NEWSFLASH: Bernstein slams early retirement!!!

[BigMoneyJim]

Originally Posted by ((^+^)) SG

The valuation an investor cares about is current price-to-future returns. But quantified valuation is always current price-to-past returns.

Yes, but there's a 1-in-2 chance that future returns will be worse than past returns.

[bosco]

Originally Posted by wabmester

If you have 4 horses in a race, what's the probability that any given one of them will be the slowest? Yup, 1 in 4.

Aside from the comments about the questionability of the accuracy of the "probabalisitc analysis" in this quote, I can't help but point out that you are comparing an equity market from a very young, almost frontier, republic to that of a nation with a much more complex economy that is in the middle of converting to a service-sector and outsourcing model, rather than a natural resources and manufacturing economy.

To claim that the first 50-year sequence has a similar expected outcome as the last period seems very questionable to me. This is apples to oranges. I think overlapping periods are probably more accurate, for this purpose, and maybe a shorter time-frame, counter-intuitively, might be more accurate for our purposes.

[ESRBob]

I know the U.S. history is what we've been using in all these long studies so far, but I am itching to get my hands on the new Dimson Marsh international long term data to see how it holds up.

Going forward, I hope none of us is tying our fortunes solely to the U.S equity markets or the U.S. economy.

When you get yourself into lots of different asset classes, currencies and countries, a lot of the bumps in the road get ironed out right there.

For now, I guess I consider that overlapping time periods are just a necessary evil in order to get more data sets -- we simply can't do meaningful analysis on the history we have any other way.

In the end, the midcourse corrections approach -- taking a percent of assets each year and living on it -- seems to me the best insurance for long-run survivability. It really makes a difference, during hard market conditions, compared to the old approach of giving yourself a stead inflation-matching raise every year off an initial base.

[retire@40]

Originally Posted by ESRBob

Going forward, I hope none of us is tying our fortunes solely to the U.S equity markets or the U.S. economy.

The US economy is pretty much the world market. If we ever fall into a depression, the rest of the world will also fall into a depression. If so, the only safety may be in gold.

But, as I've said before, chances of another depression are slim.

[ESRBob]

Originally Posted by retire@40

The US economy is pretty much the world market. If we ever fall into a depression, the rest of the world will also fall into a depression.

It has no doubt been true in recent decades. I honestly wonder if it will continue to be true. The domestic demand being fanned up in places like China and India is about to be staggering. Wall St. Journal mentioned last week that China is now the third-biggest market for luxury goods in the world. The sheer numbers of people and their need (and ability to pay for) so many fundamental manufactured goods and ancillary services is so vast that at some point, maybe soon, they won't need the U.S. 'engine' of final demand in order to keep themselves in business.

If that is true, then U.S. global influence may wane, or at least level off, and we may look back on these turn-of-the-century times and talk about the good old days.

Cerrainly China want to stand up and be counted as a superpower -- militarily and economically. And with a billion people more than the U.S. (1.3 billion total), hungry, talented and willing to work hard, they may just pull it off.

[bosco]

Originally Posted by ESRBob

I know the U.S. history is what we've been using in all these long studies so far, but I am itching to get my hands on the new Dimson Marsh international long term data to see how it holds up.

Me too!

I spent quite a while trying to track it down on the internet to no avail.

If you check out the book on Amazon (The Triumph of Optimists, or something like that) it is 1) expensive, and 2) does not actually contain the data series, just charts that are difficult to convert into data.

PS--don't forget Staunton

If anyone has a line on this data, I would love to hear about it. I'd like to drop it into Gummy-stuff's sensible withdrawal calculator and see what effect it has.

[ESRBob]

Ibbotson is selling it.

http://tinyurl.com/e422o

I looked a few months back, and I believe the data carried a hefty fee, which I am hoping will drop or some other way to get access will open up. Maybe someone with academic credentials will get a discount?


EDIT: Shortened URL

[unclemick]

Goggle - Angus Maddison - The World Economy.

Data is only from 1890-1992. A truly turgid tome - I decided to pass on that one - let Bernstein peruse and draw conclusions for me.

Heh heh heh

P.S. - Bernstein likes Maddison - and has referrd to his work in past Efficient Frontier articles.