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

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Oblivious Investor vs. Mr. Market

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My friend Mike Piper, author of the Oblivious Investor blog, has written a book called Oblivious Investor and was kind enough to send me a review copy. It recommends Passive Investing. To the bonfires with it!

Or maybe not.

I bill myself as the most severe critic of Passive Investing alive on Planet Earth today (and I don’t think you would hear an argument from Mel Lindauer, another friend of mine who wrote a book endorsing Passive Investing — Mel’s book is The Bogleheads Guide to Investing ). Still the full truth of the matter is that the reason why I so strongly oppose the current incarnation of the Passive model is that I see tremendous potential in many of the concepts wrapped up together in the package of strategies that we refer to collectively as “Passive Investing.” My goal is to save the good ideas by pointing out the flaws and getting them fixed. So I need to point out what I like about Mike’s book before turning to the part that in my view is wrongheaded.

The middle-class investor must invest in stocks to finance his or her retirement. Mike makes this point effectively. He’s right.

The middle-class investor needs a simple way to invest or else he is going to get it wrong. Again, Mike makes the point effectively. Again, he’s right.

The middle-class investor becomes hopelessly confused about what works when he tries to make sense out of the tons of junk generated by the media reports on the gyrations of the stock market. Yet again Mike makes the point effectively. Yet, again, he is right (at least that’s my take).

Oblivious Investor presents the case for Passive Investing in an extremely non-intimidating way. The book can be read in a short amount of time yet addresses all of the issues that need to be addressed. The focus is on investor emotions, which is exactly where the focus needs to be. The book makes a point of telling the reader what matters and what does not and of reassuring her that she need not concern herself with all the jizz-jazz that doesn’t amount to much in the long run.

Good.

The trouble for me comes at the bottom of Page 93. That’s where Mike is talking about Mr. Market and where he explains correctly that he is a manic depressive and advises the investor to “just ignore him.”

The trouble is — we can’t.

Mr. Market is indeed a nutcase. I do not agree with Mike (or with John Bogle or Mel Lindauer or any of the other Passive Investing advocates) that Mr. Market is a nutcase that we can safely ignore. Mr. Market at times becomes the sort of nutcase who burns the building down if not asked where he is going with the can of gasoline and the box of matches.

Mr. Market also determines whether our retirement accounts go up over time or go down over time. Nutcase that he is, Mr. Market matters. We cannot ignore him. We need to come to terms with him. We need to learn how to keep him in line.

Mr. Market is the fellow who crashed the U.S. economy. Mr. Market brought stock prices to three times fair value, which assured that the inevitable return to fair value (where we are today) would wipe us out. The wipe-out caused us to cut back on spending, which sent the entire economy into free-fall. No, we cannot ignore this fellow. He is seriously twisted. He is dangerous. This fellow is worse than Bernie Madoff. This guy should be arrested! This guy needs to be put under lock and key.

How do we do it? By being just a tiny bit less oblivious, by being a little more willing to take common sense into consideration than is permitted under Bogle’s gravely flawed first-draft cut at development of the Passive Investing package.

We need to let people know about the academic research of the past 30 years showing that valuations affect long-term returns and explain that that means that long-term investors need to adjust their stock allocations once every eight or ten years on average to keep their risk levels roughly constant. When Mr. Market gets stone drunk while driving the car carrying our retirement money, we don’t enable him by acting like nothing is wrong and saying a survival prayer. We take away the keys. We tell him in no uncertain terms what we think of such reckless behavior. We insist that he go sleep it off and not show up in public again until he’s got it under control.

That’s the change we need to make. With that change, the rest works. Without that change, the economy goes over a cliff. We cannot continue to advise people to buy stocks without telling them what they need to know to keep the car from crashing. It’s just not responsible. It’s just not right.

Mike is right to advise you to be oblivious of the short-term noise. There’s great power in that idea.

But there’s oblivious and then there’s oblivious, you know?

You must never be oblivious of the price you pay for the stocks you buy. You must go with a lower stock allocation when prices are insane than you do when prices are reasonable or low.

Otherwise, Mr. Market the Manic Depressive puts us all in a ditch. We all lose if that happens, the Rationals and the Passives both. It’s our economy. We need to start taking care of it in the manner of a people who want it to remain around for awhile.

Read the book. Learn from what is good in it. Also note what is lacking. Then talk it over with your friends with the goal of getting things back on the right track. We all benefit from having available to us an investing model that doesn’t just almost work or that doesn’t just sound like it might work but that actually does work in the real world.

“The Right of Contributors to Post Their
Sincere Views Must be Respected”

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Retired at 48 recently announced at the Vanguard Diehards board that he has entered negotiations with Morningstar.com to deal with the abusive posting problems that have plagued the board in recent years. Set forth below is an e-mail that I sent to Retired at 48 offering to help out in this effort. I have received a response from Retired at 48. We have not made a decision as to whether to go public with any future correspondence.

Retired at 48:

This is Rob Bennett. I posted as “hocus” at the Vanguard Diehards forum from July 2005 through February 2007.

I saw your note at the board concerning your talks with Morningstar to open the forum up to honest posting by community members coming at things from various points of view. That’s good and important work.

I don’t know how much you know about my background. It was my honest posting on the safe-withdrawal-rate topic (and other valuation-related topics) that caused formation of the Bogleheads.org forum in the first place (the board was formed to provide the dogmatics an escape from Morningstar, which was not willing at the time to go along with a ban on honest posting). Here’s a link to an article at my site that provides some background re the thoughts of other community members on the tactics used to enforce the ban:

http://www.passionsaving.com/investing-discussion-boards.html

Here’s a link to an article that sets forth the text of an e-mail that I sent to my congressman on this matter:

http://www.passionsaving.com/internet-harassment.html

Here’s a link to a blog post setting forth the text of an e-mail that I sent to my local police department and that I discussed in telephone conversations with a Virginia state police official who deals with internet crimes (Mel often invited contributors to the Greaney board to the Vanguard Diehards board to help intimidate those seeking to post honestly and two long-time contributors to the Greaney board were named “moderators” for the Bogleheads board on the day it was formed):

http://arichlife.passionsaving.com/2009/01/22/my-e-mail-to-the-virginia-police-re-the-campaign-of-terror-against-our-board-communities/

I wish you luck with your endeavors. I believe that the internet discussion board is an important communications medium of the future but that to achieve its potential the right of contributors to post their sincere views must be respected; that is, site owners must honor the promises they make to those who build their boards to protect them from intimidation tactics. If there is ever anything that I can do to help move things in a positive direction, please let me know.

Rob

“If We Were Starting with a Clean Slate…No One…Would Recommend…the Old School Studies”

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An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on October 19.

Michael:

Again, thanks for the frank and helpful response.

We are ALL walking like lemmings to a cliff! That’s my take.

We have been doing so ever since the mid-1990s, when prices went to insane levels. We returned to reasonable price levels in the past month. But we have not yet had a chance to absorb what has happened in the recent price crash. So I don’t think it can yet be said whether this is going to be the blow that causes us to abandon confidence in the Passive Investing model or not.

When I say something like that, it is not my intent to ridicule the investors who stuck with high stock allocations at a time when it was not rational to do so. Nor is it my intent to ridicule the financial planners who either encouraged such behavior or failed to speak out in strong opposition to it. My intent is just to hold a mirror up to reality — this is what we did. We need to accept that and come to understand how it is that we came to do such a crazy thing if we are to learn how to become more effective investors in the future.

You noted in an earlier e-mail that investors are “hard-wired” to give insufficient attention to prices when investing in stocks. To a point, I agree. I call this the Get Rich Quick impulse. It is real. But it is not all-powerful. I have spoken with tens of thousands of investors over the first six years of The Great Safe Withdrawal Rate Debate and I have learned some highly encouraging things. Most middle-class investors want to rise above theGet Rich Quick impulse. Most middle-class investors want to overcome the hard-wiring that has caused such human misery on earlier trips to la-la land price levels.

They need help. They cannot overcome their hard-wiring on their own. ACCURATE safe-withdrawal-rate analysis can provide a huge amount of help. Accurate SWR research pulls people back to reality when they don’t particularly want to go there.

A message that I hear frequently from investors is that all that I say about how stock investing works makes sense, but that they are reluctant to abandon Passive Investing so long as the “experts” continue to express confidence in it. The “experts” have become the problem!

The problem is that the experts are presumed to know more than the average investor. This is of course so in one sense — the experts have read more books and have more experience. It is not so in another sense, however. The experts are every bit as much vulnerable to the negative investing emotions as are the average investors. Experts too suffer from imperfect hard-wiring. The problem is actually worse with the experts. Experts have more of an emotional investment in the advice they offer than do the average investors who make use of it. Experts who have advocated Passive Investing really, really, really do not want to see it abandoned. It is hard to accept that the advice you have given for 20 or 30 years is in many important ways just flat-out wrong.

Still, it is wrong. Valuations DO affect long-term returns. The SWR is NOT a constant number. Investors cannot afford to stick with stock allocations that made sense at times of reasonable valuations when valuations get to the levels we have seen for the past 13 years or so. For us to get out of the mess we are in today, the experts need to reevaluate. They need to learn how to say those three magic words “I” and “Was” and “Wrong.”

Bull markets are about being wrong, Michael. That’s the essential point. The sorts of price levels that we saw from 1995 through the first half of 2008 are simply not possible in a world where most investors are following rational strategies. Investors following rational strategies sell stocks when prices go to insane levels and the selling brings the prices back to reasonable levels. Market prices are self-correcting when investors are armed with a realistic understanding of how stock investing works in the long run.

We talked earlier about the need to replace the Passive Investing model and you made what I viewed as a  important point — you said that most financial planners will not give up on the Passive model until a new model comes along to replace it. We have been working on the new model in the Retire Early and Indexing communities for some time now — we call it Rational Investing. Do you know what our biggest problem is in helping people learn about the new model? Abusive posting by those who continue to cling to the old one!

If we were starting with a clean slate today, there is no one who would recommend that SWRs be calculated in the way in which they are calculated in the Old School studies. Here’s what a fellow posting at the  Bogleheads.org board said about this methodology in words posted just a few days ago: “SWR calculations don’t really take into consideration conditional probability (so this is somewhat similar [but not identical]to the Gambler’s fallacy). It escapes me as to how this glaring flaw exists: surely the authors could notbe so ignorant about basic principles of statistics? On the other hand, it is not out of the ordinary. Everyfew months I get to review manuscripts from Nobel-calibre scientists, with glaring flaws (the manuscripts, that is).”I can point you to scores of equally harsh comments re the studies that millions have used to plan their retirements if you think that would help make the point. It shouldn’t be possible for people postingon discussion boards to identify glaring logic flaws in work done by the people responsible for our retirementplanning advice. But it is, it is.

The experts are human. That’s what it comes to. They have emotions like everyone else. Their emotionscause them to believe in silly and dangerous things like everyone else. We need to let them off the hook.We need to begin challenging them more forcefully when we discover their mistakes. That helps not onlythe investors placing their faith in the findings of the experts. It also helps the experts themselves. It forcesthem to overcome their human inclination to respond to questioning with defensiveness. By forcing themto fix the things they get wrong, we help the experts make much more productive use of their time in the days that follow.

That’s Rational Investing. That’s the new model you have been looking for, Michael!

You’re waiting for a new model to come along that is better in every way than Passive Investing.We’ve already got it! We have mined some amazing insights over the past six years. All that is holdingus back is this crazy Old School stuff that makes it impossible for humans of good intent to engage incivil and reasoned discussion about what works in the real world. There was a day when both the OldSchool SWR studies and the Passive Investing model of understanding how stocks work served good purposes. That day is long past. As soon as the academic research came in showing that valuations really DO affect long-term returns (a finding contrary to the core premise of the Passive Investing model),all of this nonsense should have been ditched so that we could all move forward with the discovery ofmuch better stuff.

It was a mistake, Michael. That’s all. There is no other area of life endeavor in which people would conclude that because something barely SURVIVED on two occasions that it is safe to try it yet a third time. Takinga 4 percent withdrawal from a high-stock-allocation portfolio at a time of sky-high valuations has ALWAYSbeen a risky thing to do. It survived twice. It may survive a third time or it may not. But there is zero reasonto believe that all of the old realities will be stood on their heads and that this risky idea will become a safe one.What’s always been risky is likely to remain risky in the future.

We need to get about the business of telling people that, in my view. It’s important. Telling people the realitiesis the way to help them overcome the negative effects of their hard-wiring. Most middle-class investors want to do better. Most want to learn. The “experts” need to start doing their part. It is only when we work up whatit takes to admit the mistakes of the past that we become able to make a better future. It’s a win/win/win/win/win. I see no potential downside whatsoever.

Valuations matter. Which is another way of saying that emotions matter. Which is another way of saying thatpeople matter.

The Efficient Market Theory ignores all that. The Efficient Market Theory presume that we are all rational actorsdespite a long historical record showing that we are not. The Efficient Market Theory has failed us. We need to move on.

Rob

“I Am Unable to Make Sense of Your Lack of Alarm Over the Effects…on Real Live Investors”

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An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that I sent to Michael on October 19.

Michael:

Thanks for touching base. I am always glad to hear from you. As you note in your e-mail, I have always found your comments helpful and valuable. And, yes, we do agree on much re both the safe withdrawal rate (SWR) issue in particular and re the investing project in general. As the thrust of your e-mail suggests, we do not agree on everything. I certainly see no reason why that should mean that we cannot remain friends or that we should not continue to learn from each other by sharing out thoughts and perspectives with each other.

How did the message-board comment come to your attention? Did you note the tactics employed at the message board at which this comment appeared to intimidate those posting honestly on the SWR topic? How do you feel about what you see when you look at the content of that board?

This question goes to the heart of what we are discussing here. I think it would be fair to say that the people posting abusively at that board are in great pain. The owner of the board is John Greaney, the author of one of the Old School SWR studies. John is a friend of mine. John started the Retire Early board at the Motley Fool site and I built that board into the most successful in the history of the Motley Fool site. When I posted about the problems with the Old School studies, John freaked out. He has now spent the last six years of his life going from discussion board to discussion board, from blog to blog, to insure that no one on Planet Earth can discuss SWRs in a reasonable manner. Does this seem to you to be a constructive use of John’s time? It sure does not seem like such to me.

Everyone who has looked seriously at this issue has come to the same conclusion. The Old School studies tell us the Historical Surviving Withdrawal Rate (HSWR). There is no question whatsoever that they report this number accurately. It is equally obvious that they do NOT report the SWR accurately. To identify the SWR, one must take the effect of valuations into account. William Bernstein said once that anyone giving thought to using one of the Old School studies to plan a retirement would be well-advised to “FuhGedDaBouDit!” I think it would be fair to say that Bernstein does not believe that the Old School studies report the SWR accurately.

Yet, like you, Bernstein is reluctant to say the words that need to be said — “The Old School studies are analytically invalid for purposes of determining the SWR and need to be corrected immediately.” Asked directly whether the Old School studies are analytically invalid, Bill said that it is his view that they ARE analytically valid. That’s the state of play on this question today. There are others who have said similar things. Scott Burns has reported on the New School SWR findings in three of his columns. Yet he continues to link to the Old School studies. He told me once in an e-mail (which he permitted me to publish at my blog) that he views my claims that the Old School studies get the number wrong and need to be corrected as “catastrophically unproductive.” I could go on and on.

I have not quoted you incorrectly. I do not even quote you in the words you cite in your e-mail. I say that “Michael Kitces also said something along these lines…” I published the full text of your e-mail at my site so that anyone who wants to check the precise wording may do do. I have been as fair to you as I can possibly be and I will of course continue to be — I view it as critical that journalists work hard to be fair. Do I have your permission to publish the text of your new e-mail at my blog? Doing that provides you a perfect way to get your precise message out to people in the precise words that you want to use to convey it. Please just let me know and I will be sure to do that.

I am unable to make sense of your lack of alarm over the effects of the Old School studies on real live investors, Michael. We talked a bit earlier about the need to abandon the Passive Investing model now that it has been discredited. It is the sort of confusion you are pointing to in your e-mail that convinces me so strongly that the Passive Investing model simply must be abandoned if humans are ever again to make sense of the investing project. This model is rooted in confusion (the idea that it is not necessary for investors to adjust their stock allocations when prices go to dangerously high levels is obviously based on a premise that valuations do not affect long-term returns and this premise has been rejected by most of the best-informed experts in the field) and the longer we try to make sense of things without putting the discredited model behind us, the more confused things get.

You have agreed that people will suffer losses because of the Old School studies, right? That’s obviously a bad thing, right? So why don’t we all get about the business of fixing them? There are millions of people who have used these studies to plan their retirements. These retirements are at grave risk of failing in days to come in the event that stocks perform in the future anything at all as they always have in the past. Are you able to think of any possible constructive purpose served by failing to get the word out to people as quickly as this can possibly be done?

I asked you this question in one of my earler e-mails and you did indeed say in your e-mail of August 24 that: “I still feel compelled to show some respect to research implying a safe withdrawal rate that really WOULD have genuinely survived every historical scenario our markets have ever actually followed.” You have said that you respect this research, Michael, and that your respect for it holds you back from doing more to warn people of the dangers of planning a retirement by making reference to it. Is this not a fair statement?

There’s a point to which I share your respect for the Old School research. The Old School research was a big advance over what was available to us before it came along. Bernstein described it as “breakthrough research” and I share that view. But, as I noted in an earlier e-mail, humankind learns by discovering things it has gotten wrong and moving forward. We learned that the Old School studies get the SWR wrong back in May 2002 (or arguably even before that). Our failure to spread the word far and wide about the analytical errors in these studies has slowed progress on the development of New School research. Are you able to think of anyone who benefits from this delay in our Learning Together experience? I sure am not.

You note in your e-mail that the New School research is rooted in theory. This is obviously so. ALL research is rooted in theory. The Old School research is rooted in theory too. The difference is that the New School research is rooted in a perfectly reasonable theory (that the SWR changes with changes in valuations) while the Old School research is rooted in a perfectly absurd theory (that the SWR is the same for retirements beginning at wildly different valuation levels). Bernstein said that the Old School studies have “embedded” within them an assumption that the average return of 6.5 percent real applies at all times. I know that you do not believe this to be so. So it logically follows that you do not accept the theory behind the Old School research. It might be reasonable to say that the New School theory has not been proven beyond any reasonable doubt (I think it has been, but I think a case can be made that it is not entirely unreasonable to believe otherwise). Any weaknesses detected in the New School theory do not do anything to address the obvious flaws in the Old School theory. We have very good reason to believe that the New School theory proves out. We know with certainty that the Old School theory is false. Are you able to point to any sliver of evidence whatsoever that valuations have ZERO effect on long-term returns (the Old School studies make no adjustment for valuations whatsoever)?

The title of the book that I am working on is “Investing for Humans.” I am a big believer in the merit of bringing things down to the human, practical level from time to time. I have discussed the flaws of the Old School studies at numerous discussion boards. I have heard positive comment from hundreds of middle-class investors. A good number have avoided the busted retirements that are almost certainly going to follow from use of the Old School studies by taking advantage of the research done in the Retire Early and Indexing communities over the past six years. Despite all that, there are a number of Goon posters who have led a vicious Campaign of Terror against these board communities in an effort to block honest examination of the SWR topic. Honest posting has been banned at the Motley Fool site, the Early Retirement Forum, the Morningstar.com site, and the board at Bogleheads,.org. What do you make of this? I think it is fair to say that it says something very troubling about the Old School research and about the Passive Investing mindset that prompted the analytical errors made in it and that encourages an attitude of indifference to the need for publicizing those errors and what we have learned from our discovery of them.

When real live people try to determine the SWR today, they often find themselves looking at the findings of the Old School studies. These studies make zero adjustment for valuations. Do you see this as a good thing or as a very, very, very bad thing? I think it would be fair to say that that is the root question here. I obviously see it as a very, very, very bad thing. My goal in getting the Old School studies corrected is to open up the field for discussion of the New School research. I obviously have no problem with the discussion of any weaknesses identified in the New School research. I encourage this strongly. But I do think it is imperative that the New School research be widely publicized before more middle-class investors experience more busted retirements as a result of the demonstrably false claims of the Old School research.

You use the phrase “empirical fact” in connection with the Old School studies. Surely you do not mean to suggest that the Old School studies get the SWR right as a matter of “empirical fact.” I presume that you are saying that the Old School studies report the Historical SURVIVING Withdrawal Rate as a matter of empirical fact. We of course agree on this point. I am not aware of anyone ever disputing the point. Can we get past this trivial point and focus our attention on the need to warn the many people who have been taken in by the false claim that it is possible to identify the SAFE withdrawal rate without taking valuations into account? We are in agreement that this is not possible, no?

I certainly stand by my statement that your blog post will do a lot of good for a lot of people. You may recall that my initial blog post about your research described you as being half in the Old School and half in the New School. My goal is to get you entirely over to the side of the good guys!  We need you, man! If you would like to pursue this in further e-mail correspondence for publication at my blog (and at yours too, if you like), I am all for it. People need to see more of these sorts of discussions to make sense out of this critically important issue. If you would like to publish an article or research at my site, I am also happy to make my pages open to you to do so. I offered in an earlier e-mail to speak to the SWR conference that you will be moderating. It seems to me that that conference represents a great opportunity to get these ideas out before more of today’s SWR “experts” and to see how they respond. I have studied this matter in great depth. It amazes me how much trouble many incredibly smart people have grasping some issues which to me seem basic. It’s an exceedingly odd phenomenon. I have come to believe that the root problem is the confusion caused by even partial acceptance of the Passive Investing model. In any event, I am completely open to doing anything that I can to help people come to a better understanding of the underlying realities (and I of course am grateful for the learning experiences that I inevitably enjoy myself when I am graced with an opportunity to interact with people who come at these questions from a somewhat different perspective).

I do not believe that I have been even a tiny bit unfair in my descriptions of your viewpoint, Michael. However, I am completely fine with the idea of publishing both your e-mail and my response to it so that people can take a look at your own characterization of your viewpoint and decide for themselves whether I have in some way indeed been unfair or not. I would like to explore these issues with you (and with others, such as those attending the conference you will be moderating) in more depth and I will remain open to doing so at any time you believe that will be helpful. If you have particular questions about any of this, please just ask. As I noted in an earlier e-mail, John and I have done a tremendous amount of work in this area. The odds are that any questions that are concerning you today relate to points that we have examined at some earlier time.

Thanks again for all your help with this and for checking in with me again. W’e’re still working on the new calculator; I will certainly drop you a note when it is available in the event that I do not hear from you again prior to that time.

Rob

Is Stock Investing Safe Again?

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A recent thread at the Lindauerheads board sets forth evidence that stocks are approaching fair-value price levels, according to the Tobin’s Q valuation assessment tool. Is stock investing safe again?

I say “no.” But we’re getting there.

Tobin’s Q is a valuations assessment tool with a sound theoretical basis and a good track record. I view the drop in the Tobin’s Q numbers as a significant development. There are smart people who today believe that stocks are no longer terribly overvalued.

Even the P/E10 valuation assessment tool, which I prefer, reports far better numbers than those that applied a few years back. The fair-value P/E10 number is 14 or 15. At the top of the bubble, we were at 44. Today we are at 23. We are not at the price levels at which informed long-term stock investors feel comfortable going with a high stock allocation. But we have made lots of progress.

The Tobin’s Q tool and the P/E10 tool are telling somewhat different stories. It’s worth taking note of that. But I don’t view it as a big huge deal. We are still in the early stages of developing the Rational Investing approach. We still have a lot to learn. It would not be reasonable to expect all of the analytically valid valuation-assessment tools to provide identical findings. I’m not even sure that it would be a good thing if they did. We need to take into consideration a variety of perspectives. The healthy thing is for some Rational Investors to point to the Tobin’s Q indicator, some to point to the P/E10 indicator, some to point to other indicators, and all to take a variety of perspectives into account in developing their own particular takes.

More important than the question of the differences between the two valuation-assessment tools is the question of whether it is reasonable to expect stocks to begin performing well once we get to fair-value price levels. The historical reality is that stocks always drop to price levels far below fair value in the wake of out-of-control bull markets. We saw the most out-of-control bull in history in the 1990s. Can we really feel safe betting our retirements on a hope that this time it will all turn out different, that this time we should expect stocks to begin a long-term upward move as soon as they touch fair-value price levels?

I don’t see that as being even a remotely safe way to proceed. It wouldn’t be a good idea to hold off on buying any stocks until we get to a P/E10 value below 10, as we usually do in the huge bear following a huge bull. But there’s a real risk that, if you buy heavily at fair value, you will see a 50 percent price drop before the emotional pain that will hit investors upon learning that Passive Investing has failed once again to work for the long term comes to an end. Even if we really are today at fair value, it is not necessarily a good idea to buy heavily into stocks just yet.

The other side of the story is that, if you got entirely out of stocks when prices went to la-la land, you probably should be inching your way back in today and planning a move to a significant stock allocation sometime over the next few years. I believe that P/E10 offers a better read of the realities than Tobin’s Q. But I am not sure. If it is Tobin’s Q giving the better read, it would be a mistake for most investors to stay entirely out of stocks too much longer. Stocks offer a strong long-term value proposition when purchased at fair-value price levels.

Perhaps the most important consideration is the emotional makeup of the investor making the allocation decision. If you have been following the Passive Investing model for some time, you are likely emotionally drained today and may need some time away from stocks to get your head straight and to start learning about more realistic investing strategies. I doubt that you’re missing a once-in-a-lifetime chance to get into stocks at good prices even if we really are at fair-value price levels today. The odds strongly favor a drop to price levels well below fair value in the wake of the sort of bull we experienced in the 1990s. So take your time before making a decision. Don’t make decisions in a panic. Work on feeling comfortable with valuation-informed strategies before making any dramatic moves.

If, on the other hand, you have long been a valuation-informed investor who has been longing for a chance to see prices good enough to justify purchasing stocks for the long term, and if you prefer Tobin’s Q to P/E10, you should be buying today. How about shifting to a stock allocation of 30 percent, or 40 percent, or 50 percent? You don’t need to jump from 0 percent to 70 percent in one fell swoop. Ease into things, continue to watch valuations, and move to a higher stock allocation when prices improve a bit more.

Personally, I want to see a likely 10-year return on stocks of at least 2 percentage points better than what I am getting from my TIPS and IBonds before moving into stocks. I view stocks as a risky choice until we see large numbers of investors giving up their attachment to the Passive Investing model. Can we really say that emotion has left the market until we see that happen? I am okay with taking on that risk if I am compensated for it. But for so long as stocks are offering a 10-year return no better than what is available to me from the super-safe asset classes, I don’t see the rational case for putting my retirement savings in jeopardy. We are still in the red-alert-danger-zone, according to the P/E10 tool. We still should be anticipating a price drop of 50 percent or more.

Things are changing, however. That’s the news that I take from the encouraging Tobin’s Q numbers. Stocks are still overvalued or at best fairly valued. But we are on our way to price levels at which stocks will again offer a very appealing long-term payoff. We all should be planning to up our stock allocations over the next few years. The smart investor avoids panic moves by using the historical data to anticipate what is likely coming in the next few years.

We still need a significant price drop for stocks to become an appealing long-term buy. But we no longer require two or three or four significant price drops to get to that magic place. We are closer to reasonable stock prices than we have been at any time since the mid-1990s. That’s good news indeed.

Today’s Passion: I argued in a recent blog entry that Stocks Might Be About to Take Off. How many times have the doom-and-gloomers been proven wrong in recent years?

Rob Sympathizes (Kinda, Sorta) with Mel
re the Morningstar Ratings Boxes

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A poster named “Yabbadabbado” argues that Mel Lindauer (co-author of “The Bogleheads Guide to Investing”) is overly sensitive. The comment comes in response to a complaint by Mel about the Morningstar ratings boxes, which permit posters to give posts they like a thumbs up and posts they do not like a thumbs down. Mel has been getting a good number of thumbs downs at the Diehards board of late because of his long history of abusive posting there.

I see merit in what both Yabba and Mel have to say re this one.

Yabba is right that Mel and lots of the others who post on discussion boards are overly sensitive. It’s a good thing that they didn’t have those rating-box thingamabobbles in place when I was posting over there. I would have been piling up negative 40s! I would have been attracting so many thumbs-down ratings that I probably would have caused the Morningstar discussion-board software to crash! I would have had people urging that a policy be adopted that a bomb be dropped on the home of the community member with the most thumbs-down ratings! And the proposal would have brought crowds to the little yellow house across the street from the post office to hear the imminent “Ka-Boom!”!

Mel — I feel for you, man. I very, very much know how it feels.

But you gotta let it go. Sometimes you’re up, sometimes you’re down. If you’re wanting to hear the applause, you’ve got to be willing to hear the boobirds too. It’s all part of the wonderful game.

I agree with Yabba that people take this stuff too personally. That causes a lot of trouble. Mel needs to chill out. Lots of others need to chill out with him.

That said, Mel has a point as well.

Mel has a lot of accomplishments to his credit in that board community. The Vanguard Diehards board was once the most successful investing board in the history of the internet. That was to a considerable extent Mel’s doing. He had put forward tens of thousands of helpful posts. Is he not entitled to some respect from his fellow community members in return for that? Should he have to listen to jeering?

Yes and no.

Mel is not being jeered because of the tens of thousands of helpful posts. He is being jeered because of the many hundreds of abusive ones. It’s taboo to say that. But he knows it, Yabba knows it, and every poster who has been paying even a tiny bit of attention knows it. To get back in the good graces of that community, Mel would need to do the things that humans do to get back in the good graces of communities they have harmed. But that would mean admitting the harm that has taken place. That cannot be done. That must not be done. Right?

I don’t think that’s right.

There’s a reason why it has become the cultural norm among all civilized peoples for those who discover they got an important number wrong in a study to correct it (Mel did not himself publish a study that got an important number wrong, but he cites without criticism the Greaney study in his book and has not done anything about the misimpressions he created by doing so since learning of the analytical errors in the study). There’s a reason why it has become a cultural norm among all civilized peoples for those who act rudely and abusively and do harm by doing so to apologize for the harm they have done. If the internet discussion board is going to achieve its potential (I very much hope that it does), the people who run the boards are going to have to start to take seriously their responsibilities for seeing that cultural norms are given the respect they merit.

Morningstar has rules prohibiting the tactics that Mel used to destroy the Diehards board. Had those rules been enforced in even a halfway reasonable manner, Mel would not be in the fix that he is in today. Had those rules been enforced in even a halfway reasonable manner, he would have been given a warning when he first began posting abusively. My guess is that he would have altered his behavior in response to the warning. He would have reined himself in. That board community would still be thriving today. Mel would still be loved there.

It’s Morningstar’s fault that it did not happen that way. Morningstar wrote its rules in the way it did to attract people of intelligence and integrity to its boards. Then it abandoned them by failing to administer its own rules in a reasonable manner. It did a whole big bunch of people a whole big bunch of harm by failing to do so. Morningstar should be ashamed of its behavior re this matter. That’s my take.

I can’t tell you precisely why Morningstar didn’t enforce the rules. It appears that part of it is that they thought that they might lose some posters if they did so and they didn’t want to lose those people. That’s wrong. That doesn’t work.

By failing to rein Mel in, Morningstar put him in an untenable position. He felt forced to become increasingly abusive to stomp out the efforts of the hundreds of community members who were interested in engaging in honest discussions of safe withdrawal rates and other valuation-related topics. Now there are hundreds and hundreds of abusive Mel posts in the files. Not good. Not good for Mel. Not good for Morningstar either (the abusive posting destroyed the board, so Morningstar ended up losing not the small number of posters who would have fled had they enforced the rules but pretty much the entire board community).

When a site owner publishes rules to govern posting at its site, it is making a promise to us to enforce those rules in a reasonable manner. We should hold the site owners to those promises. To fail to do so creates problems for everyone — for us, for the site owners, and for the abusive posters too. No one benefits from a failure to enforce the rules that prohibit abusive posting.

I admire a lot of what Mel has done. I of course do not admire his abusive posting one little bit. He’s a grown-up and he needs to take responsibility for what he has done. But Mel’s abusive posting is not solely Mel’s doing. Morningstar permitted it to happen; by failing to act, an argument can even be made that Morningstar encouraged it. We encouraged it too when we failed to speak up in clear and direct and firm terms. The Normals played a role in the destruction of that board too.

Mel blames his troubles on the ratings boxes. That’s not it. I’ve seen ratings features used well and I’ve seen them used poorly. In the days when the Motley Fool board was being built up, community members there used the recommendations feature responsibly; we used it to point other community members to the best stuff on the board. In the days when the Motley Fool board was in decline, community members used the recommendations feature to advance savage smear campaigns.

It’s not ratings features that make a board succeed or fail. It’s people. Attract people who love community and the community will grow. Attract people who hate community and the community will fail. Mel loved the Diehards community until the community expressed a strong desire to engage in honest posting re safe withdrawal rates and then he decided he hated it instead. That was his failing. Morningstar’s failing was not doing anything to rein him in until too many good people had left in revulsion and too many bad people had been drawn in by the out-of-control ugliness.

The Vanguard Diehards board was an amazing resource for middle-class investors for a long time. People insult it when they suggest that the adoption of ratings boxes is what did it in. The board was done in by one of the ugliest and most sustained rampages of abusive posting ever seen in the history of the internet. If we deny that, we fail to learn any lessons from the experience.

We need to learn these lessons. We need to stop hurting ourselves in this way. Mel deserves a lot more from us than what we have given him thus far.

And it’s not just Mel who deserves better, of course. Truth be told, we all deserve a lot better from us than what we have given ourselves thus far.

Love is the answer. Mel hates it when I quote from the lyrics of popular songs in discussions of investing. But I really do believe that Jackie DeShannon nailed it when she told us that “What the Vanguard Diehards Need Now Is Love, Sweet Love.” With a little more love, Mel never would have even considered posting abusively. With a little more love, Morningstar would have reined him in had he done so. With a little more love, hundreds of community members would have insisted that Morningstar act had it falled to do so. With a little more love, Mel would have responded to those thumbs-down ratings by acknowledging the problem and getting about the business of setting things right with his fellow community members.

Lord, we don’t need another SWR study.
We’ve got Old School ones and New School ones enough to read.
We’ve got calculators generating all the numbers you could want to show.
Lord, if you really want to know…

Today’s Passion: You can read my reaction to learning that I had been banned from the Vanguard Diehards board (now that’s a thumbs-down rating!) in a blog entry entitled Banned at Morningstar!

We Need a Tim Russert in InvestoWorld

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When Tim Russert died recently, lots of people came forward to tell us what made him so special.

He asked tough questions in a polite way.

That’s pretty much it. But that’s a lot.

When someone asks tough questions in a polite way, we learn stuff. That makes us a better people. Tim Russert made us a better people. You cannot ask much more of a guy than that, can you?

We need a Tim Russert in Investoworld. We need that really, really, really, really badly.

My background is in journalism. I used to write about tax legislation. I had a computer in the House and Senate press galleries that I used to write up my stuff. It was a kick.

I “get” Tim Russert as easy as anything. I’ve never had any difficulty understanding why he asks tough questions. Of course that’s what he does. That’s his job. What is there to get?

I’ve learned in recent years that things don’t work that way in InvestoWorld. I shake my head about it and I shake my head about it but there’s a real feeling out there that it’s rude to ask tough questions, that we all should just go along with what the Experts tell us.

Huh? With our retirement money riding on whether they get it right or not? We should just go along even when what they say makes no sense, even when what they say could cause us to suffer some of the worst life setbacks imaginable in days to come? This makes no sense to me. This I really, really, really do not get.

Having a Tim Russert around would help us all. It helps the people seeking to invest effectively because they get better answers out of the Experts. It helps the Experts too. The Experts don’t want to give bad advice, you know. They want to get it right. If being questioned by Tim Russert shows them where they got something wrong, that helps them get back on track. Most of them will end up appreciating it, if not right away then at least down the road a bit.

It appears to me that I am on the road to becoming the Tim Russert of InvestoWorld. I’m the guy who wants to ask John Bogle some hard questions. I’m the guy who wants to ask Scott Burns some hard questions. I’m the guy who wants to ask Bill Bernstein some hard questions. I’m the guy who wants to see Motley Fool and Morningstar and the Bogleheads and the Early Retirement Forum start playing it straight.

Hoo boy! If no one else is going to do this job, I feel that I have no choice but to step into the breach. Someone must do this job.

I’m a funny choice. If you had told me back on the morning of May 13, 2002, that someday I would be writing a book on investing, I would have thought you had lost it. I rarely posted on investing before that fateful day. I was none too keen on the idea of ringing any changes re that one. Now look at me!

God has a strange sense of humor. That’s my take.

I’ll make what I can of it, you know?

Who wants to be first on the hot seat?

Today’s Passion: There’s another thing I do that is sort of different. When telling a story about money, I focus on the drama buried in all the numbers junk. I talk about this in a blog entry entitled The Latest Sexy Thriller, I Mean — Personal Finance Book!

“For You and Your New School SWR Studies
to Gain a Measure of Credibility…”

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Schroeder posted a comment to yesterday’s blog entry that I believe merits a blog entry of its own in response. His comment came in response to my observation that the Bogleheads wiki statement on safe withdrawal rates (SWRs) contains a link to an Old School SWR calculator but not to the only New School SWR calculator now available on the internet. Here is what he said:

“Actually, there are several links to Old School SWR studies. They have been authored by financial planning professionals and published in peer reviewed journals.

“Rob, you need to do the same. For you and your New School SWR studies to gain a measure of credibility, they need to be embraced by the financial planning community — both by practitioners in the field and journals read by both practitioners and academics.

“Another idea is to partner with someone who does have that credibility. I realize that the partners you have petitioned like Scott Burns and Jonathan Clements have not given you a warm reception. But surely, there must be others, right? How about Robert Shiller? That’s just one name that comes to mind. I’m sure you can think of dozens of other practitioners and academics who will partner with you.”

Schroeder is correct that there are many financial planning professionals who have endorsed the Old School SWR studies. This is an important fact and it is good that we remind those following our discussions of this reality from time to time.

Schroeder misstates the realities of what happened in my discussions with Scott Burns and Jonathan Clements.

Clements said that the Old School studies are “not the last word in SWR analysis,” in his view. That is obviously not an endorsement of the Goon position that posting on the flaws of the Old School studies should be banned at all Retire Early and Indexing boards. If the Old School studies are not the last word, we obviously should be seeking to learn how to enhance our understanding of SWRs.

Clements did not endorse The Retirement Risk Evaluator. But I think it would be fair to say that he endorsed the position of the thousands of community members who have expressed a desire that honest posting on the SWR topic be permitted on our boards. He is saying that we need to learn more. We obviously cannot learn more until the ban on honest posting is lifted.

For community members to be able to interact in an honest and informed way, they obviously need to know how the Risk Evaluator works and what it says. Hence, we need to see links to this tool in places like the Bogleheads wiki statement on SWRs. Clements is saying that we need to continue the learning process and the failure of the people who control what is put in the Bogleheads wiki statement to include a link hinders the learning process in a very serious way. It is the people who control what is put in the Bogleheads wiki statement who are rejecting what Clements has said on SWRs, not me (I of course look forward to the day when Clements goes a step further and endorses the Risk Evaluator).

Burns has written three columns on the New School research done by John Walter Russell. Mel Lindauer (co-author of The Bogleheads Guide to Investing) has compared those articles to the work of a journalist on the crime beat who reports on the actions of a serial killer. I don’t buy it. It is clear to me from the wording of his columns that Scott has reported on the New School findings because he sees great value in them. I am influenced by the fact that Scott has told me in private e-mail correspondence that he believes that John and I are right in what we say about SWRs. So Schroeder’s claim that Burns has not responded warmly to the New School concept (it was Burns who coined the “New School” terminology to make reference to our findings) is obviously more than a little bit off the mark.

The other side of the story is that Scott also has not endorsed the Risk Evaluator and Scott has indeed put forward some unkind words about me. He has described my efforts to get the Old School SWR studies corrected as “catastrophically unproductive.” He has said that “the whole idea that there is a new school of Safe Withdrawal Rates reeks of personal aggrandizement.” Yes, the guy who came up with the term “New School” mocks it. Beat that one in the irony department!

There is not one Scott Burns. There are two. If there were only one, the part of Scott Burns’ brain that understands that valuations affect SWRs and that the Old School numbers are thus wildly off the mark would tell the part that writes the column in the Dallas Morning News that millions of retirements are at risk of going bust and that this is the biggest story of his lifetime and that he had better get to work pumping out some columns.

And there is not one Jonathan Clements. There are two. If there were only one, the part of Jonathan Clements’ brain that understands that the Old School studies are not the last word in SWR analysis would be asking Rob Bennett for the details of the Campaign of Terror that has been used to block honest discussions of the need for improvements in the old SWR studies so that he could write the story up in The Wall Street Journal (now that Clements is no longer employed there, he would instead send an e-mail to one of his friends there tipping them off to the story that I let him know about in an e-mail).

This strange phenomenon in which the human personality is divided into two has not affected only Scott and Jonathan. I wrote a blog entry a little while back about something that happened to Rob Arnott (editor of the Financial Analysts Journal) at a recent conference of the sort of people who spend their working days constructing peer-reviewed SWR studies. He asked the group of 200 “experts” how many of them believed in the Efficient Market Theory. Not one raised his or her hand. He asked how many would be rooting the research they would be preparing when they got back to the office on Monday morning in the premises of the Efficient Market Theory. Nearly every one of the 200 raised his or her hand.

These are the people that Schroeder is telling me to contact for help with my credibility?

In the investing field?

Um — I think I might stick to the track I am on today. There’s lots of wonderful stuff done in the world of academia. There’s also a lot of gibberish produced in that world. My job is to sort out the good from the bad and report to you what I discover. My intent is to continue to do that job to the best of my ability and let my credibility take care of itself. I have a funny hunch that, given that I have discovered through that process that the Old School studies are wildly wrong, it does more for my credibility to report what the New School studies say than it would to endorse the Old School studies.

The reality is that there are scores of peer-reviewed studies that show that valuations affect long-term returns, probably hundreds. There is nothing that I have said about the investing realities that hadn’t been said thousands of times before I came along. And of course there are academics who report the realities. Another recent blog entry reported on a Capital Spectator article noting that: “a new generation of researchers took a fresh look at the random walk in the 1980s and 1990s and the accumulating tide of studies began to turn the academic tide.” More serial killers on the loose!

Valuations have been affecting long-term returns since long before the first Old School SWR study was a gleam in the eyes of the Trinity Study authors. Nothing has changed in recent years but the P/E10 value. When the P/E10 value is 24 (the number that applies today and one of the highest on record), it’s viewed as “rude” to comment on how stocks have performed since the beginning of time. It’s viewed as “kind” to tell people the sorts of fairy tales set forth in the Old School studies.

So be it.

But I’m not in the fairy-tale telling business. I write for people. When I click my words onto the computer screen, I have the image of a real live middle-class man or woman in mind as the person to whom I am directing the thoughts. The people who read my stuff matter to me. They have college educations to fund, retirements to finance, dreams of more fulfilling work that they could pursue if only they had a bit more money. I am going to tell the story straight to those people, smear attacks on my credibility be darned.

I understand Scott’s point that what the historical data says on SWRs is “information most people don’t want to hear.” That doesn’t matter to me. Or at least it doesn’t matter to me enough to make me go along with the idea that telling the story straight is “catastrophically unproductive.” I will post honestly or I will post not. There’s zero give on that one.

So I will continue to do my thing. John Walter Russell will continue to do his thing. Mel Lindauer will continue to do his thing. John Greaney will continue to do his thing. Schroeder will continue to do his thing. Scott Burns will continue to do his thing. Jonathan Clements will continue to do his thing (at a new place since he left the Journal recently). Life will go on, ob-la-di, ob-la-da.

The historical data will continue to say what it says. There is no Smear Campaign that can change that. The authors of the Old School studies got the number wrong, wildly wrong. Their error will cause millions of busted retirements in days to come in the event that stocks perform in the future anything at all as they have always performed in the past. And when we ask them to make corrections, we will hear word games in response. Har-de-har-har.

I write for people with a sincere desire to learn how to save and invest effectively. Thousands of them have expressed a desire that honest posting be permitted on our boards. I urge them to do what it takes to see that desire brought to fruition. It is these people, not the Goons, who built our boards. These people deserve better than they are getting today. A lot better.

I will continue to report accurately what the historical data says re SWRs. Deal with it, Goons.

Today’s Passion: The many community members who would like to see honest posting on SWRs permitted at our boards sound off in an article entitled Community Comments on Using Historical Data to Diminish Retirement Risks.

“An Important Communications Medium of the Future”

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Katy Marquardt has written about the split-off of the Bogleheads community from the Vanguard Diehards community at her U.S. News and World Report blog.

Juicy Excerpt: Concludes Coleman: “The revamped Diehards.org is better organized, easier to navigate and much more intelligently moderated than the older version,” he says. “It’s becoming a true social networking site.”

I put forward a comment filling in some of the background that Murray Coleman “overlooked” in his write-up at IndexUniverse.com (referred to in Katy’s blog entry)

Juicy Excerpt: The internet discussion board is an important communications medium of the future. We learn things on discussion boards that we cannot learn through books or magazine articles or speeches. The magic is that we get to see how real live people apply the theories they learned about in books and magazine articles and speeches.

Threads are ongoing both at the Bogleheads community and at the Vanguard Diehards community. There’s a thread ongoing at Goon Central too but I recently added as a plug-in to this blog an Extreme Dumbnosity Filter and it will not permit me to post the link; you’ll have to dig that one up on your own.

Oh, shoot! — Here it is.

Today’s Passion: Jim Wiandt, publisher of IndexUniverse.com (referred to in Katy’s blog entry), said of the Valuation-Informed Indexing approach that “It’s not like you are proposing some wild new idea!” That’s me — Good Old Moderate-Sounding Non-Stop Troublemaker Rob.

Community Reactions to My FIRECalc
Correspondence with Jonathan Clements

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In my blog entry for June 22, 2006, I set forth the text of an e-mail that I sent to Wall Street Journal Columnist Jonathan Clements urging him not to put forward further endorsements of Bill Sholar’s “highly misleading” (William Bernstein’s phrase) FIRECalc retirement planning tool. The blog entry for June 23 set forth the text of a response e-mail by Clements defending FIRECalc from my criticisms. The blog entry for June 24 set forth the text of my response e-mail.

Set forth below is the text of some Financial Freedom Community reactions to the correspondence between Clements and me re my criticisms of the FIRECalc tool (Wanderer’s comment was not made in direct reference to the correspondence with Clements, but I included it as it was made in the same time-period as the other comments and addresses a topic raised frequently during The Great Safe Withdrawal Rate Debate, the long-running saga for which the Clements correspondence serves as the most recent chapter):

Arrete: “My guess is that they are laughing their buns off at the Wall Street Journal.”

Gurdison: “My guess is that Clements deleted the message before reaching the end of the first paragraph.”

GW: “Similar crank letters are commonly sent to scientists, usually describing ‘revolutionary’ ideas that the writer cannot get accepted because they are suppressed by the establishment.”

Ogrecat: “I have noticed that hocus [hocus is the screen-name that I use when posting on discussion boards] sounds a lot like the anti-evolution crowd.”

Mel Lindauer (co-author of The Bogleheads Guide to Investing): “I’ve had my fill of those long-winded posts that include distortions, unsubstantiated claims, misquotes and comments taken out of context.”

Yakers: “It looks like the best that can be done is for someone like Jason (a disruptive poster at the Vanguard Diehards board) to post a reference to the sites that explain Hocus, kind of like the web references that debunk Kiyosaki [the reference is to Robert Kiyosaki, author of Rich Dad, Poor Dad], in each thread that Hocus posts in and leave it at that.”

Wanderer: “Hocus’ investing choices have had pretty good results over the last X years. My hat’s off to him.”

Krankor53: “The objective should be to achieve the flattest possible distribution of outcomes over the historical starting points. My preference would be to do this by using a lower allocation of stocks vs fixed.”

BigMoneyJim: “FIRECalc et al are historical simulations with no claims about the future.”

Brewer12345: “The response from Clements is priceless, especially where he points out that the safe withdrawal rate has to be substantially higher than 2.4% (the yield on TIPS), vs hosuc’s [this is how some Greaney defenders spell my screen-name in their posts] suggestion that it is presently 2.5%.”

John Walter Russell (publisher of the analytically valid safe withdrawal rate research at www.Early-Retirement-Planning-Insights.com): “FIRECalc does tell us what happened historically. The danger is how people use this information going forward.”

Daryll44: “I have heard many rip Rob (that’s a reference to me), but truthfully I don’t know what the counter argument is…. Is there a counter-argument?”

Earnabuck: “Greaney did his thing based upon historical market action. Yes, he stated that it was the past, but he proceeded to put out the number as relevant to today. Much discussion and planning were done based upon that number.”

Syke: “Maybe Earnabuck is hocus.”

ResNullius: “Threats are meaningless unless backed up with action.”

WorkWayLess: “Intercst [that’s John Greaney’s screen-name], this sounds like slander to me. IIRC [if I recall correctly], you never made any physical threats against him. Civil suit judgment = new income stream for Intercst?”

Daverx: “His site [Greaney’s www.RetireEarlyHomePage.com] is the best on the web.”

Gnobility: “John’s a’ight fyask me.” [The reference is to Greaney]

John Greaney (author of the conventional methodology study published at www.RetireEarlyHomePage.com): “The fact that you are willing to expose full-blown, first-person Hocomania to influential financial columnists certainly makes your debunking a lot easier.”

Tashina: “If you do a M* [Morningstar–home of the Vanguard Diehards board] search on the term FIRECalc, of the latest eight search results, two are from jwr [John Walter Russell] and three are from Hocus. One is even Hocus bringing up FIRECalc himself when someone asks for useful financial sites.”

Bill Sholar (Creator of FIRECalc and owner of the Early Retirement Forum): “Sorry Guest, you are banned from posting or sending personal messages on this forum…. Your IP address is on the abusive poster list.” (These words appear on my computer screen when I direct my internet browser to the Early Retirement Forum web site.)