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Bull Markets and the 4% Rule
Old 02-04-2018, 06:07 AM   #1
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Bull Markets and the 4% Rule

An interesting article that generated some new thinking for me. Basically, more people retire in a bull market (because they hit their number), and since bad markets follow good markets (unless this time is different ), the 4% rule is not as conservative when looking at a 60 year time horizon.

https://earlyretirementnow.com/2017/...rement-timing/

"Using the MMM Simple Math method, youíll mostly retire during a bull market, and often during the last part of the bull market, right before the peak and the next bear market!"

As the author summarizes, it's not a huge difference, but it does highlight that for some cohorts the 4% rule is not overly conservative.
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Old 02-04-2018, 06:23 AM   #2
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I have closely read all of ERNs posts and find his research/modeling quite enlightening. Keep in mind ERN is looking at a near 60 year retirement and wishes to leave a nice inheritance. With today's historically high valuations his recommendations for such a retirement is a 3.25% SWR. For a 30 year retirement, his modeling suggests that the traditional 4% SWR remains a good bet. If you haven't, I recommend reading ERN's entire series. Valuable stuff.
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Old 02-04-2018, 07:51 AM   #3
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I also believe that ERN was banned from this website.


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Old 02-06-2018, 09:21 AM   #4
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I also believe that ERN was banned from this website.
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Old 02-06-2018, 10:15 AM   #5
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If I make it to 121, Iíll have had a 60-yr retirement...
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Old 02-06-2018, 11:36 AM   #6
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I also believe that ERN was banned from this website.


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I did not realize ERN had been banned. I hope I did not get sideways with the moderators for recommending reading ERN's stuff.
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Old 02-06-2018, 01:31 PM   #7
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I did not realize ERN had been banned. I hope I did not get sideways with the moderators for recommending reading ERN's stuff.
No problem. It's possible there is some confusion with another website.
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Old 02-06-2018, 05:25 PM   #8
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I explored the ERN site a bit, and saw nothing about annuities. Why, one supposes, for someone so concerned with SWR?

Quite frankly, much of it went well over my head. Algebra! Grrr.
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Old 02-06-2018, 05:45 PM   #9
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I did not know about this blogger, but the photo of a textbook at the top of his Web page shows a discussion of the Kalman filter! This theory was something I applied and made a living with in my working career.

PS. I worked in the area of GNC. See: https://en.wikipedia.org/wiki/Guidan...n,_and_control.

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Old 02-07-2018, 11:05 AM   #10
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Big ERN used the appellation of JohnDoe123 on this forum. He apparently focused his attentions on his blog and impending ER after making a quick "splash and dash" in the warm, cozy waters of the early-retirement.org hot tub in early 2017.

There's a lot of good stuff on his website, especially for those that like to wallow around in the finer technical details of FI.
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Old 02-07-2018, 11:19 AM   #11
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Big ERN used the appellation of JohnDoe123 on this forum.
Ah yes, I remember him. He's the guy who came on to flog his blog and didn't play well with those who disagreed with his defense of "4% isn't safe."
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Old 02-07-2018, 11:27 AM   #12
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I explored the ERN site a bit, and saw nothing about annuities. Why, one supposes, for someone so concerned with SWR?
From reading his blog, it is safe to conclude that Big ERN is not a big fan of annuities. If you google the string "site:earlyretirementnow.com annuity" (without the quotation marks), you will find links to some of his thoughts on annuities.

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Quite frankly, much of it went well over my head. Algebra! Grrr.
Big ERN has a PhD in Economics and some his stuff goes waaaayyyyy beyond Algebra. Even it you don't understand it all, his intro/summaries on his blog entries are helpful to get the gist.
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Old 02-07-2018, 03:06 PM   #13
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I dunno. I use a lot of math in my work, and making your model fit the real world can be very tough at times even though I deal with inanimate objects.

I don't know anything about econometrics, but would think that random human behavior will make it a lot more difficult. And then, there is interfering politics, which is also driven by random events.
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Old 02-07-2018, 07:59 PM   #14
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...Big ERN has a PhD in Economics and some his stuff goes waaaayyyyy beyond Algebra...
There are different levels of Algebra. The deceptively simple Last Theorem of Fermat was stated as a conjecture by Pierre Fermat in 1637.
See: https://en.wikipedia.org/wiki/Fermat%27s_Last_Theorem.

Numerous mathematicians failed to prove it, and it took 358 years before it was proven by Andrew Wiles in 1994.
See: https://en.wikipedia.org/wiki/Wiles%...s_Last_Theorem.

I do not endeavor to be able to understand Wiles' proof. I need a lot of study to get to the point I can read it, and I am too old now.
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Old 02-07-2018, 08:38 PM   #15
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at a certain point, getting too deeply analytical about all of this moves from the realm of "early retirement" into the realm of "career change"....

INW,,,,too much like w*rk.
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Old 02-07-2018, 09:15 PM   #16
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Big ERN used the appellation of JohnDoe123 on this forum. He apparently focused his attentions on his blog and impending ER after making a quick "splash and dash" in the warm, cozy waters of the early-retirement.org hot tub in early 2017.

There's a lot of good stuff on his website, especially for those that like to wallow around in the finer technical details of FI.
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Ah yes, I remember him. He's the guy who came on to flog his blog and didn't play well with those who disagreed with his defense of "4% isn't safe."
I found his thread, and read my exchanges with him. It was exactly one year ago. I did not think he was combative or overly argumentative. I was surprised to see him banned. Maybe some of his bad posts got deleted that I did not get to see.
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Old 02-07-2018, 09:17 PM   #17
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Maybe some of his bad posts got deleted that I did not get to see.
Bet on it.
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