Retirement Investment Summary

Research on Safe Withdrawal Rates

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JWR1945
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Retirement Investment Summary

Post by JWR1945 »

I have put this together to provide a short summary about my research efforts. I have restricted myself to two typewritten pages. This is meant to be sufficient to provide a lot of detail. It is not meant to evoke questions such as a sales pitch might. It does focus on the most important issues so that any questions that might result would be good ones.

These are some of our latest findings about retirement portfolios.
1. How much should we set aside? The traditional answers are still good, but they now have some important qualifiers. Set aside 25 times what you will need before taxes if you intend to withdraw a constant dollar amount (with increases to match inflation) every year. Set aside 20 times what you will need before taxes if you will allow your withdrawal amount to vary with your portfolio balance. In the first case, you will be withdrawing 4% of your portfolio's initial balance and increasing it to match inflation. In the second case, you will be withdrawing 5% of your portfolio's current balance, which is likely to fluctuate wildly.
2. What are behind those numbers? Those old answers were based upon using a low cost S&P 500 index fund and low cost cash equivalents (such as money market funds or short-term bond funds). WARNING: there are some index funds that charge high fees even though their costs are exceedingly low. In the analysis behind those numbers, it is usually assumed that the portfolio is re-balanced so as to maintain a constant stock allocation, BUT with no costs associated with re-balancing the portfolio. The stock allocation is generally high, around 50% to 80%. Such portfolios are expected to last thirty years based upon historical experience, with most growing much larger, but with some ending at zero dollars after thirty years. (If the withdrawals are a constant percentage of the current balance, the portfolio can never fall to zero, but it will be very small.)
3. What is new? The investments available during the historical period no longer exist. Stock prices are well above the historical range. Stock dividend yields are well below those of the historical period.
4. What have we learned? We can now identify the cause-and-effect relationships behind the old numbers. We know what causes retirement portfolios to fail and how to prevent it. We can spot problems very early. This allows us enough time to react. If we were to stick with the old guidelines without making any kind of adjustment whatsoever, you would have to reduce your withdrawal rate to 2% to maintain a high level of safety. We know how to look at investments other than the S&P 500 index. We have more flexibility.
5. What causes retirement portfolios to fail? Selling lots of shares when prices are low. Volatility is the killer. Another cause is not having a sufficient amount of stocks or some other growth vehicle in the portfolio. It is essential to have growth. It is not essential to have growth right away.
6. What prevents retirement portfolios from failing? Historically, it has been dividend yields. In the past, stock dividends have been 3% or higher except under the most extreme circumstances. You will notice that the 4% number is equal to the dividend yield plus a very small amount from selling shares. It was not necessary to sell many shares even in times of stress (the years 1959-1973 define the worst case, not the Great Depression). In fact, during the historical period, cash equivalents yielded considerably less than stocks (roughly one percent). Stock prices had to drop dramatically for anything else to look attractive.
7. What about today's dividend yields? They are increasing. But they remain very low, between 1% and 2%. To replicate the historical pattern, you would rely on dividends (close to 1%) plus a very small amount of selling. That means a 2% withdrawal rate.
8. What is new? What can we do? We can now coast through some very long periods when the stock market is unattractive. With long-term TIPS (Treasury Inflation Protected Securities), which are still available on the secondary market (i.e., through a broker) but no longer available directly from the Treasury Department, we can coast through 10 or 15 (or even 20) years, if necessary, until stock prices become attractive. Current yields are around 2.8% (the principal amount matches inflation so that the interest matches inflation as well). That keeps your principal close to 80% of its initial value for 15 years. Historically, that has been long enough for stocks to look attractive once again.
9. Isn't that market timing? Doesn't market timing always fail? Yes, technically it is market timing. But it is strictly founded on fundamental value. In this very narrowly defined sense, Benjamin Graham, Warren Buffett and Sir John Templeton have all engaged in market timing. Prices do matter. When you base your decisions on the long-term record of earnings and purchase for the long-term, you are not engaged in the kind of activity that fails. Technically, however, this is a form of market timing. The sensible form.
10. Why didn't the studies suggest this long ago? Today's market differs from the past in a very specific way: the non-volatile component (i.e., the dividends) used to yield more than the alternatives. (In part, this has been a limitation imposed by the models. It has not always been true about the choices available in the marketplace.) Today, the non-volatile component yields are much less than the alternatives.
11. What about alternative investment classes such as REITS and index funds for other than the S&P 500? What do you suggest in general? The key is to look at the non-volatile component (dividends) and the highly volatile (price) component separately. Most investors feel more comfortable in predicting dividends than they are when predicting prices, especially in the near-term (e.g., within five years). Meet your income needs primarily from dividends, but be sure to get some long-term growth. You need growth to make your portfolio last. If you are looking ten or more years into the future, you can predict stock prices well enough. But you must have enough to live on in the meantime. You must avoid heavy selling at low prices. Diversifying among substantially different asset classes can help by reducing volatility. Be sure that they are all attractive over the long-term. Avoid going to extremes. It makes no sense to invest with the expectation of losing money.
12. Are there any other helpful hints? Be very careful about expenses. Make sure to differentiate between dividends and a return of capital. A return of capital makes your income look bigger, but it reduces your principal. Be careful about taxes. If you are considering retirement before age 59 and a half and withdrawing substantially equal periodic payments (SEPP) penalty free, look into owning many IRAs. It is allowed. It gives you flexibility. Understand that what works when drawing out money is often the opposite of what works while accumulating it. Dollar cost averaging is great when you buy but lousy when you sell.
13. This is a final observation. Most retirees end up making good decisions even when there is no formal study that backs them up. Later studies will replace the earlier ones, but they will not replace the dollars lost.

Have fun.

John R.
Last edited by JWR1945 on Mon Mar 08, 2004 6:37 pm, edited 1 time in total.
hocus
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Post by hocus »

Wicked post!

I'm beginning to understand why there are so few willing to post at this place. Watching you post lately is like watching Bob Gibson pitch in 1968. Looking at it from a seat on the bench, it's a thing of beauty to behold. But who really wants to pick up a bat and walk to the plate and see it up close?

As for me, I don't have enough brains to know when I should be afraid. I just take my swings and see what happens. Maybe I'll get hit by a pitch, and then manage to steal second, third, and home, you know? These things happen.

I don't even wear a helmet sometimes!

Maybe it's too many years of me going without a helmet that is the cause of all this.

Anyway, wicked slider today, Bob!
peteyperson
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Post by peteyperson »

People are unwilling to post here because you're here hocus, no other reason.

P.S. I wouldn't say stock dividends are not volatile. They vary considerably and are more limited to large cap investments, those opting for slice and dice will have more limited dividends due to higher small-cap exposure with limited dividend payments. International and emerging market stock exposure may also limit the average dividend across a broadly diversified stock portfolio too.

Petey
hocus wrote:Wicked post!

I'm beginning to understand why there are so few willing to post at this place. Watching you post lately is like watching Bob Gibson pitch in 1968. Looking at it from a seat on the bench, it's a thing of beauty to behold. But who really wants to pick up a bat and walk to the plate and see it up close?

As for me, I don't have enough brains to know when I should be afraid. I just take my swings and see what happens. Maybe I'll get hit by a pitch, and then manage to steal second, third, and home, you know? These things happen.

I don't even wear a helmet sometimes!

Maybe it's too many years of me going without a helmet that is the cause of all this.

Anyway, wicked slider today, Bob!
hocus
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Post by hocus »

People are unwilling to post here because you're here hocus, no other reason.

It's not me personally that is the problem. It is what I am going to do about the disruptive posting tactics that keeps defenders of the conventional methodology away from this board. The people who don't post here don't post here because the word games and the ridicule posts don't work here. Engage in that nonsense here and you are going to get shut down, and everyone knows it.

Do you think that if one of the defenders of the conventional methodology came up with some reasoned data-based argument supporting his position, he wouldn't be posting it here in 10 seconds flat? You can count on it. Those trying honestly to make sense of this can draw their own conclusions from the fact that the group trying to defend the conventional methodology uses ugly debating tactics at the board at which they do discuss the business of this board, and at the same time refuse to post at the place where reasoned comments on those issues are welcomed.

I don't bite, Pete. If any of the defenders of the conventional methodology have any reasoned insights or observations to offer (or even just questions aimed at educating themselves on the issues), I welcome their participation, regardless of any tactics that they have engaged in in the past. If you have nothing but junk to offer, the board community that congregates here is better off if you post it someplace else.
JWR1945
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Post by JWR1945 »

For hocus:

Thank you for your very kind words. My write up was a result of a doctor's visit. He asked me what I had been up to and I mentioned retirement investment research. That got his attention. He wanted to know about anything major. I mentioned 4%, but that there are qualifiers, and that what kills retirement portfolios is volatility, specifically selling a lot of shares when prices are low. That was all that there was time for.

It used to be a lot simpler. Two sentences would have answered everything. We know more now. The next time that I see him, I will give him the write up. It contains vital information. It is short enough to be useful.

It is surprising to see how far we have advanced in such a short time. There have been a lot of contributions by a lot of people and a lot of steps, most of them very small. Taken together, they add up to a lot of progress.

It is sad to see that the disruptive element has been totally successful in destroying the context behind your own statements. Many people are innocent bystanders who have been misled. Oliver recently presented an excellent post that proved his point. Unfortunately, he also thought that he had disproved one of yours. He had acted according to the kind of context that a reasonable person should assume, absent clear warnings to the contrary. Because the disruptive element has been so successful, reasonable people are routinely assuming false and misleading information.

At some point, however, a failure to check out the details and to get the facts right amounts to recklessness. That does not apply most of the time.

Once again, I wish to make it clear that the summary was a compilation of the work of a lot of people. Most steps have been small steps. What I contribute is limited by my own skills. There are lots of other people who have skills that I do not possess and there are lots of people who can offer insights that I do not have.

Have fun.

John R.
peteyperson
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Post by peteyperson »

Well firstly I have to commend you on a short reply. I actually took the time to read it.

It seems you are trying to take the high road on why people don't post here often if at all. Fair enough - feel free. I am always happy to post where I am welcome and it won't be too frustrating an experience. However, your posting in general has become so erratic with so many very long off-topic posts that drains time & energy away from the main discussion that it no longer serves a useful purpose. It drowns out anything that might previously have been useful.

At present, you are the distruptor to other discussions not the other way around. People stay away because they want less of that. Your need for a confirmation that you have led the way in "discoveries" on SWR analysis and other FIRE topics just turns people off. Anyone claiming to work for the good of the community but wanting to claim credit for themselves is bound to frustrate others who feel that is operating in bad faith.

Petey
hocus wrote:People are unwilling to post here because you're here hocus, no other reason.

It's not me personally that is the problem. It is what I am going to do about the disruptive posting tactics that keeps defenders of the conventional methodology away from this board. The people who don't post here don't post here because the word games and the ridicule posts don't work here. Engage in that nonsense here and you are going to get shut down, and everyone knows it.

Do you think that if one of the defenders of the conventional methodology came up with some reasoned data-based argument supporting his position, he wouldn't be posting it here in 10 seconds flat? You can count on it. Those trying honestly to make sense of this can draw their own conclusions from the fact that the group trying to defend the conventional methodology uses ugly debating tactics at the board at which they do discuss the business of this board, and at the same time refuse to post at the place where reasoned comments on those issues are welcomed.

I don't bite, Pete. If any of the defenders of the conventional methodology have any reasoned insights or observations to offer (or even just questions aimed at educating themselves on the issues), I welcome their participation, regardless of any tactics that they have engaged in in the past. If you have nothing but junk to offer, the board community that congregates here is better off if you post it someplace else.
hocus
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Post by hocus »

It is surprising to see how far we have advanced in such a short time. There have been a lot of contributions by a lot of people and a lot of steps, most of them very small. Taken together, they add up to a lot of progress.

I agree completely..

This debate has demonstrated both the best of the new discussion board communications medium and the worst of new discussion board communications medium. You are right that the progress that has been achieved in 16 months is astounding. You are also right that it never could have been achieved by a few posters sitting alone in their rooms doing research and writing. It was achieved by a community of people sharing insights, commenting on the work of others, asking questions, and offering their own contributions. I made reference to this phenomenon in the title of one of my thread-starters at the REHP board (in my view this one was the best written post I have ever offered)--Community Rules!

It's because of the power of message boards to faciliate breakthoughs in learning that can only be achieved through community participation that I devote so much of my time to building such boards. I saw back in 1999 that the new communications medium could be put to powerful use in helping middle-class people learn how to achieve financial independence early in life. I was considering starting my own board at Motley Fool back then, and put the idea aside only when intercst elected to open the REHP board in May 1999. My decision then (after checking the rules to see that board founders did not possess any special powers to permit them to destroy a community that I built) was to employ my efforts building up the REHP board. It did not seem to me then that any constructive purpose would have been served by splitting the FIRE community in two through formation of a second board on the same subject, and I hold to that view today. Boards must allow for the expression of more than a single point of view, or theiy die (as can be seen by taking a look at what has happened to the REHP board of late--yesterday they were discussing bake sales, I kid you not!). Board communities that become cults of personality defending any crazy idea put forward by a board founder cannot achieve the sort of breakthroughs in learning that you refer to above.

The good side of the Great Debate is that we have been able to achieve amazing breakthroughs despite the efforts of Disruptors to block such efforts. We achieved great breakthroughs at the REHP board despite the nonsense posted there, we achieved great breakthroughs at the FIRE board despite the nonsense posted there, and we have achieved great breakthroughs here despite the nonsense posted here. My proposal is that we just continue doing that.

One thing that I think we need to do as this progresses is to post material at this board that helps someone like your doctor friend make sense of the SWR isssue. Your post yesterday was a wonderful illustration of the value of what I am suggesting here. By all means please continue with your original research, the power of which is going to receive the recognition in deserves when new voices are brought into this posting community. But if you have time (unfortunately I do not have much of that for the next few months at least), I hope that you will consider putting up some posts that sum up the progress that we have made over the past 16 months.

A good way to think about this is to ask yourself what would be the best way to respond to the sort of questions that your doctor was asking you. I have mentioned that I will be giving interviews and speechs and such when I am puiblicizing my book. Those sorts of efforts to spread the word on how to achieve financial independence early in life are going to generate questions on the realities of SWRs. It is not a good answer for us to tell newcomers to the debate to review the Post Archives, given the huge number of inaccurate claims that appear in the record. We need to sort out the honest and informed posts from the junk, and assemble the good stuff in reasonable bite-size pieces so that people trying to get a sense of why this debate is so important can do so in a short amount of time.

It was my original vision for this board for it to be a repository for posts containing lots of links to earlier posts that set forth important SWR insights. I did not think that it would be possible for us to focus on new research efforts until we built the board larger, and so I was thinking that our short-term focus would be setting the stage for the initiatives that I will be pursuing next year. I have been surprised and stunned and amazed and deeply gratified by the new research you have offered in the early months of this board's existence. Please don't hold back on any of that stuff on my account. But if you get to a point where you have some time open up for the other sorts of posts (posts summarizing earlier insights either through a narrative description or through a combination of narrative desription and links), please give some thought to doing some work of that type, in the even that you share my thought that it would be a constructive thing to do.

Anyway, we have seen the best of the new communications medium in the amazing insights that have been developed by the FIRE community during the past 16 months (led by me and you, but with many others offering a host of rich insights). We have also seen the worst of the new medium. The worst is the destruction that can be achieved by just a few bad apples seeking to impede a community's efforts to learn about the subject matter.

Intercst's motives in wanting to block reasoned discussions of SWRs are obvious-- he does not want to acknowledge getting the number wrong in his study. But the real process-side story here is not about intercst. It is about how the FIRE community has responded to intercst's con job. The community has responded in a way that has permitted a great deal of destruction to take place. The wonderful resournce that I built in 2000 has been burned to the ground because one poster put his personal desires above the needs of the community. Many fine posters became sickened by the nonsense and left the community. It took thousands of hours of my time to attract good posters to the board, and that work will need to be redone when I take over as Board General. I will do the work that needs to be done to bring that board to life, but I will never forget the lesson that we have learned about how message board communities operate over the course of the debate of the past 16 montns.

People who post on boards need to be protected from out-of-control posters. That is the most important lesson, in my view. Motley Fool promises to protect them (it's published rules state that intercst types "will not be tolerated" at its boards), but insincere promises obviously are not going to be enough to do the trick. If message boards are going to grow in the future, the posters who meet on them need to know how they are going to be protected from those who pour poison in the water supply. I have hopes that we may be able to use what has happened in the Great Debate to create interest in putting into place safeguards for message board posters.

I don't want to go into detail on the types of things I have in mind today. The time is not ripe. But my ambitions in this regard are big. I have hopes that we may be able to put in place a posting community-led entity that will have power to force Motley Fool to act to remove disruptive posters in circumstances in which they do great harm to the boards at which they post. My argument is that Motley Fool owns the boards in a legal sense, but that they have respon sibilities to the communities that populate the boards with constructive posts, and that the owners of Motley Fool have demonstrated that they cannot be trusted to enforce their posting rules in a responsible manner.

What I am saying here is that at the end of the day I do not believe that all we will have done is change the way that the world thinks about SWRs. I think that we will have also changed the way that they world thinks about how message boards should be run. There are times when bad things happen in the world. Man is a fallen creature, so it has always been true and it always will be true. It's the job of those who want to act constructively not to overact to the bad that happens (and thereby become part of the problem) but to make use of the bad to advance the long-term good. I believe that the ugliness we have witnessed over the course of the Great Debate can help us build a case for some wonderful advances in development of this new communications medium. I will be posting more on this aspect of the SWR board agenda early next year.

It is sad to see that the disruptive element has been totally successful in destroying the context behind your own statements.

Not totally, JWR1945. You' re still here.

That's sort of a joke. But the truth of the matter is that the wins of the disruptive element appear impressive only on the surface. Dig a little deeper, and you see that the big victories, the ones that count, have gone to the Information Seekers.

I ain't gonna win no popularity contest in the FIRE community today, that's for darn sure. So the disruptors were successful in taking the most loved poster in the history of the REHP board (the only possible exception being intercst) and making him an object of widespread scorn and abuse and attack and ridicule. That's a sort of victory, to be sure. They set out to do it, and it got done., So you can't take it away from them.

But where does it lead? That's the question that I keep going over in my head. Destoying confidence in the hocus insights by smearing hocus the poster is the short-term strategy. What is the long-term strategy?

My sense is that they do not have one. In the long term, it is the data that matters. The SWR concept is a data-driven concept. So long as that is true, data trumps opinion polls. We have the data on our side, so we are going to end up on top in the end. I don't see any other way that it can turn out.

The strategy mistake that people make is in thinking that a single board community constitutes the entire universe of people interested in the subject matter of the board. Intercst thorugh that if he could get the REHP board community to turn against me that he would be successful in blocking FIRE community efforts to learn about the realities of SWRs. It doesn't work that way. That community is but a subset of a larger community which I refert to as "the Wave." So is this one. It is the Wave that matters, not any one board community.

There are always people leaving a board community and people entering it. So long as you have the data and post archives needed to make your case successfully with the Wave, time is on your side. You can be outvoted 99 to 1, and it means little. A year later, you could win a vote that goes 199 to 99. A board that becomes insular and unwilling to hear minority viewpoints makes itself vulnerable to the force of those minority viewpoints as they become increasingly influential in the outside world.

Your doctor friend doesn't care one way or the other about intercst, I bet. What he cares about is whether the ideas you present to him will help him achieve his investing goals or not. That's how most people in the outside world are going to respond to our arguments. They are not going to say "hey, wait a minute, you can't say honest and informed things about SWRs, that might hurt intercst's feelings." They are going to say "this stuff you have come up with by looking at the historical data is great, why has no one else been providing these insights."

We are going to win the debate that will be held in the outside world, and then the outside world is going to show up at the doorsteps of the message boards that have tried to block out the message of the historical data and ask for an explanation. When they review the record, the outside world is going to impose change on those who resisted it for so long. You and me are on the right side of the history train, JWR1945. Intercst is on the wrong side. Intercst is going to get run over. Not because of anything that I do to make it happen. I might be able to speed that event up a little bit. But he is going to get run over because he got the number wrong in his study, and then he lied about it, and the people who want to know the truth about SWRs are not going to stand for it.

The only way that we could lose in the final chapter is if I am wrong in what I say about the Wave. My strategies are all rooted in the premise that there are a large number of middle-class people who want to know how to achieve financial independence early in life and who will help us in our efforts to build a place where reasoned discussions of the realities of SWRs is permitted. If there are not many people interested in that subject, then I have miscalculated and what I am saying here probably will not come to pass. I have good reasons for my beliefs about the Wave, however, and I think that I will be vindicated on this point, as I have on so many others that have been contested over the past 16 months. I don't form conclusion in important questions without first doing a lot of homework to find out the realities. I have done a lot of homework on the Wave, and I think that I understand it better than anyone else around.

When the Wave begins showing up at this site, I think you will see a different sort of board experience develop here. I haven't done a count, but my guess is that one-third or more of the board posted at the FIRE board relate in some way to the Great Debate on SWRs. If that debate is moved to this board because of the incapacity of that board to speak up to those who have made reasonsed debate there impossible, think that this board could become the biggest board on this site. We are small today, but that doesn't mean we will be small tomorrow. The great work that you are doing builds a foundation for something wonderdul that may be coming along in the not-too-distant future.

Something else that we might want to be thinking about is forming a new message board site. My view is that the more boards there are dealing with FIRE issues, the better; I don't like the feeling of having all my eggs in one basket. As noted above, I believe that message boards are going to be a big communications medium of the future, and I want to partiicpate in a big way in the growth of this medium. I have given some consideration to starting a new site that would be run according to rules that would protect the community posting there form the sort of events that have transpired at the REHP board and the FIRE board. Again, it's too early to go into a lot of detail. But you might want to be thinkiing about it in the back of your mind from time to time. If you have an interest in being a partner in the formation of such a site, I think it's a case where a partnership might work well. I am not saying that you would need to give up this site. As always, my goal would be to add something of value to the FIRE community, not to take something away. I do have some ideas that have not been tried at other sites to date that I think could generate some great work at a new board site, however.

Many people are innocent bystanders who have been misled.

That's certainly true on the substance questions. The SWR question is just complicated enough that it is possible through disruptive posting to cause a lot of confusion on the part of people who have not had the opportunity to study the issues as carefully as you and I have.

I am not so sure that this is so re the process questions, however. You do not need to be an expert on SWRs to know that a smear campaign is wrong and to know that all community members have a right to speak up when they see that sort of thing going on. My sense is that a lot of people fail to speak up because of what will be said about them if they do. Once it becomes clear that the majority will behave ruthlessly in blocking reasonsed debate, I think that people who have serious reservations about the tactics being used elect either to leave the board or to keep their mouths shut.

There are a good number of posters who made comments to this effect at the Motley Fool board. There were several post over there where posters asked that I be permitted to make my case without disruption, and those posts received large numbers of recs (sometimes 50 or 60 recs). Once the threats of physical viiolence were made against posters who posted honestly, you didn't see as much of that sort of thing. I think that was the point of those threats all along. I don't believe that Galeno ever actually intended to come after me and kill me because I showed that intercst got the number wrong in his study. I think he was trying to intimidate posters who had spoke up in my defense from doing so again. It's a low strategy (and a short term one), but it did succeed in making posters who has expressed a desire for a fair debate in the early days to keep theri mouths shut as the debate progressed. Lots of the best posters just left the board after the threats, of course, which also worked to the Disrupters' benefit by solidifying their control of the board.

reasonable people are routinely assuming false and misleading information.

That's why it is vital that rules apply at discussion boards. People were saying at the REHP board that it doesn't matter, that intercst should be permitted to put up as many deceptive posts as he wants and it is for the community to sort it out. I do not agree with this. The Motley Fool rules serve an important purpose. When a respected poster is claiming to be telling the community what the historical data says, and he is flat-out lying about a whole host of issues, it becomes impossible to hold a constructive discussion. The only way it would be possible would be if each and every community member took hours and hours to study the data independently.Then, the deceptions would blow up in the face of the poster putting them forward. But it is not reaosnable to expect that. It is up to the leaders of a board to insist on some minimal level of honesting in posting. When the leaders fail to do that, a board goes into decline. The leaders of both the REHP board and the FIRE board have let those boards down, in my view. They sat on their hands when they saw disruptive posting practices because they wanted the side engaging in the disruption to "win" the debate. In the long term, the preservation of board integrity is more important than which side wins. The board leaders in these two communities have put their short-term personal desires ahead of the long-term needs of the community as a whole, and much harm has been done to the respective communities as a result.

The bottom line on this is that the Great Debate has been the best of debates and the Great Debate has been the worst of debates. We should take the good stuff that has come out of it and spread the word to as much of the world as we can reach in these days of quick and broad electronic communication of valuation information. As for the bad stuff, I think we should just try to make the best of a bad situation and learn what we can from the experience. A board community that elects to go from a good place to a bad place can elect just as easily to go from a bad place to a good place. We just have to be patient and wait for that to happen, in the event that it is going to happen. Two people cannot force a board community to turn around through the force of their words, no matter how powerful those words are or how many of them (!) are transmitted to the computer screen.

The community is not just the Information Seekers and the community is not just the Disruptors. The community is both. It may seem at times that the one group has nothing to do with the other, but that is never entirely true. Even those who break a community's rules are part of the community. When crimes are committed, the community needs to work out a way to deal with those crimes. What has happened here is that intercst has committed a crime, and the community of people who were damaged by it is struggling with what to do in response. As of today, most in the community are still putting their fingers in their ears and saying "I don't want to hear about any crimes, that's not what I come here for."

It's not what any of us come here for, of course. Nonetheless, the crime happened. Pretending it did not changes not a thing. In time that must be recognized. The damage done by the crime contines to spread until the community works up the nerve to take steps. In time, I am confident that the community will do the right thing. If the small community doesn't, the larger one will.

The Wave will not be denied!
hocus
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Post by hocus »

I am always happy to post where I am welcome and it won't be too frustrating an experience.

Then you should be posting here like a madman, Pete.

The issue are as important as can be, and JWR1945 and I could use the company.

The thing about your posting behavior that baffles me is that you say over and over again that you want to direct your energies to substance stuff and remove yourself from the process stuff and yet nine times out of ten you incorporate some little zinger that misleads the community that congregates here about the history of the Great Debate.

Include a disruptive comment in your post, and you will get called on it here, Pete. It's my job to point those sorts of things out.

Leave out the junk, and you can post here to your heart's content and hardly ever even hear from me. It is possible that at some future data I will be joining the debates on substance, but the process stuff has consumed most of my energies for a long time. So if you stuck to substance, it would be be about the same as me not even being here.

I think you are sincere when you say that you want to focus on substance. So I wish that you would actually do so in the posts that you add to the board. Everyone would be better off if you would follow that course of action, in my view.

However, your posting in general has become so erratic with so many very long off-topic posts that drains time & energy away from the main discussion that it no longer serves a useful purpose. It drowns out anything that might previously have been useful.

If you have an example of a post that concerns you, please provide a link and we can discuss it. I have never posted a disruptive post. I have never engaged in word games or riducle. That sort of stuff is against my posting religion.

I have responded to smears and will continue to do so. It may be that the post you are thinking of is one where the poster was smearing me, and because you have not been able to follow the discussions from the beginning (few have been able to do so), you are not even aware of the naure of the smear. If you put up the post, and describe the nature of your concerns, I can respond in a constructive manner. If you make these sorts of criticisms of my posts without offering any example of the sort of problem that you are concerned about, you are engaging in a smear yourself.

I will state it as clearly as it can possibly be stated. I have never engaged in a non-constructive posting practice in my posting career. I never did it at the REHP board, I never did it at the FIRE board, and I never did it here. If there is anyone in this community who intends to say different, he or she is under a responsibility to this community to back up their assertions by pointing to the probmlemmatic post. If they are unable to do so, they are engaging in smears, and the community should take the appropriate steps to put an end to that sort of thing.

People stay away because they want less of that.

I agree with you that people want less of the ugliness. The problem is that "staying away" does not solve the problem. The only way that smears can be stopped is by concerned community members speaking up to the posters engaging in them and asking that they knock off the funny business. There is no other way.

When you instead "stay away" from constructive discussions as the result of the smears, you do not punish the poster who posted the smear. You instread punish the community trying to learn about the subject matter of the board. Your punishments are headed in the wrong direction,. Pete. It is not those who are aiming to steer the debate toward honest and informed posting who need to be punished.

Your need for a confirmation that you have led the way in "discoveries" on SWR analysis and other FIRE topics just turns people off.

I don't need any confirmation from you or anyone else re my contributions to this debate, Pete. I know perfectly well who has been the leader, and which posters have been sitting on their hands when disruptive posts have proliferated.

I offered the FIRE board community an easy way out of a sensitive problem that it was facing. Ataloss has been a respected and popular poster at this site in the past. He engaged in unacceptable posting practices during the SWR debate, putting up a host off word game posts and ridicule posts. He ultimately said flat out that he refused to be bound by any one definition of the term "SWR," that he would continue his disruptive practive of using a different defintion from post to post to post, so that reasoned debate on that board on this subject became impossible.

It was the responsibility of community members concerned for the long-term success of that board to speak up at that time. My sense was that they were relunctant to do so directly because they did not want to say difficult things to their long-time friend. When JWR1945 put up the post showing that the data had vinvidated me in my claims, I saw an easy way out. People could thank me for hanging in there, the implication would be clear that they didn't want to see any more of the funny stuff, and even Ataloss would have had a face-saving way out of the mess he has created open up to him. He could just say that he was not aware previously that the data had supported me so strongly, and that now he regretted the ridicule posts he had put up. I could say "oh, that's fine, why don't we just go about talking about the issues now that we are all on the same page" and the ugliness would have been put behind us.

There is a reason why Captain Kangero told us that please and thank you are magic words, Pete. They have great powers to ease social interaction. When a wrong has been done, it can be patched up by saying "thank you."

If you don't want to say it, please don't say it. I offered you a constructive path to take> If you don't want one, you don't want one. You might want to ask yourself why the idea of taking a constructive path causes so much hostility to well up inside you. There is something that is going on that is causing that, Pete and it would be in your own best interests for you to come to terms with it, in my view.

Anyone claiming to work for the good of the community but wanting to claim credit for themselves is bound to frustrate others who feel that is operating in bad faith.

We just diagree on this point. The group that is defending the convetional methodology has no reasonable claims or data on which to base its arguments. All the data supports me.

So they have been left with few appealing options in holding up their end of the debate. The option they have elected is to smear the poster who put forth the insights, and thereby aim to diminish the community's confidence in the insights itself.

That is a strategy that does harm to the community's ability to make sense of the issues.The reality is that it was my post that kicked off the Great Debate, and that I have been the leader from the first day of the side asking that reasoned debate on the issues be permitted. The FIRE community has a right to be informed of this reality when posters engage in tactics aimed at confusing it about the issues.

I will continue to put up honest and informed posts on the issues raised in the course of the debate, whether those issues involve data or attacks on the persons participating in the debate. My preference is for discussion of data and issues. But I do not decide what issues are raised by other posters. When posters elect to deceive the community about the work done by other posters, I will do what I can to correct the record so that those interested in making sense of the issues may do so.

If you want to become recongnized as a leader in this debate, the way to do it is to build up your own reputation, Pete, not to tear down the reputations of those who came on the scene long before you. Building up yourself is constructtive. Tearing down others on the thought that that will somehow make the scales more "even," is destructive.

I ask that posters contributing at this board make a serious effort to do so in a constructive manner. We have seen enough of the desstructive stuff at the two earlier boards that have played host to the Great Debate on SWRS.
peteyperson
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Post by peteyperson »

13 bolded intercst references in a single post.

Is that a record?
hocus wrote:It is surprising to see how far we have advanced in such a short time. There have been a lot of contributions by a lot of people and a lot of steps, most of them very small. Taken together, they add up to a lot of progress.

I agree completely..

This debate has demonstrated both the best of the new discussion board communications medium and the worst of new discussion board communications medium. You are right that the progress that has been achieved in 16 months is astounding. You are also right that it never could have been achieved by a few posters sitting alone in their rooms doing research and writing. It was achieved by a community of people sharing insights, commenting on the work of others, asking questions, and offering their own contributions. I made reference to this phenomenon in the title of one of my thread-starters at the REHP board (in my view this one was the best written post I have ever offered)--Community Rules!

It's because of the power of message boards to faciliate breakthoughs in learning that can only be achieved through community participation that I devote so much of my time to building such boards. I saw back in 1999 that the new communications medium could be put to powerful use in helping middle-class people learn how to achieve financial independence early in life. I was considering starting my own board at Motley Fool back then, and put the idea aside only when intercst elected to open the REHP board in May 1999. My decision then (after checking the rules to see that board founders did not possess any special powers to permit them to destroy a community that I built) was to employ my efforts building up the REHP board. It did not seem to me then that any constructive purpose would have been served by splitting the FIRE community in two through formation of a second board on the same subject, and I hold to that view today. Boards must allow for the expression of more than a single point of view, or theiy die (as can be seen by taking a look at what has happened to the REHP board of late--yesterday they were discussing bake sales, I kid you not!). Board communities that become cults of personality defending any crazy idea put forward by a board founder cannot achieve the sort of breakthroughs in learning that you refer to above.

The good side of the Great Debate is that we have been able to achieve amazing breakthroughs despite the efforts of Disruptors to block such efforts. We achieved great breakthroughs at the REHP board despite the nonsense posted there, we achieved great breakthroughs at the FIRE board despite the nonsense posted there, and we have achieved great breakthroughs here despite the nonsense posted here. My proposal is that we just continue doing that.

One thing that I think we need to do as this progresses is to post material at this board that helps someone like your doctor friend make sense of the SWR isssue. Your post yesterday was a wonderful illustration of the value of what I am suggesting here. By all means please continue with your original research, the power of which is going to receive the recognition in deserves when new voices are brought into this posting community. But if you have time (unfortunately I do not have much of that for the next few months at least), I hope that you will consider putting up some posts that sum up the progress that we have made over the past 16 months.

A good way to think about this is to ask yourself what would be the best way to respond to the sort of questions that your doctor was asking you. I have mentioned that I will be giving interviews and speechs and such when I am puiblicizing my book. Those sorts of efforts to spread the word on how to achieve financial independence early in life are going to generate questions on the realities of SWRs. It is not a good answer for us to tell newcomers to the debate to review the Post Archives, given the huge number of inaccurate claims that appear in the record. We need to sort out the honest and informed posts from the junk, and assemble the good stuff in reasonable bite-size pieces so that people trying to get a sense of why this debate is so important can do so in a short amount of time.

It was my original vision for this board for it to be a repository for posts containing lots of links to earlier posts that set forth important SWR insights. I did not think that it would be possible for us to focus on new research efforts until we built the board larger, and so I was thinking that our short-term focus would be setting the stage for the initiatives that I will be pursuing next year. I have been surprised and stunned and amazed and deeply gratified by the new research you have offered in the early months of this board's existence. Please don't hold back on any of that stuff on my account. But if you get to a point where you have some time open up for the other sorts of posts (posts summarizing earlier insights either through a narrative description or through a combination of narrative desription and links), please give some thought to doing some work of that type, in the even that you share my thought that it would be a constructive thing to do.

Anyway, we have seen the best of the new communications medium in the amazing insights that have been developed by the FIRE community during the past 16 months (led by me and you, but with many others offering a host of rich insights). We have also seen the worst of the new medium. The worst is the destruction that can be achieved by just a few bad apples seeking to impede a community's efforts to learn about the subject matter.

Intercst's motives in wanting to block reasoned discussions of SWRs are obvious-- he does not want to acknowledge getting the number wrong in his study. But the real process-side story here is not about intercst. It is about how the FIRE community has responded to intercst's con job. The community has responded in a way that has permitted a great deal of destruction to take place. The wonderful resournce that I built in 2000 has been burned to the ground because one poster put his personal desires above the needs of the community. Many fine posters became sickened by the nonsense and left the community. It took thousands of hours of my time to attract good posters to the board, and that work will need to be redone when I take over as Board General. I will do the work that needs to be done to bring that board to life, but I will never forget the lesson that we have learned about how message board communities operate over the course of the debate of the past 16 montns.

People who post on boards need to be protected from out-of-control posters. That is the most important lesson, in my view. Motley Fool promises to protect them (it's published rules state that intercst types "will not be tolerated" at its boards), but insincere promises obviously are not going to be enough to do the trick. If message boards are going to grow in the future, the posters who meet on them need to know how they are going to be protected from those who pour poison in the water supply. I have hopes that we may be able to use what has happened in the Great Debate to create interest in putting into place safeguards for message board posters.

I don't want to go into detail on the types of things I have in mind today. The time is not ripe. But my ambitions in this regard are big. I have hopes that we may be able to put in place a posting community-led entity that will have power to force Motley Fool to act to remove disruptive posters in circumstances in which they do great harm to the boards at which they post. My argument is that Motley Fool owns the boards in a legal sense, but that they have respon sibilities to the communities that populate the boards with constructive posts, and that the owners of Motley Fool have demonstrated that they cannot be trusted to enforce their posting rules in a responsible manner.

What I am saying here is that at the end of the day I do not believe that all we will have done is change the way that the world thinks about SWRs. I think that we will have also changed the way that they world thinks about how message boards should be run. There are times when bad things happen in the world. Man is a fallen creature, so it has always been true and it always will be true. It's the job of those who want to act constructively not to overact to the bad that happens (and thereby become part of the problem) but to make use of the bad to advance the long-term good. I believe that the ugliness we have witnessed over the course of the Great Debate can help us build a case for some wonderful advances in development of this new communications medium. I will be posting more on this aspect of the SWR board agenda early next year.

It is sad to see that the disruptive element has been totally successful in destroying the context behind your own statements.

Not totally, JWR1945. You' re still here.

That's sort of a joke. But the truth of the matter is that the wins of the disruptive element appear impressive only on the surface. Dig a little deeper, and you see that the big victories, the ones that count, have gone to the Information Seekers.

I ain't gonna win no popularity contest in the FIRE community today, that's for darn sure. So the disruptors were successful in taking the most loved poster in the history of the REHP board (the only possible exception being intercst) and making him an object of widespread scorn and abuse and attack and ridicule. That's a sort of victory, to be sure. They set out to do it, and it got done., So you can't take it away from them.

But where does it lead? That's the question that I keep going over in my head. Destoying confidence in the hocus insights by smearing hocus the poster is the short-term strategy. What is the long-term strategy?

My sense is that they do not have one. In the long term, it is the data that matters. The SWR concept is a data-driven concept. So long as that is true, data trumps opinion polls. We have the data on our side, so we are going to end up on top in the end. I don't see any other way that it can turn out.

The strategy mistake that people make is in thinking that a single board community constitutes the entire universe of people interested in the subject matter of the board. Intercst thorugh that if he could get the REHP board community to turn against me that he would be successful in blocking FIRE community efforts to learn about the realities of SWRs. It doesn't work that way. That community is but a subset of a larger community which I refert to as "the Wave." So is this one. It is the Wave that matters, not any one board community.

There are always people leaving a board community and people entering it. So long as you have the data and post archives needed to make your case successfully with the Wave, time is on your side. You can be outvoted 99 to 1, and it means little. A year later, you could win a vote that goes 199 to 99. A board that becomes insular and unwilling to hear minority viewpoints makes itself vulnerable to the force of those minority viewpoints as they become increasingly influential in the outside world.

Your doctor friend doesn't care one way or the other about intercst, I bet. What he cares about is whether the ideas you present to him will help him achieve his investing goals or not. That's how most people in the outside world are going to respond to our arguments. They are not going to say "hey, wait a minute, you can't say honest and informed things about SWRs, that might hurt intercst's feelings." They are going to say "this stuff you have come up with by looking at the historical data is great, why has no one else been providing these insights."

We are going to win the debate that will be held in the outside world, and then the outside world is going to show up at the doorsteps of the message boards that have tried to block out the message of the historical data and ask for an explanation. When they review the record, the outside world is going to impose change on those who resisted it for so long. You and me are on the right side of the history train, JWR1945. Intercst is on the wrong side. Intercst is going to get run over. Not because of anything that I do to make it happen. I might be able to speed that event up a little bit. But he is going to get run over because he got the number wrong in his study, and then he lied about it, and the people who want to know the truth about SWRs are not going to stand for it.

The only way that we could lose in the final chapter is if I am wrong in what I say about the Wave. My strategies are all rooted in the premise that there are a large number of middle-class people who want to know how to achieve financial independence early in life and who will help us in our efforts to build a place where reasoned discussions of the realities of SWRs is permitted. If there are not many people interested in that subject, then I have miscalculated and what I am saying here probably will not come to pass. I have good reasons for my beliefs about the Wave, however, and I think that I will be vindicated on this point, as I have on so many others that have been contested over the past 16 months. I don't form conclusion in important questions without first doing a lot of homework to find out the realities. I have done a lot of homework on the Wave, and I think that I understand it better than anyone else around.

When the Wave begins showing up at this site, I think you will see a different sort of board experience develop here. I haven't done a count, but my guess is that one-third or more of the board posted at the FIRE board relate in some way to the Great Debate on SWRs. If that debate is moved to this board because of the incapacity of that board to speak up to those who have made reasonsed debate there impossible, think that this board could become the biggest board on this site. We are small today, but that doesn't mean we will be small tomorrow. The great work that you are doing builds a foundation for something wonderdul that may be coming along in the not-too-distant future.

Something else that we might want to be thinking about is forming a new message board site. My view is that the more boards there are dealing with FIRE issues, the better; I don't like the feeling of having all my eggs in one basket. As noted above, I believe that message boards are going to be a big communications medium of the future, and I want to partiicpate in a big way in the growth of this medium. I have given some consideration to starting a new site that would be run according to rules that would protect the community posting there form the sort of events that have transpired at the REHP board and the FIRE board. Again, it's too early to go into a lot of detail. But you might want to be thinkiing about it in the back of your mind from time to time. If you have an interest in being a partner in the formation of such a site, I think it's a case where a partnership might work well. I am not saying that you would need to give up this site. As always, my goal would be to add something of value to the FIRE community, not to take something away. I do have some ideas that have not been tried at other sites to date that I think could generate some great work at a new board site, however.

Many people are innocent bystanders who have been misled.

That's certainly true on the substance questions. The SWR question is just complicated enough that it is possible through disruptive posting to cause a lot of confusion on the part of people who have not had the opportunity to study the issues as carefully as you and I have.

I am not so sure that this is so re the process questions, however. You do not need to be an expert on SWRs to know that a smear campaign is wrong and to know that all community members have a right to speak up when they see that sort of thing going on. My sense is that a lot of people fail to speak up because of what will be said about them if they do. Once it becomes clear that the majority will behave ruthlessly in blocking reasonsed debate, I think that people who have serious reservations about the tactics being used elect either to leave the board or to keep their mouths shut.

There are a good number of posters who made comments to this effect at the Motley Fool board. There were several post over there where posters asked that I be permitted to make my case without disruption, and those posts received large numbers of recs (sometimes 50 or 60 recs). Once the threats of physical viiolence were made against posters who posted honestly, you didn't see as much of that sort of thing. I think that was the point of those threats all along. I don't believe that Galeno ever actually intended to come after me and kill me because I showed that intercst got the number wrong in his study. I think he was trying to intimidate posters who had spoke up in my defense from doing so again. It's a low strategy (and a short term one), but it did succeed in making posters who has expressed a desire for a fair debate in the early days to keep theri mouths shut as the debate progressed. Lots of the best posters just left the board after the threats, of course, which also worked to the Disrupters' benefit by solidifying their control of the board.

reasonable people are routinely assuming false and misleading information.

That's why it is vital that rules apply at discussion boards. People were saying at the REHP board that it doesn't matter, that intercst should be permitted to put up as many deceptive posts as he wants and it is for the community to sort it out. I do not agree with this. The Motley Fool rules serve an important purpose. When a respected poster is claiming to be telling the community what the historical data says, and he is flat-out lying about a whole host of issues, it becomes impossible to hold a constructive discussion. The only way it would be possible would be if each and every community member took hours and hours to study the data independently.Then, the deceptions would blow up in the face of the poster putting them forward. But it is not reaosnable to expect that. It is up to the leaders of a board to insist on some minimal level of honesting in posting. When the leaders fail to do that, a board goes into decline. The leaders of both the REHP board and the FIRE board have let those boards down, in my view. They sat on their hands when they saw disruptive posting practices because they wanted the side engaging in the disruption to "win" the debate. In the long term, the preservation of board integrity is more important than which side wins. The board leaders in these two communities have put their short-term personal desires ahead of the long-term needs of the community as a whole, and much harm has been done to the respective communities as a result.

The bottom line on this is that the Great Debate has been the best of debates and the Great Debate has been the worst of debates. We should take the good stuff that has come out of it and spread the word to as much of the world as we can reach in these days of quick and broad electronic communication of valuation information. As for the bad stuff, I think we should just try to make the best of a bad situation and learn what we can from the experience. A board community that elects to go from a good place to a bad place can elect just as easily to go from a bad place to a good place. We just have to be patient and wait for that to happen, in the event that it is going to happen. Two people cannot force a board community to turn around through the force of their words, no matter how powerful those words are or how many of them (!) are transmitted to the computer screen.

The community is not just the Information Seekers and the community is not just the Disruptors. The community is both. It may seem at times that the one group has nothing to do with the other, but that is never entirely true. Even those who break a community's rules are part of the community. When crimes are committed, the community needs to work out a way to deal with those crimes. What has happened here is that intercst has committed a crime, and the community of people who were damaged by it is struggling with what to do in response. As of today, most in the community are still putting their fingers in their ears and saying "I don't want to hear about any crimes, that's not what I come here for."

It's not what any of us come here for, of course. Nonetheless, the crime happened. Pretending it did not changes not a thing. In time that must be recognized. The damage done by the crime contines to spread until the community works up the nerve to take steps. In time, I am confident that the community will do the right thing. If the small community doesn't, the larger one will.

The Wave will not be denied!
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