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 didn’t feel comfortable pretending that I believed that Greaney had included a valuation adjustment in his retirement study.”

No-one pretends that Greaney had included a valuation adjustment in his retirement study.

You have said outright that you do not believe that the Greaney retirement study contains a valuation adjustment, Evidence. I give you credit for that. You have said that “nobody” truly believes that the Greaney retirement study contains a valuation adjustment, including Greanry himself. That nails it. Good for you.

But there are several problems.

One, you have only said that within the last few months. You could have saved lots of people a lot of time by saying it in May 2002. Why didn’t you? Why did it take you over 19 years to spit that one out?

Two, you don’t quote Greaney when you say his study lacks a valuation adjustment. Why haven;t we heard Greaney himself say that? It’s pretty basic. He should know whether his own study contains a valuation adjustment or not, yes? You speak for Evidence, not for Greaney. Why haven’t we heard from Greaney? And why doesn’t it bother you that we have not heard from Greaney?

Three, when I have asked the obvious follow-up question — when did you first ask Greaney to correct the error in his study? — you have responded with gibberish. You said something about hot-dog stands. For Greaney to tell people that he has a study that reveals the safe withdrawal rate and then not include a valuation adjustment in it is like the guy at the hot dog stand taking your three dollars and handing you in return a wrapper with a bun inside that has a slice of cheese on it and and some relish but no freakin’ hot dog! All of the side stuff is nice enough but no one pays three dollars for that stuff. Where’s the freakin beef?
I think it would be fair to say that the valuation level that applies on the day the retirement begins is the most important element of a safe withdrawal rate study and the Greaney study lacks one. It’s a hot dog with no hot dog in it. Not good. People have a right to be disappointed with the lack of effort. People have a right to call the consumer protection people in a case like that.

I like it that you have implicitly acknowledged that the Greaney study is in error. That gets us perhaps halfway there. But this Greaney fellow is no known for picking up on subtle messages. If we are going to get his dangerous study corrected, we are going to have to be a bit more blunt. We are going to have to ask him straight out — Where’s the freakin’ beef?

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:

So you want to hide the fact from investors that 4% worked every time and you don’t want to tell them that VII has never worked.  Got it.

I want investors to know that there are times when a 4 percent withdrawal is super, super, super safe, when even a 9 percent withdrawal is perfectly safe. And I want them to know that there are other times when a 4 percent withdrawal is insanely risky, when no withdrawal rate above 1.6 percent is truly safe and when a retirement plan calling for a 4 percent withdrawal has only a 30 percent chance of surviving for 30 years.

And I want investors to know about the peer-reviewed research that I co-authored with Wade Pfau showing that practicing market timing permits them to retire many years sooner while taking on dramatically reduced risk. I don’t think that Wade ever should have been threatened. I think extortion of academic researchers hurts us all. It is a crime and we all should be working together to see that that crime is prosecuted. I believe that Wade hit it on the head when he declared: “Yes, Virginia, Valuation-Informed Indexing works!”

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:

“This is why I often use the analogy of drunk driving, Evidence. “

Which is a terrible analogy. There are thousands (millions ?) of cases where drunk driving led to death. You don’t need to restrict your analysis to one person who managed to do it without dying.

Whereas there are zero cases where a 4% withdrawal rate failed.

I think the analogy is strong.

We do not yet have a case where going with a 4 percent withdrawal at a time of super high valuations brought on a failed retirement.But we have a case where it caused the retirement account to be reduced to $1 at the end of 30 years (despite the fact that this is an asset class that generates an average long-term return of 6.5 percent real!). And we can compare the return pattern that applied in the case with the other return patterns that have applied over time and see that it was not an unlucky one. What happens if the next one is an unlucky one?

People need to know in advance when a suggested retirement plan carries this much risk. I believe that we need to open every discussion board and blog on the internet to honest posting, without a single exception. I don’t see that one as being optional, I see it as being 100 percent imperative.

My best and warmest wishes to you and yours, 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:

“You need to look at what survived in the past in similar conditions (that is, at similar valuation levels).”

The studies look at what survived in all conditions, including the highest valuation levels.

Even if you just restricted your search to the very small subset of occasions when valuations were at there highest you would find the same thing. 4% survived on every occasion.

Imagine these are the percentage withdrawal rates that survived.

6.2 5.3 7.4 9.3 6.1 8.2 (Low valuation)
4.7 6.3 7.1 7.2 5.3 6.5 (Medium valuation)
5.4 5.5 4.0 4.9 6.2 4.7 (High valuation)

As you will note 4.0 is the lowest
If you divide the numbers into 3 groups L M H valuations you will notice that the low in the L line is 5.3 and in the M line 4.7

But the low in the high valuation line is 4.0. Just looking at the high valuation subset does not get you a number below 4.0

This is why I often use the analogy of drunk driving, Evidence. Driving sober is highly safe. You could go on hundreds of drives and not get in a single accident. Driving drunk is insanely risky. You can’t mix it all together and conclude that driving drunk is “100 percent safe.”

Say that you have driven sober 146 times and never had a single accident. And you drove drunk four times and were in accidents requiring hospitalization each time. But you didn’t quite die in any of those accidents. Would you conclude that driving drunk is “100 percent safe.”

That’s not what the data is telling you. It is telling you that driving drunk is insanely risky. The next time you drive drunk, you might well end up dead. It is POSSIBLE that you will only require hospitalization one more time. But you are taking a big chance.

So it is with withdrawal rates. Take a 4 percent withdrawal in a retirement beginning when the CAPE is 44 and there’s a 30 percent chance that you will have at least one dollar remaining in your account after 30 years. But there’s also a 70 percent chance that that retirement will go bust. Having a one in three chance of seeing your retirement survive is not going with a plan that is “100 percent safe.”

Not according to this boy.

I naturally wish you all good things.

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 don’t consider my difference with Greaney to be a “quibble.’”

Bengen and Trinity use the exact same methodology

I have the same differences with Bengen and Trinity. This is why I say constantly that we need to open every discussion board and blog on the internet to honest posting re the last 40 years of peer-reviewed research in this field. If we did that, someone would object every time someone else brought up Bengen or Trinity. The discussion that followed would help people to think through these matters. In time I believe that Bengen and Trinity would be discarded, which would be a very good thing in the event that they really do not contain valuation adjustments (Hint: They do not).

It is a national scandal that Trinity passed peer review. Shiller’s research was publicly available at that time, The entire point of the peer-review process is to see that earlier research findings are taken into account in newly developed research. If valuations affect long-term returns, as Shiller showed, there is precisely zero chance that the safe withdrawal rate can be determined without taking the valuation level that applies on the day the retirement begins into consideration. I mean, come on.

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:

“Evidence is the one advancing 100 percent inconsistent statements under his name, not me. “

I have been 100% consistent.

A calculation of the withdrawal rate that survived in the past is different than an estimate of what withdrawal rate will survive in the future are 2 different calculations.

Changing the first calculation to try and turn it into the second one wouldn’t correct the study, it would break it.

You seem to be the only person who can’t understand the difference between the two.

I of course agree with you that the two calculations are different.

What I proposed in my post of the morning of May 13, 2002, is that we look at the second calculation. Thousands of community members expressed excitement over this idea. They thanked me for starting the most important discussion ever held in the history of the Retire Early board. Greaney freaked out. He had been trying to deceive people into thinking that he had calculated the safe withdrawal rate and he could see that honest discussions were going to cause people to lose confidence in his false clams that a 4 percent withdrawal is always “100 percent safe.”

People need to know the safe withdrawal rate to be able to plan effectively for their retirements. I believe that we should be permitting honest discussion of this question at every discussion board and blog on the internet, without a single exception. I believe that that’s the answer.

I am sure of it.

And it wouldn’t “break” the Greaney study for him to add a few paragraphs at the end of it noting that in no way shape or form can a 4 percent withdrawal be considered the safe withdrawal rate, that he never even tried to calculate the safe withdrawal rate. Doing that would bring an end to the deception, which would be a very good thing. Once the deception was brought to an end, we would all be free to discuss what we want because the Buy-and-Holders would no longer feel a need to “defend” their long-discredited retirement studies. We could all move on to better and more enjoyable and more productive pursuits.

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 is an interesting SWR article on Morningstar today.

https://www.morningstar.com/articles/1066569/whats-a-safe-retirement-spending-rate-for-the-decades-ahead

I like that article a lot.

It gets into numerous factors that were ignored during the time when Buy-and-Hold dogmatists were arguing that there is only one safe withdrawal rate that applies for all investors are all times. The retiree can change the safe withdrawal rate that applies for him by being willing to reduce spending if his preferred rate does not produce good results for a number or years or by being willing to take on part-time employment or by being willing to leave a smaller amount to heirs than he would prefer. Effective retirement planning requires that one be willing to take a look at all of these factors. And of course the valuation level that applies on the day the retirement begins must be considered as well — this article acknowledges that.

I wish that this article had been published on the afternoon of May 13, 2002. A lot of discussion board and blog communities that have been burned to the ground by Lindauerheads and Greany Goons would still be around. And we would all be learning from the powerful insights generated during those discussions. We would all be living better and freer and more fulfilling lives. Moving past the dogmatism of earlier days would yield all good stuff and zero downside.

I view the publication of this article as a highly encouraging sign. Now we just need to see a few brave people take the ball and run with it into the end zone.

My best wishes to you, 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:

“I wrote to him to ask what the deal was and he said that it was “catastrophically unproductive” of me to point out the error”.

No he didn’t.

What actually happened is laid out here.

http://www.passionsaving.com/200711.html

“The Dallas Morning News columnist said that he appreciated my “efforts to add another level to the safe withdrawal rate discussion.” But he added that: “You go about it in a manner that is catastrophically unproductive by adding missionary zeal that inflates your importance and demeans others. The whole idea that there is a new school of Safe Withdrawal Rates reeks of personal aggrandizement.”

In response to this you sent him a 4,500 word email that mentions “I” or “my” over a hundred times and which went over many of your usual “hocomania” topics.

In response to that, Scott was much more succinct, he said “Sadly, your response is exactly what I wrote you about.”

The key phrase is “You go about it in a manner that is catastrophically unproductive”. This has been the message that you have received over and over again. It has always been your manner of debating/discussing and you never learn your lesson.

Correcting an error in a retirement study is pretty darn important stuff, Evidence. My “manner” in discussing these issues has been to insist that the error be promptly corrected or, at the very least, that everyone seeing one of the Buy-and-Hold retirement studies be notified that there are two schools of academic thought as to how stock investing works and that the Valuation-Informed Indexing school produces very, very, very different numbers than the Buy-and-Hold school.

I offer no apologies for my missionary zeal in insisting that those retirement studies be corrected. A good number of the people who relied on Greaney’s study to plan their retirements had become friends of mine during the time that we posted together at the Motley Fool site.

I have zero problem with crediting my Buy-and-Hold friends for the many important contributions that they have made. But I feel strongly that they hurt themselves as well as millions of ordinary investors by failing to take prompt action to correct the error they made in their retirement studies. None of us know it all. All of us make mistakes from time to time. But there are responsibilities that apply in the investment advice filed that must be honored, in my sincere assessment. One of those responsibilities is that one must correct a retirement study that one has advanced once one learns of a serous error in that study.

If I need to add hundreds of instance of the word “I” to make that point, I am fine with that. The important thing is that the point be made clearly and firmly and repeatedly until the study is in fact corrected. Please note that the Scott Burns approach (which is followed by a good number of others, to be sure) has not to this day resulted in correction of the Greaney study or any of the other Buy-and-Hold retirement studies. When someone comes up with an approach that gets those studies corrected (or that at a minimum makes people who see the studies aware that there are two academically respected schools of thought as to how stock investing works), I will salute the fellow or gal who pulls it off. Until that happens, I will continue with the approach that makes sense to me — praising the Buy-and-Holders to the sky for their mountain of genuine good work while at the same time insisting on prompt correction of the studies.

I hope that that helps a small bit, good friend.

Correction Seeking 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:

Note that I, nor others that comment on this board call you names , like “goon”. Notice that we don’t make threats, like prison. Notice that we behave ourselves and are mindful of community standards, keeping us from banning.

Learning anything?

Greaney has not corrected his retirement study. I pointed out the error in it on the morning of May 13, 2002. I noted that it does not contain an adjustment for the valuation level that applies on the day the retirement begins. Thousands of people have looked at the study over the course of the past 17 years and not one has been able to identify a valuation adjustment in it. So I was right re what I said.

Greaney said that the safe withdrawal rate was 4 percent. If you include a valuation adjustment, you learn that the safe withdrawal rate for those who retired in January 2000 was 1.6 percent. Greaney said that those taking a 4 percent withdrawal had “100 percent safe” retirements. The properly done studies show that the odds of those retirements lasting 30 years is only 30 percent. So they were not safe or anything even remotely close to it.

I am not willing to lie re these matters. A failed retirement is a serious life setback. So, when I am on a discussion board and someone asks “what is the safe withdrawal rate?” I post honestly. I do not say that it is always the same number, 4 percent. I say what it is for retirements beginning with the valuation level that applies at that time. That’s the dispute. That’s what you refer to as my “bad behavior.” That’s always been the dispute. I say that the Buy-and-Hold retirement studies should be corrected. You don’t want to see them corrected. That’s why we are working at cross purposes.

I could live with it if you told people that Buy-and-Holders believe that the safe withdrawal rate is always 4 percent but also let them know that those who believe in Nobel-prize-winning Economist Robert Shiller’s research showing that valuations affect long-term returns get a very different number (1.6 in January 2000, other numbers at other times). But I am not going to lie re this critically important matter. I believe that valuations affect long-term returns. If I say that I believe that the safe withdrawal rate is always the same number, I am obviously telling a lie. It’s not going to happen.

I have not threatened you with prison. I have no power to put you in prison and I have no desire to seek such power. I have pointed out that you have committed crimes that will likely get you sent to prison in the days following the next price crash. It is the U.S. statute books that threaten you with prison. Take it up with them.

By pointing out that you have committed crimes that will likely get you sent to prison, I am being a friend to you. The easy thing to do here would be to ignore the criminal acts and then act surprised when you are taken away. It won’t do you any good for me to warn you about prison when it is too late for you to help the millions of people whose retirements in danger. You can help those millions of people by doing what you can to open ever discussion board and blog on the internet to honest posting re the last 38 years of peer-reviewed research. Do that and people will be less angry in the end. Which will translate into a shorter prison term for you.

I am doing for you what I would want you to do for me if the tables were turned. I am your friend, whether you choose to acknowledge it or not. I have always been your friend. I was Greaney’s friend when I pointed out the error that he made in his study. If I had made an error in a retirement study, I would be horrified. I would want people to point it out so that I could correct it before it did more harm. Greaney is off his rocker if he thinks that I was somehow being something other than his friend by pointing out the error. I am his best friend in this world. Those who fail to urge him to correct his study are being cruel. He applauds them for it. But they are being cruel all the same. They are being cruel because that is the easier path to take in the short term but one that does great harm to him in the long run.

I am Greaney’s friend and your friend for the long term. I say as a friend that you should urge him to correct the study. Or, if not that, to at the very bare minimum urge him to come clean by acknowledging that there are two schools of academic thought as to how stock investing works and that those who follow the research of Robert Shiller (Valuation-Informed Indexers) get very different numbers than the number that Greaney reports in his study.

If there is ever anything that I can do to help you, please let me know.

If you want me to turn on my friend John Greaney by pretending that I see a valuation adjustment in his study, please try to find somebody else. No freakin’ way, no freakin’ how. I would be hurting him by doing that and of course I would be hurting all of the readers of his study as well. No can do.

My best wishes to you and yours, Anonymous.

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:

“The safe withdrawal rate is not always 4 percent. It is a number that changes with changes in valuation levels.”

But for some reason you think the fair value PE10 figure is always the same.

The average daily high temperature in New York City in January is 39 degrees. Can that change? Sure. But only very slowly. Ten years from now it might be that the average daily high temperature in New York City is 40 degrees or 38 degrees. That can happen.

But if the daily high for one January day is 3 degrees, you don’t start acting as if the daily high temperature for January has dropped to 3 degrees. You certainly don’t bet your retirement savings on such a belief.

That’s the equivalent of what the Buy-and-Holders do in their retirement studies. The fair-value CAPE value of 16 is based on 150 years of stock market history. Could it change to 17 or to 15? Sure. But those sorts of changes happen very slowly. All investors should be highly suspicious of retirement studies based on an assumption of huge changes in the fair-value CAPE number.

Stock prices went up by 126 percent from 1996 through 1999. The normal price rise for four years would be 26 percent. So it was irrational exuberance that caused the other 100 percent of the total price rise. Could it be that irrational exuberance was responsible for only 98 percent of the total price rise or for 102 percent of it? Those are possibilities. But Greaney didn’t base his study on a belief that irrational exuberance was responsible for only 98 percent of the price rise. His study was set up to show zero effect for irrational exuberance! He told aspiring retirees that they could treat the entire 126 percent price rise as real and that their retirements would be “100 percent safe” all the same.

Huh? What the f?

And he showed that he knows that this position cannot be defended in civil and reasoned debate when he responded to questioning about the methodology used in his study 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. He’s a con man, Evidence. I mean, please give me a freakin’ break.

And it is not just Greaney. Lots of people saw what he did. And either supported him or ignored his behavior. Those people AIDED the con.

We WANT to be conned about how stock investing works when prices are where they are today. We LIKE believing that we have more money in our accounts than we really do have in them, we LIKE thinking that we can retire early many years before we have saved enough to do so responsibly.

The question is — Should people who participate on discussion boards make note of the 38 years of peer-reviewed research showing that Buy-and-Hold is a con, that the market is not efficient and that instead valuations affect long-term returns? I think that those of us who believe that Shiller’s Nobel-prize-winning research is legitimate research should make note of that. Shiller discredited Buy-and-Hold. And I believe that Shiller is onto something. So that’s what I tell people when I post on discussion boards and blogs.

It’s up to them whether they go with what I say or with what the Buy-and-Holders say. It’s not my place to tell people what to do. But it IS my place to post honestly. And I sincerely do not believe that Greaney included a valuation adjustment in his study. So that’s what I tell people. No apologies whatsoever.

I wish you all the best that this life has to offer a person.

Con Man Exposer Rob