A Rich Life

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

Rob Bennett to Morningstar Site Administrator: “The Greaney Supporters Openly Discuss Tactics for Disrupting Morningstar Threads….They Have Taken Comfort in the Posts by Mel [Lindauer]”

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Yesterday’s blog entry reported on an e-mail that I received from a Morningstar site administrator on April 17, 2006. The e-mail read: “Please direct us to the specific posting where you were threatened with violence by another Morningstar poster. ” Set forth below is my response, which was sent the following day. I will provide the text of my follow-up e-mail in tomorrow’s blog.

MStar Casey:

I’ve never been threatened by any Morningstar poster.

I have been threatened with violence by a poster from another board. This poster has made numerous threats against posters who in his view “cross” him by questioning his views on investing.

There are a group of posters at another board who support this individual. Several of them have signed up at Morningstar since I began posting there and have put forward disruptive posts as their attempt at harassment.

There have been several posts in which Mel and a number of others at Morningstar have posted links to the web site and the discussion board of the poster who threatened me. His name is John Greaney and he is the owner of the RetireEarlyHomePage.com web site. There is a discussion-board site connected with that web site at which he has several boards devoted solely to the topic of ridiculing me and any of the hundreds of posters who at earlier times supported me on a number of Retire Early boards at which I have posted. The obvious purpose is to intimidate posters who post at these boards not to offer support for me or to disagree with his views.

The posters at Greaney’s board have interpreted Mel’s linking to Greaney’s site and discussion board as support for Greaney’s tactics. I have seen the tactics used by Greaney supporters destroy a number of boards. These are not your ordinary discussion-board tactics.

The post that I put to the Morningstar board was in response to a post in which a poster complained about posters following me around from thread to thread and harassing me. My post was an attempt to explain the background. The Greaney supporters openly discuss tactics for disrupting Morningstar threads (and threads at other boards at which issues relating in some way to what the historical data says re long-term stock returns). They have taken comfort in the posts by Mel and a few others to the Greaney web site and the Greaney discussion board.

The root issue is that Greaney got an important number wrong in a study of safe withdrawal rates that he posted to his web site. There is no reasonable dispute about the fact that he got the number wrong. This has been confirmed by numerous experts, including William Bernstein and Scott Burns. It has also been confirmed by extensive examinations of the historical data on which the study is based. Greaney does not want to acknowledge getting the number wrong, and he understands that permitting honest posting on the safe withdrawal rate topic makes him look bad for failing to acknowledge the error. Honest posting at Morningstar embarrasses him because there are a good number of posters who participate at the various Retire Early boards who also participate at the Morningstar board.

It may take me an hour or two to find the post at Motley Fool at which the threats of physical violence were made against me. I will provide links in a follow-up e-mail. There were numerous threats made (the threats and the fallout from them caused just about all effective on-topic posters to leave the board). The posts in which the threats were made were deleted from the board, but there were several cases in which the threats were quoted in later posts. The last time I checked, the posts quoting the threats were still at the board. I will get back with links in a little bit.

Rob

Morningstar Site Administrator: “Please Direct Us to the Specific Posting Where You Were Threatened with Violence by Another Morningstar Poster”

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One of my reports on my e-mail correspondence with Academic Researcher Wade Pfau described an e-mail to Wade in which I stated: “I put up a post describing Greaney’s tactics and Lindauer’s role of linking to Greaney’s board each time a new poster dared to post honestly.” One of the Goons asked for a link to the post. I provided the link in the comments section of that blog entry. 

The post appeared in a thread at the Morningstar.com site at which long-time community members were asking why so many abusive posters had recently begun participating in the discussions. Here are the words of my post:

Look at 49451 and see someone with 2 morningstar posts that has nothing to add except a wise crack.

For those not playing close enough attention to understand what is going on here, I will provide a brief bit of background.

There is an individual who got an important number wrong in a study that he published on the internet. He has elected not to acknowledge the error. Because he has his own web site, he has a number of supporters who are willing to do just about anything to block any discussion board on the face of the internet from engaging in honest and informed and reasoned discussions of the topic addressed in the study in which he got the number wrong.

I was aware from my own research that this individual got the number wrong. I reported this to a board at which I posted, and that post generated the most exciting discussions that board had ever witnessed. My position was vindicated beyond any reasonable doubt when we discovered what Bill Bernstein says about the subject matter of the study in his book “The Four Pillars of Investing.”

I put up a post entitled “What Bernstein Says” that reported on Bernstein’s position. The response from the individual who got the number wrong was to threaten to send one of his goons to my house with a baseball bat to kill my wife and kids. Motley Fool banned me because their lawyers are concerned that some crazy supporter of this individual may actually take action on this insane threat and that they could be held liable. The site administrator has said that he would love to have me back on the board (Motley Fool co-founder Tom Gardner wrote one of the blurbs that appear on the back cover of my book) if the individual would “permit” it.

This development caused every effective on-topic poster at that board to leave the board within a matter of months. There is no longer any on-topic posting worth taking note of at that board.

Those interested in the subject matter of that board went on to form four other boards at which they hoped to be able to engage in honest and informed and reasoned posting on the subject matter of the board. As each became successful, the individual sent his goons in to destroy every one of them.

Mel has linked to this individual’s web site on several occasions. The individual’s supporters have interpreted this as an endorsement of this individual’s tactics for “dealing with” the statements put forward by Bernstein and a host of others on what the historical data says re how valuations affect long-term stock returns (a topic closely related to the topic addressed in the study in which the individual got the number wrong).

Rob

In the comments section of the earlier report, one of the Goons asked to see the correspondence that I engaged in with the Morningstar.com site administrator. Set forth below is the text of the first e-mail that I received from Morningstar. I will post the text of my response tomorrow.

hocus,

Please direct us to the specific posting where you were threatened with violence by another Morningstar poster.  In Thread #49557, post 9, you quote a threat from another poster.  Please direct us to that thread and post.

Thanks,

Mstar Casey

 

Academic Researcher Wade Pfau: “The Role of Valuations in Affecting Safe Withdrawal Rates Will Definitely Find Its Way Into the Retirement Management Analyst Curriculum…. As I Am in the Early Stages of Hoping to Return to a Job in the United States, I Do Request That You Tone Down a Bit Whatever You Will Be Writing About Me. I Am Just Concerned About What Potential Employers May See When They Google My Name.”

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Yesterday’s blog entry reported on an e-mail that I sent to Academic Researcher Wade Pfau on April 6, 2012. Wade responded a few hours later.

He said: “Thanks for sharing.  And I’ll keep plugging away at this. I’m not sure if you saw the news before, but I recently became the curriculum director for the Retirement Management Analyst designation, which focuses on the post retirement period. I was surprised to learn that CFPs don’t learn about post retirement, and their curriculum doesn’t even cover things like the Trinity study. The role of valuations in affecting SWRs will definitely find its way into the RMA curriculum.”

I responded the next day. The text of my response is set forth below.

Wade:

Please take good care. You’re the best.

I will send you an e-mail when I post the articles. My intent will
obviously not be to stir things up. I just feel better if you hear
news that you might consider unpleasant coming straight from
me rather than finding out about it through some other means.

Rob

Wade responded the same day. He said: “As I am in the early stages of hoping to return to a job in the United States, I do request that you tone down a bit whatever you will be writing about me. I’m just concerned about what potential employers may see when they google my name.”

He added: “About that first email I sent you in our exchange, please under no circumstances try to summarize or excerpt from it.  If you must use it, please include the entire message with nothing left out. I think that is only fair, because you will then have free reign for your rebuttal, and I won’t be around for further rebuttals to that.”

Arty to Rob Bennett: “If Wade Requested You Not Share Personal Correspondence, I Hope You Can Find a Way to Honor His Request”

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Arty posted two important comments to yesterday’s blog entry on my e-mail correspondence with Academic Researcher Wade Pfau. The texts of these two comments are set forth below.

Arty Comment #1:

The report is correct about start and end points mattering. After all, we know that this matters in any single regression, but especially in comparative strategy regressions, even if using only a single asset class for the “stocks”. It muddies further if using some slice/dice model. But this reviewer’s objection can be made on ANY regression! That is, the argument *always* holds. So now what? Don’t do any regressions of any sort? That would render Fama’s 3-Factor model useless too, and many other landmark works. So it kinda’ begs the question.

I especially disagree about the transaction costs objection in that any reasonable shifting strategy (where the shifts would be rare if using PE/10) should not incur any more costs than a buy-and-holder who does normal rebalancing when their allocation shifts outside the assigned ranges.

And if using a broad-range implementation, say a 25-50-75, with hold ranges once a segment was crossed, you would see even fewer rebalancing events than most who buy and hold. I’m not arguing the relative merits of the strategies here, just making this observation vis a vis the objections.

Indeed, in many accounts these days, there would not be transaction costs (say, between Vanguard funds held in a tax-deferred account). But even if we assume transaction costs, I don’t see this as a good objection.

Finally, a writer should be able to discuss the reviewer points. That is the essence of the peer-review process, when done properly. The above would have been my objections to the reviewer comments.

Arty Comment #2:
Rob,

I am a big fan of Wade’s, albeit from afar. And maybe he can use these comments in future discussions with his peers.

But speaking only from a human point of view, if Wade requested you not share personal correspondence, I hope you can find a way to honor his request for those things he wishes to remain between the two of you only.

I know his work is exciting, and worthy of much discussion. And this particular reviewer commentary is a glimpse into a world that is opaque for many. I get that.

But we can discuss his work—as it should be on its own merits— without the private communications. Speaking only for myself here, I hope you can find a way to honor his request, Rob.

My responses to Arty’s comments are set forth in the comments section of the blog entry to which they were placed.

“It’s the Most Extraordinary Thing I Have Ever Seen. The Moon Landing Is a Very Distant Second.”

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Yesterday’s blog entry reported on an e-mail that I sent to Academic Researcher Wade Pfau on March 21, 2011. Wade’s next e-mail arrived on March 28, 2011.

Wade offered his assessment of the Returns Sequence Reality Checker in this e-mail.

I had asked if the concept made sense. He said:  “Yes, indeed. You are making a good point with the spreadsheet.”

We exchanged a number of e-mails relating to technical points re the building of the calclualtor.

On April 5, 2011, Wade sent me an e-mail titled “Classy Discussion” with a link to the Early Retirement Forum:

http://www.early-retirement.org/forums/f28/safe-savings-rates-a-new-approach-to-retirement-planning-over-the-lifecycle-55545.html

The discussion thread at the link includes numerous defamatory comments about me (the forum banned honest posting on the safe withdrawal rate topic after I reported on the errors in the Old School studies and the Greaney Goons threatened to burn the entire site to the ground unless honest posting was banned). It contains a comment arguing that, since Wade has agreed to associate with someone with a long history of posting honestly on safe withdrawal rates, he should be treated as possessing “zero credibility.”

I responded the same day. The text of my response follows.

Wade:

Thanks for letting me know.

There’s a serious issue here. This is not normal human behavior. Buy-and-Holders are in serious emotional pain.

Investment professionals need to write about this aspect of things more often. People shy away from the subject. But we don’t solve it by shying away from it. Emotions matter.

I of course would like to see people speak up at that board in favor of a lifting of the ban on honest posting. But how do you think you would feel if you were one of those who had insisted on the ban some years back? As a society, we have created a huge problem. As delicate as this matter is, we are going to need to work through it as a society in days to come.

That’s my take, in any event. It’s the most extraordinary thing I have ever seen. The moon landing is a very distant second.

Rob

 

“When I Was Checking In At the Hotel, J.D. Roth Was Sitting Nearby With A Group Of People Talking And He Called Out To Me”

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I discussed the reaction I received to my investing ideas at the Financial Bloggers Conference in a recent comment put to the Goon Central board. The comment was advanced on a thread titled Tweets on Defamatory Content:

Say, Rob, did you notice that people tended to not go out of their way to include you in conversations – in fact, they tended to edge away?

No.

There is indeed discomfort about the investing issue. People don’t say “I am going to write about that at my blog when I get home” or “Tell me exactly what happened, I want to know the complete story here” or “I am going to let all my friends know about this, this is important stuff.”

To that extent, the suggestion you put forward here represents reality. This topic causes 95 percent of the people who hear about it to feel intense discomfort. Some try to hide it. A small percentage act like out-and-out goons (I didn’t meet any like that at the conference, but it could be that they made an effort to stay away from me). Most remain low-key and do express shock re the obviously shocking stuff (death threats) but don’t ask the follow-up questions that you would expect to hear if they were letting in the significance to their own portfolios and to our economic system as a whole of the message they are hearing.

I of course acknowledge that this reaction is strange. It is also highly consistent. I am not describing a sometime thing. I am describing an almost-always thing.

But, no, people did not edge away in the way you describe. For example, when I was checking in at the hotel, J.D. Roth was sitting nearby with a group of people talking and he called out to me. He didn’t have to do that. He knows my views on investing. He called out and invited me over voluntarily.

So I sat with those people. Todd Tressider was one of them. He was in the process of writing his long piece on SWRs. So that got the discussion started on my favorite issue. As part of that discussion, I told two women bloggers in the group about the death threats, etc. Both expressed shock and then the discussion turned to other subjects (as part of the phenomenon described above). When it got to dinner time,  the two women bloggers and me and a man blogger agreed to go to dinner together (J.D. and Todd had gotten into conversations with other people). There was no attempt to exclude me or anything like that. Our conversation was warm and engaging.

I’ve exchanged e-mails with J.D. and with Todd in the months since. There HAVE been disagreements expressed in those conversations. But not hostility. I think there is less warmth than there would be if the disagreements were not present — they are afraid to get too close because that would require them to take a stronger position on the honestzzz posting matter than they feel prepared to take today. So there IS a distance that otherwise wouldn’t be there. But it would not be right to say that they are avoiding me. Todd has called me on the phone unsolicited two times. Would someone trying to avoid someone punch in that person’s number on the telephone? That makes no sense.

Is there distance? Yes.

Is there discomfort? Yes.

Are people experiencing confusion? Yes.

Are people uncertain how to proceed? Yes.

Are people running away from Rob Bennett, saying “he’s crazy” or “he’s dangerous”? No. Only the Goons are pretending to do that.

Actually, it’s beginning to play out the other way around. THe Normals are showing more indications that they are feeling discomfort in the presence of the Goons.

I had a Guest Blog at Consumerism Commentary the other day. You Goons almost always try to disrupt such super discussions. There were no Goon posts. My guess is that you tried and that your posts were deleted by the site owner. That’s what we need to see. That’s what we should have seen the first time you came forward with your ugliness at Motley Fool. If people are starting to react that way, we are very much traveling on the right track, albeit slowly as all get-out.

Rob

 

The Bogleheads Forum Discusses, Um, Not Exactly Valuation-Informed Indexing…. But Something Kinda, Sorta Distantly Connected To It (Kinda, Sorta)

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The Buy-and-Holders are not taking this well, are they?

The thread is here.

Kinda, Sorta Juicy Excerpt #1: Those ridiculous pictures on the right make it hard to follow!

Kinda, Sorta Juicy Excerpt #2: You’ve stumbled across Rob “Hocus” Bennett’s site. This forum was created in large part to get away from his takeover of the old Vanguard Diehards’ forum at Morningstar.com.

Kinda, Sorta Juicy Excerpt #3: There’s an entry about him at urbandictionary, if that tells you anything.

Kinda, Sorta Juicy Excerpt #4: His main point seems to be…. Use the PE10 and adjust expectations accordingly. <—— (That did not take a whole website and a million blog posts, did it?)

Kinda, Sorta Juicy Excerpt #5: He-who-must-not-be-named rears his head again!

Kinda, Sorta Juicy Excerpt #6: I don’t know the whole history and don’t care to get into it, but the guy makes some good points about PE10-based market timing vs buy-hold-rebalance.

Kinda, Sorta Juicy Excerpt #7: This idea used to meet a lot more resistance on the internet.

Kinda, Sorta Juicy Excerpt #8: Although not everyone loved the idea of PE10, the issue with Hocus was his hundreds of rambling and incoherent posts, not their content (if they could have been said to have any). Hence the jump to this blissfully Hocus-free forum where you are free to post on any topic without being harassed or derailed.  PS– THANK YOU to the mods for making this happen. You saved the Diehards.

Kinda, Sorta Juicy Excerpt #9: I’m not sure which is more amazing: (1) That someone would go to the trouble of posting a web page detailing how many websites have had to ban the passionsaving guy; or (2) That the passionsaving guy has been banned from so many websites.

Kinda, Sorta Juicy Excerpt #10: Better be cautious…Hocus has given notice that he intends to sue all those individuals who have disagreed with him and those sites which have banned him, thus doing irreparable damage to his online personal finance consulting business. A drastic step for sure, but one Hocus feels necessary given that his complaints to the FBI, the state police and his congressman regarding his inability to troll at will were not resolved to his satisfaction.

Kinda, Sorta Juicy Excerpt #11: LOL wow, that’s quite a history!

“I Am a Threat Only to the Buy-and-Holders”

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Set forth below is the text of a comment I put to a thread on Valuation-Informed Indexing at the My Personal Finance Journey site:

Bogleheads.org is just one of many personal finance discussion boards and blogs which have “uninvited” Mr. Bennett.

That’s so.

But why?

I am the person who discovered the analytical errors in the Old School safe withdrawal rate studies.

So the first post that I put to the Vanguard Diehards board was met with a hostile response. And then there were abusive posters who followed me to every thread in which I posted. Why? Is it a bad thing to let people know about errors that were made in retirement studies? It seems to me that it is a very, very good thing.

There’s no one today who says that the Old School studies are valid. Bernstein has said those studies get the numbers wrong. Scott Burns has said this. Wade Pfau has said this. The Economist Magazine has said this. Michael Kitces has said this.

Shouldn’t the fact that I am the person who discovered the errors in these studies be cause for the Bogleheads to send me a special invitation to their discussions? Why this strange reaction?

It’s because a finding that the Old School SWR studies got the numbers wrong raises doubts about the entire Buy-and-Hold project. The way that the site administrator there put it is that I am a “threat” to the board community there. The reality is that I am not a threat to the entire community. I am a threat only to the Buy-and-Holders. There were hundreds of community members there who loved my stuff and who told me so on numerous occasions.

If you were confident in your investment strategies, you would not feel threatened by posters who post views consistent with Shiller’s research, Carlyle. You make an effort to sound confident. But it’s bravado you evidence, not true confidence.

I say these things not to hurt your feelings or the feelings of any other Buy-and-Holder. I say them because we need to come to terms with these realities before we drive our entire economic system over a cliff.

It reflects poorly on the Bogleheads that they have banned honest posting at their site. It goes against our society’s deeply held social norms. We are going to need to work together to change this. We cannot even begin learning the realities of stock investing until we reach a point at which we all agree that all sides should have a chance to speak.

Rob

“Your Outlandish Statements Create a Giant Chasm That Regular People View As Just Another Infomercial, Over-the-Top Claim”

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Spokane Al speaks for many in a comment he put to my Beyond Buy-and-Hold column the other day. Here are his words:

“For me at least when you say stuff like “. . . is the most dangerous Get Rich Quick scheme ever concocted by the human mind” I lose interest. I am willing to read and consider when one conducts reasonable discussions on a subject. I think that your outlandish statements create a giant chasm that regular people view as just another infomercial, over the top claim. They serve more to inflame rather than convince.

“And I know that turns me off because I know that as a buy and holder, contrary to many of your statements, my returns have been competitive over the past 10, 15 and 20 years. Oftentimes, I do not see your data as backing up your arguments.

“At least that is my opinion.”

I wrote one of those lengthy responses for which I have become famous (infamous?).

Juicy Excerpt:  I am 100 percent convinced that what you are describing here is a real phenomenon. Most people see my claims as extreme and tune me out when they see me say something extreme. It’s a big problem for me.

 

“No Site Owner Should Ever Knowingly Facilitate the Dissemination of Materials Known by Him or Her to be Malicious and Defamatory and Consequences Must be Visited on Those Who Do So If the Internet Is to Become a Safe Place to Transact Business”

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Ken Evoy, the owner of the SiteSell.com site, put a post to Facebook on August 18 titled Proof That Google Has No True Googlebomb Algorithm. The post describes a defamatory and malicious effort to do harm to the SiteSell business through use of the internet.

I posted a comment supporting Evoy in his efforts and describing the nine-year Campaign of Terror against the Retire Early and Indexing discussion-board communities led by those posting in “defense” of the Old School safe withdrawal rate studies and supported by numerous Buy-and-Holders (there are also numerous Buy-and-Holders who have expressed a desire that honest posting be permitted, to be sure).

Juicy Excerpt: It is the Decency in Communications Act that makes this sort of thing possible. If sites could not permit known cases of defamation, every site could ban this individual and his supporters once they saw him post. But once a site has permitted defamation to continue for months, how does it justify turning on a dime and prohibiting it? We have created a big mess by applying different rules on the internet than have always applied in the non-internet world. No site owner should ever knowingly facilitate the dissemination of materials known by him or her to be malicious and defamatory and consequences must be visited on those who do so if the internet is to become a safe place to transact business.

Evoy responded to my comment by stating: “That is one of the issues that Google hides behind. Our attorney, an intellectual rights attorney, dismantled that in one of our communications with him…. While the content of the review IS defamatory and malicious, it’s not the issue that this post focuses upon, for the reasons you outline.”

I responded by thanking Evoy for his comments and for wishing him well in his efforts to have this obvious injustice addressed by Google.