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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 08:22 AM   #161
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Re: Yahoo "Finance Quiz"

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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.
If the long-term forward returns from stocks were, say, 1% higher than treasuries, I think that would be a strong argument for 100% treasury portfolios for retirees.

Who needs the volatility with such a low risk premium?
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 08:47 AM   #162
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Re: Yahoo "Finance Quiz"

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

I'm not invested 100 percent in fixed-income assets. You know that.

My personal guess is that you are not really angry, but that you are pretending to be as a debating tactic. I think it would help normalize the SWR discussions if you would stop doing so.

Everyone wins if we put that stuff behind us--you, me, the entire Retire Early community. Please give the idea some serious thought.
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 09:05 AM   #163
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Re: Yahoo "Finance Quiz"

Once a SWR is decided upon there have been a number of withdrawal strategies that have been proposed. For one, galeno had proposed and used a mechanical withdrawal strategy, like F! 25%, stocks 75%, with 2 years living expenses in MMF, 2 yr expenses in CD maturing in 1 y, 2 yr expenses in maturing in 2 yr. Adjust his portfoilio at year end by replenshing his FI amount. There have been others as well that have adjusted there withdrawal stategy based upon personal risk assessement.

Using PE's with subsequent wide swings in asset allocation is really timing the market. Although appealling in theory, the long term track record of market timers is not very good. Besides this there are many other variables, other than PE, that affect market values: e.g. interest rates, profit growth, etc. Add to this human nature (fear & greed) wouldn't it be difficult to stay out of market because of high PE's & continue to watch the market go up for 6 months, 1 year 2years, etc waiting for the PE's to adjust lower? Then get in only to watch the market go down.

no one is against adjusting a portfolio % asset allocation based upon the individuals risk tolerance, which may well change based upon personal or market conditions. The danger in PE timing is that we are fooled into believing we know what will happen, become overconfident, and start dismissing asset allocation and diversification as prudent fundamental investing tools.
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 09:09 AM   #164
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Re: Yahoo "Finance Quiz"

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

I'm not invested 100 percent in fixed-income assets. You know that.
Oh really? I guess your reply in #129 on this thread was a misstatement, too.

My three asset classes are (1) TIPS; (2) ibonds; and (3) CDs. I have significant amounts invested in each of these three asset classes.

Come on, *****. If you can't keep your misrepresentations straight, how do you expect to convince others that you are credible?

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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 09:30 AM   #165
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Re: Yahoo "Finance Quiz"

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Using PE's with subsequent wide swings in asset allocation is really timing the market. Although appealling in theory, the long term track record of market timers is not very good. Besides this there are many other variables, other than PE, that affect market values: e.g. interest rates, profit growth, etc. Add to this human nature (fear & greed) wouldn't it be difficult to stay out of market because of high PE's & continue to watch the market go up for 6 months, 1 year 2years, etc *waiting for the PE's to adjust lower? Then get in only to watch the market go down.

no one is against adjusting a portfolio % asset allocation based upon the individuals risk tolerance, which may well change based upon personal *or market conditions. The danger in PE timing is that we are fooled into believing we know what will happen, become overconfident, and start dismissing asset allocation and diversification as prudent fundamental investing tools. * * * * * * * * *
Excellent observation!

I believe ***** has been out of the stock market since 1995 or 1996. He's still waiting for somebody to 'ring the bell' and tell him that stocks are 'appropriately valued.'

Meanwhile, those that maintained a balanced allocation between equities and fixed income assets from 1995-2004 are much richer today and enjoying a more comfortable retirement. Here's a link illustrating how various retirement investing approaches have fared over that time period.

http://www.retireearlyhomepage.com/reallife04.html

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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 10:07 AM   #166
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Re: Yahoo "Finance Quiz"

Come on, *****. If you can't keep your misrepresentations straight, how do you expect to convince others that you are credible?

It would be a good thing in my view if a fellow commumnity member would put forward an appropriate response to this comment.

In any event, I pass.
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 10:20 AM   #167
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Re: Yahoo "Finance Quiz"

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Come on, *****. If you can't keep your misrepresentations straight, how do you expect to convince others that you are credible?

It would be a good thing in my view if a fellow commumnity member would put forward an appropriate response to this comment.

In any event, I pass.
Wouldn't it make more sense for you to directly respond to this comment?

*****: I'm not invested 100 percent in fixed-income assets. You know that.

intercst: Oh really? I guess your reply in #129 on this thread was a misstatement, too.

<<<*****: My three asset classes are (1) TIPS; (2) ibonds; and (3) CDs. I have significant amounts invested in each of these three asset classes. >>>

</snip>


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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 10:33 AM   #168
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Re: Yahoo "Finance Quiz"

Wouldn't it make more sense for you to directly respond to this comment?

You're a trip and a half, my old friend.

I'm going to leave it at that.
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 11:56 AM   #169
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Re: Yahoo "Finance Quiz"

I have to say I'm a little confused as well. In another thread you say you are completely out of the stock market.

Is there some terminology issue at work here, because I thought cd's and bonds were all considered 'fixed income'?!?
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 12:03 PM   #170
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Re: Yahoo "Finance Quiz"

Yes, I asked ***** about his allocation, and he said that his financial assets were in fixed income, and that he had zero exposure to equities (see reply number 9).

http://early-retirement.org/cgi-bin/...752712;start=8
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 12:26 PM   #171
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Re: Yahoo "Finance Quiz"

Is there some terminology issue at work here, because I thought cd's and bonds were all considered 'fixed income

TIPS and ibonds are inflation-adjusted investments. The amount of income they pay is not fixed.

The REHP study compares investing in stocks with investing in fixed-income assets, and concludes that the "optimal" investment is a portfolio of 74 percent stocks. It is this finding that supports the intercst claim that a choice to allocate less than 74 percent of one's portfolio to stocks causes a delay in one's retirement.

A reasoned SWR analysis shows the opposite to be the case. I am not stuck with the 2.3 percent SWR that the REHP study shows applies to fixed-income assets. JWR1945 has done an analysis showing that the SWR for TIPS when they were paying a 4.1 percent real return was 5.85 percent. My return is not quite that good, but I am getting an SWR of well above 4 percent from both my TIPS and my ibonds.

My CDs are fixed-income assets. But in the years that I have owned them, I have obtained returns that support an SWR well in excess of 2.3 percent. The historical data indicates that the SWR on stocks will likely be heading upward in the not-too-distant future. When the SWR on stocks reaches a level that is consistent with my 4 percent take-out number, I will be shifting my CD money to stocks.

My overall SWR is higher than 4 percent. The SWR for stocks at the time I "retired" (August 2000) was somewhere in the neighborhood of 2 percent. I more than doubled my SWR by investing in asset classes other than stocks. A 74 percent stock allocation was not optimal for me at the time of my retirement.
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 12:48 PM   #172
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Re: Yahoo "Finance Quiz"

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TIPS and ibonds are inflation-adjusted investments. The amount of income they pay is not fixed.
It's fixed in real terms. (I like semantic games too )
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 12:49 PM   #173
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Re: Yahoo "Finance Quiz"

***** writes,

My overall SWR is higher than 4 percent. The SWR for stocks at the time I "retired" (August 2000) was somewhere in the neighborhood of 2 percent. I more than doubled my SWR by investing in asset classes other than stocks. A 74 percent stock allocation was not optimal for me at the time of my retirement.

No one is going to know the 30-year SWR for someone retiring in August 2000 until August 2030.

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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 01:04 PM   #174
 
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Re: Yahoo "Finance Quiz"

*****-pocus,

Until you answer the very simple question that I asked you earlier, everyone will continue to see you as the Troll that you are and will quit feeding you.

IOW - If you play straight, everyone will play straight with you. If you don't, I predict that your time on this forum will be very short.
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 01:13 PM   #175
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Re: Yahoo "Finance Quiz"

It's fixed in real terms. *(I like semantic games too *)

I don't like word games. Not when my money is at stake.

The U.S. government has made me a promise to pay me 3.5 percent above the rate of inflation on my TIPS investments. Intercst says that his 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.

He is wrong to say that. He is confusing people about what the historical data says when he says that.

The historical data says that stocks are an amazing investment at low valuation levels, a great investment at moderate valuation levels, a not-entirely-bad investment at high valuation levels, and a generally poor investment at extremely high valuation levels. That is the historical data talking, not me. All that I have done is to report what the historical data actually says.
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 01:17 PM   #176
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Re: Yahoo "Finance Quiz"

If you play straight, everyone will play straight with you.

Put up your queston again without the words "***** pocus" and "troll" in it, and I will do my best to offer a sound response.

Otherwise, I will take a pass.
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 01:20 PM   #177
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Re: Yahoo "Finance Quiz"

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Intercst says that his 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.
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.
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 01:21 PM   #178
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Re: Yahoo "Finance Quiz"

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.
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 01:33 PM   #179
 
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Re: Yahoo "Finance Quiz"

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.

_________________________________________
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Re: Yahoo "Finance Quiz"
Old 06-05-2004, 01:35 PM   #180
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Re: Yahoo "Finance Quiz"

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.
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