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Outsider's Perspective: Beware The Assumptions!

 
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Crestmont
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PostPosted: Wed Jul 30, 2003 4:22 am    Post subject: Outsider's Perspective: Beware The Assumptions! Reply with quote

A. Models are only as good as their assumptions.
B. Valid assumptions are not always good ones.
C. A perfect model with perfect assumptions is rarely valid over the long term.

First, thanks to all that have participated and posted in this board on the subject of SWR. The postings are quite informative and insightful. We were set to visit in open discussion about our research on the financial markets next week. Since it has been postponed, I'd like to offer a few comments to assist all in the consideration of the issues that have been raised. As well, based upon a solid investigation of SWR, there are a few additional comments. 'Hocus', 'JWR1945', and others are right: valuation does matter toward future returns in the stock market. For what it's worth, valuation always affects future returns in any financial instrument or model (by definition). If you'll read on, there are other issues that matter more...


There has not been an extended period over the past century or more when history can be said to fully repeat itself. Said another way: if an analyst had used historical data before 1950 or before 1975 or before 2000 to estimate what could have been expected over the subsequent 25 years or so, the forecasted scenarios would not have happen exactly as expected. Several key considerations to consider about the using the historical data since the late 1800's as the full analysis set:

1. Prior to the 1960's, interest rates and inflation were not aligned and were inconsistent - after 1960 or so, the relationship is much more consistent (as one would expect fundamentally). [see http://www.crestmontresearch.com/pdfs/i%20rate%20relationship.pdf]

2. P/E ratios relate to inflation, not to interest rates. This will explain some of the perceived anomalies over the past century. [see http://www.crestmontresearch.com/pdfs/Stock%20Inflation%20&%20PE.pdf]

3. Stock market returns tend to occur in cycles: P/Es rise when inflation heads toward price stability; EPS (earnings) are fairly constant with the economy over longer periods; therefore stock returns are dependant upon positive trends in P/Es (i.e. inflation trending toward 1%) and suffer when P/Es fall.

4. We are currently in a period of (a) high P/E valuations. (b) low interest rates, and (c) low inflation - significant "Vulnerability" for financial markets and securities. If inflation declines much further (deflation), P/E's will fall. If inflation rises, P/E's will fall as well. The prospects for significant gains in the stock market this decade are dismal (P/Es are likely to decline slightly as EPS increases, with a net result being a very choppy and relatively flat market).

5. CLOSELY NOTE: When using historical data about the stock market and cash returns (especially during the early 1900's), note the substantial dividend yield and cash returns (the commercial paper rate is used in some popular SWR models). Today, dividend yields and cash yields are significantly lower than the early part of the 20th century. High dividends and cash yields sustain a higher SWR. This was particularly true in the earlier parts of the 1900's and enables the hypothetical investor in SWR models to endure large market swings. Without the same level of current cash flow, the SWR models have significantly different results.

6. BIG PICTURE: SWR seems to be about how much a retiree can withdraw from savings without running out of principal over a prescribed long term period. If stocks are destined for mediocre returns (maybe none over the next decade or so) and other sources of income imbedded in the historical data (i.e. dividends, interest, etc.) are substantially less today, how can retirees hope to fund relatively higher withdrawals (4%+)?

7. Transaction Costs: the assumptions in most SWR models that I've evaluated assume index returns - without regard for transaction costs, asset management fees, commissions, bid/ask spreads, taxes, etc. There costs can be material - bake them in as well - and total transaction costs often run 1% to 3% annually or more.

8. Techniques: seek advice from an independent financial advisor about techniques to deal with non-trending markets. The stock and bond bull markets of the 1980's and 1990's were trending markets and benefited from "buy-and-hold" and "buy-on-dips" strategies. The next phase could be another secular bear cycle (see http://www.crestmontresearch.com/pdfs/Stock%20Secular%20Chart.pdf). Note the difference in secular bull and secular bear periods. Ask your advisor about the effect of more frequent rebalancing, covered call option writing, higher yielding preferred stocks and other securities with higher current return, TIPS, hedge funds, and other risk-controlled and value-added investment strategies.

Please consider reviewing our research at www.CrestmontResearch.com relating to stock market cycles, long-term returns, and interest rate cycles. For each of the charts with links listed above, you'll find a brief description within the Stock Market and Interest Rate sections. We welcome your insights and perspectives to further the research. Our analysis is not above challenge: I welcome it. It has not gotten to were it is today without challenge. All along, I've hoped for rational insights that would support strong upside potential in the financial markets. To date, the results instead have been rather sobering. Our research is not intended to generate predictions; rather it is intended to be provocative and enlightening. Hope it's helpful; there's no cost and it's free of banner ads. I welcome your comments, questions, and persepctives either in reponse to this posting or through our website.

Unlike Bill Murray in "Groundhog Day", we don't get another chance to replay our retirement scenario. The risk for a retiree of an error in applying an SWR strategy is serious: you only find out that the assumptions were insufficient when it's too late to change the course. Accolades to all that are advancing these issues for their and others insights. SWR is a rational methodology for applying financial planning to long-term retirement using investments as the primary source of income - beware the assumptions.

Ed Easterling
Crestmont Research

hocus wrote:
"The special event discussion with Ed Easterling on SWR-related issues, that had been scheduled for August 6, has been canceled.
It is my hope that the event will be re-scheduled for some later date"


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hocus
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PostPosted: Wed Jul 30, 2003 6:16 am    Post subject: Reply with quote

Hocus', 'JWR1945', and others are right: valuation does matter toward future returns in the stock market.

Thanks for saying that, Crestmont. I had a feeling that I was onto something with this thing.

Our analysis is not above challenge: I welcome it. It has not gotten to where it is today without challenge.

This is a comment to which I relate strongly. My work on SWRs has been subject to intense challenge. My confidence in my SWR claims is far stronger today than it was 14 months ago. I'm not saying that I would have elected to be put through this. But it has been a good way of finding out whether the claims that I have put forward can withstand serious scrutiny. I don't have too many worries at this point about taking my claims to far larger groups. It's hard for me to imagine that there are too many questions that could be posed to me that I haven't already had to cope with in the 14 months of The Great Debate. And it doesn't seem likely that the tone of debate could be much more harsh than it has been in the 14 months of discussion we have had at the two discussion board sites.

Re the Special Event Discussion with Crestmont (Ed Easterling):

Crestmont and I have exchanged a few e-mails on this over the past few days. Shortly after he put up this post, we agreed to a re-formulated approach for the special event discussion.

We will have the discussion at this board ("SWR Research Group") rather than at a non-moderated NFB board. That will permit me to delete any posts that send the discussion off track of its purpose, learning about patterns in long-term stock performance and any possible bearing that has on the calculation of SWRs.

The discussion will be held on the same day as planned--Wednesday, August 6, and will be for two hours. We have moved the start time to 10:00 am Eastern Standard time.

All community members at the FIRE board, the Index Funds board, and the Motley Fool REHP board are welcome to participate.

I am looking forward to the event. I think we might be able to trade some ideas that will help the FIRE community come to a richer understanding of the data on long-term stock returns. It would be great, in my view, if insights that we have to offer on the SWR matter served to help Crestmont in the research that he has been doing on the more general topic of long-term stock returns.


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peteyperson
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PostPosted: Wed Jul 30, 2003 9:47 am    Post subject: Reply with quote

Mr Easterling,

I would like to ask you to move the discussion of FIRE-related strategies including withdrawal rates to the general FIRE board.

http://nofeeboards.com/boards/viewforum.php?f=2

Many people here dislike or disagree with Rob Bennett aka hocus sufficiently that they don't post or even view his moderated board. Frankly, they object to his attitude and prefer a broader uncontrolled discussion.

The idea of asking people from various investment backgrounds to join our discussion was intended to broaden the discussion and not limit it, hence my relocation suggestion. I would also suggest that the planned meeting also be moved back to the FIRE board so that everyone who use the NoFeeBoards may benefit and not just a select few.

Warm regards,
Pete

Crestmont wrote:
A. Models are only as good as their assumptions.
B. Valid assumptions are not always good ones.
C. A perfect model with perfect assumptions is rarely valid over the long term.


Ed Easterling
Crestmont Research


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Crestmont
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PostPosted: Wed Jul 30, 2003 10:33 am    Post subject: Reply with quote

Petey,

From perusing the FIRE board, it appears that our research would be consistent with its discussions as well. I'll post a note similar to the one composed below.

Although hocus's passion and intensity may rub some as a little rough, he does seem quite sincere in his desire to understand and expose some of the shortcomings and vulnerabilities of SWR. His diligence, persistence, and leadership is a positive; though I'd probably as well rather not see censorship unless the postings are maliciously disruptive. We should give the benefit of the doubt that it is what he intends.

I think that it would be appropriate to maintain a thread of discussion on the SWR Research Group board and to participate in the discussion forum next week. Whether FIRE members choose to particpate or avoid the discussion, I assume that they could review it afterwards. That would not preclude involvement in other NFB sections or other boards.

Hocus has exposed me to the SWR issue and debate and has done a great job of explaining the issues and framing several of the sides of opinion. It's an intriguing issue in the context of Crestmont's research. Though I'm not in the position to become an active participant on any board, I'm certainly willing to present our research, solicit insights and perspectives, and participate in forum discussions.

All the best,

Ed


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hocus
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PostPosted: Wed Jul 30, 2003 11:47 am    Post subject: Reply with quote

Many people here dislike or disagree with Rob Bennett aka hocus sufficiently that they don't post or even view his moderated board. Frankly, they object to his attitude

To add some perspective to your comments above, here is a link to a post of yours from pre-March 13, 2002, Petey.

http://boards.fool.com/Message.asp?mid=13361855

You say here: "I have five posts that I have printed out, that resonated for me. Two in the Retire Early board and three from the LBYM board.
What I want to do is link to them so y'all can have a look and then perhaps request that the community join in, adding their suggestions and recommend the ones they like the most.... we would be collecting what everyone thinks are the best / most helpful posts. Clear? Smile
Okay, so the first two posts come from hocus of the Retire Early board (who else?)"

I am the same guy now that I was then, Petey. I was intense about finding ways to help people achieve financial independence early in life then, and I am intense about it now. You know what? I couldn't do what I do without being intense. It's the intensity that makes it happen.

The poster is the same. The topic to which the poster addresses himself has changed. That has made a big difference, and the reasons why it has made a big difference are part of the story we need to tell here.

This is not the time. But it's something we all should be pondering in the backs of our minds. The reaction to the May 13, 2002, post is a big part of the story.

The story is an important one, Petey, and I hope you play a role in unraveling it. I can't force you to do so. I can only ask and hope. I do ask and I do hope. As intense as I am, that's all that it is in my power to do.


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peteyperson
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PostPosted: Wed Jul 30, 2003 1:16 pm    Post subject: Reply with quote

Hocus,

You may be the same man, but your posts do not carry the same interest for others that they once did. The posts tend to be verbose without conveying anything meaningful for the extra length, creative arguements often instead of reasoned discussion and increasingly come from a single fixed position. These are just some of the reasons that many will not join your board and since your insulting behavior, more have left.

This is why I appealed for the widest possible discussion on a board where everyone would participate.

Petey

hocus wrote:
I am the same guy now that I was then, Petey. I was intense about finding ways to help people achieve financial independence early in life then, and I am intense about it now. You know what? I couldn't do what I do without being intense. It's the intensity that makes it happen.


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peteyperson
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PostPosted: Wed Jul 30, 2003 1:41 pm    Post subject: Reply with quote

Hi Ed.,

Many posters on No Fee Boards would enjoy weighting-in on the subjects to be discussed, but sadly will not participate due to hocus's presence and moderator status. Passion and intensity are fine, but his recent appalling behaviour on this renegade board, taking credit for the instigation and much of the work produced by many on SWR analysis over the last year infuriated the most valuable posters here. Keeping the discussions and events here on hocus's board ultimately limits the discussion from the outset on both the depth & breadth of discussion. Reading the discourse later doesn't allow for a balanced conversation on issues interesting to all here at No Fee.

Raddr, one of our best posters has replied to add my comments on the main FIRE board (he won't post on the hocus board under any circumstances):

http://nofeeboards.com/boards/viewtopic.php?t=1212

raddr wrote:
Hi Petey, This doesn't surprise me. I may peek in on the discussion but I certainly won't participate if it is on hocus' board, esp. since he has again broadcast his desire to "delete problem posts" - i.e censor those he doesn't agree with. If you think about it this is ridiculous. Out of the thousands of posts we've had at NFB I can't think of ANY that were problem posts, at least until hocus resurfaced in recent weeks. Confused

If the event is changed back to the FIRE board I'll be an enthusiastic participant. Very Happy

John R's recent posts on SWR analysis are a case in point. When he posted them in conjuction with myself on the FIRE board, the posts flowed with many replies and significant advances made. He has taken to posting only on hocus's board now and the replies are limited in number (some with no replies at all), and this is important work is now being sidelined. Everyone suffers as a result. Thus, cross-posting threads doesn't resolve the issue, it just makes a muddle of them. Moving all Crestmont Research related items, new threads and events to the FIRE board, allows the most balanced and fair opportunity for everyone here to participate should they choose.

I appreciate the cross-posting but it doesn't resolve the matter satisfactorily for those who won't visit hocus's board. I doubt you have the time to be involved in two places at once, even if you occasionally participate at one place from time to time. Reaching the widest possible audience should also be a consideration I would imagine.

Respectfully,
Petey

Crestmont wrote:
Petey,

From perusing the FIRE board, it appears that our research would be consistent with its discussions as well. I'll post a note similar to the one composed below.

Although hocus's passion and intensity may rub some as a little rough, he does seem quite sincere in his desire to understand and expose some of the shortcomings and vulnerabilities of SWR. His diligence, persistence, and leadership is a positive; though I'd probably as well rather not see censorship unless the postings are maliciously disruptive. We should give the benefit of the doubt that it is what he intends.

I think that it would be appropriate to maintain a thread of discussion on the SWR Research Group board and to participate in the discussion forum next week. Whether FIRE members choose to particpate or avoid the discussion, I assume that they could review it afterwards. That would not preclude involvement in other NFB sections or other boards.

Hocus has exposed me to the SWR issue and debate and has done a great job of explaining the issues and framing several of the sides of opinion. It's an intriguing issue in the context of Crestmont's research. Though I'm not in the position to become an active participant on any board, I'm certainly willing to present our research, solicit insights and perspectives, and participate in forum discussions.

All the best,

Ed


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JWR1945
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PostPosted: Wed Jul 30, 2003 5:36 pm    Post subject: Reply with quote

Quote:
The discussion will be held on the same day as planned--Wednesday, August 6, and will be for two hours. We have moved the start time to 10:00 am Eastern Standard time.


Shouldn't that be 10:00 am Eastern Daylight Time and 2:00 pm GMT?

Have fun.

John R.


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hocus
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PostPosted: Thu Jul 31, 2003 1:31 am    Post subject: Reply with quote

You may be the same man, but your posts do not carry the same interest for others that they once did....These are just some of the reasons that many will not join your board.

OK, Petey.It makes no sense for you to lose the ability to engage in conversations with JWR1945 or Crestmont or anyone else who posts here soley because you have differences with me. What if you included in each of your posts here an introductory disclaimer saying "The fact that I am posting here should not be interpreted as an expression of support for or agreement with the board moderator?"

Would something like that address the problem? I would rather you include such a statement in all your posts than have you not post here at all.


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peteyperson
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PostPosted: Thu Jul 31, 2003 5:58 am    Post subject: Reply with quote

John,

Having already pointed out to hocus the lack of thought in simply posting the American time and expecting International posters to work it back, here we go again with the new time stated the same way!

I had worked out that Eastern might include NY and NY is usually 5 hours behind London. Is daylight time pushing it back another hour?

So much easier for someone to use a little bit of intelligence and state it in GMT and American timing so we all know what is happening, but I guess that is too much to ask.

Petey

JWR1945 wrote:
The discussion will be held on the same day as planned--Wednesday, August 6, and will be for two hours. We have moved the start time to 10:00 am Eastern Standard time.

Shouldn't that be 10:00 am Eastern Daylight Time and 2:00 pm GMT?

Have fun.

John R.


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hocus
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PostPosted: Thu Jul 31, 2003 6:22 am    Post subject: Reply with quote

So much easier for someone to use a little bit of intelligence and state it in GMT and American timing so we all know what is happening, but I guess that is too much to ask.

There is no such thing as "American time," Petey. America has more than one time zone.


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peteyperson
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PostPosted: Thu Jul 31, 2003 6:31 am    Post subject: Reply with quote

Hocus,

Stop wasting other people's time with nonsense posts.

American time quite clearly meant time which means something only to Americans ie. EST, PST etc and not GMT which means something to all. Stating both would cover everyone, something your new board with its own personal agenda hijacking "expert" meetings planned for all but now just for you, seems intent to do frequently.

I'm perfectly aware America has more than one time zone. Subtle commentary from you that says in so many words I'm too dumb to know America has more than one timezone is insulting. It might not outright call me dumb, but it does much the same thing with more words, your speciality.

Petey

hocus wrote:
So much easier for someone to use a little bit of intelligence and state it in GMT and American timing so we all know what is happening, but I guess that is too much to ask.

There is no such thing as "American time," Petey. America has more than one time zone.


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hocus
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PostPosted: Thu Jul 31, 2003 7:27 am    Post subject: Reply with quote

something your new board with its own personal agenda hijacking "expert" meetings planned for all but now just for you, seems intent to do frequently.

Petey:

You have something on your mind other than time zones. It is as clear as clear can be.

I see two constructive ways of dealing with whatever is on your mind. One if for you to decide to come to peace with things on your own, and to restrict your posting here to matters of substance. My preference is for you to deal with things that way.

Another way that might prove constructive is for you to talk turkey about whatever is on your mind. The benefit of that approach is that there are some others who have similar things on their minds, and it might help all of us to clear the air and come to terms with where things stand. I'm OK with that approach.. If you pursue that approach, I will do all I can to take things in a constructive direction.

Please choose one of those two approaches. It does not do any good at all for you to put up posts purporting to be about time zones when it is really something altogeher different that is on your mind.


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JWR1945
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PostPosted: Thu Jul 31, 2003 8:51 am    Post subject: Reply with quote

To peteyperson:

I have confirmed that GMT-5 hours accurately describes my time (Central Daylight Time). Since hocus referred to Eastern Time, he is referring to Eastern Daylight Time at this time of year. That means that your time is Eastern Time + 4 hours. Our 10:00 am Eastern Time during the summer is 2:00 pm GMT.

(Some areas of the US are excluded from the shifts between standard time and daylight savings time. However, they are exceptions and it would have been mentioned.)

Have fun.

John R.


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peteyperson
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PostPosted: Thu Jul 31, 2003 11:11 am    Post subject: Reply with quote

Hocus,

How dare you twist my words for your own means.

I have discussed the confusion caused by your time snaffo and the movement of the planned meeting for your own ends. There is no private agenda. You are the one who harbors such things. I merely pointed out that you were not "clear as can be" at all. John has actually had to post after you to clear up your confusion.

Petey

hocus wrote:
something your new board with its own personal agenda hijacking "expert" meetings planned for all but now just for you, seems intent to do frequently.

Petey:

You have something on your mind other than time zones. It is as clear as clear can be.

I see two constructive ways of dealing with whatever is on your mind. One if for you to decide to come to peace with things on your own, and to restrict your posting here to matters of substance. My preference is for you to deal with things that way.

Another way that might prove constructive is for you to talk turkey about whatever is on your mind. The benefit of that approach is that there are some others who have similar things on their minds, and it might help all of us to clear the air and come to terms with where things stand. I'm OK with that approach.. If you pursue that approach, I will do all I can to take things in a constructive direction.

Please choose one of those two approaches. It does not do any good at all for you to put up posts purporting to be about time zones when it is really something altogeher different that is on your mind.


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hocus
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PostPosted: Thu Jul 31, 2003 12:35 pm    Post subject: Reply with quote

I have discussed the confusion caused by your time snaffo

I think you have something on your mind other than time zones, Pete.


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peteyperson
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PostPosted: Thu Jul 31, 2003 6:18 pm    Post subject: Reply with quote

Hocus,

I have made it clear that I think your recent behaviour was poor and many others over on the main FIRE board feel the same way. You seem to completely overlook this. Your attitude has actually been upsetting, a kick in the teeth to others who have equally devoted a lot of valuable time to the matters at hand.

The "something" that you mention would be that. A whole mess started on the main FIRE board a short few days ago, you then moved to your own board and managed to insult several people in one post. Your replies did you no favors either. You are creating a trail of people in your wake who dislike, disagree and simply find you utterly disagreeable from the Fool boards where you are now banned, to the FIRE board on No Fee where several posters won't even visit your new board. You seem to manage to blindly ignore the obvious.

I'm frankly tired of the talk of everyone having it in for you, the conspiracies, the explanations as to what someone is really saying or what their real motivation for their comments were. Some of us simply wish to discuss the various aspects of personal finance, investing and financial planning in a suitable environment. That is complicated enough! At times sadly you make that even more difficult.

The "expert" discussion was supposed to be something where everyone could benefit. It wasn't supposed to be something where only a few who visit your board will benefit. You talk of community but frequently you only think of yourself. It is a simple, easy to grasp point that it is better to hold a discussion at a place where everyone feels comfortable and can participate. This was the original plan, until you changed it. It shouldn't be something I'm having to spend time to discuss. This latest action by you coupled with your insulting claims that you instigated the SWR opposing view and take credit for a substantive part of any advancements is one step too far for me.

You should take note that since I asked the new poster to post the thread on the main FIRE board, there has been a very lively debate on that thread. People there are eager to discuss the issues, which only proves my point that limiting the discussion of someone you trumpetted as someone with a valid point worth consideration goes against what people on No Fee are trying to do. It goes against the grain. It is not in the spirit of the thing.

Petey

hocus wrote:
I have discussed the confusion caused by your time snaffo

I think you have something on your mind other than time zones, Pete.


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hocus
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PostPosted: Fri Aug 01, 2003 2:37 am    Post subject: Reply with quote

I have made it clear that I think your recent behaviour was poor and many others over on the main FIRE board feel the same way.

I am convinced that you feel my recent behavior was poor and I am convinced that there are others who feel the same way.

You seem to completely overlook this.

I don't entirely overlook it. I take note of it. I give consideration to it in making decisions as to which issues to focus on now and which it hold off on for later times. I also respond to questions about it when other community members bring it up.

Your attitude has actually been upsetting, a kick in the teeth to others who have equally devoted a lot of valuable time to the matters at hand.

The "equally" claim is false. There are a good number in this community who have made outstanding contributions. That is beyond dispute. But there is no one here or at the other board who has directed even one-tenth of the time and energy to this matter that I have. That includes JWR1945. He has done wonderful things for which I am eternally grateful. But he has not been the leader on this issue. I have been the leader.

A whole mess started on the main FIRE board a short few days ago,

It didn't start by spontaneous combustion, Pete. There are living breathing human beings who lit the matches. Anyone who feels so inclined can read the Post Archives and find out which particular living breathing human beings it was who did this thing.

you then moved to your own board and managed to insult several people in one post.

I said nothing insulting, Pete. I said that it would be a healthy development for the board if it would give recognition to the fact that JWR1945's post from last week vindicated me in my claims. It would be a healthy development. If would allow us to put the personal stuff behind us and focus on matters of substance. There are times when you can get a whole bunch of mileage out of the words "Thank You." These are magic words, just like Captain Kangeroo said.

You are creating a trail of people in your wake who dislike, disagree and simply find you utterly disagreeable from the Fool boards where you are now banned, to the FIRE board on No Fee where several posters won't even visit your new board.

I wish it were not so, Pete. What would you have me do, go up to my bedroom and cry into my pillow that no one likes me? These things happen in the world from time to time. The world seems to continue turning about regardless.

All of the personal junk is going to be blown away like dust in a year's time. No one is going to care about any of it one way or the other. All of the energy being devoted to it is being devoted to nothingness.

What is going to matter is the tool that we are going to create for aspiring early retirees as a result of the insight that I put forward. The tool is going to change the world. I am putting my energies into the development of the tool, not the personal stuff. That's why I am not struggling with the negativity that some others are. The personal stuff, as unpleasant as it is, doesn't matter to me so much. It's what we can do to advance the world's knowledge of how to achieve financial independence early in life that matters to me.

You seem to manage to blindly ignore the obvious.

The satisfaction that I get from thinking about the good stuff that will come of this compensates me for the personal stuff that I am dragged through in trying to push things along. It's not that I don't notice the personal stuff. It's that I make a conscious effort not to permit it to hold me back.

I'm frankly tired of the talk of everyone having it in for you, the conspiracies, the explanations as to what someone is really saying or what their real motivation for their comments were.

I don't think there are any conspiracies, Pete. We do need at some point to address the motivation question, however. When you see certain patterns of responses play themselves out repeatedly, you have no choice but to conclude that there is a reason for it. It's natural to feel curiosity on that aspect of the thing. It's not just me who feels that curiosity, Lots of people are making reference to the "why?" question in various different ways in their posts.

The short answer to the why question is that we are struggling with change. There was a way of thinking about invvesting that became popular in the 1990s that has now been proven to be false. People could probably handle it is it were just me as one person saying that I believe this old approach to investing doesn't work. What makes this matter special is that it is not me offering an opinion, it is me putting forward data proving it to be so.

It is not reasonable to think that you are going to have someone put up a post, and everyone else is going to say "hey, that makes sense, I better go change all my investing strategies from the ground up." That's not how human beings cope with change.

What they do is absorb things over time. We are still at an early stage of a long-term process of coming to terms with the realities of SWRs. At the end, we will all look back and see that it was worth it going from where we are to where we need to be, but that doesn't mean that every step of the journey is going to be an easy one. We are going through a rocky patch right now. You shouldn't necessarily view that as such a bad thing. Change requires pain, and you are hearing expressions of pain. We are in the process of working through this. I am not sure that there is any other way that it can be done.

We will get to the good stuff, Petey, if you hang on tight. There is lots of good stuff. I have an eight-year head start on everyone else on this matter, so I have had a lot more time to discover the good stuff. I am giving you my word that it exists. You don't see it now not because you are part of a conspiracy but because you believe in some things that are not true that blind you to the good stuff.

You can't hold two contradictory ideas in your mind at the same time. That's generally not possible for sane people. You hold some ideas that the vast majority of people hold because these ideas have been repeated to you hundreds of thousands of times and you have naturally come to believe that there is a good bit of truth to them. It turns out that, while there is indeed some truth to them, the support in the data for these ideas has been greatly exagerrated. In many cases, the ideas are not so clearly true and in some cases the ideas are flat-out false.

To get to the good stuff, you need to let go of your confidence in the widely-popular false ideas. It is not possible to do that in a day, or a week, or a month. It takes time. People of good will can do it if they give it the time it requires. Trying to force it to happen before its time just makes matters worse.

The thing to do is to gradually open yourself to new ways of thinking about SWRs, ways more in accord with what the historical data actually says. Don't even try to do it all at once. Do it in stages. First try out one new idea. Subject it to all sorts of tests. See if it holds up. If it does, move on to Idea Two. If you let the force of the whole thing hit you at once, you will find yourself shutting it down because the strength behind it is too much to take in one moment. This is a Big Idea, Pete. You need to respect that.

You already understand significant parts of it. Work with that. Take what you know to be wrong about the conventional methodology, and think through the implications. You will get there. Give it time, and there will be a day when it will all make perfect sense.

Some of us simply wish to discuss the various aspects of personal finance, investing and financial planning in a suitable environment.

You have my vote!

Do you think that this preoccupation we have developed with the game of "Tear Down the Poster Who Brought Forward the Insight" helps in this regard? I don't. Why not drop that stuff? It seems clear to me that the less time we spend on that stuff the more time we have for matters of substance relating to the board agenda.

The "expert" discussion was supposed to be something where everyone could benefit. It wasn't supposed to be something where only a few who visit your board will benefit.

Anyone can come to my board, Petey. It's like dancing in the street. Every boy grab a girl, everywhere around the world.

I love you all. You are all invited. I will be crushed if there is someone who isn't able to make it.

I know that I am going to be crushed, OK? I know that there will be one or two for whom the time slot just won't work out. I understand. But every single soul with a slight interest in learning how to achieve financial independence early in life is welcome here, both during the special event and at all other times.

Intercst is welcome. It would do my heart good to exchange pleasantries with him. My old friend Galeno is invited. I learned the other day that Galeno has been banned from the Motley Fool boards, so now we have something important in common. Perhaps he is more interested now in my outstanding invitation to him to have a few cold beers and talk about old times.

I want a blurb from intercst on the back cover of my book when it comes out, you know. That's the way God planned it, and that's the way I want it to be. A great way to get things moving in the direction where that dream would become a reality would be for intercst to show up for the special event and try to learn something about SWRs. Is there some reason why he would not want to do this? I know that many people are going to reject the suggestion I make here out of hand, but I see no good reason why intercst should not show up here. I have always praised him for the good things he has done for the FIRE movement ("the Wave") and I would love to see him get involved in this exciting next chapter. I want him here, and I want Galeno here, and I want PeteyPerson here and I want raddr here and I want ataloss here and I want the whole gang here.

The odds are that it is going to be hocus and JWR1945 and Crestmont.. OK. You don't always get what you want, do you? I want the other thing, but I have learned that on this particular planet I am living on now I sometimes have to settle for taking what I can get. So I do.

You talk of community but frequently you only think of yourself.

You are wrong on this one, Pete. I always think of the communinity, Pete. The community is the thing that I refer to as "the Wave." The Wave is something I think about 24 hours a day. Not just when I am awake. I dream about the Wave. Six nights out of seven. I slip something in there about my kids every now and again.

Every time I am ready to put up a post, I stop before hitting "Submit" and ask myself, "Is this going to make the Wave bigger or smaller?" The ones where the answer is "smaller" get thrown in the discard pile. The others are the ones you know about. Everything I do I do for the Wave.

Do you know how important this book I am writing is going to be for the growth of the Wave? Gaining the freedom to be able to spend my time writing this book was the whole point of my FIRE plan in the first place. I saved for nine years and collected 40 binders of material because I wanted to be free to spend my time writing this book.

And it has been held up for 14 months now so that I could help this community come to terms with the realities of SWRs. Do you think I made the decision to do that lightly? Have you given any thought to the nature of the personal sacrifice that I have made to help this community grow and thrive. If you haven't, you should. There is no one else in this community who has given up 14 months. There is no one else who has put a book that they were dreaming about for nine years on hold.

The book is still going to get published. It is not on indefinite hold. But I made a decision to go along with a delay on a key Wave builder so that I could respond to community questions on the realities of SWRs. You are making a mistake if you believe that I would do such a thing without coming to a firm conclusion that the potential payoff to all concerned is huge. The potential payoff to the entire community is huge, and that is what makes it worth it working my way through all the nonsense that comes as part of the package called "Helping Others Understand the Realties of SWRs."

This latest action by you coupled with your insulting claims that you instigated the SWR opposing view and take credit for a substantive part of any advancements is one step too far for me.

Only you can decide what it "too far" for you and what isn't. I don't pretend to have any right to decide for you.

It's a fact that I was the one who put forward the March 13. 2002, post. That one is in the record books and it is a rejection of the Reality Principle to say otherwise. It is also a fact that that post generated widespread and intense opposition and that I never backed down from the claim for 14 months. I expressed complete confidence that I would ultimately be vindicated in what I said. And the post put up by JWR1945 last week vindicated me. So that part of it should be over. There shouldn't be any need to discuss it any further.

You should take note that since I asked the new poster to post the thread on the main FIRE board, there has been a very lively debate on that thread.

I noted that and I applaud the development. Good for you in getting the ball rolling on that one.

People there are eager to discuss the issues

People everywhere are eager to discuss the issues. We are still stuck on the ABCs, and we have already seen tens of thousands of posts appear on this matter.

Can you imagine what the reaction is going to be when I take this to the big world that exists outside of internet discussion boards? It is going to positively explode. If you take what happens on internet boards as a sort of market test (and I do), then this one is going to rock the world.

Good for me for putting up the post that started it all. Good for all of you for building on the idea, making it bigger and better and sharper and richer and cooler and deeper. It's a win, win, win, win, win.

I don't see any possible downside to any of this, unless you view the rough patches we have to work through as downside. That stuff is a stone drag, to be sure, but it's a small part of this in the grand scheme of things. I don't think that anyone is going to remember any of that once we find our way to the good stuff.

limiting the discussion of someone you trumpetted as someone with a valid point worth consideration goes against what people on No Fee are trying to do. It goes against the grain. It is not in the spirit of the thing.

I want you there for the event, Pete. Please come.


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