A Rich Life

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

“Either the Greaney Retirement Study Contains a Valuation Adjustment or It Doesn’t. I Sincerely Believe That it Doesn’t.”

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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:

Have haven’t discovered anything.  You have been too busy trying to spin a story in an attempt to gain fame on the internet that ended up blowing up in your face.  Early on, you positioned yourself as some kind of leader of the online financial community, when, in fact, you were simply the butt of many jokes.  You can try and blame others, but you brought it all on yourself.

Either the Greaney retirement study contains a valuation adjustment or it doesn’t.

I sincerely believe that it doesn’t.

Rob

“The People Who Hold Degrees Make Money Due to the Public’s Perception of Their Expertise in That Model. If Shiller’s Nobel-Prize-Winning Research Is Legitimate, Then the Last Thing in the World That You Want to See in an Investment Adviser Is Expertise in Buy-and-Hold. That’s Expertise in What Doesn’t Work. I Lack That Sort of “Expertise.” Good for Me.”

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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:

Do you have any degree in the investment field? Do you have any degree with respect to research or statistical analysis? Do you have a track record of investing success?

The answer to all those questions are “no”. Any attempt from you to tell people what they should do in retirement investment is fraud. You should be the one fixing YOUR problems instead of telling everyone else what you think they should do.

I do not have a relevant degree. That’s a plus. Shiller’s research discredits the dominant academic model for understanding stock investing (Buy-and-Hold). The people who hold degrees make money due to the public’s perception of their expertise in that model. If Shiller’s Nobel-prize-winning research is legitimate, then the last thing in the world that you want to see in an investment adviser is expertise in Buy-and-Hold. That’s expertise in what doesn’t work. I lack that sort of “expertise.” Good for me.

If Buy-and-Hold were a real thing, Buy-and-Holders would welcome new research findings and challenges from people who don’t hold degrees. The reactions that we have seen from Buy-and-Holders show us that the “strategy” is just a marketing gimmick, a money- making thing. Buy-and-Holders tell people that irrational exuberance gains are just as good as real gains, making effective financial planning impossible. Boo, baby. Not this boy, you know?

Rob

“Since the Valuation Level That Applies on the Day the Retirement Begins Is the Most Important Factor Affecting Safety, You Would Need to Consider Valuations in Your Analysis. Greaney Didn’t Do That. He Did a Retrospective Analysis of the Wrong Thing. He Looked at Survival and Then Claimed That He Had Identified What Was Safe.”

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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:

…..or it doesn’t need it.  You keep leaving that part out.  Are you familiar with research?  Do you understand what a retrospective study is?  Doesn’t look like it.

If you want to say that the Trinity study is a retrospective study of what withdrawal rate survived in the past. I am fine with that. If there are some people who want to use the withdrawal rates that always survived in the past as their personal withdrawal rate, I think that’s their choice. But a rate that happened to survive in the past is not a safe withdrawal rates. To say that is nutso. Greaney said that 4 percent is always safe. That’s not even close to being so.

To do a retrospective study of what withdrawal rate was safe in the past, you would need to look at safety. Since the valuation level that applies on the day the retirement begins is the most important factor affecting safety, you would need to consider valuations in your analysis. Greaney didn’t do that. He did a retrospective analysis of the wrong thing. He looked at survival and then claimed that he had identified what was safe.

That’s fraud. If you want to say that he didn’t know that he made a mistake, I could be persuaded of that. But not after the mistake was pointed out to him. His response after having the mistake pointed out to him was to engage in abusive and in some cases criminal behavior. I mean, come on.

Not this boy, you know? There’s no valuation adjustment in the study. I am sure.

Rob

“You Either Believe That Peer-Reviewed Research Has Value or You Don’t. Valuation-Informed Indexing Is What Buy-and-Hold Would Have Been Had Shiller Published His Amazing Research in 1961 Instead of 1981.”

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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:

First of all, the buy of holder is just fine. Let’s use a typical 60/40 split, which is often a 60/30/10 split (stock/bonds/money market or CDs). That means that the retiree has 40% of their portfolio in something other than stocks. Downturns are always temporary. The Buy and Holder can simply start using the money market/CD portion of the portfolio and then move on to the bond portion after that. The buy and holder also has interest and dividend income coming from the portfolio as well as social security. The buy and holder can easily wait for stock prices to recover, should their be a downturn during retirement.

What people can’t do is wait to see how it all plays out. Look at what would have happened to people if they did as you suggested over the last few decades. When you reach 60 years old, you have to have it fully funded. People lose their jobs and have health issues. 70% of people retire before the age of 60.

If you want more security, just listen to Wade Pfau presentation from last week. Build yourself a bridge to 70, add on an asset buffer, etc. Telling people to follow a timing scheme that has never worked is dishonest at best.

Your first paragraph makes a certain amount of sense to me. I don’t entirely agree with it. But there is a core reality to it — that stocks are a good investment class in the long run and so a strategy that keeps you mostly in stocks is not going to be too terrible. What it misses is that you can do better by Staying the Course in a meaningful way (keeping your risk profile constant over time). But, if you keep that to one side, there is a bit of logic here. Stocks are indeed a great investment class.

The second paragraph I don’t get. What does it mean to be “fully funded”? If you are at the same risk profile that you determined was best for you when you started, why aren’t you fully funded. I think that you can’t get out of the habit of taking the numbers on your portfolio statement too seriously. If those numbers show you not to be fully funded, you’re not fully funded. It’s those official numbers that matter! Forget irrational exuberance!

I don’t forget it. I think that accepting irrational exuberance and doing what you can to overcome it is the key. That’s 70 percent of what it takes to invest successfully for the long term. Stock investing is a battle with irrational exuberance and the Buy-and-Holders don’t even put up a fight — they feel that they can avoid the fight by conceding before the fight begins. Some strategy!

I don’t think of Buy-and-Hold as a strategy, I think of it as a marketing gimmick. I believe that it started out as a strategy. But I think it stopped being a true strategy when the Buy-and-Holders decided “let’s ignore all research from 1981 forward” The thing that I loved about Buy-and-Hold in the days when I was a Buy-and-Holder was the respect for the peer-reviewed research. When I saw how committed many Buy-and-Holders were to blocking discussion of Shiller’s Nobel-prize-winning research, the appeal of the thing just went “Poof!” The Buy-and-Holders aren’t even true to their own core principles.

You either believe that peer-reviewed research has value or you don’t. You can’t say “I believe in all peer-reviewed research except for the research that shows that I didn’t know everything when I came up with the best strategy that I could come up with in the days before the most important research was published.” Valuation-Informed Indexing is what Buy-and-Hold would have been had Shiller published his amazing research in 1961 instead of 1981.

My best wishes,.

Rob

“Do You Think It Would Have Been Better If I Had Kept It Zipped re the Error in the Greaney Retirement Study (It Lacks a Valuation Adjustment)?”

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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:

Your words are empty calories.  I can spend what I have.  You can’t do that when you are broke.

You can spend what you have, Anonymous. We agree re that one.

I obviously wouldn’t be broke if there had been no abusive posting. So that one’s on you, not me.

Do you think it would have been better if I had kept it zipped re the error in the Greaney retirement study (it lacks a valuation adjustment)?

Rob

“Irrational Exuberance Gains Are the Stock Investing Equivalent of Empty Calories.”

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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:

No one takes dieting advice from a 600lb person.  No one takes sobriety advice from a drunk.  As such, it is a logical impossibility that a broke guy in his 60’s knows what he is talking about when it comes to investing.

No one says that calories don’t matter for someone trying to stay fit. Irrational Exuberance gains are the stock investing equivalent of empty calories. The Buy-and-Holders say that irrational exuberance gains are the same as economic-growth gains. I don’t buy it. I say that it is a mistake to treat empty calories as if they were real food.

Rob

“If Buy-and-Hold Was a Real Thing, There Never Would Have Been a Single Abusive Post. You Would Be Able to Accept It That There Are People in the World Who Have Different Views Than Yours re How Stock Investing Works.”

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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:

If VII was a real thing, you wouldn’t be broke and you wouldn’t need to live in the land of make believe.

Fix your own problems.

If Buy-and-Hold was a real thing, there never would have been a single abusive post. You would be able to accept it that there are people in the world who have different views than yours re how stock investing works. You would do your thing and they would do their thing and you would see no reason why you couldn’t be friends.

Rob

“If Buy-and-Holders Believe That Buy-and-Hold Cannot Survive Without Abusive Posting, That’s a Huge Story in Itself.”

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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:

“My job for the last 23 years has been to open every site on the internet to honest posting re the last 44 years of peer-reviewed research in this field. “

Approximately how many sites have you managed to open up in those 23 years?

I opened every one at which we did not see abusive posting.

If Buy-and-Holders believe that Buy-and-Hold cannot survive without abusive posting, that’s a huge story in itself.

Rob

“In Ordinary Circumstances, There Would Be No Need for Me to Take on This Work. There Would Be Universal Agreement That Posting re the Peer-Reviewed Research Would Be Permitted. The First 23 Years of Discussions Shows That the Get Rich Quick Urge Residing Within All of Us Is a Very Strong Thing.”

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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:

Then you should stop your abusive and criminal behavior.  I am also guessing that the fact that you haven’t worked in 25 years also has something to do with it.

My job for the last 23 years has been to open every site on the internet to honest posting re the last 44 years of peer-reviewed research in this field. Do you think it is going to happen by itself with no one working it. The history of the thing shows that you would be wrong to think that. Do you think that it is easy work? Try it for two days and see if that changes your mind.

In ordinary circumstances, there would be no need for me to take on this work. There would be universal agreement that posting re the peer-reviewed research would be permitted. The first 23 years of discussions shows that the Get Rich Quick urge residing within all of us is a very strong thing.

It doesn’t follow that we will never replace Buy-and-Hold with Valuation-Informed Indexing (Buy-and-Hod updated to reflect the last 44 years of research). I believe that we are a fundamentally good people. If we were 100 percent corrupt, we would never have permitted Shiller to publish his research in a peer-reviewed journal in the first place.

We’ll see.

Rob

“Irrational Exuberance Does Put Money in Your Account for a 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:

Gee, why did I follow the old system?  I am now burdened with millions of dollars when I could have followed the new system and be broke like Rob Bennett.  Silly me.

Irrational exuberance does put money in your account for a time, Anonymous. That’s how it works. That’s the appeal.

Rob