4% of what?

[Hyperborea]

Reversion. Indeed. This burning the midnight oil is catching up with me!

Petey

Though as SG points out the mean that we revert to is constantly being revised.

 

[hix9]

this post deleted by hix9

 

[hix9]

this post deleted by hix9

 

[peteyperson]

hi petey

There are several problems with this analysis.  Firstly as Siegel seems to commonly do, it ignores the reality of taxes on dividend payments. This makes any findings inaccurate and possibly completely wrong.

This is of course not a problem with the analysis, it is a deficiency in Shiller's long term price index to be fair, correct?  

I don't think Shiller thinks dividends are particularly important with regard to mean reversion of the P/E ratio, but I don't have his paper.  If he did, I would have thought he would have included them in his long term price data.  Since he didn't I would guess he thinks them irrelevant to the concept.

You, or someone else more versed in mean reversion data should be able to help me out here though, since Shiller is fairly prominent in this area I believe.  Does Shiller think dividends are relevant when assessing validity of P/E reversion?  If not, then what is your point with reference to this paper as presented?
So no change in anything presented when they used Shiller's favored 10 yr earnings.

I will say I now understand Mikey's previous post about why he thought time was better spent elswhere rather than in debates of these types.  

hix9

If you're saying that there are some studies that refute mean reversion, I'm sure there are studies of all kinds! I have read more than enough on the matter to be satisfied. I have seen more than enough strong 5-year performance in both companies and countries, that then experience a poor following 5-years to appreciate what that means for reversion and value investing.

I agree the disclaimer is useful in the paper but I believe the basic conclusions are as wrong as those that believe in the random walk in long-run returns or in perfectly effiicient markets. Charlie Munger has said it is smart to not waste time with people (or ideas) that one knows immediately to be foolish. I feel that way about thinking that reversion isn't real, belief in perfectly efficient markets and all the rest of the hokum out there!

As for your comment in reference to Mikey, if you don't wish to discuss something, better to just not do so rather than make some backhanded insult towards me. That was completely unnecessary. I respect all the views on the board, regardless of whether I think they are wrong or not.

Petey

 

[haha]

Just for the record-when I said I didn't think it was very prospective to discuss these complex issues, I wasn't referring to anyone's particular ideas or understanding.

I think message boards are good for statements of fact and sharing of experience- I have a 5.25% mortgage, etc. But often not so good for more complex things. If chaired PhD professors of economics and finance can't take the matter to a definite conclusion, how could we? We don't have to directly answer any questions, just whatever suits our purpose at the moment.

Can be fun, but essentially hopeless. And people do on occasion get aggressive toward one another

Mikey

 

[unclemick]

Exactly

If I've got it figured out - then the other guy/guys/guyette's must be wrong.

Unless - there are multiple right AND wrong solutions?

Heh, heh, heh, heh.

 

[peteyperson]

Just for the record-when I said I didn't think it was very prospective to discuss these complex issues, I wasn't referring to anyone's particular ideas or understanding.

I think message boards are good for statements of fact and sharing of experience- I have a  5.25% mortgage, etc. But often not so good for more complex things. If chaired PhD professors of economics and finance can't take the matter to a definite conclusion, how could we? We don't have to directly answer any questions, just whatever suits our purpose at the moment.

Can be fun, but essentially hopeless. And people do on occasion get aggressive toward one another

Mikey

Well said. I certainly feel that I have been on the receiving end of some unwanted aggression and hostility.

Petey

 

[peteyperson]

Really? "Unwanted"? Really?? Hmmm...

<Sure glad you didn't claim it was "unwarranted.">

BUT, me thinks thou dost protest too much.
Why would you post sooo confrontationally, if you weren't inviting some hostility??
Are you sure you weren't 'wanting' just a lil aggression and hostility??

Have a verrrry nice day!

And I see you cannot help yourself, now adding condescending to the list.

I said "unwanted", I mean unwanted. You can rewrite me if you desire or try to demonstrate a superior English capability to show other people up. That only indicates a confidence problem on your end when you feel a need to correct others each time you post. If I wanted to use "unwarranted" I would have done so.

Petey

 

[refff]

Here is a site that is very current. It takes the last 10 years and allows you to simulate different indexs and funds. Go to: http://retireearlyhomepage.com/reallife05.html for the last 10 years.I believe that the 4 % rule is of the beginning balance. Also "Buckets Of Money' book is very helpful and provides soreadsheets fir calculation.

 

[peteyperson]

Here is a site that is very current. It takes the last 10 years and allows you to simulate different indexs and funds. Go to: http://retireearlyhomepage.com/reallife05.html for the last 10 years.I believe that the 4 % rule is of the beginning balance. Also "Buckets Of Money' book is very helpful and provides soreadsheets fir calculation.

There are numerous problems with this page. I read it a while ago and had to shake my head.

The last decade was rather unusual in terms of returns. Taking that as a snapshot and comparing how various portfolios did is pretty much meaningless. Buffett did well because a good portion of his investments were not in the stock market. The portfolio intercst has recommended is 75% S&P 500, 25% US Bonds. This is a disaster waiting to happen and leaves you vulnerable to the whipsaw of the markets.

Petey

 

[intercst]

I think hix9 has offered some remarkable insights and commentary.

I'm cross-posting this thread to the REHP forum where a dedicated team of scholars and researchers will dissect hix's thoughts in more detail.

http://www.retireearlyhomepage.com/cgi-bin/yabb/YaBB.pl?board=HOCO

intercst