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Old 01-12-2019, 11:49 AM   #61
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1870 was pre-electricity and coal fired steam was the primary workhorse. I'm all for a hardened model but wonder if you go too far back if the data stops being reality based for today. "Nobody was killed in an automobile accident in 1775" sort of thing.
IMHO, it's the exogenous factors that come from out of nowhere that are the biggest threat to us since it's hard to prepare for the unknowable. By including years that are not longer reality based today, I am hoping those non-reality years can be used as a proxy for the unknown. My 2˘. I may be wrong.
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Old 01-12-2019, 01:18 PM   #62
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As a matter of fact, yes, in certain cases. I have a friend who indulges in exquisite wines. Two friends actually, and some of their stuff is expensive and amazing. Once or twice a year I'll have a little of it, as offered, but I don't dare buy such a bottle. I definitely don't need to develop a taste for that!

But I guess I did sample it.
When I was at BigMegaCorp I traveled quite a bit with an excellent VP who was a mentor and who also exposed my palate to “fine wine” all on the company credit card at that time. The experience gave me the wine bug so I collected a 450 bottle cellar during my high income years that now gives me immense pleasure during my retirement. Sharing bottles with friends and families is one of my favorite pastimes. Cheers!
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Old 01-12-2019, 08:03 PM   #63
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Originally Posted by Chuckanut View Post
IMHO, it's the exogenous factors that come from out of nowhere that are the biggest threat to us since it's hard to prepare for the unknowable. By including years that are not longer reality based today, I am hoping those non-reality years can be used as a proxy for the unknown. My 2˘. I may be wrong.
Same here. I'm glad for those wilder years in the model that make outcomes 5-10% or so worse.
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Old 01-13-2019, 06:20 AM   #64
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Same here. I'm glad for those wilder years in the model that make outcomes 5-10% or so worse.
+1 for including grey-to-black swans. Of course when backtesting something like that, all you have are the returns associated with those events. You don't get all of the other things that go with them which might have affected you personally, such as being drafted into a war, hyperinflation, a worldwide flu epidemic, inability/ability to log into your broker and buy or sell nearly immediately, etc. A lot of those things went hand-in-hand with the returns that occurred back then. On the other hand, we can surely imagine events that could happen in modern society that could have similar effects on returns as happened in the past. So include them, why not. But total judgment call regarding whether and how much you try to do something to your portfolio to try and mitigate the worst of them.
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Old 01-13-2019, 08:27 AM   #65
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I get the civil war vs. Cold War. What is different now is machines trade and money moves in and out far than the past. Media fears multiply the impact as well.
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Old 01-13-2019, 11:24 AM   #66
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When I was at BigMegaCorp I traveled quite a bit with an excellent VP who was a mentor and who also exposed my palate to “fine wine” all on the company credit card at that time. The experience gave me the wine bug so I collected a 450 bottle cellar during my high income years that now gives me immense pleasure during my retirement. Sharing bottles with friends and families is one of my favorite pastimes. Cheers!
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