Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Need more examples? How about Wade Pfau. We all remember this little beauty:
“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.”
There are lots or stories of people not wanting to see their careers destroyed and jumping through lots of crazy mental hoops to stop that from happening. There are just as many stories of people betraying an interest in letting rationality play a role in the stock investing project. If we were a completely corrupt people. Shiller would never have found a journal to publsh his research. He never would have found a publisher for his book. He never would have been awarded a Nobel prize.
We are not a completely corrupt people. I continue to believe that we are going to find a way to get accurate, honest, research-based investment advice out to the millions of middle-class investors who need exposure to it. We’ll see.
Rob
Research is not based on your opinion of what one guy said. Wade’s email to you is an example of how you operate. Your results (broke, divorced and friendless) are a product of your actions. Stop blaming everyone else for your problems.
My opinion on Shiller’s research is that it shows that valuations affect long-term returns. What is your opinion on it?
Rob
My opinion is the same as Wade’s. We both don’t think you know what you are talking about. I have $6.3 million to back up my opinions. You have $0 in savings to back up your opinion. Results matter.
Wade Pfau’s opinion is that “yes, Virginia, Valuation-Informed Indexing works!” He came to that opinion after 16 months of study of my views on investing, which of course are all rooted in a belief that Shiller’s Nobel-prize-winning research is legitimate research. Every investor should be able to hear both sides of the story and make up his or her own mind. I believe that in the days following the next Buy-and-Hold Crisis they will be able to do just that and that from that point forward, we will all be able to live richer and fuller and better lives. We’ll see, you know?
My best wishes to you, Anonymous.
Rob
Actually, Wade said this: “ 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.”
We can also read all of Wade’s books and his website. He does not recommend VII. Further, he refuses to speak with you.
Nothing that he said after he was threatened counts, Anonymous. If Buy-and-Hold were a real thing, we never would have seen any threats in the first place.
Wade spoke his true mind in scores and scores of emails to me sent during the 16 months when we were working together on our peer-reviewed research showing that Valuation-Informed Indexing has been far superior to Buy-and-Hold for as far back as we have records of stock prices.
The abusive stuff is a bad sign. It shows that you have serious doubts whether Buy-and-Hold could survive if open and honest posting re the last 41 years of peer-reviewed research were pernmitted at every site. I share your doubts.
I love a lot of what the Buy-and-Holders did. I incorporated every element of the Buy-and-Hold Model into the Valuation-Informed Indedxing Model with the exception of the loony-tunes idea that market timing (price discipline!) is not always 100 percent required. But that one mistake has caused a lot of human misery and is posed to cause a lot more with the onset of the next Buy-and-Hold Crisis. That one I think needs to be corrected by the close of business Tuesday, if not a good bit sooner.
My best and warmest wishes to you, in any event.
Rob
Wade said that it is YOU causing him harm. He says:” The reality is that you are causing me 1000x more career damage than the Goons ever could have”
Again, he only said that after he was threatened. In the 16 months before he was threatened, he was like a kid in candy store he was so excited about all the new things he was learning on a daily basis about how stock invesitng works in the real world.
The Buy-and-Holders started with a wonderful idea — use the research to learn how stock investing works. One of the good things about that approach is that over time you learn about errors you have made and correct them. It was when Shiller published his amazing, Nobel-prize-winning research that things got off track. The advance was so big that the Buy-and-Holders couldn’t let it in and we got into this situation where they pretended that Shiller’s research did not have hundreds of far-reaching how-to implications that changed what people had come to believe in pre-Shiller days. We need to get back to the original Buy-and-Hold idea, considering the research. But of course we need to consider ALL of the research, not just the pre-1981 stuff.
Wade loved, loved, loved doing that. What he didn’t like even a tiny bit was seeing his career threatened and not seeing people like Bogle (who knew what was going on at the Bogleheads Forum) speaking up for him. The extortion stuff needs to come to an end. It is in the process of killing us as a society. Things will only get worse in the days following the next Buy-and-Hold Crisis if we do not open every site to honest posting.
My sincere take.
Rob
‘ Again, he only said that after he was threatened.“
Where is the threat? We can’t find it. Wade can’t find it? There is nothing to suggest that anything you say is true. To the opposite, we see in his private emails that he says that is it YOU that are causing him harm. That is direct evidence against you.
The Greaney retirement study has not been corrected to this day, Anonymous. It’s been 20 years. What more proof could there possibly be? It’s not normal for an error in a study that people use to plan their retirements to be pointed out and for the study to remain uncorrected for 20 years. I mean — Holy, moly!
Rob
Like I said, you don’t have any proof. You made it up. On the other hand, we have proof of the harm you caused Wade. Look at how people run away from YOU. No you are all alone.
I won’t be alone or anything close to it on the day following the day on which we elect as a society to open every discussion board and blog to honest posting re the last 41 years of peer-reviewed research in this field.
We cannot have one set of laws for every field of human endeavor except the investment advice field and another set for the investing advice field. That is just not a viable long-term proposition. I believe that the ocean of human misery that people are going to witness as part of the next Buy-and-Hold Crisis is going to give more of us the courage to stand up to you Goons.
But we’ll see, you know? I’m not God. I don’t know everything. But I know for certain that I don’t feel one tiny bit comfortable saying that I believe that the Greaney retirement study contains an adjustment for the valuation level that applies on the day the retirement begins.
My best wishes to you and yours.
Rob
There are plenty of boards with honest (truthful) posting. Too bad you don’t allow it here. You just need to keep the cover story going given you are broke and divorce. You always said that a retirement failure was the worst outcome, yet that is what has happened to you.
If there are so many boards permitting honest posting, how is it that the Greaney retirement study has remained uncorrected for 20 years now? Every iota of evidence that we have seen over the past 20 years has shown that I was right in what I said in my famous post from the morning of May 13, 2002 — the Greaney study lacks a valuation adjustment. Even Evidence-Based Investing, one of the generals in Greaney’s Army of Goons, said in a post he put to this blog in late 2021 that it is his belief that “nobody” truly believes that the Greaney study contains a valuation adjustment, including Greaney himself! That one nailed it, in my assessment.
Greaney has neither affirmed nor denied what Evidence said in that post. I wonder why.
Rob
You are very good at pointing out that the Greaney study doesn’t contain a valuation adjustment. You are much less good at explaining why it needs one.
It needs one because Shiller’s Nobel-prize-winning research shows that valuations affect long-term returns.
Price discipline is required in every market that ever existed. The only reason why anyone ever thought that it might be different in the stock market is that some economists believed in the Efficient Market Theory in the days before Shiller publushed his research. If the market were efficient, market timing would not be required and Buy-and-Hold would be the ideal strategy. But it’s not. If the market were efficient, there could never be overvaluation or undercaluation. The rational thing would be for investors to price stocks properly. The reason why they do not do that is that they are emotional humans. They like the idea of getting something for nothing. So they push prices up to unsustainable levels. That’s irrational exuberance. That’s the thing that makes stock investing risky.
The Bennett/Pfau research shows that we can reduce stock investing risk by nearly 70 percent by one simple step — encouraging all investors to practice market timing at all times. So long as all investors know to practice market timing, stock prices are self-regulating. When they get too high, informed investors sell a portion of their stocks and that pulls prices back to reasonable levels. When most investors are not practicing market timing/price discipline, prices get out of control and eventually we see a price crash and an economic crisis (because massive amounts of consumer buying power are lost in a price crash).
No market can function without price discipline. In the stock market, price discipline is achieved through market timing. So market timing is absolutely essential.
Stock market risk is not constant, it is variable. The CAPE value tells us how risky stocks are at a given point in time. The safe withdrawal rate is a risk assessment tool. It is not possible to calculate the safe withdrawal rate accurately without looking at the factors affecting risk and the valuation level is by far the most important factor affecting risk. In a world in which valuations affect long-term returns, it is a logical impossibility that anyone could calculate the safe withdrawal rate without taking into consideration the valuation level that applies on the day the retirement begins.
We have seen safe withdrawal rates as low as 1.6 percent and as high as 9.0 percent. People planning retirements need to know which it is for their particular retirement. Taking valuations into consideration makes it possible to calculate the safe withdrawal rate accurately and honestly and in a research-based way. A researcher who fails to take valuations into consideration is going to get the numbers wildly wrong. Retirement studies that get the numbers wildly wrong hurt people in very serious ways. Investment analysis should be aimed at helping people, not hurting them.
Rob