I have a future in the community. He [intercst] doesn't.
[link]Schroeder's blog
Five Characteristics Common to Kooks
Submitted by Schroeder on Sun, 2008-07-13 13:42.gw posted a fine analysis that accurately describes kooks. Rob fits nearly every category . . .
Martin Gardner published a book entitled "Fads and Fallacies in the Name of Science", and dealt with everything from flying saucer nuts to Scientology and chiropractic. The nugget of the book is a list of five characteristic common to the kooks:
1. The pseudo-scientist considers himself a genius.
2. He regards other researchers as stupid, dishonest or both.
3. He believes there is a campaign against his ideas, a campaign compared with the persecution of Galileo or Pasteur.
4. Instead of side-stepping the mainstream the pseudo-scientist attacks it head-on: The most revered scientist is Einstein so Gardner writes that Einstein is the most likely establishment figure to be attacked.
5. He coins neologisms.
Rob, does it ever bother you in the slightest when people like Gardner - who don't know you exist - paint such an accurate portrait of you when they're describing general properties of kooks?
LINK
Rob acknowledges Greaney’s study accurately reports the historically surviving withdrawal rate
Submitted by Schroeder on Fri, 2008-06-20 20:52.Sifting through the hocomania, we see that Rob acknowledges Greaney’s study accurately reports the historically surviving withdrawal rate . . .
There are many people who have asked that Greaney call his study an Historical Safe Withdrawal Rate study. If he did this, there would obviously be no problem with it. He has never agreed to do this. And of course there is language throughout the study in which he discusses safe withdrawal rates, not historical surviving withdrawal rates. All of that needs to be changed to make the study accurate.
If it were made accurate, there would not be a thing wrong with it. The problem is the inaccuracies. I gave the study a five-star review at Soapbox.com because it does a good job of reporting the HSWR. I have no problem whatsoever with using that methodology to determine the HSWR. That's just what it does.
nfs analyzes VII both before and after taxes
Submitted by Schroeder on Thu, 2008-04-10 21:36.On paper, Valuation Informed Investing (VII) has shown to beat Buy and Hold (B&H). However, in the real world, trading costs and taxes come into play. nfs performed an analysis that shows that after taxes, VII doesn't hold up as well. Here is the analysis.
Recall that black is B&H and violet is VII. The comparison for the recent 20-year experience between with or without tax treatment is more dramatic. Here's without taxes . . .
And here's with taxes applied . . .
Hocus acknowledges the end of the secular bear market
Submitted by Schroeder on Sun, 2008-03-09 21:23.Schroeder: The Dow reached all-time highs last year.
Hocus: What a relief!
Financial Webring Analyzes Valuation Informed Investing (VII)
Submitted by Schroeder on Mon, 2008-02-18 21:48.Martingale offers this interesting comment . . .
**LINK**
If VII is really just the value effect and/or the momentum effect, that's a fairly serious criticism of it, as it could be cheaper in that case simply to follow one of those strategies instead (eg: buy and hold value stocks). It would also imply that you are not getting any free lunch if, as many have argued, there are rational reasons why value and momentum investing have higher returns than the market average. To wit, they are perhaps riskier.
I think Martingale is on to something. His rationale makes sense with respect to the value effect (though I'm not fully understanding how the momentum effect applies).
P/E10 acts like a value-based screen by raising the VII investor's stock allocation when value stocks dominate the S&P 500 (as evidence by lower P/E10 levels ). And conversely, lowers the VII investor's stock allocation when growth stocks dominate the S&P 500 (as evidence by higher P/E10 levels ).
I find this a logical explanation why VII may tend to outperform B&H, as value stocks tend to outperform growth stocks over long periods.
Now the question becomes is whether VII is still an effective value screen as it was in the past. And my answer is, probably not. And the reason is because many companies, including value stocks, have shifted their payout policy away from cash dividends and toward share buybacks. Share buybacks will have the effect of boosting prices more so than when cash dividends were the dominant payout policy.
The Goons intimidated William Bernstein
Submitted by Schroeder on Fri, 2008-02-01 21:34.I wish there was clean hoco-quote for this; it would have been nicer to make this a one-sentence deal. Oh, well. So here goes . . .
Or the William Bernstein who, when asked about SWRs at The Old Vanguard Diehards Board at a time when the Lindauer Goons were in the room and had made clear how they would deal with anyone who posted honestly on this topic,said that he had "no idea" what the SWR is?
So the Goons have intimidated William Bernstein, too? I had no idea.
The Goons have posted Lindauer's [?? I think hocus meant to refer to Bernstein] "no idea" comment hundreds of times. The Goons take comfort in it. The Goons use it to justify their Campaign of Terror. The majority of community members would like to see honest posting permitted and they would get what they want if people like Bernstein spoke up in favor of it and in opposition to the Goon tactics.
Bernstein degrades himself when he agrees to go along with the Goon agenda in this way.
"Wide range of possibilities at all valuation levels"
Submitted by Schroeder on Mon, 2008-01-28 22:48.I guess hocus didn't realize that he admitted to a major flaw in his New School methodology . . .
The historical data shows that there is a wide range of possibilities at all valuation levels, not just for those from P/E10 of 15 to P/E10 of 20. Valuations are the single most important factor; they are not the only factor.
This is quite an admission, hocus. Don't you see that this serves to undermine the validity of JWR's calculators?
This "wide range of possibilities" describes why statistical tests, like r^2, show that the historical data does not support the kinds of conclusions regarding SWRs that you and JWR espouse.
Email from William Bernstein
Submitted by Schroeder on Wed, 2007-12-26 10:46.One of hocus' favorite references is to William Bernstein's "fuggedaboudit". Ataloss recently posted the original quote from an email he received from Bernstein. LINK
the trinity study?? fuggedaboudit. the methodology is sound, but remember, there's a 7% real equity return embedded into it. who in the peanut gallery wants bet their retirement on that?
"No connection whatsoever between the SWR and the real rate of return"
Submitted by Schroeder on Wed, 2007-11-28 21:40.No connection? That's what hocus says. LINK
I think it's reasonable to believe that one's overall stash can grow by about 4 percent real per year plus any additions to saving. This is a very rough rule of thumb. People should be working their own numbers and coming up with more customized rules of thumb.
I am inclined today to suggest a higher number for those using the Valuation-Informed Indexing approach. I think that a Multiply-by-20 rule would work for a good number of aspiring early retirees. In general, though, it is better to underestimate your earnings than to overestimate them.
There is of course no connection whatsoever between the SWR and the real rate of return earned on all of your holdings. The idea that the two are the same thing is Goon Talk.
The Passive-Aggressive Patient
Submitted by Schroeder on Sat, 2007-11-03 12:29.This is a classic description of hocomania first written by poster BobSmith at early-retirement.org but now found at TMF. LINK
When I worked in a psychiatric setting I was on a treatment team consisting of physicians and other professionals. We always had one or two patients who behaved in a "passive-aggressive" manner. These folks consumed countless hours of our time. They irritated and frustrated others in countless small ways, but always stayed within the boundaries of socially acceptable behavior. They tended to be indirectly manipulative and would needle and prod their target repeatedly; always knowing what buttons to push. They tried to get the targeted person to explode. The passive-aggressive patient almost never crossed the line. They were usually very subtle, and almost ingratiatingly polite on the surface. When their target reacted in anger, the passive-aggressive patient would feign innocence and place the target into a position where it was almost impossible to explain why they reacted so strongly. They came off sounding petty and childish, which is just what the passive-aggressive patient intended. To the uninvolved observer, it often appeared that the person who blew up was overreacting, and the person behaving in a passive-aggressive style was a "victim." There was nothing more difficult than dealing with these folks, and I can recall adding up the hourly pay of all the people sitting around the table with me and thinking, "There's over $1000/hour worth of experienced and highly trained brain power sitting here trying to outmaneuver this passive-aggressive patient with a 6th grade education, and we're stumped".
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