

  17. “ I think that the value is enormous.”

    Value is based on what someone has paid for what you have to offer. You haven’t earned one dime from this. Changing the packaging does change anything as the content is the same. Zero value.

  18. The perceived value will change when the CAPE value changes. Today’s CAPE value is 34. We usually go to 8 at the end of a bull/bear cycle. If we go to 8, stock investors will have lost over 75 percent of their portfolio amount. I believe that there will be greater interest in knowing how stock investing works at a time when millions of people have suffered a loss of 75 percent of portfolio value than there is at a time when the CAPE value is at the level that brought on the Great Depression.

    The pain of irrational exuberance is telescoped. It doesn’t hurt at all for long periods of time and then it hurts terribly. A price crash is like a heart attack. Doctors tell their overweight patients that they need to improve their diets or suffer a heart attack. Some rationalize that “nothing bad has happened to me yet, so I might as well just go on eating as I always have.” When they have the heart attack, they wish that they could go back in time.

    If we survive this next Buy-and-Hold Crisis, I believe that we will never go back to a the promotion of a pure Get Rich Quick strategy. Once word gets out about how stock investing really works, people are not going to forget. If we don;t survive the next crisis, I am cooked. But in that scenario, we are all cooked. At least I gave it a good shot. I have been arguing that we should open the entire internet to honest posting going back to the afternoon of May 13, 2002. I could do no more and I could do no less.

    Rob

  19. “We usually go to 8 at the end of a bull/bear cycle.”

    You are basing that on a very small number of instances.

  20. Yes, we have a very small number of complete bull/bear cycles in the historical record. It takes about 40 years for a cycle to play out. We only have good records for stock prices going back 150 years. That’s just the way it is.

    We may not go to 8. I pray that we do not. But say that we only go to 17, the fair-value CAPE value. That’s still a loss of 50 percent of portfolio value for millions of people. We only need one large site to be opened to honest posting for knowledge of the last 41 years of peer-reviewed research to start spreading like wildfire. Please recall the reactions we have seen from many of the top names in this field. These people are chomping at the bit to start doing honest work. Once one does it and gets away with it, there’s going to be a flood of experts moving to the Valuation-Informed Indexing side of the table. The pent-up desire to provide honest, research-based investment advice is off-the-charts strong. We need one large site to flip and then there will be no holding us back.

    My sincere take.

    Rob

  21. “That’s still a loss of 50 percent of portfolio value for millions of people.”

    Only if they are at 100% stock allocation.

    We have already had two 50% drops during my investing lifetime, in 2000 and 2008 and nothing close to your hoped for reaction happened.

  22. Neither of those drops remained in place for long. No, you are not going to see a change in thinking in a short amount of time. The price drop would need to remain in place for a number of years for a widespread change to take place.

    “17” is the mean CAPE value. “16” is the median CAPE value. That means that in the history of the U.S. market, we have had as many years where the CAPE value has been below 16 as we have had years where the CAPE value was above 16. Since 1996, they have just about all been above 16. If we are going to see in the wake of the next price crash as many years below 16 as we have seen above 16 in recent decades, there are going to be a lot of below-16 years in a row. It’s when investors live through something like that that their minds open to considering what the peer-reviewed research is trying to teach us all about how stock investing works.

    This is not my hoped-for reaction. It is the reaction that Shiller’s Nobel-prize-winning research says we should expect to see. Irrational exuberance is emotion-based. When it disappears, the emotion turns in the opposite direction. Insanely high stock prices beget insanely low stock prices. It’s always worked that way and, assuming that Shiller’s Nobel-prize-winning research is legitimate research, it can never work any other way. When investors go nuts in one direction, they are going to go nuts in the opposite direction in the following years. How do you think they are going to feel about the pure Get Rich Quick/Buy-and-Hold “strategy” when it is taking money out of their pockets instead of putting money into their pockets.

    The only stable strategy is the rational, reason-based one, Valuation-Informed Indexing. Get Rich Quick/Buy-and-Hold’s popularity depends on how much irrational exuberance it generates. When the pretend money disappears, so does the primary appeal of the strategy. If Buy-and-Hold were a real thing, Buy-and-Holders would not object to discussion of the peer-reviewed research.

    Rob

  23. You’re not a serious person. A serious person would have realized long ago that his collapsing financial and family situation required immediate attention and real effort. That there was no longer time to waste with this navel gazing nonsense.

    Not you though. You just walked away from real life and its obligations. Now you are left with nothing but squalor and isolation. The high price of devoting your life to foolishness.

  24. “ Neither of those drops remained in place for long.”

    Because markets have always recovered and have gone on to new highs. Thanks for making the case for Buy, hold and rebalance.

  25. You’re not a serious person. A serious person would have realized long ago that his collapsing financial and family situation required immediate attention and real effort. That there was no longer time to waste with this navel gazing nonsense.

    Not you though. You just walked away from real life and its obligations. Now you are left with nothing but squalor and isolation. The high price of devoting your life to foolishness.

    Okay, Anonymous.

    I do wish you all the best that this life has to offer a person, in any event.

    Please take good care, my old friend.

    Rob

  26. “ Neither of those drops remained in place for long.”

    Because markets have always recovered and have gone on to new highs. Thanks for making the case for Buy, hold and rebalance.

    Markets will certainly always recover and go on to new highs. The question is how long it takes for that to happen. The market recovers when investor psychology improves. With Buy-and-Hold, that can take a very,v very long time because the relentless promotion of a pure Get Rich Quick strategy causes irrational exuberance to get totally out of hand, With Valuation-Informed Indexing, you never have much irrational exuberance. So, to the extent there are any price drops, they are small and short-lasting. Buy-and-Hold/Get Rich Quick strategies pushes stock investing risk as high as it can do. Valuation-Informed Indexing/research-based strategies reduce risk to the greatest extent possible.

    That’s why I say that we should permit honest posting. It’s a win/win/win/win/win.

    Rob

  27. “ The question is how long it takes for that to happen. The market recovers when investor psychology improves.”

    No, we already know that a 4% SWR has always worked over any historical 30 year period. Are you now saying we should ignore the historical data when it is not convenient for you?

  28. I’m saying that we should calculate the numbers honestly and accurately. The last 41 years of peer-reviewed research shows that the valuation level that applies on the day a retirement begins is a key factor in determining what withdrawal rate is safe. So a valuation adjustment is required.

    My sincere take.

    Rob

  29. “ The delay is because of the social isolation.”

    That is your own doing. Should have kept working. You would not be isolated and you would have money in the bank, instead of being broke.

  30. The social isolation is because of the Ban on Honest Posting. If we had been permitting honest posting all along, every investor on the planet would know the arguments in favor of Valuation-Informed Indexing and the arguments in favor of Buy-and-Hold and there would be no fraud. So there would be thousands of people posting at this blog on a daily basis. No social isolation!

    We need to bring an end to the social isolation if we are as a society to advance in our understanding of how stock investing works. That’s why it is so important that I continue doing the work that I do. When I get that $500 million settlement check, I can guaranty you that I will be invited to give the keynote address at the next Financial Bloggers Conference. I will probably be invited to do that for the next 10 conferences in a row. We’ve got a tiger the the tale with this one, Anonymous.

    The social isolation hurts. Big time. I don;t say different. But there is no other way that this advance can be achieved at this point. If we all had been thinking clearly, Greaney would have corrected the error in his study within 24 hours of the moment that the error was brought to his attention. We obviously were not all thinking clearly on the morning of May 13, 2002. And it gets harder every say to acknowledge the error at the core of the Buy-and-Hold strategy because now we have to come to terms not only with the error but with the 41-year cover-up of the error. Anyone who works up the courage to post honestly is going to have to pay the price of social isolation until the day comes when every site on the internet has been opened to honest posting and the far-reaching implications of Shiller’s research are common knowledge.

    It has been a very, very, very rocky road. But presuming that we all make it in one piece to the other side of The Big Black Mountain, I think it would be fair to say that there will not be one non-Goon who will ever wish to return to the days when Buy-and-Hold was dominant. My personal belief is that we will probably win over most of you Goons as well. But we’ll see, you know.

    My best wishes.

    Rob

  31. “ When I get that $500 million settlement check, I can guaranty you that I will be invited to give the keynote address at the next Financial Bloggers Conference. I will probably be invited to do that for the next 10 conferences in a row. We’ve got a tiger the the tale with this one, Anonymous.”

    You have a better chance of winning the Power Ball Lottery.

  33. “ Sez a Goon.”

    Gee, Rob, you really got me on that one. I am sure all the other kids on the playground are really impressed with that comeback.

  34. How impressed will the kids on the playground be with “you have a better chance of winning the Powerball lottery” in the days following the next Buy-and-Hold Crisis?

    We are all in this together. We all need to know how to invest our retirement money. When someone who has posted a retirement study at his web site learns that he got an important number wrong in the study, he needs to correct it promptly. Otherwise he is going to do great harm to a good number of the other kids on the playground.

    Yes, we all have that Get Rich Quick/Buy-and-Hold urge residing within us. So one might get away with not correcting the study for so long as the CAPE level remains high enough to bring on a Great Depression. But this field should not be just about turning a quick buck. There were people at Motley Fool who believes that the Greaney study was a real thing. Some of those people had become friends of mine over the years. So I did what I had to do, I am confident that the kids in the playground will be with me after the next Buy-and-Hold Crisis ruins millions of lives.

    We’ll see. No one us going to have a hard time figuring out which side I am on. I am on the side that says that honest posting re the last 41 years of peer-reviewed research should be permitted at every site.

    The kids on the playground are okay with honest posting in every field of human endeavor other than the investment advice field. Gee, I wonder what’s up with that. I have a funny feeling that a good number of the kids on the playground have come to believe that the numbers on their portfolio statement are real given how seldom they hear the far-reaching implications of Shiller’s Nobel-prize-winning research discussed on the internet.

    The kids on the playground are not cartoon characters. They are actual people with hopes for the future that depend on them knowing how much real money there is in their retirement account.

    My sincere take.

    Rob

  35. “ How impressed will the kids on the playground be with “you have a better chance of winning the Powerball lottery” in the days following the next Buy-and-Hold Crisis?”

    Even the kids on the playground know that you have a better chance winning the lottery.

    “ We are all in this together.”

    No, we are not in the same game as you. We don’t live in a fantasy world.