Rob Bennett: Crazy, Or Crazy Like A Fox?

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Jul 172010
 

While on Financial Samurai’s blog the other day, I realized that a poster named Rob Bennett  consistently challenges what Sam has to say. My opinion of Financial Samurai is that about half the time he has something valuable to say and the other half he throws out arguments against conventional wisdom just to stir things up. Whether I agree with his opinions or not, I have to admit it’s a pretty effective way to gain readership.

Anyway, I’ve always liked what Rob had to say. He has well thought out opinions about everything he writes. He’s clearly a very intelligent guy. So I decided to click through to his blog (A Rich Life) to see what he writes about.

Turns out Rob is just a little crazy.

Rob has weeks of blog entries that are emails he’s exchanged with other bloggers. JD from Get Rich Slowly basically called him insane and made it pretty clear that he wants to never hear from Rob again. Mike from The Oblivious Investor has barred Rob from posting comments.

Anyone who pisses off the establishment piques my interest. Nothing ever worth accomplishing was ever achieved without bucking conventional thinking. I started reading more into Rob’s archives.

Rob is doing his best impression of Galileo or Bill Gates, except his cause is the withdrawal rate on retirement calculators. Rob’s thesis is that the standard 4% withdrawal rate is wrong, that retirees should be able to take out more. He goes on to state that every single retirement calculator is wrong and that “goons” are actively working to keep his message away from the masses that so desperately need to hear it.

What is the proper retirement withdrawal rate? Damned if I can figure it out after spending some time on Rob’s site. It has to do with the valuation of the market as a whole. If the market is at a frothy valuation, then the retiree can withdraw more. If it’s at a trough, they can withdraw less- at least I think. I like to think of myself as a reasonably astute guy when it comes to these sorts of things and I can barely make any headway on it.

(Rob, if you’re reading this, I welcome you to submit a guest post to better explain your method. But please keep it under 600 words. You get a little long-winded sometimes.)

Let’s face it, retirement withdrawal rates doesn’t even make for exciting discussion on a personal finance blog. I, along with what I’m assuming is most of you, are much more interested in the accumulation of wealth. My plan is to have so much of it when I retire that I have ample to give away to to my favorite charities and causes. Perhaps I’m in the minority, but reading about retirement withdrawal rates excites me as much as reading another post on the benefits of ING Direct or comparing credit cards.

I do have to give Rob credit for writing stuff that no one else is writing about. The last thing I want to do is turn this post into a call for everyone to pile on the insults towards the crazy guy. Maybe the problem is that Rob is so intelligent that what he says goes right over my head. Or, maybe he’s batshit insane. I honestly don’t know.

What I do know is that the world of personal finance blogging needs more Rob Bennetts. He’s passionate. He’s intelligent. He’s writing things that go against the grain. I’d much rather read one of Rob’s posts than another piece on emergency funds or frugal ways to spend the summer. Keep on keeping on my crazy friend.

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 Posted by Nelson Smith at 12:15 am
  • http://arichlife.passionsaving.com Rob Bennett

    If the market is at a frothy valuation, then the retiree can withdraw more. If it’s at a trough, they can withdraw less- at least I think.

    I just noticed this on rereading the piece, Uproar.

    It's actually just the opposite. The SWR is lower if you retire at a time of high valuations. The portion of your portfolio that represents overvaluation is cotton-candy nothingness that gets blown away in the wind in time. You should not be counting that money as money that can finance a retirement. If you cash in immediately, you get the money. But if you hold those shares, their value diminishes over time as the Funny Money goes "Poof!" The amount of a stock portfolio that constitutes overvaluation does not possess any genuine economic value.

    It's not that I am some sort of genius. This is very basic stuff. Others don't immediately get it only because most of us have been saturated with Buy-and-Hold thinking for 30 years or more. The Buy-and-Holders were trying to do something good. But we did not know everything there is to know about stock investing a the time they came up with their theories about how markets work.

    Now they are in a trap because it has become embarrassing for them to acknowledge that they have been keeping this covered up for 30 years. The answer is just to get things out in the open and thereby help the shame to dissipate. We need to make these discussions less emotional.

    Rob

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  • http://arichlife.passionsaving.com Rob Bennett

    Uproar:

    This is Rob. Thanks for writing a balanced piece. I’ll definitely write a Guest Blog Entry of under 600 words for your review.

    It’s true that Mike Piper at Oblivious Investor has banned me. But he hated to do it. If you enter “Oblivious Investor” in the Search box at my site, you will pull up many e-mails in which Mike and I talked things over. I think he was very wrong to ban me. But I also think he is a smart guy and a good guy who writes a fine blog. J.D. Roth and I also get along well on all topics other than investing. He did say I am insane. But on other occasions he has written me kind notes thanking me for comments I have put to his blog.

    I think it would be fair to say that a good number of Buy-and-Holders use the word “insane” to describe anyone who says that Buy-and-Holders don’t know all there is to know about stock investing. We should be asking ourselves why that is so. Is name-calling a sign of confidence or a sign of defensiveness? You know what I think.

    The brutal reality here is that it was the reckless promotion of Buy-and-Hold for many years after the academic research showed that there is zero chance that it could ever work for the long-term investor that was the primary cause of the economic crisis. Stocks were overvalued by $12 trillion in January 2000. It is an “Iron Law” (John Bogle’s phrase) of stock investing that stock prices always return to fair value over 10 years or so. So we knew in 2000 that within 10 years about $12 trillion of wealth was going to disappear from our economy. And there are some who express surprise that we are suffering from an economic crisis?

    Those interested in learning more about the SWR matter might want to check out my Google Knol entitled “The First Retirement Calculator That Gets the Numbers Right”:

    http://knol.google.com/k/rob-bennett/the-first-retirement-calculator-that/1y5zzbysw7pgd/5

    There’s another Google Knol entitled “The Bull Market Caused the Economic Crisis”:

    http://knol.google.com/k/rob-bennett/the-bull-market-caused-the-economic/1y5zzbysw7pgd/3#

    We don’t all need to agree. That would be boring and pointless. We do all need to be open to learning new things and to showing respect and affection to all who help us learn (those who disagree with us often help us more than those who agree with us). We should be talking about this stuff at hundreds of blogs, both money blogs and political blogs. That’s my sincere belief.

    By putting the issue on the table (while also expressing your sincere skepticism), you are advancing the ball, Uproar. I am grateful.

    Rob

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