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Good Bye St Louis

It’s not just adios, but probably goodbye. Last weekend, St. Louis was the host city for FinCon, the Financial Blogger’s Conference. So far, it’s been in Chicago, Denver, and now St. Louis.

stlouisarch

This is The Gateway Arch which Wikipedia tells us is a 630-foot monument in St. Louis, Missouri. Clad in stainless steel and built in the form of a flattened catenary arch, it is the tallest man-made monument in the United States. I hadn’t given it much thought in my life until the SyFy TV show Defiance was released, and the arch is a prominent feature in the show.

FinCon was the brainchild of Phil Taylor, the blogger better known at PT Money, and this year, the number of attendees hit the 500 mark. The people that came are nothing short of amazing. When you combine the love of a topic, the desire to write about it, and the urge to connect, there’s a magic that happens.

This year, author and financial editor of the  Today Show, Jean Chatzky gave a keynote address. She really knew how to relate to the audience. Jean shared her story of how she got started in the business, and after being told she’d never make it to TV, didn’t just get on television, but did it in NYC, the last place one expects to get a break. Her next project is the expansion and promotion of her Money School, an online seminar series to help you improve your finances. My fellow bloggers and I are likely to come back with more on Jean’s Money School. From the bit I saw of it, she’s going to help a lot of people.

There were so many bloggers who gave a talk that I really run the risk of leaving off someone who deserves a mention, but here are the ones that stand out in my mind –

Rob Bennett – I’ve met Rob at prior FinCons and he strikes me as one of the most passionate people out there. Rob gave a talk at Ignite, an evening function in which each speaker has 5 minutes to share an idea via a set of 20 slides timed to change at 15 second intervals. Rob has a message to share, but somehow his message isn’t welcome in many financial forums. What’s Rob’s message? It seems to be twofold, first, stocks actually do get overpriced. Any of my readers old enough to remember the crash of ’87? No? No problem, we had another crash from 2000 through Mid-02. I know, that was still over a decade ago. The latest crash occurred from Mid-07 till Jan ’09. It would seem that Rob’s observation is correct. Another Rob, Schiller to be specific, had a similar idea. He doesn’t get kicked out of finance forums, that I know, instead he gets a Nobel prize. Which is pretty cool. The second part of Rob Bennett’s message is that by using data that we know, the PE10, which happens to be popularized by Robert Schiller, we have a tool to judge market valuation. If there’s a problem with the process Rob discusses, it’s that it takes time and patience. Check his site out, and see what you think.

Barbara Friedberg blogs at her site about saving, investing, and building wealth. She gave a regular length talk containing a mix of writing and investing advice that were right in line with my own opinion. Patience, asset allocation, and she even offered a quote that I loved – “Investing should be like watching grass grow or paint dry. If you want excitement, take $1,000 and go to Las Vegas.” (Paul Samuelson)  Barb prefers indexing, as do I, and even suggested that if one wanted to buy individual stocks, they should limit that portion of their assets to 10%. On a side note, a newer blogger and I were talking over lunch, and she was determined to go all in, choosing stocks from the very beginning of her investing life. It’s tough to explain to a new investor why they are not going to be the chosen one who beats the market year in and year out.

Eric Rosenberg – Eric is a big deal (ask him, he’ll tell you), he offers great financial writing at his blog, DJs on weekends, and just announced to his readers that he’s engaged. I may be twice his age, but I’m the first to admit there’s far more to be learned than I’ll ever know, and I’m always happy to learn from Eric.

Romeo Jeremiah didn’t offer a talk, but we did spend some quality time together at the hotel bar. He writes about finance, relationships, and life, and whether one agrees with him or not, he offers his views respectfully and with great insight. He was away from the US with his son last year and missed FinCon. Great to see him this year and catch up.

As I started to say, a great group, and with 500 attendees, it was impossible to chat with each and every one. If you were there and I didn’t meet you, I’m sorry, I look forward to next year. If we met, it was great. There’s no one I spoke to that wasn’t interesting, a rare time to be with a group that has no one you wanted to walk away from. If you missed FinCon this year, you can buy a virtual pass and see what the fuss was all about.

This Sunday may feature a roundup of FinCon posts. A lot to read and learn.

 

 

{ 133 comments… add one }
  • Rob Bennett November 3, 2013, 7:44 am

    Thanks for your kind words, Joe. I always enjoy running into you at FinCon events. Your good heart is evident as soon as anyone meets you.

    I liked it that you had the courage to stand up re the sexist comment you referred to in another blog entry. And I like that quote about how those who don’t speak out against a fraud are themselves guilty of fraud (I would add — in a smaller way).

    Take care, man.

    Rob

  • Bob November 3, 2013, 11:57 am

    I am sorry, but I find little to no value in Rob’s site. In fact, much of it seems silly. He spends the majority of his time talking about death threats and someone’s job being threatened, yet there is no proof offered, except for Rob linking to his own posts. When people do question Rob, he calls them a “goon” and tells them that he will sue them and that they will go to jail.

    Rob continues to post about a group of people that follow “Buy and Hold” and what he describes as poor performance. However, he has been given significant data on various portfolios that have continued to perform exceeding well. Rob, on the other hand, gives his own investment advice that he admittedly hasn’t followed. Makes you wonder when someone preaches one thing, but does something different.

    Bottom line is that he cannot tolerate anyone with a different opinion, despite his words to the contrary. It is not surprising he has been kicked off of so many boards.

  • Joe November 3, 2013, 8:21 pm

    I watched how his posts proposing the downside of buy and hold were attacked. I also watched as an advocator of PE10 won a Nobel prize. Interesting juxtaposition.

  • Rob Bennett November 3, 2013, 8:30 pm

    Things are getting better.

    When we get to the other side, I doubt that there will be one person who wants to go back.

    The truth here is that we are the luckiest generation of investors ever to walk Planet Earth.

    We just need to get past this one last obstacle.

    Rob

  • Bob November 4, 2013, 8:25 am

    And Fama won a Nobel as well even though he is the opposite of Schiller.

    Rob – Maybe you can tell us how you can actually implement the “lucky seven” strategy. Timing, managing fees, allocations, etc. While you are at it, maybe you can explain why you don’t personally follow this investment strategy for yourself.

    On the other hand, we can look a long list of portfolio strategies in which you can set your allocation and only have to rebalance the allocation on an annual basis. Rob has this data, but won’t respond to it. In fact, you can find one of the tables here:

    http://www.s152957355.onlinehome.us/cgi-bin/yabb2/YaBB.pl?num=1383080933

    So, maybe Rob can explain how the buy and hold isn’t working in these portfolios.

  • Rob Bennett November 4, 2013, 8:44 am

    And Fama won a Nobel as well even though he is the opposite of Schiller.

    This is so. And I wrote a column at the Value Walk site saying that this was a good thing. Fama is the researcher responsible for Buy-and-Hold. I believe that he made mistakes. But I also believe that he made a huge contribution and that we all should feel respect and affection and gratitude to Fama and to ALL Buy-and-Holders for the good they have done. Can you say that same about the Valuation-Informed Indexers, Bob?

    I am not going to respond to the argumentative comments you make, Bob. Those send us backwards rather than forward.

    Here is an article that provides lots of background on what Valuation-Informed Indexing is all about as well as links to other articles that treat particular issues in more depth:

    http://arichlife.passionsaving.com/about/

    As for the portfolios, you are taking a moment in time in which stocks are dangerously overvalued, failing to make the necessary adjustment for the effect of valuation and then acting as if those portfolio amounts tell us something meaningful. The reasons why such a procedure cannot possible work are obvious to anyone who is open to considering both sides of the question.

    The people who invested in Bernie Madoff’s fund thought the fund was AMAZING until they lost all their money. I think it would be fair to say that you won’t be pointing to portfolio values if we see the price drop of 65 percent that Shiller’s research shows is coming in the next year or two.

    What matters (in my view!) is how you do over an investing LIFETIME. I am the co-author (with Wade Pfau, who holds a Ph.D. in Economics from Princeton) of research that was published in a peer-reviewed journal that shows that over the course of an investing lifetime Valuation-Informed Indexers ALWAYS enjoy FAR higher returns than Buy-and-Holders and always do so at DRAMATiCALLY reduced risk. The difference is usually enough to permit them to retire five to ten years sooner than they ever imagined possible in the days when they were following Buy-and-Hold strategies.

    There’s only one difference between Valuation-Informed Indexing and Buy-and-Hold. VIIers practice long-term timing. That is, we consider the price at which stocks are selling when setting our stock allocations. Another name for that is “price discipline.” Are you able to name one other good or service on Planet Earth where you can do better not practicing price discipline than you can do practicing price discipline?

    Common sense tells us that VII MUST provide far better long-term results than Buy-and-Hold. There is now 32 years of peer-reviewed academic research CONFIRMING that what common sense tells us must be so really is so.

    We should permit honest posting on every board and blog on the internet.

    Or at least that’s my sincere take re this important question, Bob.

    My warmest wishes to you and yours.

    Rob

  • Bob November 4, 2013, 9:19 pm

    Rob – Your whole campaign is bashing buy and hold and you continue to lie. For example you just said:

    “As for the portfolios, you are taking a moment in time in which stocks are dangerously overvalued, failing to make the necessary adjustment for the effect of valuation and then acting as if those portfolio amounts tell us something meaningful.”

    Wrong, Rob. These are long term results. The Wellington numbers, for example, go all the way back to 1929.

    Next, you throw in Bernie Madoff, like that is a comparable analogy. Bernie was running a Ponzi scheme. The money was not really invested. People are investing in the same assets between your “lucky seven” strategy versus the other mentioned portfolios. Merely, the debate is setting an allocation and sticking to it or trying to time the market. Stop making such silly comments.

    Next, you tell another lie about being a co-author on a paper. The paper you refer to does not have your name listed as an author. Instead, you are one name amongst dozens that were given credit for particular thoughts/information.

    As to your comment of : “Common sense tells us that VII MUST provide far better long-term results than Buy-and-Hold. There is now 32 years of peer-reviewed academic research CONFIRMING that what common sense tells us must be so really is so.”

    That is wrong Rob. You have been given countless portfolios with superior returns to your “lucky seven” strategy. I have provided just a few examples. You have been given countless examples as to how you are just plain wrong.

    Finally, you said: “I am not going to respond to the argumentative comments you make, Bob. Those send us backwards rather than forward.”

    Rob, once again you are trying to knock down anything that is opposite of what you say. Your more typical tactic is to threaten people. Anyone can look at your site and see that you continue to tell people that they are going to jail and will be paying you huge amounts of money in legal settlements. Your largest focus has been on Jack Bogle where you say he will be on a stage with you telling everyone that he is wrong, followed by you being on the front page of the New York Times as some kind of celebrated hero. You have then claimed that Jack as well as other notable people in the financial world, such as Rick Ferri, Larry Swedroe, William Bernstein, etc. will all be going to jail as well for not sticking up for you (or some other kind of vague rationale). I, as well as others, have posted to your site asking questions about your claims. In turn, your defense reaction is to tell us we are all goons, will be going to jail and will have to pay you hundreds of millions in settlements. Rob, this is just not normal.

    Even more outrageous is your treatment of Wade Pfau. You bring him up as a hero for your cause, but then talk about how he will also likely go to jail once he turned on you as well. Wade explains how you have caused him significant harm and has asked you to stop talking about him. Yet, you send out emails every day using him as your talking point. I am sure you remember this message Wade sent to you:

    “Hi Rob,

    I forgot that I was still saying things like this even 2 weeks after the initial incident.

    This was more than a year ago now, but I am thinking that I was just trying to explain politely to you that I’d rather have you quit writing about me, or at least stop using my name. I suppose that I figured the only way you might understand why is if I explained it in terms of your favorite conspiracy theories.

    I will make one more attempt at a reality check for you. You go on and on about how I allegedly lack personal integrity because I allowed the Goons to threaten me into silence.

    The reality is that though I may have for a brief moment got a bit too caught up in YOUR drama, I do not have any fears about the Goons.

    The reality is that you are causing me 1000x more career damage than the Goons ever could have by filling Google with so much nonsense about me, and sharing embarrassing private details such as my overly ambitious journal submission strategies, etc. Those in particular are highly private. People don’t publicly share where they submit articles to unless those articles are accepted. You’ve violated my trust in so many countless ways and yet you still proclaim to be my friend.

    And the further reality is that if I *did* lack personal integrity, I could have made this all stop just by saying the meaningless sentence you want so desperately to hear: “I think the errors in the traditional safe withdrawal rate studies must be corrected by using Rob’s analytically valid method.”

    But I don’t believe that. I do not believe you have offered a valid correction to the safe withdrawal rate question. And I believe that retirement income strategies go much further than the question of a safe withdrawal rate. And so that is why I’ve had to endure your ongoing harassment for months on end now.

    Usually I can figure out the Rob-logic behind what you are thinking, but I really don’t know how you think you come out of this whole episode looking like the good guy. I guess it is because you think you are saving my soul and putting me back on the path of righteousness, or something, huh? If only you had the power to do a little bit of self reflection…

    Now that the whole email history is on display, we have the reminder of how angry you got at the very beginning when I referred to you as dogmatic. Yet, look at the way you’ve treated me for disagreeing with you on something which you don’t even understand. You quote numbers from JWR’s statistical work, but I’m not sure if you can even distinguish a mean from a median. So how can you be sure his work is right? I don’t know either, as I never did get around to digging into it, and I doubt I ever will now. But I’m not sure how a properly calculated lower confidence bound for a 2000 retiree could have been higher than zero.

    Rob, suppose the stock market does drop 65% as you are expecting. It might happen, who knows.

    Step 1: Stock Market Drops 65%

    Step 2: ??

    Step 3: Rob wins $500 million settlement from the Goons, the Goons are sent to prison, the investing public learns about and adopts VII.

    What is Step 2? There isn’t one. You will still be in the same position as you’ve been in for the last 10 years. Why didn’t something happen for you after the 2008 financial crisis? You are like the guy who keeps predicting new ends for the world as each previous prediction date passes by.

    That is why I’m telling you, from one human being to another, that it is time to move on. You are a smart guy, and you could use your talents for something productive. While warning people about the 4% rule is helpful, the way that you go about doing it is rather “catastrophically unproductive” as one wise fellow said to you years ago. I provide a loud voice that is critical of the 4% rule, and so spending your days assassinating my character is counterproductive to your underlying cause. So perhaps you can start fresh with a new issue of social import that carries less baggage for you. What happened in the past is a sunk cost, but you still have a chance to turn things around and start afresh today. And you can do all of this while still being honest and true to yourself.”

    Rob – These are all facts. They can all be supported with links. Time to get honest.

  • Rob Bennett November 4, 2013, 9:38 pm

    Wade Pfau and I co-authored research that was published in a peer-reviewed journal that shows millions of middle-class investors how to reduce the risk of stock investing by 70 percent.

    Anyone who cares to can go to site and read the entire story. I have reports on over 100 e-mails that Wade and I exchanged with each other. I have a link to the study we produced and to lots of positive commentary on it (some by people who were lifetime Buy-and-Holders until they read the study). I have reports on the threats that you Goons made and on how Wade told me how scared and he was about what you were doing to his career and all this sort of thing.

    I just finished watching with my boys a documentary on the life of Steve Jobs. People rave about how Jobs improved all our lives. The thousands of people who have helped me develop the Valuation-Informed Indexing concept have helped us all to live richer lives to a greater extent than have the innovations we have seen in the computer industry. Once word on VII gets out, there will be no more economic crises. Once word on VII gets out, we will all be able to retire years sooner. And on and on.

    There’s one problem. VII is such a huge advance over Buy-and-Hold that there are some (not all) Buy-and-Holders who cannot bear to hear about it. It hurts them too much to accept that there was a day when they did not know it all.

    That’s very, very, very sad, Bob.

    This is the greatest advance in the history of investing analysis. And all you can do is hate.

    We will win. We will replace Buy-and-Hold. Not because of some sort of grudge I have against the Buy-and-Holders. We will win because deep in their hearts the Buy-and-Holders themselves want us to win. Bogle says in one of his books that, when someone learns he had made a mistake, he wants to know about it. I honored the man’s desire when I pointed out the great flaw in Buy-and-Hold to him. VII is what Bogle MEANT for Buy-and-Hold to be and VII is what Bogle deep in his heart has always wanted Buy-and-Hold to be. VII is a form of Buy-and-Hold that works in the real world.

    I wish you all good things, Bob.

    Rob

  • Bob November 5, 2013, 7:16 am

    Rob,

    It comes down to credibility and here are the facts:

    1. Anyone can read the article and see that you are not the co-author. You are acknowledged for motivating the topic and there is a long list of others that are also acknowledged.

    2. Your “lucky seven” strategy is just that, a strategy. It involves timing the market. It is NOT superior to other strategies as we have seen a list of portfolios that are much simpler to execute. I have given a list of portfolios as a start and there are more that you have been provided in other forums. By the way, you have yet to explain why you haven’t followed your own advice in using your lucky seven strategy with your own portfolio.

    3. You continue to talk about threats and have been asked for proof, yet all you provide are links to your own comments. Instead, we see by Wade’s comments above that you have caused him much greater harm. He has asked you to stop, but you have continued. As for those threats, they are actually coming from you. Anyone that visits your site will see countless posts where you tell all of us that we are going to prison.

  • Rob Bennett November 5, 2013, 7:51 am

    Anyone can also read the many e-mails Wade wrote describing me as the teacher and him as the student and understand that not only was I the co-author, I was the PRIMARY co-author, Bob.

    I talk about the prison terms because the prison terms are an important issue, Bob.

    Ideas have a life cycle. There is a time when they are rising and gaining new adherents by the day. There is a time when they are dominant. There is a time when they decline in influence. And there is a time when they die.

    Buy-and-Hold was a wonderful idea in its early days. We wouldn’t have Valuation-Informed Indexing today if Buy-and-Hold hadn’t come along first.

    But Buy-and-Hold died intellectually in 1981, when Shiller published his research showing that valuations affect long-term returns. For Buy-and-Hold to work, returns must be random. If returns are higher when valuations are lower (and they have been for 140 years now), then risk is higher when valuations are higher. If you fail to adjust your stock allocation when risk increases, you end up with a risk profile to which you are entirely unsuited.

    That’s a disaster. We are spending an enormous amount of resources teaching millions of investors to do something (ignore price when setting their stock allocation) that dooms their efforts. We need to stop doing that.

    Now —

    There are millions of good and smart people who believe in Buy-and-Hold today. Nothing could be more clear. Those people obviously have every right to talk about what they believe on discussion boards and blogs.

    BUT SO DO THE VALUATION-INFORMED INDEXERS!

    When you Goons deny us that right, you place yourselves on the wrong side of an important line. You have employed death threats to silence Valuation-Informed Indexing. You have employed unjustified board bannings. You have employed tens of thousands of acts of defamation. You have employed threats to get academic researchers fired from their jobs.

    That cannot stand, Bob. That is not what the Personal Finance Blogosphere is about. That is not what the United States of America is about. It is not all about you.

    Shiller published the research founding the Valuation-Informed Indexing model in 1981. It’s been 32 years. In ordinary circumstances, everyone would know about every idea I have put forward, given that they have had 32 years to explore them. It’s not an accident that the vast majority of people don’t know about these ideas today.

    The Buy-and-Holders have engaged in nasty tactics to block million of people from learning about what the research in this field really says. This sort of thing was obviously going on long before I came on the scene. But I have documented the last 11 years of nasty stuff. And a lot of what we have seen has been very, very nasty indeed.

    Following the next price crash, are you going to be able to make whole the millions who have suffered huge financial losses because of your insanely abusive behavior? You cannot do it. There’s not enough money in the world to do it.

    So those people are going to be angry.

    And my site documents your many felonies.

    So I believe you are going to end up in prison.

    Not because of anything I say or do. I have zero ability to send you to prison and zero desire to gain any such abilities. So any threats you are hearing from me are empty threats.

    What I am seeking to do is to get your prison sentence REDUCED. You were a friend to me in the days before I put up my famous post pointing out the errors in John Greaney’s SWR study and so I care about you. Aside from that, you are a human and the thought of any human going to prison because he didn’t like what someone else said on a discussion board or blog makes me want to be sick. So I want to see you come clean. If you come clean prior to the next crash, your prison sentence is obviously going to be a lot less than what it will be if you do not come clean until after the next crash. So that is something I advocate at my site.

    I believe that every blogger on the internet should be pushing for an end to the Ban on Honest Posting. I have had thousands of people tell me that they want to see it come to an end. 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. These people matter. These people have a RIGHT to do honest work. And they would be helping us all by doing it.

    Once the ban is lifted we are going to see thousands of blogs writing about Valuation-Informed Indexing. Joe says up above that the problem with VII is that it takes a long time for prices to return to fair-value levels. That will never again be an issue following the lifting of the ban. There will be thousands of blogs offering people tools to help them understand when stocks are not worth buying. So there will never again be a sustained bull market. We will never again have to worry about overvaluation once we all feel free at last to speak honestly about what the last 32 years of peer-reviewed academic research in this field says.

    If you truly don’t believe that you will be going to prison, please forget I said anything, Bob. I am no one to you. Ignore me with my blessing.

    But I have a conscience. So I am going to continue to point out to people that that is where things are headed. I want to be able to say on the day that your prison sentence is announced that I did something to keep that prison sentence limited.

    It is my job to pull people together. I want the Buy-and-Holders and the Valuation-Informed Indexers working together and learning together and laughing together and having a good time together. So I don’t turn away when I see one of my Buy-and-Hold friends in trouble. You are in trouble, my old friend. You have crossed lines. Not once, THOUSANDS of times. And there is a record of internet posts showing this. You need to take care of the problem.

    Ignore me if you like. THAT’S on the right side of the line. But I am the one who has to live with himself as events play out. I knew on the morning of May 13, 2002, that I could no longer live with myself if I didn’t work up the courage to tell the truth about Greaney’s study. So I did it and I accepted the consequences that followed from that brave decision to “cross” my old friend. I know today that I will not be able to live with myself in future days if I do not do what I can to help my old friend Bob from landing himself in prison for a long, long time. So I am going to continue doing what I can to see that your prison sentence is shortened a bit.

    The rest is out of my hands, old buddy.

    My warmest wishes to you and yours.

    Rob

  • Bob November 5, 2013, 8:24 am

    Joe,

    I think you have enough here to make your own judgement.

    You see the following:

    1. Various portfolios that Rob describes as buy and hold actually perform as well or better than timing the market in the way Rob describes without having to worry about the actual timing of the trades, the expenses, etc. In short, you establish you portfolio and ratio and rebalance each year. Simple as that. Notice that Rob did not comment about not following his own investment advice.

    2. Rob lies about being the co-author. All you need to do is look at the publication and see that he is not listed as an author and is given credit amongst dozens of other people and acknowledge for motivation. We can also see Wade’s own words listed above in an email he sent to Rob.

    3. When Rob loses an argument, he resorts to threats. Just look at this last post and you get a small taste of his immediate threats of jail time and/or lawsuits. He says that I have committed many felonies. What a joke. I am some anonymous guy that happened to visit Robs site over the past year asking a few questions. When I happened to catch Rob in lies (just like we see here), he starts with the prison threats. He will do the same to you Joe. Merely ban him from your site or pose questions like I have and he will add you to the list of those that he says are going to jail.

  • Rob Bennett November 5, 2013, 8:48 am

    Joe has enough material available to him to make a good judgement.

    So does everyone else.

    The entire 11 years of discussions have been conducted on the internet. So there are Post Archives that cover every question.

    The trouble we have is that humans are not computers. They don’t analyze facts and then spit our logical conclusions. We are social creatures. There is a Social Stigma re pointing out the dangers of Buy-and-Hold in place today that stops us from saying things that we would say in two seconds if the Social Stigma were removed.

    My strongly held belief is that the Social Stigma will disappear following the next price crash. It had better. We went to valuation levels this time that were far, far higher than the valuation levels that caused the Great Depression. If we do not agree as a society to open the internet to honest posting on the last 32 years of peer-reviewed academic research in this field, we all go down together.

    The other side of the story is that, if we DO open the internet to honest posting on the last 32 years of peer-reviewed academic research, we gain the ability to tap into the benefits of being the luckiest generation of investors ever to walk Planet Earth. No one who came before us was able to enjoy stocks as a virtually risk-free asset class. That option is open to us. I believe that, once we are in the Second Great Depression, we will choose to enjoy our good fortune rather than to continue to engage in stupid arguments as to whether honest posting should be permitted or not (the answer to that one would be obvious to every last one of us, including Bob, if we were thinking clearly re these matters).

    In any event, I certainly wish you all the best that this life has to offer a person regardless of what investing strategies you elect to follow, Bob.

    Rob

  • Bob November 5, 2013, 9:08 am

    So, Rob, in summary:

    1. You are not the co-author of the paper with Wade.

    2. There are many portfolios (that you describe as buy and hold) that have performed as well or better than you lucky seven strategy.

    3. You have yet to comment why you haven’t followed your own investment advice

    4. Have made threats of jail time and lawsuits and refer people to your own website as “proof”.

    5. There is no ban on posting on any subject. The only ban is on you and your participation on various boards due to your behavior.

  • Rob Bennett November 5, 2013, 9:12 am

    That all sounds on the mark, Bob.

    Truly outstanding!!!

    Rob

  • Bob November 5, 2013, 9:31 am

    Joe, set all of Rob’s silly talk aside. We call all look at history and see if we just happened to trade a certain way, we can become rich. In fact, I can look at last nights lottery numbers and see that if I had used those numbers I would have won. It comes down to execution. What if you don’t time it just right? What if missed by days, weeks or months? What should the allocation be? What about the expense of trading in and out?

    On the other hand, I could just go with my low cost three fund portfolio, set my allocation and then rebalance once a year. Great performance and easy.

    Final thought- we can all see long term results with the portfolios that have been in practice for a long time. Where have we seen actual portfolios like the lucky seven where people actually did these trades and we can look back on documentation as to when they began doing this (proving actual execution)?

  • Rob Bennett November 5, 2013, 9:52 am

    We call all look at history and see if we just happened to trade a certain way, we can become rich

    We can all also just consider how we have done over a relatively short period of time and conclude that we are following a genius strategy because we have obtained good results for 10 or 15 years. The typical investing lifetime lasts 60 years (age 25 through age 85). We need strategies that offer good results OVER THE LONG TERM. Buy-and-Hold has caused a financial wipeout for every investor who has followed it for 140 years now. VII has provided FAR higher long-term returns at DRAMATICALLY reduced risk for 140 years now.

    If the market is efficient, Buy-and-Hold is the ideal strategy. You have never heard me say different, Bob.

    The trouble I have with risking my retirement money on the claim that the market is efficient is the 32 years of peer-reviewed academic research showing that it is NOT.

    If the market is efficient, returns should be random.The person who bought stocks in 2000 should have had just as good a chance of obtaining good long-term results as the person who bought stocks in 1982. A regression analysis shows that the most likely annualized long-term return on stocks purchased in 1982 was 15 percent real and that the number that applied in 2000 was a negative 1 percent real.

    It’s not a close call. Valuations matter. And, if they matter, you must take them into account when setting your stock allocation. If you fail to do that, you are permitting your risk profile to go wildly out of whack when prices go wildly out of whack. That cannot possible be a good thing.

    Jack Bogle is the lead advocate of Buy-and-Hold alive on the planet today. And even Jack says that the most important rule in stock investing is to “Stay the Course.” Is an investor who goes with a 70 percent stock allocation when the likely long-term annualized return is 15 percent real and who also goes with a 70 percent stock allocation when the likely long-term annualized return is a negative 1 percent real Staying the Course in a meaningful way? It sure does not seem so to me. When Jack Bogle implicitly says that Buy-and-Hold cannot possibly work, I think it’s fair to say that the time has come to give it up.

    Investors who listened to the Buy-and-Hold advocates and bought an asset class promising a negative 1 percent real long-term return in 2000 hurt themselves in a very serious way. TIPS were paying 4 percent real at the time. Had they purchased the asset class carrying less risk, they would have seen a greater return of 5 percent real on average for every year, ten years running. That’s a total shortfall for the Buy-and-Holders of 50 percent of their starting-point portfolio value. That means retiring perhaps ten years later (especially when you consider the losses suffered as a result of the years of lost compounding returns on that differential).

    What purpose is served by denying millions of middle-class people access to honest posting on these matters? We all should be allowed to report honestly on what the last 32 years of peer-reviewed academic research says and each investor should make his or her own choice as to whether to follow the strategies pushed by the Wall Street Con Men (who make millions when people are persuaded to buy overpriced stocks) or the strategies supported by the last 32 years of peer-reviewed academic research.

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

    Rob

  • Bob November 5, 2013, 10:37 am

    Rob,

    You have been given portfolios with long term results. The Wellington fund alone is from 1929. Stop lying. On the other hand, show us a portfolio that has been demonstrated your strategy in the long term. You are looking at data points that say “if I just happened to have traded an those days, here are my results”. So where are the portfolios that have done this? Why have you not followed your own advice? Show us where this has actually been put in practice for the 60 year standard that you just set.

  • Rob Bennett November 5, 2013, 11:04 am

    You have been given portfolios with long term results.

    Buy-and-Hold performed well from 1982 through 1995. But not because of anything having to do with Buy-and-Hold. Buy-and-Hold performed well in those years because stocks were priced low or moderately and stocks ALWAYS perform well when priced low or moderately. ANY strategy calling for a high stock allocation did well in those years. VII calls for a high stock allocation when stocks are priced low or moderately. VII performed well from 1982 through 1995.

    Buy-and-Hold performed poorly from 2000 forward. VII performed at least as well in those years. I give VII the edge because there is so much less risk for those following VII. But I think it would be fair to say that the two strategies generated numbers in the same general neighborhood in those years.

    Buy-and-Hold KILLED VII in the years 1996 through 1999.

    Stocks are priced today for a 65 percent price drop, according to the peer-reviewed academic research of the past 32 years. In the event that stocks continue to perform in the future at least somewhat as they always have in the past, VII will be far, far ahead of Buy-and-Hold following the next crash. Then it will go even farther ahead as the compounding returns on that differential grow larger and larger and larger.

    That’s the story, Bob.

    There are millions of good and smart people who think Buy-and-Hold is the way to go. I do not. But I certainly wish them well. I would never in my wildest dreams think of putting forward death threats or demands for board bannings or tens of thousands of acts of defamation or threats to get academic researchers fired from their jobs because I wanted to intimidate people who have different ideas about what works in investing into silence. I consider the Buy-and-Holders my friends.

    And I know that I can make mistakes. I think that anyone who followed my advice just because I happened to put it forward would have to be drunk or dumb or loco or very, very young and inexperienced. I am some guy whose expertise re this subject matter is that I figured out how to get stuff posted on the internet. It is my hope that there will never be one person who will ever give the slightest thought to following the advice I offer solely because I put it forward.

    I feel equally strong about the idea of posting dishonestly on all these questions. I said that I think of the Buy-and-Holders as my friends because of all the wonderful things I have learned from them and because of the good times I have had with them. The Buy-and-Holders earned something from me through their friendship. They earned my honesty. I intend to honor the debt I owe them. I have refused for 11 years in the face of the most relentless and brutal pressures that anyone has ever faced on the internet to post dishonestly re these matters. If I am true to myself, I will continue to refuse to post dishonestly for another 11 BILLION years. As Elvis once put it, if you don’t believe me, you can count the days.

    I wish you the best of luck in all your future endeavors, Bob.

    Rob

  • Rob Bennett November 5, 2013, 11:12 am

    Show us where this has actually been put in practice for the 60 year standard that you just set.

    We need a speech from Jack Bogle in which he separates himself in every possible way from the individuals who have put up posts in “defense” of Mel Lindauer and John Greaney.

    The day after my good friend Jack gives that speech, my other good friend Wade will be back in the business of publishing honest research. I know Wade pretty darn well. He will be happy to take whatever time it takes to explain everything you need to know, Bob.

    And, the day after Wade starts publishing honest research again, there are going to be THOUSANDS of other researchers jumping on the honest research train. This field is like any other. People do all the work it takes to get jobs in this field largely because they want the good feeling inside that comes from helping people. I have spoken to lots of people in this field who dream of the day when they can feel safe doing honest work again. The day after Jack gives his “I Was Wrong” speech is when that day comes for all of us.

    Once you get to the other side of The Big Black Mountain, you are never going to want to go back to Buy-and-Hold, Bob. I was a Buy-and-Holder myself on the morning of May 13, 2002. I gave it up on the day that Greaney threatened to kill my wife and children and 200 Buy-and-Holders endorsed his post. I knew that night that Buy-and-Hold was far too an emotional strategy for me to use for investing my retirement money. That’s when I started working full time developing the Valuation-Informed Indexing Model. I never for two seconds have been tempted to look back in all the years since.

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

    Rob

  • Bob November 5, 2013, 11:15 am

    Like always, Rob, you avoid answering direct issues.

    You cannot show any examples of portfolios that have successfully executed your strategy with YOUR prescribed long term timeframes.

    You don’t say why you have not followed your own advice.

    Instead, you try to create some boggie man out of the mysterious buy and hold “mafia” as you describe it as a way of justifying your positions.

    Stop the lies, Rob.

  • Rob Bennett November 5, 2013, 11:25 am

    It’s not my answers alone that matter, Bob. I am not God.

    We need to see honest posting from THOUSANDS AND THOUSANDS of people to figure this stuff out.

    You don’t get that when the penalty for saying that you see merit in the last 32 years of peer-reviewed academic research is death threats and board bannings and tens of thousands of acts of defamation and threats to get academic researchers fired from their jobs.

    We need every blogger on the internet to join together to solve the PROCESS problem. Then the substance issues will take care of themselves.

    There is a reason why the tactics that the Lindauerheads and Greaney Goons have been employing for 11 years now to intimidate Valuation-Informed Indexers into silence (or worse) are prohibited by the published rules at every discussion board and blog on the internet.

    There is a reason why the worst of these tactics are defined as felonies under the laws of the United States of America.

    We know as a people that this is not the way to go. We know as a people that human just cannot sink this low and continue to feel good about themselves. We know as a people that honesty must be permitted in all fields of human endeavor other than discussions of what works in stock investing.

    My primary contribution over the past 11 years has been pointing out that permitting honesty may work out well in the investing advice field as well.

    Forget the “may.” I am sure!

    Hang in there, old buddy.

    Rob

  • Bob November 5, 2013, 11:45 am

    Rob,

    There you go again avoiding the questions.

    All topics are open for free discussion. The problem for you is that you have been banned from many boards due to your behavior.

    If you want honesty (as you say), stop lying.

  • Rob Bennett November 5, 2013, 11:53 am

    Was I lying when I pointed out the errors in John Greaney’s safe withdrawal rate study, Bob?

    At the time, you Goons said I was. Even though hundreds of my fellow community members said I had started the most interesting discussion ever held at the Motley Fool board.

    In recent years, the Wall Street Journal has said that I was right. So has the Economist magazine. So has Reuters. So has the Financial Mentor blog. So has Smart Money. So have many other fine publications.

    Was I lying when I reported on the errors in the Old School SWR studies ten years before these errors were reported on in just about every major publication in this field?

    Should I take back that lie? Now that there is a universal consensus that I was right about the errors in the retirement studies, should I pretend that I believe that those studies get the numbers right and do not need to be corrected?

    Or would I be committing financial fraud if I participated in the cover-up?

    Should I be willing to go to prison to please Greaney’s wounded ego, Bob?

    I’m not inclined to go there. Call me madcap.

    Rob

  • Bob November 5, 2013, 12:52 pm

    There you go avoiding the questions. I will address your’s after you address my points

  • Joe November 5, 2013, 8:41 pm

    My view on Rob and his research are in my article above. The fact that Shiller is a proponent of the approach takes it from a fringe view to mainstream, in my opinion. I know, emotions run high in this type of discussion.

    I only wish this passion were present in the discussions on the fees that funds charge.

    Finally, Bob. You can see I welcome debate. I get a lot of comments hitting my spam filter, I’m glad yours was not caught in there. If anyone who commented doesn’t see their post, please resubmit. I just cleared 2K+ comments from that folder.

  • Rob Bennett November 6, 2013, 5:18 am

    The fact that Shiller is a proponent of the approach takes it from a fringe view to mainstream,

    Thanks so much for saying that, Joe. Your comment cuts right to the heart of things, in my assessment.

    These ideas should be discussed at every site on the internet. People should be 100 percent free to reject them. But all bloggers should be sure that their readers are aware of the ideas and feel free to say whatever they please about them. Each of our readers has the right to make his or her own decision as to whether it is Fama or Shiller who ultimately will be proven right. The success of their retirement plans depends on the answer to that question. No blogger or site owner should be taking on the financial responsibility for the success of all of his or her readers’ retirement plans.

    Rob

  • Anonymous November 6, 2013, 7:25 am

    Joe: Investing with an eye toward valuations using a measure such as PE10 has been part of the mainstream for many years. Benjamin Graham discussed precisely what Rob calls VII back in the 1930s. PE10 is frequently debated openly and honestly at discussion boards such as the Bogleheads Forum. When Rob says that honest posting is banned, all he really means is that he, personally, is banned. And it isn’t for his “ideas” (since he doesn’t have any original ideas anyway), but for his consistently boorish behavior.

    You are also right to suggest that some of Rob’s fury should be directed toward something more useful, like how many investors are being ripped off by paying unnecessarily high fees on their investors. But Rob doesn’t care about this, since he doesn’t think in his own mind that he discovered the idea that high fees are bad. He thinks he will becoming rich from “discovering” that PE10 can be used to guide asset allocation, forgetting (as he has been told many times) that Lucille Tomlinson’s “variable ratio plan” from the 1950s is exactly the same thing. As for the notion that he discovered an error in safe withdrawal rate studies, don’t even get me started on how ridiculous that is.

  • Straight Talker November 6, 2013, 7:26 am

    “I am the co-author (with Wade Pfau, who holds a Ph.D. in Economics from Princeton) of research that was published in a peer-reviewed journal”

    This is an outright lie.
    Joe, I’m shocked that you not only give this charlatan a platform to use on your site, but also that you seem to ENDORSE him and his tactics. Bizarre. I think the poster above did a good job of both debunking Rob’s claims, as well as illustrating that Rob simply will not answer direct questions about the methods he espouses, nor can he give examples of anyone who used them successfully, including himself! You may like Shiller, and you may like PE10, and/or timing the market, but those preferences should not blind you to the fact Mr. Bennett himself is a poisonous troll, who is using your site to further an 11 year campaign of making himself the center of attention, through any means at his disposal.

  • Bob November 6, 2013, 8:08 am

    Thanks for allowing a discussion Joe (even though Rob won’t directly respond to my questions/points). The points I have made here, Rob deletes at his site. A main part of his theme is to allow open and honest posting, yet he deletes posts like mine.

    As to the topic at hand, we have yet to see a long term portfolio as Rob describes, put into practice, in which someone has actually been able to time the trades and show complete results along with the expenses factored in. In fact, even Rob doesn’t use this strategy with his portfolio. To the opposite, we have seen numerous portfolios (that Rob describes as Buy and Hold) that have demonstrated superior returns, low cost and easy implementation (as described in a previous post).

    It seems to be common sense to use pathways that have been put into practical use that have had demonstrated track records.

  • Rob Bennett November 6, 2013, 8:34 am

    Joe made the essential point, in my view.

    Rob

  • Bob November 6, 2013, 9:57 am

    Tell us, Rob, why don’t you follow your own advice. According to a comment you made, you got out of stocks in 1996 and haven’t returned. Care to explain? Secondly, can you point to one single portfolio that trades as you describe with a long term track record that we can compare to the other portfolios mentioned?

    Rob, as to your SWR question, I think Wade (an expert by your own admission) said the following:

    “But I don’t believe that. I do not believe you have offered a valid correction to the safe withdrawal rate question. And I believe that retirement income strategies go much further than the question of a safe withdrawal rate. And so that is why I’ve had to endure your ongoing harassment for months on end now.”

  • A Goon November 6, 2013, 10:21 am

    There is one absolute certainty here. Unless Joe bans him, Rob will have the last comment in this thread. Even if it goes on for years.

  • Rob Bennett November 6, 2013, 10:42 am

    My take is that Joe made the essential point up above.

    Rob

  • Bob November 6, 2013, 11:08 am

    So, You don’t want to comment as to how Wade says you are wrong on SWRs and you don’t want to comment on why you don’t follow you own advice and you can’t point to any portfolio that has long term results using your strategy and you don’t want to give third part proof to your claim of death threats (only links to your boards), but you will throw out those nice little threats of prison time and lawsuits to those you disagree with. Did I get all of that right, Rob?

  • Rob Bennett November 6, 2013, 11:22 am

    I’ve looked this over and come to the conclusion that Joe made the essential point.

    Rob

  • Bob November 6, 2013, 11:58 am

    So, you are confirming my points. Thanks for doing so, Rob.

  • Rob Bennett November 6, 2013, 12:49 pm

    The essential point? It may just be the one that Joe made up above!

    Rob

  • Bob November 6, 2013, 1:56 pm

    And thanks once again for confirming my points.

    I will offer you up one concession. We should give you a bit of grace for not investing in the market as you probably couldn’t take the risk after retiring with only $400k while still have 2 growing kids at home to support, as we as a wife.

  • Rob Bennett November 6, 2013, 2:10 pm

    Point.

    Essential.

    Joe.

    Put it all together, mix it up a bit, and I think you’ve really got something!

    Rob

  • Bob November 6, 2013, 2:31 pm

    It seems you still struggle in responding to the points brought up Rob. Maybe you can answer them by typing the letter “g” just like you do on your hocomania board when you can’t provide an answer.

  • Rob Bennett November 6, 2013, 3:08 pm

    Point essential the made Joe.

    Please read this sentence backwards to reveal an important secret message!

    Rob

  • Bob November 6, 2013, 3:12 pm

    Joe- just to give you a heads up, Rob now seems to be referring to you over on the Hocomania board. Not sure why, as it seems to be odd responses.

    http://www.s152957355.onlinehome.us/cgi-bin/yabb2/YaBB.pl?num=1383748938/15

    Rob- like always, you have no real answers.

  • Rob Bennett November 6, 2013, 3:19 pm

    Sung to the tune of “Hey, Jude”:

    Hey, Joe.

    You made the point.

    It was the point that

    Was so essential.

    Remember when we see a post by old Bob

    That it was you, Joe

    Who made that point.

    Rob

  • Bob November 6, 2013, 3:23 pm

    Another diversion tactic by Rob. Not surprised, given his background.

    http://retireearlyhomepage.com/bennett.html

  • Rob Bennett November 6, 2013, 3:25 pm

    Who made the essential point:

    (a) Joe

    (b) Bob

    (c) Both Joe and Bob

    (d) Neither Joe nor Bob

    Rob

  • Bob November 6, 2013, 3:45 pm

    Answer:

    None of the above. It was Wade when he said:

    “Hi Rob,

    I forgot that I was still saying things like this even 2 weeks after the initial incident.

    This was more than a year ago now, but I am thinking that I was just trying to explain politely to you that I’d rather have you quit writing about me, or at least stop using my name. I suppose that I figured the only way you might understand why is if I explained it in terms of your favorite conspiracy theories.

    I will make one more attempt at a reality check for you. You go on and on about how I allegedly lack personal integrity because I allowed the Goons to threaten me into silence.

    The reality is that though I may have for a brief moment got a bit too caught up in YOUR drama, I do not have any fears about the Goons.

    The reality is that you are causing me 1000x more career damage than the Goons ever could have by filling Google with so much nonsense about me, and sharing embarrassing private details such as my overly ambitious journal submission strategies, etc. Those in particular are highly private. People don’t publicly share where they submit articles to unless those articles are accepted. You’ve violated my trust in so many countless ways and yet you still proclaim to be my friend.

    And the further reality is that if I *did* lack personal integrity, I could have made this all stop just by saying the meaningless sentence you want so desperately to hear: “I think the errors in the traditional safe withdrawal rate studies must be corrected by using Rob’s analytically valid method.”

    But I don’t believe that. I do not believe you have offered a valid correction to the safe withdrawal rate question. And I believe that retirement income strategies go much further than the question of a safe withdrawal rate. And so that is why I’ve had to endure your ongoing harassment for months on end now.

    Usually I can figure out the Rob-logic behind what you are thinking, but I really don’t know how you think you come out of this whole episode looking like the good guy. I guess it is because you think you are saving my soul and putting me back on the path of righteousness, or something, huh? If only you had the power to do a little bit of self reflection…

    Now that the whole email history is on display, we have the reminder of how angry you got at the very beginning when I referred to you as dogmatic. Yet, look at the way you’ve treated me for disagreeing with you on something which you don’t even understand. You quote numbers from JWR’s statistical work, but I’m not sure if you can even distinguish a mean from a median. So how can you be sure his work is right? I don’t know either, as I never did get around to digging into it, and I doubt I ever will now. But I’m not sure how a properly calculated lower confidence bound for a 2000 retiree could have been higher than zero.

    Rob, suppose the stock market does drop 65% as you are expecting. It might happen, who knows.

    Step 1: Stock Market Drops 65%

    Step 2: ??

    Step 3: Rob wins $500 million settlement from the Goons, the Goons are sent to prison, the investing public learns about and adopts VII.

    What is Step 2? There isn’t one. You will still be in the same position as you’ve been in for the last 10 years. Why didn’t something happen for you after the 2008 financial crisis? You are like the guy who keeps predicting new ends for the world as each previous prediction date passes by.

    That is why I’m telling you, from one human being to another, that it is time to move on. You are a smart guy, and you could use your talents for something productive. While warning people about the 4% rule is helpful, the way that you go about doing it is rather “catastrophically unproductive” as one wise fellow said to you years ago. I provide a loud voice that is critical of the 4% rule, and so spending your days assassinating my character is counterproductive to your underlying cause. So perhaps you can start fresh with a new issue of social import that carries less baggage for you. What happened in the past is a sunk cost, but you still have a chance to turn things around and start afresh today. And you can do all of this while still being honest and true to yourself.”

  • Rob Bennett November 6, 2013, 3:48 pm

    Essential point-wise, it was Joe who made it.

    Rob

  • Bob November 6, 2013, 3:55 pm

    Joe- just another heads up. You have become Rob’s new best friend. He is going to ride your name like a pony as you are now his favorite topic over at the hocomania board. You will soon understand why Wade made made the comments he did as Rob is going to make you his new poster child.

    Good luck with that!

  • Rob Bennett November 6, 2013, 4:05 pm

    It’s an essential point thing.

    Those who are not Joe will not understand.

    Rob

  • Bob November 6, 2013, 4:22 pm

    Rob,

    With you, it is a mental illness. I am sure Joe will find that to be the case if he hasn’t already.

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