Jack Bogle's dour forecast

[ejman]

Quote:

Originally Posted by Cut-Throat Well, I don't think so either ...... As I said, I think the 4% is a viable planning tool. And I don't think anyone on any investment forum that I've seen, actually employs it.

True, but it's a good reference -lets see, I'm below the magical 4% I'm golden...

[street]

Quote:

Originally Posted by COcheesehead IF I get a 4% return on equities and a 3.5% return on bonds WITH 2% inflation. I would be very happy. Inflation is the silent killer.

Exactly! I would be happy if that was the case.

[FIREd]

Quote:

Originally Posted by Cut-Throat Well, this is very easy to simulate in past history.... Using FireCalc, or VPW Backtesting... Which I'm guessing you've done one or the other or both. And then of course you would have to decide if it was at a 'Scary Level'.... For myself that is retired and employing VPW, there is no 'Scary Level', which is a benefit of VPW for me personally.

Not sure about that. When taking a percentage of remaining portfolio, the *“scary level” is on the income side it seems. Sure, you won’t deplete your portfolio as quickly but your income can quickly become insufficient to cover your expenses if returns are lackluster for a long time.

In my case, I need 1% real returns on my financial assets for my plan to work (to age 100) without selling real estate assets.

[Cut-Throat]

Quote:

Originally Posted by FIREd Not sure about that. When taking a percentage of remaining portfolio, the *“scary level” is on the income side it seems. Sure, you won’t deplete your portfolio as quickly but your income can quickly become insufficient to cover your expenses if returns are lackluster for a long time.

This has been covered ad infinitum. -- If you set your asset allocation on the lower risk side and take other steps like delaying S.S. to age 70, the downside risk is minimal. Again, use the backtesting of VPW and adjust your portfolio so that there is no 'scary level'.... If there is, you didn't retire with a Big enough portfolio.

[gstillson]

I somehow managed a 136% return this year but if markets are turning sour, I guess we should prepare for somewhat lower future returns.

I'd be happy with 20% to 25% honestly.

[Dtail]

Quote:

Originally Posted by bobandsherry So he's been spot on... Lol. As I said earlier, anyone can make a prediction. Would be great if there was a site that tracked the predictions of the "experts" against how things turned out. I predict they are wrong more than they are right. [emoji3]

Bolded - there is a site out there with some of this info. Don't remember what.
Possibly REWahoo knows...

[REWahoo]

Here you go:

Guru Grades

It's a bit dated (2005 - 2012 data) but I doubt the bottom line of an average accuracy of 47% has changed much.

[GravitySucks]

Quote:

Originally Posted by Cut-Throat Well, I don't think so either ...... As I said, I think the 4% is a viable planning tool. And I don't think anyone on any investment forum that I've seen, actually employs it.

I retired at 54.5 and left enough in my 401K to draw 4.5% each year (no inflation adjustments) and lived in that exclusively till a bit past 59.5 when I could get to my IRA money. So I guess I came pretty close to employing it so far.

[Free bird]

Lets move the asteroid posts over to the don't bother to save for retirement thread.

[USGrant1962]

Quote:

Originally Posted by REWahoo Here you go: Guru Grades It's a bit dated (2005 - 2012 data) but I doubt the bottom line of an average accuracy of 47% has changed much.

So within the margin of error it is,

wait for it,

ta da,

a coin flip!

[NW-Bound]

Quote:

Guru Grades It's a bit dated (2005 - 2012 data) but I doubt the bottom line of an average accuracy of 47% has changed much.

Bogle is not on the list!

That's because he and people like Buffett know that they cannot predict what the market will do next year.

What Bogle offers is the outlook for the next decade.

I never care for the Bogleheads and their forum. But I still listen to Bogle.

PS. I do not know why people are upset with his projection for low market returns. If people are planning their retirement on 10-15% return, they can just ignore him and go ahead with their plan. He cannot stop anyone from doing so.

[DrRoy]

Why would anyone expect past stock market growth levels to be sustained? Stock prices rise when earnings grow and/or PE expands. PE's are at historic highs. Not a lot of room to grow. Earnings are driven by economic growth, population growth, and productivity growth. All of these are lower than in past decades.

[DEC-1982]

Quote:

Originally Posted by racy I have kept track of some predictions from various sources. Here are Bogle's: 2012 - 7% stks & 3% bonds for next decade, minus 2% inflation. 2015 - 4% stks & 3% bonds for next decade, minus 2% inflation. 2018 - 4% stks & 3.5% bonds for next decade, minus 2% inflation. FWIW, Michael Kitces in 2016 - Using Shiller PE, real returns of stocks 2% through 2020's, and 1% real for bonds. 2030's and 40's could be quite good for investors. So, hang in there till the 2030s!

When I look at FIDO RIP, the first 10 years always stink, no matter whether you started now or whether you started in 2015 or in 2012. One recent analysis (this year) showed 2.09% growth annualized over 10 years. But many of us are looking beyond 10 years. If you get past the initial poor sequence of returns in good shape, you are all right for the long run.

[Cut-Throat]

Quote:

Originally Posted by GravitySucks I retired at 54.5 and left enough in my 401K to draw 4.5% each year (no inflation adjustments) and lived in that exclusively till a bit past 59.5 when I could get to my IRA money. So I guess I came pretty close to employing it so far.

The problem with employing a 4% SWR with inflation adjustments, comes when a severe market downtown occurs... I don't think anyone has the 'guts' or foolishness to continue to take the 4% plus inflation adjustment into the teeth of a Bear Market. Human nature will take over, and you will pull in your horns (Probably more than necessary) and if you really panic you'll sell your stocks at the bottom.


Better to have a workable Plan like VPW to keep you on track and keep your head!

[Dtail]

Quote:

Originally Posted by DEC-1982 When I look at FIDO RIP, the first 10 years always stink, no matter whether you started now or whether you started in 2015 or in 2012. One recent analysis (this year) showed 2.09% growth annualized over 10 years. But many of us are looking beyond 10 years. If you get past the initial poor sequence of returns in good shape, you are all right for the long run.

I believe that Fido RIP reduces your portfolio by ~15% in the first year and goes from there.

[MichaelB]

Quote:

Originally Posted by NW-Bound PS. I do not know why people are upset with his projection for low market returns. If people are planning their retirement on 10-15% return, they can just ignore him and go ahead with their plan. He cannot stop anyone from doing so.

I agree. If people think returns will be higher (or lower), share why and act accordingly.

Even if one disagrees with Mr. Bogle, it seems a bit shortsighted to just write it off and ignore it. The man is intelligent. Also, this debate is over the absolute number, which (IMO) is less relevant, and ignores the framework and methodology Bogel uses, which (IMO) is more meaningful.

[street]

It will be, what it will be, and each need to do and prepare for the years they have left in retirement or if you are just planning. I do believe that the numbers have shown for 10 plus years, the average percent of gains is 7%. This has been the average (7%) for the history of the DJ. Correct me if that is a false statement. I would never use that number when making a plan for retirement. I have done some projections but I use 2% over the long haul, 10 plus year for my investments to see where I could be at, down the road.

[GravitySucks]

Quote:

Originally Posted by Cut-Throat The problem with employing a 4% SWR with inflation adjustments, comes when a severe market downtown occurs... I don't think anyone has the 'guts' or foolishness to continue to take the 4% plus inflation adjustment into the teeth of a Bear Market. Human nature will take over, and you will pull in your horns!

Could be that I'll spend less when we got a true Bear, but it will be more from Fear and Greed than foolishness. The nice thing about Bengens SAFEMAX is that it accounts for Bears. I hope to actually have the courage to spend a bit extra when the next recession hits as some toys i want will go on sale. Some years like this one will have low spending, some will have higher spending, but that's more due to travel costs in my case than what the market does.

Now that I have access to the IRA I use Fidos planner to set my guard rail. That uses way worse scenarios than what Mr. Bogle has forecast for the next 10 years, so I'm hoping he's correct.

[NW-Bound]

Quote:

Originally Posted by street It will be, what it will be, and each need to do and prepare for the years they have left in retirement or if you are just planning. I do believe that the numbers have shown for 10 plus years, the average percent of gains is 7%. This has been the average (7%) for the history of the DJ. Correct me if that is a false statement. I would never use that number when making a plan for retirement. I have done some projections but I use 2% over the long haul, 10 plus year for my investments to see where I could be at, down the road.

It's for a lot longer than 10 years. Maybe 20+ years.

From 1965 to 1975, the market return was 0, after accounting for dividend and inflation.

More recently, it's the same from 2000 to 2011.

[street]

NW-Bound >>> thanks for that information. After reading your response I googled and found that the average is 7%, but like you said it is for 20 plus years. Thanks.