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How Firecalc handles missing Treasury data
Old 12-04-2004, 12:35 PM   #1
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How Firecalc handles missing Treasury data

A belated response to some questions about why fiddling with the TIPS coupon would affect the results when you aren't investing in TIPS...

As TH points out, Firecalc gets testy when you fiddle with its TIPS but then don't follow through. (Sorry... I couldn't resist.)

As most folks know, there were no such things as 30 year Treasuries before 1925, and no such thing as 5 year Treasuries before 1953. Simply leaving those out would result in too little data for good calculations.

After discussions with whoever was paying attention back when this was all being done, we* decided to use the average of commercial paper and the theoretical TIPS calculation for missing years.

(* - The literary "we".)

The rationale for that is lost in the archives of the TMF RE forum and correspondence I no longer have.

If there is any consensus on a better approach(just use commercial paper?), I am glad to make the change. It's a simple change in the code.

Dory36
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Re: How Firecalc handles missing Treasury data
Old 12-04-2004, 12:55 PM   #2
 
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Re: How Firecalc handles missing Treasury data

Hi Dory. You have a good thing. My vote is
"don't mess with it."

JG
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Re: How Firecalc handles missing Treasury data
Old 12-05-2004, 01:57 AM   #3
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Re: How Firecalc handles missing Treasury data

My vote is to use TIPS across the board. The purpose of the tool is to help aspiring early retirees develop effective investment strategies today and in the future. Now that TIPS are available, TIPS seem to me to be a better non-stock option than commerical paper. So it seems to me that the relevant comparison is stocks vs. TIPS rather than stocks vs. commercial paper.
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Re: How Firecalc handles missing Treasury data
Old 12-05-2004, 02:45 PM   #4
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Re: How Firecalc handles missing Treasury data

I agree with John. It's good the way it is. Don't mess with it.
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Re: How Firecalc handles missing Treasury data
Old 12-05-2004, 02:59 PM   #5
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Re: How Firecalc handles missing Treasury data

I'll add my agreement that you should leave it the way it is. I certainly wouldn't remove any of the options that are available. Not only is it valuable to compare results using different strategies, but many users probably have tabulated and graphed results from the program that they may want to refer to and check future runs against.

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Re: How Firecalc handles missing Treasury data
Old 12-06-2004, 11:12 AM   #6
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Re: How Firecalc handles missing Treasury data

Quote:
After discussions with whoever was paying attention back when this was all being done, we* decided to use the average of commercial paper and the theoretical TIPS calculation for missing years.
Any change is optional.

IMHO, you should mention this algorithm somewhere. Possibly with the FAQS.

Have fun.

John R.
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Re: How Firecalc handles missing Treasury data
Old 12-06-2004, 03:06 PM   #7
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Re: How Firecalc handles missing Treasury data

Quote:
IMHO, you should mention this algorithm somewhere. Possibly with the FAQS.
Good suggestion. Or perhaps put a little asterisk beside the 30 year and 5 year treasuries that is linked to a brief explanation. It would be good if new users knew that complete data exists for stocks, commercial paper, and TIPs - but not the other two.
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Re: How Firecalc handles missing Treasury data
Old 12-06-2004, 04:00 PM   #8
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Re: How Firecalc handles missing Treasury data

Quote:
...IMHO, you should mention this algorithm somewhere.
Done. The lead-in to that selection now includes an explanation.

Now why didn't I think of that?

Dory36
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