Short Posts starting from April 19, 2007

Updated: August 23, 2007.

Building on Success

Combining intermediate term timing based on valuations (i.e., delayed purchases) with an income blend approach lifts the continuing withdrawal rate to 6.1% (plus inflation).

Building on Success

Expanded Allocator Insights D

This time, I examined inflation. It doesn’t cause nearly so much damage as I had expected.

Expanded Allocator Insights D

Taken At Face Value: Upside

Once again, I have taken the Morningstar Dividend Investor newsletter at face value. Last time, I was conservative. This time, I assume that they meet the upside of their growth levels.

Taken At Face Value: Upside
Edited: Taken At Face Value: Upside

Automatic Rebalancing Examples

If you have ever doubted the folly of automatic rebalancing, look at these retirement portfolio examples.

Automatic Rebalancing Examples

Price Drops

Today’s holder of the S&P500 index can expect his balance to fall to 60.5% of its current purchasing power within the next decade even with dividends reinvested. The likely range of outcomes is between 45.5% and 75.5%.

Price Drops

Price Peaks

Today’s holder of the S&P500 index can expect his balance to remain below 228.8% of its current purchasing power throughout the next decade even with dividends reinvested. The likely range of outcomes is below 153.5%. The most likely outcome is a loss throughout the entire decade.

Price Peaks

Subtle Observation about Dividend Capture

The probability distribution of the income stream from dividend capture is largely independent of price fluctuations.

Subtle Observation about Dividend Capture

Rock Bottom Withdrawal Rate

What is the worst case continuing withdrawal rate? The rock bottom is 2.77% per year.

Rock Bottom Withdrawal Rate

Back of the Envelope: Dividend Blend

Not everyone is comfortable using a spreadsheet calculator. Here is how to calculate a withdrawal rate for a dividend blend portfolio by hand. It is not exact. It comes close.

Back of the Envelope: Dividend Blend

Dividend Blend Rule of Thumb

Here is a rule of thumb for the dividend blend.

Dividend Blend Rule of Thumb

Data Mining Bias

This extends my discussion of Evidence-Based Technical Analysis. I write this to improve the understanding of the role of theories for coping with data mining bias.

Data Mining Bias

Doctor’s Visit

I visited my doctor today and introduced him to my new wife. All is well.

Doctor’s Visit

Saving For Retirement

Those who are still accumulating money for retirement are in an excellent position. Those who are already in retirement can do much better than conventional studies claim. Both should use the techniques developed at this site.

Saving For Retirement

Avoiding Disaster

A retiree should avoid selling stocks. Upgrading his portfolio is an exception.

Avoiding Disaster

Shun Rebalancing

Rebalancing is a bad idea.

Shun Rebalancing