Well, without a substantial portfolio and a very small withdrawal, most people wouldnt have survived ER in those time periods whether they owned their home or not.
I would suspect that in the nth year of a multi-year drop, not having to make the mortgage might be a comfort though.
I guess you'd have to read the bernstein book to comment on his methodology, but his take isnt far from Bogles. I imagine at least one of them knows what they're talking about, but then again we are talking about the future.
I think to summarize Bernsteins point, and with gross simplification because I am a simpleton, overall market returns over long periods of time tend to follow a fairly straight path of their future income production. When that rate is discounted by a risk adjusted discount rate into todays dollars, you get todays value. Over 20+ year periods, this calculation rings true for every civilizations equity and bond markets going back through recorded time. Deviations from that trend in periods shorter than 20 years are simply speculative gains and losses.
His assertion is that due to high current prices and low current dividend rates (the source of a substantial piece of historical return), that would suggest much lower returns going forward.
A good analogy he uses talks about a guy walking his dog on a straight line from his apartment to central park. The dog is on a 20' leash and as dogs do, it runs all over the place. His take is that by watching the man (the trend of discounted future income of a company or the risk adjusted interest rate of a bond), you get an idea of long term market movement. However most people watch the dog and try to make bets as to which direction the dog will go next. In other words, buying the total market index vs market timing.
His approach observes markets from europe of 500 years ago to today, with the acknowledgement that the US equities market is a shining star in the history of investment for its duration.
He lays out a whole chapter (#2) which outlines the idealogy. Plenty of math and numbers, all possibly arguable, once again because we simply cant guess the future.
He does include an interesting article that really captures the mindset of todays american: the ability to obtain anything, invest anywhere, travel anyplace, with obstruction to these efforts considered a major annoyance to the impeded. Except the article was written by a Londoner just prior to WWI, following which the English investment markets were hammered for about 50 years by unstable world conditions invoked by two world wars and ripple effects from the depression in the US.
In other words, when things look pretty good, look out. When things look pretty bad, might be time to get your checkbook out and buy some beaten out stocks. If you have a 20+ year horizon that is.
A secondary effect is the lifecycle of a market/civilization. Most are characterized early on by higher risks, high interest rates, highly speculative and risky corporate equities markets and the like, with appropriate discounted current values of those risky assets. Eventually they settle down until the risk becomes very low, interest rates bottom out, bonds return below inflation, and equities barely outperform those due to relatively marginal additional risk.
Except for the equities underperforming (so far), doesnt that sound a little familiar? Maybe the US equities/bond markets will perform differently going forward than the dozens of strong civilizations/markets that Bernstein outlined: the romans, the greeks, the portugese, the english.
Maybe its all different now.
So with these things in mind, I'll take my $250k off of that table, put it in an appreciating asset that is relatively decoupled from the finance markets (that I can also live in and that also gives me nearly complete control of my withdrawal rate), and keep the other mil asset allocated to about 50% us stocks and bonds and the rest to foreign and emerging markets, other real estate, and oil and gas pumpers.
You've got half of it though, historical calculators can help people get a handle on what to do and when to do it. The only problem is that if the markets moved in a manner that was calculable, this would be easy. The fact is that the market moves as a socialogical function of expectations and reactions. Faced with the same set of criteria, sometimes people move it up, sometimes down. That factor of unpredictability makes me want to increase the predictability.
But thats because it makes me feel good, I can afford to do it, and because I want to.