The mid 60s was the start of the terrible period I’m discussing where SWR failed or nearly failed.HanSolo wrote: ↑Sat Dec 25, 2021 3:59 pmNot really. The 1960s had higher than average equity valuations in comparison to history up to that point.Nathan Drake wrote: ↑Sat Dec 25, 2021 3:42 pmThat period coincided with reasonably cheap equity valuations.HanSolo wrote: ↑Sat Dec 25, 2021 2:13 pmDo you really think Jack Bogle didn't know about the rising interest rate environment around the period 1945 to 1980? Or that he would just ignore it when formulating his investment recommendations?Nathan Drake wrote: ↑Sat Dec 25, 2021 12:00 pmMost of their experience was with a declining interest rate bond bull market and rising equity valuations. One particularly bad sequence in the late 60s through early 80s included similar metrics to where we are todayHanSolo wrote: ↑Sat Dec 25, 2021 3:38 am As you can see from my sig, I think there's nothing wrong with 60/40. In addition, I have certain tilts in my IRA, some of which are discussed in this thread. I don't have a strictly Boglehead-compliant portfolio (like 3-fund), but I think that, on the whole, the Boglehead ideas are pretty good and aren't out of date. The ideas of Bogle and related authors were formulated after having experience with a lot of different market conditions. I think there's a reason why they never said, "well, you need to throw all that out if interest rates are lower than inflation". I think the reason why they never said that is because they didn't think that would be the right thing to do, based on their experience and insights.
Bogle obviously knew about variability of valuations and interest rates. If your argument is that he didn't intend for his portfolio recommendations to be all-weather, then maybe you should suggest that there should be a revision to The Bogleheads Guide to Investing, saying that those recommendations can be thrown out in situations like the present.
Of course, I'd disagree with that.
No, we don't (other than for short-term bonds, perhaps).
But the more important question is what they'll yield relative to equities, not relative to inflation.
If we look at long term secular bond markets, an era predominated by rising or even relatively flat interest rates tends to do less than inflation.
The real return is absolutely critical when it comes to SWR risk.
I do not believe Bogle’s beliefs were an all-weather portfolio. It was the one HE was comfortable with, but he was also extremely wealthy and probably did not need to analyze the details of a SWR scenario like most of us need to. He was not a financial advisor. And his major life achievement was the S&P 500 index fund, so through that lens it makes sense why he would be biased/partial to it.
Simplicity worked throughout most of his era because the environment generally featured reasonable asset prices for at least one of the two main components.
If you are retiring today, 2021, on 60/40, and don’t have much wiggle room to reduce expenses while aiming to achieve 4% inflation adjusted withdrawals, that’s a plan that just is simply far too risky to ignore.