Evaluating various withdrawal strategies

[audreyh1]

Quote:

Originally Posted by photoguy If I understand the article correctly, if the withdrawal (4%) is not sufficient to reach the target allocation, the portfolio will be left out-of-whack. I guess his rebalancing approach will fail to maintain the target allocation whenever stocks have a greater than 8% gain/loss (he uses 50-50 portfolio).

OK - good point. That is not complete rebalancing. Then the model is just confusing.

[photoguy]

Yeah I hate it when people don't use an appropriate default when testing their new fangled algorithm. Sometimes I think it's intentional (instead of cluelessness) but either way doesn't instill confidence in his work.

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[donheff]

I read an article years ago that suggested a starting WR % calculated as 1/Schiller's PE/10 (CAPE) at the start of ER. That would amount to 3.8% today. And someone else suggested reducing that a bit ~.83/PE/10 (3.2% today). Does anyone know where I could find a reference that discusses using the PE/10 to set a starting WR?