Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“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
This points out that either of the following:
A) You have a reading comprehension issue
Or
B) You lie and have no regard for the truth
What it really points out is that Bernstein has a conscience, which of course is a good thing, He felt compelled to tell the truth about safe withdrawal rates. But he knows the Buy-and-Holders well enough to know that coming completely clean about all the how-to implications of Shiller’s research findings was going to put him in hot water. So he said what he said and then he moved on.
If we were all thinking clearly, we would all want to explore what he said. Not one person would object because we all benefit from knowing more about this subject. We’re not quite there yet as a nation of people But we’re close or else Bernstein never would have ventured forward with what he said about safe withdrawal rates.
The story is mixed. There’s more good than bad. But there’s enough bad to have kept us from getting the Greaney study corrected for 22 years now. So we’re not living in the Garden of Paradise, you know. We’re living on that sometimes nasty but often wonderful Planet Earth. Like it or not, that’s the story,.
Rob
We can read, Rob. It doesn’t look good for you. Nothing looks good for you. Your retirement plan failed and you are broke. All your predictions failed. No one talks to you and your wife divorced you. How does it get any worse than that?
It would be worse if I got an important number wrong in a retirement study posted at my web site and failed to correct it for 22 years.
You live in denial of that reality But I 100 percent believe that it’s a reality. I think that’s worse.
I never quite had a retirement study with my name on it that got the numbers wrong, But I kept it zipped re the error in the Greaney study for the first three years that I posted at the Motley Fool board. That horrifies me. Given that it horrifies me, I obviously don’t want to see anyone else experience that. Hence, the focus that I place on opening every site to honest posting re the peer-reviewed research.
We have different ideas about what is good and bad. I think of the people who posted at Motley Fool as actual human beings. And I can’t stand the thought of lying to them in ways likely to cause them harm. That strong feeling influences every decision I make. I see Shiller’s amazing research as a gift that we all should be enjoying together. So I favor the idea of us giving ourselves permission to talk about it. Denying ourselves that gift is worse than the bad things you reference, in my assessment.
Rob
You clearly got lots of numbers wrong and that is why you are broke……….but we already heard you admit that you are not a “numbers guy”.
There is any easy way for anyone bystander to see who is wrong. Just compare outcomes. You are broke. Those of us that followed buy and hold are doing extremely well and have been able to pay our bills and fund our retirements. You can’t. End of story.
10 percent of the population of every community in which our discussions were held was willing to look at the Greaney study and determine whether it contained a valuation adjustment and go from there.
You’re in the majority. You’re in a massive majority. But I’m right that the Greaney study lacks a valuation adjustment. If you look at how those sorts of errors have done harm to millions in the past, it makes sense to believe that there will come a time when as a nation of people we will want to open every site to honest discussion of the peer-reviewed research.
Or so Rob Bennett sincerely believes, you know? We’ll have to wait to see how things play out during the next Buy-and-Hold Crisis to know for sure.
Rob