I really wish a Bernstein or some other researcher would get on that project. For bonus points it could consider the effects of mixing the portfolio with varying percentages of cash, too.brewer12345 said:Heh, I wonder what a portfolio that contained TIPS and commodities would have done fr the 1966 retiree?
Yep, Raddr can take comfort in being the leading expert in that field.brewer12345 said:The problem is that the DJ-AIG commodity futures index didn't exist back then, and neither did TIPS. I think raddr did a reasonable job of trying to cobble together data, and I have seen some other studies that use a created commodities index, but it is always a little loosey-goosey when researchers start creating the data they work on.
Well, her motto is "If at first you don't succeed..."Zipper said:Not to worry Nords.
The next guy will be able to figure it all out.
Nords said:Well, her motto is "If at first you don't succeed..."
mathjak107 said:isnt it "IF AT FIRST YOU DONT SUCCEED,TRY TRY A GUN"
Here we go again...NYCGuy said:It seems to me that many people here take the 4% SWR rate somewhat too seriously, although I may be reading too much into people's intentions from the tone of the present discussion.
NYCGuy said:So, to me watching for and trying to assess novel risks is more to the point that extrapolating well-understood results from the past, although that is also important. And integrating assessments of those risks into decision-making is not going to be by formula.
NYCGuy said:It is entirely possible that the world is less stable now than in the past, even though much of it is more prosperous. And if, like me, you do not subscribe to the reassuring conviction of American exceptionalism, then we may very well be subject to profound changes in the future from wars, nuclear accidents, nuclear on-purposes, military coup, shift in wealth or power to another region, economic depression, bird flu pandemic, global warming, currency collapse, or some other singularity that is now completely unforseen. My own expectation is that our actual future will probably be dominated by one or more of these changes. And the actual future is the one I care about.
So, to me watching for and trying to assess novel risks is more to the point that extrapolating well-understood results from the past, although that is also important. And integrating assessments of those risks into decision-making is not going to be by formula.
Not really. The assumption is that investing broadly in stocks and bonds in the future will not produce worse long-term results than the worst case that has happened over the past 130 years.NYCGuy said:. . . All of this long-term investment advice is admittedly based on an assumption that the future will essentially like the past, a controlling assumption that is usually forgottern as quickly as it is made. . . .
NYCGuy said:So, to me watching for and trying to assess novel risks is more to the point than extrapolating well-understood results from the past, although that is also important. And integrating assessments of those risks into decision-making is not going to be by formula.
Cute & Fuzzy Apocalypse said:NYCGuy:
So, over the next 5-10 years, what do you see as the risks?
I've sort of mellowed over the past few months. But . . . on the international front I still see an escalating war or boom or boom-boom-boom event as an extreme event. I currently give that a low percentage possibility. Even if it happens say after 2008, for speculation purposes, I suspect we will just bunker up as a country and protect our borders more--maybe fine tune the defense system in event of further problems.
On the domestic front I still see a looming huge debt problem. I'm anticipating a muddle thru though at this point--no huge depression (low percentage probability), no huge inflation (low percentage probability). I still see a huge amount of fixing needed starting in the next few years. I'm hoping for/anticipating gradual and incremental change for the better. (But it will still probably get worse before getting better)
brewer12345 said:Heh, I wonder what a portfolio that contained TIPS and commodities would have done fr the 1966 retiree?
brewer12345 said:Um, housing bubble fixed in your mind?
3 Yrs to Go said:So your point is to plan for the things that, by definition, can't be planned for?
I agree with you that the future may not be like the past and that the "SWR" concept is fatally flawed in its dependence on fairly short and narrowly defined historic data. But what is the alternative? The relevant question we're all trying to answer is "should I quit my job or continue working?" The threat of global pandemic, nuclear war, etc. doesn't really have a bearing on that decision. In fact, some might argue that they'd rather have a few years of retirement under their belt before Armageddon strikes than die while fruitlessly trying to accumulate enough resources to withstand the worst possibilities imaginable.