New Posts Starting from August 28, 2006
Updated: September 24, 2006.
P/E10 Predictions Revisited
I built Bull Bear Retirement Trainers A and B. They allow you to select the market’s direction: Bull Market, Neutral Market or Bear Market. They produce a realistic sequence of returns.
I have collected two sets of P/E10 data. The first assumes a Bear Market starting from today’s valuations, P/E10=26.0. The second assumes a Bull Market starting from P/E10=9.0.
P/E10 Predictions Revisited
Playing with the Toy
I simulated three “what-if” scenarios on my Bull Bear Retirement Trainer B.
I started with today’s valuations, P/E10=27.3 and today’s TIPS interest rate of 2.2%. I specified that we are in a secular Bear Market. I sought to maintain a 5% withdrawal rate.
Playing with the Toy
More Fun with the Toy
My new toy is the Bull Bear Retirement Trainer B. I revisited run 3 from my earlier study.
Using an identical sequence of returns, I approximated fixed allocations of 50% and 80% stocks. The 50% stock portfolio succeeded. The 80% stock portfolio did not.
My original approach was best. It was very easy. It was intuitive in light of my many investigations.
More Fun with the Toy
Why Dividends Are Better
If you just looked at Gummy’s (Professor Peter Ponzo) Safe Withdrawal Rate formula, you would have no idea that withdrawing dividends is better than harvesting capital gains. It is.
What happens is that the statistical distribution CHANGES when there are dividends.
Why Dividends Are Better
Great Fun with the Improved Retirement Trainer
I have finished building the Type 2 Bull Bear Retirement Trainer. It is fun. It is realistic. Now it is time to learn from it.
Great Fun with the Improved Retirement Trainer
Accumulation and the Retirement Trainer
I couldn’t help myself. My new Type 2 Bull Bear Retirement Trainer is fun. It is realistic. I couldn’t wait. I had to look at accumulation NOW.
Accumulation and the Retirement Trainer
Dividends versus Capital Appreciation
Which is more important to retirees? Dividends or capital appreciation? Or does it make a difference?
Answer: Dividends. They are much more reliable.
Dividends versus Capital Appreciation
E10 or D10?
Professor Robert Shiller’s P/E10 does a great job when calculating Safe Withdrawal Rates. Sometimes, using dividends (P/D10) is even better.
E10 or D10?
Edited: E10 or D10?
Type 2A Bull Bear Retirement Trainer
I am continuing to improve my Type 2 Bull Bear Retirement Trainer. It does a great job in Bear Markets. It doesn’t do a good job in Bull Markets. It fails to reach high valuations.
I examined a variety of alternatives. The simplest solution is best. Don’t use separate Bull Market equations. Use the standard (Neutral Market) equations except during Bear Markets.
Type 2A Bull Bear Retirement Trainer
More PE10 Predictions
Here are more P/E10 predictions from my Type 2A Bull Bear Retirement Trainer.
I collected two sets of P/E10 data. Each set consists of eight sequences. The first set assumes a Bear Market starting from today’s valuations, P/E10=27.3. The second set assumes a Neutral-Bull Market starting from P/E10=8.0.
I use these sequences in my Simplified Retirement Trainer A. You can download it from the Retirement Trainers folder in my Yahoo Briefcase.
More PE10 Predictions
Yahoo Briefcase
Retirement Planning Insights
Here are insights for retirement planning, both before and after retirement.
Retirement Planning Insights
Retirement Trainers and Accumulation
My Retirement Trainers help you improve your skill during accumulation.
Retirement Trainers and Accumulation
Learning the RIGHT Lessons
I have made a series of practice runs with Dollar Cost Averaging starting from a balance of $0. Glancing at the Year 30 balances doesn’t tell us the entire story. In fact, that is the wrong place to look for the most important lessons.
Learning the RIGHT Lessons
The Wrong Lessons
The experts have let us down. Too many are teaching us the wrong lessons.
The Wrong Lessons
New Posts Starting from June 13, 2006
New Posts Starting from June 13, 2006 has links to Earlier New Posts:
New Posts (original)
New Posts (Sept-Oct 2005)
New Posts (Nov 2005-Jan 2006)
New Posts though April 13, 2006
New Posts though June 11, 2006
New Posts Starting from June 13, 2006 introduces articles on the following topics:
The Lower Latch and Hold Threshold, Additional Constraints with Latch and Hold, Idiot Switching, Typical Values of P/E10, Special Note about Mean Reversion, No New Discovery This Time, Looking a Little Bit Harder, Time and the Gordon Model, Orders of Magnitude, Using Stock Return Predictions, Eye Opening Calculations with Compact CVTVR L, New Standards for Financial Reporting, Rational Pessimism and Tobin’s q, Turning Points, A Helpful Theorem, Designing a 45-Year Retirement, P/E10 Predictions, Bulls, Bears and P/E10 Predictions.
New Posts Starting from June 13, 2006