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

The Bengen study and the Trinity study also used the “what survived in the past” method. And not surprisingly came up with just about the same result.

If you want to see that methodology replaced you need to come up with a better way.

And convince others that your way is better.

I will leave it as an exercise for the reader to decide if you have been successful.

I agree that Greaney employed essentially the same methodolology as the Trinity study and the Bengen study. Both of those studies are in error as well. As you note, they look at what survived in the past. That’s part of the story but not the entire story. You need to look at what survived in the past in similar conditions (that is, at similar valuation levels).

If someone drives a car 150 times and gets in accidents that nearly kill him but don’t quite do so on four of those occasions and those four occasions happen to be the four times he drove drunk, those experiences do not show that driving drunk is “100 percent safe.” What they show is that driving drunk is extremely dangerous.

That’what Greeaney’s study (and Trinity and Bengen) show re retirements using a 4 percent withdrawal rate for a retirement beginning when valuations are where they were at the top of the bubble. Someone who retired in 1929 and used a 4 percent withdrawal had only $1 left in his account at the end of 30 years. At times when valuations were reasonable, the portfolio grew in size. It was super, super safe. But retirements at a CAPE of 33 barely squeaked by. Barely squeaking by indicates risk, not safety. And of course the CAPE was far higher in 2000 than it was in 1929. So those retirements were even more risky than the 1929 ones that left the retiree with $1 in his account. Those were insanely risky retirement plans, not “100 percent safe” (Greaney’s words) ones.

I want to see that long discredited methodology replaced. And, of course, working with John Walter Russell and Wade Pfau and many others, I came up with a better one. There have been thousands of our fellow community members who have expressed a desire that honest posting be permitted so that people can learn about the better methodology. Numerous big-name publications, like the Wall Street Journal and the Economist, have noted that the 4 percent rule does not apply when valuations reach the levels that we saw at the top of the bubble and that apply today. Yet there are still people promoting this long-discredited methodology today. And there are still investors who are tricked into placing their confidence in it because they do not get to hear the criticisms of it that people like me would put forward if it were not for the criminal behavior (death threats, acts of extortion. etc.) that you Goons have employed to keep people from hearing the straight story.

I believe that this will change in the days following the next price crash. I think that people will be pissed when their “100 percent safe” retirements fail. We’ll see. You obviously would not have behaved in the manner in which you have behaved if you thought that the methodology employed by Greaney could convince people in a community in which honest posting re the last 40 years of peer-reviewed research was permitted.

A con relies on deception to convince people. Something real can win support even in an environment in which challenges to its logic are permitted. Your own behavior shows that the Greaney study cannot survive challenges. You have hurt millions of people in very serious ways. I am confident that I will indeed be successful in the days following the next price crash, when the on-the-ground realities show people how dangerous it is to tolerate a con of this magnitude. Please mark me down as saying that Greaney should have corrected his study within 24 hours of learning of the error he made in it and that he never should have engaged in a single criminal act in “defense” of his “100 percent safe” retirement claims.

A failed retirement is a serious life setback.

My sincere take.

Here is a small sample of the comments that our fellow community members have advanced:

Investing Discussion Boards Ban Honest Posting on Valuations!

Rob

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 only quibble with Greaney is the definition of “safe”. His definition for the purpose of his study is objective and precise. Your definition, near as anyone can tell, is subjective and squishy, and therefore unmeasurable. It boils down to “I don’t know what safe is, I only know that Greaney is wrong.” Which is useless hot air.

Perhaps your precise definition is in your book, which you said would be done by the end of the year. Yet another missed deadline?

My definition of “safe” is the dictionary definition of the word. I don’t consider my difference with Greaney to be a “quibble.’ People use retirement studies to plan retirements. A failed retirement is a serious life setback. We all should want to numbers reported in retirement studies to be accurate.

Gresney obviously doesn’t consider my objection to the methodology used in his study to be a “quibble.” He wouldn’t threaten to murder my loves ones over something he viewed as a quibble. He wouldn’t engage in extortion to silence an academic research who worked with me for 16 months and concluded from his research that “Yes, Virginia, Valuation-Informed Indexing works!” Greaney gets it that Valuation-Informed Indexing and Buy-and-Hold are very, very different models for understanding how stock investing works

The difference is that one is a pure Get Rich Quick approach and the other is the first true research-based model. Buy-and-Hold treats irrational exuberance as if it were something real, something that you could use to finance a retirement. Valuation-Informed Indexing treats irrational exuberance as empty air and counts economic-based gains as something real.

That’s a very big difference. The reason why many Buy-and-Holders get so upset when someone cites the last 40 years of peer-reviewed research in this field is that spreading knowledge of Shiller’s Nobel-prize-winning research to every investor on the planet will cause the Buy-and-Hold house of cards to tumble to the ground. I see that as a very good thing. Greaney wants to maintain confidence in Buy-and-Hold. Greaney and I are working at cross purposes.

I consider us friends. I had a lot of good times with Greaney in the days prior to May 13, 2002. And I believe that his study caused a lot of people at the Retire Early board to take lower withdrawal rates than what they would have taken if he had not prepared the study. But once it became clear that I was not buying into the core Buy-and-Hold dogma that market timing is not always 100 percent required for every investor, he could see that we were working at cross purposes. The fact that thousands of our community members reacted positively to what I said freaked him out completely.

I have fond feelings for the guy. But I do not believe to this day that his retirement study contains an adjustment for the valuation level that applies on the day the retirement begins. I didn’t believe that on the morning of May 13, 2002. I really, really, really don’t believe it after seeing the past 20 years of behavior of Greaney and his Goon pals. Buy-and-Hold is rooted in emotion. The “idea” that irrational exuberance gains are real is the product of an emotional Get Rich Quick impulse, nothing more. Buy-and-Hold is what sells, Valuation-Informed Indexing is what works.

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

My best wishes to you and yours, Anonymous.

Rob