Edited Important Posts
Updated July 24, 2006
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Edited: Dividends and True Buy-and-Hold Investing
We are making excellent progress with the True Buy-and-Hold concept..
Edited: Dividends and True Buy-and-Hold Investing
Very Heavily Edited: Gradually Increasing Bond Allocations: Returns
The traditional advice to investors is to increase bond allocations as they age. Here are the effects on 10, 20 and 30-year real, annualized total returns.
Very Heavily Edited: Gradually Increasing Bond Allocations: Returns
Edited: Gradually Increasing Bond Allocations: Returns Addendum
I have added 15-year bond ladders.
Edited: Gradually Increasing Bond Allocations: Returns Addendum
Edited: Gradually Increasing Bond Allocations: HSWR
The traditional advice to investors is to increase bond allocations as they age. Here are some 30-year Historical Surviving Withdrawal Rates (HSWR).
Edited: Gradually Increasing Bond Allocations: HSWR
Edited: Refusing to See the Obvious
You should reject all claims that an effect does not exist simply because a statistical test fails to declare significance. Such claims are false.
What is even worse, and I see it often, is that people go out of their way to avoid seeing the obvious.
Edited: Refusing to See the Obvious
Current Research F: Executive Summary
In Current Research F: Intermediate-Term Returns we return to more traditional tools to see what happens in the Intermediate-Term of 10 to 20 years.
The story at today's valuations (100E10/P = 3.5%) is bad news. The most likely outcome will be a net loss (of 3% annualized) between 2000 and 2010. The bull market that follows is likely to bring the overall annualized return to 1.7% (plus inflation) by year 20. That would almost match today's TIPS.
Current Research F: Executive Summary
Edited: Risky Alternatives
We have developed several intermediate-term timing strategies recently. Retirees invest in TIPS at 2% (real) interest up to a decade waiting for valuations to improve.
But what about alternatives? What if we hold stocks and 2% TIPS for the first decade?
Edited: Risky Alternatives
Dollar Cost Averaging Today: Edited
Not many subjects are more relevant to investors than dollar cost averaging. It is a time-tested, successful strategy.
But what about today?
There is reason for concern.
Dollar Cost Averaging Today: Edited
Year 10 Choices: Edited
I contrast today’s actions, starting from today’s valuations, to those of the not-too-distant future, when valuations will be much more favorable.
Year 10 Choices: Edited
Building Blocks: Edited
Lots of details are unique to your own situation. This article will help you bring everything together.
Building Blocks: Edited
Edited: Why People Ignore Valuations
Why Do People Ignore Valuations? In the past, it did not matter. It did not affect stock allocations. Today, it does.
Edited: Why People Ignore Valuations
Why People Ignore Valuations
Edited: Idiot Switching
I read an article recently that showed that timing never works, regardless of the details. I marvel at how much cleverness it takes, possibly unknowingly, to force such a conclusion.
This got me to thinking about how our results could be distorted and whether our procedures would catch the errors.
I set about building a ridiculous algorithm. I call it Idiot Switching. I put it through its paces. This is what I found.
Edited: Idiot Switching
Idiot Switching
Edited: Orders of Magnitude
The rebalancing bonus exists because of a misleading definition. It is an illusion. Very often, rebalancing lowers returns.
Returns from individual market slices add or subtract 2% to 3% from the market as a whole.
Variations caused by valuations are huge. At today’s prices, with P/E10=26, the most likely (real) return ten years from now is 1.3%. At historically typical prices, with P/E10=14, the most likely return after ten years is 6.3%. At bargain levels, but well above market bottoms, with P/E10=8, the most likely return after ten years is 14.5%.
Edited: Orders of Magnitude
Orders of Magnitude
Earlier Posts
Edited Posts from before September 10, 2005