Yahoo "Finance Quiz"
- Thread starter Walker101
- Start date
wabmester
Thinks s/he gets paid by the post
- Joined
- Dec 6, 2003
- Messages
- 4,459
You know intercst better than I do, but I've never heard him say anything about the future with 100% certainty.
BTW, his calculator will tell you that the SWR for a 100% TIPS (3.5%) portfolio is well above 4% for a 30-year term.
No one is going to know the 30-year SWR for someone retiring in August 2000 until August 2030.
So stop saying that you do know.
The REHP study was not designed so as to reveal the safe withdrawal rate. It was designed so as to reveal the historical surviving withdrawal rate. These two concepts are related concepts, but they are not at all the same thing.
So stop saying that you do know.
The REHP study was not designed so as to reveal the safe withdrawal rate. It was designed so as to reveal the historical surviving withdrawal rate. These two concepts are related concepts, but they are not at all the same thing.
C
Cut-Throat
Guest
OK, One last time.
*****,
Since you are 99% done with your 'project' would you mind sharing with the forum some information on your personal portfolio makeup currently?
I am only interested in the percentages and various asset classes that you now hold. Also what would it take for you to increase your exposure to stocks. You can answer this one by comparing to the Dow (e.g. - Dow would have to hit 6500 before you'd buy stocks, at todays earnings levels)
A very Short answer would be nice ! - Something Like
____________________________________________
Currently TIPS - 30%, IBonds, 35%, and CDs 35%.
and at todays P/E levels the Dow would have to be in the 4000 - 5000 range for me to be interested in stocks.
_________________________________________
*****,
Since you are 99% done with your 'project' would you mind sharing with the forum some information on your personal portfolio makeup currently?
I am only interested in the percentages and various asset classes that you now hold. Also what would it take for you to increase your exposure to stocks. You can answer this one by comparing to the Dow (e.g. - Dow would have to hit 6500 before you'd buy stocks, at todays earnings levels)
A very Short answer would be nice ! - Something Like
____________________________________________
Currently TIPS - 30%, IBonds, 35%, and CDs 35%.
and at todays P/E levels the Dow would have to be in the 4000 - 5000 range for me to be interested in stocks.
_________________________________________
You know intercst better than I do, but I've never heard him say anything about the future with 100% certainty.
I used the phrase "with 100 percent certainty" because I thought it was a more charitable way of getting the point across than to quote his actual words. I will not put forward here the actual words. The claim that he has made is that there is no possibility whatsoever that my plan could work. He has not said this once or twice. He has said it hundreds of times. He has cited his study in support of this claim.
BTW, his calculator will tell you that the SWR for a 100% TIPS (3.5%) portfolio is well above 4% for a 30-year term.
You are right that the REHP study contains a fine discussion of the benefits of TIPS. If only intercst would keep that section of his study in mind when commenting on my Retire Early plan.
He has said hundreds of times that the SWR for my plan is 2.3 percent and that it is certain to fail given that I am taking a 4 percent withdrawal from it. I have pointed out to him scores of times that I am invested in TIPs, IBonds, and CDs, not the commercial paper he examined to generate the 2.3 percent number.
Do you see any constructive purpose served by him continuing to cite the 2.3 percent number in connection with my plan given that there is a section in his own study that shows that it does not apply to me? If we are going to normalize these discussions, we need to put an end to this silliness.
I used the phrase "with 100 percent certainty" because I thought it was a more charitable way of getting the point across than to quote his actual words. I will not put forward here the actual words. The claim that he has made is that there is no possibility whatsoever that my plan could work. He has not said this once or twice. He has said it hundreds of times. He has cited his study in support of this claim.
BTW, his calculator will tell you that the SWR for a 100% TIPS (3.5%) portfolio is well above 4% for a 30-year term.
You are right that the REHP study contains a fine discussion of the benefits of TIPS. If only intercst would keep that section of his study in mind when commenting on my Retire Early plan.
He has said hundreds of times that the SWR for my plan is 2.3 percent and that it is certain to fail given that I am taking a 4 percent withdrawal from it. I have pointed out to him scores of times that I am invested in TIPs, IBonds, and CDs, not the commercial paper he examined to generate the 2.3 percent number.
Do you see any constructive purpose served by him continuing to cite the 2.3 percent number in connection with my plan given that there is a section in his own study that shows that it does not apply to me? If we are going to normalize these discussions, we need to put an end to this silliness.
*****,
You continue to demonstrate that you have absolutely no understanding of the basics of SWR arithmetic. I've corrected the misstatement you've made in bold above many times before on other boards, but you continue to post some of the most bizzare misinterpretations of the historical data imaginable.
The 2.3% inflation-adjusted 30-year SWR for a 100% fixed income portfolio survived all 100 30-year pay out periods from 1871-2002. That's why it's called the maximum 100% survivable inflation-adjusted withdrawal rate or '100% safe' for short. In 99 out of the 100 30-year periods you could have withdrew more than 2.3% and survived. Neither I, nor anyone else who understands the subject has said, "that an examination of the historical data provides him 100 percent certainty that I will not obtain a return of a penny above the return that would support a 2.3 percent withdrawal rate."
On the other hand, if you took a 4% withdrawal from a 100% fixed income portfolio, you ran out of money in less than 30 years in 33 out of the 100 30-year periods from 1871-2002. Few retirees who understand arithmetic would follow a strategy that historically left them broke one-third of the time.
intercst
would you mind sharing with the forum some information on your personal portfolio makeup currently?
I have done that. I responded to the best of my ability to this exact question earlier in this thread. If there is some aspect of the answer that you do not understand, I am happy to try to help out. But I am not able to make out what it is that is causing you confusion.
You seem to want to know the precise percentage allocations for the TIPS, the ibonds, and the CDs. To get that, I would need to check in my investment binders. I don't see that any constructive purpose would be served by doing so.
The TIPS provide an SWR of greater than 4 percent. The ibonds provide an SWR of greater than 4 percent. JWR1945's research shows that a strategy of switching from CDs to stocks when the SWR for stocks goes higher will provide an SWR of greater than 4 percent.
With three asset classes providing SWRs of greater than 4 percent, do you see any way that my overall SWR could be less than 4 percent? I can't figure out what you are driving at.
I have done that. I responded to the best of my ability to this exact question earlier in this thread. If there is some aspect of the answer that you do not understand, I am happy to try to help out. But I am not able to make out what it is that is causing you confusion.
You seem to want to know the precise percentage allocations for the TIPS, the ibonds, and the CDs. To get that, I would need to check in my investment binders. I don't see that any constructive purpose would be served by doing so.
The TIPS provide an SWR of greater than 4 percent. The ibonds provide an SWR of greater than 4 percent. JWR1945's research shows that a strategy of switching from CDs to stocks when the SWR for stocks goes higher will provide an SWR of greater than 4 percent.
With three asset classes providing SWRs of greater than 4 percent, do you see any way that my overall SWR could be less than 4 percent? I can't figure out what you are driving at.
C
Cut-Throat
Guest
A very Short answer would be nice ! - Something Like
____________________________________________
Currently TIPS - 30%, IBonds, 35%, and CDs 35%.
and at todays P/E levels the Dow would have to be in the 4000 - 5000 range for me to be interested in stocks.
_________________________________________
Since you didn't answer the very simple question, I guess that makes you a troll
____________________________________________
Currently TIPS - 30%, IBonds, 35%, and CDs 35%.
and at todays P/E levels the Dow would have to be in the 4000 - 5000 range for me to be interested in stocks.
_________________________________________
Since you didn't answer the very simple question, I guess that makes you a troll
Few retirees who understand arithmetic would follow a strategy that historically left them broke one-third of the time.
Let's simplify things.
Most of my money is in TIPS and ibonds paying roughly a 3.5 percent real return (that translates into an SWR of well above 4 percent). The remainder is in CDs, and that money will be moved into stocks pursuant to the switching strategies that JWR1945 has written about on the SWR board (the historical data shows a SWR of above 4 percent for money invested pursuant to these strategies). My take-out number is 4 percent.
Is this a reasonably safe Retire Early plan, in your view?
Let's simplify things.
Most of my money is in TIPS and ibonds paying roughly a 3.5 percent real return (that translates into an SWR of well above 4 percent). The remainder is in CDs, and that money will be moved into stocks pursuant to the switching strategies that JWR1945 has written about on the SWR board (the historical data shows a SWR of above 4 percent for money invested pursuant to these strategies). My take-out number is 4 percent.
Is this a reasonably safe Retire Early plan, in your view?
C
Cut-Throat
Guest
You continue to play games on this forum. No one else does this.
Do not be surprised when people call you a troll. This was your last chance with me. I will no longer feed the Troll
Do not be surprised when people call you a troll. This was your last chance with me. I will no longer feed the Troll
BigMoneyJim
Thinks s/he gets paid by the post
earlyout said it better than I was going to. To summarize I'll say that I don't believe I can value the market better than most or time the market better than most, and from what I'm reading *****' strategy requires precisely these two things, not to mention the effort required to monitor the markets.
*****, I appreciate the research you and JWR and the others have done, and I appreciate your past essays and insights, but I am a bit disturbed about how fanatic you are about your strategy. I see no reason to be confident that you can value the market or time asset reallocations more effectively than the market can. Nor am I confident that I could learn how to do that from you, a spreadsheet or a book.
I don't consider myself a pure "efficient market" guy, but it seems given to me that if one type of investment is clearly superior in all aspects to another that enough people will reallocate funds to close the difference. I believe chasing ineffeiciencies could yield small time returns, but I doubt anyone could reliably exploit inefficiencies on a retirement-portfolo-sized basis.
I do have reasonable confidence than I could maintain a 60%-80% indexed stock fund allocation, take slightly less than 4% WR and lower my withdrawals if I lose confidence in the plan. With a radical reallocation plan I feel like I could lose a lot by taking a simple misstep.
I'll say that I don't believe I can value the market better than most or time the market better than most, and from what I'm reading *****' strategy requires precisely these two things.
Given that you are not today convinced of the merit of my approach, I would not want you today to put money on the line by making use of it, BigMoneyJim.
What I would like people to do is to take an occasional visit to the SWR Research Group board (at NoFeeBoards.com), read as many of the posts there as you have time to read, direct whatever questions you have to me or JWR1945, and over time see whether this new approach begins to make more sense to you.
There is no single 500-word post that I can put forward that is going to convince you. The reason why I am so confident of the merit of the approach is that I have been studying it for over eight years now and it checks out every which way I look at it. I've read scores of books, hundreds of articles, dozens of research papers, thousands of discussion board posts, and it still holds up.
I understand that it is something new. I understand that it is something different. That doesn't mean that there is anything wrong with it.
The wonderful thing about a discussion board community is that we have lots of people participating with lots of different viewpoints. So there is every reason to believe that, if this approach does not pass muster in some way, someone is going to identify the flaw. When they do, you and everyone else will hear about it. Feedback that I get from other posters helps me sharpen the tool, make it better. And feedback helps others to determine whether they should place confidence in the tool or not.
The great power of the internet discussion board communications medium is that it allows people with all sorts of different skills and viewpoints to work together towards advancement of a common goal--in this case, achieving an enhanced understanding of how to put together an effective Retire Early plan. That's what we should be aiming to do re the SWR matter as well as on all other topics taken up at these boards.
Given that you are not today convinced of the merit of my approach, I would not want you today to put money on the line by making use of it, BigMoneyJim.
What I would like people to do is to take an occasional visit to the SWR Research Group board (at NoFeeBoards.com), read as many of the posts there as you have time to read, direct whatever questions you have to me or JWR1945, and over time see whether this new approach begins to make more sense to you.
There is no single 500-word post that I can put forward that is going to convince you. The reason why I am so confident of the merit of the approach is that I have been studying it for over eight years now and it checks out every which way I look at it. I've read scores of books, hundreds of articles, dozens of research papers, thousands of discussion board posts, and it still holds up.
I understand that it is something new. I understand that it is something different. That doesn't mean that there is anything wrong with it.
The wonderful thing about a discussion board community is that we have lots of people participating with lots of different viewpoints. So there is every reason to believe that, if this approach does not pass muster in some way, someone is going to identify the flaw. When they do, you and everyone else will hear about it. Feedback that I get from other posters helps me sharpen the tool, make it better. And feedback helps others to determine whether they should place confidence in the tool or not.
The great power of the internet discussion board communications medium is that it allows people with all sorts of different skills and viewpoints to work together towards advancement of a common goal--in this case, achieving an enhanced understanding of how to put together an effective Retire Early plan. That's what we should be aiming to do re the SWR matter as well as on all other topics taken up at these boards.
C
Cut-Throat
Guest
It's nothing new at all. Berstein described it as 'Dynamic Asset Allocation' in his book 'The Intelligent Asset Allocater' - Sorry to burst your Bubble!
Cut-Throat asked you this;
A very Short answer would be nice ! - Something Like
____________________________________________
Currently TIPS - 30%, IBonds, 35%, and CDs 35%.
I don't see a request for 'precise percentages' here.
Most successful early retirees I'm aware of can tell you their asset allocation within 5% or so without consulting their 'investment binder'. The fact that you cannot (will not?) doesn't do much to build your credibility.
intercst
C
Cut-Throat
Guest
*****-Pocus, (I lived up to my end of the bargain, you didn't live up to yours!)
Yup Intercst has it correct. Within 5% would be fine!
Heck, I'll tell you mine off the top of my head.
Stock/Bond, Cash - 60% /40%
Large Cap 500 Index..........15%
Large Cap Value................15%
Small Cap Value................12%
Tot. Intl Index...................3%
Europeon Index..................3%
Pacific Index......................3%
Emerging Mkt.....................3%
REIT Index........................6%
TIPS...............................12%
Short term Corp Bond.........18%
Dodge and Cox Income........8%
Cash................................2%
Also, I have no clue whether stocks are fairly valued or not and I don't believe that anyone else knows either.
That was pretty painless! - Unless you're a 13 year old kid with no assets, I don't understand why you're not smart enough to do this!
Yup Intercst has it correct. Within 5% would be fine!
Heck, I'll tell you mine off the top of my head.
Stock/Bond, Cash - 60% /40%
Large Cap 500 Index..........15%
Large Cap Value................15%
Small Cap Value................12%
Tot. Intl Index...................3%
Europeon Index..................3%
Pacific Index......................3%
Emerging Mkt.....................3%
REIT Index........................6%
TIPS...............................12%
Short term Corp Bond.........18%
Dodge and Cox Income........8%
Cash................................2%
Also, I have no clue whether stocks are fairly valued or not and I don't believe that anyone else knows either.
That was pretty painless! - Unless you're a 13 year old kid with no assets, I don't understand why you're not smart enough to do this!
Let us get away from the name-calling.
It is one thing to talk about market timing that involves frequent trades over short periods of time. It is another thing to talk about investment decisions that take place about once per decade.
It is one thing to quote Sir John Templeton's words in order to get people to buy based on value. It is quite the opposite to use Sir John Templeton's words to encourage people to buy at any price.
It is one thing to approach retirement investing with due care and a reasonable amount of caution. It is another thing to make one's retirement finances critically dependent upon the supposition that the bubble will be followed by a super bubble.
Have fun.
John R.
It is one thing to talk about market timing that involves frequent trades over short periods of time. It is another thing to talk about investment decisions that take place about once per decade.
It is one thing to quote Sir John Templeton's words in order to get people to buy based on value. It is quite the opposite to use Sir John Templeton's words to encourage people to buy at any price.
It is one thing to approach retirement investing with due care and a reasonable amount of caution. It is another thing to make one's retirement finances critically dependent upon the supposition that the bubble will be followed by a super bubble.
Have fun.
John R.
C
Cut-Throat
Guest
I would not recommend buying or selling at any price.
Unless you are talking about yearly Portfolio Rebalancing - In which I am in favor of.
A question for you - What would the Dow have to be roughly before you saw any value? - All I'm looking for is a very simple answer - Something like Dow 4000 or Dow 7000.
Re: Yahoo "Finance Quiz" attractive
What would the Dow have to be roughly before you saw any value? - All I'm looking for is a very simple answer - Something like Dow 4000 or Dow 7000.
This question was directed to JWR1945 and I cannot answer for him. But it is a slightly reworded version of a question that was directed to me earlier, so I thought it would be OK if I ventured forth with a response.
You are always obtaining some value in return for the money you turn over to purchase a share of stock. A stock share gives you partial ownership of an ongoing business enterprise; that's always a good thing to possess. If the DOW went to 30,000 in the next 12 months, there would still be value obtained by purchasing shares of stock of the companies comprising the DOW.
The concern that has been raised is whether the price you pay affects the long-term return you can reasonably expect to obtain from the purchase of the shares of stock. Say that the value of a share is $10, and that you purchase the shares for $5 each. Is it reasonable to expect to obtain a higher long-term return from that purchase than from one where you pay $15 per share for shares worth $5 each?
It is. Valuation is not the only thing that affects long-term stock returns. There are lots of other factors. Most of those other factors are reasonably well accounted for in the conventional methodology SWR studies, in my view. My concern is that the conventional methodology studies do not make any adjustment whatsoever for changes in valuation levels. They ignore this critical factor.
SWRs vary with changes in valuation levels. When valuations go up, SWRs go down. When valuations go down, SWRs go up.
To know whether it is a good idea to purchase stocks at DOW Level X, you need to know what sorts of long-term returns are being offered by alternative investment options. When TIPS were offering a real return of 4.1 percent (that's an SWR of 5.85 percent), that was an incredible deal. The value proposition offered by TIPS today is not nearly so compelling. I still think that TIPS generally offer a good deal compared to stocks, but it is a closer call than it was a few years ago.
I cannot now give you a DOW number that will cause me to get back into stocks. The level of valuation is one factor that I will consider. But I will also take into account the sorts of long-term returns available at the time via other investment classes. Another factor will be how much money I have available to invest. If I get to a point where I have more slack in my plan, my inclination would be to get some skin in the stock game regardless of the valuation level that applies.
This question is a strategy question, and it is question that I hope to explore in some depth at some later time. My hope is that I will pick up insights from other community members (as I have so many times before) that will help me determine when is the right moment for me to get back into stocks. These strategic questions are likely to be a bit more fun to discuss than some of the definitional stuff we have gotten hung up on in the past, in my view.
What would the Dow have to be roughly before you saw any value? - All I'm looking for is a very simple answer - Something like Dow 4000 or Dow 7000.
This question was directed to JWR1945 and I cannot answer for him. But it is a slightly reworded version of a question that was directed to me earlier, so I thought it would be OK if I ventured forth with a response.
You are always obtaining some value in return for the money you turn over to purchase a share of stock. A stock share gives you partial ownership of an ongoing business enterprise; that's always a good thing to possess. If the DOW went to 30,000 in the next 12 months, there would still be value obtained by purchasing shares of stock of the companies comprising the DOW.
The concern that has been raised is whether the price you pay affects the long-term return you can reasonably expect to obtain from the purchase of the shares of stock. Say that the value of a share is $10, and that you purchase the shares for $5 each. Is it reasonable to expect to obtain a higher long-term return from that purchase than from one where you pay $15 per share for shares worth $5 each?
It is. Valuation is not the only thing that affects long-term stock returns. There are lots of other factors. Most of those other factors are reasonably well accounted for in the conventional methodology SWR studies, in my view. My concern is that the conventional methodology studies do not make any adjustment whatsoever for changes in valuation levels. They ignore this critical factor.
SWRs vary with changes in valuation levels. When valuations go up, SWRs go down. When valuations go down, SWRs go up.
To know whether it is a good idea to purchase stocks at DOW Level X, you need to know what sorts of long-term returns are being offered by alternative investment options. When TIPS were offering a real return of 4.1 percent (that's an SWR of 5.85 percent), that was an incredible deal. The value proposition offered by TIPS today is not nearly so compelling. I still think that TIPS generally offer a good deal compared to stocks, but it is a closer call than it was a few years ago.
I cannot now give you a DOW number that will cause me to get back into stocks. The level of valuation is one factor that I will consider. But I will also take into account the sorts of long-term returns available at the time via other investment classes. Another factor will be how much money I have available to invest. If I get to a point where I have more slack in my plan, my inclination would be to get some skin in the stock game regardless of the valuation level that applies.
This question is a strategy question, and it is question that I hope to explore in some depth at some later time. My hope is that I will pick up insights from other community members (as I have so many times before) that will help me determine when is the right moment for me to get back into stocks. These strategic questions are likely to be a bit more fun to discuss than some of the definitional stuff we have gotten hung up on in the past, in my view.
wabmester
Thinks s/he gets paid by the post
- Joined
- Dec 6, 2003
- Messages
- 4,459
Cut-Throat, I'll give you a strawman number so we can move this along. If the Dow fell to about 7500 tomorrow, that would bring the P/E close to its historic average. All else being equal, I'd be a buyer at that level.
For Cut-Throat who wants a very definite and very simple answer.
I have no numbers for the DOW. This is what I have for the S&P500 index.
I quote myself from TIPS Switching Surveys from Tue Mar 09, 2004 at 1:28 pm CDT. http://www.nofeeboards.com/boards/viewtopic.php?t=2208
http://www.econ.yale.edu/~shiller/data.htm
Date: November 2003
S&P500 price was 1054.87
P/E10 was 25.898702
E10 is the ten-year trailing average of earnings. P is the current index value or price.
Assuming that E10 has not changed significantly from last November, for P/E10 to equal 24.0 would require that the S&P500 index value fall to 977.53.
The current value of the S&P500 index is 1122.50 and the current value of P/E10 (assuming that E10 has not changed significantly since last November) is close to 27.559.
Therefore, when the S&P500 falls close to 977.53, you may reasonably allocate 20% to 30% of your portfolio to stocks (or, more precisely, to an S&P500 index fund with 0.20% expenses).
This is my best answer for today within the constraints of our existing calculators.
Have fun.
John R.
I have no numbers for the DOW. This is what I have for the S&P500 index.
I quote myself from TIPS Switching Surveys from Tue Mar 09, 2004 at 1:28 pm CDT. http://www.nofeeboards.com/boards/viewtopic.php?t=2208
In the summary, I wrote:
Here are the latest numbers from Yale Professor Robert J. Shiller's web site.
http://www.econ.yale.edu/~shiller/data.htm
Date: November 2003
S&P500 price was 1054.87
P/E10 was 25.898702
E10 is the ten-year trailing average of earnings. P is the current index value or price.
Assuming that E10 has not changed significantly from last November, for P/E10 to equal 24.0 would require that the S&P500 index value fall to 977.53.
The current value of the S&P500 index is 1122.50 and the current value of P/E10 (assuming that E10 has not changed significantly since last November) is close to 27.559.
Therefore, when the S&P500 falls close to 977.53, you may reasonably allocate 20% to 30% of your portfolio to stocks (or, more precisely, to an S&P500 index fund with 0.20% expenses).
This is my best answer for today within the constraints of our existing calculators.
Have fun.
John R.
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Thanks JWR 1945 for a very clear answer that provides a protocol for investing.
My equity investments are mostly in individual stocks, and tax considerations and factors unique to the individual companies are quite important.
Still, as I sell, I will not re-invest until overall values are lower. My last net investment period was early spring 2003.
Mikey
My equity investments are mostly in individual stocks, and tax considerations and factors unique to the individual companies are quite important.
Still, as I sell, I will not re-invest until overall values are lower. My last net investment period was early spring 2003.
Mikey
John, I have a couple of follow-up questions, just for clarification:
-- Where are you getting the most current E10 figure? How often is it updated?
-- And just to confirm, P/E10 is simply the S&P Index price (now 1122) divided by E10, correct?
-- And when it comes to implementation, your studies have shown that when the P/E10 is over 24, it's best to have zero exposure to stocks, correct? And with a P/E10 of 11 or less one could reasonably have 100% in stocks, correct?
I probably won't be making major allocation shifts, but I could use a good valuation tool and will likely increase my stock allocation at some point (currently at about 35%). Thanks for sharing your work.
-- Where are you getting the most current E10 figure? How often is it updated?
-- And just to confirm, P/E10 is simply the S&P Index price (now 1122) divided by E10, correct?
-- And when it comes to implementation, your studies have shown that when the P/E10 is over 24, it's best to have zero exposure to stocks, correct? And with a P/E10 of 11 or less one could reasonably have 100% in stocks, correct?
I probably won't be making major allocation shifts, but I could use a good valuation tool and will likely increase my stock allocation at some point (currently at about 35%). Thanks for sharing your work.
Bob_Smith
We know what P/E10 tells us about the past and we use it to help us decide what to do in the future, but we still use judgment. P/E10 tells us about stocks in general (as represented by the S&P500 index) but not about individual securities. Special circumstances often apply. In addition, costs and fees are killers so sell only when you find the evidence to be compelling.
Keep in mind that our tools are necessarily limited but not our thinking.
Have fun.
John R.
My figures are from Professor Shiller's website. E10 is the average of the previous 120 monthly values of real earnings. He does not present E10. He calculates P/E10. (You can look at the formula in Excel. He uses the AVERAGE function for the first calculation and a wonder tool called the fill handle to drag the equation down to apply to average to later groups of cells.) The price is the real price. Delays are caused because it is necessary to wait on the CPI.
You are correct and you are treating this the right way.
We know what P/E10 tells us about the past and we use it to help us decide what to do in the future, but we still use judgment. P/E10 tells us about stocks in general (as represented by the S&P500 index) but not about individual securities. Special circumstances often apply. In addition, costs and fees are killers so sell only when you find the evidence to be compelling.
Keep in mind that our tools are necessarily limited but not our thinking.
Have fun.
John R.
lso givesRe: Yahoo "Finance Quiz"
The October issue of JFP has an article on SWR. The article suggests that the optimum stock allocation for retiree is between 50-75%. It warns of too little or too high stock allocation. It also gives some advice based upon the early years investment results (good, bad and ugly).
The October issue of JFP has an article on SWR. The article suggests that the optimum stock allocation for retiree is between 50-75%. It warns of too little or too high stock allocation. It also gives some advice based upon the early years investment results (good, bad and ugly).
Re: lso givesRe: Yahoo "Finance Quiz"
Can you give us a link to that article?
The 50%-75% stock allocation certainly jibes with most of the respected research on the subject. It's in sharp contrast to the 0% stock position taken by our most verbose troll.
intercst
Can you give us a link to that article?
The 50%-75% stock allocation certainly jibes with most of the respected research on the subject. It's in sharp contrast to the 0% stock position taken by our most verbose troll.
intercst
Similar threads
