The Great SWR Investigation - Part 1

Financial Independence/Retire Early -- Learn How!
bpp
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Post by bpp »

BenDelivers,

Wow, ask and ye shall receive.

Very interesting chart. If I were to interpret the spread around the middle as being +/- one third of the regression line, then at a PE/10 of 30, you're looking at two-thirds of 2% or a 1.3% safe withdrawal rate. Ouch...

Of course that's a pretty mindless extrapolation. It looks like some kind of 1/(x^n) curve might fit the data equally well, which would yield a considerably more optimistic SWR, though still lower than would be found at lower PE/10 values.

I don't think it is going to be easy to pin this down to anything much more precise. But fun to look at.

Cheers,
Bpp
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BenSolar
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Post by BenSolar »

bpp wrote: It looks like some kind of 1/(x^n) curve might fit the data equally well, which would yield a considerably more optimistic SWR, though still lower than would be found at lower PE/10 values.


Hi Bpp :)

It's been a long time since I've done real math and I forget what such a graph looks like. Can you discribe it? Is it like the dual asymptote graph I described?

Ben
"Do not spoil what you have by desiring what you have not; remember that what you now have was once among the things only hoped for." - Epicurus
bpp
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Post by bpp »

Hi Ben,

It's been a long time since I've done real math and I forget what such a graph looks like. Can you describe it? Is it like the dual asymptote graph I described?


Yup. Approach the x-axis at large values of x, and approach the y-axis at large values of y.

Don't suppose the raw data that went into that plot is available, is it?

Cheers,
Bpp
dbphd
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Post by dbphd »

Raddar's caveats regarding potential impacts on predicting any SWR remind me of those so often found in technical papers. Bottom line, we can't predict anything with certainty, need more data and more analyses, so please renew our NSF grant for another three years. Hell, I've written those myself.

I think most of us understand such estimatinon is imperfect, and are looking for rule of thumb guidelines that might be useful in planning, not some hard and fast number that I bet can't be predicted with any accuracy. Adding parameters can give an unwarranted sense of accuracy.

Hocus seems to have made flogging interst his career goal, and, although I really like NFB's FIRE and Index boards, I am alarmed to see once again the long posts. Hope this board doesn't deteriorate the way the Fool board did. So far, the discussions have remained mostly at the intellectual level, even though a good deal of it seems to be about which technique better estimates the number of angels that can dance on the head of a pin. Really like the gummy post

db
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BenSolar
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Post by BenSolar »

Hi Bpp
you wrote: Approach the x-axis at large values of x, and approach the y-axis at large values of y.

Don't suppose the raw data that went into that plot is available, is it?


Cool.

The data isn't available in a neat table, but the maximum withdrawal rate for each year is available here: http://rehphome.tripod.com/pestudydata.html

and the PE-10 is available here: http://www.econ.yale.edu/~shiller/data/ie_data.htm

I think Greaney used the January value of PE-10. That is actually calculated by Shiller using a month long average price, IINM, so using the prior December's PE-10 combined with the January maximum withdrawal rates would be slightly more realistic, though only a little bit different.

Ben
"Do not spoil what you have by desiring what you have not; remember that what you now have was once among the things only hoped for." - Epicurus
hocus
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Post by hocus »

Hocus seems to have made flogging interst his career goal

You're allowed under the rules to make a comment like this on a public message board. But you should understand that, if you offer criticism of another indivudal on a public message board, there is a good chance that individual is going to respond. The comment you make above is completely unwarranted, and by offering it here you leave me no option but to comment on it.

I have put up over 2000 posts in my discussion board posting career. Not one contains a personal attack on another poster. Not one. That should tell you something about my beliefs about what sorts of discussions are appropriate on a board like this and what are not.

If it were my career goal to flog intercst, why would I have posted scores of times during the course of this debate my opinion that intercst made an important contribution with his study, and why would I have recommended that anyone with a serious interest in early retirement would be making a mistake not to take advantage of its insights? The reality of how I have behaved in this matter simply does not jive with what you say here.

It is true, however, that I expect to do further writing on the intercst matter and not just at this board. I am going to have my own web site next year and there will be material there. I expect to be writing magazine articless and appearing on radio interviews after I publish my book, and I expect that this subject is going to come up. By no means does it die because intercst succeeds in having me driven off one one particular message board that he seems to think he "controls."

I have done the responsible thing at every single stage. I pleaded with intercst supporters to ask him to knock off the personal attacks and other disruptive posting practices. How do you think that stuff is going to look as knowledge of the realities of SWRs grows over time? It is not going to look good. I asked Intercst supporters to help him out because I do not want him to look as bad as he is going to look in days to come. I have behaved towards intercst in the way that a true friend behaves. I have advised him to do what is in his long-term best interest. It is not my fault that he rejected my advice and that there were not too many others willing to advise him to do the right thing.

I do not like intercst's posting tactics one little bit. But the reality is that he is a human being who provided me with some valuable insights at a time when I was much in search of them, and I am appreciative of that. There are many ways in which this experience has been painful for me, but one of those ways that many others do not seem to appreciate is that I do not at all like what this has done to intercst and what it will do in days to come. I do not like it, but there does not seem to be anything that I can do about it.

It is my career goal to advance the world's knowledge of how to achieve financial independence early in life. Understanding the realities of SWRs is a key part of that. So I have no choice but to continue to point out how intercst got it wrong, and how he spread confusion so that others would not be able to see how he got it wrong. I simply have no choice.

It is intercst who added the ugly side to the story. The reality is that I was removed from the Motley Fool message boards because intercst could not bear to acknowledge in public something that everyone in their private minds already knows--he made a mistake. That's what it comes to when you boil it all down. It's now part of the story.

When I post informatiion about the realities of SWRs at my web site, I need to include links to my TMF posts to make my case. There is no way around it. Do you not realize that there are going to be some who, once they are at that board, are going to look around a bit and notice that there was something a bit unususal about the manner in which that debate was conducted? Do you not realize that I am going to be asked questions about why these things happened?

I am going to be asked questions, and I am going to answer them honestly. It's not going to sound good for intercst, but there is simply nothing I can do about it. Do you see me trying to bring the ugly side of this business up here? I do not. Others bring it up all the time, as you did in your post. And I respond. People who are smeared on internet discussion boards are permitted to respond to the smears, are they not?

What has happened with this thing is that the smears became so pervasive at the other board that people who had little knowledge of what went on (you may well fall into this class, db) began repeating the smears under their own screen-names. So then I am responding not only to intercst smears, but smears put forward by others who under ordinary circumstances would never post such things.

The ugliness just spreads and spreads. I have tried to convince people that the best way to stop the ugliness is to speak out against it as early in the process as possible. People need to speak out against this stuff in the strongest terms possible. That's how you stop it. It is the failure of people at the other board to do enough of that sort of thing that allowed it all to get so out of control.

I have posted in a responsible manner. Others have not. That's the bottom line. I have a long posting history prior to the day I raised questions about the methodology of the intercst study, and never once in three years did I have a single negative interaction with another poster. There were people who critiicized my ideas, to be sure, but I never responded in such a way that there would be any of this sustained sort of ugliness. I love having people criticize my ideas, that's what I come to boards for, so there simply has never been anyb way for any sort off problem like this to develop.

If you oppose personal attacks on discussion boards, db, and I believe you do, please understand that you have my support for anything you want to do to create an environment in which there are fewer of them. But the way to do that is to find fault with people who do wrong things, not people who are the victims of people who do wrong things. I have nothing to be ashamed of and I am not going to slink off into the shadows because one out-of-control poster did not want a board community to hear valid information about a subject of great importance.

The post that kicked this off has generated hundreds of valuable insights. It is the most important post that I have ever written. I do not regret posting it for one second. I have been 100 percent vindicated in what I said in the intial post by things that have been brought to light subsequent to my posting of it. The bottom line is that I was right in what I said on that board and intercst was wrong; and that he engaged in personal attacks and that I did not.

I don't like talking about this stuff. To the extent that it is possible to not do so, I agree with many others here that that is the thing to do. But when it becomes impossible to ignore it, I will not hold back because of any feelings of discomfort I have in knowing that knowledge of the damage that intercst did to that board will become more widespread. He did what he did and he has to accept the consequences.

He can do the right thing even today. He can send an e-mail to Motley Fool acknowledging what he did and asking that my posting privileges be reinstated. If he does that, I will return to that board and I will explain the realtiies of SWRs to the community that congregates there, a community that expressed great enthusiasm for hearing about the subject in the days prior to when intercst flipped his lid.

I have no personal animus towards intercst whatsoever, db. You believe what you want, but that's the way it really is. Don't think that just because I have nothing personal against him that I will allow him to succeed in blocking aspiring early retirees from learning about this important subject matter, however. I will not. I will continue to advance knowledge of the realities of SWRs. When it can be done without mentioning intercst, he will not be mentioned by me. When mentioning him is required to tell the story in an effective way, mention him I will.

Why? Because it is the people who have been harmed by what intercst has done that I am most concerned about.. He has caused losses of millions of dollars of accumulated capital by insisting in the most dogmatic terms possible on claims that have been proven beyond any reasonable doubt to be false. He has done even more than that. He has engaged in prohibited posting practices to insure that the other side of the story cannot even be heard at that board. This should never have been allowed to happen, and it could not have happened had enough members of that community worked up the courage to do the responsible thing.

Intercst at one time made a positive contribution. In the past 12 months, he made a terribly negative contribution. I didn't destroy his reputation. He did that all on his own. Please do not find fault with me for what intercst did entirely on his own despite my genuine and regularly reiterated pleas for him to do otherwise.
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