February 6, 2006 Short Posts
Updated: June 22, 2006.
New Search Feature
I have added a new search feature at the bottom of this page. It includes an index and a site map.
SWR Success
We have captured today’s long-term return of the stock market. We have successfully brought the Safe Withdrawal Rate (SWR) up to the long-term return of stocks, based on today’s valuations.
SWR Success
Extracting Information
I go into the details when I calculate numbers. This is never enough. I search for insights that will stand even if everything else fails.
The discussion at the end of Building Blocks supplies an example of what I am trying to achieve.
Extracting Information
What Do I Really Think About Dividends?
Dividends raise today’s Safe Withdrawal Rate to 5.4% (plus inflation) of the portfolio’s initial balance.
Dividends extend the portfolio lifetime indefinitely, well beyond 40 or 50 years.
What Do I Really Think About Dividends?
Allocate 25%
How much should you allocate to hobby stocks?
My answer: 25% of your stocks.
Allocate 25%
Allocate 25%: Addendum
What If There Is A Bubble?
Our TIPS/Dividends strategy looks great, starting today. But what if you had selected a dividend-based strategy back in 1995, before the bubble? You might have had to be out of the market for 20 years.
The answer: You would have done exceedingly well. Around 1995, you could have bought TIPS with a 4% (real) interest rate.
What about today? With today’s interest rates? What will happen if you have to wait 20 years before buying stocks?
The answer: You will be sitting pretty.
What If There Is A Bubble?
Volatility and Your Timeframe
I almost glossed over something important when I wrote an addendum to Allocate 25%. It reveals a critical flaw in investment research.
Volatility and Your Timeframe
Dividend Growth Sensitivity Study
I was asked about what happens to dividend growth projections when I limit my investigation to more recent times, starting in the mid-1950s.
There are differences. Fortunately, they tend to reinforce, not undermine, our previous use of the data.
Dividend Growth Sensitivity Study
Three Powerful Advantages of Dividend Strategies
Here are three powerful advantages of dividend-based strategies.
1) Dividends continue indefinitely.
2) Dividends isolate you from price fluctuations.
3) Dividend-based strategies have a gentle failure mechanism.
Three Powerful Advantages of Dividend Strategies
May 2006 Highlights
Our roots date back to May 13, 2002, when Rob Bennett asked a simple question. It was not allowed to be answered. Now, it is May 2006.
May 2006 Highlights
May 2005 Highlights
Investment Traps
Here are four traps to avoid.
Investment Traps
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
Typical Values of P/E10
My choice for the typical value of P/E10 is 14.
Here are the numbers.
Typical Values of P/E10
Older Short Posts
Pre-September 27, 2005 Short Posts
September 27, 2005 Short Posts