Bull Markets and the 4% Rule

[Tekward]

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...l-rates-part-22-endogenous-retirement-timing/

"Using the MMM Simple Math method, you’ll 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.

 

[Gunny]

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.

 

[Golden sunsets]

I also believe that ERN was banned from this website.


Sent from my iPad using Early Retirement Forum

 

[REWahoo]

I also believe that ERN was banned from this website.

Username?

 

[HFWR]

If I make it to 121, I’ll have had a 60-yr retirement...

 

[Gunny]

I also believe that ERN was banned from this website.


Sent from my iPad using Early Retirement Forum

I did not realize ERN had been banned. I hope I did not get sideways with the moderators for recommending reading ERN's stuff.

 

[MichaelB]

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.

 

[Lawrence of Suburbia]

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.

 

[NW-Bound]

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/Guidance,_navigation,_and_control.

 

[DrBrisket]

Username?

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.

 

[REWahoo]

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."

 

[DrBrisket]

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.

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.

 

[NW-Bound]

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.

 

[NW-Bound]

...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's_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_proof_of_Fermat'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.

 

[HadEnuff]

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.

 

[NW-Bound]

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.

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.

 

[REWahoo]

Maybe some of his bad posts got deleted that I did not get to see.

Bet on it.