Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
And in that 20 years, no one, but you, thinks there is any cover up. What information is missing? You have plastered your crap on this website and hundreds of others. Unfortunately for you, no one is buying your crap.
The information that is missing is the pain that millions of people will experience during the next Buy-and-Hold Crisis. A Get Rich Quick approach always possesses appeal for so long as it is putting money in your pocket. The allure is diminished when the imaginary money disappears and you need to rebuild your life.
Shiller’s Nobel-prize-winning resesarch was not available until 1981. So, until then, irrational exuberance was just one of those things we had to live with. Starting in 1981, it became optional. The Bennett/Pfau research shows that, once we open every site to honest posting, we can reduce the risk of stock investing by naarly 70 percent. We have not had an extended bear market from 1981 forward. Prices dropped a little below fair-value levels in the wake of the 2008 Buy-and-Hold Crisis. But they recovered within a year. So we have not seen the bad side of irrational exuberance. In the event that stocks continue to perform in the future somewhat as they always have in the past, we will begin seeing that within the next year or two or three. That’s the missing information — the negative side of the rentless promotion of a pure Get Rich Quick/Buy-and-Hold strategy for stock investing.
I hope that helps a tiny bit, Anonymous.
Rob
What pain? Going broke? I have never seen even one buy and holder go broke. I have never seen any successful outcome with VII. The only cover up going in is taking place at this website.
Have you ever watched the movie “Grapes of Wrath”? It stars Henry Fonda.
Rob
You do realize that movies are just made up stories and that we have to deal with reality, right? Check your bank account right now. That is reality.
I don’t think that the Great Depression was a made-up story. And I don’t think that today’s CAPE value of 31 is a made-up story. Something like that could never happen if we were encouraging market timing/price discipline at every site. Most investors want to do the right thing. But we all have a Get Rich Quick/Buy-and-Hold urge residing within us. So sometimes we need a little push.
My best wishes to you and yours.
Rob
The market today is nothing like the market during the Great Depression. Further, the 4% rule has NEVER failed during the entire history of the stock market, including the time period that includes the Great Depression. To the opposite, VII has never worked for anyone. Like I said, just look at your bank account.
A retirement that began in 1929 and that called for a 4 percent withdrawal was not anything close to safe. The historical data shows that there was a 50 percent chance that that retirement would survive for 30 years and a 50 percent chance that it would not.
There are times when a 4 percent withdrawal is super, super safe. In 1982, the safe withdrawal rate was 9.0 percent. The fact that ON AVERAGE a 4 percent withdrawal is safe doens’t make it safe for a retirement that begins at a time of super high valuations.
If you want to know whether a withdrawal rate is safe, you need to look at the factors affecting safety. The most important factor is the valuation level that applies on the day the retirement begins.
That’s my sincere take re these terribly important matters, in any event.
Today’s CAPE level is 31. The CAPE level that brought on the Great Depression was 33.
Rob
When did the 4% withdrawal rate fail? Answer: Never
When did VII ever have a successful outcome? Answer: Never
The claim that a 4 percent withdrawal rate is safe failed in every case in which the historical return data showed that the safe withdrawal rate was lower than 4 percent.
If someone is thinking of building their house in an area where there is likely to be flooding, you don’t tell them that it is “100 percent safe” to build a house there and then point out to them after the flood occurs that there hadn’t yet been a flood at the time you made the claim. You should perform the calculations you do to determine whether there is likely to be floosing accurately and honestly.
That’s my sincere take re this terribly important matter, in any event.
Rob
It is interesting that you bash buy and hold, which has never failed and then promote VII, which has never worked. Which path has more risk based on outcomes? Why are you broke?
It is the Buy-and-Holders who put the thought in my head that it is a good idea to pay attention to the peer-reviewed research. I just wish that they had listened to themselves!
Hang in there, my good friend.
Rob
Who is really listening? When Shiller said that you shouldn’t time the market, the VII goons wouldn’t listen. Also, your interpretation is not considered to be “peer-reviewed research”.
You could invite Shiller to a discussion at the Bogleheads Forum any time you pleased. He is an affable person and would be happy to answer any questions you have. It’s been 21 years and you haven`r seen fit to do that. I can’t help but wonder why.
I do wish you all good things, dear Goon friend.
Rob