General Topics

Starting from September 20, 2005

Withdrawal Rates at Favorable Valuations

We can expect stocks to return to favorable valuations in approximately ten years.

Here are the 30-year withdrawal rates for all of the portfolios in Equations for Design using P/E10 = 8, 10 and 12.

Withdrawal Rates at Favorable Valuations

Ridiculous Pessimism

Rob Bennett sent me an article from Barrons, Can You Afford to Retire? Only in a very narrow sense do the numbers come close to telling us the truth. I call it Ridiculous Pessimism.

Ridiculous Pessimism

Addendum to Ridiculous Pessimism

Here are some further reflections.

Addendum to Ridiculous Pessimism

Gradually Increasing Bond Allocations: HSWR

The traditional advice to investors is to increase bond allocations as they age. Here is what happens to 30-year Safe Withdrawal Rates.

Gradually Increasing Bond Allocations: HSWR

Gradually Increasing Bond Allocations: Returns

The traditional advice to investors is to increase bond allocations as they age. Here is what happens to 10, 20 and 30-year real, annualized total returns.

Gradually Increasing Bond Allocations: Returns

Gradually Increasing Bond Allocations: Returns Addendum

I have added 15-year bond ladders.

Gradually Increasing Bond Allocations: Returns Addendum

Asset Weighted Mutual Funds

These are my comments about Passive Investing: The Emperor Exposed by Christopher Carosa, CTFA, in the October 2005 FPA Journal.

The article is exceedingly well done. It is revolutionary. Best of all: it makes sense.

I have included my original News Alert from the NOTES section and added more comments.

Asset Weighted Mutual Funds

S&P500 Returns Update

I have added 40, 50 and 60-year returns to my S&P500 tables. I have added statistical summary tables. I have added regression equations for 20, 30 and 40-year returns as a function of the percentage earnings yield 100E10/P (or 100/[P/E10]) of the S&P500 index.

S&P500 Returns
S&P500 Returns Statistics
S&P500 Regression Equations
S&P500 FIRST YEAR within a DECADE with returns above 7%, 6%, 5% and 4%

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 is when people go out of their way to avoid seeing the obvious.

Refusing to See the Obvious

Refusing to See: Dividends

I read recently that dividend yields have no power to predict stock returns. Absurd!

Here are my speculations as to how someone could reach such a conclusion.

Refusing to See: Dividends

Years to Double

I have examined historical sequences beginning in 1921-1984. I determined the number of years that it has taken for a portfolio to recover and to double while making withdrawals.

Years to Double

Historical Perspective

Benjamin Graham gave good advice. Benjamin Graham’s constraint (25% to 75% for both stocks and bonds) minimizes regret.

Historical Perspective

Earlier General Topics

General Topics prior to September 20, 2005