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

I realize that once your brain locks on some nutty idea, it’s locked forever. But Evidence has explained multiple times that he is not “on your side.”

Greaney himself never claimed his study had a valuation adjustment. So I guess he’s on your side too. Time to declare victory, pick up your ball and go home.

I declared victory on the evening of August 27, 2002. That was the evening on which Greaney advanced his first death threat and on which over 200 of my fellow community members endorsed his death threat. I had been a Buy-and-Holder up to that point. From that point forward, I have devoted my energies to development and promotion of the Valuation-Informed Indexing concept.

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

Are you willing to specify the date on which you and Anonymous first called on Greaney to correct the error in his study?

Evidence-Based Investing: I never called for him to correct his study. A study that calculates the withdrawal rates that survived different historical time periods does not require a valuation adjustment.

It simply requires the calculation of what rate survived.

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

<i>“ The Greaney study (and other similar studies) were very clear in what they were calculating. They calculated the inflation adjusted withdrawal rate that survived 30 year periods in the past.

The rate you are looking for (I believe) is what rate is going to survive in the future. Those are two different things.”

Uh, oh. There goes the $500 million.</i>

I don’t think so, Anonymous.

There have been many occasions on which people have visited our boards and asked if someone could tell them the safe withdrawal rate. I cannot recall a single time when someone asked to know the surviving withdrawal rate. It is certainly true that Greaney calculated that number accurately. But that number is not much more than a curiosity. What people need to know when planning a retirement is what withdrawal rate is safe. Greaney clearly understood that. He referred to the 4 percent number as the “safe withdrawal rate” on thousands of occasions. In fact, he often claimed that a 4 percent withdrawal rate is “100 percent safe” (he even said this when the safe withdrawal rate was 1.6 percent and when the odds of a retirement plan calling for a 4 percent withdrawal surviving 30 years were only 30 percent. When a fellow community member (BenSolar) suggested that we bring all the nastiness to a close by agreeing to refer to the 4 percent number as the “Historical Surviving Withdrawal Rate,” Greaney refused to even consider the idea.

Knowing the safe withdrawal rate is of huge value. In January 2000, the safe withdrawal rate for am 80 percent stock portfolio was 1.6 percent. The safe withdrawal rate for a 100 percent TIPS portfolio was 5.8 percent. Those are shocking numbers that would help every investor on the planet understand the dangers of following a Buy-and-Hold strategy (which would not call for market timing when stock prices reached insanely dangerous levels). We need to be discussing these matters in civil and reasoned and honest discussion.

My sincere take.

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:

“Do you believe that it is possible to calculate the safe withdrawal rate accurately without taking valuations into consideration?”

It depends on what you mean by “safe withdrawal rate”.

The Greaney study (and other similar studies) were very clear in what they were calculating. They calculated the inflation adjusted withdrawal rate that survived 30 year periods in the past.

The rate you are looking for (I believe) is what rate is going to survive in the future. Those are two different things.

I agree that the Greaney study and other similar studies calculated (properly, in my assessment) the Historical Surviving Withdrawal Rate (HSWR).

I agree that that is different from the Safe Withdrawal Rate (SWR). I generally agree with your description of what the safe withdrawal rate is. People want to put together retirement plans and they want to know what withdrawal rate will work even in a worst-case scenario in order to do so. Many of the people who posted at the Retire Early board were planning on leaving high-paying corporate jobs. They did not want to hang on too long because they were anxious to get on with their plans. But they also did not want to leave their jobs before they had saved enough to be virtually certain that their plan would survive for 30 years.

One small change that I would make in your language is to note that the safe withdrawal rate is not necessarily the withdrawal rate that will work in the future. There is no way to identify that number since no one knows the future. The purpose of safe withdrawal rate analysis is to identify the withdrawal rate that will work in the future in a worst-case scenario <b>presuming that the market continues to operate in the future at least somewhat as it has always worked in the past. </b> Since the valuation level that applies on the day the retirement begins has in the past always affected what withdrawal rate would work, valuations have to be taken into consideration to identify the withdrawal rate that is virtually certain to work in the future. </b> A calculation that does not consider valuations is not a safe withdrawal rate calculation. You are saying there that you agree with that. But then I can’t help but wonder what all the fuss has been about.

Please recall that my famous post from the morning of May 13, 2002, did not say that the Greaney study was in error (I did say that later but not in the first post). That first post asked a question — Should we be taking valuations into consideration when calculating the safe withdrawal rate? I believe that we should be and hundreds of our fellow community members said that I started the most interesting and helpful discussion in the history of that board community by putting that question on the table. That’s the discussion that we need to have today at every discussion board and blog on the internet — Should investors be taking valuations into consideration when forming their stock investment strategies?

I say that they should. There is only one difference between Buy-and-Hold and Valuation-Informed Indexing. Buy-and-Holders never take valuations into consideration (because it was believed at the time that Buy-and-Hold was developed that the market was efficient and thus that valuations did not matter) and Valuation-Informed Indexers always take valuations into consideration (because valuations are always a critically important factor).

If you are okay with me saying that valuations must be considered to calculate the SAFE withdrawal rate accurately, we have no dispute. I of course agree with you that Greaney calculated the SURVIVING withdrawal rate properly. But I do not feel even a tiny bit comfortable saying that the SAFE withdrawal rate is always 4 percent. I believe that the safe withdrawal rate is a number than changes with changes in valuation levels. It can drop to as low as 1.6 percent and it can rise to as high as 9,0 percent. If I were to say that the safe withdrawal rate is always the same number, I would be engaging in fraud. I do not believe that. So I am not willing to say that I believe that.

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:

“There was a comment here a few weeks back in which Evidence-Based Investing acknowledged that he does not believe that the retirement study posted at John Greaney’s web site contains an adjustment for the valuation level that applies on the day the retirement begins. Evidence has been a general in Greaney’s Goon army going back to the early days. So he has no bias against Greaney. The one possible reason he would have for saying that the study lacks a valuation adjustment is that that is what he truly believes.”

This is correct. No-one believes that Greaney’s study contains valuation adjustments. The other similar studies (Trinity etc.) also do not contain valuation adjustments. Again, no-one believes they do.

We are in agreement re all that, Evidence.

Do you believe that it is possible to calculate the safe withdrawal rate accurately without taking valuations into consideration? I do not. I believe that the idea that that was possible came about because there was a time when people believed that the market was efficient. If the market were efficient, the Greaney study would be accurate. But Shiller’s Nobel-prize-winning research shows that the market is NOT efficient. So a valuation adjustment is required.

Are we in agreement re that part as well?

If you do not agree that a valuation adjustment is required to calculate the safe withdrawal rate accurately, can you please explain why not?

Do you agree that valuations affect long-term returns? If valuations affect returns, then valuations must affect the safe withdrawal rate. Is that not so?

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:

Obviously you are prepared to blither incoherently forever. However this is my final comment.

A. You could be working a real job.
B. You definitely need the income, to support yourself and your family.
C. You choose not to work.
D. You have made that same choice every day for over twenty years.

There is no one on earth who respects such a person.

Do you think it would have been better if I had just kept quiet about the error in the Greaney retirement study?

Rob

Set forth below is the text of an interaction that I had with one of the Greaney Goons in the discussion thread for another blog entry at this site:

“I agree with you that it doesn’t contain a valuation adjustment.”

I think everyone agrees with you. Greaney has certainly never claimed that it contains a valuation adjustment.

Can you specify the date on which you believe he corrected the study?

Rob

I don’t believe any such thing

I see

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:

“Can you please explain why Greaney has not to this day correscted the study?

Can you also please explain why everyone has not insisted that he do so?”

The problem is that the number you are looking for is a different number that the one calculated by Greaney and the other studies. They all come to about 4% because they all do basically the same calculation. “What inflation adjusted withdrawal rate survived all 30 year withdrawal periods in the past and what stock percentage did that portfolio have?”

The answer turned out to be 4% from a relatively high stock percentage.

Now the data set used only had a small number of periods that started with very high stock valuations and even those valuations did not reach the level we saw in 2000. So it is reasonable to ask if we could see 4% fail for a 30 year period from 2000. It is also reasonable to ask what sort of lower withdrawal rate might be needed if from times of high valuations.

However those are different questions than the one that Greaney, Trinity etc. answered.

a) If they really had made a mistake then it would be incumbent upon them to correct their numbers.
b) If however the case is that they got their number right but there is a different better number that people should use then it is the duty of the people proposing the different number to calculate that number (or range of numbers), document how and why they chose their calculation method and argue why their number(s) should be adopted.
You found it easier to simply make the incorrect claim that “intercst got the number wrong” rather than do the heavy lifting required by proposing a new and better number.

What you should have stated instead is
a) intercst got the number right
b) however it is NOT a number you should use to plan your retirement
c) here is a better way to calculate a withdrawal rate
d) and here are the reason why it is a better way

However that would have required a lot of difficult work by you or others who support your position, work that you seemed incapable of doing and work that you were not able to get anyone else with credibility to do for you.

Therefore you went with
a) “intercst got the number wrong”
b) “<b>intercst</b> got the number wrong”
C) “INTERCST GOT THE NUMBER WRONG”
D) “INTERCST GOT THE NUMBER WRONG!!!!!!!!!!!!!!!!!!!!”

and so on ad infinitum.

And it hasn’t worked
And it won’t work.

Of course I believe that Greaney calculated the SURVIVING withdrawal rate properly. I have been saying that since the first day. Greaney claimed that a 4 percent withdrawal rate is “100 percent safe” regardless of the valuation level that applies on the day the retirement begins. I do not agree. I believe that the safe withdrawal rate CHANGES with changes in valuations (because valuations affect long-term returns).

If I were to say that a 4 percent withdrawal is always “100 percent safe” I would be engaging in financial fraud. I do not believe that. A failed retirement is a serious life setback. So I am not willing to post dishonestly re this matter. Each investor has a right to hear both sides of the story and to decide for himself or herself which withdrawal rate to employ in his or her own retirement plan.

My sincere take.

My best and warmest wishes to you and yours.

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:

“I can’t buy a house today with the $500 million settlement payment that I expect to receive in the days following the next price crash. But I will be able to buy lots of houses then. And I will have the satisfaction of knowing that I helped millions of people live richer and betters lives than they ever imagined was possible in the Buy-and-Hold Era. That ain’t nothing.”

It is a BIG nothing and you haven’t help one single person. All you have done is wasting very valuable time that you can never get back.

Okay, Anonymous.

I do wish you all the best that this life has to offer a person regardless of what investment strategy you elect to follow, in any event.

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:

“ How much of the growth was real and how much was irrational exuberance? ”

It is obviously very real. I can do whatever I want with the $6.5 million. For example, I can go buy a $6.5 million house. How real is your $500 million? Can you buy a house with it?

I don’t think that irrational exuberance is real, Anonymous. It TEMPORARILY has the appearance of being real. I’ll give you that. That’s what makes it so dangerous. If you fall into the trap of thinking that irrational exuberance is real, you will not be able to plan effectively because you will not know how much real and lasting money you have.

I can’t buy a house today with the $500 million settlement payment that I expect to receive in the days following the next price crash. But I will be able to buy lots of houses then. And I will have the satisfaction of knowing that I helped millions of people live richer and betters lives than they ever imagined was possible in the Buy-and-Hold Era. That ain’t nothing.

If you were confident that the irrational-exuberance money was real, you wouldn’t get so angry when I bring up Shiller’s Nobel-prize-winning research. If you were confident, you would be calm and happy to invite questions and to engage in friendly and respectful conversations with those holding other points of view.

My best wishes.

Rob