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Frequent Responses to Hocus- FRH-1- Invalidity
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hocus
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PostPosted: Wed Jul 23, 2003 3:43 am    Post subject: Reply with quote

Playing the mis-representation game again , hocus
Now I know why few people are sympathetic with your views

You said that the substance of my invalidity claim was "fine," and I was letting you know that I appreciated you doing that. I do appreciate it. I put your own words in italics so that everyone would know exactly what they were. There was no misrepresentation whatsoever.

There's something going out of whack here if someone can't put up a "thank you" post without getting his chops busted for it.


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[KenM]
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PostPosted: Wed Jul 23, 2003 5:15 am    Post subject: Reply with quote

Quote:
You said that the substance of my invalidity claim was "fine,"

hocus
A totally absurd mis-representation of what I said, it's laughable Very HappyVery HappyVery Happy
I very much regret that I have to repeat -
"Now I know why few people are sympathetic with your views Mad"



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hocus
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PostPosted: Wed Jul 23, 2003 6:04 am    Post subject: Reply with quote

A totally absurd mis-representation of what I said, it's laughable

All that I can think of to do in response is to set forth the words that appear in your initial post as you wrote them, and then set forth the words in my post quoting your words.

Your words:.....hocus has chosen the "invalid" word very carefully - it's not a question of semantics.
The substance of his conclusion is fine

my quoting of your words: hocus has chosen the "invalid" word very carefully - it's not a question of semantics.
The substance of his conclusion is fine

I engaged in no misrepresentation whatsever.


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[KenM]
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PostPosted: Wed Jul 23, 2003 4:49 pm    Post subject: Reply with quote

hocus
Quote:
I engaged in no misrepresentation whatsever.

If you want to play pathetic, childish word games you can play them on your own. If I responded in a manner that your games deserve then ES wouldn't like it (and I have no problems with that, ES )

Goodbye Exclamation



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ataloss
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PostPosted: Thu Jul 24, 2003 7:55 am    Post subject: childish word games Reply with quote

I don't see much point in discussing things with hocus under the circumstances



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ben
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PostPosted: Thu Jul 24, 2003 8:08 am    Post subject: Reply with quote

sad but true Wink



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[KenM]
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PostPosted: Thu Jul 24, 2003 8:57 pm    Post subject: Reply with quote

ES
Is the "looney" word permitted on NFB?

Only referring to myself, of course Very Happy........ for getting involved in such a pathetically stupid discussion in the first place Shocked



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ataloss
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PostPosted: Fri Jul 25, 2003 1:54 am    Post subject: Reply with quote

LOL, perhaps I need counseling. I have been the worst in terms of replying to hocus and trying to explain things. That is my original ideal in the FRH posts. I was thinking of a series of them. Hocus says x but I (or better yet we) say y. Just to present the other side. No more wasted and repetitive effort to explain things to hous with the looney idea that he would listen Wink

I was thinking of some sort of FRH aimed at the issue of prediction of future in general and wrt swr. Hocus has a lot of confidence in this than I do.



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ben
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PostPosted: Fri Jul 25, 2003 4:06 am    Post subject: Reply with quote

Stay away from the dark side guys... Very Happy



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ElSupremo
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PostPosted: Fri Jul 25, 2003 5:19 am    Post subject: Reply with quote

Greetings Ken Smile
Quote:
Is the "looney" word permitted on NFB?


As long as you are referring to yourself, ES(Who IS looney! Shocked), or some kind of bird, I would say yes! Rolling Eyes



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[KenM]
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PostPosted: Fri Jul 25, 2003 4:07 pm    Post subject: Reply with quote

Quote:
As long as you are referring to yourself

Who else? Very Happy

Had to change my signature again ..... this is getting to be hard work Rolling Eyes



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ataloss
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PostPosted: Sat Jul 26, 2003 2:04 am    Post subject: Reply with quote

Sorry, time for an update to include the "astonishing" misstatement of the historical studies:

Historical swr studies and inflation adjusted safe withdrawal rates

The rate is expressed relative to initial portfolio value. Withdrawals in subsequent years are adjusted upward for inflation.

There are two general approaches to estimating "safe" withdrawal rates from retirement portfolios.

Studies based on historical sequences of returns have looked at various portfolio compositions and based on the amount initially withdrawn have reported the probability of portfolio survival. (Example Trinity) or the maximum "100% Safe" withdrawal rate. (REHP) These studies have limitations. If planned withdrawals start at a period of overvaluation more extreme than occurring during the course of the study questions arise about the applicability of the historical swr. Interesting attempts to test the historical swr have included rearranging the yearly data, increasing the expense ratio to simulate possible lower future investment returns, and simply reducing "swr" in a linear fashion according to degree of overvaluation/ historical extremes.

Monte Carlo analysis allows computer simulation of safe withdrawal rates based on estimates of portfolio return and variability. One limitation of this type of study is that future portfolio returns and volatility are unknown.

Using a particular definition of "safe withdrawal rates" (swr) some people (mainly hocus) have argued that historically based swr analysis is invalid. Most people seem to use the term "safe withdrawal rates" as if it meant withdrawal rates which are safe. Hocus has a specialized meaning in mind:



Please explain how the Trinity study is invalid.
Quote:
The Trinity study methodology does not take into account how the SWR changes with changes in valuation levels.
Hocus 6/3/03






And here by failure to account for changes in valuation, he means failure to explicitly include valuation in some sort of calculation.. Many of us, using the conventional meanings of words have disagreed.


Quote:
I don't agree with this claim. In science of all sorts, researchers frequently chose to study one part of a problem and basically ignore everything else. I see it all the time in food and health studies. Just because a study doesn't present the whole picture doesn't mean it is invalid. Just that it is limited. Authors usually include some wiggle words to indicate that they haven't presented the entire picture. The REHP study does that. Bensolar 7/20/03





Quote:
About the Trinity Study:
It shows what would have happened had you invested this way or that, in the past.
It doesn't make any claims about the future.
How can it possibly be "invalid"? (Unless, of course, their data was invalid.)

Are these also "invalid" studies?
http://home.golden.net/~pjponzo/sensible-1.gif
http://home.golden.net/~pjponzo/Losses-SPa.gif
Gummy 6/5/03




Further hocus on this matter:


Quote:
The reason why I say that the 2.0 percent number is valid and the 2.3 percent number is valid, but the 4.0 percent number is invalid, is that the first two numbers both are the product of methodologies which consider the effect of changes in valuation, while the latter is not.
Hocus 7/19/03



Some of us wasted effort trying to tell hocus that changes in valuation occurred during the historical period and were implicit in the study. A waste of effort since he has defined valid studies as those that make explicitly use of valuation in some sort of calculation.

Some of us wanted to say that perhaps a study could be valid but less applicable to current circumstances. For example at the peak of the market bubble the market's p/e ratio was above the range that existed in the 1870-1970 period studied. Monte Carlo analysis using expected future returns suggested a lower swr. Wasted words since for hocus the "invalidity" of the study is definitional and does not depend in any way on the study actually giving a wrong or unreliable swr estimate. The study is invalid even for the 1870-1970 period where the withdrawal rate is know to have been safe. Hocus has also criticized the study for giving too high a withdrawal estimate and for causing "busted retirements" but I think it is important to understand that the invalidity claim if definitional and is not subject to disproof.

Until 7/21 I had assumed that hocus understood the Trinity/REHP approach and simply rejected the embedded inclusion of valuation preferring a calculation based on an explicit valuation factor. Then hocus revealed that he completely misunderstood the studies:
Quote:
What the conventional analysis tells you, I believe, is the average SWR over a long period of time. If you properly calculated all the SWRs for each of the past 100 years, added them together, and then divideded by 100, I believe that the number you would get would be something close to 4. I guess it's good to know that number. But that number is not the SWR as defiined for purposes of SWR analysis.


and then look at this:
Quote:
The one thing that distinguishes me from all others in this matter is that I am the only one who understood the realities of SWRs from the first day.

hocus Sun Aug 17

and
Quote:
There may be some who do not possess a clear understanding of exactly how a SWR is defined in the studies ......... If there are genuine points of confusion, I am happy to help out.

hocus Sat July 26



Hocus prefers to call studies based on sequential historical data the "traditional method."

I thought this was an interesting scattergram of maximal withdrawal rates vs. P/e ratio:
http://rehphome.tripod.com/pestudy1.html
Apparently even devoted followers of the historical approach are aware that there is an association between valuation, investment results, and safe withdrawal rates.
(Thanks to Intercst and BenSolar)

New development 9/03 jwr gets hocus to be more careful with his claims of invalidity:
http://nofeeboards.com/boards/viewtopic.php?t=1459

Alternatives to this type of withdrawal include:
Annual withdrawal of a fixed proportion of the portfolio
Preservation of capital with spending dividends/ income
Multiple sub-portfolios/ dynamic asset allocation
sensible withdrawal rates
http://home.golden.net/~pjponzo/sensible_withdrawals.ht

There is an "official" swr definition on the NFB FIRE board but hocus defines swr in a somewhat different manner.



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[KenM]
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PostPosted: Sun Jul 27, 2003 12:54 am    Post subject: Reply with quote

Now all I have to do is remember all that in case I debate with hocus again - which is highly improbable, I hope Smile



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[KenM]
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PostPosted: Sun Jul 27, 2003 4:54 pm    Post subject: Reply with quote

I apologise in advance for belabouring the point, but I just can't resist.

Unbelievable Wink
Quote:
I am the most informed poster in the FIRE community on the subject of SWRs. This is fact
hocus Sun Jul 27

Quote:
Do you see any word games in my posts? Do you see any personal attacks?
hocus Sun Jul 27



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[KenM]
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PostPosted: Mon Jul 28, 2003 3:51 am    Post subject: Reply with quote

sorry, I missed one - again unbelievable Wink
Quote:
There may be some who do not possess a clear understanding of exactly how a SWR is defined in the studies ......... If there are genuine points of confusion, I am happy to help out.
hocus Sat July 26



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[KenM]
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PostPosted: Sun Aug 17, 2003 8:18 pm    Post subject: Reply with quote

.......a few more hocus quotes.......
Quote:
I have never put up a bickering or time-draining post in my entire posting career,
hocus Sun Aug 17

Quote:
It is not the posters who know what they are talking about that waste the community's time when they post. It is those who don't bother to do their homework, yet post as if they possess a better understanding of the issues than those who do.
hocus Sun Aug 17

Quote:
The one thing that distinguishes me from all others in this matter is that I am the only one who understood the realities of SWRs from the first day.
hocus Sun Aug 17



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ataloss
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PostPosted: Mon Aug 18, 2003 12:22 am    Post subject: Reply with quote

Quote:
I have never put up a bickering or time-draining post in my entire posting career,

hocus Sun Aug 17

Although amazing he is serious. Looking at the swr board yesterday. Petey tries to discuss something and is taken to task for referring to the hocus board as the hocus board.

Hocus required jwr1945 to call results of studies (trinity, rehp) the historical data base rate - hDBT rather than hSWR as proposed by bensolar. Big progress in swr research indeed Smile


Quote:
I submit this statement as proof positive of my assertion that KenM is light years ahead of many. IMHO, he is light years ahead of most.
jwr1945 6/3/03

I agree Smile



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ataloss
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PostPosted: Mon Aug 18, 2003 12:52 am    Post subject: Reply with quote

since hocus is frequently saying that he hasn't been argumentative should there be a FRH on this matter (his quotes and links to counterexamples?)



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JWR1945
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PostPosted: Mon Aug 18, 2003 3:13 pm    Post subject: Reply with quote

ataloss
Quote:
Hocus required jwr1945 to call results of studies (trinity, rehp) the historical data base rate

Absolutely False. It was my idea entirely. The distinction is important.

Historical Database Rates have no predictive features. They are no more than outcomes. They are not probabilities, estimates or predictions.

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John R.


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ataloss
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PostPosted: Mon Sep 22, 2003 11:19 am    Post subject: Reply with quote

this is the thread where I said:

I have decided to use the conventional definitions of words. By withdrawal rate I will mean inflation adjusted based on the original portfolio value. By safe I will mean deemed to be unlikely to fail

and jwr insisted:

I must insist that you restrict yourself to the official definition if you are going to use the term Safe Withdrawal Rate. It is OK for you to talk about what you are talking about. Just use different words. You may work on changing the official definition if you so desire. That is OK. But until you do, I must insist that you restrict your choice of words.

I had concluded that definitions were being used to control thought
rather than enhance understanding



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