Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
If demand for stock wasn’t flexible we wouldn’t see huge swings in stock prices.
The question is — What is causing those swings?
Shiller showed that it is largely shifts in investor emotion that cause the swings. We should all want to moderate the shifts in investor emotion to the greatest extent possible.
The way to do that is to make investors aware of how much valuation shifts change the value proposition of stocks. You’re not doing that when you tell people that the safe withdrawal rate is the same number at all valuation levels. The suggestion there is that stock investing risk is constant, which is not even a tiny bit true.
Stock prices become self-regulating in a world in which honest posting re the peer-reviewed research is permitted. Stock prices go nutso in a world in which investors are discouraged from practicing valuation-based market timing.
Today’s CAPE value tells the tale on the merit of Buy-and-Hold. Today’s CAPE value is a national scandal. We should never see a CAPE value like that. And we never would if we permitted honest posting re the peer-reviewed research at every site. Buy-and-Hold hurts everyone and helps no one. We all should be Staying the Course re our risk profile, not re our stock allocation.
Rob
I got involved in discussion about retirement at my workplace’s internal intranet forum. Lots of people were clueless about this stuff and an opportunity for me to teach presented itself. I explained the tyranny of compounding costs and how much paying just 0.4% more per year in fees for a managed portfolio costs over time, why I don’t think their guidance is worth anything to begin with, and why most people should just follow a simple strategy like the three fund strategy. I linked to Bogleheads and recommended it highly as a resource for easy to understand and easy to replicate advice.
Personally I do hold a lot of individual stocks but I’d never recommend it the public especially clueless people who feel lost. Best to stick to the tried and true, and easy, approach. I won some converts to buy and hold, Bogleheads style.
This is a company with hundreds of thousands of mostly middle and upper middle class employees.
I agree with everything that you say in that comment, Sensible. There’s a lot of good stuff discussed at the Bogleheads Forum. I was very fond of that place.
Rob
It’s nice to see you finally coming around to supporting buy and hold, and the Bogleheads forum.
I don’t support the ban on honest posting re the last 43 years of peer-reviewed research. Doh!
Valuation-Informed Indexing is just Buy-and-Hold updated to incorporate Shiller’s Nobel-prize-winning research finding that valuations affect long-term returns.
Rob
I don’t support a ban on honest posting, but I support the bans for bad behavior (which is why you were banned). I also support investing strategies that work, like buy and hold, but I don’t support get rich quick scheme, like market timing.
I wish you the best of luck with it, Anonymous.
I would like to think that that would help, at least a tiny bit.
Rob
I don’t need any help. I am not broke. You are.
Woe is me, Anonymous.
Rob
Silly me. I guess I have been wrong all this time. I thought the goal was to have a financially secure retirement. I guess this is really a race to the bottom and see if we can go broke. I guess you won that race, Rob. Congratulations.
Um….
Rob
Two of us are millionaires, one is not. The two millionaires are buy and holders, the non-millionaire is a valuation informed indexer.
And the Greaney retirement study does not contain a valuation adjustment.
All three of those things are so, Sensible.
My sincere take.
Rob
You can believe whatever you want about Greaney, just like anyone else can have their opinion. All that is just a diversion and opinions don’t pay the bills. The entire focus is on saving for retirement. Two people are millionaires and one is not. Who has the resources for retirement and who doesn’t?
I believe that getting the numbers right in retirement studies matters, Anonymous. There were people at the Motley Fool board who used the Greaney study for help in planning their retirement. I was there.
Rob
What is more important: a) your opinion on Shiller and Greaney or b) the outcome of someone’s retirement plan/strategy?
Should everyone be focused on making you happy by agreeing with your opinions and letting you post whatever you want or, instead, should everyone be focused on achieving a successful retirement?
Both are important.
The purpose of getting the numbers right in retirement studies is to help people achieve successful retirements. So the two goals don’t have to be in conflict and shouldn’t be. We are living during a transition period from Buy-and-Hold to Valuation-Informed Indexing (Buy-and-Hold updated to incorporate Shiller’s Nobel-prize-winning research showing that valuations affect long-term returns). I have suffered a financial penalty because I believe that Shiller’s Nobel-prize-winning research is legitimate research and I have said so and the members of the Buy-and-Hold goon squads want to suppress discussion of the recent research. None of that makes the Buy-and-Hold strategy a superior strategy. The fact that advocates of the strategy feel a need to resort to such tactics shows the weakness of the case for it.
Outcomes change as investor emotions shift. If you don’t understand investor emotion (the undiscovered continent of stock investing strategy opened up by Shiller), you can never have confidence in any outcome you seem to have achieved. Learning is always a plus. There never can be any negative that can follow from discussing new research.
Rob
So the buy and holders reached their goals and you did not. Who got it right? The buy and holders.
I’ve reached my goals a thousand times over, Anonymous. My goal is to learn what I can about the subject of stock investing and then share what I learn with my fellow community members. I have learned thousands of things over the past 22 years. On the morning of May 13, 2002, I was still a Buy-and-Holder! You have probably detected that I am not that today. That’s called learning. I learn some tiny new thing almost every day. That’s a big reason why the book is not complete. I need to complete the learning process first. I need to continue reaching goals.
The part that you Goons have interfered with is me getting the message out to the millions of people interested in hearing it. That makes me very sad. I have not achieved my goals in that department. But I believe that we are fundamentally a good people, not a corrupt people. So I believe that we will get there in time. If we were fundamentally a corrupt people, Shiller’s research never would have passed peer-review and he never would have found a publisher for his book and he never would have been awarded a Nobel prize and I would have seen thousands of my fellow community members express a desire that every site be opened to honest posting and John Walter Russell would never have agreed to devote eight years of his life to building four amazing calculators with me and Wade Pfau would never have spent 16 months of his life researching my ideas and then concluded that “Yes, Virginia, Valuation-Informed Indexing works!” There’s been some bad stuff, yes. But there’s been 50 times more good stuff. So the goal of getting the word out about the last 43 years of peer-reviewed research out to millions of interested parties is a goal in the process of completion.
There’ s a lot more good to this story than there is bad. The arc of history in the stock investing realm points toward rationality. Or so this Rob Bennett fellow sincerely believes, you know? Check out some of the early statement of the Buy-and-Holders and you will see that even the Buy-and-Holders have a soft spot in their hearts for peer-reviewed research. Tell me that that is not going to help us all in the days following the onset of the next Buy-and-Hold Crisis!
My best wishes.
Rob
If you funk out of school, did you really learn something? No. You are broke and no one but you did that.
The community is for learning how to retire successfully. It is not about you trying to stoke your ego. You seem to have a vision of being some kind of leader or expert. You are not. You are simply some guy with a failed strategy that made a fool of himself. Work on fixing your problems.
Okay, Anonymous.
My best and warmest wishes to you and yours.
Rob
Did your message help anyone achieve a higher retirement account balance? No. Anyone that might have taken your advice, would now have substantially less in their retirement account. How is that a good thing?
What you are really suggesting is that the rest of the world is not buying and selling stocks as you would like them to do and that is why people like you are not successful. Unless we are become a dictatorship and you are named the dear leader, your plan will continue to fail.
It’s not just me who says that the majority of investors are not properly buying and selling stocks today. Today’s CAPE value is 35. I mean, come on.
Rob
There are many ways to invest. Your method is better than putting your money into a giant pile and then burning it, but it’s still really bad. My sincere take.
I believe you and I think that’s fine. There’s no rule (at least there shouldn’t be one) that everyone needs to have the same opinion about what works in stock investing.
That’s pretty much how I feel about Buy-and-Hold. The historical record shows that stocks are an amazing asset class. It also shows that pretty much the only way that buying stocks can end up doing harm to an investor is if he fails to practice price discipline by engaging in valuation-based market timing. And the Buy-and-Holders say that there might be some crazy circumstances in which it’s not 100 percent necessary! Um….
Rob
https://www.joshuakennon.com/janitor-ronald-read-leaves-behind-8000000-secret-fortune/
This buy and holder was a near minimum wage worker who died in 2015 with an $8,000,000 fortune. He didn’t time the market and he didn’t sell.
Does that justify this?
https://www.youtube.com/watch?v=fOuAZLA_jWQ
I say that nothing can justify it once the peer-reviewed research is published showing why it happened and what we need to do to make sure that it is not repeated in the future.
Irrational exuberance is not a joke, Sensible.
Rob
No serious person thinks that living modestly, investing your extra cash in undervalued blue chip stocks, and then reinvesting dividend checks into other stocks caused the Great Depression.
The primary cause was the failure of a nation of people to take effective action to get the CAPE level back to a reasonable place once it reached the sort of insanely dangerous levels that inevitably result in a Buy-and-Hold Crisis (the sort of CAPE level that applies today). In fairness to the investors of that day, Shiller’s Nobel-prize-winning research showing that valuations affect long-term returns had not yet been published at that time. That excuse no longer applies.
Irrational exuberance always disappears because it is not rooted in anything real (unlike the real economic gains of 6.5 percent real produced by the market annually). When it disappears, the loss of trillions and trillions of dollars of consumer buying power always does great damage both to our economic system and to our economic system. I think we should all be satisfied with the genuine gain of 6.5 percent real and skip all of the garbage these has been doing so much harm to human lives for as far back as we have good records of stock prices. Our Wall Street Con Man friends would turn a few less bucks in the short term. But they would make more in the long run because they would live in a country with a more stable economic system and a more stable political system. I could live with that.
My best wishes to you.
Rob
And all your crash predictions failed. Great track record, Rob.
My claim that the Greaney retirement study lacks a valuation adjustment hasn’t failed, Anonymous. After many years of silence on the matter, Evidence-Based Investing put up a comment here in which he said that “nobody” truly believes that the Greaney study contains a valuation adjustment, “including Greaney himself.” I think that that one nails it.
Rob
It didn’t need it, Rob. You have been told that thousands of times.
Do you believe that Robert Shiller’s Nobel-prize-winning research showing that valuations affect long-term returns is legitimate research?
Rob
I believe Shiller when he said you shouldn’t use CAPE to time the market. Too bad you didn’t listen.
Did you believe him when he published a paper in 1996 saying that investors who failed to lower their stock allocation in response to the high valuation levels of the day would live to regret it within 10 years? Sounds like advocacy of valuation-based market timing to me.
Rob
Just tell people what you really want. What you want is for all the sites in the world to be open to your posts so that you can increase your popularity. Your ambition is to be one of the leading, if not the top, investment experts in the world. With this fame, you thought you would become rich by becoming a sought after speaker and perhaps selling books and other materials.
The real problem is that you don’t have any education or expertise in this area, a personal failed track record (you are broke) and your market timing performance has been trounced by buy and hold (your expected crashes never happened).
All that you describe sounds 100 percent good to me. I enjoy using my talents to help others and I of course think it’s find that in cases in which those talents produce an exceptional work product that I would be well-compensated for the work I do.
I agree with you that I don’t possess any particular expertise in the stock investing realm. It could be argued that in today’s world that’s a plus. I have spoken to many, many experts in the field who have evidenced a desire to do honest work but who hold back from starting things clearly because they worry what will happen to their careers if they do so.
The perfect example is William Bernstein, He stated in his book that the safe withdrawal rate at the top of the bubble was 2 percent, not 4 percent. That’s what I say. So Bill could have obviously been a big help to me and the thousands of other community members who have evidenced a desire that honest posting re the peer-reviewed research be permitted. He posted at the Bogleheads Forum on numerous topics. But, when the Great Safe Withdrawal Rate Debate was raging there, he never once advanced a post expressing his view that the Greaney retirement study gets the numbers wildly wrong. It’s not just Bill Bernstein, His story is the story of pretty much every expert in this field in the Buy-and-Hold Era, in my assessment.
I’m a journalist, not an investment expert. This is a huge story, one of the most important stories there is to tell in the United States today. We are talking about something that would help millions and millions of people to live richer and fuller and freer lives and all it would take is for a small number of people to insist on their right to post honestly re the peer-reviewed research. I offer precisely zero apologies for doing everything in my power to get us all to the better place where deep in our hearts we all want to live. I have compared the situation to the one that would exist if a pill were discovered that cured every form of cancer and the people who earned six-figure salaries offering chemotherapy engaging in abusive and criminal behavior to block the millions of people who wanted to learn about a cure from gaining access to discussions about it.
I am in favor of finding a cure for cancer and I am in favor of learning for the first time in history how stock investing works in the real world. I want everyone on the planet to know about Shiller’s amazing, Nobel-prize-winning research showing that valuations affect long-term returns and about how to use it to invest in stocks far more effectively than it was possible to do in the days before that research became available (at least theoretically) to all of us. If there has been a more important journalistic endeavor than that that has come around in the course of my lifetime, I sure am not able to imagine what it might have been.
I wish you all good things. But I sincerely believe that the Greaney retirement study lacks an adjustment for the valuation level that applies on the day the retirement begins.
Rob
“He stated in his book that the safe withdrawal rate at the top of the bubble was 2 percent, not 4 percent.”
No he didn’t.
Here is what he actually said “A particularly bad returns sequence can reduce your safe withdrawal amount by as much as 2 percent below the long-term return of stocks. Recall from Chapter Two that it’s likely that future real stock returns will be in the 3.5 percent range, which means that current retirees may not be entirely safe withdrawing more than 2 percent of the real starting values of their portfolios per year.”
https://www.passionsaving.com/stocks-in-retirement.html
“can reduce”
“by as much as”
“it’s likely”
“range”
“may not be”
Greaney said that a 4 percent withdrawal IS “100 percent safe.” When Bernstein says that withdrawing more than 2 percent “may not be entirely safe,” he is saying that Greaney’s claim is a false one.
Once we have acknowledged that valuations affect the result, we have opened up the undiscovered continent of investment analysis, Lots of smart people will have lots of different thoughts as to precisely how to go about buying stocks in the wake of the publication of the last 43 years of peer-reviewed research. Each contribution that is made will cause our overall knowledge of the subject matter to advance another tiny bit. In time, the progress achieved will be breathtaking.
The hardest step in the first one, the acknowledgement that valuation-based market timing is alwayus 100 percent required for every investor who seeks to keep his risk profile stable over time, to Stay the Course in a meaningful way. Please mark me down as being 100 percent in favor of taking that magical step, a step that I believe it would be fair to say will provide to be a turning point in U.S. history. We permit advances in understanding in every field of life endeavor other than the investment advice field. I strongly believe that we should permit advances in the investment advice field as well, Evidence.
That’s where I’m coming from re this one, my good friend.
Rob
— Greaney said that a 4 percent withdrawal IS “100 percent safe.”
Why did you put the word IS outside the quotation marks?
“ All that you describe sounds 100 percent good to me. I enjoy using my talents to help others and I of course think it’s find that in cases in which those talents produce an exceptional work product that I would be well-compensated for the work I do.”
The problem is that no one else thinks what you have to offer is of any value. Despite being banned at certain websites, you have had massive exposure when you look at all the sites and all of the content you have posted out there. Despite all of this massive exposure, you don’t have people lined up asking for your services and/or offering you money for your “talents”.
Most of us have a much smaller level of exposure as compared to you, yet have a continuous string of people in our circle that are willing to pay us for what they see as value. For example, my experience and expertise is in business transactions related to a technical space. I have a long track record of success that others can easily see and they desire to have a similar outcome with their business. I am approached almost monthly by people that want to hire me on as either a consultant, employee or potential business partnership for what they see as my value. I don’t even go out seeking this. In your situation, you have a much more massive exposure as compared to me, yet you don’t have a single person approaching you for your services. What that tells you is that no one sees any value on what you think you have to offer. It doesn’t matter what you think about your value or how much you think someone should be paying you. It matters as to what others think about your value.
To emphasize the conflict between what Greaney said and what Bernstein said.
If Greaney said “there’s a chance that a 4 percent withdrawal will work out, even at these crazy prices –that has worked out for retirements beginning at crazy price levels in the past,” I would endorse the statement. When he instead says falsely that a 4 percent withdrawal is 100 percent safe at all times, he is taking the valuations question off the table. The Bennett/Pfau research shows that the valuation level that applies on the day the retirement begins is the most important factor affecting retirement safety. So we all should very, very much want to see that issue remaining on the table.
We should be discussing stock valuations everywhere and at all times. If we were always focused on the effect of high stock valuations, we never again would see a CAPE value of 35, the CAPE value that applies today. So we never again would experience the ocean of human misery that inevitably follows a time when we permit the CAPE value to rise to insane highs. The enemy of stock investors is irrational exuberance. And the greatest friend of irrational exuberance is investor complacency re stock valuations. Greaney’s false claim that a 4 percent withdrawal is always 100 percent safe encouraged complacency about valuations among investors who were using that withdrawal rate or thinking of using it. I was there. I saw this. So I eventually worked up the courage to point out the false claim.
I offer no apologies. I believe that, if we were all thinking clearly, there would be zero controversy over the question of whether the authors of retirement studies should make an effort to get the numbers right. The problem is that we are NOT today thinking clearly. The CAPE value that applies today shows that. Most of us are guilty of irrational exuberance. The only thing that could possibly change that would be to open every site to honest posting re the last 43 years of peer-reviewed research. So that’s what I have been proposing as a fix to this mess going back to the afternoon of May 13, 2002.
Rob
“ I’m a journalist, not an investment expert. ”
Then you should seek a job in the journalism field and not expect to get compensation based on your thoughts of investing for retirement. You try to put yourself into the same company as Bernstein, Shiller, Pfau, etc., but you don’t have the skill set and knowledge that they have.
You Goons have seen how people have responded to my work at every site at which I have posted. If you hadn’t, you obviously would never have insisted on a single unjustified board banning. People love the idea of hearing what the last 43 years of peer-reviewed research teaches us all about how stock investing works in the real world.
Sure, they are concerned to hear that their portfolio is worth much less than what they had been led to believe it was worth. But that concern will no longer be a factor in the days and years following the onset of the next Buy-and-Hold Crisis. It will be interesting to see how things play out then.
Rob
“ I’m a journalist, not an investment expert. ”
Then you should seek a job in the journalism field and not expect to get compensation based on your thoughts of investing for retirement. You try to put yourself into the same company as Bernstein, Shiller, Pfau, etc., but you don’t have the skill set and knowledge that they have.
Journalists expose stories that people need to know about. There is no story that has come along in my lifetime that is more important to more people than the 43-year cover-up of the amazing Nobel-prize-winning research showing that there is precisely zero chance that a pure Get Rich Quick/Buy-and-Hold/Irrational Exuberance-creating stock investing strategy could ever turn out well for a single long-term stock investor. I mean. come on.
I have zero desire to become an investment expert. But I have a great desire to free every investment expert on the planet to feel free to share his or her sincere thoughts on the subject of stock investing with zero concern that his or her career will be destroyed because he or she pointed out the error made by the people who developed the Buy-and-Hold strategy back in the days before Shiller’s amazing research was published. We have seen over and over and over again that the people who work in this field are like the people who work in every other field of human endeavor — they want to help other people. We should let them! We should open every site to honest posting re the research.
That’s where I’m coming from re this one.
Rob
You have admitted you are a journalist and not an investment expert. Don’t you get it? No one on these forums is seeking out the services of a journalist. You admit that you are not an investment expert, yet then go on to try to tell people you are by saying you know what the research says. You also say you should be paid for what is advice from an investment expert. It is like wanting to be paid for potentially being a surgeon when you never even went to medical school.
“ Journalists expose stories that people need to know about. There is no story that has come along in my lifetime that is more important to more people than the 43-year cover-up of the amazing Nobel-prize-winning research showing that there is precisely zero chance that a pure Get Rich Quick/Buy-and-Hold/Irrational Exuberance-creating stock investing strategy could ever turn out well for a single long-term stock investor. I mean. come on.”
Again, no one is seeking out the services of a journalist to read a story on your opinions. Look at what they want. They want advice from an expert that has a track record of success. Not one person wants to hear a story from a journalist.
I expect to be compensated for the value that I have offered as a journalist in exposing the greatest act of financial fraud in the history of the United States, nothing more and nothing less. If there were not a great interest in our communities in being able to discuss the last 43 years of peer-reviewed research, we would not have seen thousands express a desire that honest posting be permitted.
Shiller’s research obviously must say something. He wasn’t awarded a Nobel prize because he has a nice haircut. I say that he showed that valuations affect long-term returns, that the market is not efficient as was widely believed at the time that the Buy-and-Hold strategy was being developed. What do you say that Shiller’s research shows? How did he earn that Nobel prize? How have you changed your strategies as a result of what you learned from Shiller’s research findings?
Rob
You should only expect to be compensated when someone asks you for your services. Do you expect Home Depot to pay you a salary if they haven’t hired you?
Say that there’s just a one in one-hundred chance that what I have been saying for 22 years now is in fact so — that the Greaney retirement study lacks a valuation adjustment. If that’s so, we should be talking about it at every investment site on the internet. People need to know one way or the other for sure. People use retirement studies to plan retirements. Greaney is not the only person who had advanced the infamous 4 percent rule. There are thousands of people in this field who have advanced that claim.
A world in which the market is efficient and valuation-based market timing is not always 100 percent required for every investor is a very different world from the world we live in according to the last 43 years of peer-reviewed research. In the event that Shiller’s Nobel-prize-winning research is legitimate research, we will be seeing another Buy-and-Hold Crisis in the not-too-distant future. Does that sound good to you? It sure doesn’t;t sound good to me.
I believe that obtaining stock gains ogf 6.5 percent real per year and leaving the irrational exuberance garbage behind would be just fine.
Rob
Rob – again……who is asking for your services as a journalist? No one.
We can all sit here day after day arguing opinions. That is a whole separate topic. With respect to your compensation it is more of a factor of getting someone that is willing to pay you something for what they want to buy.
I don’t feel a tiny bit comfortable saying that I believe that the Greaney study contains a valuation adjustment. That’s the bottom line.
I wish you all good things.
Rob
After your tens of thousands of posts regarding your opinions of Greaney and Shiller, can you name one person that has ever offered to pay you even one dime for your opinions on those subjects?
If you didn’t think that I would make hundreds of millions of dollars from this, you never would have put forward a single abusive post or engaged in a single criminal act. I mean, please give me a freakin’ break. What other possible motive could there be for your behavior of the past 22 years?
Getting the numbers right in retirement studies matters, Anonymous. If Greaney really thought that it didn’t matter, he would just have permitted honest posting. He doesn’t want to acknowledge that he got the numbers wrong re SOMETHING THAT MATTERS A GREAT DEAL. Why did people discuss safe withdrawal rates on a daily basis if they don’t matter.
They matter. And, if they matter, it makes sense to try to get the numbers right. And if all of the retirement studies in this field get the numbers wildly wrong, what does that say about the state of the investment advice field in the Buy-and-Hold Era? The freakin’ Buy-and-Holders themselves were once in favor of the use of peer-reviewed research for guidance in making investment decisions. That’s why I was a Buy-and-Holder once upon a time.
And it’s as clear as clear could be that many of the people who work in this field would like to feel free to do honest work. We need to open every site to honest posting and let those people use their talents for good.
That’s where I’m coming from.
Somehow I have a funny feeling that I won’t have any money concerns from the day that every site is opened to honest posting until the end of time. Some of this investing stuff is so hard to figure out!
My best wishes, etc.
Rob
Greaney’s explanation of what his retirement study calculates
https://retireearlyhomepage.com/restud1.html
“The table below assumes a $1,000 initial portfolio value and shows the maximum initial inflation adjusted annual withdrawal (as a percent of assets) that allows the portfolio to survive to the end of all pay out periods examined.”
“The maximum 100% survivable withdrawal rate is the highest annual withdrawal rate where all terminal values are positive for the pay out periods examined.”
No one has ever questioned that a 4 percent withdrawal survived in all 30-year time-periods in the historical record. Greaney said that that shows that a 4 percent withdrawal is “100 percent safe” regardless of the valuation level that applies on the day the retirement begins.
Say that there is someone today who hears Greaney’s claim that a 4 percent withdrawal is “100 percent safe” and he used that withdrawal rate in a retirement that begins tomorrow. And say that stocks continue to perform in the future somewhat as they always have in the past and that retirement fails (today’s CAPE is 35). Do you see that as a good thing?
I do not see it as a good thing, I believe that we should be permitting honest posting re the past 43 years of peer-reviewed research at every site, without a single exception.
Does that not sound like a very, very, very good idea? There’s no valuation adjustment in the study. I am sure.
Rob
“No one has ever questioned that a 4 percent withdrawal survived in all 30-year time-periods in the historical record.”
So Greaney got the number right.
He got the Historical Surviving Withdrawal Rate right.
He got the safe withdrawal rates wrong.
To calculate the safe withdrawal rates accurately, you need to take into account the valuation level that applies on the day the retirement begins. Those who follow the peer-reviewed research have known that for 43 years now.
Rob
No one is going to pay you a dime, Rob. No one believes your silly stories about abusive posts or criminal acts. Try acting like an adult instead of a child playing silly word games.
Okay,Anonymous.
Is it okay if I wish you all the best that this life has to offer a person?
Rob
“I believe that we should be permitting honest posting re the past 43 years of peer-reviewed research at every site, without a single exception.”
Would that include posting a link to Shiller’s 1981 paper?
Not if its being used as a distraction.
I pointed out the error in the Greaney study on the morning of May 13, 2002. It lacks a valuation adjustment. It shouldn’t take 22 years to figure out whether that is so or not. It shouldn’t take more than 22 minutes.
Rob
“Not if its being used as a distraction.”
You said “Those who follow the peer-reviewed research have known that for 43 years now.”
What were you referring to with your reference to “43 years”, was there some other research in 1981 that you meant?
That was it. The Shiller study shows that valuations affect long-term returns. It’s not a secret. There’s no controversy over what the study shows. Shiller wrote an entire book about it. There have been hundreds and hundreds of articles written about it. Shiller was awarded a Nobel prize as a result of publishing that study.
The problem is that that study discredits the Efficient Market Theory, which is the academic construct on which the Buy-and-Hold strategy was based. The normal thing is that, when a strategy is discredited, everyone talks about how to replace it. What would work better. That’s Valuation-Informed Indexing. We should be talking about Valuation-Informed Indexing at every site.
Now —
When new research is published replacing one model with another, everyone does not switch from the old, discredited model to the new, promising one in 24 hours. People need to hear about the new model and ask questions about it and slowly they make the switch. In time, the new model becomes dominant. But it is not something that happens overnight. There needs to be that discussion stage for the transition to take place.
It is that discussion stage that I am trying to get started by opening every site to honest posting. I had nothing against Buy-and-Hold on the morning of May 13, 2002. I knew that the Greaney study was in error because of what I read in Bogle’s book. It was when Greaney advanced his first death threat and over 200 Buy-and-Holders endorses it that I knew that this Buy-and-Hold stuff was garbage. That’s when I started working on developing the new model.
The key to irrational exuberance is the first word of the term. It’s irrational for the Buy-and-Holders not to want to get the numbers right in retirement studies. But tbey suffer from irrational exuberance! So there’s a weird way in which it makes sense.
The battle is a battle between reason and research. For reason to have a chance, we need to permit honest posting re the research. Because it’s the research that can help people see the downside of a purely emotional approach. Buy-and-Hold APPEARS to be helping when you see your portfolio value pushes to two times its real value. The research shows that the irrational exuberance part disappears in time and you would have been better just going with the real numbers all along.
If valuations affect long-term returns, there is zero chance that the safe withdrawal rates is always the same number. It’s a logical impossibility. Irrational exuberance is not real. It is temporary. It is pretend. It is phony. It is wealth-destroying.
Now tell me how you’re a millionaire according to the phony baloney numbers.
Rob
“That was it.”
So why do you think posting a link to that study was using it as a distraction? If you reference it to support a point that you are making what is the problem with providing a link to that study?
“ Now tell me how you’re a millionaire according to the phony baloney numbers.”
You must be referring to the guy that claims he will be getting $500 million in windfall payments.
Numbers are based on what you can buy with what you have. Simple as that.
Because all that we need to know about the study is that it shows that valuations affect long-term returns and there is no controversy on that point.
The only controversy is over whether we should all be able to acknowledge that it logically follows that the safe withdrawal rate cannot be calculated accurately without taking valuations into consideration. I say that we should all be permitted to post honestly at every site.
Rob
Numbers are based on what you can buy with what you have. Simple as that.
It’s not as simple as that when you are putting together a retirement plan. It’s as simple as that with the amounts in a portfolio that are real and lasting but not with the amounts that are supported by nothing more than irrational exuberance. Those amounts always disappear in time. If your portfolio has a lot of irrational exuberance in it, the odds are much greater that it will fail. A portfolio heavy on irrational exuberance is far less safe.
That’s the entire point. To calculate the safe withdrawal rate, you need to look at the factors affecting safety.
Rob
Tell you what. I will take my $7+ million over to the store and see what I can buy. You go take your $500 million windfall to the store and tell us what you come back with. We will compare notes as to which is irrational thinking. Deal?
If Shiller’s Nobel-prize-winning research is legitimate research, a portfolio with a $7 million nominal value at today’s CAPE value has a real and lasting value of $3.5 million. That’s an important reality of stock investing. People need to know that.
If we permitted honest posting re the research at every site, the problem would go away because telling people the truth would cause them to lower their stock allocations and that would pull prices down to reasonable levels. Stock prices are self-regulating so long as honest posting re the research is permitted. When honest posting re the research is banned. the market becomes dysfunctional and we all suffer. I vote “no” to that. I think that gains of 6.5 percent real are just fine.,
Rob
Years ago, you told me to cut my $2 million in half. Look at how that turned out. Meanwhile, you haven’t received a dime in the last 20+ years and your wife ran out the door. I think I will stick to my plan.
I wish you the best of luck with it.
Rob
“ I expect to be compensated for the value that I have offered as a journalist in exposing the greatest act of financial fraud in the history of the United States, nothing more and nothing less. If there were not a great interest in our communities in being able to discuss the last 43 years of peer-reviewed research, we would have seen thousands express a desire that honest posting be permitted.”
Who, specifically, is going to pay you and what are they actually buying? Answers: No one and nothing.
All of the specifics will be revealed after we have opened every site to honest posting re the research. The shift from Buy-and-Hold to Valuation-Informed Indexing is the biggest advance ever achieved in the history of personal finance. There would never have been a single abusive post from the Buy-and-Hold side if that were not the case. So I have a funny feeling that there will be no shortage of money flowing in to those who have the courage to be pioneers on the Valuation-Informed Indexing side. We’ll see. I have precisely zero worries re this aspect of the question.
It’s not like I am doing this for money, at any rate. My primary motivation is to help the millions of people who need to hear the research-based story. I get that regardless of how much money comes in. I think it makes sense that lots of money come in because people should be rewarded when they do good work; that way, we see more good work being done. So I am all in favor of the idea of me making big money from this. I think it’s appropriate and beneficial to all. But it is not my primary motivator by a long shot. I love the learning. I love seeing others learn, That’s what I am all about. On my judgment day, I want to be able to say that I played a part in creating learning experiences.
My best wishes, etc.
Rob