FANOFJESUS
Thinks s/he gets paid by the post
I was thinking about an idea like this. My social security is small and not enough to live on.
I heard a guy on youtube say 4 years of cash and the rest in a s&p 500 fund has a 98% success rate over rolling 30 years periods. That sounds about right.
The devil in bucket strategies is in the details. What are the details on his withdrawal method (and rate, for that matter)?
I mean, does this person recommend spending nothing but cash for 5 years until it is depleted, and then start withdrawing from stocks?
Or is this person always keeping 5 years cash on hand (which effectively means drawing from stocks on day 1).
Or does this person recommend trying to time market ups and downs in some fashion?
I do all stock and ~ 2 years of expenses in cash.
January will be 4 years in and although at times it has felt scary ( December 2018 and March/April 2020) my portfolio is up almost 60%.
How much of your month expenses are you paying with your portfolio what percent?
He pulls from cash in down years.
Doesn't sound like much of anything to me unless we know how much this guy has overall, what his yearly expenses are, and how much of a percentage of the pot those 4 years in cash make up. But in general, it sounds like an OK plan, since IMO if you don't have any bonds to rebalance or spend when the market is way down, you'd need to compensate by keeping more cash.I heard a guy on youtube say 4 years of cash and the rest in a s&p 500 fund has a 98% success rate over rolling 30 years periods. That sounds about right.
Virtually every time we decide to make a trade we are market timing to some extent. The extreme is someone who is trying to call tops and bottoms, but that is widely understood to be impossible. IOW, market timing is not a black/white situation.So, he is a market timer.
Academics who have no axes to grind and who aren't selling anything have concluded that the market is best approximated as a random process with a slight upward bias and a distribution with fat tails. There are no rules that are applicable to a random process except "Wait and see." Backtesting results are useless as well. Really, the idea of trading rules is a variation on technical analysis, which is widely thought to be a joke.does he give clear rules about how to time the market?
Rules or no, each decision to make a trade/refill the bucket is "winging it." But that doesn't imply calling tops and bottoms; it is mostly a recognition that at least since the 1929 crash recoveries have always followed bottoms. So with a bucket view, I can decide to not sell equities after the market has taken a hit and then expect that if I wait a while (maybe even a few years) before selling equities again I will be ahead of the game. Is that timing? Sure, but so what? Would some kind of rule(s) help? No.Or are you supposed to just wing it?
@Out-to-Lunch, you seem to be a little tense on this subject.