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 fantasyland comes with a Nobel prize.
Yours comes with death threats” etc etc.

No, those are both your fantasies. That’s really the heart of the problem, isn’t it? Everything you write is fantasy. You used to toss in a bit of reality every once in a while. Back when people actually sent you emails. But those days are long gone. Your post-Wade psychotic break changed everything.

The bottom line is that the Buy-and-Hold retirement studies have not been corrected to this day. I pointed out in my famous post from the morning of May 13, 2002, that the Greaney study lacks an adjustment for the valuation level that applies on the day the retirement begins. All of the words that have been spilled over the following 16 years show that I was right. Thousands of people have looked at the Greaney study during that time. Not one has been able to identify a valuation adjustment. A failed retirement is a serious life setback. Greaney should have corrected his study within 24 hours of the moment when he learned of the error he made in it.

Now —

The backstory is that Greaney’s retirement study would be perfect in a world in which the market was efficient, which is the world that Bogle thought we lived in at the time when he developed the Buy-and-Hold strategy. The idea that the market is efficient was born in 1965, when Fama published research showing that short-time timing doesn’t work. Lots of good and smart people jumped to the conclusion that no form of timing works. Shiller showed in 1981 that this conclusion was a false one. He showed that long-term timing (price discipline) always works and is always required for investors seeking to keep their risk profile roughly constant over time. Shiller has described the intellectual leap from the finding that short-term price changes are unpredictable to the Buy-and-Hold conclusion that the market sets prices properly as “one of the most remarkable errors in the history of economics.” That’s the core dispute. Buy-and-Hold is rooted in error, the error was revealed by the peer-reviewed research in this field 37 years ago, and now that the error has been covered up for 37 years, the Buy-and-Holders are very, very, very, very much opposed to seeing it exposed.

I refuse to post dishonestly re the numbers that my friends are using to plan their retirements. So you see me as your enemy. I don’t see it that way. The way that I see it is that we all want the same things and so we all should be working together to learn how stock investing really works in the real world. But there are no words that I can put forward that can persuade you. You don’t want millions of middle-class investors to learn that you got the numbers they have been using to plan their retirements wrong and I am 100 percent unwilling to post dishonestly re the matter, no matter how much in the way of intimidation tactics are applied, so we work at cross purposes.

I don’t like that reality but it remains the reality that I must deal with all the same. I agree with what Wade Pfau said in the days before you Goons threatened him with career destruction and John Bogle failed to step in and help the man — the Buy-and-Hold retirement studies are “dangerous.” They should be corrected. At the very bare minimum, anyone who points someone to one of the Buy-and-Hold retirement studies for use in planning a retirement should let that person know that there are today two schools of academic thought as to how stock investing works, not one, and let that person make the decision as to whether to rely on the numbers generated by the Buy-and-Hold studies or the numbers generated by the Valuation-Informed Indexing studies.

We will learn together how it all plays out in the days following the next price crash. I can wish you the best of luck with it because I think of you Goons as friends. But that’s as far as I can go. I cannot post dishonestly re the numbers that my friends are using to plan their retirements. No way, no how. Zero chance. Not in 16 years, not in 16 billion years. I truly wish that you would make an effort to find somebody else.

I naturally wish you the best of luck in all your future life endeavors in any event, my dear Goon friend.

Fantasy Man Rob

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

“Please tell me the downside, Anonymous.”

We can’t all live in Rob’s fantasyland. We have to live in reality.

My fantasyland comes with a Nobel prize.

Yours comes with death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs.

Reason vs. Emotion.

My best.

Fantasyland 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:

Not a smart thing to be living out a fairytale as a retirement strategy. You might as well be telling people that you are waiting for the next rainbow do that you can collect your pot of gold.

I don’t think that it makes sense to commit criminal acts because someone on the internet has a different opinion than yours as to how stock investing works, Anonymous.

I believe that the last 37 years of peer-reviewed research is legitimate research. I believe that Shiller’s Nobel prize was well-deserved. I believe that valuations affect long-term returns. I believe that stock investing risk is not static but variable. I believe that the safe withdrawal rate is a number that varies with changes in valuation levels.

So that’s what I say. If I say things that I don’t believe re these matters, I could hurt people very seriously A failed retirement is a horrible life setback. Financial fraud is a crime, a felony. So I could go to prison if I lie about these matters.

No thanks, you know? Not this boy.

I wish you all good things. But there are limits.

Rainbow-Chasing 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:

What a funny headline. You try to speak for people almost everyday.

I speak for people re the process issue but never re the substance issue.

I favor Valuation-Informed Indexing over Buy-and-Hold. So I of course advocate Valuation-Informed Indexing over Buy-and-Hold in all my writings. But you have never once heard me say that someone is wrong to follow a Buy-and-Hold strategy if that is what that person believes in or that someone is wrong to advocate a Buy-and-Hold strategy if that is what that person believes in.

I believe strongly that those who believe in Buy-and-Hold not only have a right to make the case for Buy-and-Hold but that they also have a RESPONSIBILITY to do so. It’s not just the Valuation-Informed Indexers who have a right to post honestly. We all do. If we don’t all post honestly, all of our discussions are gravely compromised. If we don’t all post honestly, all of our discussion boards and blogs become corrupt enterprises.

I think it is at least somewhat fair to say that I speak for others when it comes to the process question. 90 percent of us believe in Buy-and-Hold and only 10 percent of us believe in Valuation-Informed Indexing. So it might seem intuitive that we would ban discussions of what the last 37 years of peer-reviewed research teaches us about how stock investing works in the real world. That’s the majority position, right? Those who believe in Buy-and-Hold have a lot riding on it being a legitimate strategy. Why shouldn’t they throw their weight around? Buy-and-Hold is a lot less likely to remain dominant if we permit honest posting re the last 37 years of peer-reviewed research. Why not just ban honest posting at every internet site? That makes sense, doesn’t it?

No. It does not make sense. Not in this country. Not in a country that has laws making financial fraud a felony.

Our laws against financial fraud reflect what we are as a people. We are TEMPORARILY not enforcing those laws because it hurts so much to acknowledge that as a people we have for 37 years now been tolerating a criminal cover-up of the most exciting research ever published in this field, research that is so important that the author of it was awarded a Nobel prize for his amazing, life-affirming work. We feel ashamed that we all played a role in permitting continued promotion of the Buy-and-Hold strategy to bring on an economic crisis that caused hundreds of thousands of businesses to fail and that caused millions of good, hard-working people to lose their jobs. We failed ourselves by tolerating this criminal cover-up for so long. Please note that I include myself in that condemnation. I knew about the error in Greaney’s retirement study for three years before I worked up the courage to post about it.

We are liars. We believe that honest posting re how stock investing works should be permitted. That belief is reflected in our laws, good and necessary laws. But we get quiet when we see those posting in “defense” of Mel Lindauer and John Greaney and Jack Bogle advance death threats and demands for unjustified board bannings and thousands of acts of defamation and threats to get academic researchers fired from their jobs because we don’t want their fire directed at us. We have principles. We have beliefs. But we lack the courage to stand up for them when there is enough money and power on the other side of the table to do serious harm to those who dare to do so.

I do indeed presume to speak for the people who support the laws against financial fraud in theory but who are afraid to speak up at our boards and blogs because they love their family members and because they do not want to see their reputations and their careers destroyed. Those are good people. Their goodness evidences itself in the laws that we have enacted and in the published rules of every site to which I have posted. Their cowardice in the face of those engaging in the criminal acts is a temporary thing. It does not reflect what they truly are. So, yes, I dare to speak for the goodness in my fellow community members, both the Buy-and-Holders and the Valuation-Informed Indexers, who hold back from speaking their minds in the face of such horrors.

I don’t believe at this point that it is at all likely that we will as a people work up the courage to speak up prior to the next price crash, which will do great, lasting harm to millions of us. But I am 100 percent certain that we will work up that courage once we have seen that ocean of human misery with our own eyes rather than just having read the peer-reviewed research that shows that it is coming. There is a big difference between seeing peer-reviewed research showing that such a day is coming and reading about the ocean of human misery in the morning newspaper.

It is really the laws against financial fraud that speak for us all and that reveal what sort of people we are down deep inside. I merely take note of those laws and thereby give voice to a very positive assessment of the people who adopted those laws.

It will be interesting to see how this all plays out in the days following the next price crash.

I naturally wish you the best of luck in all your future life endeavors, dear Goon friend.

Funny-Headline-Writing 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 have not seen one single scared person, except for you. You are so scared, you have to make up stories about pretend death threats, job threats, fraud and prison.

The people putting forward death threats aren’t scared.

And the people putting forward demands for unjustified board bannings aren’t scared.

And the people putting forward thousands of acts of defamation aren’t scared.

And the people putting forward threats to get academic researchers fired from their jobs aren’t scared.

And the people failing to speak up about that behavior aren’t scared.

That makes perfect sense, Anonymous. I believe you.

The Only Scared Person, 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 have never had a choice.”

You had a choice to behave or not behave. You had a choice to tell the truth or lie. You chose the later in both cases.

There have been thousands of people who have looked at the retirement study posted at John Greaney’s web site over the past 16 years. Not one has been able to identify a valuations adjustment in the study. That tells the tale.

I “misbehaved” on the morning of May 13, 2002, by pointing out this obvious reality to my fellow community members at the Motley Fool’s Retire Early board. Greaney didn’t like my act of misbehavior one tiny little bit. There are a lot of Buy-and-Holders who share his basic take on the matter. And there are a lot of Normals who, seeing the reaction of the most emotional Buy-and-Holders, have elected to keep quiet about what they believe and what they have seen except perhaps to note their doubts about Buy-and-Hold in the most vague and general ways. That’s not me.

I am proud of my many, many, many acts of “misbehavior.” I think we need to launch a national debate on the far-reaching implications of Shiller’s “revolutionary” (Shiller’s word), Nobel-prize-winning research. I think that would be best for every single person involved. The prison sentences would be shorter if the debate were launched prior to the onset of the next price crash. The number of civil lawsuits would be fewer. The number of failed retirements would be fewer. The damage to our economic and political systems would be less.

My acts of “misbehavior” put me on the right side of the felony line rather than on the wrong side of it. I do not believe that Greaey’s study contains a valuation adjustment. So, if I say that it does or I pretend that I have not noticed that it lacks one, I am doing what Bernie Madoff did — I am committing financial fraud. When calculated honestly and accurately, the safe withdrawal rate at the top of the bubble was 1.6 percent, not 4 percent. Retirees who relied on the Buy-and-Hold studies to plan their retirements entered retirements that have only a 30 percent chance of surviving 30 years. In the event that stocks continue to perform in the future at least somewhat as they have always performed in the past, this act of financial fraud is likely going to hurt more people than Bernie Madoff’s act of fraud by a factor of 100 or more.

Not this boy, you know? Not by a long shot. No way, no how. Zero chance. A prison sentence is not in my future, Goon intimidation tactics or no Goon intimidation tactics. I would be truly grateful if you would try to find somebody else.

I extend my best wishes to you and yours, my dear Goon friend. But please mark me down as a “no” re the financial fraud garbage. A STRONG no. A NON-NEGOTIABLE no. I think of you as a friend. But there are limits. I mean, come on.

Don’t let the bad guys get you down, Anonymous.

Misbehaving 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:

You are wrong. This is not a ‘point of view issue’. Making things a ‘matter of opinion’ when they are logically false/true is the type of ignorant relativism that makes ‘anything’ possible to be right or wrong.

It is ALWAYS possible to find a back-tested strategy that beats buy-and-hold, hence it is ALWAYS possible to say that some kind of scheme ‘beat the market’. Therefore, it is IMPOSSIBLE to say that timing doesn’t work. Trying to find a paper that argues against an impossibility is a reductive waste of time.

Simply put, all timing can work. If you get the timing right!

It is just that almost no one has got it right so its best not to try. Your horrific long term returns, for example.

If Buy-and-Hold cannot be discredited, then Buy-and-Hold is not the product of science. For something to be the product of science, it has to be falsifiable. If 150 years of stock market history isn’t enough to discredit Buy-and-Hold, nothing is. The reality is that the only thing that has supported Buy-and-Hold for 37 years now is the naked assertion that the market is efficient.

There is simply no evidence for this assertion. For the market to be efficient, investors would need to be rational — they would need to be willing to act in their self-interest. This is the ASSUMPTION on which Buy-and-Hold is based. But why assume this? People do not always act rationally (in their self-interest) when it comes to drinking. Some people become alcoholics. That’s not rational. People do not act rationally when it comes to smoking. People do not act rationally when it comes to gambling. People are not fully rational creatures. The reasonable thing is to believe that people will be only partly rational and also partly emotional when it comes to investing in stocks too.

If the level of collective investor emotionalism waxes and wanes, then stock investing risk is not constant but variable. If the level of stock investing risk is variable, then investors must be willing to adjust their stock allocations in response to dramatic changes in valuations to have any hope whatsoever of keeping their risk profiles roughly stable over time.

A strategy that is rooted in a common-sense observation as to how humans are constructed (they are emotional creatures) is not a “scheme.” It is an approach to investing rooted in reality rather than in a long-discredited assumption that has been doing great harm to both investors and to the society in which it is advocated for as long as stock markets have been in existence. When someone is trying to make a decision as to whether to hand in a resignation from a corporate job, he needs accurate information as to the lasting value of his stock portfolio. The Buy-and-Holders are not able to provide it because they are not willing to look at what the 150 years of stock-market history available to us for review tells us about how stocks perform differently in the long run starting from different price levels (because some reflect a greater level of emotionalism than others).

I do not believe in Buy-and-Hold. So I am not going to recommend it to others. I have no problem with you recommending it. I believe that you believe in it. So I believe that you should recommend it to others. But not me. I should be saying what I believe re these matters when I advance posts with my name on them. I believe that the last 37 years of peer-reviewed research in this field is legitimate research. I believe that Shiller deserved his Nobel prize. I believe that valuations affect long-term returns. I believe that the safe withdrawal rate is a number that varies given the valuation level that applies at a given point in time.

I wish you the best of luck with the strategy that you have decided is right for you, Laugh. Does that help at all?

Horrific Long-Term Returns 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:

So it would be fair to say that the prediction-making aspect of the Valuation-Informed Indexing project has not been working out so hot.”

And the Titanic sinking wasn’t so nice.

Market timing IS prediction making. Forward tests, not back tests, which is all you’ve got to cling to. So to properly rephrase your quote: The market timing aspect of your market timing scheme has failed miserably every single time.

You keep saying “just you wait till the next crash, it will be a doozy”. Sorry, you’re out of chances. You’ve proven beyond any doubt that you have no understanding of how the market works. You proved that 22 years ago, when you got out of stocks forever. The single fact is all anyone will ever need to know about your market knowledge.

I see the issue of whether stock gains are rooted in something real or are just the product of irrational exuberance and the issue of whether it is possible to say precisely when those gains will disappear as two separate issues. 100 percent of the evidence available to us today supports the belief that gains that result from overvaluation are not rooted in anything real and will disappear in time. But the ability to say precisely when those gains will disappear is not there.

Someone who retires based on portfolio numbers that are rooted in irrational exuberance is making very risky choices. He doesn’t know when his retirement will fail but he knows or should know that the odds are strong that it will. Huh? What the f? I think it would be better to hold off on retiring until there is enough real money in the account to support a long-term retirement. To me, the question of when the retirement will fail is of secondary importance. The question of whether it is a safe retirement or not is of far greater importance.

That’s my sincere take re this one, in any event.

I would add that I detect a lot of emotion in your post, Anonymous. That’s a telltale sign, in my assessment. I believe that the Buy-and-Holders made many hugely valuable contributions to our understanding of how stock investing works. I think of them as friends. Can you say the same re the Valuation-Informed Indexers? Can you point to any valuable contributions that we have made over the past 37 years? Do you think of us as friends?

My best wishes to you.

Rob

Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:

In short, you have no plans to post anything new. Did I get that correct?

I certainly wouldn’t put it that way, Sammy.

From my perspective, Valuation-Informed Indexing is the future. There are thousands of things to be said about it that have never been said before. Shiller revolutionized our understanding of how stock investing works. It will take decades and thousands and thousands and thousands of articles before we will as a people come to terms with all of the exciting investing insights that he opened up to us with the publication of his Nobel-prize-winning research. In my assessment, every word that I write about the valuations question is new and important. Otherwise, I wouldn’t put them forward.

You of course have a different perspective. You are a Buy-and-Holder. From your perspective, everything that we ever needed to know about how stock investing works was known in 1980. To your ears, every word that I write is another boring word being used to support a claim that Buy-and-Hold is not the perfect, final answer.

We are coming at things from very different perspectives. I hope that is okay with you.

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 have looked at Greaney’s retirement study hundreds of times… I have never been able to find a valuation adjustment in it.”

No one, including Greaney, ever said it had a valuation adjustment. So one look should have sufficed. Why would you keep looking, hundreds of times, for something that no one ever said was there? That’s just silly. And stupid. And entirely dishonest.

If the study does not contain a valuation adjustment, there is zero chance that it reports the safe withdrawal rate correctly. There’s 37 years of peer-reviewed research showing that valuations affect long-term returns. The long-term return obviously determines the safe withdrawal rate.

A failed retirement is a serious life setback.

Not this boy, you know?

I wish you all good things.

Rob