Edited Posts

The 4% Shocker

The old adage, which I am guilty of repeating, that withdrawing 5% of a portfolio’s current balance is roughly equivalent to withdrawing 4% of its initial balance (plus inflation) is false.
The 4% Shocker

Switching Overview

Here is my answer to MacDuff, who asked, "Say one is absolutely convinced that varying his/her allocation to stocks according to PE10 is a great idea....Given that, what is the algorithm for making the switches?"
Switching Overview

Hobby Stocks and Rebalancing: Edited

I examined whether one should rebalance hobby stocks with his core holdings or whether he should allow them to grow unimpeded. Almost always, my answer is: Let them grow.
Hobby Stocks and Rebalancing: Edited

More on Rebalancing: Edited

I continued to look at what the data show about rebalancing. Rebalancing took away far more from the upside than it gave back in the form of downside protection.
More on Rebalancing: Edited

Beware of Threshold Distortion: Edited

This is one trap that I have seen much too often.
Beware of Threshold Distortion: Edited

More on Threshold Distortion: Edited

I show you how to beat the S&P500 index by 2% to 3% using actively managed mutual funds.
More on Threshold Distortion: Edited

Using SWR Analysis to Compare Asset Classes: Edited

Here are some of Rob Bennett’s thoughts about using SWR analysis to compare asset classes. He has done this for years.
Using SWR Analysis to Compare Asset Classes: Edited

Accumulation Stage: Edited

How should you invest BEFORE retirement? Here are some insights for the accumulation stage.

This is a compilation from five posts.
Accumulation Stage: Edited

Why PE10?

I have taken this article from Professor Robert Shiller’s web site and edited it heavily: Price–Earnings Ratios as Forecasters of Returns: The Stock Market Outlook in 1996.
Why PE10?

Edited: You Can’t Count on 7%: Dollars

What happens if you are just a little bit lucky, but well within a reasonable range of outcomes? What is the upside?

The upside leaves you with twice as much as buy-and-hold. It is much safer. It has a good chance of happening.
Edited: You Can’t Count on 7%: Dollars

Edited: Since You Can’t Count on 7%

What about those people who wish to retire ten years from now? What is their payoff for waiting? How about those who are just starting out? What should they do?
Edited: Since You Can’t Count on 7%

Edited: Switching Allocations with Large Cap Value

Large Capitalization Value stocks respond well to P/E10 switching. Here are the details, both edited and unedited.
Edited: Switching Allocations with Large Cap Value
Unedited: Switching Allocations with Large Cap Value

Edited: Large Cap Growth and Switching

Large Capitalization Growth stocks respond well to P/E10 switching. Here are the details, both edited and unedited. I have included comparisons with the S&P500 index.

Large Capitalization Growth stocks have dragged down the S&P500 index with and without switching.
Edited: Large Cap Growth and Switching
Unedited: Large Cap Growth and Switching

Edited: Switching Allocations with Small Cap Value

Small Capitalization Value stocks respond well to P/E10 switching. The performance is impressive. Here are the details, both edited and unedited.
Edited: Switching Allocations with Small Cap Value
Unedited: Switching Allocations with Small Cap Value

Edited: Small Cap Growth and Switching

Small Capitalization Growth stocks respond well to P/E10 switching. Here are the details, both edited and unedited. I have included comparisons with the S&P500 index.
Edited: Small Cap Growth and Switching
Unedited: Small Cap Growth and Switching

Edited: S&P500 and Government Long Bonds (Revised)

I determined Historical Surviving Withdrawal Rates using S&P500 and Government Long Bond data from Gummy’s database.

First, I varied the stock allocation in accordance with P/E10. Then, I collected baseline data with fixed stock allocations.

Here are the results, both edited and unedited.
Edited: S&P500 and Government Long Bonds (Revised)
Unedited: S&P500 and Government Long Bonds (Revised)

Edited: Sanity Check with the S&P500

Switching stock allocations with Large Cap Value and Small Cap Value produces spectacular results. I compared S&P500 results from different databases as a sanity check to confirm these findings.

It turns out that we can trust our new results.

I have included both edited and unedited versions.
Edited: Sanity Check with the S&P500
Sanity Check with the S&P500