kwyjibo wrote:Just looking at your P/E ratio idea:
I used Robert Shiller's spreadsheet which he provides on his website for his CAPE data in the book Irrational Exuberance. But I downloaded it a while ago, so it only had complete data up to 2011.
Lets say you retired in 2011 (because that is where my data ends) and you invested from age 21 to 66; 1966 to 2011. When you start investing in January 1966, the average P/E ratio form 1871 to 1966 is 13.8. So you would have used 13.8 and not 16.5 as your P/E ratio. The idea is when the monthly P/E ratio is below the average you add money to stocks, this works out to only putting money into stocks for 166 of the 540 months you are saving; if you update the average P/E ratio every month, this only increases the number of months to 168 (the average P/E increases to 15.4 by 2011).
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