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Re: Yahoo "Finance Quiz"
Old 05-31-2004, 12:59 PM   #141
 
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Re: Yahoo "Finance Quiz"

And everyone tells me I should write a book. Even with
my enormous ego, I assume some of them are just
being polite.

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Re: Yahoo "Finance Quiz"
Old 05-31-2004, 01:08 PM   #142
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Re: Yahoo "Finance Quiz"

Quote:

*****,

Since you have read my very simple question and refuse to answer it or acknowledge it, I for one will not be participating in your silly games.

You came to this board and were basically welcomed. I now understand the 'bad blood' on the other forums. *I will no longer read your posts or respond to you on this forum. I am already bored with you and your posts.

I suggest that you get a girlfriend.
Home wrecker!

He's already married and has kids. <LOL>

intercst
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Re: Yahoo "Finance Quiz"
Old 05-31-2004, 04:29 PM   #143
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Re: Yahoo "Finance Quiz"

I think there is an ignore feature on this, it just has to be installed or enabled.

Its worth noting though that in my substantial posting career, I've never been "ignored" or ignored anyone. Thought about it a couple of times but then it occurred to me that the "problem" that made me want to ignore someone was usually mine.

However, if we had the feature, I would probably use it. Just not on *****.

He seems long winded, well intentioned, and certainly persistent. Whether I agree with him or not isnt relevant. I dont think any "withdrawal rate" calculation except for historic ones is workable, predictable or worthwhile except as an academic discussion. Since we wont be living in the past, that makes it all pretty irrelevant.

Markets move short term because mass market psychology moves it. In unpredictable manners. Nobody has ever come up with a "system" that consistently beats "the market" and nobody ever will. Most patterns or "correlations" (theres that word again) we "discover" in the historic data is coincidental, unpredictable in future cycles, and may or may not ever repeat.

We'll continue to see historic returns as long as our economic cycle continues to operate like it has historically. When it stops doing that, things will get better or worse depending on which direction our civilizations economic cycle takes. With history as a guide, that would be downward at some point.

Nobody will be able to predict when or where that directional change will take place. Owning the market in indexes and across a broad range of diverse asset classes over long periods of time will be a winning strategy as long as everyone else doesnt figure that out. Being lucky a few times in getting out at extreme market tops and in at bottoms, as I did in early 2000, can make or break your retirement. But theres no calculation, strategy or spreadsheet that can do that for you, and you're as likely to be wrong as right.

All THAT having been said, the idea of avoiding investments that are overpriced and buying asset classes that are beaten down may make sense. Unfortunately every person has their own idea of what is under or overpriced and they'll likely never agree.

In summary, as far as I'm concerned ***** and everyone else can have their say. I can choose whether to read or pass by their dissertations. If I do read a post, I'll say whether I agree or disagree...if I feel like it. What I hope I never devolve into is someone with nothing better to do than follow someone else around with a jar of tar and a bag of feathers. I'd rather go back to work.
:
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Re: Yahoo "Finance Quiz"
Old 05-31-2004, 05:29 PM   #144
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Re: Yahoo "Finance Quiz"

Quote:
The more implicit assumptions you make like this, the more likely you are to be wrong.
Wabmester,

How right you are. This is a concept, like confounding of variables, is often missunderstood or forgotten. By the way, beautiful presentation of the assumptions underlying the various approaches: succinct and clear.

I do agree with intercst, though, that the weather analogy might better be in years rather than days.

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Re: Yahoo "Finance Quiz"
Old 06-01-2004, 03:26 AM   #145
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Re: Yahoo "Finance Quiz"

There have always been two different sorts of discussions going on when this community and other Retire Early communities have taken up the topic of SWRs. There are the substance-oriented discussions that I refer to as The Great SWR Debate. And there are the process-oriented discussions that I refer to as The Debate About Having a Debate.

There is lots of evidence in the Post Archives that community members absolutely love the substance stuff. There is also lots of evidence that people absolutely hate the process stuff. The substance stuff has pulled all sorts of great posters into the various communities; JWR1945 is the most outstanding example. The process stuff has driven scores of fine posters away. There are a good number who have put up posts telling us that they were leaving. A far larger number just got up and left when they reached a point where it became clear in their minds that it was time to go.

I very much want these communities to thrive. Nothing has done more to cause them to thrive over the course of the past two years than The Great SWR Debate. For that I am grateful to every poster who has participated.

It pains me to see these communities dimished. Nothing has done more to diminish them over the course of the past two years than The Debate About Having a Debate. In regard to that I ask that other community members do what they can do to keep things at least somewhat reasonable when they see the potential of things spinning out of control.

There are not two positions on SWRs. There are probably 22. Wabmaster does not agree with *****, but Wabmaster does not agree with intercst either. Dory36 agrees with intercst more than he does with *****, but by no means does he agree with intercst on all points. JWR1945 shares *****' view that the conventional methodology is analytically invalid, but there are a number of points on which JWR1945 and ***** have exchanged dozens of e-mails trying to work through their differences.

This is wonderful. This is what you want to see on a discussion board--a healthy diversity of opinion on the most important question before the communty. Not only does this mean that you are going to see a lot of posts generated. It means that the posts generated are going to be on-topic and significant.

We can't lose when we engage ourselves in this sort of debate. There are three possible outcomes: (1) We reach a consensus that I was 100 percent wrong in everything I ever said re SWRs; (2) We reach a consensus that I was 100 percent right in everything I ever said re SWRs; or (3) We reach a consensus that I was right about some things I said about SWRs and wrong about others. All three are great outcomes for the comnmunity. Getting to any one of those three places requires that we learn together, and learning together is what this new internet discussion-board communications medium is all about.

My recommendation is that we all do what we can to highlight the wonderful aspects of this debate and to downplay the destructive aspects. We need to normalize discussions of SWRs. When people click on an SWR thread, we want them to have the same feeling they have when they click on any other sort of thread. We don't want people clicking with the half-expectation that they are going to see blood on the floor. It demeans us for us to allow too much blood on the floor and it does great harm to the efforts of those trying to build these boards into valuable information resources.

You could draw a chart showing where all of the various posters fall on the spectrum of SWR opinion possibilities. I am at one end of the chart. Intercst is at the other. Dory36 is somewhere in the middle. That's great. You've got long-time, well-known posters covering the three major spots on the spectrum.

I have learned a lot about SWRs over the course of the past two years. Dory36 has learned a lot too; I know because I can compare his posts from the old days to the ones from the post-May 13, 2002, era. It is my impression that lots and lots of people have learned. I asked intercst yesterday whether he has learned too. He didn't answer the question.

My belief is that he has learned, and my belief is that it was my decision to put my doubts about the conventional methodology on the table that caused him to learn. I am glad that I was able to teach intercst something because it is fair payback for earlier times when he taught me. I hope that intercst will answer my question in days to come. I hope that he will acknowledge that he has learned. I think that a response like that from him would do an awful lot to help normalize these discussions.
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Re: Yahoo "Finance Quiz"
Old 06-01-2004, 03:52 AM   #146
 
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Re: Yahoo "Finance Quiz"

SWR? Short Written Replies

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Re: Yahoo "Finance Quiz"
Old 06-01-2004, 08:23 AM   #147
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Re: Yahoo "Finance Quiz"

Quote:
Wabmaster does not agree with *****, but Wabmaster does not agree with intercst either.
*****, thanks for the mention. Maybe all three of us should write books on the subject. Since I tend to be terse, my book is likely to be very short. In fact, I'll include the entire contents below for review:

Hope for the best, plan for the worst, nimbly adapt to your environment, and if all else fails, withdraw 4% or less.
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Re: Yahoo "Finance Quiz"What do you mean by specif
Old 06-01-2004, 03:02 PM   #148
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Re: Yahoo "Finance Quiz"What do you mean by specif

Quote:

This post borders on the incredible. I see why you call yourself "WorkWayLess". Could you explain to me why anyone should work way more, to convince someone he doesn't even know to do something that will not be paid for and that will not in any way help the person who is being asked (and not very politely I may add) to do the work involved?

I would say do it yourself, or just continue in whatever course you have decided on. It will work or not, and you will be responsible.

Many things worth knowing require some effort.

Mikey,

Hmmm, you seem to be making assumptions about who I do or do not know, whether or not there is money involved in the payoff and even whether or not such research would benefit me personally.

Looking at the responses, I'm sure that you can see that given the huge amount of interest generated by my suggestion then perhaps the whole idea is a bit credible that you thought, eh Mikey?
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Re: Yahoo "Finance Quiz"
Old 06-01-2004, 07:57 PM   #149
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Re: Yahoo "Finance Quiz"

Alright, WWL, I can't speak for Mikey, but I'll admit you provided a valuable service by goading JWR1945. However, I also have to say that I find your boy-george avatar somewhat disturbing
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Re: Yahoo "Finance Quiz"
Old 06-02-2004, 03:29 AM   #150
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Re: Yahoo "Finance Quiz"

I'll admit you provided a valuable service by goading JWR1945. *

I have been an active participant in these discussions from the first day. In fact, it was me who put up the post that kicked them off. I have seen zero evidence that JWR1945 has ever been in need of “goading” to do the work that needs to be done to advance our understanding of the realities of SWRs.

In this post,

http://boards.fool.com/Message.asp?mid=17229181

he was the first to respond to my request that the community look at the historical data to determine whether changes in valuation levels might have an effect on the question of which withdrawal rate is truly safe. The post is titled “Hocus is Really Onto Something." The date of the post is May 16, 2002, Day Four of the Great SWR Debate. This post obtained 44 recommendations, showing that there was a widespread community appreciation for JWR1945’s responsiveness in the early days of this debate.

JWR1945: "Maybe it makes sense to add to that cash cushion every now and then if we can define what “way overvalued” means. We do not need a precise definition. I doubt that that is possible. But we could use an accurate definition even if it is coarse. As long as we do not demand precision, such a definition must exist....I have begun looking at whether “way overvalued” might be meaningfully defined.

“...We should not conclude too much from these early results. But the fact that there were only three bad periods to start a retirement in the twentieth century indicates that you probably can vary allocations successfully as long as your actions are based on decade long variations and not one or two year changes. So far, it seems as if some changes in the percentage of stocks and in the type of cushion (commercial paper, TIPS, 5 year treasuries, long term treasuries) do make sense.”

Here is a JWR1945 post from May 18, 2002, Day Six. It is called “Hocus Started It All" (the lead sentence is “and I Am Having a Ball”). This one got 59 recommendations.

http://boards.fool.com/Message.asp?mid=17238256

JWR1945: "***** has brought up some really good issues. In a few cases these and related issues can and have been addressed directly. IMHO, however, the best responses are those that have generated new ideas and opened up whole new areas worth looking at. I personally appreciate all of them, even a few abrupt, dismissive responses. They reveal gaps in our knowledge. I regret that a few posters have been abusive. But I am pleased that ***** has stayed around. It has helped a lot.

"I have made a brief sensitivity analysis of the safe withdrawal number. Roughly speaking, a change of 0.1% changes the safe withdrawal period by a decade....***** is very much aware of this sensitivity. But before he brought it up on a recent post, I was not aware of it and I doubt that many you were either....***** has also been looking at the time history of failures in withdrawal rates, thresholds and periods. This is worth knowing.”

There is no statistically skilled poster in the Retire Early community more willing than JWR1945 to take on the work needed to help out those of us who do not possess statistical skills but who have questions that we would like those who possess statistical skills to expore in greater depth. He is a godsend to the community.
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Re: Yahoo "Finance Quiz"
Old 06-02-2004, 07:24 AM   #151
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Re: Yahoo "Finance Quiz"

*****:

For doG's sake, shut yer pie hole, boy! Nobody cares and most of us find this unbearable. If you must electronically masturbate, do it elsewhere.
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Re: Yahoo "Finance Quiz"
Old 06-02-2004, 10:56 AM   #152
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Re: Yahoo "Finance Quiz"

Quote:
However, I also have to say that I find your boy-george avatar somewhat disturbing *

Boy-George Yipes! Not the look I was going for. It's actually Lara Croft, Tomb raider. I went with her since that other female superhero, Zena, was already taken.
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Re: Yahoo "Finance Quiz"
Old 06-02-2004, 11:29 AM   #153
 
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Re: Yahoo "Finance Quiz"

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*****:

For doG's sake, shut yer pie hole, boy! *Nobody cares and most of us find this unbearable. *If you must electronically masturbate, do it elsewhere.
Well, if everyone can restrain from feeding the Troll, eventually his fun will stop and he will go away.
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Re: Yahoo "Finance Quiz"
Old 06-02-2004, 02:20 PM   #154
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Re: Yahoo "Finance Quiz"

Zena, was already taken.


Ooops! Sorry

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Re: Yahoo "Finance Quiz"
Old 06-03-2004, 07:02 AM   #155
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Re: Yahoo "Finance Quiz"

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Zena, was already taken.


Ooops! *Sorry *

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Re: Yahoo "Finance Quiz"
Old 06-03-2004, 03:51 PM   #156
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Re: Yahoo "Finance Quiz"

The future is unknowable, all we can do is use a reasonable method to get an estimate of what a SWR might be. SWR is better than WAG, but it can never be precise because of future uncertainity (principle). Perhaps more important is understanding our own selves in relation to investing and how to avoid "mistakes" (e.g. fear, greed, diversification, etc). How we invest has the greatest influence on a SWR, more so than is 2% (or 4%SWR) . SWR tells us that too high a withdrawal rate and were in trouble; too low and get a lowered living standard. What we have gained is the understanding that relying on a 11% market return average and taking out 8% will not work. As someone once said, " We measure with a micrometer, mark with a crayon and cut with an ax".

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Re: Yahoo "Finance Quiz"
Old 06-04-2004, 04:45 AM   #157
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Re: Yahoo "Finance Quiz"

all we can do is use a reasonable method to get an estimate of what a SWR might be.

The question we are struggling with is: "Is it a reasonable method to presume that changes in valuation have no effect on long-term returns?"

The "Stocks for the Long Run" philosophy has been the dominant investing paradigm for the past 20 years. Under that paradigm, stocks are always the best investment class for the long-term investor. Thus, valuation changes are not viewed as a matter of great importance. Most investors accept that valuation changes have an effect on their long-term returns, but this does not cause them much concern because they believe almost as a matter of faith that things will work out over the long term and that stocks will ultimately be proven the best long-term investment.

In all likelihood, the first researcher who put together a conventional methodology study believed in the "Stocks for the Long Run" paradigm, and thus did not view it as necessary to incorporate the effects of changes in valuation into his analysis. Later researchers probably just relied on the methodology used in the first study in designing their own studies without giving the matter too much thought.

There is now a good bit of research discrediting the "Stocks for the Long Run" paradigm. It turns out that stocks are a superior long-term investment class at some valuation levels and a poor long-term investment class at others. Changes in valuation levels have a big effect on the long-term returns delivered by a stock investment, according to the historical data.

Here is a link to just one of the research papers coming to findings along these lines. The paper appeared in the February 2002 issue of the Journal of Financial Planning.

http://www.fpanet.org/journal/articl...0202-art10.cfm

Juicy Quote: "Our results indicate that the best estimate of future average returns is no longer the long-term average returns on stocks found, for instance, in the Ibbotson’s series of 10 to 12 percent a year. An investment advisor can obtain a more accurate measure of expected returns by making expected returns conditional on the current P/E ratio."
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Re: Yahoo "Finance Quiz"
Old 06-04-2004, 08:35 PM   #158
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Re: Yahoo "Finance Quiz"

Quote:
all we can do is use a reasonable method to get an estimate of what a SWR might be.

There is now a good bit of research discrediting the "Stocks for the Long Run" paradigm. It turns out that stocks are a superior long-term investment class at some valuation levels and a poor long-term investment class at others. Changes in valuation levels have a big effect on the long-term returns delivered by a stock investment, according to the historical data.

Here is a link to just one of the research papers coming to findings along these lines. The paper appeared in the February 2002 issue of the Journal of Financial Planning.

http://www.fpanet.org/journal/articl...0202-art10.cfm

Juicy Quote: "Our results indicate that the best estimate of future average returns is no longer the long-term average returns on stocks found, for instance, in the Ibbotson’s series of 10 to 12 percent a year. An investment advisor can obtain a more accurate measure of expected returns by making expected returns conditional on the current P/E ratio."
Trevino and Robertson (the authors of the research study) are respected scholars in business and finance. It comes as no surprise that the study is beyond *****'s comprehension and that he would misunderstand the substance of their work just as he continually misquotes Bernstein.

The juiciest quote in the article is the authors' conclusions in the last paragraph.

What does this mean for financial planners? First, do not use current P/E ratios to predict short-term returns. Second, financial planners should adjust their long-term expected returns to reflect the reality of current market conditions. If current P/E ratios are high, expect lower long-term average returns and if current P/E ratios are low, then expect higher long-term average returns. Finally, if P/E ratios are at historically high levels, expect long-term average returns on stocks to be low but above those of long-term T-bonds and T-bills. So the best advice to give investors when P/E ratios are high could well be to expect lower returns but still stay with stocks.

</snip>


I see nothing in the article that supports the ***** theory that retirement withdrawals are enhanced by jumping in and out of stocks based on PE ratios.

There's also nothing in the article that supports *****'s current asset allocation of 100% fixed income. Indeed the authors say "expect long-term average returns on stocks to be low but above those of long-term T-bonds and T-bills."

intercst

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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 04:59 AM   #159
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Re: Yahoo "Finance Quiz"

It comes as no surprise that the study is beyond *****'s comprehension...

just as he continually misquotes Bernstein....
*
I see nothing in the article that supports the ***** theory....

There's also nothing in the article that supports *****'s current asset allocation of 100% fixed income.

Why so angry?
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 08:01 AM   #160
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Re: Yahoo "Finance Quiz"

Quote:
It comes as no surprise that the study is beyond *****'s comprehension...

just as he continually misquotes Bernstein....
*
I see nothing in the article that supports the ***** theory....

There's also nothing in the article that supports *****'s current asset allocation of 100% fixed income.

Why so angry?
Why do you assume that the charitable folks who correct the misstatements and misrepresentations in your posts are angry?

intercst
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