Investing--The New Rules
Rob Bennett takes readers on a roller coaster ride this week: discussion boards, ethics, safe withdrawal rates, the Dominion card game, human nature, retirement planning?thrills, chills and spills galore! Along the way, Bennett has a few things to say about investors, the investor culture and ?the big mess? that?s been created since 2002. Don?t miss a word of this edition of Investing?The New Rules.
Investing ? The New Rules
Rob Bennett
The Ethics of Card Shuffling and Retirement Planning
#100?April 9, 2012
There was a fellow who once wrote me a note observing that ?you sure have a lot of enemies!? That one left a mark.
We all want people to like us. We all very much want people not to hate us. When more than a few people hates one of us, the rest of us become suspicious of that person. What?s wrong with him? Why do so many people dislike him? It must be something he is doing.
I have so many people who hate me today that I cannot afford to think that way anymore. I sometimes want to holler out: ?Hey, everyone! I am actually a pretty darn nice guy! Everybody thought so until I discovered the error in the studies that people use to plan their retirements and told the story on an internet discussion board!?
But people trust people who holler protestations of their innocence to them even less than they trust people who are hated by large numbers of people. So I thought that maybe I should go about it this other way instead.
The oddest things can set people off. There was a fellow at the discussion board at which I told the truth about safe withdrawal rates who said that he thought that the safe withdrawal rate controversy sounded like ?the sort of thing that would be discussed at an economist?s tea party,? I thought that was funny because it is so true and yet so untrue at the same time. Most people really could not care less about safe withdrawal rates. And yet to others it is a matter of life and death. People are funny.
I saw a discussion of card shuffling at a site for people who play the game Dominion that made me realize how it is often the most insignificant issue that get people the most stirred up. The thread that appears at that link is amazing. It goes on for nine pages. It is about how cards should be shuffled. On Page nine, there is a discussion of whether the thread should be locked. There is even a discussion of Godwin?s Law. People were being compared to Nazis because of their views on card shuffling! I provided a link to prove that I am not making this up.
I know why people got so hot in that thread.
There is an ethics issue involved.
In Dominion, it is important that certain cards not appear in the same hand. So a player might gain an edge by separating those cards before shuffling. If the shuffle were effective, it wouldn?t matter. But what if some shuffles are not entirely effective? Players who thought to separate the cards that they don?t want to see appear together would thereby gain an edge. They might not deliberately do a poor shuffle. But the odds would be shifted in their favor because they would make out better following a poor shuffle than those who did not think to separate the cards that should not appear together.
The edge would be tiny in any event. There are hundreds of things of more importance for Dominion players to talk about. So why is so much human energy directed to hashing out this one? It?s that ethics issue. People don?t like to be thought of as unethical. Raise an ethics issue and people will fight.
I did that.
I said that the Old School retirement studies got the numbers wildly wrong. They did. No one disputes that today. I should be a hero to everyone in the field. But all that a lot of people hear is: ?You made a mistake in your study and caused millions of failed retirements.?
I don?t say that the mistakes were deliberate. I don?t believe they were. But the people who made the mistakes have responded defensively. They think they should be above making mistakes. Or perhaps the mistakes to some extent really were deliberate, perhaps they knew that there were problems with the methodology they used and elected not to worry about them until I highlighted the issue. In their minds, they have been called out on an ethics lapse. And they intend to fight that one to the death.
ALSO at DBKP:
* Investing: Make Millions by Posting Stuff on the Internet
* Investing: Doom and Gloom is a Dead End
* Hocomania: The Word, The Phenomena, The Coffee Cup
* Ten More Reasons Why Wall Street Doesn?t Want You to Know the Truth About Stock Investing
* Ten Reasons the Investing Establishment Wants to Bottle Up Latest Academic Research
* Economic Crisis: The Fed Laughed?and the Rest of Us are Still Laughing Today
* The Weakness of Human Nature in Investors: Three Reasons for Optimism
* Coming Economic Crash: Are Conservatives Better Off If Next Crash is Before the Election or After?
* Investing: Buy-and-Hold Not a Conspiracy, It?s Cognitive Dissonance
* Investing: The Stock Investing Truths No One Can Talk About
* Buy-and-Hold: Investor Spaceship to Nowhere
* Investing: Where Are the Leaders?
* Investmenting: Machiavelli Explains Why We Hate Progress
* The Free Market as Umpire: You?re Not as Rich as You Think
* Investing: Using Numbers to Pop the Fantasy Balloons of Buy-and-Holders
* Buy-and-Hold Denial: We Need to Acknowledge True Cause of Economic Crisis
* Retirement Advice Scandal: Four Fixes Before A Bad Situation Turns Worse
That?s the story.
The sad thing is that there really are ethical lapses that have come into play during the 10 years in which the mistakes have been covered up. Had the people who produced these studies acknowledged the problems on the first day, this never would have been a big deal. But their behavior during the 10-year cover-up makes them look very, very, very bad. So now I suppose that I really am pointing out ethical lapses. Not because I wanted to. Because the people who got the numbers wrong reacted so strangely to learning about the mistakes they made.
People?s feelings are raw. I want to make them feel better. But I want those studies fixed too. It doesn?t help anyone for the studies to remain uncorrected. The financial damages grow higher by the day. And it?s public knowledge that I pointed out these errors back in 2002. It?s a big mess.
I have to believe that some good will someday come out of all this hate.
I believe that the thing I noticed that no one had noticed before me was missed not because the people who did the studies are dumb but because it relates to an aspect of the investing project that has been largely overlooked until now., I believe that this aspect will be getting more attention in days to come and we will all learn to invest far more effectively. I think we need to walk this path in which so many angry words have been spoken to get to a place to which we all deep in hearts want to go.
I?m here to help you learn how to invest more effectively. Please don?t hate me for that. I am innocent, I tell you. Innocent!
One fellow actually threatened one time to get me sent to the electric chair. That?s worse than being banned from a discussion board. I want to live!
by Rob Bennett
images: dbkp file; dbkp; icis
1) Bear Market Analysis
http://www.passionsaving.com/bear-market-analysis.html
2) Bio
http://knol.google.com/k/rob-bennett/rob-bennett/1y5zzbysw7pgd/4#
3) Important Cautionary Words
http://www.passionsaving.com/disclaimer.html
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