Set forth below is the text of a comment that I put to the discussion thread for another blog entry at this site:
How many studies have you included in your study of the last 41 years of research?
Shiller published his Nobel-prize-winning research showing that valuations affect long-term returns in 1981. It has not been discredited in the 41 years since. Every year that passes in which it remains not discredited, our confidence in Shiller’s finding should increase.
In contrast, there has never been a single study showing that market timing doesn’t work. Academics put that forward as an hypothesis (“The Efficient Market Theory”). But no one ever tested the hypothesis to determine whether or not it is so until Shiller came along to discredit it. Some people say that Fama’s research supports the hypothesis. But Fama only tested short-term timing. There is indeed good reason to believe that short-term timing doesn’t work. But to say that no form of timing works just because one form of timing has been shown not to work is like saying that no form of driving works because one form (drunk driving) has been shown to be a bad idea.
Rob
Hi Rob,
I forgot that I was still saying things like this even 2 weeks after the initial incident.
This was more than a year ago now, but I am thinking that I was just trying to explain politely to you that I’d rather have you quit writing about me, or at least stop using my name. I suppose that I figured the only way you might understand why is if I explained it in terms of your favorite conspiracy theories.
I will make one more attempt at a reality check for you. You go on and on about how I allegedly lack personal integrity because I allowed the Goons to threaten me into silence.
The reality is that though I may have for a brief moment got a bit too caught up in YOUR drama, I do not have any fears about the Goons.
The reality is that you are causing me 1000x more career damage than the Goons ever could have by filling Google with so much nonsense about me, and sharing embarrassing private details such as my overly ambitious journal submission strategies, etc. Those in particular are highly private. People don’t publicly share where they submit articles to unless those articles are accepted. You’ve violated my trust in so many countless ways and yet you still proclaim to be my friend.
And the further reality is that if I *did* lack personal integrity, I could have made this all stop just by saying the meaningless sentence you want so desperately to hear: “I think the errors in the traditional safe withdrawal rate studies must be corrected by using Rob’s analytically valid method.”
But I don’t believe that. I do not believe you have offered a valid correction to the safe withdrawal rate question. And I believe that retirement income strategies go much further than the question of a safe withdrawal rate. And so that is why I’ve had to endure your ongoing harassment for months on end now.
Usually I can figure out the Rob-logic behind what you are thinking, but I really don’t know how you think you come out of this whole episode looking like the good guy. I guess it is because you think you are saving my soul and putting me back on the path of righteousness, or something, huh? If only you had the power to do a little bit of self reflection…
Now that the whole email history is on display, we have the reminder of how angry you got at the very beginning when I referred to you as dogmatic. Yet, look at the way you’ve treated me for disagreeing with you on something which you don’t even understand. You quote numbers from JWR’s statistical work, but I’m not sure if you can even distinguish a mean from a median. So how can you be sure his work is right? I don’t know either, as I never did get around to digging into it, and I doubt I ever will now. But I’m not sure how a properly calculated lower confidence bound for a 2000 retiree could have been higher than zero.
Rob, suppose the stock market does drop 65% as you are expecting. It might happen, who knows.
Step 1: Stock Market Drops 65%
Step 2: ??
Step 3: Rob wins $500 million settlement from the Goons, the Goons are sent to prison, the investing public learns about and adopts VII.
What is Step 2? There isn’t one. You will still be in the same position as you’ve been in for the last 10 years. Why didn’t something happen for you after the 2008 financial crisis? You are like the guy who keeps predicting new ends for the world as each previous prediction date passes by.
That is why I’m telling you, from one human being to another, that it is time to move on. You are a smart guy, and you could use your talents for something productive. While warning people about the 4% rule is helpful, the way that you go about doing it is rather “catastrophically unproductive” as one wise fellow said to you years ago. I provide a loud voice that is critical of the 4% rule, and so spending your days assassinating my character is counterproductive to your underlying cause. So perhaps you can start fresh with a new issue of social import that carries less baggage for you. What happened in the past is a sunk cost, but you still have a chance to turn things around and start afresh today. And you can do all of this while still being honest and true to yourself.
These words were not written by Wade Pfau today. One of the Goons just posted them today. But they were written by Wade a good number of years back, when he was threatened by the Goons after working with me for 16 months on the research that we had published in a peer-reviewed journal which caused Wade to exclaim: “Yes, Virginia, Valuation-Informed Indexing works!”
It was one of the Goons who posted this comment today. But look at what it says! Even in these Goon-approved words, Wade says that: “warning people about the 4% rule is helpful.” If there is something to warn people about, that’s huge. Before I put up my famous post from the morning of May 13, 2002, no one at the Motley Fool board was warning people about Greaney’s study. They were using it to plan retirements! That happened almost every day at that board! So getting that out there was huge. And of course what Wade really believes is that the Greany study is “dangerous,” which is what he said before he was threatened. And he believed all of the things that he said in the days before he was threatened on scores of other subjects as well.
Why is it that only the members of the Buy-and-Hold Goon Squads who feel a need to threaten people? We never see Valuation-Informed Indexers do that. The difference is that the Valuation-Informed Indexers have Nobel-prize-winning research supporting what they say while all the Buy-and-Hold Goons have is a mistake (the Efficient Market Theory) that was DISCREDITED by that Nobel-prize-winning research 41 years ago. We all need to move on from the mistake at the heart of the Buy-and-Hold strategy (the idea that market timing [price discipline!] is not required for all investors at all times).
That’s my sincere take re these terribly important matters, in any event. I believe that we will as a nation of people move on in the days following the next Buy-and-Hold Crisis. And, when we do, Wade Pfau will return to saying all the things that he said in the days before the Buy-and-Hold Goon Squads threatened to destroy his career if he continued doing honest work in this field. We all benefit from having Wade Pfau believe that it is safe to do honest work in this field. We all benefit from having EVERY academic researcher feel that it is safe to do honest work in this field.
Rob
Too bad you never took Wade’s words seriously. Now you sit here all alone, broke and acting like a victim.
I took the words that Wade said in the 16 months before he was threatened very seriously. I think he was a hero for saying those words. I do not take the words that he said after he was threatened even a tiny bit seriously. I believe that the fact that the Buy-and-Hold Goons feel that the only way that they can keep Buy-and-Hold alive today is with the use of threats tells us all how weak the concept is today. I believe that we will all be moving on in the days following the next Buy-and-Hold Crisis.
But we’ll see, you know? I am not God. I do not know everything. It is theoretically possible that I am wrong. I don;t think so. But we’ll see soon enough, you know.
I naturally wish you all good things, in any event.
Rob
It’s everyone else’s fault that you are broke?
“ I took the words that Wade said in the 16 months before he was threatened very seriously.”
No, you just cherry-picked a few words that you felt would give you the spin you wanted.
It’s no more everyone else’s fault that I am broke than it is everyone else’s fault that I now hold in my possession an asset worth a minimum of $500 million in the days following the next Buy-and-Hold Crisis.
The world did not always know how stock investing worked. Buy-and-Hold was at one time a plausible guess. But it was with the publication of Shiller’s Nobel-prize-winning research in 1981 that we put the last critically important piece of the puzzle into place. Now we can all live far richer and better and fuller lives. But of course we hve to open every internet site to honest posting to be able to do that. You Goon don’t like that idea one little bit. But I believe that as a nation of people we are eventually going to pull it off whether you like the idea or not. We’ll see.
No one will ever look back once we get to the other side. I think that that much is more than fair to say. Do you hear of anyone wanting to go back to the days of polio or slavery or kings? Human knowledge advances over time and all of the humans get to live better lives as a result. That’s why we have peer-reviewed research — to enjoy advancves in knowledge and thereby live better lives. I think that we are eventually going to elect to do just that in the stock investing realm.
When that happens, it will be the entire world’s fault. But I will be proud to be able to say that I did everything in my power to see that it happened as quickly as possible.
My best wishes to you and yours.
Rob
you just cherry-picked a few words that you felt would give you the spin you wanted.
“Yes, Virginia, Valuation-Informed Indexing works!”
Those few words spin very nicely, I must say.
Rob
“ It’s no more everyone else’s fault that I am broke than it is everyone else’s fault that I now hold in my possession an asset worth a minimum of $500 million in the days following the next Buy-and-Hold Crisis.”
And how much of that $500 million have you received? How many bills have been paid with that $500 million?
What is today’s CAPE value? If we were all thinking clearly, stocks would be priced at fair-value levels. I’ll receive the settlement payment when we are all thinking clearly, probably not before.
When we are all thinking more clearly about stock investing, we all will be better off. Every last one of us. It’s all upside and no downside. That’s why I say that we should permit honest posting re the peer-reviewed research at every site. There was a time when even the Buy-and-Holders favored making use of the peer-reviewed research when making stock investing decisions. Because peer-reviewed research helps us all to think more clearly.
Peer-reviewed research is a plus, not a minus. My sincere take.
Rob
Rob says:” I’ll receive the settlement payment when we are all thinking clearly, probably not before.”
Wade says: “ What is Step 2? There isn’t one. You will still be in the same position as you’ve been in for the last 10 years. Why didn’t something happen for you after the 2008 financial crisis? ”
Wade says you can’t get a dime without step 2.
Support for Buy-and-Hold was breaking down following the 2008 price crash but the Federal Reserve stepped in and turned things around before things unraveled too much. The longer that an out-of-control bull market continues, the harder that is to pull off.
Why even have research journals if we are not going to permit people to consider research that produced findings that were not known at the time that Buy-and-Hold was being developed? I think that we should be grateful that knowledge has advanced.
We should all be working to open every site to honest posting. The only reason why it is scary is that there are not enough of us looking out for each other. Each time someone like Wade elects to censor himself, it makes things worse for all the rest of us. The answer is to do just the opposite, to insist on our right to do honest work. If the 10 percent of the population that believes that Shiller’s research is legitimate did that, you Goons would be out of luck. From that point forward, there wouldn’t be any more intimindation tactics, just amazing learning experiences. I can vote for that!
Rob
What is step 2? You haven’t answered Wade’s question.
I believe that, following the next Buy-and-Hold Crisis, there will be at least one brave soul who owns an internet site who will be sufficiently horrified by the unnecessary human misery that he has seen that he will open his site to honest posting re the last 41 years of peer-reviewed research. From that point forward, it’s all downhill sledding. We all want the same thing.
There will eventually be thousands of Wade Pfau’s. The hard part is being one of the first ones. But we all want to go there once we are persuaded that it is safe to do so. The horror at what the relentless promotion of Get Rich Quick strategies does to us has to be great enough to motivate one brave soul who owns a large site to take on you Goons. I believe that it will happen in the days following the next Buy-and-Hold Crisis. We’ll see.
Rob
The stock market had a major drop, yet no one blames buy and hold.
https://www.cnbc.com/2022/09/12/stock-futures-are-higher-as-wall-street-awaits-key-inflation-report-.html
What is step 2?
Where is this pathway to the $500 million windfall?
I blame Buy-and-Hold. Buy-and-Holders discourage market timing. Market timing (going with a lower stock allocation when prices reach dangerously high levels) is the only way to keep irrational exuberance from getting out of control. There probably would have been a small price drop today just because of the bad economic news. But prices that are at sky-high levels always fall harder when bad economic news is reported. So I definitely think it would be fair to attirbute the majority of today’s price drop to the relentless promotion of the pure Buy-and-Hold/Get Rich Quick “strategy.”
We should let prices seek their proper level. That’s how it works in all other markets. It would work that way in the stock marlet as well if we permitted honest posting re the last 41 years of peer-reviewed research at every site, without a eingle exception. When I explained that Buy-and-Hold was the primary cause of today’s price drop, some investors would be persuaded. Then they would persuade others over time. Eventually, we would all be Valuation-Informed Indexers and Buy-andf-Hold/Get Rich Quick would just die out. We should permit the market to do its job by opening every site to honest posting re the peer-reviewed research.
That’s my sincere take re this terribly impotant matter, in any event.
My best and warmest wishes to you and yours.
Rob
“ I blame Buy-and-Hold. Buy-and-Holders discourage market timing.”
We know that, but the investment community doesn’t agree. That’s the whole reason for asking the question on step 2. Without an answer to that, you have nothing.
The entire investment community does not agree. That much is certainly so. It’s about 10 percent. But 10 percent of the investment community is millions and millions of people. There are enough who agree that Shiller was able to get his research published in a peer-reviewed journal and that Wade Pfau and I were able to do the same. There are enough who agree that Shiller’s book was a best-seller. There are enough who agree that Shiller was awarded a Nobel prize for his amazing and “revolutionary” (this word appears in the subtitle for his book) work. There are enough who agree that we saw thousands of our fellow community members express a desire that honest posting re the peer-reviewed research be permitted re the safe withdrawal rate matter.
There are enough that you Goons engaged in the behavior in which you have engaged. I think it would be fair to say that that behavior reveals a desperate mindset. Yes, Buy-and-Hold remains dominant today. But for how much longer? Open one large site to honest posting re the last 41 years of peer-reviewed research and what happens? You know what I think.
My best and warmest wishes to you in any event.
Rob