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Old 11-12-2008, 07:20 AM   #41
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Kidding aside, I understand where you're getting your numbers. To your original point - that things may not appear as bad as they seem in this example - I certainly hope you are correct. I retired mid-2005 and see a close parallel to the performance of my portfolio and the first three years of Bob's green line. I can only hope it continues to follow a similar course.
And I'm frigging Bill. Where's my medicine? Hopefully I will fare a little better than Bill as my current w/d rate is well below 4%.
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Old 11-12-2008, 09:00 AM   #42
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Given the present state of affairs, your expectations for the next few years should be very low. Therefore, if you run the numbers and can live with such low expectations, there is little risk of disappointment -- any surprise is more likely to be to the upside. So, this is a good time to retire . . . provided you can handle the likelihood of very anemic returns.
I understand and more or less agree with your overall statement here. But I don't understand why "your expectations for the next few years should be very low". I also don't understand why you would assume "the likelihood of very anemic returns." I should think that rationally formed expectations for the next few years are either equal to or better than the long term data, since we are clearly starting from better long term valuations. If it were clear that returns going forward could be expected to be low, prices would already be there.

What happened to all the efficient marketeers and portfolio theorists?

Serial price correlation tends to be very short term. The idea that "we are in a bear market" can't really be rationally derived. We have been in a bear market, of that there is no doubt. But it may become a flat market, or a bull market at any time. or it might continue down. These are only after the fact descriptions.

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Old 11-12-2008, 09:51 AM   #43
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You don't know that T'AL. We only know he had $750k in '75 when he retired, however he got it. It's not necessarily the residual from $1.4 mil in '73.
I agree. In the extreme case he could have won the lottery, or inherited it.

But for our purposes, the scenarios are meaningful only if we assume "all things being equal." That is, the value of the example is in its ability to help us decide "Do I retire now in a recession, or do I wait?" Or: "Am I screwed because I've retired into a recession?"

To answer those questions, we need to assume that in 1973 Bill and Bob had their money in the same places. The example makes it seem that Bob would have been screwed if he'd retired in 1973, but in fact, he would have done just about as well. The only difference would have come from two additional years of deposits and no withdrawals. Small potatoes relative to the 1.4 Million he likely had invested.

That is, the example seems to say that two years difference can make the difference between collecting shopping carts and having 2.25 million. That's misleading, since the different retirees had vastly different amounts of money in 1973. My conclusion is that two year's difference is significant, but not life or death significant.

If we don't assume that Bill and Bob had their money invested in the same way, then the example is only useful if we are trying to decide:

"Do I retire now, or wait two years, and perhaps win the lottery?"
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Old 11-12-2008, 10:08 AM   #44
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DOW down 300 plus points at this moment. As of yesterday, I'm down 21% for the year. It's the Bill 1973 syndrome.
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Old 11-12-2008, 10:14 AM   #45
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DOW down 300 plus points at this moment. As of yesterday, I'm down 21% for the year. It's the Bill 1973 syndrome.
In 1973 I didn't have a care in the world........
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Old 11-12-2008, 11:19 AM   #46
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"Do I retire now, or wait two years, and perhaps win the lottery?"
We've had threads related to this before........

I think it's important for folks to realize that successful FireCalc outcomes may be fraught with staggering dips, dives and plunges along the way. And to remember that a FireCalc success includes outcomes where you're pretty close to broke at the end of the period. The years immediately following your retirement have the biggest impact.......

It's not so much a matter of deciding if you should retire at a particular time. You know what your portfolio looks like at that moment. It's what happens in the next year or two or three, that you really know little about, that throws the wrench in the works or makes you one of the lucky ones.....

Frankly, at 29 months into RE, I'm considering the current recession as the harbinger of a retirement that ends with a smaller residual ( perhaps much smaller) for the kiddies and won't include some of the discretionary spending we might have been able to do had we retired into a rising market.

As I said in an earlier post, for the FireCalc run that represents my FIRE status, outcomes vary from failure to about 7X what I started with! Now that a couple years have passed and I know I've retired into a down cycle, I think that 7X possibility may have evaporated! And so be it! You just to laugh it off and go on enjoying life, as challenging as that can be with all this crap going on.......
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Old 11-12-2008, 04:09 PM   #47
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In 1973 I didn't have a care in the world........
In 1973 I didn't have any money!!! I had been out in the workforce just a few years and was just managing to make ends meet.

It's all relative -- you know?

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Old 11-12-2008, 05:49 PM   #48
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In 1973 I was thrilled to land my first post college job paying $8400 (the guys made $9400) and I thought I was wealthy beyond belief. My share of the rent was $70/month and food was $5/week. I started my savings that year with $4000.
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Old 11-12-2008, 07:35 PM   #49
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In 1973 I didn't have any money!!! I had been out in the workforce just a few years and was just managing to make ends meet.

It's all relative -- you know?

-- Rita
Yep...

I didn't have a care in the world because in the fall of '73, I started my junior year in high school. Well, maybe I did have one care...did I have enough strawberry lip gloss to last the day!
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Old 11-12-2008, 08:08 PM   #50
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Yep...

I didn't have a care in the world because in the fall of '73, I started my junior year in high school. Well, maybe I did have one care...did I have enough strawberry lip gloss to last the day!

LOL

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Old 11-12-2008, 08:10 PM   #51
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In 1973 I didn't have a care in the world........
Ya me neither.

top songs 1973

Top 100 Hits of 1973/Top 100 Songs of 1973

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Old 11-12-2008, 08:51 PM   #52
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Top 100 Hits of 1973/Top 100 Songs of 1973

Reading through the list I saw

18. Little Willy, Sweet

and it reminded me, for some reason of "Don't Touch My Willie" by Kevin Fowler:

"She showed up at my house at half past nine
In a low-cut dress with a bottle of wine
She said this will be a night you won't forget

She poured us some drinks to get us into the mood
I reached for the lights, she reached for my tunes
She pulled out that Red Headed Stranger, I stood up and said

Don't touch my Willie"

Kevin Fowler, Don't Touch My Willie Lyrics

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Old 11-13-2008, 09:31 AM   #53
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I guess some people are protective of their Willies.
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