The Old Ideas on Saving & Investing Don't Work -- Here's What Does
"Valuation-Informed Indexing Is the Same Song We Sing. Glad You Belong to the Same Choir We Do."
"Retirees Now Frequently Base Their Retirement Decisions on the Portfolio Success Rates Found in Research Such as the Trinity Study.... This Is Not the Information They Need for Making Their Withdrawal Rate Decisions."
"The P/E10 Tool Could Drastically Change
How the Entire Investment Industry
Operates and Measures Risk."
"The Your Money or Your Life Book
for a New Generation."
"A Newer School of Thought Believes That the Safe Withdrawal Rate Depends on How Stocks Are Priced at the Time You Begin Making Withdrawals."
"A Fascinating Retirement Calculator."
"The Evidence is Pretty Incontrovertible. Valuation-Informed Indexing...Is Everywhere Superior to Buy-and-Hold Over Ten-Year Periods."
"Every Detail Shows Rob's Respect
for His Information and His Reader."
"You’ve Accomplished Something Radical
With Your Idea of Passion Saving."
"Big Moves Out of Stocks Should Not Be Done at All. But Strategic Asset Allocation Can Be Done At Very Rare Times, Maybe Six Times in an Investor’s Lifetime, Three Times When the Market Is Stupidly High and Three Times When Stupidly Low."
"Valuation-Informed Investing and Passive Investing
Share More of a Common Ancestry
Than It Might Appear at First."
"It Is Great to See a Finance Journalist Who Understands That Valuations Matter. Efficient Market Zealotry Is Rampant in the Journalism Community. I Just Love Your Valuation-Based Return Calculator."
"There Is Always An Unlimited Supply of Complainers Against Any Good Idea."
"Rob: This Has Been One of the Most Insightful and Helpful Comments I Think Anyone Has Ever Posted. Thank You for This Lesson and for Sharing Your Knowledge on This Subject!"
"There Is An Extensive Literature About the Predictability of Long-Term Stock Returns. There Is an Extensive Literature About Short-Term Market Timing. My Question Is About Long-Term Market Timing. The Literature Seems Slim."
"Your Ideas Are Sound."
"For Years, the Investment Industry Has
Tried to Scare Clients Into Staying Fully Invested
in the Stock Market at All Times, No Matter
How High Stocks Go. It's Hooey.
They're Leaving Out More Than Half the Story."
"There Are Time-Periods Where Stocks Are a Terrible Addition to That Portfolio. Yet Inexplicably, We As Planners STILL tend to Suggest That It Is 'Risky' to Not Own Stocks When in Reality the Only Risk Is to Our Business."
"Valuation-Informed Indexing Provides More Wealth for 102 of 110 of the Rolling 30-Year Time-Periods While Buy-and-Hold Did Better in Eight of the Periods."
"There Is a Growing Behavioral Economics Movement, But It So Far Has Had Limited Impact. Economists Are Not Fond of the Softness and Imprecision of Psychology. These Notions Are Considered Vaguely Unprofessional and Flaky."
"I Would Occasionally Get a Response Post
Saying I Was 'the Best Since Rob Bennett
Challenged Us to Think.'"
"This [The Stock-Return Predictor]
Is a Very Handy Little Tool."
"A Much Simpler Way to Bring
the Valuation Issue to Focus."
(Referring to The Stock-Return Predictor)
"It's Informative, It's Based on Solid Data and It Provides Useful Results." (Referring to The Stock-Return Predictor)
"Meet Three Couples Who Left the Corporate World to Do the Kinds of Work That Satisfied Them."
"A Very Solid Approach to Investing."
"Rob Bennett Has Been on a Tear With One Outstanding RobCast After Another."
"It’s Time for a Different Way to Look at Investing, and Rob Is Onto Something Here."
"My Afternoon Train Reading."
(Referring to Rob's Article titled
Why Buy-and-Hold Investing Can Never Work)
"What Is It With Guys Named Rob?
Longtime Index Agitator Rob Arnott Has Now
Been Joined on These Pages by a
Vanguard Diehard Agitator Named Rob Bennett."
"He Offers a Fresh New Perspective
that Will Motivate You to Get on Track
With a Solid Savings Plan."
"While Browsing at www.PassionSaving.com the Other Day, I Discovered an Article Featuring Ten Unconventional Money-Saving Tips. Each of These Offers a New Way to See Money."
"Rob Has Ideas About Investing That Many Bloggers Find 'Interesting.' His Posts Are Often Controversial and Always Thought Provoking."
"Is There a Way to Turn Saving Into Something Fun? If There Was, I Bet a Lot More of Us Would Do a Lot More Saving. I Found a Website Where This Basic Premise Is Explored in Great Depth."
"I Have Much More Confidence in My Ability to Understand What Is Happening....I Thank You for Your Public Service, and, In Another Dimension, for the Personal Courage It Took to Make It Happen."
"I Was Hooked on the Idea of [Passive] Index Indexing, But Something Inside Made Me Wonder "Too Good to Be True?" and "What's the Downside?" I Happened on to Your Site and Valuation-Informed Indexing Seems to Make Sense."
"Reads Like a Casual Conversation
with a Likable Guy Who Wants Nothing More
Than to Help Others Experience the Same Joy
and Happiness He Has Found."
"Your 'Secrets' Are Exactly Like Magic Tricks: Once Revealed, They Look So Simple, Yet You Need Somebody to Show You How It Works."
"Rob's Da Man! Never in the History of the Diehards Forum Has One Poster, Always Making Civil and Well Thought-Out Posts, Managed to Irritate So Many Without Anyone Being Able to Articulate a Good Reason As to Why."
"I’ve Been Surprised at How Controversial This Idea Is, but If Most People Are Buying and Holding, They Are Emotionally Invested in This Strategy."
"The Findings for [Long-Term] Market Timing Are So Robust That It Hardly Matters How We Do It."
"The Elegant Simplicity of His Ideas Throughout Warms the Heart and Startles the Brain."
"Mr. Bennett Evidences an Unusual Skill....
You'll Have to Buy a Copy....Extraordinary....
A Massive Heap of Crap."
"By Reading All the Information on Your Website I Was Able to Develop a Part of Me I Didn't Know I Would Be Able to Become."
"Innovative Financial Thinking."
"Knowledgeable."
""He Offers Down-to-Earth But
Nevertheless Eye-Opening Insights About
the Why and the How of Early Retirement."
"Challenges Unfounded Assumptions."
"It’s Always Good to Read Something New That Challenges Your Way of Thinking."
"Rob, Thanks for All of Your Articulate, Well-Written and Well-Reasoned Commentary."
"Although Rob and I Don’t See Eye to Eye
on Every Detail, His Site Is a
Valuable Resource for Research."
"Thanks, Rob. I Love Seeing So Many
Personal Finance Bloggers Who Offer Such
High Quality Content on Their Own Sites Come Here
to Weigh In [on Your Ideas]."
"A Ton of Tremendously Useful Content."
"Your Enthusiasm Is Infectious."
"I Woke Up at 4:00 am and Stared at the Wall for 20 Minutes....Thank You for Doing What You Do."
"It Might Just Give You
a New Way of Looking at Saving."
"'Staying Too Long in a Job Where You Don’t Feel Relevant Takes a Toll,' Said Rob Bennett, Who Worked for Years in a Well-Paying Corporate Communications Job Where He Didn’t Have Enough to Do."
"You Have Started One of the Most Interesting
and Stimulating Discussions This Board has Seen
in a Long Time."
"A Respected Author and Commentator, Mr. Bennett has Dedicated Himself to Educating Average Investors to Avoid the Most Common Errors."
"I've Gone from Shattered Dreams of Early Retirement to Glimpses of Hope to Reassurance from Quantitative Research."
"Some of the Most Helpful and Insightful Market Discussions on the Web Take Place on These Pages."
"Rob is the Only Person I Know (If Only via Message Board) Who has Completely Opted Out of Participation in the Stock Bubble. And You Know What? He Has Benefited Immensely from Doing So."
"Makes the Subject of Saving Edgy and Fresh."
"Rob Bennett, the Author of a Book Called Passion Saving, Thinks the Saving Problem Is Partly One of Packaging. So He Prefers to Couch it in the Language of Freedom."
"I LOVE This Article and
Am Proud to be Publishing It!"
"Rob Bennett: Some People Disagree With Him, and He Rubs a Lot of People the Wrong Way. But He Has Interesting Ideas About Valuation-Informed Indexing, and He Delves Into a Lot of What Makes a Successful Investing Strategy."
"Rob….Wow…..Your Response Sent Shivers
Up the Ol’ Pilgrim Spine."
"I Have Counseled My Clients to Allocate a Percentage to Equities Based Upon Market Valuations....I Feel Like I've Found a Kindred Spirit. Fascinating Web Site."
“A Simple Age-Based Asset Allocation Formula Is Not Appropriate, and Any Sensible Asset-Allocation Formula Should Combine Both Age/Investment Horizon and Market Valuation Levels.”
"Had a Guest Post This Week from Rob Bennett, Where He Discusses the Benefits of Value-Informed Indexing, Which I Find Very Intriguing."
"I Can Appreciate Rob's Comments.... Buy-and-Hold?
For the Most Part, a Long Obsolete Theory."
"Utterly Brilliant!"
"Your Website Is So Enjoyable That It Is Keeping Me From My Research As I Am So Excited That I Have Found Such a Valuable Resource."
"What We're Talking About Here Really
...Is Empowerment."
"The Return Predictor Is Based upon the Principle that Over the Long Term, Stock Market Prices Will Reflect the Ten-Years Earnings Growth of the Underlying Companies. Prices Return to a Common Growth Pattern."
"Rob’s Arguments in Favor of Value Investing Actually Make a Lot of Sense In a Way That Should Make Any Rational Buy-and-Holder Uncomfortable."
"What I Don't Understand Is How Rob Can Correspond in Such a Sweet and Polite Way
-- Yet He Irritates Me to No End!"
"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."
"Inflammatory."
“What Warren Buffett Did Was Essentially Quite Close to What Rob Bennett Has Written. Buffett Has in Fact Been Cleverly Incorporating Long-Term Market Timing Based on Valuation of the Market in His Allocation of Money to Stocks.”
"This Report Offers A Fresh Perspective That Is Rarely Found In Other Financial Literature."
"Rob Bennett Says That Market Timing Based on Aggregate P/E Ratios Can Be a Far More Effective Strategy. This Claim Is Consistent With Shiller's Analysis and I Can See How It Might Be So."
"Retiring Early Was A Concept I Did Not Entertain. I Was Going to Retire at 65 After Putting in 40 Years. Now I Am Glad To Say That All That Has Changed."
"In a Couple of Days, I Had
Devoured the Entire Book."
"FIRECalc May Not Be the Last Word
on Safe Withdrawal Rates."
"It Seems to Me That Some on This Board Feel Threatened by the Arrival of Rob and His Ideas. They Feel a Threat to Their Perceived Elite Status."
"You've Got to Say One Thing for Rob. He Has NEVER Lowered Himself to Ad Hominen Attacks -- Subliminal or Otherwise -- on Any Other Person on This Board. Not Once. Ever. At Least Give Him Credit for That."
"I Have Never Seen Rob Show Incivility. No Matter What. Truly Amazing. Either He Is Really the Output of an Artificial Intelligence Program, or the Man's on the Way to Becoming a Saint!"
"You're the Politest Guy on the Internet.
Such a Soft Touch!"
"Props for Keeping Your Cool in the Married with Debt Article. Best of Luck Combating Buy-and-Hold."
"I Caught Up [at the Financial Bloggers Conference] With a Fairly Controversial Financial Blogger
Named Rob Bennett, Who Struck Me As the
Nicest Guy Around. There -- I Said It!"
"In Rob Bennett's Case, He Was Banned for No Known Listed Forum Policy. Except His Viewpoint Was Different From Other Bogleheads and [He Was Perceived As] a Threat."
"Mr. Bennett, You Are Spot on About Integrating Some Type of Valuation Filter to One's Stock Allocation. Astute Investors Have Incorporated Some Type of 'Valuation Timing' Into Their Investment Decisions Since the Beginning of Time."
"His Insights Into What Is Really Going On In The Stock Market Are Quite Compelling."
"It Was an Epiphany...Valuation-Informed Indexing Beats Buy-and-Hold Over Most Long-Term Holding Periods at Much Lower Volatility."
"I Am Intrigued By Your Ideas."
"I Read the Book and I Loved It.
The Philosophy Resonated with Me.
I Am a Believer in Your Concept."
"If Your Investment Ideas Can Do for Investing
What Weston Price’s Ideas Did for Food,
You’ve Got Our Attention."
"I Have Looked at His Website and Reviewed His Research and Find It Both Compelling and Completely Logical and Common-Sense-Based."
"If Investors Paid More Attention to Valuations, We Would Have Fewer Boom-and-Bust Cycles. The Investing Institutions Are Definitely Going to Avoid It Because It Affects Their Income."
"The Calculators on Your Site Are Great Resources. It Amazes Me How So Many People Can Say 'Valuations Matter' Yet, in the Next Breath, They'll Say That We Should Ignore Valuations."
"Must Read As Per My Viewpoint
For All Value Seekers."
"His Approach Is Both Mathematically Rigorous
and Easy to Understand."
"Difficult Subjects Can Be Explained to the Most Slow-Witted Man If He Has Not Formed Any Idea of Them. But the Simplest Thing Cannot Be Made Clear to the Most Intelligent Man If He Believes He Knows Already What Is Laid Before Him."
"I Am Not Afraid. I Was Born to Do This."
"I Certainly Have Seen the Academic Profession Squelching Unfashionable ideas and Have Often Been on the Wrong Side of It. Kuhn Shows How Most Pathbreaking Scientific Ideas Are Rejected at First, Usually for Decades.”
"First They Ignore You, Then They Ridicule You, Then They Fight You, Then You Win."
"We Cannot Assume the Existence of Predictability Just Because There Are No Studies That Fully Reject It."
"I Am Also Extremely Grateful to Rob Bennett for Motivating This Topic and Contributing His Experience and Encouragement."
"Rob Bennett Was an Early Pioneer in 3rd Generation Modeling by Advocating (Through Various Online Forums) that Withdrawal Rates Must Be Adjusted for Market Valuations Consistent with Research by Campbell and Shiller."
"I Am Fascinated by the Growing Body of Research that Revolves Around the P/E10 Ratio by Robert Shiller, Doug Short, Wade Pfau, Michael Kitces, John Hussman, Crestmont Research, Jim Otar, Mike Philbrick, Adam Butler & Rob Bennett."
"Rob Is an Enigma in the Personal Finance World. He Has Interesting Theories on Investing Based on Market Valuations. But He Weaves a Tale Which Makes the Stories of Alexander Litvinenko & Gareth Williams Seem Tame by Comparison."
"In Recent Years, the 4 Percent Rule
Has Been Thrown Into Doubt."
"A Safe Withdrawal Rate Is Very Dependent
on the Valuation of the Stockmarket
at the Retirement Date."
"I Have Read Everything I Can About Valuation-Informed Indexing. Buy-and-Hold Is Extremely Problematic. I Respect the Passion, Hard Work and Research That You Have Put Into This Very Important Issue. Your Work Has Huge Value."
"The World of Personal Finance Blogging Needs More Rob Bennetts. He’s Passionate. He’s Intelligent. He’s Writing Things That Go Against the Grain."
"Beyond Awesome."
"The Wealth Management Industry Seems Intent on Containing This Discussion for Fear Clients Might Discover that the Emperor Has No Clothes."
"Recommended Reading."
“All Who Are Still Holding Equities at Present Levels Because Their Financial Adviser Insists that Timing Market Cycles Is Impossible to Do -- Read This!"
"The Fact that Aggressive and Short-Term Market Timing Was Unproductive Did Not Mean That There Were Never Times When It Would Be Wealth-Maximizing to Get Out of the Market."
"The Amount of Return You Can Expect From a Diversified Equity Portfolio Is Inversely Correlated to the Market Valuation at the Start of the Holding Period. It Is One of the Most Robust Statistical Relationships in Modern Finance."
"Why Would Your Job Be Jeopardized
By Such a Sensible Claim?"
"Received Worrisome E-Mail from Rob Bennett. Warns of Risk with Buy-and-Hold Investing
-- I Have No Clue."
"As Attorney, Tax Expert and Financial Writer Rob Bennett Told Us, the Problem Is That, By the Time Shiller Published His Research, Many Big Names Had Already Endorsed Buy-and-Hold."
"This Seems to Me to Be a Fundamental Challenge to Some of the Most Basic Tenets of the Boglehead Paradigm."
"You Want to be Very, Very Wary of Anything Connected with Rob Bennett, the Most Infamous Troll in the History of Investing Forums on the Internet."
“I’ve Had My Fill of Those Long-Winded Posts that Include Distortions, Unsubstantiated Claims, Misquotes and Comments Taken Out of Context.”
"Haven't You Noticed Yet That NO ONE Discusses Your Ideas, NO ONE Mentions Your Name, NO ONE Goes To Your Web Site."
"I've Had Similar Experiences. I Know of Two Young Professors Who Wanted to Do Research on Fundamental Index and Reported to Me That Their Colleagues Advised Them That This Line of Research Could Derail Their Career Prospects."
"As with Drug Studies Funded by Drug Companies, It Would Be Churlish to Suppose that the Chicago School of Business Was in the Bag. But It Would Also Be Idealistic to Assume That There Was No Funding Bias at All."
"This Sort of Intimidation Is Not Acceptable. The Cigarette and Pharmaceutical Industries Found Research Supporting Their Products By Funding It. But That Was Big Money Supporting Outcomes, Not Dissuading Others."
"Financial Economists Gave Little Warning to the Public About the Fragility of Their Models. There Is No Ethical Code for Professional Economic Scientists. There Should Be One."
"The Situation [Referring to the Intimidation Tactics Used to Silence Academic Researcher Wade Pfau's Reporting of the Dangers of Buy-and-Hold Investing Strategies] Seems Well Below Any Professional and Academic Acceptable Standards."
Many Academics Can Become Quite Strident When Their Views Are Challenged. Academia Is Often Subject to Self-Serving Bias That Obliterates Ethical Bounds."
"I Don't Like Too Much the Conspiracy Idea. I Am Not Pressured By Anyone in My Research."
"This Is What Investing Should Be -- Calculated, Deliberate, Confident, Informed and Simple."
"It Is Obvious that Rob, in Attempting to Identify New Safe Withdrawal Rate Strategies...Is Goring Your Ox. If Rob Improves on [the] Safe Withdrawal Rate Methodology, the Implication Is Clear: You Are All, Metaphorically, Out of Business."
"I Applaud His Effort to Inject Another Piece of Objectivity Into a Very Complex, Highly Subjective Topic -- Making Money in the Market."
"Naturally, I Am Finding That Valuation-Informed Indexing Can Allow You to Reach a Wealth Target With a Lower Saving Rate and to Use a Higher Withdrawal Rate in Retirement Than You Could With a Fixed Allocation."
"A Careful Examination of Past Returns Can Establish Some Probabilities About the Prospective Parameters of Return, Offering Intelligent Investors a Basis for Rational Expectations About Future Returns."
"The Ability to Estimate the Long-Term Future Returns of the Major Asset Classes Is Perhaps the Most Important Investment Skill That An Indivisual Can Possess."
"The Stock Market Resembles Roulette. In Both Cases, the Accuracy of Sensible Forecasts Rises Over Time."
"Returns Are for the Most Part a Matter of Simple Arithmetic...Much of Our Industry Seems Fearful of Basic Arithmetic of This Sort."
"How Can It Be That One-Year Returns Are So Apparantly Random and Yet Ten-Year Returns Are Mostly Forecastable? In Looking at One-Year Returns, One Sees a Lot of Noise. But Over Longer Time Intervals the Noise Effectively Averages Out and Is Less Important."
"The Notion That Rich Valuations Will Not Be Followed By Sub-Par Long-Term Returns Is a Speculative Idea That Runs Counter to All Historical Evidence. It Is an Iron Law of Finance That Valuations Drive Long-Term Returns."
"It's January and the Temperature Is Below Freezing. If You Asked Me Whether It Will be Warmer or Cooler Next Tuesday, I Would Be Unable to Say. However, If You Asked Me What Temperature to Expect on April 9, I Could Predict "Warmer Than Today" and Almost Surely Be Right."
"If the Response Is "Who Knew?", It Won't Be Much Comfort for Retirees in the Employment Line at Wal-Mart. This is Especially True Since a Rational Understanding of History and the Drivers of Longer-Term Stock Returns Can Help Retirees To Avoid That Surprise."
"New of the Demise of the Random Walk Has Only Very Slowly Spread, In Part Because Its Overthrow Came as a Shock. If the Random Walk Hypothesis Were Correct, the Most Likely Return Would Be the Historic Average Return. The Evidence, However, Is Strongly Against This."
"I Don't Think We Can Debate the Merits of This Type of Forecasting [Referring to the Numbers Generated by The Stock-Return Predictor] Unless We Believe 'This Time It's Different.'"
"I've Seen Absolutely Nothing From You That I Can Use in a Tangible Fashion to Formulate an Investment Plan. Your Ideas Are So Mushy That It's a Complete Waste of Time to Even Consider Them."
"Do You Really Think Your Tool
[The Stock-Return Predictor]
Is 'Wiser' Than the Market?
If It Was That Easy,
Everybody Would Be Doing It."
"The Expected Return of Stocks [As Reported By The Stock-Return Predictor] Needs To Be At Least the Treasury Inflation-Protected Securities (TIPS) Rate for Stock Investing To Make Sense."
"I Have Used Valuations to Adjust My Asset Allocation For Many Years With Very Favorable Results."
"I Don't Care If You Do or Don't Believe That the Market Will Behave Similarly in the Future As It Has in the Past. Either Way, This [The Stock-Return Predictor] Is an Excellent Way to Understand What the Market Has Done In the Past."
"My Role Is To Give People Who Don't Like What the Historical Stock-Return Data Says About the Effect of Valuations on Long-Term Returns Somebody To Yell At On Internet Discussion Boards."
"It Really Is a Shame and Indefensible That So Many Feel the Need to Jump Into It With No Interest of Posting on the Topic But Just to Disrupt. Are You That Insecure? Some on the Forum Have an Interest in This Topic. If You Don't, Stay Out!"
"Irrational Behavior Does Follow Patterns. But How Many Experts in Behavioral Finance Believe That Such Knowledge Can Be Used to Predict Markets? Basically, None. Your Model Cannot Attain the Level of Predictive Value You Claim."
"The Safe Withdrawal Rate Studies Are Based on History. This [The Retirement Risk Evaluator] Shows, Based on the Same History, What the Probabilities Are for the Future at Various Starting Points. If the First Has Value, Then Surely This Does Too."
"There Are Hundreds of People Who Contributed to This. This Calculator [The Stock-Return Predictor] Demonstrates in a Compelling Way the Power of This New Internet Discussion-Board Communications Medium."
"A P/E10 of'26' Is Bad. Now Look at the 30-Year Return Predicted by the Calculator -- 5.4 Percent Real. That's Not Bad. There Are All Sorts of Strategic Implications That Follow From Understanding That Stocks Provide Different Sorts of Returns Over Different Sorts of Time-Periods."
"I Would Never Invest in Anything Without Having Any Idea What the Expected Return Is. For Instance, I Would Not Walk Into a Bank And Say "I'll Take One Certificate of Deposit, Please" WIthout Asking What Rate They Are Offering."
"I've Seen Things Said on Investing Boards That I Have Never Heard Said in Discussions of Any Non-Investing Topic. The Question of Whether Valuations Affect Long-Term Returns Is a Topic That Causes People More Emotional Angst Than Does Abortion or Impeachment Proceedings or the War in Iraq."
"It's Not Possible For Those Who Have Come to Believe That Stocks Are Always Best to Accept that Valuations Matter. The Two Beliefs Are Mutually Exclusive. If Valuations Matter, There Is Obviously Some Valuation Level At Which Stocks Are Not Best. The Two Paradigms Cannot Be Reconciled."
"The Great Safe Withdrawal Rate Is Over. Rob Bennett Has Won.The Technical Evidence Supporting This Assertion Is Rock Solid."
"I Am Afraid that the Emperor SWR [for "Safe Withdrawal Rate"] Has No Clothes."
"I Cite You and John Walter Russell in My Paper as the Earliest and Strongest Advocates of This Approach [New School Safe Withdrawal Rate Research]."
"Dear Rob -- I Just Became Aware of Your Past Research in September. Since Then, I've Read Archives From Many Discussion Boards and Websites, and I Always Find Your Writing to Be Very Interesting and Intriguing."
"I Think Rob Bennett Did Provide An Important Contribution in Terms of Describing a Way for P/E10 to Guide Asset Allocation for Long-Term Conservative Investors. I Also Think He Was Right on the Issue of Safe Withdrawal Rates."
"What Studies Show This [That Long-Term Timing Doesn't Work]? In Particular, Are There Some Academic Studies That I Haven't Found Yet? That's All I Want to Know."
"Because the Precise Timing of This Mean Reversion Is Not Known in Advance, Expecting the Result to Happen in the Short-Term Will Not Be Possible. But Long-Term Investors Who Can Be Patient Can Wait for This Mean Reversion and Will Eventually Come Out Ahead."
"Your Work Is at Odds with the Ethos of the Board -- Here the Theme is John Bogle's Philosophy, Which Eschews Market Timing. This Board Came Into Existence to ESCAPE One Individual, the Very Individual With Whom You Have Openly Aligned Yourself."
"The Problem With Long-Term Market Timing Is That It Takes Too Long to Find Out If You Are Right or Wrong."
"Why Is It Such an Odious Violation of the Tenets of Bogleheadism to Explore Whether Someone Who Has Enough Patience Might Be Able to Benefit from the Transitory Nature of Speculative Returns (the Idea That the P/E Ratio Eventually Ends Up Where It Started)?"
"Let Me Explain Why I Posted About This Here. Valuation-Informed Indexing Has Had Critics for Years. But Until Norbert Did It In 2008, Nobody Seemed to Have Provided a Serious Investigation of It. I Couldn't Understand Why. That Bothered Me."
"If You Really Don't Like Market Timing in Any and All Forms, You May Not See Any Point in an Empirical Investigation. You View Me as One of a Long Line of Hucksters Trying to Sell You Some Snake Oil. I Don't Want to Be Such a Person."
"Having a Completely Ineleastic Demand for Equities Is a Bit Bonkers. No One Acts That Way with Life's Other Important Commodities. Campbell Advocates a Linear Valuations-Based Strategy so That You Wouldn't Be Making Big Changes. This Would Be Like Rebalancing But More Flexible."
"The Whole Idea of Valuation-Informed Indexing Belongs to You. Do You Mind if I call the Paper 'Valuation-Informed Indexing'? I Would Give You Credit. I Have Been Toying With the Idea of Sending the Paper to the Journal of Finance, Which Is the Most Prestigious Journal in Academic Finance."
"I Definitely Need to Cite You as the Founder of Valuation-Informed Indexing, As I Have Not Found Anyone Else Who Can Lay Claim to That. Shiller Pointed Out the Predictive Power of P/E10 But Never Discussed How to Incorporate It Into Asset Allocation, As Far As I Know."
"I Tested a Wide Variety of Assumptions About Asset Allocation, Valuation-Based Decision Rules, Whether the Period Is 10, 20, 30 or 40 Years, and Lump-Sum vs. Dollar-Cost Averaging To Show That the Results Are Quite Robust to Changes In Any of These Assumptions."
"Yes, Virginia, Valuation-Informed Indexing Works!"
"I Wrote Up the Programs to Test Your Valuation-Informed Indexing Strategies Against Buy-and-Hold and I Am Quite Excited. You Say in the RobCast That VII Should Beat Buy-and-Hold About 90 Percent of the Time. I Am Getting Results That Support This."
"Never Underestimate the Power of a Dominant Academic Idea to Choke Off Competing Ideas, and Never Underestimate the Unwillingness of Academics to Change Their Views in the Face of Evidence. They Have Decades of Their Research and Academic Standing to Defend."
"There's So Much That's False and Nutty
in Modern Investing Practice."
"Following Conventional Wisdom Has Led a Generation of Investors Down the Road to Ruin."
"It Is Sad That the Idea That Price Doesn't Matter...Should Ever Have Been Seriously Considered".
"The Conventional Wisdom of Modern Investing Is Largely Myth and Urban Legend."
"Economics Is a Dog's Breakfast of Theoretical Ideas and Alleged Causal Relationships That Are At All Times Unproven and In Dispute."
"Since They Did Not Diagnose the Disease, There Is Little Popular Confidence That They Know the Cure. What If Economics Is, Actually, At the Same Level as Medicine Was When Doctors Still Believed in the Application of Leeches?"
"One of the Most Remarkable Errors
in the History of Economics."
"Everything Has Fallen Apart."
"We Wonder Why Funds and Banks, Full of the Best and Brightest, Have Made Such a Mess of Things. Part of the Reason Is That We Have Taught Economic Nonsense to Two Generations of Students."
"Perhaps Most Scandalously, the Theory [Behind Buy-and-Hold] Remained Received Wisdom Long After Empirical and Theoretical Arguments Had Demolished It Within the Academic Community."
"I Love the Humans Dearly (the Title of the Book I Am Writing Is Investing for Humans: How to Get What Works on Paper to Work in Real Life) But They Can Be a Trial at Times. Hey! Helping the Humans Learn What It Takes to Invest Effectively Is Not All That Different From Being Married!
"We Are Going to See Hearts Melt Following the Next Crash. I Will Be Working Side-By-Side With All of My Many Buy-and-Hold Friends to Rebuild Our Broken Economy."
"Wow, I Did Not Realize You Had Achieved This Much Success and Had Many Devoted Believers/Followers. That’s Great, Then Ignore the Opposition. It Is Great to Have Opposition: That Means You Are Doing Something Right."
"I Do NOT Believe I Know It All. I Believe That Shiller Discovered Something Very Important and It Appalls Me That More People Are Not Exploring the Implications of His Findings. My Aim Is To Launch a National Debate."
"I Can See How Many Readers Would Be Put Off by the Somewhat Sensational/Scandalist Tone and Would Not Persevere to Read, Thinking You Are Losing Your Mind."
"I LOVE Everything About Buy-and-Hold Other Than the Failure to Encourage Investors to Take Price Into Consideration When Setting Their Stock Allocations. That's a Mistake That Was Made Because Shiller’s Research Was Not Available at the Time The Strategy Was Being Developed."
"Valuation-Informed Indexing Sounds Like a Real Thing. If It Is and I Can Thoroughly Understand It, Then It Will End Up In My Classrooms and in My Students' Minds (Of Course, With References to You and Wade)."
"I Can Confirm Wade Pfau's Experience. Whenever I Send My Papers to the Financial Analysts Journal or Similar Traditional Journals, I Get Rejected."
"As a Fan of Thomas Kuhn's The Structure of Scientific Revolutions, I Know That Progress Can Be Frustratingly Slow and What Is Typically Needed Is Either a Crisis or the Ascent of a New Generation of Scientists Who Did Not Build Their Careers on the Old Models and Theories."
"We Trace the Deeper Roots [of the Financial Crisis] to the Economics' Profession's Insistence on Constructing Models That, By Design, Disregard the Key Elements Driving Outcomes in Real World Markets."
"Rob Gets Himself So Worked Up Over What Someone Else Is Doing With Their Own Money and Not Bothering Rob in the Least. As Long As They Aren't Knocking on Your Basement Door, What Do You Care? They Are Happy and Content. Leave Well Enough Alone and Focus on Your Own Account."
"I've Been on Forum Since the BBS Days and I Think Rob is Special. He Could Be an Internet Meme If He Put Some Effort Into It. Someday, He Will Realize That the Only Thing He's Good At Is Being an Epic Loser. He Just Needs to Embrace That Idea and Run With It. Watch Out, LOLCats, Here Comes Pathetic Guy!"
"Your Lies Are Not Even in the Realm of the Possible, Much Less Actually Credible, Much Less Actually True."
"I'm Your Friend. I Am Not a Boil on Your Ass."
"You Guys [the Greaney Goons] Are the Same Jokers Who Have Done This Before, Sparring with Rob Over Nonsensical Issues On This Site and Others, Leveling Personal Attacks, and You Don't Even Use Real Names! Rob Is Entitled to His Opinion, But the Fact That You Challenge Every Jot and Tittle of What He Says Makes It Clear You Have An Unholy Agenda. Please Take It Elsehwere."
"Rob, Take This As Friendly Advice. You're a Smart and Articulate Guy and You Could Be Making Valuable Contributions to This Discussion. I've Dealt with the Mentally Ill Before and I've Found That They Sometimes Can Be Reasonable If Gently Redirected."
"Always Remember Others May Hate You, But Those Who Hate You Don't Win Unless You Hate Them, and Then You Destroy Yourself."
"I’m a Numbers Guy. And I Believe I Understand Rob’s Thesis, that Future Returns, Over the Next Decade, Have a Tight Inverse Correlation to the PE10 for the Starting Point. Remember, Correlation Doesn’t Need to be 100%, Only That There’s a Bell Curve of Potential Outcomes that Shift Meaningfully Based on the Input."
"What a Difference a Threat to Get the Father of Two Small Children Fired From His Job Has on an Investing Discussion, Eh? Long Live Buy-and-Hold! It’s Science! With a Marketing Twist!"
"I Respect Rob and His Analysis. He's Bright, Energetic and Passionate. [The Goon Stuff] Is Really Nonsense. I Enjoy a Thought-Provoking Conversation With People I Respect."
"The Fact that Shiller is a Proponent of the Approach Takes it from a Fringe View to Mainstream, in my Opinion."
"I Have had Academic Researchers Tell Me That They Dream of the Day When They Will be Able to do Honest Research Once Again. I Have had Investment Advisors Tell me That They Dream of the Day When They Will be Able to Give Honest Investing Advice Again."
"Let’s Call a Spade a Spade, Shall We? Wade Pfau Stole Your Research and Put His Name on it, Throwing You Just a Tiny Crumb of Acknowledgement to Ward Off a Lawsuit. He’s Profiting Handsomely By His Theft, Leading a Charmed Life, Widely Published, Widely Respected. While Rob Bennett Continues to Toil in Total Obscurity. It’s So Incredibly Unfair, I Think If It Happened to Me, It Could Actually Drive Me Insane."
by 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 keep telling us about criminal acts, yet never provide links to those acts. Why would anyone believe you without proof?
The easiest way to find out if there has been some funny business going on is to check how long it took Greaney to correct the error in his retirement study after it was pointed out to him.
Rob
by 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:
If you have THOUSANDS of supporters, go ask them to do what you want. Meanwhile, you won’t even open up YOUR website to people wanting to make what they think are “honest” posts.
I’ve asked them. I did that all the time when I was posting at the various boards.
Having thousands of people interested in learning about the last 41 years of peer-reviewed research isn’t anything close to having a majority of investors wanting to hear the case against Buy-and-Hold. The vast majority would prefer to believe that the numbers on their portfolio statement are real. That’s the entire problems. The vast majority of investors prefers not to know how stock investing works. Nothing could be more clear.
The majority of alcoholics prefer to remain alcoholics, you know? I don’t think it follows that we should not provide services helping people to overcome alcoholism. I think we should provide such services. If it makes the alcoholics uncomfortable to hear that such services exist, that’s just too darn bad. I don’t think we should force people to take advantage of such services (except where that is done as part of a court proceeding). But I think that it is a good thing for such services to be available to people. Alcoholism is a trap and people need access to ways to overcome it when they make up their minds to do so. The same is true of Buy-and-Hold (price indifferent) investing strategies.
Just because I believe that we should open every site to honest posting doesn’t mean that I believe that site owners should not place limits on what can be said at their sites. I absolutely believe that there should be limits. John Greaney wouldn’t be looking forward to a long prison sentence today if Motley Fool had enforced its site rules in a reasonable manner by banning him the first time he advanced a death threat. I sent the site administrator there an email suggesting that they do just that. I believe that every community member who viewed the guy as a friend should have done the same and I said so at the board. Site restrictions are very much needed. Bans on honest posting re the peer-reviewed research are a huge negative.
Rob
by Rob
Set forth below is the text of a comment I recently posted to the discussion thread for another blog entry at this site:
“ If my work did not have great value, Wade Pfau would never have concluded that: “Yes, Virginia, Valuation-Informed Indexing works!”
If my work did not have great value, we never would have seen thousands of our fellow community members put their lives on the line by saying that they love my stuff and that they believe that I should be permitted to post honestly.
If my work did not have great value, Rob Arnott would not have said that my stuff checks out and that he hoped that I would stick to my guns.
If my work did not have great value, John Bogle would never have advanced a post in which he acknowledged that he could see circumstances in which market timing would produce good results (he had earlier said that he did not think market timing could work).
If my work did not have great value, you Goons would never have committed a single criminal act to keep people from being exposed to it.”
None of that is work. It is a bunch of made up crap. Why didn’t you do something to make money?
I am a journalist and I am involved today in the most important journalism project of my lifetime. This is bigger than Watergate. Do you know how much money the Washington Post has made as a result of Watergate. It put them on the map as one of the most important papers in the United States and they have been making money from having that reputation ever since.
Well, this is bigger. Watergate brought down a President. What do you think most people care more about — who is President or whether their retirement goes bust or not? The vast majority care more about their retirement surviving. This is Issue #1 for most people. And we have had leading figures in the field show that they very much want to tell the truth about the matters but they are too afraid of what you Goons will do to them if they do so to do it. John Bogle is a giant in this field. He put up a post at Bogleheads saying that he could see how market timing could work in some circumstances. This is a guy who has said on hundreds of occasions that market timing doesn’t work. In ordinary circumstances, that would be front-page news in every newspaper in the country. But Bogle was too scared of Lindauer to say it on more than one occasion. So the cover-up remained in place even with the leading advocate of Buy-and-Hold implicitly acknowledging that it is all a big pile of smelly garbage.
An investment strategy that cannot get the numbers that people use to plan their retirements right is an investment strategy that needs to be buried 30 feet in the ground where it can do no further harm to humans and other living things. Fair enoughh?
That’s certainly my sincere take re this terribly important matter.
I’m with Bogle. We should all be looking at the peer-reviewed research for guidance. Both the peer-reviewed research from 1980 and before AND the peer-reviewed research from 1981 forward. That’s Valuation-Informed Indexing. It sure ain’t Buy-and-Hold. It’s the OPPOSITE of Buy-and-Hold. The entire point of looking at the peer-reviewed research is to AVOID the trap of falling for Get Rich Quick approaches.
Stay the Course! (in a meaningful way, NOT in the Buy-and-Hold way)
Rob
by 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:
To have an credibility, your theory has to match up to outcomes. After 2 decades it has failed to do so. You try to package this up like it is in line with Shiller, but it is not. It is counter to what he has said. Why would anyone put their money behind your strategy?
The theory behind Valuation-Informed Indexing has been matching up to outcomes for 150 years now. The peer-reviewed research that I co-authored with Wade Pfau shows that beyond any reasonable doubt whatsoever. If you didn’t think that our research was of huge importance, you never would have engaged in a single criminal act to block people from learning about it.
Every word that I have ever said about stock investing is rooted in Shiller’s Nobel-prize-winning research finding that valuations affect long-term returns. If that is so, there is zero chance that the safe withdrawal rate is the same number at all valuation levels. It is a logical impossibility. If you thought that there was anything more than a 1 in 100 chance that you could get Shiller to say that he believes that the safe withdrawal rate is the same number at all valuation levels, you would accept my challenge to invite him to the Bogleheads Forum to discuss the matter.
If you want to know why hundreds of our fellow community members have said that my stuff is the best work that they have ever seen on stock investing, ask them. It’s up to each investor to decide how to invest his money, not to a gang of internet Goons to decide the matter for them.
You are right that we haven’t seen the price crash yet. That is certainly surprising. I have written several articles explaining the factors that may have caused the long delay. Jeremy Grantham has written similar articles. Again, it is up to each investor to decide whether he finds those articles convincing or not. Those who engage in criminal acts to block people from hearing both sides of the story are liable for damages in the event that stocks continue to perform in the future somewhat as they always have in the past and those investors suffer losses that could have been avoided had you Goons permitted honest posting re the last 40 years of peer-reviewed research in this field.
My best wishes to you.
Rob
by Rob
Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
When looking at my account balance vs tour’s, I would say that your interpretation of Shiller’s work is wrong.
If you thought that my interpretation of Shiller’s work was wrong, you would be inviting everyone you could think of to offer alternative interpretations in an effort to determine the correct interpretation. I have been suggesting for years now that you ask Shiller to appear at the Bogleheads Forum and that you ask him whether he believes that the safe withdrawal rate is the same number at all valuation levels. It hasn’t happened. I wonder why.
Valuation-Informed Indexers are always asking to have discussions because we have rationality and research on our side, Buy-and-Holders have to avoid discussion because all that they have on their side is the temporary illusion of success created by the flood of irrational exuberance that we always see when Get Rich Quick/Buy-and-Hold is heavily promoted.
I believe in the peer-reviewed research. Call me madcap.
Rob
by 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:
“ We couldn’t possibly disagree more, Anonymous. There were hundreds of people at Boglehead who indicated that I was one of their favorite posters. Those people should be able to hear from the posters that they want to hear from.”
Bogleheads was explicitly started with the goal to keep you out, given your history of bad behavior. No one wanted you there.
That’s false. There were many people there who told me that I was the first person they ever heard talk about stock investing in a way that made complete sense. It was’t a majority. But I was a significant minority, about 10 percent of the board community.
Even John Bogle had a post where he said that he could see how Valuation-Informed Indexing could work! I think it would be fair to say that , when you’ve lost John Bogle….
If it hadn’t been for the criminal behavior of those who were posting in “defense” of Mel Lindauer, Bogle would have expanded on those comments and we all would have enjoyed an amazing learning experience. I believe that the announcement of prison sentences for those who have posted in “defense” of Lindauer and Greaney are going to send shock waves through all investing communities. I am proud to be able to say that I have been speaking out in strong opposition to the criminal stuff dating back to the evening of August 27, 2002, which is the day when Greaney advanced his first death threat and I abandoned my belief in Buy-and-Hold and began my quest to develop the first true research-based strategy, Valuation-Informed Indexing.
My best and warmest wishes to you and yours, Anonymous.
Rob
by 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 believe that any of us has sole possession of the truth. I believe that, if we all post honestly, the truth will reveal itself over time.”
What is it that you believe that people don’t already know? What information is not out there?
People need to understand that the value proposition of stocks is not constant but variable. Investing rationally means looking at the pros and cons of various stock allocations at a particular point in time and choosing the one that makes the most sense for someone in your particular circumstances. That process of thinking things through is cut off when investors come to believe that market timing is not required. Market timing is the act that permits reason to enter the stock investing project. That’s why the payoff for engaging in it has always been so huge.
There was a poster at the Bogleheads Forum who said: “No one would ever go into a bank and announce that ‘I will take three certificates of deposit please’ without first checking on the rate being offered. But that’s how all Buy-and-Holders make stock purchases. They don’t even check how the current CAPE level affects the value proposition of the thing they are buying before making a decision. I would like to see people making use of their reasoning abilities when buying stocks. To do that, they have to give up any aversion they feel to market timing.
Once every investor appreciates how important it is to engage in market timing, there will be mountains of material generated to help them do it effectively. There will be all sorts of good stuff available to us, things that we cannot even imagine today. We don’t today even appreciate what we are missing because so many of us have fallen for the line about market timing not always being 100 percent required and 100 percent beneficial.
Rob
by 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:
“ We’ll see how the millions of middle-class people who see the size of their stock portfolio diminish by 50 percent feel about it in the days following the next crash, Anonymous.”
We already know the answer to that as we see what happened in 2008/2009. They will keep buying more stock because they are happy they can get it so cheap.
I saw people begin to question Buy-and-Hold in a serious way in the days when the CAPE had dropped to 13. There were people at the Bogleheads Forum flat-out calling Taylor Larimore a liar. That was unimaginable in the days before the crash.
That development never gained much momentum because prices recovered quickly. We will see whether having prices remain low for a long time makes a difference with the next Buy-and-Hold crisis.
There is no such thing as “cheap” if the market is efficient. If there is such a thing as cheap, there is such a thing as expensive. If there is such a thing as expensive, we all should be timing the market. We should be buying more stocks when they are cheap than we do when they are expensive.
Rob
by 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 saw people begin to question Buy-and-Hold in a serious way in the days when the CAPE had dropped to 13. There were people at the Bogleheads Forum flat-out calling Taylor Larimore a liar. That was unimaginable in the days before the crash.”
Those are market timers. We can just look at history and see that Buy and Holders have done extremely well as the held their stock and continues to buy.
These were ardent Buy-and-Holders before prices fell.
Are you saying that Taylor Larimore is a market timer? Before prices fell, he said that he would never sell. Then after prices fell he said that he needed to reconsider. Get Rich Quick strategies are not nearly as appealing after the pretend money disappear.
Check with the people who bought into the Bernie Madoff fund. They said that their strategy performed “extremely well” too before his fraud was exposed.
This is the benefit of looking at peer-reviewed research. Research takes you out of the emotion of the moment and helps you to focus on what works best in the long term.
Rob
by 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 can’t name just one person and provide a link, yet Wade Pfau has denied that there was ever any threat made against him. So the whole premise is false to start with. When you send out 30,000 emails making the claim, you were just spreading something that lacks any proof.
The guy spent 16 months of his life studying whether long-term market timing always works or not. He sent me scores of e-mails describing his excitement over our findings. He posted numerous articles at his web site summarizing our work. He contributed to discussions about it at the Bogleheads Forum on many occasions, He sent our paper to several peer-reviewed journals and had it published in one. Then you Goons threatened to destroy his career unless he took the articles he had written down from his web site and agreed to stop doing honest work on these matters in the future. And he wrote to me and told me that he was scared of you and that one of the journals he had contacted had told him that they had received hate mail from Buy-and-Holders. He told me that he thought that he might lose his job if he continued doing honest work and that he thought that the best thing he could do was to keep quiet. That’s extortion, Anonymous.
And of course this is not the only case. There’s the fact that I was banned from many sites where hundreds of posters have expressed a desire to be able to hear what I have to say and despite the fact that I have never once in 19 years violated a published posting rule. There’s the fact that I have had financial advisers call me on the telephone because they want to pick my brain on Valuation-Informed Indexing but they ask me not to tell anyone that they have spoken to me. Rob Arnott said that he would like to help me but that he is dealing with too much “controversy” of his own because he has spoken honestly about the effect of stock valuations on long-term returns. Bill Bernstein said that the safe withdrawal rate studies were off by two full percentage points at the top of the bubble but then never said that when he was posting at the Bogleheads Forum. The Wall Street Journal ran a story in which Bret Arends said that the ides that long-term timing doesn’t work is “a bunch of hooey” and that the Buy-and-Holders leave out half the story when they talk to investors. Numerous professors who teach this stuff in universities have told me that my work is top rate and yet I am banned everywhere that matters. Call me madcap but, yes, I have come to believe that there is some funny stuff going on.
A nation cannot survive indefinitely if there is no means to communicate to millions of investors what the peer-reviewed research teaches us all about how stock investing works in the real world. The people of the United States are going to find a way to overcome you Goons. Because we have no choice. It will happen in the days following the next price crash, when millions of people will be able to see with their own eyes the consequences of the relentless promotion of a pure Get Rich Quick approach to stock investing without people even being able to hear about the downside of it and to deide for themselves. We’ll see, you know?
I will continue to wish you all the best things that this life has to offer a person. And I will continue to maintain that the retirement study posted to John Greaney’s web site lacks an adjustment for the valuation level that applies on the day the retirement begins. Because I believe that it is best for you Goons and for Greaney himself that this cover-up brought to a full and complete stop. I don’t believe that any of us is capable of knowing everything there is to know about a subject. So we should always be willing to let the other guy say what he thinks and to keep our minds open to learning from it. That’s where I am coming from, Anonymous. That’s the story here. I truly do not believe that that study contains a valuation adjustment. So that’s what I say when discussions of safe withdrawal rates come up on the internet.
My best wishes.
Rob
This is Dynamik Widget Area. You can add content to this area by going to Appearance > Widgets in your WordPress Dashboard and adding new widgets to this area.
feed twitter twitter facebook