A Rich Life

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

Wade Pfau Has Published an Article in the Wall Street Journal Titled ‘What Is the Sustainable Spending Rate for Retirees in 2016?'”

by

Wade Pfau recently published an article in the Wall Street Journal titled What Is the Sustainable Spending Rate for Retirees in 2016? I thank my Goon friend Anonymous for letting me know about the article.

Juicy Excerpt #1: An alternative way to view the historical data is to go beyond merely considering past withdrawal rate outcomes by seeing how they relate to retirement date values of the underlying sources of returns. We can find a way to investigate these implications by following the approach described in 1998 by John Campbell and Robert Shiller. They found useful predictive power in estimating the relationship between Shiller’s PE10 and the subsequent ten-year real return for stocks.

Juicy Excerpt #2: Sustainable withdrawal rates from a diversified portfolio including stocks can be expected to share this relationship with market valuations.

Juicy Excerpt #3: Until 1986, we can see that the relationship between the predictions and the actual values is close. The two variables (PE10 and interest rates) can explain 55% of the fluctuations in the historical spending rates.

Juicy Excerpt #4: this is not an estimate of the “safe” withdrawal rate. It is not a conservative guess about a safe withdrawal rate, but rather it is the best guess based upon the historical relationship between withdrawal rates, market valuations, and interest rates. It could end up being more or less (we won’t know which for another thirty years). To be conservative, a lower withdrawal rate is required to account for the additional random fluctuations from outside the model. This analysis further confirms the idea that the 4% withdrawal rate cannot be treated as safe for retirees in today’s market environment.

Juicy Excerpt #5: A 4% withdrawal rate should never be treated as an almost guaranteed annuitization rate from one’s assets, but this is especially true for today’s retirees.

Juicy Excerpt #6: These exercises about looking at the impacts of interest rates and market valuations illustrate that assumptions about future returns matter a great deal.

Juicy Excerpt #7: Unfortunately, we do not know what the future will bring, and, ultimately, retirees should remain cautious and flexible.

 

 

” I Love My Country Because My Country Has Always Been a Place Where We Move Forward Over Time, Where We Learn From the Past Rather Than Push It Down the Memory Hole and Forget It. Part of the Message Being Conveyed When Someone Says That We Should “Forget the Past” Is a Message of Kindness. That Part of the Message I Endorse. It’s the Other Part of the Message — the Part That Says ‘Don’t Learn From the Mistakes of the Past’ — That I Reject.”

by

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

Gasp!!!! She wants you to forget the past? How could you ever be expected to do that, Rob?

I don’t want to forget the past, Anonymous. I want to learn from the past.

I want to move on to a better place. I want a better life for my children tomorrow than I have today. I want that for your children too. And for Jack Bogle’s children. I want us all to move forward. You don’t get that by pushing the lessons of every day down the memory hole one by one by one until 35 years of them have been pushed down.

I often say that “I love my country.” That’s my four-word response when people like Jaime (who I obviously respect and like) and people like yourself (who I also respect and like, whether you are wiling to acknowledge it for not) tell me to “forget the past.” I love my country because my country has always been a place where we move forward over time, where we learn from the past rather than push it down the memory hole and forget it.

The past happened, Anonymous. Forgetting it is a lie. I don’t want to tell that lie. I want to be kind in what I say about the mistakes that were made in the past. Part of the message being conveyed when someone says that we should “forget the past” is a message of kindness. That part of the message I endorse. It’s the other part of the message — the part that says “don’t learn from the mistakes of the past” — that I reject.

You don’t want to go to prison. I get that. I understand the feeling. I am sympathetic. I have said that I would be happy to do anything in my power to keep you out of prison. What else can a person do? I am not willing to “forget” the past in the way that you are proposing. But I am willing and happy to make our collective acknowledgment of the past as painless as possible for every single person involved. Does that cut it for you? If not, why not? You insist that we not learn from the past. That’s where we part company. That’s where we have a disconnect.

I am 100 percent certain that, had Shiller published his “revolutionary” (his word) research findings in 1961 rather than 1981, the initial version of Buy-and-Hold would be what I today call “Valuation-Informed Indexing.” Problem solved, right? Me and Bogle and Linduaer and Greaney would all be on the same side. That’s the perfect resolution. That’s what I want. That’s what we all should want.

How do we get there?

By forgetting the past?

Or by acknowledging the past while adopting a charitable perspective on every single thing that happened in the past so that we can obtain from the past all of the good learning experiences that we need to mine from it while kicking out all the nastiness and friction that we all know deep in our hearts we need to avoid?

I think that we need to ACKNOWLEDGE the past in a charitable way. I think that we need to LEARN from the past and then move forward together to something better than what we were capable of creating in the past. Doing that takes Jack Bogle’s contributions and transforms them into something ten times more important than what they appeared to be at the time when he was the most popular he has ever been (this was at the top of the bubble in early 2000).

And I am portrayed by you Goons as a Bogle hater. I am the best friend that Jack Bogle ever had in his life. I am the one trying to take Bogle’s ideas and make them real. I am the one trying to preserve the good in Buy-and-Hold while leaving behind the one mistake and thereby taking the concept to a place that Jack Bogle never dreamed it could go.

I am the one following the SPIRIT that created Buy-and-Hold. It didn’t start out as a lie, a con, a Get Rich Quick scheme, a fraud, a marketing gimmick, a Ponzi scheme. Buy-and-Hold started out as SCIENCE, something objective, something real. That was a huge advance. It was because of that huge advance that I fell in love with the Buy-and-Hold concept and continue to pursue that initial vision to this day.

Jack Bogle BETRAYED the spirit that he employed to create Buy-and-Hold when he endorsed Mel Lindauer’s death threats and demands for unjustified board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs. That stuff is not science. That stuff is a big pile of smelly garbage. That’s why we have laws that we use to put people putting forward that kind of stuff in prisons. We have decided as a people that we cannot tolerate too much of that smelly garbage. Go too far with that stuff and we put you in a prison cell because we need to protect the millions trying the best they can to provide for their retirements. That stuff crosses a line. So we collectively condemn it. For good reason.

Science changes over time, Anonymous. That’s just how it works. Doctors once believed that bleeding patients was the best way to treat many diseases. They were wrong. They hurt lots of people. Unknowingly. It happens. We had to accept that and move on. And we did.

Investing experts once believed that it was not necessary to engage in price discipline when buying stocks. They were wrong. They hurt people. Unknowingly. Same story.

Until 1981.

When Shiller published his “revolutionary” (his word) research, the story changed into something that in the not-too-distant future will be putting you and your Goon friends in prison cells, in some cases for a very long time indeed. A mistake that has been covered up for 35 years (with death threats and all the other smelly garbage noted above) is no longer a mistake. A mistake covered up for 35 years is a CRIME. A felony. A prison sentence. It’s not Rob Bennett who says so. It is the people of the United States who say so. Take it up with them you know? Direct your hate at the people of the United States who supported enactment of the laws against financial fraud, not at the humble reporter who happened to be the first to speak up clearly and bluntly and firmly about what has gone down here.

The people of this country need to have a means to determine what the last 35 years of peer-reviewed research tells us about how stock investing works in the real world. This is not a nice idea. This is the law. This is not elective. This is 100 percent imperative. This is going to happen.

People are not going to permit our economic system to fail because a good and smart man named Jack Bogle made a mistake once upon a time and now has spent 35 years of his life covering up that mistake and because that makes people feel real sad for him. People do feel sad. Properly so. Bogle is a giant. A giant who fucked up. That’s the reality. Jaime is wrong. We cannot continue to push that reality down the memory hole. For Jack’s sake (and for everyone else’s sake as well), we need to ACKNOWLEDGE the past in a charitable spirit, not forget it. To forget the past is to ruin my good friend Jack Bogle’s reputation for all time. To dishonor this great man and this good friend in this way is unconscionable. This cannot be. This will not be. I will see to it. Count it. Non-negotiable.

I hope you understand what I am saying. I hope it clicks this time.

This will not end well for you Goons. If I have my way, the ugly stuff will end today and we will together achieve the best possible result for you Goons that it is possible for us to achieve at this point in the proceedings. You can count on me to do everything in my power to see that that happens. But I have seen too much to place any bets on this beautiful dream of mine coming true. There’s a good chance that you will elect to play it so that your prison sentence ends up being a little longer than it has to be. Heaven help us all, perhaps you will play it so that your prison sentence ends up being a lot longer than it has to be. Once a Goon, always a Goon, and so forth and so on and scoobie, doobie, doobie.

I am on your side, Anonymous. I am on Jack Bogle’s side. Jaime WANTS to be on your side and Jack Bogle’s side. But she is worried about what it would mean for her business for her to come out publicly and take your side in clear and firm and blunt words. You will need to reassure her with some reasonable words. Or Bogle will need to do so. I can offer you a 100 percent guaranty that, once you or Bogle offer those reassurances, you will have your friend Jaime fighting the good fight alongside your friend Rob. It is in your power to make that happen. It is not in my power to make that happen today. If it were, I would do it. But it is in your power to make it happen. I will naturally help out to the best of my ability.

We don’t want to forget the past. We want to acknowledge the past and move forward with a charitable spirit into a much brighter and more prosperous and more fun and less combative future.

I am sure.

Love is the answer, man. The hippies were right about that one even if they were terribly mixed up about the drug thing.

Please take good care.

Rob

“This Is Investing Stuff, It Should Never Have Gotten Personal on Either Side. The Fact That the Buy-and-Holders Take Any Mention of the Last 35 Years of Peer-Reviewed Research in This Field So Personally Is One of Many Things That Tells Me That This “Strategy” Is a Big Pile of Smelly Garbage.”

by

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

“My family should not be suffering at all.”

Given the size of your house and the vacations you’ve lamented you’ve had to skip, I’d say they most certainly are. No one escapes unscathed when Dad’s “job” is trolling the internet.

Meanwhile I’ve maintained a mostly stock buy and hold portfolio, remained gainfully employed, and given my family – and myself – the life we deserve.

And yet you are the one going to prison and not me, Anonymous.

There’s something messed up here.

The mess-up is that giving investment advice is not ONLY about turning a quick buck.

Honesty matters.

That’s why we have laws against financial fraud.

Those laws were adopted by the entire nation. Those laws are my protection. I have zero desire to give up the protection of those laws by putting up some words endorsing your massive act of financial fraud. Zero.

So we are just going to have to wait and see whether the price crash changes things. I believe that, when people lose most of their retirement money, they are going to be angry at those who tricked them out of their life savings. That’s what happened to Bernie Madoff (“Saint Bernie” in the days before his con was exposed) and I believe that that’s what will happen to Jack Bogle and those who have posted in “defense” of him.

You pretend to believe otherwise. I am not convinced by the act. If you really believed otherwise, you would drop it and get on with your life. But even if you really did believe otherwise, we still end up in the same place. There are no words that I can put forward that will convince you that Shiller is right and there are no words that you can put forward that will convince me that Fama is right. Fama got there first and so Buy-and-Hold is dominant for now and some crooked people have elected to use that dominance in ways not permitted by U.S. law to shut me out.

So be it. I don’t like it. It happened regardless of my feelings. I accept it.

Is there something you want from me?

I say that this matter is going to be decided following the next price crash. That’s when lots of people will work up the courage to join me in standing up to you Goons and prison sentences will be announced for you and then all the rest of us will live happily ever after.

Is that okay by you?

Is there something you want me to do (something that I CAN do — I don’t do financial fraud) to make it okay by you?

I have offered to spin things to put you in the best possible light. I’ve done it before, I think it’s the right thing to do in these circumstances, and I fully intend to continue to do it in the future. I ask nothing from you for that favor from me. But that’s as far as I go. I don’t cross the felony line. I don’t CONSIDER crossing the felony line. I work hard to get thousands and thousands of posts in the record showing that it has always been my uncompromising policy not to cross the felony line. I don’t think you are dumb, but even if I did think you were dumb, I couldn’t possibly think you were so dumb that you wouldn’t get this by now. So I have to believe you get it.

So what are you trying to accomplish with your posts here?

Do you ever ask yourself that question?

I get more posts in the record in which I speak out in strong OPPOSITION to the 35-year cover up. What do YOU get?

You get nothing. Feel free to continue. Most of your efforts will get deleted. But some will get through. Include a little joke and I will approve the post. Include a question that appears to me to possess a tiny bit of sincerity and I will approve the post. Approach something from an angle that hasn’t been explored 20 times before and I will approve the post.

But we both know my words are not going to change anything. I think it would be fair to say that that was clear to every single person involved at least 13 years ago, perhaps something close to a full 14 years ago.

I cannot post dishonestly re the numbers that my friends use to plan their retirements. I care about my plan. I want it to work. And that makes me feel for the people being tricked. And that makes it impossible for me to lie about this stuff. I am clearly an outlier. Most people are able to rationalize a million lies. I am not. I’m proud of this trait of mine, lots of others think I am a moron. So be it. I think what I think and other people think what they think. I believe that someday I will stand before my Creator and I want to be able to say that I did not lie to my friends about the numbers that they use to plan their retirements. So I will continue to do what I feel I need to do.

And you will continue to do what you feel you need to do coming at things from a very different perspective. Good luck with it, you know. I can’t say that I understand what you think you might accomplish by continuing to post here. It’s my job to figure these sorts of things out. That one remains a bit of a mystery to me. My best guess is that you are not at ease with your position and so you feel compelled to do something and yet you do not want to go to prison AT ALL and so you cannot bear to come clean and so you follow this crazy middle position of saying the same thing over and over again to no apparent purpose.

Whatever, I guess.

I hate that word “whatever.” I like to know why things happen. I don’t like to give up trying to figure things out. But after 14 years I believe that I may have to acknowledge that this one is beyond my reach. Feel free to do what you like. I don’t really get it. I get it halfway but not fully. If you truly have decided to roll the dice (I believe that you have), then it seems to me that you should just let it play out and not spend any more words on any more nonsense.

But it’s your call. I like jokes. So come up with even a little joke and you get past the line. And I obviously want to respond to any even partly sincere questions. That’s my job and, Goon or no Goon, I can learn from someone putting forward a partly or fully sincere question. So those go up.

The rest I will just have to accept.

Just don’t get any funny ideas in your head that you might someday say something that would cause me to consider crossing the felony line. Not this boy. Not gonna happen. No way, no how.

And please do take care. These warm ending lines of mine are sincere. You may not see it that way but they are sincere and its important to me that I make the effort to reach out and help someone whom I consider a friend even if he is a long-confirmed Goon. This is investing stuff, it should never have gotten personal on either side. The fact that the Buy-and-Holders take any mention of the last 35 years of peer-reviewed research in this field so personally is one of many things that tells me that this “strategy” is a big pile of smelly garbage.

That remains the dominant model for the time being.

But not for too much longer.

Or at least so Rob Bennett says.

The End.

Rob

Valuation-Informed Indexing #305: Nine Rules for Exercising Price Discipline When Buying Stocks — Part Two

by

I’ve posted Entry #305 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Nine Rules for Exercising Price Discipline When Buying Stocks — Part Two.

Juicy Excerpt: If you compare the results for Buy-and-Hold and for Valuation-Informed Indexing over 30 years, you will see that for the vast majority of those years the results will be comparable. Both strategies call for high stock allocations when prices are at low or fair-value levels. So they obviously yield similar results at most times. When prices are high, Valuation-Informed Indexers go with lower stock allocations. Those lower stock allocations often yield lower returns.

Stocks are more risky when prices are high. But it doesn’t at all follow that returns are never good at high price levels. The reality is that returns are often very good indeed at high price levels. In fact, the odds of high returns go up a bit when prices reach insanely dangerous levels (because price changes are determined primarily by investor emotion and extreme price levels generate even more of the irrational exuberance that produced them).

However, gains enjoyed at times of high prices always prove to be short-lived. That’s the reality that Buy-and-Holders overlook. It can take a good number of years for the economic realities (which justify price gains of 6.5 percent real per year but not more than that) to assert themselves in market prices. But they always do. The greater the artificial gains experienced in a bull market, the greater the real losses experienced once the fantasy investor expectations are exposed for what they are.

The benefits of the Valuation-Informed Indexing strategy are achieved through a lot of waiting for prices to be set right. The waiting pays off big time in the tiny number of years in which the Valuation-Informed Indexing portfolio far outpaces the Buy-and-Hold portfolio. A tiny number of years of extreme outperformance frequently counters a larger number of years of small outperformance by the Buy-and-Hold portfolio. Valuation-Informed Indexing is a strategy of infrequent but big scores.

Jackie, Owner of the The Debt Myth Blog, to Rob: “When the Methods You’ve Been Using for a Long Time Continue Not to Work, Why Keep Using Them? I Think It Comes Down to ‘Do You Want to Be Right?’ or “Do You Actually Want to Get Your Message Out and Have It Read By the People Who Could Benefit From Reading It?”

by

Set forth below are the text of a series of e-mails sent to me on October 15, 2014, by Jackie, owner of the The Debt Myth blog, followed by my responses:

But first you have to get people to actually read those words. Rhetorical question: When the methods you’ve been using for a long time continue not to work, why keep using them? You really have nothing to lose by changing. I think it comes down to “do you want to be right?” or “do you actually want to get your message out and have it read by the people who could benefit from reading it?”

Jackie:

Your point is well taken.

I have NOT been successful at getting the word out.

I’m happy to try another approach.

I am not entirely sure what it would entail.

I am 100 percent happy to agree not to comment on guest blog entries.

I am 100 percent happy not to bring up any of the Goon stuff in guest blog entries, to discuss only the content-based stuff.

Does that do it?

Rob

I would also go with shorter posts (say 850 words or less) that are more scannable (see http://www.4syllables.com.au/resources/scannable-tips/ for tips) and a more conversational tone.

Jackie:

Those both make sense.

I am grateful for your help.

Rob

No problem, did you look at the Drop Dead Money stuff?

Jackie:

Yes, I looked at it.

The “four seasons” terminology is something that I strongly believe in. There’s a wonderful book called
“Stock Cycles” that uses that terminology. That is one of my favorite investing books of all time.

One point re which I suspect I would disagree with the Drop-Dead Money person is that I believe that it is stock crashes that cause economic recessions rather than the other way around. I have never heard anyone else say that it is stock crashes that cause economic bad times. But I do believe that.

The graphic at the link highlights more up times and down times than I would worry about. I take more of a big-picture approach. In the 140 years of stock market history available to us, there have been four bull/bear cycles. I don’t say that the smaller ups and downs pointed to in that graphic don’t exist, just that it is harder to predict the smaller ones and they don’t do nearly as much damage.

The general concept sounds right. In good times, people get carried away and come to believe that good times will never end. In bad times, people get carried away and come to believe that bad times will never end. The reality is that things cycle from one extreme to the other. The  reality is in the middle.

Rob

Cool, I might have to check out that book.

“You Referred to the Goons as ‘Assholes.’ That’s Fair. They Do Behave Like Assholes. But the Biggest Asshole of Them All, the Lead Goon, is John Greaney. He’s the Guy Who Got the Numbers Wrong in the Safe-Withdrawal-Rate Study Published at His Site. John Was a Friend of Mine for a Good Number of Years. We Joked Around Together on a Daily Basis for Years. Is Not Part of This Story Why This Man Now Hates Me With Such a Burning Hate? He Hates Me Because He Cares About Accuracy Too. He Was EMBARRASSED to Have People Learn That He Got Those Calculations Wrong.”

by

Set forth below is the text of an e-mail sent to me on October 15, 2014, by Crystal, owner of the Budgeting in the Fun Stuff blog, followed by my response:

Intensity can be concise. 😉

Crystal

Crystal:

There’s caring behind the intensity. The matters we are discussing here affect millions of people in very serious ways. I want to get things right. I have found from years of experience that people jump to conclusions if I am not clear about what I am saying and what I am not saying. So I try to take things step
by step and help people understand as much of the background as possible. In this particular case, intensity (caring) translates into long comments.

In an earlier e-mail, you referred to the Goons as “assholes.” That’s fair. They do behave like assholes. But the biggest asshole of them all, the lead Goon, is John Greaney. He’s the guy who got the numbers wrong in the safe-withdrawal- rate study published at his site. John was a friend of mine for a good number of years. We joked around together on a daily basis for years. Is not part of this story why this man now hates me with such a burning hate?

He hates me because he cares about accuracy too. He was EMBARRASSED to have people learn that he got those calculations wrong. He is an engineer. He made his living (before he retired) getting numbers right and he was ashamed to have been publicly exposed as having gotten them wrong. That’s the driver
here. Greaney just copied the methodology he used for his study from other retirement studies. He ASSUMED that some earlier person had checked the matter out and gotten things right. When he found out that that was not the case, he became enraged. Not at the person who originally got the methodology
wrong, but at me. I was the one who in a direct sense made him look foolish, so he got angry at me rather than the person who made the mistake.

That’s the entire story here. Greaney is not alone. ALL of the Buy-and-Holders are good and smart people. They thought they were helping people by promoting this strategy. The entire academic world made a mistake back in the mid-1960s, when the Buy-and-Hold strategy was developed. When the error was uncovered in 1981, the entire academic world went into cover-up mode. They could not emotionally
accept that they had made such a huge mistake. So they suffered cognitive dissonance. They have been covering up this mistake for 33 years now. They caused the economic crisis by covering it up.

This isn’t just a story of research vs. research. It is a story of why large numbers of good and smart people elected to ignore or cover up critically important research for so many years. I have had people tell me that: “everything you say makes perfect sense but I cannot go along with it because that is not what the experts say.” That is a perfectly reasonable take. But those people are in the process of losing their life savings. We all should want to help them. We can help them only by telling the whole story, both the content-based part that we all would prefer to be talking about and the process-based part where we explain why the research that gets it right has been ignored for 33 years. The process-based part of the story must be told for the content-based part of the story to make sense.

I have the greatest respect and affection for the Buy-and-Holders that it would be possible to have. Valuation-Informed Indexing would not exist but for their many important contributions. The aim is not to make these people feel bad. But the reality is that they know on one level of consciousness that the strategy that they have been pushing for years is gravely flawed and they are ashamed for people to learn this. This is a reality that must be faced. It is a delicate reality and we all should be doing everything in our power to face up to this reality in a kind and charitable and loving  way. But we cannot just pretend that this elephant is not standing in our living room. None of the rest of this story makes even a tiny bit of sense unless we deal with the human element.

New research does not replace old research by some magical process. The human beings who devoted their lives to promoting the old research have to come out publicly and say the words “I” and “Was” and “Wrong” for the new research to become dominant. That’s what has not happened yet. We need to create an environment in which people on both sides of the debate feel safe making their points in a civil and reasoned way. Then all the bad stuff goes away and all the good stuff that follows from use of such a
process becomes evident.

There is not one person alive who would be hurt by this. It would help everyone alive on the planet today. There is no cost associated with this. Learning experiences enhance human lives for free. We are bloggers. This is a HUGE opportunity for bloggers. I know from the percentage of people exposed to this who expressed enthusiasm for hearing the full story that the market for this in in the MILLIONS of people. All the textbooks need to be rewritten. All existing calculators need to be reformulated. Thousands of new books need to be written to reflect the 33 years of research that has been treated as taboo for so long. This isn’t about making one person a millionaire. It is about making thousands of people millionaires. And all by helping millions of people. It’s a win/win/win/win/win.

If it were easy, it would have been done a long, long time ago. The reason why this opportunity exists is because of this delicate part where we need to keep the feelings of the people who made the mistake in mind when telling people what the last 30 years of research says. I am 100 percent in favor of keeping those people’s feelings in mind at all times. What I say is that we are hurting them more by stretching out their pain and keeping the cover-up in place. And that we cannot end the cover-up without telling people
that for a long time there has been a cover-up in place and why that has been so.

If Shiller has published his research last week, we wouldn’t have to talk about the  Goons/Assholes and the pain they are in. But that’s not the reality here. You can’t have something covered up for 33 years and not mention that fact. The pain of the Goons/Assholes is real and is a part of the story. We need to deal with it with charity. But we cannot get the job done without dealing with it in some way.

Those are my sincere thoughts, in any event. My response is long because I need to be careful in how I say things to get it right. And I need to get it right because there are big matters at stake, including the feelings of lots of good and smart and hard-working people who happened to make a mistake about something important a good number of years back. I didn’t cause any of this. I just found myself in a position where I think it would be fair to say that I was elected to be the one to tell the world about it. I am doing the best that I can do and I almost always elect to use more words than I would ordinarily use rather than take the chance of planting wrong impressions in the minds of the people reading my words because I left something out that would have helped them understand the full reality.

Rob

“I AM Intense. There Is No Question But That That Is a Reality. I Am Friendly and Polite and Warm. But I Am Intense and Determined. And There Is No Question Whatsoever But That That Turns a Good Number of People Off in My Discussions With Them. My Challenge Is to Retain the Good that Comes from Caring Deeply without Scaring People or Turning Them Off.”

by

Set forth below is the text of an e-mail from Jackie (owner of the The Debt Stuff blog) to me dated October 14, 2014, followed by my response:

Some of my (unasked for) thoughts:

– I think you could really benefit from an editor to make sure you aren’t focusing on the past but instead are getting your actual message across
– I think a simpler tone (like what I posted from your emails vs. the tone of what you originally sent me) is more readable
– Shorter paragraphs are more scanable.
– Shorter comment responses make you look helpful vs. over-doing it (Most people don’t respond to comments with multiple paragraphs; that gets overwhelming)

As a side note, your message reminded me a little of what http://dropdeadmoney.com/ talks about.

Jackie:

Your comments are 100 percent welcomed. I will also pledge to read yours over again several times and to try to let the message get past my protective radar.

The last comment (re overdoing it) is the one that hits home the most.

I once wrote a guest blog at Miranda Marquit’s blog that told a story about me that I think is funny today only because I have distance from it. Basically, I had a crush on a girl when I was in my 20s and it was clear that she liked me but it was also clear that she didn’t want to get more involved and it was driving me crazy for a long time. Eventually, she broke down and told me that I was “too intense.” I never would have come up with that one because in my mind intense is the best thing that a  person can be!

I wrote only about saving strategies for several years and I was universally loved. I was the same person! It’s just that then I was being intense about a different  subject, one that did not upset people. The name of my book about saving is “Passion Saving.” I don’t think that’s an accident. When people used to praise me, the common thread was that “he’s passionate about the subject.”

I care deeply about helping people. I saved like a crazy man for nine years because I couldn’t bear to do work that I did not love, no matter how much money I made doing it. It’s not my intent here to brag. I am saying that it is my nature to be intense. In some circumstances people love that trait and in some circumstances people hate it.

I am not sure that I am capable of being non-intense. There are circumstances in which one needs to pull in the reins to be effective, and, if that’s the way it is here, I need to work harder at doing that. But it really is something deep in my nature that drives that behavior. I don’t know how effective I can be if I deny my nature.

It may well be that the intensity has hurt me in many cases. I think there is a good bit of evidence that that is indeed so. But the other side of the story is that it has led me to good places on other occasions. I really do have my name on peer-reviewed research that I believe will be featured on the front page of the New York Times one day. That’s a pretty darn amazing reality given that I never studied investing in school. That happened because Wade Pfau contacted me because of my posts at the Bogleheads Forum. It didn’t bother Wade that I was banned for writing those posts. He saw merit in them and wanted to perform research that would show whether I was right or not.

I am hearing. I know that I am offering some pushback. But I am also at least TRYING to listen. We all have a hard time listening to messages that say we have long been doing something wrong in an important way.

I AM intense. There is no question that that is a reality. I am friendly and polite and warm. But I am intense and determined. And there is no question whatsoever but that that turns a good number of people off in my discussions with them. It makes the Goons go positively mad. But it causes at least some unease on the part of lots of people who are not at all goonish in their behavior.

I would be happy to rein it in if I believed that that would bring good results for everyone. But it amazes me that Shiller’s research has been out there for 33 years now and very few people have explored the implications of it in any great depth. I didn’t know that when this started. When the Goons started attacking me, I looked around for friendly sites and found that there was not at that time one site on the internet exploring the  implications of Shiller’s ideas in depth (now my site is the one site that does that).

Think about Wade Pfau, the researcher who contacted me to work with him. He told me that he was learning new things from me on an almost daily basis. And he has a Ph.D. in Economics! It should not have been possible for someone like me to teach Wade anything. But I taught him lots of very important things, according to what he told me in the hundreds of e-mails we exchanged.

I see that as evidence that my intensity can be a positive in some circumstances. I  could have folded up when the Goons attacked me and I never would have learned these things myself. I didn’t. I dug and dug and dug and dug. And I learned and learned and learned and learned. That’s what gives my work value, in my assessment. That’s the good side of my intensity.

The bad side of it is that it may turn some people off. I need to deal with that if that really  is so (and I think there is a good bit of evidence that you are right on this point). I am not dismissing what you are saying. I am struggling with the puzzle of how to be intense when that is a good thing to be and to be more reserved when that is the better thing. The intense person is inclined to see the good in intensity and not the bad, even though seeing only the good may hurt him in some ways.

It’s very hard for me to write short responses. When I detect that someone has an interest in the ideas, I want to share EVERYTHING. Sometimes I write an absurdly long response and people complain about it and they don’t realize that I cut it in half before posting it because I didn’t want to upset people by going on too long. That really happens! There was one woman at Motley Fool who put up a thread about me that she called “Death by Verbosity.” So you are pointing to something real. I acknowledge that.

My challenge is to retain the good that comes from caring deeply without scaring people or turning them off. It’s my problem, not yours. I am grateful to you for trying to help. I am not agreeing 100 percent because I feel that I see good that comes from the intensity too. I don’t feel that I can apologize for caring so much. But my ultimate goal is to get the message out and, if you point me in a direction that makes me more effective in getting the message out, you are doing me a big favor.

Thanks for trying to break through my super-strong defenses!

Rob

Crystal, Owner of the Budgeting in the Fun Stuff Blog, to Rob: “To Get the Word Out There, You Just Need Bloggers to Post. To Get Bloggers to Post, You Just Have to Be a Person We Know That Won’t Get Personal With the Assholes of the Blogging World. Your Posts Just Need to Be Informational And Positive Every Time. Never Put Any Focus on the Goons at All. Don’t Reply to the Goons.”

by

Set forth below are the texts of an e-mail sent to me by Crystal (owner of the Budgeting in the Fun Stuff blog) and Jackie (owner of the The Debt Stuff blog) on October 14, 2014, followed by my response:

You should totally respond to Evan. To get the word out there, you just need bloggers to post. To get bloggers to post, you just have to be a person we know that won’t get personal with the assholes of the blogging world. We weren’t saying that you shouldn’t post. Your posts just need to be informational and positive every time. Never put any focus on the goons at all. Don’t reply to the goons. Just reply to the Evans. That was our general point. Does that make sense?

Crystal

I would say reply in one (short) paragraph to Evan 🙂

And to keep all references to stuff that’s gone on in the past out of your posts/comments.

I haven’t gotten a comment on the one on my site, but that’s not at all unusual. I noticed some people did tweet/repin it though.

Crystal:

After I finish this response, I will put up a brief response to Evan.

What you say about the Goon matter almost makes sense to me but not quite. I 100 percent agree with the idea of always being informational and positive. And I know that people hate it when I talk about the Goons. But there are problems that come about from not responding to them.

The Goons are assholes. That’s fair to say. But on a lot of other issues a lot of them are NOT assholes. They believe in Buy-and-Hold. They lie about all sorts of things. But they are not lying about that. The reason why they act like assholes is that they are insecure in their beliefs. They have doubts in their own minds and, when I point out what the research says, I stir up their insecurities and they lash out.

There was one discussion board where they were having a debate as to whether I should be banned and one guy said: “Rob is the politest guy that I have ever met on the internet but he irritates me to no end!” That guy was not a Goon. He would not say something kind about me if he was a Goon. But he did vote for silencing me. My stuff really does bother even good and smart people. It is hard for people to accept that they have made a mistake with their retirement money. The Goons exploit that reality. But it is not only the Goons that are the problem.

I had a weekly column for a long time at the “Out of Your Rut” site. Kevin, the owner of the site, LOVED my stuff. He loved it so much that he told me that he wanted to start paying me even though I never asked for payment. Kevin has lots of friends in the social media and so the column would regularly get positive comments. I once wrote about how John Bogle caused the economic crisis (through his advocacy of Buy-and-Hold). One guy got upset about that. He likes Bogle and he didn’t like hearing that. I like Bogle too. He is one of my heroes. I wrote another column at the same site in which I praised Bogle to the skies. 90 percent of what Valuation-Informed Indexing is about is taken from Bogle. So the problem is not that I don’t like Bogle. The problem is that I am PERCEIVED as having something against Bogle even though that is not at all what I feel in my heart (I do believe that Bogle was the lead voice in favor of the investing strategy that caused the economic crisis but I do not believe that it was his intention to cause an economic crisis.).

It’s not my intent to be argumentative here. I appreciate that you are sincere and are trying to give me helpful advice. I am trying to be frank. I am trying to show the true nature of the problem. What is going to happen to people’s retirement money is a sensitive question. No one started out with bad motives. But people are in tough spots. Emotions are raw. The biggest problem that I have is that my case is research-based. If it were just my opinion, people could say “oh, that’s just that crazy guy saying crazy things again” and we could all be friends. But the Buy-and-Holders take pride in promoting a research-based strategy and it hurts them to hear that it is a very different strategy that is really supported by the research.

I will give one more example that perhaps will put a human face on the story. I had a friend named “Brian” when I worked at Ernst & Young. We used to go to lunch several times a week in the late 1990s.
Sometimes we talked about stock investing. He always said that I was “crazy” in a friendly and warm way. I would say “yes, I know that I am crazy, Brian, but that’s what I sincerely believe” and all was fine. A few years ago, the Wall Street Journal ran a story saying that I was right about safe withdrawal rates.
Brian knew that that was the issue that got me banned from numerous boards years ago. So he called me
on the telephone and said “How does it feel to be vindicated after all these years?” I said that I guessed it
felt good but that discussion of what the research says re SWRs is still banned at all those boards. He said
that he didn’t believe that and that he was going to put up a post repeating what the Wall Street Journal said at the Bogleheads Forum and see what happened. He bet me $5 that he would not be banned. He was banned within 30 seconds.

It’s hard for people to admit that they are wrong when they have invested years of their lives saying the wrong thing and telling others the wrong thing. That’s the real issue here. As a society we have to turn the boat around and it is a hard business because we have so much invested in the old way of thinking.

I’m not sure what my response adds up to. I am not trying to argue with you. I think I am just passing along thoughts gathered from 12 years experience trying to get the word out about these matters. I don’t think the Goons are the entire problem. I think that people tolerate behavior from them that they would not tolerate in other circumstances because they find it painful to hear parts of the message.

I will promise to ponder what you said a bit more. I will go back and re-read your e-mail several times. I don’t feel that I can promise not to talk about the Goons on an across-the-board basis because I feel that they are part of the story. But I of course acknowledge that I can get things wrong and that I need to try to be open to feedback from people who are obviously trying to help. So I will make some effort to challenge my own beliefs re all this.

Hopefully it will all work out for the best in the end.

Rob

“I Could OVERCOME the Goons If Only People Like Evan Were Aware of the Research Showing How Easy It Is to Implement This and Take Away Most of the Risk of Stock Investing. It Is the COMBINATION of the Lack of Understanding of How the New Ideas Work AND the Role That the Goons Play in Keeping Knowledge from Spreading that has Created the Problem.”

by

I had lunch at FinCon 2014 (the a conference for financial bloggers) with two bloggers, Crystal (owner of the Budgeting in the Fun Stuff blog and Jackie (owner of the The Debt Myth blog). We discussed the problem of the Goons invading blogs at which I posted guest blog entries in an effort to get the word out about Valuation-Informed Indexing. We agreed that I would write guest blog entries for each of their sites and that one would go up under my name and the other under an assumed name and then we would discuss the matter to determine how to handle any problems caused by Goon posters. Set forth below is the text of an e-mail sent by Crystal to Jackie and me, followed by my response:

Hi you two,

I received one comment on the post over at my site, and I know the commenter (definitely not a troll). How about you, Jackie?

Thanks,
Crystal

Crystal:

The comment was a good one.

Here is what Evan said:

“Most people would agree that buying low and selling high is the way to go -it’s telling when high and low are actually happening that is the trick. It’s hard to capture all the highs if you’re too busy trying to market time out the lows. You’re advice is sound but if it was easy to implement stock investing would be a piece of cake.”

He’s not saying that this is a bad thing. He is saying that it is a WONDERFUL thing. The only thing that is holding him back from following a Valuation-Informed Indexing strategy himself is that he finds it too good to be true (he says that, if this was easy to implement, stock investing would be a piece of cask and the peer-reviewed research that I co-authored with Wade Pfau shows that this is VERY easy to implement).

How do we get enough people talking about this so that people like Evan come aboard?

I’ve been getting these sorts of reactions going back to the first day (May 13, 2002). About 20 percent of the people exposed to the new ideas respond as Evan did — with interest, but not sufficiently convinced by one exposure to change how they invest their retirement money. How do we change things so that people like Evan can get all of their questions answered and come aboard? One exposure doesn’t do the
job. We need people talking about the last 33 years of peer-reviewed research at every investing board and blog on the internet. And it’s when the owner of a board or blog shows enough interest in the ideas to give them continuing exposure that the 20 percent of the population comprised of diehard Buy-and-Holders gets involved with their abusive stuff and ruins it for the 20 percent like Evan and the 60 percent in the middle.

I want to get these ideas out to EVERYONE. I obviously don’t have any problem with those who CHOOSE to go with Buy-and-Hold after being exposed to the new ideas (relatively new but supported now by 33 years of research). I want everyone to be informed about both sides and therefore able to make an INFORMED choice one way or the other.

I want to RESPOND to people like Evan, to show him why implementation is as easy as easy can be. No, he’s not a troll. But, though no fault of his own, he has never heard the other side of the story, he has never heard how easy this is to implement. I want to tell him. I see that as the entire point of our blogs. When new ideas come along that reduce the risk of stock investing by 70 percent while greatly increasing
long-term returns, I want to help people learn about those ideas.

That’s where I am coming from, in any event. My purpose in contacting you was to see if you could help me in my efforts to persuade more bloggers to help spread the word. I of course understand if you elect not to get involved. But that was my aim.

I have never said that the only problem is the Goons. It is not. There would be no problem if it were not for the Goons. I would have been able to spread the word myself 12 years ago if it had not been for the Goons. But I could OVERCOME the Goons if only people like Evan were aware of the research showing how easy it is to implement this and take away most of the risk of stock investing. It is the COMBINATION of the lack of understanding of how the new ideas work AND the role that the Goons play in keeping knowledge from spreading that has created the problem.

I am going to continue to try to help people by trying to overcome the Goons and get the ideas out to people like Evan. If you run into other bloggers who have an interest in joining in the effort, I hope you will let me know. I am always happy to answer any questions whatsoever or to address any concerns whatsoever. The advances are 100 percent good. There will come a day when everyone will recognize that, including the Buy-and-Holders and including the Goons. So I don’t feel that I am doing anyone even the tiniest bit of harm by trying to get the investing ideas that won Shiller a Nobel prize out to more people (even though some obviously FEEL that I am hurting them by showing that they made a mistake a good number of years ago and that that mistake needs to be fixed if we are all to move forward together).

I am grateful to you both for the efforts you put into this. Perhaps one of your readers will contact me and end up helping in a  big way. It may not happen. But that sort of thing has happened before and none of us can know when it is going to happen again. We just need to keep trying and thereby to keep creating opportunities for good things to happen.

Please take good care and I wish you both the best of luck in all your future life endeavors. It will be fun to meet up with you at FinCon15 and trade notes re the developments that take place over the next year. I HOPE I will have achieved my big breakthrough by then. Of course I held similar hopes last October!

Rob

“Yes, I E-Mailed 30,000. I Am a Bit of a Bulldog on Issues re Which I Develop a Passion. Two of the Academics to Whom I Wrote Told Me That They Have Developed Course Materials on the Valuation-Informed Indexing Concept That They Are Now Using to Teach Their Students!”

by

Set forth below is the text of an e-mail that I sent to Ken Evoy, owner of the SiteSell.com web hosting company, on April 16, 2014:

Ken:

I work full-time on my site. The long-term success of the site is my top priority. But I don’t have an employer that I need to answer to. So it would be my decision alone as to how much time to direct to a new project.

Yes, I e-mailed 30,000. I am a bit of a bulldog on issues re which I develop a  passion. Two of the academics to whom I wrote told me that they have developed course materials on the Valuation-Informed Indexing concept that they are now using to teach their students!

I don’t have an ongoing relationship with Wade today. I am happy to e-mail him. But my preference would be to have a good bit of detail to send him re his precise role before contacting him. He’s a fairly high profile guy today. He is quoted in the Wall Street Journal and the New York Times. So I don’t know whether this is something he would want to be involved in or not. It might depend on the extent of the time commitment. It might be that his employer would not even permit outside work, I just don’t know. I know that his focus today is retirement planning research and teaching.

Please take good care.

Rob