A Rich Life

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

Comments

  1. If you are not a “numbers guy”, nor capable of technical analysis, you then lack the ability to understand what research really says. Just because you have flown on a plane, it doesn’t mean you can pilot the aircraft.

  2. I can’t pilot an aircraft. But, if I am flying in a plane and I hear the engine making strange sounds and experience the plane taking sudden dips in altitude, I know enough to be concerned.

    I am not a numbers guy. But I don’t need a Ph.D in Economics to know that, in a world in which valuations affect long-term returns (the world we live in, according to Shiller’s Nobel-prize-winning research), there is presisely zero chance that the safe withdrawal rate is the same number at all valuation levels. It is a logical impossibility.

    And I know by the behavior of the Buy-and-Holders that even those who follow the strategy have grave doubts that they are trying to silence in themselves. We should be seeing death threats appear in discussion of stock investing. We should be seeing acts of extortion being used to silence academic researchers who are just trying to advance knowledge and help us all out. We shouldn’t be seeing thousands of acts of defamation or any of the other garbage that we have seen from you Goons. And most of all we shouldn’t be seeing TOLERANCE of such behavior from the thousands of Normals who would never in a million years advance a death threat themselves but who have given recommendations to abusive posts advanced by you Goons (Greaney received over 200 recommendations for his first death threat). That sort of behavior ain’t normal. It’s not a terribly close call.

    Buy-and-Hold was developed at a time when we did not have Shiller’s Nobel-prize-winning research available to us. If Shiller’s research has always been available, the “idea” that market timing (price discipline!) is not always 100 percent required for every investor would never have been seroiously entertained by a single rational human being. The “idea” (I put the word in quote marks because the thought that price discilline might not always be 100 percent required is not the product of rational thought but of the Get Rich Quick urge that resides within all of us — Buy-and-Hold is at its core a purely emotion-based strategy, there is nothing research-based about it) that price discipline is not required is obviously preposterous. There are thousands of markets in this world. There has never in the history of Planet Earth been one that could function well without the benefit of price discipline. The 41 years of peer-reviewed research showing that market timing is always 100 percent required for every investor merely CONFIRFMS what anyone with a hint of common sense could have figured out for himself or herself without needing to look at any research.

    If Buy-and-Hold were a real thing, the Buy-and-Holders would be happy to see challenges raised to it. They would understand that responding to challenges would strengthen their own belief in the strategy and persuade others who had experienced some of the doubts present in the minds of the people raising the challenges. I think it would be fair to say after 20 years of this stuff that those who follow Buy-and-Hold strategies don’t like to hear challenges raised to their strategies one tiny little bit. It’s not a research-based strategy. It’s a strategy that provides emotional relief because it tells people that the numbers on their portfolio statement are real even at times when those numbers are wildly off the mark because of the presenxe of a huge amount of irrational exuberance.

    I don’t say that I have a higher I.Q. than you Goons, Anonymous. But I like to think that I have enough common sense to know when I am being conned. Greaney’s claim that a 4 percent withdrawal is always “100 percent safe” is a con. I like the way that Evidence put it. “Nobody” truly believes that the Greaney retirement study contains a valuation adjustment, including Greaney himself, It took Evidence 19 years to work up the courage to advanvce that statement. And — Surprise! Surprise! — even that statement did not prompt our good friend John Greaney to make a correction to his “study.” Not this boy, you know? No freakin’ way, no freakin; how.

    Just to be fair, I’ll add a note pointing out that Greaney’s crazy claim that the safe withdrawal rate is always 4 percent undoubtedly caused a lot of people at the Retire Early board to use lower withdrawal rates than they would have employed had they not been exposed to it. So it helped people. But, no, there is no valuation adjustment in the study. It should have been corrected within 24 hours of the moment that Greaney was made aware of the error contained in it. If Buy-and-Hold were something real, there never would have been a single ban on honest posting at a single discussion board or blog.

    I am sure.

    Rob