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Re: Please explain a 3% SWR to me

I believe you're ignoring the fact that because many people require a 4% real withdrawal rate to retire and maintain desired spending, a 4% real withdrawal rate must work. Are you saying wants=needs? I'm saying some people have decided they need a 4% withdrawal rate to achieve their objectives and ...
by richard
Thu Apr 24, 2014 1:21 pm
 
Forum: Investing - Theory, News & General
Topic: Please explain a 3% SWR to me
Replies: 78
Views: 3913

Re: Please explain a 3% SWR to me

On why 3% would only last 30 years, look at the cumulative inflation from 1970 t0 1990 to see where the compounded earnings went. As mentioned, that 3% was boosted by inflation for each year of retirement. The final withdrawals were several multiples of the initial amounts. I would assume with a 10...
by richard
Thu Apr 24, 2014 9:55 am
 
Forum: Investing - Theory, News & General
Topic: Please explain a 3% SWR to me
Replies: 78
Views: 3913

Re: Please explain a 3% SWR to me

Now that this thread is heating up... :) Any taker for my question about the Gordon equation and Bogle/Bernstein gloomy forecasts? I don't have the exact numbers handy, but it seems to me that the past 30 years worked reasonably well from an overall return standpoint, and yet dividends were already...
by richard
Thu Apr 24, 2014 9:48 am
 
Forum: Investing - Theory, News & General
Topic: Please explain a 3% SWR to me
Replies: 78
Views: 3913

Re: Please explain a 3% SWR to me

I try and try but I just can't wrap my head around someone needing 33x for a 30 year retirement. It seems if that is true it could only be because of too much risk in the portfolio. I know I am missing something. Help bring me in from the dark. Do you know how to put together a spreadsheet? If yes,...
by richard
Thu Apr 24, 2014 6:07 am
 
Forum: Investing - Theory, News & General
Topic: Please explain a 3% SWR to me
Replies: 78
Views: 3913

Re: Please explain a 3% SWR to me

33x is a conservative goal, for someone who is both risk averse and who desires to annuitize nothing, thus maximizing his expected estate for heirs. Most of us can do OK with a lesser multiplicative factor.. I think the desire to pass things along to heirs must be a bigger driver in this. Which in ...
by richard
Thu Apr 24, 2014 6:05 am
 
Forum: Investing - Theory, News & General
Topic: Please explain a 3% SWR to me
Replies: 78
Views: 3913

Re: Please explain a 3% SWR to me

On why 3% would only last 30 years, look at the cumulative inflation from 1970 t0 1990 to see where the compounded earnings went. As mentioned, that 3% was boosted by inflation for each year of retirement. The final withdrawals were several multiples of the initial amounts. I would assume with a 10...
by richard
Thu Apr 24, 2014 5:59 am
 
Forum: Investing - Theory, News & General
Topic: Please explain a 3% SWR to me
Replies: 78
Views: 3913

Re: Do you think the biotech sector will be hurt long term?

There are ways to finance drug development other than the current patent system. Somehow I don't think you are going to raise 4B to 6B on kickstarter to fund your own cure for Hep C. And what would you offer contributors? A T-shirt? Government funding is likely to work better than kickstarter, espe...
by richard
Wed Apr 23, 2014 11:32 am
 
Forum: Investing - Theory, News & General
Topic: Do you think the biotech sector will be hurt long term?
Replies: 56
Views: 2679

Re: Do you think the biotech sector will be hurt long term?

I don't take it as a given that they reduce the availability of medicine. Patents? Well the industry couldn't exist without them. I'd phrase that as: the US drug industry couldn't exist in its current form without patents, but that's not the same as the industry couldn't exist without them. Look at...
by richard
Wed Apr 23, 2014 7:20 am
 
Forum: Investing - Theory, News & General
Topic: Do you think the biotech sector will be hurt long term?
Replies: 56
Views: 2679

Re: Housing in NYC area

keith6014 wrote:<snip>Its hard to believe there will be another bust in real estate in NY.<snip>

That sounds like one of Shiller's signs of a bubble.
by richard
Tue Apr 22, 2014 8:22 pm
 
Forum: Personal Finance (Not Investing)
Topic: Housing in NYC area
Replies: 21
Views: 1642

Re: Is 1800s stock market data even relevant?

If you believe in market efficiency why would it not work in the 1800s when it worked in the 1900s and today? Packer To me, efficient markets and insider trading are incompatible. The US first passed its insider trading laws in the 1930s. Perhaps, others with more knowledge can weigh in, but I don'...
by richard
Tue Apr 22, 2014 8:16 pm
 
Forum: Investing - Theory, News & General
Topic: Is 1800s stock market data even relevant?
Replies: 60
Views: 2862

Re: Is 1800s stock market data even relevant?

Whether 1800s market data are relevant depend on what you want to do with the data.

Get a vague sense that prices fluctuate? Sure. Specific numerical analysis? Highly doubtful.
by richard
Tue Apr 22, 2014 8:12 pm
 
Forum: Investing - Theory, News & General
Topic: Is 1800s stock market data even relevant?
Replies: 60
Views: 2862

Re: If you have ACA health insurance, what is your experien

I suspect Obamacare is at or close to being self-sustaining at this point, since there has been a recent influx of younger people. Older healthy people are better than younger people. Older people pay more than younger people and healthy people tend to be less expensive than unhealthy people. As fa...
by richard
Tue Apr 22, 2014 5:47 am
 
Forum: Personal Finance (Not Investing)
Topic: If you have ACA health insurance, what is your experience?
Replies: 209
Views: 8477

Re: Mel's Unloved Mid-Caps Finally Getting Some Respect

I'm under-weighted in domestic mid caps -- 20% of the portfolio. Reading your post and looking at the performance charts makes me pause and reflect. Maybe I should re-think my small value tilt a little bit. Deciding that you need more of something that has gone up recently is not always the best id...
by richard
Sun Apr 20, 2014 12:27 pm
 
Forum: Investing - Theory, News & General
Topic: Mel's Unloved Mid-Caps Finally Getting Some Respect
Replies: 46
Views: 3400

Re: Mel's Unloved Mid-Caps Finally Getting Some Respect

I'm under-weighted in domestic mid caps -- 20% of the portfolio. Reading your post and looking at the performance charts makes me pause and reflect. Maybe I should re-think my small value tilt a little bit. Deciding that you need more of something that has gone up recently is not always the best id...
by richard
Sun Apr 20, 2014 11:42 am
 
Forum: Investing - Theory, News & General
Topic: Mel's Unloved Mid-Caps Finally Getting Some Respect
Replies: 46
Views: 3400

Re: POLL: why carry cash?

fareastwarriors wrote:Cash is king. I still like my stack of cash over a plastic card. The feeling is not the same. :D

A different feeling is likely the reason for the reported behavioral differences between using cash and cards.
by richard
Sun Apr 20, 2014 11:37 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: why carry cash?
Replies: 225
Views: 7619

Re: POLL: why carry cash?

I'd write you last sentence "Still, the remoteness from cash did cause some of the people in these studies to lose some integrity whether by engaging in more cheating on tests or in cheating themselves by buying junk food." I agree with the rewrite. I'll add that behavioral studies provid...
by richard
Sat Apr 19, 2014 10:55 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: why carry cash?
Replies: 225
Views: 7619

Re: POLL: why carry cash?

<snip>Either place, no one has trouble with change. Most donut shops where I live are run by immigrants who can both count and make change (two different meanings, but each applicable in its own way). I think most are Cambodian (my language skills aren't that great, so I am not sure), although seve...
by richard
Sat Apr 19, 2014 10:53 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: why carry cash?
Replies: 225
Views: 7619

Re: POLL: why carry cash?

How well this generalizes is not clear. Generalizing is an issue with all behavioral experiments. Experiments are controlled for a single variable, whereas in the real life people are simultaneously subjected to many different stimuli, some of which are pulling in different directions. Also, the va...
by richard
Sat Apr 19, 2014 10:43 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: why carry cash?
Replies: 225
Views: 7619

Re: POLL: why carry cash?

Further search has led to the paper itself : Thomas Manoj, Kalpesh Kaushik Desai, and Satheeshkumar Seenivasan (2011), “How Credit Card Payments Increase Unhealthy Food Purchases: Visceral Regulation of Vices,” Journal of Consumer Research , June, 126-39. Victoria The first description of a study I...
by richard
Sat Apr 19, 2014 10:37 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: why carry cash?
Replies: 225
Views: 7619

Re: POLL: why carry cash?

Behavioral economics experiments show that people behave more honestly and make more prudent decisions when they use cash. An example of the former is that when students were getting cash for completing puzzles they were cheating much less than when they were receiving a token exchangeable for cash...
by richard
Sat Apr 19, 2014 10:25 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: why carry cash?
Replies: 225
Views: 7619

Re: POLL: why carry cash?

Again, do you have a citation? Where have you been? Go to google.com, type "empirical study credit card users spend more than with cash" Here's one I found from MIT - http://web.mit.edu/simester/Public/Papers/Alwaysleavehome.pdf http://www.lmgtfy.com/?q=credit%20card%20users%20junk%20food...
by richard
Sat Apr 19, 2014 10:11 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: why carry cash?
Replies: 225
Views: 7619

Re: Beware Vanguard DOES NOT update all your account values

I hold some TIPS in my Vanguard brokerage account. Values get updated some number of hours after 6:00pm (certainly by the next morning), while my Vanguard mutual fund values get updated within minutes.
by richard
Sat Apr 19, 2014 9:53 am
 
Forum: Investing - Theory, News & General
Topic: Beware Vanguard DOES NOT update all your account values
Replies: 56
Views: 4569

Re: POLL: why carry cash?

Outside of a toll plaza on a highway or bridge who doesn't take a cc? Chucking change while not even coming to a complete stop is DEFINITELY faster.... of course, if you're using time savings as an argument to use cash or cc. Using a cc at a toll booth seems pretty ridiculous. E-Z pass is faster, e...
by richard
Sat Apr 19, 2014 9:49 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: why carry cash?
Replies: 225
Views: 7619

Re: POLL: why carry cash?

Behavioral economics experiments show that people behave more honestly and make more prudent decisions when they use cash. An example of the former is that when students were getting cash for completing puzzles they were cheating much less than when they were receiving a token exchangeable for cash...
by richard
Sat Apr 19, 2014 9:46 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: why carry cash?
Replies: 225
Views: 7619

Re: POLL: why carry cash?

My experience using a credit/debit card does not match the descriptions I see in this thread. For most transactions, I swipe, no one swipes for me. I then wait for the other person to hit the correct button on the register. The POS device then asks me for my PIN. I have to type and then hit enter. ...
by richard
Sat Apr 19, 2014 9:34 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: why carry cash?
Replies: 225
Views: 7619

Re: POLL: why carry cash?

Processing cash is not free for merchants. There are issues of training, security, employee error, etc. Many people do not appear to realize they will have to pay for things. They'll wait until a cashier is done ringing up their purchase, then search for cash or plastic. How quickly payment gets pro...
by richard
Sat Apr 19, 2014 9:27 am
 
Forum: Personal Finance (Not Investing)
Topic: POLL: why carry cash?
Replies: 225
Views: 7619

Re: Japan Does not Show That Stocks are Dangerous

But if you're in the valuations matter camp, earnings yield is around 4%-5%. Add in 2% inflation and you have a nice premium above CDs. Perfect! So, tomorrow, earnings yield is around 2%-2.5%. Would you "do nothing" to your Equity risk allocation ? richard » Thu Apr 17, 2014 9:34 am Valua...
by richard
Thu Apr 17, 2014 4:24 pm
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4154

Re: Japan Does not Show That Stocks are Dangerous

richard » Thu Apr 17, 2014 9:34 am Would you rather invest your money in the stock market in the depths of the 1973-74 stock market when P/E's were 8 or in early 2000 when market P/E's got up to about 32? In which scenario were the future returns higher? Of course valuations matter. Valuations most...
by richard
Thu Apr 17, 2014 11:41 am
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4154

Re: Question about the gordon equation

Consider Modigliani Miller, which essentially stands for the proposition that it doesn't matter how a corporation finances its activities - retained earnings or borrowings. The world is awash in capital seeking higher returns. That's one reason interest rates are so low. It doesn't appear that lack ...
by richard
Thu Apr 17, 2014 11:03 am
 
Forum: Investing - Theory, News & General
Topic: Question about the gordon equation
Replies: 2
Views: 195

Re: Japan Does not Show That Stocks are Dangerous

Would you rather invest your money in the stock market in the depths of the 1973-74 stock market when P/E's were 8 or in early 2000 when market P/E's got up to about 32? In which scenario were the future returns higher? Of course valuations matter. Valuations most likely do matter. The question is ...
by richard
Thu Apr 17, 2014 9:34 am
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4154

Re: "At Vanguard my voice is my password"

I've used it for some time now. Works fine, even when I have a cold.

Works fine appears to mean it lets you in (no false negative). What I worry about is how well it keeps others out (I don't want false positives).
by richard
Thu Apr 17, 2014 5:44 am
 
Forum: Personal Consumer Issues
Topic: "At Vanguard my voice is my password"
Replies: 24
Views: 2272

Re: What is your net worth

would the poll have more relevance if it included age as well as net worth to put things in perspective? knowing at what point others reached or surpassed my number might be a bit depressing yet informative! Download the spreadsheet from the net worth survey thread. You can then chart age against n...
by richard
Wed Apr 16, 2014 1:31 pm
 
Forum: Investing - Theory, News & General
Topic: What is your net worth
Replies: 37
Views: 5431

Re: Looking at top 1% for actionable insight

For an "actionable insight" that applies to younger forum members wrestling with educational and career choices, for example, the fact the IRS's top one percent statistics show that big chunks of the one percent club own a small business (maybe 22%?) or own a slice of a professional servi...
by richard
Wed Apr 16, 2014 11:39 am
 
Forum: Personal Finance (Not Investing)
Topic: Looking at top 1% for actionable insight
Replies: 73
Views: 7511

Re: Japan Does not Show That Stocks are Dangerous

I'm asking very precise questions - what are the numbers at which I should stop buying, sell and resume buying? Is your answer that I should stop buying (sell?) when bond yields (which bonds?) exceed 1/CAPE? This is a great question and there are bound to be several equally good answer. When it com...
by richard
Wed Apr 16, 2014 11:19 am
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4154

Re: Japan Does not Show That Stocks are Dangerous

What is the CAPE at which I should not buy stocks? I'm asking very precise questions - what are the numbers at which I should stop buying, sell and resume buying? Is your answer that I should stop buying (sell?) when bond yields (which bonds?) exceed 1/CAPE? A precise question about an imprecise si...
by richard
Wed Apr 16, 2014 11:09 am
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4154

Re: What is your net worth

From the 2014 Bogleheads net worth survey
Image
by richard
Wed Apr 16, 2014 10:46 am
 
Forum: Investing - Theory, News & General
Topic: What is your net worth
Replies: 37
Views: 5431

Re: Japan Does not Show That Stocks are Dangerous

What is the CAPE at which I should not buy stocks? Should I sell my stocks if CAPE goes above this level? If so, at what level should I start buying them back? Well, there isn't a precise answer for this, but certainly there is a "loose" answer. All things being equal, the expected return...
by richard
Wed Apr 16, 2014 9:59 am
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4154

Re: Looking at top 1% for actionable insight

Part of the issue is the top 1% are very diverse group. Spending on luxury items has a much larger effect on the bottom edge of the top 1% than the bottom edge of the top 0.1% or the 0.01%.
by richard
Wed Apr 16, 2014 9:53 am
 
Forum: Personal Finance (Not Investing)
Topic: Looking at top 1% for actionable insight
Replies: 73
Views: 7511

Re: Another take on the "rebalancing bonus"

The problem with your examples are you set them up in a non-random way, they always have some guaranteed return to the mean so you force a greater amount of buy low sell high than exists in the real world. You are arguing about a different point than I was making. Clearly you have not bothered to r...
by richard
Wed Apr 16, 2014 8:45 am
 
Forum: Investing - Theory, News & General
Topic: Another take on the "rebalancing bonus"
Replies: 78
Views: 4240

Re: Looking at top 1% for actionable insight

Most of the relationships to being a top 1% would likely be spurious and not really actionable. Probably a lot of 1% drive BMW's - but it doesn't follow that I will become a 1% by buying a BMW. Actually the data from the IRS syncs pretty tightly with the Millionaire Next Door book... note that the ...
by richard
Wed Apr 16, 2014 8:38 am
 
Forum: Personal Finance (Not Investing)
Topic: Looking at top 1% for actionable insight
Replies: 73
Views: 7511

Re: Japan Does not Show That Stocks are Dangerous

What is the CAPE at which I should not buy stocks?

Should I sell my stocks if CAPE goes above this level? If so, at what level should I start buying them back?
by richard
Wed Apr 16, 2014 6:42 am
 
Forum: Investing - Theory, News & General
Topic: Japan Does not Show That Stocks are Dangerous
Replies: 79
Views: 4154

Re: Looking at top 1% for actionable insight

SeattleCPA,

A major problem with looking at people who've done very well and studied what actions they have taken is that you're ignoring all those who have taken those actions but have not done very well.
by richard
Tue Apr 15, 2014 2:33 pm
 
Forum: Personal Finance (Not Investing)
Topic: Looking at top 1% for actionable insight
Replies: 73
Views: 7511

Re: Looking at top 1% for actionable insight

JuanZ wrote:Another thread were we should be mindful of survivorship bias.

Yes.

You might want to add the distinction between correlation and causation.
by richard
Tue Apr 15, 2014 1:10 pm
 
Forum: Personal Finance (Not Investing)
Topic: Looking at top 1% for actionable insight
Replies: 73
Views: 7511

Re: Looking at top 1% for actionable insight

<snip> Wealth Tier----------------------------------------Count---------Mean Net Worth Under $2 million in gross assets---------------449,000--------$1,046,619 $2 million to $3.5 million in gross assets----1,008,000------$2,593,065 $3.5 million to $5 million in gross asset------364,000--------$4,15...
by richard
Tue Apr 15, 2014 1:08 pm
 
Forum: Personal Finance (Not Investing)
Topic: Looking at top 1% for actionable insight
Replies: 73
Views: 7511

Re: Asness & Fama on Bloomberg TV NOW

"Go with Jack"
This clip is worth watching: http://www.bloomberg.com/video/professo ... 543qA.html
by richard
Tue Apr 15, 2014 12:28 pm
 
Forum: Investing - Theory, News & General
Topic: Asness & Fama on Bloomberg TV NOW
Replies: 23
Views: 1153

Re: The slackening...

JuanZ wrote:
SC Hoosier wrote:Look at the 'Greatest Generation.'

Be mindful of survivorship bias.

Think of what Isaac Newton's generation could have done with the "Greatest Generation's" press agent :P
by richard
Tue Apr 15, 2014 7:35 am
 
Forum: Personal Finance (Not Investing)
Topic: The slackening...
Replies: 61
Views: 6584

Re: Why does Vanguard use average return iso compound annual

I thought I remembered pointing this out about a year ago that they are really CAGR returns - so I am not sure why everyone thinks this is new news?<snip> Some forums have policies against duplicate threads and strong recommendations that people search before posting. We're not in that group. I'm n...
by richard
Tue Apr 15, 2014 7:22 am
 
Forum: Investing - Theory, News & General
Topic: Why does Vanguard use average return iso compound annual?
Replies: 99
Views: 4156

Re: Did not have fun this year doing my taxes- TT

Fun fact: the IRS could prepare a first draft of your taxes, which you could then check. You wouldn't have to fill in anything reported to the IRS, such as interest, dividends, wages. It would make things much simpler for most people, although obviously some have more complicated situations or would...
by richard
Tue Apr 15, 2014 6:00 am
 
Forum: Personal Finance (Not Investing)
Topic: Did not have fun this year doing my taxes- TT
Replies: 42
Views: 4053

Re: A Bubble in Value Stocks?

Pretend the economy consists of 100 similar factories. Company A owns 90 factories and companies B, C ... K each own one. Which is a more diversified portfolio - 90 shares of A and one each of B, C ... K or one share each of all eleven companies? In other words, is it more important to diversify by ...
by richard
Mon Apr 14, 2014 7:23 am
 
Forum: Investing - Theory, News & General
Topic: A Bubble in Value Stocks?
Replies: 31
Views: 2471

Re: How much is rich?

It of course depends on your definition of rich.

No significant financial worries, nice house, nice cars, regular luxury vacations?

Fly in your own jet?

Major politicians come to pay court?
by richard
Sun Apr 13, 2014 8:27 am
 
Forum: Personal Finance (Not Investing)
Topic: How much is rich?
Replies: 47
Views: 2468
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