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

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

Is Greaney broke? No
Is Wade Pfau broke? No
Is Robert Shiller broke? No
Is Evidence broke? No

Is Rob Bennett broke? Yes………I wonder why? Hmmmmmmmm…………

I know why, I pointed out the error in the Greaney retirement study (it lacks a valuation adjustment). If the 4 percent rule goes down, the entire Buy-and-Hold strategy goes down. Shiller published the Nobel-prize-winning research discrediting it in 1981 and the cover-up has continued for 44 years now, doing a lot of harm to millions of people. So there is a strong feeling among a lot of wealthy and powerful and well-connected people that this thing has to be kept under wraps.

But that only makes it worse. It can only get worse and worse, never better. So I think it would have been better just to come clean on the afternoon of May 13, 2002. If Greaney’s study contained a valuation adjustment, he would have pointed us to it on the first day.

I don’t want to be broke. But I don’t want to stab my friends in the back either. And I don’t want anyone else to feel that they need to stab their friends in the back. LOTS of people would like to see every site opened to honest posting re the research. But someone has to lead the way. I guess I was elected. Once we get to the other side. no one is going to want to go back. It makes no sense to have one set of laws for every field of human endeavor other than the investment advice field and then a different set of laws for the investment advice field. I mean. come on.

If Buy-and-Hold were a real thing, there never would have been a single abusive post, much less 23 years of them.

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:

“In 70 percent of the return sequences that we have seen in the historical record, a 4 percent withdrawal failed for a retirement beginning in 1929.”

In the only actual returns sequence that happened from 1929 onwards, 4% survived.

70% of the simulated sequences in your calculator for a 1929 valuation 4% did not survive.

I will leave it as an exercise for the reader to decide whether to base their judgement on reality or your calculator.

Of course it is up to the individual investor to decide how to act on the information presented. The key is that both Buy-and-Holders and Valuation-Informed Indexers should always feel 100 percent free to make their case. There should never be any intimidation in the discussions.

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:

When you refer to “what is safe” you are referring to what withdrawal rate will survive in the future.

That is not knowable.

The Greaney, Bengen and Trinity studies report what survived in the past and all agreed the 4% (roughly) was what survived in all cases in the past.

If you wish to carry out a different study, that estimates what might survive in the future, you are free to do so.

Insisting that other people alter studies to report (incorrectly) that 4% did not survive in the past is a ridiculous demand.

We all agree that 4 percent always survived in the past. That is not in dispute.

It was not always safe in the past. There were some valuation levels at which it was high risk but happened to survive.

People need to know that. If people want to use a withdrawal rate that has always survived but that is high-risk at the valuation level that applies on the day their retirement begins, I wish them the best of luck with it. But I am not going to say that something is safe just because it always survived in the past. To find out whether it is safe, you need to look at the factors affecting safety and the most important factor affecting safety is valuations.

I have never once suggested that anyone say that 4 percent did not always survive in the past. I have said that we all should be free to point out that it is not possible to calculate the safe withdrawal rates accurately without taking valuations into consideration and that it is irresponsible to say that there is one withdrawal rate that is safe at all valuation levels. Valuations affect long-term returns and the safe withdrawal rates changes with changes in valuation levels.

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:

That thread is now at 1133 comments and has gone into detail that would never appear in your writing.

Honest and open posting is great.

And yet the Greaney retirement study remains uncorrected.

The fact that the thread exists is wonderful. People are learning from it. But, if we really want to get that CAPE value down and avoid future Buy-and-Hold crises, we are going to need to put what we learn into practice. Getting the numbers right in retirement studies is pretty darn important. There should be 100 percent agreement that we need to get the numbers in retirement studies right. We need more of those sorts of threads and we need them at more sites and we need to be sure that everyone participating on them feels 100 percent free to post their sincere thoughts.

We are better off with that thread in existence than we would be without it. But we still have a lot of work to do. The first thing that we need to do is to give up this idea that there are two sides to this matter. We all want the same thing, We all need to know how to invest effectively for the long run. We are all on the same side.

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:

“I intend to continue to say that the Greaney study lacks a valuation adjustment.”

We know that.

Because there is a lot of evidence that you are good at repeating that.

But there is also a lot of evidence that you are not good at articulating a reason why it should contain a valuation adjustment.

You continue to say that because it is easy.

It is more difficult to explain why it should contain an adjustment.

And it is much more difficult to conduct a study that predicts what future withdrawal rates will survive.

JFK said “We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard”

The hocus equivalent would be “I choose to repeat the same things over and over again because it is easy”

I don’t think that it is possible to predict what withdrawal rates will survive. The best that you can do is to assign probabilities to various different possibilities, based on what has happened in the past. When the CAPE value is 8, the safe withdrawal rate is 9.0 and the odds of a plan calling for a 4 percent withdrawal surviving are very, very high. When the CAPE value is 44, the safe withdrawal rate is 1.6 and the odds of a plan calling for a 4 percent withdrawal surviving are not at all good.

I’ve already co-authored a calculator that gives the odds at the various CAPE levels. Had we opened every site to honest posting re the last 43 years of peer-reviewed research on the afternoon of May 13, 2002, we could have spent the last 22 years developing the Valuation-Informed Indexing concept and deepened and broadened our understanding of these issues in scores of amazing ways. Motley Fool called it “learning together.” All of the boards and blogs have the published rules that they have because they want to facilitate that process to the benefit of each and every one of us. The nasty Goon stuff takes things in the opposite direction and thereby holds us all back.

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:

Anyone who uses Greaney’s stuff to plan their retirement did fine.

Not because he got the number right.

When you tell people that a particular withdrawal rate is safe, it should be safe, not wildly risky.

If you identify a wildly risky withdrawal rate as safe, it may still work. But, if you stick with the flawed methodology, sooner or later there will be failed retirements as a result. What do you do then? Is Greaney going to compensate all the people who suffer failed retirements because his study was not corrected when he learned of the error?

And how about Buy-and-Hold? Greaney made the error because he believed in the Buy-and-Hold claim that valuation-based market timing (price discipline) is not always 100 percent required. How do we get the word out to every investor that it was all a horrible mistake? What do we do about the millions who will be hurt by the inevitable economic collapse?

Had we opened every site to honest posting re the peer-reviewed research, we would today be 22 years ahead of where we are in our development of the Valuation-Informed Indexing concept.

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:

No one even claims that Greaney included a valuation adjustment in his study.

I agree with you that no one has ever claimed that. Thank God for small favors.

But Greaney has not corrected the error in 22 years. That’s the source of conflict.

The Bennett/Pfau study shows that practicing price discipline (valuation-based market timing) when buying stocks is 70 percent of what it takes to achieve long-term investing success. Given the valuation-based market timing is 70 percent of the story, 70 percent of the efforts of those in the investment advice field should be directed at insuring that investors practice price discipline. It’s hard work. The entire history of the market shows that investors love the Get Rich Quick/Buy-and-Hold garbage. We are naturally inclined to turn stock investing into a roller-coaster ride, bull markets followed by bear market. The last 43 years of peer-reviewed research points us to a better way. But we can’t get there if we cant even talk about the problem, the Get Rich Quick urge that causes us to believe that there might be an alternate universe where everything works the opposite of how it works here on Planet Earth and valuation-based market timing is not always 100 percent required for every investor.

People at the old Motley Fool board were talking about the Greaney study daily. Some of them became friends of mine. What kind of friend was I being when I failed to point out the error in the study? What kind of person does that?

I did it for three years. I sure cannot imagine circumstances in which I would ever again be able to rationalize that sort of behavior. You do you. I am going to do me. I sincerely believe that the Greaney study lacks a valuation adjustment. Just like Evidence.

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:

Nothing is certain, we’re all working on probabilities. What are the odds an asteroid destroys the world as we know it and ruins my retirement plans?

The amount of irrational exuberance present in the stock price at a given time greatly influence the probability that investors will see poor outcomes. If valuations affect long-term returns, then valuations affect risk. The safe withdrawal rate is a risk-assessment tool. So it is a logical impossibility that the safe withdrawal rates is the same number at all valuation levels.

Asteroid hits are unlikely events, Price crashes at times when valuations are at insanely dangerous levels are common events. The CAPE was 33 in 1929, when a 30-year retirement plan with a 4 Percent withdrawal barely survived. In ordinary circumstances, a 4 Percent withdrawal would permit huge gains in portfolio value over 30 years. Why did a 4 percent withdrawal barely survive? Because valuations were so insane at the beginning of that retirement.

The fact that 4 percent barely survived is not telling you that a 4 percent withdrawal is “100 percent safe.” It is telling you that it is high risk. Try it again and it might well fail. Try it at a time of moderate valuations and you will see your portfolio value skyrocket. But try it again at a time of insane valuations and it might well fail. Valuations are by far the most important factor in assessing retirement safety. So it is not possible to assess retirement safety reasonably without taking valuations into consideration. You need to give some consideration to the most important factor.

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:

“Shiller’s research shows that a valuation adjustment is required to calculate the safe withdrawal rate accurately”

“It’s the entire study. It shows that valuations affect long-term returns.”

There is not a single reference to safe withdrawal rates in his paper.

If there was you could point us to it.

Um….

Rob