Doom and gloom SWR based on 1965-1982

[cute fuzzy bunny]

Dammit Chuck...

Nords? Anything uranium tipped from your naval days?

I vote we let ***** hash it out with himself. He's demonstrated the ability to have extensive conversations with himself over something that really isnt that important.

Heck, I was ER'ed for three years before I even heard the term "withdrawal rate", let alone a 'safe' one.

Somehow I managed.

Lord knows what would have happened if I had never heard of it though. The SWR police might have swooped in and sent me back to work.

Hey has anyone ever tried cutting out like the middle three paragraphs of one of *****'s 18 page missives and used that to respond to him...just to see if he'd argue with it or support it?

I almost wish the stock market would go to zero tomorrow, and the bond market fully default. That way we would all be reduced to unsafe withdrawal rates, go back to work, and that would effective end the discussion ... :P

[Nords]

... *****, please leave and go post somewhere else.

[hocus]

*****, please leave and go post somewhere else.

I am certainly not going to push my views on anyone, Nords. I recommend that any community members who want to explore the Data-Based SWR Tool in depth go to the SWR Research Group board (at NoFeeBoards.com) and do it there. The environment is not good at this board at this time for informed discussions of the topic. There is no constructive purpose served by generating further friction.

That said, all of the various boards need to come to terms with this issue in time. SWRs are important and there is a lot of interest in the various commnities in exploring the realities of SWRs. This has been demonstrated time and time again. There is close to zero interest in experiencing further friction, so we all should be doing what we can to keep that stuff to a mimimum. But we also need to keep in mind that the ultimate goal is to create an envrionment in which we can have reasoned discussions of this important Retire Early topic.

One thing that causes a serious problem is when someone puts forward a post that recommends that someone look at the REHP study without pointing out that serious people like William Bernstein have raised serious questions about the accuracy of that study. These are money questions we are dealing with at this board. People are going to suffer serious life setbacks if we give them bum advice. Bernstein thinks that the REHP study is bum advice. He says that the results of that study are "highly misleading." Anyone who recommends that someone look at that study in putting together his plan is also under an obligaton to let that person know about the flaws of that study and about where to find more information re those flaws.

I never have put forward a post for the post of causing friction. I never will. But it is a seriously wrong thing to do to tell aspiring early retirees that the historical data says something that it does not say. Any poster is entitled to express any opinion he chooses. None of us is permitted to put forward highly misleading claims re what the historical data says and not expect to be challenged on those claims.

[unclemick]

Well ***** you've certainly convinced me that the whole idea of SWR should be thrown in the trash can. The data posted over at SWR Research has reinforced my prior lifetime's suspicion of over use of numbers/calculations - a curse of engineers and certain other types. At best - a good data set/mythical portfolio can reinforce and offer insite into general principles.

Beyond that - it gets into 'debate over icons in the Byzantine Empire'.

Handgrenades(25X type), DeGaul and the Norwegian widow ride on! Yeah.

[hocus]

Well ***** you've certainly convinced me that the whole idea of SWR should be thrown in the trash can.

I find that an extremely interesting comment, UncleMick. It makes me feel a little good and a little bad.

I am glad if the stuff I have put forward has caused people to question the SWR concept. Questioning is good. If the SWR concept is a strong one, it will survive any questioning directed to it. If it is not, it will indeed be thrown in the trash can, and should be. My personal view is that the SWR concept is a strong one, and that it will survive the questioning. But I think that it is a positive sign that people like yourself are questioning its value.

Your comment makes me feel a little bad because it is not my ultimate goal at all to cause people to become dismissive of SWR analysis. There are a lot of people who have suggested that I have some sort of personal animus towards intercst. People who say that sort of thing just do not understand my motivations even a little bit. On the day when I discovered the intercst web site, I was jumping up and down and printing out all the articles and boring my wife about with talk about what I found. The biggest reason why I found the site so exciting is that he used SWR analysis to plan his retirement just as I did and he used a 4 percent withdrawal rate in his plan just as I did.

It was always clear to me that intercst and I did not agree on everything. But it seemed to me that we agreed on the most important things. To this day there is a sense in which that is true. There are a lot of people today who argue that the SWR is not really the product of a numerical calculation, that it is just the product of guesswork. You never hear me saying that and you never hear intercst saying that. He has said a lot of things that I wish he hadn't said, but I like it that he consistently argues that the SWR is the product of a mathematical calculation. I think he is absolutely right about that (SalaryGuru is another poster argues for the integrity of SWR analysis).

My long-term goal is not to cause people to lose confidence in the SWR concept. It is to restore people's confidence in the concept. The SWR concept is in the very early stages of its development. It's just not reasonable for people to expect that the pioneers of SWR studies would get every factor in the analysis 100 percent right. Advances in scientific knowledge don't work that way. The way it works is that someone comes up with something, it catches on and becomes popular, and then someone else makes a refinement, and so on.

The Data-Based Tool is a refinement. The fact that JWR1945 and I have refined the conventional methodology tool does not mean that we see no value in it. We see great value in it. I have always recommended that aspiring early retirees buy the REHP study and use it in their planning. JWR1945 makes use of the study in the work he does at the SWR board. We are not trying to bury the conventional studies, we are trying to make them more useful and valuable.

All of the friction that has been generated for 26 months has been 100 percent unnecessary. I am not making a personal attack on intercst when I say that the methodology in his study generates highly misleading results. He didn't even develop the methodology. He used a methodology that had been used by a good number of others before him. What I am trying to do is to enhance the REHP study, to make it better.

In the long run, the enhanced study would reflect well on all of us. We all should be working towards the goal of producing the best SWR analysis we can possibly produce. Different community members have different sorts of contributions to make. We should stop dividing up into enemy camps and instead work together to advance the community's knowledge of the subject matter.

I think we are going to find our way to doing that. I think that the friction is going to subside in time but I think that we will be talking about SWRs for a long time to come. It may be that we need to go through a stage first in which a number of community members just lose confidence in the SWR concept altogether. Perhaps people need to lose confidence in an old approach before they can develop confidence in a new one.

It is sort of like how Sleeping Beauty had to go to sleep for a while before she could realistically expect her Prince to come and awaken her with a kiss. It might be that the best thing would be to permit our interest in SWRs to go to sleep for a bit with the hope that we will be able to return to the subject with a refreshed perspective for dealing with it at some later time.

[intercst]

Quote:

*****, please leave and go post somewhere else. That said, all of the various boards need to come to terms with this issue in time. SWRs are important and there is a lot of interest in the various commnities in exploring the realities of SWRs. This has been demonstrated time and time again. There is close to zero interest in experiencing further friction, so we all should be doing what we can to keep that stuff to a mimimum. But we also need to keep in mind that the ultimate goal is to create an envrionment in which we can have reasoned discussions of this important Retire Early topic.

Actually many of us on the other successful early retirement boards enjoy Hoco-Mania and the "friction" that ensues. Not a week goes by when someone provides a link to one of the most humorous ***** threads from this or the nofeeboards.

We also have the benefit of several medical professionals who post on the other boards who have given us a play-by-play analysis of Hoco-Mania with prognosis and treatment suggestions.

intercst

[Nords]

Stop feeding the troll, Greaney.

[unclemick]

18 pages breaks the existing record -- and then, and then maybe Dory shall return and say -"Jeez Louise"
Now that was cool!

[cute fuzzy bunny]

I vote it stops here.

Please stop poking the monster with a stick, its not dead.

[charlie]

Does anybuddy want to talk about P11?

Charlie

[cute fuzzy bunny]

Is that like PE/10 only 10% better?

[bow-tie]

Good Lord, ***** is windy. I admire having passion, but damn....

[hocus]

I admire having passion, but damn....

I do love this stuff, bow-tie.

If that's a sin, then I'm a sinner.

[db]

I have a problem with the premise that started this roll: Namely that you shouldn't worry about trying to establish SWR to any high degree of certainity because of variables that could intervene. Now I might agree that trying to determine if the correct SWR rate is 3.14159265 or 3.14159266 to the .001 confidence level (assuming a normal non-truncated distribution) makes little sense, but the logic bothers me. It seems a bit like saying why give up smoking, because you may die in a car accident.

db

Well, let's face it. The big fear is running out of money while you are still alive. Knowing more about the
circumstances and timing of our departure would
surely make things easier. Having said that, unless
you opt for the "Hemingway exit", there necessarily
will be a lot of guesswork. Life is just a big crapshoot,
but that is part of what makes things interesting.
Maybe some of you would not like to know the details of your demise. I certainly would, but as I have said before,
God made the world round so that we couldn't see
too far ahead.

John Galt

[Hyperborea]

Quote:

I have a problem with the premise that started this roll: *Namely that you shouldn't worry about trying to establish SWR to any high degree of certainity because of variables that could intervene.

The question is how much accuracy is required?

I think that it is probably enough to get the initial SWR into the right ballpark and then use a system with feedback (e.g. Gummy's "Sensible Withdrawals"). The base rate in one of these variable systems more than accounts for the worst historical data and the variable portion lets you enjoy the more than likely "extra" returns. Using feedback allows the system to cope with changing conditions.

[cute fuzzy bunny]

Determining a reasonable withdrawal rate from a ballpark perspective and periodically adjusting your plan to make sure you arent over or under withdrawing makes perfect sense.

But that isnt what is being proposed here by the travelling troll.

He thinks, or wants us to think he thinks, that he can determine asset valuations and whether to own them or not.

The little "system" has already been wrong in a big way twice in 10 years. But that doesnt seem to reduce the silliness level.

There IS a good reason why he's been thrown off of most discussion boards.

[hocus]

This thread includes good substantive discussions.

http://early-retirement.org/cgi-bin/...num=1080235218

[arrete]

Quote:

The question is how much accuracy is required? I think that it is probably enough to get the initial SWR into the right ballpark and then use a system with feedback (e.g. Gummy's "Sensible Withdrawals"). The base rate in one of these variable systems more than accounts for the worst historical data and the variable portion lets you enjoy the more than likely "extra" returns. Using feedback allows the system to cope with changing conditions.

This makes much more sense than obsessing over events that can't be controlled. I have a rather large slush fund in my budget just for unusual events. It means I don't have to freak if the market drops. And I'm well-diversified, so some part of my portfolio is usually doing OK. Beats worrying about valuation or whatever.

Of course, the important thing is to actually pay attention to the feedback. Sometimes you have to whack yourself in the head to pay attention to negative feedback. Being an ostrich doesn't work.

arrete - happy with travel or Canasta

[Hyperborea]

Quote:

And I'm well-diversified, so some part of my portfolio is usually doing OK. *Beats worrying about valuation or whatever.

Yes, that is another good point. *I'm already much more diversified than the S&P500 and CDs. *When I retire and can more efficiently diversify a bit more I will do so. *The reason for that is the portfolio will be larger and so the little "bits" of diversified stuff (i.e. 5% here and 5% there) will be larger in absolute term giving lower costs per unit plus my tax situation will be much better.

Quote:

Of course, the important thing is to actually pay attention to the feedback. *Sometimes you have to whack yourself in the head to pay attention to negative feedback.

Yeah, I think it will be hard to just adjust by the "seat of the pants" and that's why I intend to actually grind out the calculation once a year on the growth of the portfolio, transfer the calculated amount to the fixed income buffer (FIB) and then take at most "one year's" amount out of the FIB for that year (i.e. if the FIB is 5 years money then spend no more than 1/5 that year). *The FIB and the averaging will reduce the volatility of the yearly income. *It would be far too easy to just coast with the same withdrawal rate unless you actually grind the numbers.

Quote:

happy with travel or Canasta

In my case when I FIRE it will be the decider on how much time is spent in Thailand/Eastern Europe/South America and Japan/North America/Western Europe.