I’ve posted Entry #668 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called A 4 Percent Withdrawal Rate Has Been a High-Risk Bet Several Earlier Times in U.S. History.
Juicy Excerpt: That’s good. All concessions to the realities are good news. But the suggestion that the Buy-and-Hold retirement studies are wrong only because valuations rose so high in recent years misses the most important point. Say that the CAPE had not risen above 33 in recent years. Would the fact that 4 percent had always worked in the past show that 4 percent is safe? It would not.
How risky it it to have a depleted retirement account when you are over the age of 60? How safe is that person? Should a person like this be giving investment advice?
Everyone should be in favor of having the same laws that apply in every field other than the investment advice field apply in the investment advice field as well. There’s nothing controversial about that statement. It’s obviously true. Only a Goon could suggest otherwise.
People make mistakes. That’s a reality of life on Planet Earth. The people who developed the Buy-and-Hold strategy made a terrible mistake when they decided that, since there was solid research showing that short-term timing (which is a guessing game) doesn’t work, long-term timing (which is price discipline) might not be required either. We are all suffering from that mistake and the 42-year cover-up of that mistake today. We have laws that permit the mistake to be exposed. We should be grateful that we have those laws and be 100 percent united in seeking to have every internet site opened to honest posting re the peer-reviwed research.
Do you think that the Buy-and-Holders support this cover-up? I surely do not think that. I have seen Buy-and-Holder after Buy-and-Holder evidence a desire to do honest work and then pull back when they saw what the consequences would be if they did so. I don’t think that you Goons would engage in the cover-up if you had it to do over. If we could go back to the morning of May 13, 2002, and play it over, you would behave very differently from how you behaved historically. I cannot go back in time and permit you a do-over. The best that I can do is to suggest that we open every site to honest posting today so that whatever consequences you ultimately face are not as severe as they will be if the cover-up continues for another day or another week or another month or another year. I mean, holy, moly!
I don’t believe to this day that the retirement study posted at John Greaney’s web site contains an adjustment for the valuation level that applies on the day the retirement begins, If it were not for the 42-year cover-up, that statement would inspire zero controversy. I mean, come on. It can be checked by anyone interested in determining the reality of the matter.
My best wishes to you.
Rob