New Posts

Adding a Dividend-Only Extension

What happens if you live only on dividends during the first decade of your retirement? Answer: you extend your portfolio's lifetime by ten years.

Not so obvious: this is true even if your portfolio balance declines during the first decade.

Adding a Dividend-Only Extension
Adding a Dividend-Only Extension: Follow On
S&P500 Dividend Yields

What Should You Do?

You will be retiring soon. You haven't thought through your finances. What should you do?

Your starting point is from a baseline withdrawal rate of 4.46% plus inflation over 30 years. Even if stocks never become attractive enough for you to buy, there is no need for you to do worse than this.

What Should You Do?
What Should You Do: Addendum?

Gummy Slices

I have determined Calculated Rates, Safe Withdrawal Rates and High Risk Rates for several portfolios with and without rebalancing. I selected slices from Gummy's database.

The behavior of individual slices dominate the effect of composite portfolios.

All of the portfolios behave in the same way with respect to rebalancing. Rebalancing is helpful during times of high valuations. Rebalancing is harmful during times of normal valuations. Rebalancing is very bad when valuations are low.

Gummy Slices

More Gummy Slices

This time I looked at balances.

My graphs show that the minimum balances with slices are equal to or better than the balances of the (capitalization weighted) S&P500 index. The S&P500 returns are clustered tightly about inferior numbers. The slices are (almost) always better, but they have a lot of scatter. Sometimes, their returns are a little bit better. Sometimes, their returns are a whole lot better. Always (well, almost always), their returns are better.

More Gummy Slices
More Gummy Slices Addendum
More Gummy Slices Addendum Two

Refusing to See the Obvious

You should reject all claims that an effect does not exist simply because a statistical test fails to declare significance. Such claims are false.

What is even worse is when people go out of their way to avoid seeing the obvious.

Refusing to See the Obvious
Edited: Refusing to See the Obvious

Monthly Returns

Our investigations into Managing Downside Risk in Financial Markets have led us to an unexpected conclusion: Much of academic investment research should be tossed out.

The critical flaw is the use of monthly returns.

Monthly Returns

Refusing to See: Dividends

I read recently that dividend yields have no power to predict stock returns. Absurd.

Here are my speculations as to how someone could reach such a conclusion.

Refusing to See: Dividends

Years to Double

I have examined historical sequences beginning in 1921-1984. I determined the number of years that it has taken for a portfolio to recover and to double while making withdrawals.

Years to Double

Historical Perspective

Benjamin Graham gave good advice. Benjamin Graham’s constraint (25% to 75% for both stocks and bonds) minimizes regret.

Historical Perspective

Current Research F: Executive Summary

I have written an executive summary of Current Research F: Intermediate-Term Returns for those with limited time.

The story at today's valuations (100E10/P = 3.5%) is bad news. The most likely outcome will be a net loss (of 3% annualized) between 2000 and 2010. The bull market that follows is likely to bring the overall annualized return to 1.7% (plus inflation) by year 20. That is almost as good as today's TIPS.

Current Research F: Executive Summary

Earlier New Posts

These are earlier pages of New Posts.

New Posts (original)
New Posts (Sept-Oct 2005)