Cute Fuzzy Bunny reminds us in a post to the Early Retirement Forum that we had better not report accurately what the historical stock-return data says about safe withdrawal rates if we know what’s good for us.
I post a Letter to the Editor to the www.Early-Retirement-Planning-Insights.com site entitled Obtaining “Permission” to Ignore Valuations. I say: “I’m beginning to think that people are counting on the illusory safety of indexing to make them feel better about the unacknowledged risk they take on by going with Passive Investing.”
The Kirk Report (link no longer available) describes the Retirement Risk Evaluator as “a different retirement calculator.”
The And Freedom Tastes Like Reality blog (link no longer available) says: “I’ve looked at the Passion Saving return predictor, and as of this post, the S&P 500 index is over 1500, so the Price/Earnings ratio is over 30. Unless I’m in a retirement plan with an employer match, my investment dollars will not go far in an equities market. “
The Generational Dynamics Site notes the recent New York Times article that uses the P/E10 tool to form a reasonable assessment of long-term stock prices. It says: ““This is an extraordinary and historic event in economic journalism.”
The 2Merrill blog links to the article on “Pros and Cons of Invdexing” (please see the “Valuation-Informed Indexing” section of the site) in the first sentence of its description of John Bogle’s revolution in investing.
I post a Letter to the Editor at the Early-Retirement-Planning-Insights.com site entitled Is the Stock Market a Closed System?
I say: “We are saying that there is more integrity to the portfolio numbers when stocks are at fair value than there is when stocks are wildly overvalued. I really think it is fair to say that that is the bottom-line point we are making. We are saying that at times of overvaluation investors need to mentally adjust down those numbers to have them reflect reality or else they are fooling themselves.”
The Nature Lover Blog (link no longer available) says of the “The Self-Directed Life” section of the site: “I’ve been doing a lot of research and reading since I decided to simplify my life, because I’ve been trying to find tips and direction on how to go about it. I came across this site and I found this particular article very interesting. I have bookmarked the site and will be going back to it often.”
Norbert Schenkler presents historical performance charts at the Financial WebRing Forum showing that Valuation-Informed Indexing has historically beaten conventional buy-and-hold strategies.
“J” at the Yahoo Finance Groups cites The Stock-Return Predictor in support of the proposition that the “current valuation of S&P 500 companies already indicates poor forward-looking returns.”
The Get Rich Slowly blog discusses the profile of my Retire Early plan done by Liz Pulliam Weston at MSN Money. One poster notes: “Early retirement is not about stopping working, it’s really about doing what you want, stopping worrying about money and salary and I’m convinced it opens many more opportunities than when you work.”
I post a Letter to the Editor at Early-Retirement-Planning-Insights.com site entitled The Trouble with Mechanically Defined Algorithms. I say: “I want to make the Valuation-Informed Indexing approach sound as appealing as possible. If I tell people to go with a 100 percent stock allocation at a P/E10 of 17, that will make the numbers look better in the case I put forward for how this strategy pays off long term. It’s hard for me to resist the pull to at least tell people what the numbers say (and I sometimes do indeed do just this).”
I post a Letter to the Editor at the www.Early-Retirement-Planning-Insights.com site entitled Do All Really Bad Price Drops Happen at Times of High Valuations? I say: “If an investor could be assured of not being likely to experience a loss of greater than 20 percent for more than five years, I think that would make stock investing more attractive.”
I post a Letter to the Editor at the www.Early-Retirement-Planning-Insights.com site entitled How Long Do You Have to Wait for 7 Percent? I say: “I would like to be able to cite to people how long it would take them to get to 7 percent in a worst-case scenario, for purchases made today, for purchases made in January 2000, and for purchases made at moderate valuations. I think it would also be helpful to know the number that applies at extremely low valuations.”
I post a Letter to the Editor at the www.Early-Retirement-Planning-Insights.com site entitled A New Take on the 7 Percent Rule. I say: “There’s are big differences between being sure of a 7 percent return in 10 years and being sure in 30 years and being sure in 50 years.”
I post a Letter to the Editor at the www.Early-Retirement-Planning-Insights.com site entitled True Buy-and-Hold Investing. I say: “I do not believe that an investor should be using the newspaper prices of his stock investments to determine his net worth.”
I post a Letter to the Editor at the www.Early-Retirement-Planning-Insights.com site entitled You Can’t Count on 7 Percent. I say: “There is no need for an indexing investor to choose particular stocks. What he chooses instead are different mixes of income streams. The strategic issue facing the indexing investor is — how much do I put in stocks today and how much do I put in non-stocks so that the long-term income streams generated are likely to provide the best help to my quest to achieve my most important life, work, and money goals?”
I post a Letter to the Editor at the www.Early-Retirement-Planning-Insights.com site entitled Safe Withdrawal Rates and Historical Surviving Withdrawal Rates. I say: “The root flaw of the conventional methodology is not that we entered a bubble in the late 1990s, but that the methodology always examined not safety but survival. The bubble greatly exacerbated the problem that existed from the day the conventional methodology was created.”
I post a Letter to the Editor at the www.Early-Retirement-Planning-Insights.com site entitled Safe and Hazardous Regions. I say: “We need to call a spade a spade. Retirements that have more than a one in four chance of going bust are not properly termed “safe,” in my view. I would like to think that few are ‘planning’ such retirements.”
I post an article at the www.Early-Retirement-Planning-Insights.com site entitled
Using SWR Analysis to Compare Asset Classes. I say: “Another factor that is often overlooked is the growth potential of a safe asset class like TIPS when the intent is to transfer those funds to stocks when the SWR for stocks becomes attractive.”