I am perplexed

Financial Independence/Retire Early -- Learn How!
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ataloss
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Post by ataloss » Fri Oct 31, 2003 5:27 pm

my post, that pointed out that The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts., was deleted.


that was going to be in my profile (but it was too long :twisted:)
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Ataloss

therealchips
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Post by therealchips » Fri Oct 31, 2003 6:57 pm

Petey said:
Partly this was connected to the market still being overvalued after the large drops and investors not understanding intrinsic value. If they had understood it, they would have known that the market went from (for example) a 150% overvalued level to a 75% overvalued level and so it wasn't a recession from a market value perspective.


hmm, the market was overvalued, investors do not understand intrinsic value, but certain astute investors do? You used the expression "intrinsic value" in three consecutive posts. You'll pardon me if I remain dubious. I know you have heard this quotation, but just for the record again and for passers-by, let me quote the following: The Four Pillars Of Investing Chapter 3, The Market is Smarter than You Are. Similar quotations are, of course, available on request.

You understand this is not so much an argument between you and me as a formal dance, it which each of knows exactly what steps are expected of him and repeats them. :)
He who has lived obscurely and quietly has lived well. [Latin: Bene qui latuit, bene vixit.]

Chips

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ataloss
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Post by ataloss » Sat Nov 01, 2003 2:27 am

"True wisdom is less presuming than folly. The wise man doubteth often, and changeth his mind; the fool is obstinate, and doubteth not; he knoweth all things but his own ignorance."
-- Akhenaton (d. c.1354 BC), Egyptian king
Have fun.

Ataloss

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Post by wanderer » Sat Nov 01, 2003 3:37 am

from ataloss

I have found it interesting that the mathematicians seem to see the swr idea as a rule of thumb. Some imagine much more significance.

From hocus:

The time is not right for a discussion of the realities of SWRs at this board.

That said, I would not want a statement like this to cause further confusion. It is perfectly acceptable to use a SWR as a rule of thumb in determining one's personal withdrawal rate (PWD). In a year in which the SWR is 3 percent, a pessimist might set his PWR at 2 percent and an optimist might set his PWD at 4 percent.

At the calculation stage, the SWR is a data-based construct. Calculation of the SWR is an objective exercise. When doing the math, there are right and wrong answers.

How come hocus' post has not been removed? It clearly is derogatry and implies that ataloss is attempting to confuse readers.

Again, have fun 'learning together' with hocus.
regards,

wanderer

The field has eyes / the wood has ears / I will see / be silent and hear

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ElSupremo
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Post by ElSupremo » Sat Nov 01, 2003 3:55 am

Greetings wanderer :)
Why should anyone accept you as the arbiter of anything? es, please take action on this derogatory statement.

That was an opinion. Everyone has a right to their opinion. Whether it was derogatory depends on your point of view. I will not be removing "opinions" unless they violate site rules. I don't believe that's the case here. Everything is not always either black or white and I'll just have to do the best I can when making these decisions. If there is doubt I will give the poster the benifit of that.

Thanks
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ataloss
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Post by ataloss » Sat Nov 01, 2003 4:09 am

es has sort of a difficult job here

hocus is quite experienced with little posting games

he is careful to say that I am confused or that I can't handle the implications of his "insights" but without crossing the line

I think that this care is why it took tmf so long to boot him, he wasn't obviously violating the terms of service

he had some well received posts so they let him go for a year rambling endlessly about some "great debate" before pulling the plug

all of this is just my opinion of course
Have fun.

Ataloss

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ElSupremo
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Post by ElSupremo » Sat Nov 01, 2003 4:26 am

Greetings ataloss :)
all of this is just my opinion of course

Quite right. And this is mine. Anyone here can express their opinions on any subject as long as it doesn't violate site rules. Specifically there can be no personal attack, no name calling, no derogatory comments.

Some of our members are having a little trouble grasping this concept. And I would also point out that going on and on about whether someone is right or wrong is a huge waste of time. Agree to disagree then move on.
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Post by therealchips » Sat Nov 01, 2003 7:10 am

OK, then, back to the original question from ataloss:
About this issue of safe withdrawal rates depending on the size of the portfolio It seems to me that a 100 million portfolio with a 4 million withdrawal/ year has the same chance of success as a 1 million dollar portfolio with a $40,000 withdrawal assuming similar investment allocations. I would appreciate help with the math if this is not the case. I have never seen a proposed method for determining swr that includes an adjustment for portfolio size.


Just as you say, the survivability of portfolios that differ only in size and not in allocation is independent of that size. Retirement planning, however, is not independent of portfolio size. From this I conclude the obvious: SWR analysis is not a complete approach to retirement planning. SWR analysis omits consideration of life expectancy, reducing withdrawals in the face of market declines, utility functions other than linear, planning to preserve capital rather than just avoiding going broke, and income taxes, to name the omissions most conspicuous to me. That doesn't ruin SWR analysis; it means only that additional analysis is useful.

I find traditional SWR analysis useful for comparing with the alternative results I get from computing the withdrawal rate that stabilizes the retirement stash as nearly as possible with a constant real standard of living. That comparison tells me that my plan has withdrawal rates low enough that, judging by history, I am unlikely to go broke. I find traditional SWR analysis useful also for comparing with the results I obtain using the logarithmic utility function and life expectancy tables appropriate to people my age and sex. This comparison tells me that the withdrawal rates I find comfortable are lower than the rates that would maximize my expected total utility. That means that I have not yet found the utility function that fits my preferences, or maybe that I am managing the money as if I were a much younger man. The latter possibility is entirely consistent with my idea of managing the retirement stash as if I hold the money in trust for future generations.

Well, that's what I could do to get back on the subject ataloss raised.
He who has lived obscurely and quietly has lived well. [Latin: Bene qui latuit, bene vixit.]

Chips

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Post by [KenM] » Sun Nov 02, 2003 4:12 am

petey
Sorry, Ken. Your remark below is just plain wrong. .......... Hindsight is 20/20.
Petey

KenM wrote:
nobody truly believed in the bubble so only lost money that shouldn't have been gained anyway.

This medium and quick typing of short posts frequently leads to misunderstandings :lol:. What I was trying to do was describe how two potential retirees might feel when using hindsight to rationalise their actions after a 30% fall in their portfolio value. The guy who'd DCA'd for 20 years would probably rationalise his position by saying to himself - "OK my portfolio's 30% down but I didn't really believe in the bubble anyway so I'm not worse off and I'll continue LTBH". However the guy who invested all his life savings in a lump sum at the top of the bubble is most unlikely to be able to rationalise a 30% loss and is likely to take a completely different course of action - probably selling everything to cut his losses.

I'm more and more coming to the opinion that one of the most important aspects in successful investment is knowing your own investment temperament and the sort of psychological tricks you might have to play on yourself to keep to your chosen strategy. Even though you know that historically there had been a "safe" SWR at what stage would you decide there was no choice but to cut your losses - 30% drop in portfolio value ... 50% ..... 70% ........ 90% :!::!::!:. That's why I'm a market timer - I know I'd chicken-out somewhere between 30% to 50% and would sell everything rather than hope that things won't get worse and might improve in a few years time.
KenM
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ElSupremo
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Post by ElSupremo » Sun Nov 02, 2003 4:25 am

Greetings Ken :)
I'm more and more coming to the opinion that one of the most important aspects in successful investment is knowing your own investment temperament and the sort of psychological tricks you might have to play on yourself to keep to your chosen strategy

You can say that again! IMO when the investor realizes this then things really start to progress. As opposed to standing still or going backwards. :wink: I came to this realization about 15 years ago and what a difference it has made!
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Post by raddr » Sun Nov 02, 2003 6:11 am

ElSupremo wrote: Greetings Ken :)
I'm more and more coming to the opinion that one of the most important aspects in successful investment is knowing your own investment temperament and the sort of psychological tricks you might have to play on yourself to keep to your chosen strategy

You can say that again! IMO when the investor realizes this then things really start to progress. As opposed to standing still or going backwards. :wink: I came to this realization about 15 years ago and what a difference it has made!


I agree with both of you. In fact, I'd put this at the top of the list of any list of rules of investing. After all, no matter how good an investment plan might look on paper it is worthless if it won't be followed.

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ElSupremo
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Post by ElSupremo » Sun Nov 02, 2003 9:26 am

Greetings raddr :)
no matter how good an investment plan might look on paper it is worthless if it won't be followed.

Hey! That looks like a good signature quote for anyone who needs one! Snap it up while supplies last! 8)
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