Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
We told you that 20 years ago, yet here you are repeating the same garbage.</i>
Until Greaney corrects the study, we are in the same situation we were in on the evening of May 12, 2002. The proper thing to do when you learn that you got an important number wrong in a retirement study posted at your web site is to correct that darn study. Greaney hasn’t done that. It was our collective decision to just let the fraud continue that got us into this mess in the first place. He is not going to take up one morning and say “Gee, I feel like telling the truth about safe withdrawal rates today.” We live in communities. Each member of a community has to do his part to make the community a livable, honest place to live.
It’s not just safe withdrawal rates. That’s not the only thing that the Buy-and-Holders got wrong. Their “idea” that the market is automatically efficient (that we don’t need to work to achieve rationality) is the biggest mistake ever made in the history of personal finance. It threatens t bring down our entire economic system, possibly our entire political system. You just cannot have a free society where people are putting money aside to finance their retirements and they are using studies that get the numbers wildly wrong and no one is doing anything to help because they are afraid of the criminal acts that the people who made the error will engage in if anyone says anything. That is just not a viable long-term state of affairs.
How about the 2008 economic crisis? That hurt a lot of people. If Shiller is right (I believe he is)), it was the relentless promotion of the Buy-and-Hold “strategy” that was the primary cause of that economic crisis. We need to tell people that so that we can avoid similar economic crises in the future. If we talk honestly about that, we are going to end up saying things that are going to cause people to question the numbers in the Buy-and-Hold retirement studies. It’s inevitable.
You cannot get something so basic as whether the market is automatically efficient wrong and not have it affect thousands of things in very serious ways. Once we learned that we had gotten that one wrong (that market efficiency is an aspiration, not something that is automatic and that it is an aspiration that is achieved with regular reminders that all investors always be sure to engage in market timing with the aim of keeping their risk profile constant over time), we should have all made it job #1 to get that one fixed. And part of that job would have been to get the numbers in the Greaney retirement study corrected before they hurt more people.
My sincere take.
Rob
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