We Have Seen the Future of Retire Early Boards,and It Works!

Research on Safe Withdrawal Rates

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hocus2004
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We Have Seen the Future of Retire Early Boards,and It Works!

Post by hocus2004 »

Dory36 has banned me from the Early Retirement Forum.

Our community proved a point in the two days in which that board was in existence. Early on in the Motley Fool chapter of this saga, I asked intercst to allow us one non-disrupted thread per month in which to discuss the realities of SWRs. He refused that request because he had seen the same reaction from the community that I had seen when I first brought the Data-Based SWR Tool to the community's attention. There has never been a topic that has so excited those members of our community with a greater interest in learning what it takes to win financial freedom early in life than in further inflating intercst's already far-too-inflated ego.

For the two days in which the Alternate SWR Methodology board remained in existence, we saw what our discussions will look like when honest and informed posting on investing is permitted once again. There was no deception on that board. No intimidation. No word games. No personal attacks. No nonsense. It was all wonderful substance discussions aimed at helping middle-class workers win financial freedom early in life.

The contrast with what we saw on the intercst-controlled boards couldn't have possibly been greater. On the intercst boards, we saw no substance. We saw hate. We saw fear. We saw desperation. Nothing that could help anyone win financial freedom early in life. Nothing that would cause a person holding a strong interest in the topic our boards were formed to explore to want to hang around much longer. The greater the intercst presence in evidence at a board, the more ugliness we witnessed at it. Intercst was the problem in February 2002, when the Smear Campaign against Wanderer was initiated, and Intercst is the problem today.

The two visions of our community's future are as different as two visions could possibly be. The intercst vision is a vision of deception, a vision of hate, a vision of anger, a vision of self-obsession, a vision of fear. It is a narrow and dark vision. The community vision is a vision of optimistic realism, of love, of generosity, of confidence in the future. It is a broad and bright and forward-looking vision.

We are at a fork in the road. The desperation we saw in the posts of the intercst supporters over the course of the past two days tells us that they see how the saga is going to end. They are not yet willing to turn in their guns. But I think it is fair to say, judging from the tone of their posts in recent days, that they know in their hearts where things are headed, no matter how much they wish that there were some way to turn back the clock and make intercst appear in the eyes of reasonable community members to be a staight-shooter once again. I've been saying since November 2002 that it could not be done. Dory36 has now added his name to the list who acknowledge (in his case only implicitly) that there is no possible way that honest and informed posting on SWRs can co-exist in the same board community with intercst-type posting tactics.

It is an either-or. We choose intercst or we choose honest and informed posting on how to retire early. One drives out the other. Allow honest posting, and intercst cannot survive--that's what Dory36 learned these past two days. Allow intercst posting tactics, and fully honest and informed discussion of how to invest for early retirement is not possible. We all have learned that lesson thousands of times over the course of the past 34 months.

Here are some words that I put to the Early Retirement Forum thread in which the decision was made to create the Alternate SWR Methodology board:

"It is not realistic for intercst supporters to think that they can permanantly "ban" discussions of what the historical data says re SWRs. Are we going to hunt down every last copy of Bernstein's book and burn them all? Are we going to get Rob Arnott removed as editor of the Financial Analysts Journal? Are we going to crash the web site for the Dallas Morning News when the Scott Burns column endorsing JWR1945's research appears?

"The desire to learn how to win financial freedom early in life evidenced by the 100-plus members of the Motley Fool community who asked that intercst kindly knock off the nonsense will be realized. We can slow down realization of that desire by piling more nonsense on top of all the nonsense that we have allowed to accumulate for 34 months now. All that we will be doing by taking that step is delaying the inevitable.

"When you get a number wrong in a study, the smart thing is to acknowledge the error, put it behind you, and move on. Any person with common sense knows that. Intercst has demonstrated that he lacks common sense. He is a failed leader.

"This is not an intercst board. It is a Retire Early board. We need to get about the business of governing it as such. It's all part of the process of growing up. Is it hard sometimes? Sure. Is it worth it? You bet.

"I've seen a glimpse of the other side and I can offer a few tantalizing words to end this post on an optimistic note--It gets better. "

I stand by those words.
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Post by JWR1945 »

At least Dory36 included a link to this site.

It looks as if El Supremo is the sole occupant in the leadership position among the discussion boards.

Everything was over before I had a chance to participate in a meaningful manner.

Have fun.

John R.
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Post by hocus2004 »

It looks as if El Supremo is the sole occupant in the leadership position among the discussion boards.

ES now has the only board that permits honest and informed posting on SWRs. That distinction presents him with a great opportunty to build this site by appealing to the largest segment of our community--the community that wants the focus on substance and that wants intercst-type posting practices to be put to an end once and for all.

To take advantage of that opportunity, he needs to ban Ataloss and any other intercst supporters who continue to put forward deception and intimidation posts on intercst's behalf. That stuff hurts us. That stuff drives the type of poster we want to attract to this place away.

We need to get back to first principles. We need to ask ourselves what it is we are trying to accomplish with the boards.

This board today is not a true discussion board. It is a posting board. My guess is that it will remain a posting board until reasonable site administration policies are put into effect.

The intercst supporters will stop at nothing. They will simply not permit honest and informed SWR posting to exist on any board where they have the power to block it. There should not have been any doubt about this in anyone's mind for a long, long time now. If there was a sliver of doubt in anyone's mind prior to today, that sliver has now been taken care of.

My understanding (I don't know because I do not have access to the forum) is that Dory36 has not even put forward a reason for the banning and for his decision to shut down the Alternate SWR Methodology board. If he has put forward a reason, I hope someone will inform me. If he has indeed put forward no reason, what does that tell you? There is no reason that he could possibly give.

There was not one post that that appeared at the Alternate SWR Methodology board that in any way, shape, or form could be said to be a personal attack. Not one. There were a good number at the Conventional Methodology board.

The Conventional Methodology Board remains. The Alternate Methodology Board is gone.

Why? Because it was clear to all that intercst cannot long survive in any environment in which honest posting is permitted. What's more important to our future? That honest on-topic posting be permitted? Or that intercst retain posting priviledges at our boards?

The question answers itself.
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Post by hocus2004 »

Everything was over before I had a chance to participate in a meaningful manner.

I think it is fair to say that enough damage was done to the intercst case in two days of non-disrupted SWR posting for Dory36 to have concluded that he didn't dare risk permitting a third.

My understanding is that he has removed the posts that were put to the Alternatve SWR Methodology board from the forum. I wonder why.
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Post by Gnobility »

Hocus, with all due respect, you were banned because you're an asshole.

Luv,

Gn
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Post by hocus2004 »

This is what we have become, people.

You can take a look at what we were in the days before intercst was named "Board General" and you can take a look at what we have become, and you can decide for yourself whether intercst is an effective leader for our community or not.

My view is that the post above this one tells us in very few words pretty much all we need to know about what intercst's leadership has done for us.
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Post by peteyperson »

Here is my reply to the thread where we were discussing investing strategies:

This speaks to some of the problems I have with the 4% number. The 4% number is a useful starting point but it is exactly that, a starting point. The actual experience will always be different.

It makes complete sense to me that the withdrawal rate on the S&P 500 is lower than previous. There are various ways to work it out depending on how stretched out you make the revision-to-the-mean on present market valuations & whether you plan to spend down the assets or not, but one starts with the initial dividend yield today circa 1.8%. The average yield is closer to 4.5%. So right away 2.7% is lost from the long-run return. (It is worth noting at this juncture that US total market returns from 1900-2002 were just 6.3% real so a loss of 2.7% by way of much smaller dividend yield than history is a major issue - Source: Prof. Dimson & Marsh, London Business School). Historical nominal S&P 500 growth has been 5% with 1.8% real growth. If one were to assume the same real growth going forward, one may obtain a 3.6% real return. However this fails to take account of the overvaluation present in the S&P 500 today. Depending on what one feels that is, and over what period one reduces the price-to-earnings multiple (average is a decade), you reduce the 3.6% real return down accordingly.

Bond returns are unlikely to match the past two decades which were themselves an anomoly caused by very high starting rates and the steady decline in interest rates thru the 80s and 90s. We're now in the opposite situation - low starting rates that are slowly increasing along with inflation. In any case, nominal bond returns are circa 5% nominal (2.5% real using 2.5% CPI) - Nominal return data comes from Dimensional Fund (DFA) data. Thus a 75/25 split could not possibly provide a pre-tax return of 4%. Even excluding revision-to-the-mean on the stock market from present market levels, returns would only be 3.12% real, allowing for 0.20% fees.

Better returns are available from the value style in the first instance and from other assets such as real estate, timber, absolute return and commodities. Safer assets like TIPS also have a place either to provide cash flow in bad market years or as an alternative defensive way to live off assets. The days where a simple split of the S&P 500 and US total bond index made good sense are over. It is also a falsehood to suggest that because previous studies concluded that in the past 4% withdrawals were viable, that this is valid going forward. The returns on investment for stocks are a function of the initial dividend yield + real growth +/- P/E expansion or contraction. If one starts from a position where dividends are less than half what they have historically been and P/E multiples are 20+ rather than the P/E 14-16 long-run average, then this affects what returns are possible from this starting point. To suggest otherwise is to indicate either ignorance of the facts at hand or being so wed to the past studies that one cannot understand how different valuations levels & dividends affect future expected returns. I believe Bernstein made the same point when discussion 'the Gordon equation' in his book, Four Pillars.

Just this morning I did a similar reference to the expected returns of EAFE Value and cross-checked this with Jeremy Grantham's numbers. He accounts for lower dividend levels there and overvaluations from P/E 18-19 down to more sensible P/E 14-16 for large-cap foreign developed markets too. 10-year expected returns for EAFE Value were not much better than 4%. When using a higher 3.5% inflation number for the UK and discounting fees & taxes on dividends, returns for me fall to 2.38%. So not pretty at all. I still feel there are better return opportunities in small asset classes like UK ScV, UK micro, Pacific/Asia LcV and Pacific/Asia ScV which don't show up in the broad EAFE Value numbers but I am not certain returns will be there for these asset classes. I believe valuations are lower and dividend levels more reasonable for these asset classes but the data series is not terribly long to verify this.

Petey
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Post by hocus2004 »

You posted on the "Alternate SWR Methodology" board, Pete. When you looked at that board, did you see a single post that was in any way, shape, or form abusive or that in any way contributed to the problems that our community has been experiencing in its discussions of SWRs for 34 months now?
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Post by JWR1945 »

hocus2004 wrote:For the two days in which the Alternate SWR Methodology board remained in existence, we saw what our discussions will look like when honest and informed posting on investing is permitted once again. There was no deception on that board. No intimidation. No word games. No personal attacks. No nonsense. It was all wonderful substance discussions aimed at helping middle-class workers win financial freedom early in life.
I will confirm this.

But the evidence of this has been removed.

Have fun.

John R.
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Post by JWR1945 »

hocus2004 wrote:The contrast with what we saw on the intercst-controlled boards couldn't have possibly been greater. On the intercst boards, we saw no substance. We saw hate. We saw fear. We saw desperation. Nothing that could help anyone win financial freedom early in life. Nothing that would cause a person holding a strong interest in the topic our boards were formed to explore to want to hang around much longer. The greater the intercst presence in evidence at a board, the more ugliness we witnessed at it. Intercst was the problem in February 2002, when the Smear Campaign against Wanderer was initiated, and Intercst is the problem today.

The two visions of our community's future are as different as two visions could possibly be. The intercst vision is a vision of deception, a vision of hate, a vision of anger, a vision of self-obsession, a vision of fear. It is a narrow and dark vision. The community vision is a vision of optimistic realism, of love, of generosity, of confidence in the future. It is a broad and bright and forward-looking vision.
I will confirm this.

Much of the evidence of the intercst-controlled boards was removed. Some remains. Much of what remains will be removed in a week or two.

All community vision posts were removed.

Have fun.

John R.
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Post by hocus2004 »

I will say something re the "conspiracy" claims being made by Ataloss at the other board.

Dory36 has obviously done a very wrong thing. He has betrayed both the community members who participated at the "Alternate SWR Methodology" board during its too short life and the community members who would have participated in days to come had it been permitted to continue until it died a natural death.

That said, the dark vision of early retirement that intercst puts forward in his posts to the various boards is NOT the Dory36 vision of early retirement. Dory36 is following in the footsteps of many others in blackening his repuation on behalf of an individual who makes ugly just about everything he touches. The longer intercst remains with us, the more ugliness the rest of us have to overcome to get things back on the right track. Each post that defends either his SWR claims or his posting tactics makes things worse.

There is no defense that any reasonable person can put forward for what intercst has done to us. People who are reasonable when posting on other topics need to start making more of an effort to apply the same good sense they make use of when posting on other topics to their posts on the intercst matter as well.
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Post by unclemick »

Hocus

I suggest you back up and read Petey's post. That is the way to approach the issue.

And then there is this other guy - Adam Smith and his 'Invisible Hand'.

Alas - he is long deceased.

Numbers rule. The other stuff is Shakespeare's - Sound and fury signifing nothing.
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Post by JWR1945 »

hocus2004 wrote:For the two days in which the Alternate SWR Methodology board remained in existence, we saw what our discussions will look like when honest and informed posting on investing is permitted once again. There was no deception on that board. No intimidation. No word games. No personal attacks. No nonsense. It was all wonderful substance discussions aimed at helping middle-class workers win financial freedom early in life.
Here is an example of what they are missing:

I had decided to post something similar to The 4% Shocker. People on Dory36's board need that information badly.

I would have centered my discussions on the FIRECalc.

A key FIRECalc limitation is that its balances are all in nominal dollars. That is, before adjusting for inflation. If a person chooses to withdraw a fixed percentage of his portfolio's current balance, his buying power can drop dramatically, but FIRECalc (unintentionally) hides this information. Something needs to be done to convert nominal balances to inflation-adjusted (real) withdrawal amounts.

My first thoughts were to extract the 10-year, 20-year and 30-year inflation adjustments that are already on the Retire Early Safe Withdrawal Calculator (as-is, without needing any of my upgrades).

Doing this, checking it out and writing it up takes a fair amount of effort.

Now, I will just refer people to my own post on this board. Forget about FIRECalc.

Have fun.

John R.
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Post by hocus2004 »

I suggest you back up and read Petey's post. That is the way to approach the issue.

That's the approach that was followed in every post that was put to the Alternate SWR Methodology board (with the exception of the small number that were deleted pursuant to Dory36's instructions), both those put up by me and those put up by the 10 or 12 other posters who participated there during the 48 hours it remained in place.
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Post by Norbert Schlenker »

hocus2004 wrote:Dory36 has banned me from the Early Retirement Forum. ... For the two days in which the Alternate SWR Methodology board remained in existence, we saw what our discussions will look like when honest and informed posting on investing is permitted once again. There was no deception on that board. No intimidation. No word games. No personal attacks. No nonsense. It was all wonderful substance discussions aimed at helping middle-class workers win financial freedom early in life.
There's a rewrite of history if there ever was one. Dory made you moderator and you could not help abusing your position by deleting much of what was written by others.
It is an either-or. We choose intercst or we choose honest and informed posting on how to retire early.
Or we choose to delete contrary viewpoints. How long will this one survive?
Great minds think alike. Fools seldom differ.
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Post by peteyperson »

hocus2004 wrote:You posted on the "Alternate SWR Methodology" board, Pete. When you looked at that board, did you see a single post that was in any way, shape, or form abusive or that in any way contributed to the problems that our community has been experiencing in its discussions of SWRs for 34 months now?
I did not read all the posts, but no. What I saw was constructive discussion from the off. That is why I joined in and added a couple of lengthy and well considered posts to the mix.

I won't begin to get into the political angle of it. It just drains too much energy from what should be a fairly simple and somewhat enjoyable process of learning about investing. It just seems too weird. I do think that intercst going around adding 'hocomania' to online dictionaries is an attempted form of pychological abuse. It is deliberately trying to hurt your feelings even if he is using your online persona to do it. This perhaps makes it not a case of slander but I would say emotional distress. It is way beyond reasonable behaviour, whether he believes what he is saying or not. I really don't like to see things sink to these levels frankly.

Petey
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Post by peteyperson »

unclemick wrote:Hocus

I suggest you back up and read Petey's post. That is the way to approach the issue.

And then there is this other guy - Adam Smith and his 'Invisible Hand'.

Alas - he is long deceased.

Numbers rule. The other stuff is Shakespeare's - Sound and fury signifing nothing.
Hi Uncle,

Could you clarify what you mean in bold? I wasn't sure what exactly you were referring to.

Thanks,
Petey
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Post by peteyperson »

hocus2004 wrote:I suggest you back up and read Petey's post. That is the way to approach the issue.

That's the approach that was followed in every post that was put to the Alternate SWR Methodology board (with the exception of the small number that were deleted pursuant to Dory36's instructions), both those put up by me and those put up by the 10 or 12 other posters who participated there during the 48 hours it remained in place.
I had my long post I copied here above removed with a note from dory that it was due to some issue that was too detailed to go into. I looked at the post and was at a loss why it was pulled. I am even more confused if some posts were pulled including mine but not others on the board. But then the board seemed to get yanked altogether in an act of censorship.

Petey
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Post by hocus2004 »

I had my long post I copied here above removed with a note from dory that it was due to some issue that was too detailed to go into.

I knew nothing about that until I just read your post, Petey.

I do think that intercst going around adding 'hocomania' to online dictionaries is an attempted form of pychological abuse.

I appreciate the point you are making, but his purpose is not to hurt my feelings. I think he gets it that my self-esteem doesn't depend too much on what some intercst-like individual thinks of me or pretends to think of me.

The purpose is intimidation, Pete. It's not me he is trying to influence. It's you, and anyone else who might get the idea in his or her head to post honestly on the SWR question.

This has been going on since long before May 13, 2002. He humilates FoolMeOnce. He humiliates Wanderer. He humilates JWR1945. He humiliates BenSolar. Do you detect a pattern? These are some of the best posters in our history. Any effective on-topic poster is a potential intercst target.

Why? Because it is effective on-topic posters who burst his fantasy of being The Guy Who Knows More About Retiring Early Than Everyone Else in the World Combined. His doesn't mind people posting about bird feeders or near-death experiences or flaxseed. None of that stuff represents a threat. The big threat in his eyes is the honest and informed on-topic poster.

He's a guy who got lucky in stocks and let it go to his head. He started a board on early retirement not knowing what he was tapping into. What he tapped into was this incredible desire among middle-class workers to learn more about this wonderful life-affirming topic.

He started this little niche board about SEPPS and SWRs, and I came along with my Passion Saving stuff, and the board caught fire. My stuff appeared daily at the Motley Fool "Best Of" board, and it attracted all sorts of wonderful posters with fascinating insights into the topic that the board founder knew next to nothing about--over 100 of them. He was perfectly happy with the increased traffic but he sure wasn't happy with the competition for the Guru status he so longed for, even if the others weren't into the ego stuff one-tenth as much as he was.

So he started knocking them off one by one. By the time he got to Wanderer, who was the most popular and most effective poster at the board at the time of the Smear Campaign that drove him off, I knew that the only hope of keeping together the group that made all the good stuff happen was to generate some strong on-topic stuff fast, and lots of it. I had been holding back on posting about the Data-Based SWR Tool because I knew it would generate lots of heat if I did, and I didn't want to do harm to the community. But things had gotten to a do-or-die situation anyway, so I could see no reason anymore not to venture forward.

As always, the board community came through with flying colors. We had scores and scores of people thanking me for what I had brought forward in thiose days, there were none of these "We Hate Hocus" rallies back in those days. Even when he threatened a Campaign of Terror in his "Our Board Culture Demands Ridicule of Anyone Who Asks Hard Questions About the Study" post, there were several posts standing up for the integrity of the board, and those got lots of recommendations.

That community is long gone. The FIRE Board Community, which was smaller but also excellent, is long gone. The Early Retirement Forum community is still generally intact, but I think it is safe to say that that one will be destoyed in time too unless some way is found to open up the option of honest and informed posting on SWRs there. What do you think is going to happen when stock prices go down, as the historical data indicates is likely? I don't think that too many are going to find the intercst posting tactics quite so "amusing" then.

All we can do is all we can do. JWR1945 has done a wonderful and amazing job of laying the groundwork for a build-back-up after we run head first into our seemingly inevitable knock-me-down. When people get pissed about the lies they have been told about what the historical data says, it won't take them long to find out what it really does say according to the research of a straight-shooter. We just point them to this board and maybe go through each thread here a second time, only the next time with community participation so that more of us can actually figure out what is going on and why it matters. When our community has experienced hundreds of busted retirements because of out ill-fated romance with The One Who Knows More About Early Retirement Than Everyone Else in the World Put Together, perhaps boycotts of boards that tell it straight won't seem like such a fun idea anymore.

I think we will make it through. I don't think any of this was necesary. I think it was a huge waste of board talent and time in the service of one massively blown-up ego case that wasn't worth one-thousandth of the time we spent on him. But I do think we will make it through. When I get down, I look at old threads and remember when we used to be. For 48 hours beginning last Friday night, I was able to experience the way it was in the old days all over again, and it was something fine..

You will see it that way again someday, Pete, if you can hang in there long enough. I hope you do.

Here's what Marshall Crenshaw said in a post from a ways back on this very topic:

"And whenever somebody tells you
That all the good times are through.
You look him in the eye and you tell him
Hey! I'm sure surely glad that I'm not you!"
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Post by hocus2004 »

Dory made you moderator and you could not help abusing your position by deleting much of what was written by others.

The deletions that I made were made on Dory36's instructions. I wasn't even informed of the deletion of Petey's post.

I wonder if our new friend Norbert Schlenker is an intercst supporter. What do you figure are the odds on that one?
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