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Re: SWR of 6.21% for 26 years
Old 03-28-2004, 10:44 AM   #41
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Re: SWR of 6.21% for 26 years

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Irritating? . . . No, but I am confused. TH, there is a correlation of tomorrows performance results with the performance yesterday. That does not imply that the correlation is 1 (ie completely predictive) or even that I can quantify it.

But you seem to acknowledge this on the one hand, while rejecting it on the other. You seem comfortable with Bernstein's predictions for the market 30 years out. How could any prediction be made about performance in the future if that performance were not correlated to today's financial situation? Don't confuse correlation with detailed predictability.

Ok, I cant be any more confused. How can you know something exists (that has been proven 10 ways to sunday not to exist), but not be able to quantify it? Other than pornography.

As far as the second bit goes, I think its fairly simple and has already been explained many, many times. We can guess where we'll go in the long run, but in the shorter hauls there is NO prediction. But I think what you've said is you believe the opposite...that you can at least somewhat predict the shorter term market movements (ie, 3-5 years?) based on recent history but the long term is unpredictable. Yes?

Anyone else want to chime in on whether Bernstein is on the right track or he and all the data are backwards?
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Re: SWR of 6.21% for 26 years
Old 03-28-2004, 11:21 AM   #42
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Re: SWR of 6.21% for 26 years

This might help address market predictability. I have posted (real annualized) stock market returns (based on Professor Shiller's numbers for the S&P500) with dividends reinvested and with 0.20% expenses for the years 1871-1980.

Annualized Real Total Returns 100% stocks
http://nofeeboards.com/boards/viewtopic.php?t=2226

For example, the range of real returns at 5 years is from a (9.68%) loss starting in 1916 to a 21.42% gain in 1932.

In contrast, the range of real returns at 30 years is from a gain of 3.05% near 1890 and 3.80% in 1965 to 9.56% starting in 1932.

It turns out that there is little predictability (except for some very short-term momentum) early and a great amount of predictability later on. The long-term variability (or variance) decreases faster than might otherwise be expected. (The variance falls faster than 1/N.) This is because market returns are not entirely independent, but they are loosely related to long-term earnings.

The effect of any individual year is reduced when calculating annualized returns, which involves taking the Nth root of the total number of years (N). That helps explain why short-term variations get suppressed in long-term calculations of annualized return.

Have fun.

John R.
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Re: SWR of 6.21% for 26 years
Old 03-28-2004, 11:38 AM   #43
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Re: SWR of 6.21% for 26 years

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How can you know something exists (that has been proven 10 ways to sunday not to exist), but not be able to quantify it? Other than pornography.
Q: What is a Safe Withdrawal Rate?
A: I'll know it when I see it.

Actually, that about sums it up for this group.

Quote:
Anyone else want to chime in on whether Bernstein is on the right track or he and all the data are backwards?
I am still new to pondering stock return futures, but it seems to me that short term market movements are based on reactionary mass behavior and long term market movements are based on productivity. It may seem easier to "follow the man, not the dog", but what is left out of this equation are political revolutions, plagues, wars, technological revolutions (steam engines, combustion engines, flight, semiconductor electronics, radio, etc.) and extraterrestrial invasions (or whatever).

Besides, after the dog does his business, doesn't the man turn around and go home?
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Re: SWR of 6.21% for 26 years
Old 03-28-2004, 12:30 PM   #44
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Re: SWR of 6.21% for 26 years

Quote:
Man plans and God smiles.

John Galt
Not taking away from the thoughtful insight of so many on this thread, but I know of no better quote on this topic. Hurray John!
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Re: SWR of 6.21% for 26 years
Old 03-28-2004, 06:17 PM   #45
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Re: SWR of 6.21% for 26 years

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. . . After sleeping on it I woke up with this thought: if we accept that periods like 2000-2004 can be eliminated from the sample pool for the next 26 years then our number of historical samples has decreased significantly..
I'm not sure why you have concluded that we are throwing out 2000-2004. That's not the case at all. The SWR simulation is looking for the worst case of all past starting retirement dates. The SWR calculator does not "throw out" all years except for 1929 or 1965. All those other years simply are not the worst case. The SWR needs to be at or below 4% to insure 30 years of inflation adjusted withdrawals only for starting retirement dates of 1929 and 1965. So if you look at what the safe withdrawal rate would have been for retirement starting in most of the 1930's, for example, you would get a higher rate than 4%. The person retiring in 1934 could perform the same analysis that amt is applying to 2004 and calculate what the 1929 SWR retiree was currently withdrawing and withdraw at that higher rate.

Quote:
And if it's okay to project backwards from now to 2000, then why did Mr. ER 2000 not project backwards a few years to take what Mr. ER 1996's current SWR is?

I just looked it up: if Mr. ER 2000 projected back 4 years he would find that Mr. ER 1996 who started with a 4.1% withdrawal is at a 2.21% withdrawal rate in 2000.

If Mr. ER 2004 looks at Mr. ER 2000 and takes his 6.21% withdrawal rate, then why shouldn't Mr. ER 2000 have looked at Mr. ER 1996 and taken the 2.21% withdrawal rate?.
Mr. ER 2000 can look back 4 years, and if the ER 1996 number is 2.21%, them Mr. ER 2000 can use that rate and be safe. But of course if he believes the underlying assumption of historical SWR simulators, he can also use the 4% SWR and be safe.

Notice that when markets are on the rise, the SWR you calculate using today as the starting point will almost always be higher than the rate you calculate from using previous start dates. When markets decline, however, you are guaranteed that the worst case was in the immediate past, so you will get a less limiting SWR by considering the SWR from the onset of the declining markets.

For example, at the end of 2000, markets had declined significantly. We could not predict whether 2001 and 2002 would provide gains or losses, but we could be sure that the string of years starting in 2000 and moving forward would be worse than any string that started in 2001 or 2002 etc. until the market returned to positive territory. So the worst case that FIRECALC would seek, might ultimately include retirement start date of 2000, but will not include a start date of 2001 or 2002.

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I'm not awake enough to calculate how many sample periods we've eliminated, my my intuition says we've eliminated between a quarter and a half of the samples.

However, if we're using the past 4 years to eliminate historical 4-year periods from our 26-year period, then aren't we bound to take only 26-year samples in which the previous 4 years behaved similarly to 2000-2004? If that's the case then our sample size has dropped to 4 or so historical periods depending on how closely you want to match the year 1-4 overall return.
We're not eliminating any periods. We are searching for the worst case retirement date. If we find the withdrawal rate that is safe for the worst case, then it will be safe for all others.

Ask for clarification if you don't understand what I'm explaining yet.
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Re: SWR of 6.21% for 26 years
Old 03-28-2004, 06:27 PM   #46
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Re: SWR of 6.21% for 26 years

For TH and any others interested, Bernstein wrote
an interesting article on market timing here:

www.efficientfrontier.com/ef/703/timer.htm

Cheers,

Charlie (aka Chuck- Lyn)
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Re: SWR of 6.21% for 26 years
Old 03-28-2004, 06:46 PM   #47
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Re: SWR of 6.21% for 26 years

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Ok, I cant be any more confused. *How can you know something exists (that has been proven 10 ways to sunday not to exist), but not be able to quantify it? *Other than pornography. *. . .
TH, No one has ever proven that future economic actions are uncorrelated to present economic actions. In fact, the scientific principle known as causality insures that they are. You keep trying to confuse predictibility with correlation.

The weather over your home tomorrow is correlated to all the weather patterns surrounding your home and region today. Yet weather predictions are not 100% accurate. Even when they get temperature highs or cloud cover or precipitation nearly accurate, they may miss on humidity or wind or temperature lows. Sometimes they predict that is going to rain tomorrow evening and it does indeed rain -- but not until the following morning. This is very analogous to financial performance.

Quote:
As far as the second bit goes, I think its fairly simple and has already been explained many, many times. *We can guess where we'll go in the long run, but in the shorter hauls there is NO prediction. *But I think what you've said is you believe the opposite...that you can at least somewhat predict the shorter term market movements (ie, 3-5 years?) based on recent history but the long term is unpredictable. *Yes?

Anyone else want to chime in on whether Bernstein is on the right track or he and all the data are backwards?
No. I don't think I've ever said that. I certainly don't believe it. First, you are playing fast and loose with the issue of correlation here. You want to say that you can "guess" at 30 year performance. But if you are going to have any faith in that guess, it must be based on some analysis. And what is the input for that analysis if it is not the economic conditions of today. So if economic conditions of today will shape the finanical performance over the next 30 years, there must be a correlation between them. You can't claim to be able to predict performance in the future based on today and still deny a correlation.

Now, as far as the 30 year issue goes. I believe that unforseeable major events such as wars, law changes, revolutionary technological developments, etc. are likely to change the financial landscape over any period as long as 30 years. So I question the validity of any predictions that are that long term. I don't recall many people in the 1960s predicting the stock market run up of the 1990's, for example. I have no more faith in Bernstein or Bogle or Buffet or anybody else to predict the performance we will see in 2024 to 2034.

When Bogle described his analysis that predicts stock performance out 10 years, he makes a point of telling you how much those predictions changed over the past 3 years. His discussion of the basis of those predictions as well as his discussion of how events can result in significant changes to those predictions is very enlightening, logical and reasonable.
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Re: SWR of 6.21% for 26 years
Old 03-28-2004, 11:10 PM   #48
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Re: SWR of 6.21% for 26 years

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I'm not sure why you have concluded that we are throwing out 2000-2004. [...] The SWR calculator does not "throw out" all years except for 1929 or 1965.
I'm not saying the calculator throws it out. I'm saying that by definition amt's supposition eliminates historical sample periods to claim a 100.0% success rate for 6.21%. This is going to take a lot of typing to explain:

amt's scenario is Mr. ER 2000 started with $1mil and $41,900 yearly withdrawals (a 100.0% success rate in FIREcalc) and has $674,000 left at the end of 2003. If I count right, that amount is comparable to the year 4 column in FIREcalc. i.e., when the historical data is update in FIREcalc it will look like:
2000 929544 793077 ?----? 674000

This is not important except to help provide context for the following tables.

He says that since that Mr. ER 2000 is on a 100.0% safe 30-year plan and his $41,900 withdrawal rate is now 6.22% of his remaining balance means that we can all use 6.22% or 6.21% if we retire in 2004 and get the same 100.0% safeness for 26 years.

Here are the first few historical sample periods from amt's scenario sorted by worst year 4 results:

1929 911671 739828 480288 426636
1930 813534 529961 472511 628282
1928 1311021 1208022 991669 653985
1937 726818 773848 757081 674853
1931 653002 583719 778033 695139
1881 972714 967214 902092 791911

I ran FIREcalc again, this time with $674,000, withdrawing $41,900 (6.22%) for 26 years. It reports to succeed 70.5% of the time. Here are the failing retirement years in this case: 1899, 1901-1903, 1905-1907, 1909-1914, 1916, 1928-1931, 1934, 1936-1940 and 1959-1973.

I just listed 39 failing historical 26-year periods for a 6.22% withdrawal rate. Let's start with 1899: I could say that 1899 will fail a 6.22% 26-year withdrawal; but you're saying that 1895-1899 had a better return than 2000-2004 so taking 6.22% there isn't a fair comparison. We just eliminated one out of 105 26-year sample periods.

Repeat for all other dates except 1934 and we're down to 67 sample 26-year historical periods to support a 100% safe 6.22% rate.

However, if we eliminate those 38 failing sample periods because they had higher 4-year leading returns than 2000-2004 then why are we keeping all the successful sample periods where the leading 4-year returns were higher? If we follow that logic--which I think we have to statistically to support amt's supposition--we need to eliminate the rest. If you look at the table above, that leaves us with 5 sample 26-year periods--those after 1929-1933, 1930-1934, 1928-1932, 1937-1941 and 1931-1935--that had 4-year leading returns comparable to 2000-2004.

As far as I can tell, amt's claim of 6.22% withdrawal being 100% safe from 2004-2029 is only when supported by 4 or 5 historical samples which is probably not enough for anybody.

It's not FIREcalc or its method that eliminated the samples; it's using the past 4 years to extrapolate the SWR for the next 26 years that requires us to disqualify "invalid" samples whether we do it consciously or not.

FIREcalc doesn't think that way and tells us 6.22% fails 29.5% of the sample periods.

I'm confused about failed 26-year period starting in 1934 looking at the above table; if $41,900 from $1mil was survivable for 1930-1959 then why does 1934-1959 fail as $41,900 from $674000 in our test or $628282 (which is the correct balance for the beginning of 1934)?

Even if I goofed up the math or the calculator usage somewhere I think my point about eliminating statistical samples stands on firm ground.
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Re: SWR of 6.21% for 26 years
Old 03-28-2004, 11:12 PM   #49
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Re: SWR of 6.21% for 26 years


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Ask for clarification if you don't understand what I'm explaining yet.
I think I understand about the rest you said. Perhaps what I'm misunderstanding is what FIREcalc is. My understanding is that FIREcalc runs our proposed SWR through every sample period in our market's history to determine portfolio survivability success in that historical period. It does this without considering recent market action or even when I'm going to retire.

After that point it's the ER's decision how confident they are that the future market fluctuations won't fare worse than the historical sample periods.

However you seem to be modifying SWR by considering recent market movements and applying historical bias to them and then projecting forward.

I see two different methods here. As far as FIREcalc is concerned, 1929's trailing performance can start right now, even after the 2000-2004 decline. If 1929's trailing performance starts now then 6.22% for a new retiree isn't safe. Nor is it now safe for the 2000 4.19% retiree, even though FIREcalc said it was then. Your rise/fall/historical analysis is basically saying that 1929's trailing performance won't happen after 2000-2004's performance because that's worse than history.

I'm not necessarily saing your analysis is invalid; I'm saying I don't think the statistics support it like they support a FIREcalc calculation.

But me using FIREcalc and getting into a SWR discussion is kind of like a 6-year old directing the NASA Mars rovers: we're interested but bound to get something wrong for lack of experience.
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Re: SWR of 6.21% for 26 yearsThe SWR simulation is
Old 03-29-2004, 01:37 AM   #50
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Re: SWR of 6.21% for 26 yearsThe SWR simulation is

The SWR simulation is looking for the worst case of all past starting retirement dates. *The SWR calculator does not "throw out" all years except for 1929 or 1965.

Say that you have a friend who has been to your house 130 times over the course of the time you have known him. On 128 of those occasions, he drove home without incident. Twice he got drunk at parties you were throwing. On the first of those occasions, he banged into another car at a red light. On the second, he smashed up a neighbor's fender while parking. In neither case did he get himself killed as a result of his drunk driving.

This weekend, he gets twice as drunk as you have ever seen him before. You see him heading to the car and suggest that he sleep over rather than taking a risk of getting himself killed.

He says "I was drunk on two earlier occasions, and I didn't die either of those times. If I bang up another car again this time, I'll just somehow come up with the money needed to pay the bill. At least I can be certain that I won't get myself killed."

You say: "But two times isn't much to go on, and you're a lot more drunk this time. I think there's a real chance you actually will get killed this time."

He says "you're forgetting that I have driven home from your place 130 times. That's an awful lot of times that I drove home from here and didn't get killed. Considering that I've done this 130 times before, I'm 100 percent confident that I can pull it off again this time."

I am not persuaded by this logic. What matters is what happened the two times your friend was drunk. On both occasions when retirees tried to get away with a 4 percent withdrawal at 1929-type valuation levels, their retirements barely survived 30 years. And during the bubble, valuation levels went a lot higher than they were in 1929. I do not think that aspiring early retirees should be placing their confidence in claims that, because on two earlier occasions retirees just barely mananaged to survive on 4 percent withdrawals, it is safe for new ones to try test their luck in hoping this same withdrawal rate will barely squeak by yet a third time. This is especially so when the valuation level at which they are starting their retirements is far higher than it was on the two earlier occasions on which this withdrawal rate squeaked by.

Your friend might survive the ride home no matter how drunk he is this time. Anything is possible. But I don't view it as a safe practice for you to hand him back his car keys.

I believe that the historical data is trying to tell us something important. I think that we should be soberly trying to come to terms with the message it is trying very hard to communicate to us.
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Re: SWR of 6.21% for 26 years
Old 03-29-2004, 03:50 AM   #51
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Re: SWR of 6.21% for 26 years

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I believe that the historical data is trying to tell us something important. I think that we should be soberly trying to come to terms with the message it is trying very hard to communicate to us.
Could you give me a capsule summary of what you think this message is, and what to do about it Rob?
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Re: SWR of 6.21% for 26 years
Old 03-29-2004, 05:04 AM   #52
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Re: SWR of 6.21% for 26 years

Cut expenses. Live off the SEC yield of your retirement portfolio(total taxable plus tax deferred). If history mean reverts and the yield goes north of 4% SWR - take the lower number. If the size (too small) of your portfolio prevents this - forget retirement calculators and look/read about value funds/individual stocks/MLPs/bonds/etc and construct the best portfolio you can.

Stocks above their 1871 trend channel and historic low interest have been a source of caution expressed by many posters to this forum.

Anyway - my two cents.
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Re: SWR of 6.21% for 26 years
Old 03-29-2004, 06:06 AM   #53
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Re: SWR of 6.21% for 26 years

Could you give me a capsule summary of what you think this message is, and what to do about it Rob?

I think that people with high stock allocations need to give some thought to the idea of lowering them until the PE10 number and dividend payout number return to levels closer to the historical norms.

Here's a post from the SWR Research Group board where JWR1945 puts forward an allocation strategy that the historical data indicates would support a 4 percent withdrawal at today's valuation levels.

http://nofeeboards.com/boards/viewtopic.php?t=2158

By no means do I think that the approach described in the link above is the only reasonable approach. Nor do I believe that everyone needs to be getting out of stocks altogether. There is lots of room for reasonable differences of opinion on lots of questions.

What alarms me are the claims that those with a 74 percent stock allocation can count on a 4 percent withdrawal for retirements beginning at the valuation levels that have applied since the late 1990s. I don't think those claims are reasonable. I think we all need to back off of that stuff a good bit before our promotion of that stuff ends up discrediting the entire Retire Early movement.

SWR analysis is not yet sufficiently developed to use it to support dogmatic pronouncements. We need to engage in years of study of what the historical data really says before we get to a point where we are telling people with confidence that particular take-out percentages are "100 percent safe."

I am more comfortable telling people what is not safe than I am telling them what is safe. If there is strong evidence in the data that a particular strategy may not work, that is enough to declare it something less than absolutely safe. If there is strong evidence that a particular strategy will work, the most you can reasonably do is say that it appears to be safe pending futher analysis.

I think that we have lost sight of the purpose of SWR analysis. The original purpose was to caution people as to possible risks. When Scott Burns used the Trinity study to show that Peter Lynch was wrong with his claims that a 7 percent withdrawal was safe, he was providing his readers an extremely valuable insight. SWR analysis is being used today to support investment strategies that may or may not work, but which in fairness can only be advertised as strategies entailing a good bit of risk. We all should do what we can to bring that sort of thing to a stop.
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Re: SWR of 6.21% for 26 years
Old 03-29-2004, 07:56 AM   #54
 
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Re: SWR of 6.21% for 26 years

Hi *****! Good post. Since I don't really use SWR
planning much in my own situation, I guess I won't
get nervous until my net worth starts to decline.
In the meantime, I subscribe to Al Pacino's opinion regarding risk in general.............
"You can get killed walking your doggie!" You can also get
"killed" financially in spite of "walking" through all of the SWR formulas ever devised.

John Galt
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Re: SWR of 6.21% for 26 years
Old 03-29-2004, 08:04 AM   #55
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Re: SWR of 6.21% for 26 years

By the way, personally I agree with unclemick and John Galt on the ultimate futility of predicting the future.

However, we frequently use the past to guide us for the future. We can measure past returns and apply historical statistical results of our future plans (FIREcalc). We can extrapolate based on market direction and performance (salaryguru), and we can extrapolate based on price versus value (*****).

I think any of the above given tools is valid on its own to give us different points of view to help plan, but if we start mixing the tools I want to be clear we are doing so. I don't want to say that I'm only relying on 105 samples of historical statistics when I'm applying a market or value bias on the results. That's when you end up mathematically "proving" Stevie Wonder is God.

***** has made a good point by comparing this visit's drunk man to two previous drunk visits by him (effectively eliminating all but 2 of the 100+ historical samples when the visitor isn't drunk and realising it's not enough to be sure), but he has added value bias even to his example's forward thinking by noting the man is twice as drunk now than before. If we were going to argue this point (I'm not), we should argue whether or not the man is really twice as drunk this time or even whether he's drunk at all; or if we use historical statistical analysis we should argue how many historical samples are valid and whether that's a sufficient sample pool. But to argue both at the same time is lots of trouble.

I think amt's example and salaryguru's support of it adds market movement analysis to the FIREcalc result and tries to claim FIREcalc's statistical method fully supports the judgement-modified conclusion.

I hope I'm not stepping on toes here; I'm just trying to understand what we're all saying and figure out why amt's 6.22% claim just doesn't sound right to me. I may be making a total fool of myself and not realizing it yet.

By the way, FIREcalc as a tool does not tell you what SWR is. It simply tells you what it was historically. After the result is given then you apply value judgements on whether that's useful going foreward, but let's not use FIREcalc's math to support the validity of our judgement.
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Re: SWR of 6.21% for 26 years
Old 03-29-2004, 11:33 AM   #56
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Re: SWR of 6.21% for 26 years

Well, in the past couple of days I did not check these boards, a lot had been discussed. It seems to me that most of the criticism against my initial proposal stems from the sentiment that the future is likely to be worse than the worst case of the past. I understand that sentiment and it is probably wise to asssume as such.

Salary, thanks for your well reasoned explanations in support of my hypothesis. I can't explain anywhere near what you have.

Personally, I am conservative. I plan on drawing about 3% when I ER. That's where people have to make their own plan and adjust the FIRECalc results up or down based on their comfort levels.

Regards,

amt
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Re: SWR of 6.21% for 26 years
Old 03-29-2004, 12:52 PM   #57
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Re: SWR of 6.21% for 26 years

Hoo boy, we're down to semantics.

Well I think this is one of those discussions where we end up agreeing on the results but the path on which we get there is rife with disagreement.

Just to wrap up my thoughts on this:

- Correlation by its definition show a demonstrable connection between one or more things and another. Correlation cannot be proved without demonstrating the connection, ie, establishing that the presence, absence, or change in one thing has a measurable effect on the other. In the absence of a solid measurement, correlation becomes opinion.

- I cant agree with the weather example. Weather correlations and predictions include no social or psychological factors, which are the primary drivers of short term (<5-7 year) market movement.

- I think the principal disconnect here is that I perceive that you may be discounting the same social and psychological influences on the market and perceive that there is a weather-like pattern to markets that can be divined with some level of accuracy. If this were true, then actively managed funds should beat the stuffing out of index funds, except that historic data shows that they fare worse than if they were run by rules of chance.

- The argument that monte carlo simulation results fare worse is a failure of those calculators to follow some correlation seems off the mark to me. Monte carlo simulators produce scarier results because they produce more periods of calculation and can as a result of their nature string together more bad years in series than the shorter historic numbers produce.

- I'm still stuck on the short and long term expectations, and feel like we're dancing around it. I'll try to restate what I think you said again since i missed the first time. You feel that certain hard to measure correlations in market movements makes shorter term (5-7 year) movements more predictable than longer term ones (30+ years). I agree in principle that a lot may happen to disrupt markets over 30 years, but I also note that a lot HAS happened and during long periods of time the market has simply moved upwards. Which agreeably has nothing to do with where ours will end up. The same disruptions however make for far more substantial immediate and short term effects. I look at an 80 year log plot of any major long running index and except for the recent bump and dip I see a fairly smooth and straight line that over a 30 year period is higher at the end than at the beginning. Not so for ANY period of 1-20 years. Thus I can reasonably presume that short of major damage to or extinction of our society, the same is likely true for the next 30 years.

- I can reasonably presume that if stocks have run up a lot in a year or two, that at some point they will either head back down in a shot or a drizzle, or stay where they are for a long time until earnings catch up. My likely ability to predict that through any correlative action is very low.

- Is this tracking as random as a coin toss? Probably not. I think it would be unlikely to see 50 years of straight down or 50 years of straight up, both possibilities of a coin toss.

- I think there is reason to believe that there is SOME correlation between past and current actions in the market and future ones. I think it is unreasonable to believe that it is measurable, predictable, or actionable.

Is this last bit agreeable, makes sense, and sums up the whole thing?

As far as the original point and tying it in with *****'s points, I dont think the 6.21 works. Simply because stocks ran up so much prior to 2000 that even taking the run down into consideration, they never reached historical valuation levels, and this past years run up made it worse. Expecting that we'll get a fair and upward run up from here in line with historic results at historic valuation levels while excluding the plain observation that todays valuations are far higher than those historic ones may not be reasonable.

These long "bad times" calculations also presumes another big one: that someone would watch their portfolio decline steadily, as they did in the 1929 and 1965 scenario returns minus withdrawals, and do so for 20 years without changing anything or getting out. You can be brave running a calculator based on historic data. History shows that the reality of 5 or 10 years of this results in an exceptional lack of braveness.

All this having been said, I'll subscribe to any of John Galts posts in this thread. Do your planning, be careful, be patient, and in the end none of that really matters.

Fortunately the worst case end result is punching a time card. Not so bad.
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Re: SWR of 6.21% for 26 years
Old 03-29-2004, 01:30 PM   #58
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Re: SWR of 6.21% for 26 years

Th,

I mostly agree with your bold face summary except
for one minor point. Both Bernstiein and Bogle
suggest that it is probably smart to make small
adjustments to your asset allocation based on
current market fundamentals. I cited Bernstein
in an earlier post on this thread. Bogle expresses
the same sentiment on page 244 of his book
"Bogle on Mutual Funds". You yourself indicated
that you felt REITs were overvalued and were planning
to take some off the table. If you really believed
that short term returns are completely unpredictble
why would you do that? BTW, I value your comments
very much. You can type faster than I can think,
even while holding a glass of wine in one hand and
a 25 lb. lap cat in the other.

Cheers,

Charlie (aka Chuck-Lyn)
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Re: SWR of 6.21% for 26 years
Old 03-29-2004, 01:46 PM   #59
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Re: SWR of 6.21% for 26 years

Charlie - thanks for the kind words. I dont feel like anything adversarial or discounting really happens here. Well not most of the time. Its just good clean expression of opinions based on wan facts and large supposition. And I'm only typing quickly because the big cat is sprawled on the couch defying the dogs to come over and try and smell his butt, and the coffee has gone cold. Wine is unavailable at this time and will remain so until a trip to the store is undertaken.

Why do I say the short term market movements are unpredictable and then with 30 breaths later say that I'm taking some reits off the table.

Because I'm an idiot. And also as per Bogle and Bernsteins allocation suggestions, I'm considering taking from one boat thats floated higher than the rest and donating to one boat that is 20 feet underwater with the idea that the overall rising tide will float all boats.

In this case I'm not predicting. I'm guessing. And probably wrong in the short term. Maybe just as wrong in the long term. Hell, more than half of my investments are still in (admittedly cheap and non-volatile) actively managed funds. So obviously I still dont get it.
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Re: SWR of 6.21% for 26 years
Old 03-29-2004, 01:55 PM   #60
 
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Re: SWR of 6.21% for 26 years

Hey TH! Your last post makes me think maybe the wine was not as far away as you implied. It's okay though.
I've written some of my best stuff while under the
influence of "Old Stumpknocker". My advice is that it's
okay to pontificate during cocktail hour, but you're
better advised to wait until morning to hit the send button.

John Galt
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