A Rich Life

The Old Ideas on Saving & Investing Don't Work -- Here's What Does

“Today It Is a Big Advance to Say ‘the Buy-and-Hold Retirement Studies Get the Numbers Wildly Wrong Because They Lack Valuation Adjustments.’ Some Day in the Future That Will Be Widely Accepted and Understood. So That Insight Will Offer No Particular Value. Today It Is a Big Deal. Today We Need to Get That Insight Accepted to Open Up the Possibility of Hearing Hundreds of Other Powerful Investment Insights. So Today That Insight Is the One That Generates the Big Money.”

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Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

“It would make sense that we would both get $500 million. ”

It could become like the Oprah show.

“You get $500 million!!! And YOU get $500 million!!!!!! EVERYBODY gets$500 million!!!!!!!!!!!”

We are as a society in the process of making the transition from one model for understanding how stock investing works (Buy-and-Hold) to new model for understanding how stock investing works (Valuation-Informed Indexing). The new model obviously started out with only a small number of supporters. If it is over time going to become the dominant model (we should all want to see that in the event that it is the better model), then there will need to be rewards provided to the people who serve as pioneers in the development and exploration of the new model. Those pioneers naturally need to be well compensated for their work.

Over time, promoting Valuation-Informed Indexing will become more accepted and the compensation for doing so will of course be much less. If the first few pioneers get $500 million, then perhaps the next few get $100 million. Then the compensation will drop to $10 million. Then $1 million. And so on.

The hardest work is the early work. The hardest work receives the most compensation. That’s just common sense. Apple made a lot of money by being an early producer of smart phones. If someone came out today with the same phone that a number of years ago brought in millions for Apple, they would earn little for doing so. It’s those who make major advances who earn the big money.

“That’s how our system works, Evidence. I didn’t create the system. I think it is a good system. I support it. I am happy to have made a major contribution that I believe will lead to me receiving big compensation under this system, that’s all. I certainly offer no apologies for helping out millions of people in the way that I did. I personally wish that someone else had earned the $500 million so that I could have earned a far smaller amount with a lot less fuss and bother.

But things are what they are, you know? When I saw what had to be done and realized that no one else was interested in stepping forward and doing what had to be done, I pulled up my big boy pants and gave it my best shot. So here we stand. The more that I am compensated, the more people we will have signing the praises of Valuation-Informed Indexing in days to come. Which benefits each and every one of us. So I think it would be fair to say that I have earned the $500 million many times over.

My sincere take.

Multimillionaire (And One Offering No Apologies!) Rob

“People Have Not Integrated Shiller’s Findings Into Their Thinking. If a Large Portion of all of Our Portfolios Is Comprised of Irrational Exuberance and Is Not Backed By Anything of Lasting Economic Significance, That Changes Our Understanding of How Stock Investing Works in a Fundamental Way. That’s Why Shiller Was Awarded a Nobel Prize. We Have As a People Only Touched the Surface of What Shiller’s Research Has to Teach Us.”

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Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

I still don’t get it. Everyone has heard of Shiller. He didn’t need or ask for any P.R. If there is any payment made, he should get it since it is his work, unless you have some king of license agreement with him.

Everyone in the investing field has heard of Shiller. But when I put up my famous post of the morning of May 13, 2002, pointing out the error in the Buy-and-Hold retirement studies, a lot of people reacted with great surprise. Huh? What was that about?

People have not integrated Shiller’s findings into their thinking. If a large portion of all of our portfolios is comprised of irrational exuberance and is not backed by anything of lasting economic significance, that changes our understanding of how stock investing works in a fundamental way. It changes absolutely everything that we once thought we knew about this subject. That’s why Shiller was awarded a Nobel prize. We have as a people only touched the surface of what Shiller’s research has to teach us.

John Bogle was an exceedingly smart man. I don’t think that there is any reasonable person who disagrees. But Bogle did not know what to make of Shiller’s insights. I was amazed when Bogle put forward his post semi-endorsing Valuation-Informed Indexing. He saw that there was too much merit to the concept to dismiss it. But he couldn’t square the fact that Valuation-Informed Indexing relies on market timing to deliver its amazing results with his longstanding disdain for market timing.

If Bogle could not figure something out, then I think it is fair to say that lots and lots of smart people could not figure that something out. So I am doing something important by putting these questions before people. It is by grappling with these questions that we all come to enjoy an amazing learning experience.

Shiller just got the ball rolling., We need to open every discussion board and blog on the internet to honest posting to tap into the full power of Shiller’s amazing research findings. That’s what I have been working on for 18 years now. No apologies, you know?

Shiller P.R. Guy Rob

“Has Shiller Improved the Lives of People? He Has Not. The Measure of Whether He Has Improved the Lives of People Is the CAPE Value. Shiller’s Research Shows That a High CAPE Value Destroys Human Lives. A High CAPE Value Is Like a Cancer on Our Economic System. Today’s CAPE Value Is One of the Highest Ever Seen in U.S. History.”

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Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

It looks like Shiller did the work. Shouldn’t he be the one that gets the $500 million, instead of you?

It would make sense that we would both get $500 million. The shift from Buy-and-Hold is obviously worth a whole big bunch more than $1 billion to the people of the United States.

You are right in a sense that Shiller “did the work.” Shiller did the intellectual work. Prior to 1981, the academics believed that the market was efficient. If that were so, Buy-and-Hold would be the ideal strategy and the safe withdrawal rate would always be the same number. So Shiller did something of earth-shaking importance.

But I have have a chapter in my book titled “Robert Shiller Is a Failure.” I have devoted 18 years of my life to exploring the far-reaching implications of Shiller’s research. How could I say that he is a failure?

Shiller’s job is not just to provide intellectual insights. Ultimately, those insights serve no good purpose unless they improve the lives of people. Has Shiller improved the lives of people? He has not. The measure of whether he has improved the lives of people is the CAPE value. Shiller’s research shows that a high CAPE value destroys human lives. A high CAPE value is like a cancer on our economic system. Today’s CAPE value is one of the highest ever seen in U.S. history. We have had high CAPE values for 24 years running. This is the longest stretch of high CAPE values in U.S. history. Shiller’s powerful insights have not changed the way people invest. Not nearly enough.

What do we need to do with Shiller’s work to improve human lives? We need to promote it. We need to discuss it. We need to explore its implications. That’s a journalist’s function. That’s what I do. Or at least that’s what I try to do. I have not had as much success as I would have wished for because the criminal behavior of you Goons has been holding me back for 18 years now. But I have been giving it my best shot. And it is my intent to continue doing that until we break through the Big Black Wall of Ignorance and Complacency that is causing us all so much pain.

The part that I am doing — opening every discussion board and blog on the internet to honest discussion of the last 39 years of peer-reviewed research in this field — is every bit as important as the part that Shiller has done — publishing research showing that the key to long-term investing success is always, always, always practicing market timing (exercising price discipline!) when buying stocks.

We need both. We need the research and we need to have it widely discussed. Once the entire internet has been opened to honest posting, I have a funny feeling that we will no longer be looking at CAPE values of 30. Holy moly!

My best wishes to you, Anonymous.

Rob the Journalist

Valuation-Informed Indexing #484: The Effect of Interest Rates on Stock Valuations Is Exaggerated

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I’ve posted Entry #484 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Effect of Interest Rates on Stock Valuations is Exaggerated.

Juicy Excerpt: Shiller wrote that: “People will point this year to low interest rates to justify the high C.A.P.E. ratio. But interest rate levels historically have not correlated well at all with the C.A.P.E. For example, low long-term rates did not explain the high C.A.P.E. ratios in 1929 and 1999, nor did rising long-term interest rates explain subsequent market crashes.”

That to me is how you go about testing a theory that you have re how the stock market works — you check the historical record. It makes sense to believe that low interest rates cause high stock prices. It’s a plausible theory. But, when we are putting our retirement money at risk, we need more than a plausible theory to guide us. Given the poor historical correlation between low interest rates and high stock valuations, I am not willing to buy into this theory.

 

 

“The Idea That Market Timing Is 100 Percent Required for Every Investor Makes Perfect Sense. There Shouldn’t Be Anything Even a Tiny Bit Controversial About It.”

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Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

A person would have to be drunk to believe in VII.

I don’t think so, Anonymous.

I think it is common sense.

In every other market that exists, we all practice price discipline. I have never heard anyone question that that is the right thing to do. So it’s simple and non-controversial.

When it comes to stock investing, the way we practice price discipline is by engaging in market timing. Shiller showed that the value proposition of stocks varies depending on the valuation level that applies. So the common-sense thing to do is to vary your stock allocation in response to big shifts in valuations so that your risk profile is roughly constant over time, That’s Valuation-Informed Indexing! That’s the entire deal. That’s the concept. You take Buy-and-Hold, which is wonderful in many ways, and you incorporate market timing into the mix and you have Valuation-Informed Indexing. Now you’ve really got something that works!

But there’s controversy.

Huh? What the f? Where does this controversy stuff come from? Why is there even one person in the world who feels so opposed to the idea of practicing price discipline when buying stocks that he would say that someone would have to be drunk to believe in Valuation-Informed Indexing?

It’s because we did not always have Shiller’s Nobel-prize-winning research available to us. Buy-and-Hold was developed in the 1960s. Shiller did not publish his “revolutionary’ (his word) research findings until 1981. Had Shiller published in 1961, there never would have been a Buy-and-Hold. It would have been Valuation-Informed Indexing all along. It’s possible that we would have called it Buy-and-Hold. But the thing that we would have come up with if we had had Shiller’s research available to us at the time would have called for market timing (the long-term variety, obviously) by all investors. And there would have been no controversy attached to it. We all want the same things. We all want to be able to invest effectively. So we all would have went with what made sense and with what the research supported. Easy, peasey.

The problem was this thing called the Efficient Market Theory. There was never any research supporting the Efficient Market Theory. It was just an assumption. Economists thought that it made sense that investors would act rationally in pursuit of their own self-interest, which is to get prices right. And it does make sense so long as you ignore the fact that humans are highly emotional creatures. Given that Shiller’s research was not available to us, a lot of us came to believe that this Efficient Market Theory thing was real. If the Efficient Market Theory were real, market timing would be a mistake and Buy-and-Hold would be the ideal strategy. So we went with that.

Then Shiller came along and blew it all up.

And the Buy-and-Holders — did nothing. They didn’t change their strategy to reflect what we learned from this “revolutionary” (Shiller’s word) research. They just acted as if nothing had happened. They just kept rolling along.

And here we are. It’s now 50 times harder to acknowledge that market timing is always required as it would have been to acknowledge that in 1981. It looks bad to have engaged in a 39-year cover-up. But we cannot move backwards in time. We are where we are. There has been a 39-year cover-up and as a society we need to come to terms with it.

The idea that market timing is 100 percent required for every investor makes perfect sense. There shouldn’t be anything even a tiny bit controversial about it. The controversy comes from the unfortunate reality that we once didn’t know everything there is to know about stock investing and so we made a mistake and now it hurts to say those words “I” and “Was” and “Wrong.” But the idea that market timing (price discipline!) is required is the future and we are going to have to learn how to say those words sooner or later. So we are all better off just doing it now and moving on to a better future as soon as possible.

I think it is the idea that it is not necessary to practice price discipline when buying stocks that is evidence of drunkenness, Anonymous. I think that the idea that market timing is always required is just common sense. And the fact that 39 years of peer-reviewed research supports it is just icing on the cake.

I naturally wish you all the best of luck with whatever investment strategies you elect to follow, in any event.

Common-Sense Rob

“I Can Report That Greaney’s Retirement Study Caused a Good Number of People at the Retire Early Board to Go With Lower Withdrawal Rates Than They Would Have Gone With Had Greaney Not Posted and Promoted His Study. That’s a Positive. I Can Honestly Say That That’s the Case. So I Have No Problem Doing So.”

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Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

“ I hope that that helps at least a tiny bit.”

You are not paying attention. We are not looking for help. Your the one with the problem and you are looking to blame everyone else.

My strong sense is that you are indeed looking for help, Anonymous. If you weren’t looking for help, you wouldn’t be posting here.

I am 100 percent willing and happy to offer you some help. As just one example of how I can help, I can report that Greaney’s retirement study caused a good number of people at the Retire Early board to go with lower withdrawal rates than they would have gone with had Greaney not posted and promoted his study. That’s a positive. I can honestly say that that’s the case. So I have no problem doing so.

Does that mean that you will have no prison sentence? I don’t think so. There has never been a situation like this. So I cannot say for sure what will happen. But I would not feel comfortable promising you that the things that I say will get your prison sentence reduced to zero. I’ll give it my best shot. That much I can promise.

I cannot say that I believe that Greaney included a valuations adjustment in the study. That’s always been the sticking point. I have zero willingness to go to the wrong side of the felony line myself. So I think that it would be fair to say that we are just going to have to wait to see how things play out in the days following the next price crash.

I hope that that works for you, dear Goon friend.

Helpful (But Not the the Point of Committing Felonies) Rob

“Those Who Follow the Peer-Reviewed Research in This Field Have Known for 39 years Now. We Just Cannot Talk About It Publicly Because It Causes the Buy-and-Holders Too Much Pain to Hear Their Beliefs Challenged.”

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Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

Can we trust anything you say when Wade said this:

“ 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….”

Each person is going to have to make up his or her own mind re that one, Anonymous.

Wade really did say the words that you quote him as saying. I give you that one And he really did say the words that I quote him as saying. You are not willing to give me that one. But the reality remains that he really did say all those words.

I think that the bottom line is that people’s willingness to look at both sides will increase following a price crash in which millions of people will lose half of their life savings and hundreds of thousands of businesses will go under and millions of workers will be thrown out of their jobs and political frictions will increase. We know how stock investing works today. Those who follow the peer-reviewed research in this field have known for 39 years now. We just cannot talk about it publicly because it causes the Buy-and-Holders too much pain to hear their beliefs challenged. Will the next price crash cause more of us to come to believe that the pain of experiencing more economic crises is worse than the pain felt by the Buy-and-Holders to hear their beliefs challenged? I believe that it will. But I am not God, I could be wrong.

We are just going to have to wait and see how things play out.

I naturally wish you all the best that this life has to offer a person, in any event.

Rob

“It Is Not Possible That Any Reasonable Person Could Read Those Words and Conclude Anything Other Than That Wade Pfau Believes That the Buy-and-Hold Retirement Studies Are “Dangerous” and That Valuation-Informed Indexing Is Gold. Those Are the Two Most Important Issues That Have Been Debated Over the Past 18 Years.”

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Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

“ When the same person says two things that are opposites, that presents a puzzle. ”

Actually, it is his words versus your interpretation of what he said or meant.

“ We have to do better.”

There is no”we”. You are responsible for YOU. You want everyone else to change to your way of thinking. That is not how YOU get better.

Set forth below are some of Wade’s words. It is not possible that any reasonable person could read those words and conclude anything other than that Wade believes that the Buy-and-Hold retirement studies are “dangerous” and that Valuation-Informed Indexing is gold. Those are the two most important issues that have been debated over the past 18 years.

I agree that I am responsible for me and only me. That’s why I insist that I be permitted to post honestly. When I see someone advocating the 4 percent rule and I fail to point out that there is 39 years of peer-reviewed research showing it to be false, I am failing my readers and myself.

I do not want everyone else to change to my way of thinking. I want everyone else to post their honest views just as I post my honest views. That’s how I learn from others. It would be horrible if everyone just agreed with me. I would hate that. That’s why I never engage in intimidation tactics against people who offer views that I do not agree with. But the fact that I like hearing views that I do not agree with from others does not mean that I like hearing views that I do not agree with from me. I believe that posts with my name on them should reflect accurately my views. That’s the thing that enrages Mel Lindauer and John Greaney. They want me to pretend to believe things that I just do not believe. And I do not feel even a tiny bit comfortable going there.

A) Academic Researcher Wade Pfau’s Statements Showing Interest In and Confidence in Rob Bennett’s Work

1) “I do cite you and John Walter Russell in my paper as the earliest and strongest advocates of this approach [New School safe-withdrawal-rate research].

2) “Are you aware of Shiller offering asset allocation advice based on PE10? …. If you read Rob Bennett’s stuff carefully, I think he did provide an important contribution in terms of describing a way for PE10 to guide asset allocation for long-term conservative investors. I also think he was right on the issue of safe withdrawal rates.” — Posted at the Bogleheads Forum discussion board.

3) “I am also extremely grateful to Rob Bennett for motivating this topic and contributing his experience and encouragement.” — Written in Acknowledgments section of Wade’s breakthrough research paper.

4)”You deserve much of the credit as the whole idea of Valuation-Informed Indexing belongs to you.”

5) “I definitely need to cite some of your work as the founder of Valuation-Informed Indexing, as I have not found anyone else who can lay claim to that. Shiller pointed out the predictive power of PE10 but never discussed how to incorporate it into asset allocation, as far as I know.”

B) Academic Researcher Wade Pfau’s Statements on the Superiority of Valuation-Informed Indexing Over Buy-and-Hold

1) “What you see in the top part of the graph for each year is the amount of wealth accumulated after 30 years for someone following Buy-and-Hold against someone following Valuation-Informed Indexing….Valuation-Informed Indexing provides more wealth for 102 of the 110 rolling 30-year periods, while Buy-and-Hold did better in 8 of the periods.”

2) “I will take steps in my final paper to test a wide variety of assumptions about asset allocation, valuation-based decision rules, whether the period is 10, 20, 30, or 40 years, lump-sum vs. dollar-cost averaging, and so on, and to show that the results are quite robust to changes in any of these assumptions.”

3) “Any data mining that I am doing is in favor of buy-and-hold, not in favor of market timing.”

4) “The findings for “market timing” are so robust anyway, that it hardly matters how we do it.”

5) “The maximum drawdown from market timing is much less. That is how far the portfolio drops from past highs to current lows. The Buy-and-Holder once experienced a 60.96% drop, whereas the worst drop for market timing was 24.16%.”

6) “Market timing provides signficantly higher returns at a comparable level of risk.”

7) “The market timer enjoys a far less risky strategy.”

8) “On a risk-adjusted basis, market-timing strategies provide comparable returns as a 100 percent stocks Buy-and-Hold strategy but with substantially less risk. Meanwhile, market timing provides comparable risks and the same average asset allocation as a 50/50 fixed allocation strategy, but with much higher returns.”

9) “If everyone increased exposure after a market fall and vice versa, then this would dampen out the big swings in the market aggregates, and we might get shallower boom/bust cycles.”

10) ““‘I’m excited about this, as depending on what you have already done, I think I can design a study using the Shiller data to provide historical simulations of Valuation-Informed Indexing strategies against fixed Buy-and-Hold strategies and also lifecycle strategies (declining allocation to stocks as one ages). If Valuation-Informed Indexing consistently outperforms fixed and lifecycle strategies, then the proof is in the pudding so to speak. Given how well valuations help to explain withdrawal rates, I think there is a lot of potential for this topic.”

11) “Yes, Virginia, Valuation-Informed Indexing Works!”

12) “It makes complete sense to have an equity allocation that is in some way flexible. Having a completely inelastic demand for equities is a bit bonkers; no-one acts that way with life’s other important commodities.”

13) “I wrote up the programs to test your Valuation-Informed Indexing strategies against Buy-and-Hold, and I must say that the results look very promising…. I am quite excited about the findings so far. As you say in the podcast, Valuation-Informed Indexing should beat Buy-and-Hold about 90 percent of the time, and I am getting results that support this for various strategies.”

14) “I have been toying with the idea of sending the paper to the Journal of Finance, which is the most prestigious journal in academic finance.”

15) “Now that I am accounting for risk, I am even more amazed by how well Valuation-Informed Indexing works.”

16) You shouldn’t be too excited with great wealth accumulations if they happened due to unusually high valuations, and low wealth accumulations shouldn’t be as scary if valuations are also quite low.”

17) “My idea is to show many different tables with results over the whole period for returns and risks. Valuation-Informed Indexing always provides more returns for often less risk.”

18) “No matter what I try, Valuation-Informed Indexing will still perform better in 85-95% of cases for 30 years.”

19) “I have a new figure for showing this as well. And a nice figure showing the outperformance percentages across rolling periods of lengths between 1 and 40 years. I think it is all quite persuasive.”

20) “You haven’t seen anything yet! This was just the secondary study. I’m still working on the main one!”

C) Academic Researcher Wade Pfau’s Statements of Incredulity That He Was the First Academic Researcher to Examine the Valuation-Informed Indexing Strategy

1) ” I know that there is an extensive literature about the predictability of long-term stock returns dating back to Campbell and Shiller’s work in the mid-1990s. I also know that there is an extensive literature about short-term market timing strategies…. But my question is about LONG-TERM market timing strategies. In other words, using market timing over periods of at least 10 years to obtain better returns than a Buy-and-Hold strategy. The literature seems slim.”

2) “Let me just explain a bit more why I posted about this here. Valuation-Informed Indexing has had critics for years, but until Norbert did it in 2008, nobody seemed to have provided a serious investigation of it. I just couldn’t understand why. And that bothered me.”

3) “Two papers by Fisher and Statman are still all I can find that provide evidence against long-term market timing.”

4) “I’m so confused by why Fisher and Statman didn’t consider risk in their idiot switching tests. Valuation-Informed Indexing is much less risky by pretty much any standard I consider. I must wonder… did I make a mistake somewhere? Why haven’t academics already published research about this?”

D) Academic Researcher Wade Pfau’s Statements on the Dangers of the Conventional Retirement Planning Advice

1) “The traditional approach to retirement planning (as described on pages 10 and 11 of The Bogleheads’ Guide to Retirement Planning, for example) is counterproductive and possibly damaging.”

2) “Retirees now frequently base their retirement decisions on the portfolio success rates found in research such as the Trinity study…. This is not the information that current and prospective retirees need for making their withdrawal rate decisions.”

3) “This article provides favorable evidence based on the historical record for long-term conservative investors to obtain improved retirement planning outcomes (lower savings rates, higher withdrawal rates) using valuation-based asset allocation strategies.”

4) Wade sent me a link to an article in Business Week that was published more than eight years after my post pointing out the errors in the Old School retirement studies and which he characterized as “quite sympathetic to the point you were trying to make all along”.

5) “Though I was only trying to do an Old School safe-withdrawal-rate study, all that I ended up doing was showing in a different way what you had been saying all along: the safe withdrawal rate changes with valuations.”

6) “Valuations are the driving factor. ”

7) “This is similar to your drunk driving analogy, which I agree with.” The discredited but uncorrected retirement studies find that in most circumstances a 4 percent withdrawal rate provides a huge cushion for the retiree using it. However, in each of the three cases in history when stocks reached insanely high price levels, retirements using a 4 percent withdrawal came within a whisker of failing. To say that this shows that a 4 percent withdrawal is “100 percent safe” (these words are used in the Greaney study) for a retirement beginning at a time of insanely high price levels is like saying that driving drunk is “100 percent safe” because 97 sober drivers drove their cars 20 miles without incident while 3 drunk drivers were paralyzed for life in car accidents but did not die. The fact that 4 percent only worked by a whisker in the cases in which valuations were high at the beginning of the retirement shows that a 4 percent withdrawal is high-risk at times of high valuations, not that it is “100 percent safe.”

8) ” Actually, this issue shouldn’t really even be all that controversial. It’s just common sense that the probabilities from the Trinity study shouldn’t be interpreted as forward-looking probabilities for new retirees.”

9) Naturally, I am finding that Valuation-Informed Indexing can allow you to reach a wealth target with a lower savings rate, use a higher withdrawal rate, and also have a lower “safe” savings rate, than a fixed allocation.

E) Academic Researcher Wade Pfau’s Statements Showing His Concerns that Continuing to Report Honestly on the Investing Realities in the Face of the “Hostile Environment” for Doing So Created by Buy-and-Holders Would Harm His Career

1) “I was trying to pay tribute to your accomplishments in what I knew would be a hostile environment.”

2) “Valuations and long-term investors is a somewhat controversial topic.” Wade posted these words to his blog in October 2011 as his explanation of why he was abandoning his plan of doing further research on the superiority of Valuation-Informed Indexing strategies over Buy-and-Hold strategies. He had told me in earlier days that “You ain’t see nothing yet!” when I praised his breakthrough research in this area. After his flip to the dark side, Wade removed the page containing this blog entry from his site.

3) “We have both read and met to discuss your paper. Unfortunately, we did not find the paper’s incremental contribution to the academic finance literature, assuming the analysis proved to be correct, rose to the level that we are seeking for papers in the JFR. Thus sending the paper to a reviewer would be inefficient.” These words are from an academic journal’s “desk reject” of Wade’s breakthrough research.

4) ) ““ I was discouraged when I first received the “desk reject” by the editors of the same journal that published the Fisher and Statman paper. I realized that I didn’t have a chance with one of the top journals.”

5) “I think I should stay publicly quiet for a while, as I really don’t want anyone sending messages about any topics to officials at my university.”

6) I don’t want them [the Goons] working behind the scenes to derail me.”

7) “I did warn the editor of the Journal of Financial Planning that they may receive some ‘hate mail‘ after I mentioned your name in the safe savings rate paper.”

Rob (Expressing the View of Rob, As Is Proper)

“Please Mark Me Down As Saying That John Greaney’s Failure to Correct the Error in the Retirement Study Posted At His Web Site for Nearly 18 Years Constitutes Fraud, the Biggest Case of Financial Fraud in the History of the United States By a Long Shot.”

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Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

I don’t see fraud. I don’t see death threats. I don’t see job threats. I don’t see anyone that is afraid (maybe you are afraid?). Until people see actual evidence of what you say, your words are “catastrophically unproductive” as someone once said.

I pointed out that the retirement study posted at John Greaney’s web site lacks an adjustment for the valuation level that applies on the day the retirement begins in a post that I put to a Motley Fool discussion board on the morning of May 13,2002. Today’s date is January 29, 2020. The study has not been corrected to this day.

Please mark me down as saying that that constitutes fraud, the biggest case of financial fraud in the history of the United States by a long shot.

I will continue doing everything in my power to EXPOSE this massive act of financial fraud. I can do no more and I can do no less.

If pointing out financial fraud and seeking to have it corrected constitutes catastrophically unproductive behavior, then please make me down as pleading 100 percent “guilty as charged.” And please feel free to tell everyone on the internet that that is my plea.

I naturally wish you the best of luck in all your future life endeavors.

Catastrophically Unproductive Rob

“If Wade Pfau Had Gone With Me to the New York Times and Told Them the Story About Fraud and Corruption in the Investment Advice Field That He Saw With His Own Eyes for 16 Months, I Think That We Could Have Gotten This Story Written Up on the Front Page. When You See Fraud, You Have to Call Out the Fraud. Otherwise You Become Compromised Yourself and It Becomes Harder for the People Who Come After You to Call Out the Fraud Because It Has Been Going On for an Even Longer Time.”

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Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:

A little blast from the past from Wade Pfau:

“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.”

If Wade had gone with me to the New York Times and told them the story about fraud and corruption in the investment advice field that he saw with his own eyes for 16 months, I think that we could have gotten this story written up on the front page. And from that time forward, no one would have been afraid to post honestly. That would have changed the world in a very, very, very positive way. The way to end corruption is to EXPOSE it, not to appease those practicing it.

Wade agrees that the Greaney retirement study is in error.Has his appeasement approach gotten the study corrected? It doesn’t work, Anonymous. If Greaney were worried about the harm he has done to people with his study, he would have corrected it on the day he learned about the error in it, May 13, 2002. Asking him “pretty please” isn’t going to get the job done. Wade’s way doesn’t work. When you see fraud, you have to call out the fraud. Otherwise you become compromised yourself and it becomes harder for the people who come after you to call out the fraud because it has been going on for an even longer time.

That is my sincere take re these terribly important matters, in any event.

Corruption Exposing Rob