For "TH"

Research on Safe Withdrawal Rates

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For "TH"

Post by hocus2004 » Sat Jun 12, 2004 2:37 am

You are a newcomer to this, TH, so you bring to it a fresh perspective. I would like to ask you for some advice.

My portfolio is comprised of three asset classes--TIPS and ibonds paying roughly a 3.5 percent real return and CDs which will be converted into long-term stock holdings when the valuation level for stocks falls to such a point that such purchases are consistent with my 4 percent annual take-out number. JWR1945, our resident Numbers Guy, says that the SWR for each of these asset classes is in excess of 4 percent. Thus, the plan appears to me to be a reasonably safe one.

In the "Yahoo Finance Quiz"Â￾ thread at the Early Retirement Forum, I asked intercst his view as to whether my retirement plan is reasonably safe. He did not respond to the question.

I wanted to see what he would say on that forum, but the reality is that I knew his view on the question before I asked it. He has said hundreds of times in hundreds of different ways that there is zero chance that my plan will survive and that anyone who thinks that it is possible that this plan will survive is suffering from mental illness.

My guess is that these sound like extreme statements to you. If these statements were coming from someone other than intercst, they would not cause me much trouble in my effort to inform community members of the realities of SWRs. If these statements came forth from "Poster X," people would assume that "Poster X" is a nutcase. I could safely ignore the statements of "Poster X" and continue about the business of telling the story of the realities of SWRs.

Intercst is not "Poster X." He has a special status in these communities for three reasons. One is that he has been posting at them daily for five years now; he has lots of friends. Two is that he started the first board, the Motley Fool board, and is thus viewed by many as the founder of our little movement. Three is that he is the author of a study on SWRs that many community members have rightly found to be of great value and that has received endorsements from Scott Burns and others of similar stature.

When intercst says something re SWRs, community members listen. Most community members have not performed independent research on the questions we discuss at this board. They put their trust in fellow community members who have gained reputations as experts. Intercst is widely viewed as the ultimate expert on SWRs at the various FIRE/Passion Saving/Retire Early boards.

When intercst says that my plan is not a reasonably safe plan, he is engaging in deliberate deception. He is not making a mistake when he says that my plan cannot survive because I am invested 100 percent in "fixed-income" assets and his study proves that fixed-income assets can never support more than a 2.3 percent take-out number. He has been corrected on this point scores of times. Still, he continues to say it. I can provide you with any number of links supporting this assertion.

Learning is achieved through a building block process. The first step in learning how to read Shakespeare is learning the ABCs, If you skip that step and go directly to "King Lear," it will appear to you that the pages are filled with scribbles that have no meaning. You would be wrong in thinking this, but it would be understandable why you came to this conclusion if you did not possess the ability to put letters together into words and words together into sentences.

For community members to come to understand the realities of SWRs that are understood by me and JWR1945 and William Bernstein, we need to start by achieving a general consensus on the most basic factual questions. The question of whether my plan is a reasonably safe one is a basic factual question. We should all possess a good sense of the right answer to that question at this point, given how much time we have spent on this matter.

We don't. JWR1945 says in no uncertain terms that my plan is reasonably safe. Intercst says in no uncertain terms that my plan is not by any stretch of the imagination safe. It is not possible that both of these experts are telling us the truth on this question. One of them is engaging in deliberate deception. We need to figure out who, so that we can ask that person to kindly knock off the funny business and thereby permit the community to get about the task of advancing its understanding of the realities of SWRs.

I will tell you my suggestion for how to deal with the problem. I think that we need to take action as a community insisting that intercst play by the rules. All the rest of us know what the rules are and play by them in our discussions with fellow community members. Intercst is an out-of-control poster. He needs to be reined in. It needs to be a community project.

I have been asking for help with this matter for a long time. There have been occasions when particularly courageous community members have stepped forward and provided it. I will provide you with three examples so that you have a sense of why these efforts have not had the desired effect until now.

Here is a link to a post from the Motley Fool board put forward by BenSolar and titled "The hocus Plan: 4 Percent from 100 Percent Fixed-Income?" ... sort=whole

I provide below the full text of the post for the benefit of those who do not have access to the Motley Fool board:

intercst wrote: hocus has been telling us for a year now that you can reliably take a 4% withdrawal from a 100% fixed income portfolio.

"This type of BS has been the largest contributor to the circus-like atmosphere that has surrounded hocus for the last year. Intercst, of course, isn't the only one to make statements like this. In fact they come so fast and furious from so many different people that a casual reader would swear they are true.

From hocus' 'My Plan' post ( )

1) TIPS at 3.5 percent in tax-protected accounts

2) ibonds at 3.4 percent in non-protected accounts (not taxed until cashed in)

3) Certificates of Deposit still held from pre-retirement days (and, thus, held at higher rates than those available today.). The CDs are being phased out as they come due into other investment classes. I expect to move a portion of the CD money into stocks. If stock prices came down, I would move it all into stocks.

Stock Allocation Goal: My goal is to get to a 50 percent stock allocation. I initially made the zero percent allocation to stocks for two reasons:

(1) I accumulated all of my retirement stash in a short amount of time. It was nine years from having zero in the bank to retirement date. So any stock purchases made in anticipation of retirement would not have been "for the long term." My worst nightmare was that, one year short of my retirement date, stocks would go into a downturn. I was not counting the months until retirement, I was counting the weeks. There was no way I wanted to take the risk of losses that could put off the retirement date for years.

(2) Stocks were at extreme levels of overvaluation at the time I began accumulating large sums for investment. I preferred to put money ultimately to be allocated for stocks into safe investment classes until stocks could be purchased at prices closer to average valuations. That way, I can purchase many more shares for the same portion of my retirement stash. Once I find reasonable purchase points, I intend to hold the stocks for the long term (no "timing" in and out of the market).

Not listed there, but mentioned elsewhere in the post is the fact that he owns his home. So real estate can be added to the list.
So he has TIPS and I-bonds and real estate. All are inflation protected assets that do not fit under the 'Fixed Income' category. He also has a plan to buy stocks when valuations are closer to average. Here's a news flash: they are still overvalued.

In my post 'The Hocus Plan: 2% SWR?? ( )
I examined the effects of a stock switching strategy similar to the one described by hocus. My conclusion: history backs hocus up, his valuation based switching strategy from 0% stocks to 50% stocks worked in the past, and in fact beat the static 'optimal allocation'.

Hocus is the only person I know (if only via message board) who has completely opted out of participation in the stock market bubble. And you know what? He has benefited immensely from doing so. So why can't the 10-15 people who like to spout the cr@p like the quote above just grow up and lay off the elementary school tactics?"

The post was recommended by 32 community members. That means that there was broad support for the proposal put forward by BenSolar that intercst knock off the "bs." You participated in the "Yahoo Finance Quiz" thread. So you can judge for yourself whether the "bs" continues until this day.

Here is a link to a post by JWR1945 titled "Blunt Words."

"These words are very blunt, but necessary. I am confident that I could prove all of these assertions if I were required to do so. I would prefer not to, however, since it would be tedious and time consuming.

"Intercst engages in a big lie strategy. Repeated often enough and loud enough, people will eventually believe a big lie. There is no way to defend oneself against it. You have to refute it convincingly every time it comes up. Many people will believe a big lie simply because someone is so insistent upon bringing it up. They assume that there must be a basis in fact even when there isn't. That is why intercst will least, for another few months.

"A person caught as the target of a big lie is frozen. Defending himself quickly consumes all of his time. He finds himself reacting to everything as if he were in a big lie environment. He simply does not have time to respond properly. He simply does not have enough time to discern honest comments from dishonest ones. As such, he assumes, because he has to assume, that people understand the full context and history behind a remark. They don't and that causes problems.

"Please keep the big lie off of these boards. When you import the Motley Fool into these boards, you import the big lie with it. It is OK to raise questions as a result of your visiting those boards. Just don't bring those words into our environment. The big lie is hidden in them. You may not recognize it. I assure you that it is in them.

"I find fault with hocus in this one thing and this one thing only: he has an intense love, an intense passion, for what the Motley Fool discussion boards could be. Sadly, they are something less."

I think it is fair to presume that you have gained a little insight into how the Big Lie game is played by benefit of your participation on the "Yahoo Finance Quiz" thread. The community was enjoying a great learning experience on that thread until Intercst poisoned it with dirty posting. I asked that he kindly knock off the funny business and in response he asked Dory36 to revoke my posting privileges. Dory36 did not go along with that request but he also did not admonish intercst for his use of dirty posting tactics to distract the discussions. The result is that a number of community members at the Early Retirement Forum now know that future SWR discussions held there are likely to be unpleasant ones.

That hurts me in my efforts to explain the realities of SWRs to fellow community members. The SWR issue is a complex one, and the realities that I am bringing to people's attention are not ones that they start out being particularly happy to find out about. Most community members are fair-minded and most see that there is at least some truth to the points that I have brought forward. But very few are willing to participate in threads containing the sort of ugliness you see revealing itself near the end of the "Yahoo Finance Quiz" thread. My chances of getting reasonable community members to participate in future SWR threads at that forum has been diminished.

Intercst gained something from the use of those tactics. He put off the day that people will gain an informed understanding of what the historical data says re SWRs. It is obvious to me that that is why he makes use of these sorts of tactics so regularly. He does not actually believe that I am a troll anymore than he believes that I am the man in the moon. He knows from long experience that if he claims that I am a troll, it is unlikely that he will suffer negative consequences for doing so, and that my reputation and thus my ability to make my case effectively will be diminished.

Community members often stop participating in SWR discussions when these tactics are employed. In many cases, they have done more than that--they have up and left the community. Here is a post from FoolMeOnce in which he explains to the Motley Fool community why his conscience required him to do just that, given the way that the SWR discussions were conducted at that board. This post obtained 54 recommendations from fellow community members. ... sort=whole

"This will be my last post here. Thanks to all that have engaged in constructive posts on this board over the years. This board has degenerated into something that I can no longer be proud to be involved with. Even some folks that I respect, have thrown in with a board culture that cannot tell the difference between witty repartee and childish personal attacks. I was the one that FA'd Galeno. His attempts to incite others to engage in personal attacks, with the tacit support of some on this board, was one of the final straws for me."

The poster he is referring to as offering tacit support is intercst. Galeno asked that community members seek me out and engage in acts of physical violence against me to stop me from offering my views on SWRs at the Motley Fool board. At one point, he put forward a death threat. Several hours after the posting of the death threat, I received the first e-mail in a series that I ultimately received from Motley Fool relating to the termination of my posting privileges there. My guess is that the reason why the first e-mail from Motley Fool came within hours of the posting of the death threat is that Motley Fool lawyers were concerned re potential liabilities that might follow from some crazy person taking action on the threat. Intercst offered no words in opposition to the threat. He implicitly endorsed it, telling fellow community members that in his view Galeno was offering better suggestions for how to bring the SWR discussions to resolution than any other community member.

Motley Fool site administrators told me throughout their communications with me that they greatly valued my contributions to the site. They never accused me of breaking a posting rule. They said that their strong preference was that discussion on all on-topic questions be permitted at the board. The explanation that they gave me in the e-mail telling me of termination of my posting privileges is that they had suffered the loss of too many community members during the Great SWR Debate.

This sort of thing should never happen. No community member should ever feel bound by conscience to leave a posting community because the level of discourse has reached so low a level as to be intolerable to decent civilized people. But that is what has happened when questions have been raised at the Motley Fool boards re the methodology used by intercst in his study of SWRs.

We have diminished ourselves in how we have handled this matter. If we insisted that intercst play by the same rules as everyone else plays by, I believe that he would do it. But he is not going to do it unless we insist. If he can continue to get away with throwing spitballs, he will continue throwing spitballs. He has found it to be an effective tactic.

There is a name that intercst uses to refer to the four posters who have been bold enough to challenge him either on the methodology used in his study or on the tactics he has employed to defend it. Me, JWR1945, BenSolar, and FoolMeOnce are commonly referred to as "The Four Dimwits."Â￾ It is rare for any community member to challenge this designation; long timers know what consequences follow from doing so. Mikey put up a post during the "Yahoo Finance Quiz" thread that intercst viewed as favoring "the side" questioning his SWR views and Mikey was quickly deemed "the Fifth Dimwit."Â￾ No response from the community. This is what regulars at that board have come to know as business as usual.

This sort of stuff is killing us, in my view. It is killing all of us, including intercst. The reality of things is that his study is a valuable piece of work. The dishonesty he employs in making claims about it on discussion boards is in the long run going to greatly diminish the perceived value of his contributions. He is destroying himself and he is destroying all the rest of us in the process. I believe that responsible community members need to step forward and do something.

I don't believe that people should be saying that they agree with my views on SWRs. Most do not, so it would be wrong for people to do that. What people should be doing is saying that the tactics that have been used to block reasoned debate are unacceptable and must come to a quick end. Anyone who uses the word "troll"Â￾ as a debating tactic should be given a warning that that sort of nonsense will not be tolerated. Anyone who ignores the warning should be removed from the community. That's my take.

I'd like to hear your take, TH. You obviously do not agree with my views on SWRs. But you also have obviously come to see that there is something in intercst's posting tactics that is not at all right. I am here to tell you that it would not be possible for you to imagine how deep the problem goes without having seen it play out in front of you. I saw it play out in front of me and I need to go back and check the Post Archives from time to time to assure myself that I am not crazy, that large numbers of people really did behave in so abominable a manner right out in public where a record was being kept which would be available for review by others for many years to come.

Consider the words that JWR1945 employs above to describe the tactics that have been used to block reasoned debate--"The Big Lie." I don't know how well you know JWR1945, but I think it is more than fair to say that he is not given to exaggeration and the making of wild claims. When JWR1945 says that someone is making use of Big Lie tactics, you can take that to the bank. It really is so.

What do we do?

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Post by hocus2004 » Sat Jun 12, 2004 5:41 am

CatherineCoy indicated on the Motley Fool board that she would like to take a fresh look at the May 13, 2002, post.

Here is a link:

Here is the full text:

Author: hocus
Number: of 172721

Subject: Price-Adjusted Safe Withdrawal Rates Date: 5/13/02 10:40 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 11

I am looking for a place to invest some money that came in when my wife and I recently moved to an area with somewhat lower housing prices. My inclination is to put it in ibonds, but I am not thrilled with the 2 percent real rate of return now being paid. I would like to be able to expect a real return of 3 percent or higher.

However, I can't afford to take much risk of a long-term loss of capital as I need most of the capital I now possess for my FIRE plan to remain viable.
Short-term losses of 20 or 25 percent are acceptable for a portion of my investment portfolio, but losses of greater than 15 percent that remain in place for longer than 8 years or so are problematic (these numbers are my rough estimates of the loss percentages and durations that might cause me to rethink an investment choice and move out of it, causing me to lose out on any future upside). So I have been trying to assess what the risk is of a loss of that size if I were to invest a portion of my money in stocks today.

I've considered moving a small amount of my total portfolio (about 10 percent) into stocks. As regular readers of my posts know, I am concerned with the high prices prevailing for many stocks today. My hope, however, is that I might be able to pick individual stocks that are not overvalued and thereby limit my risk of a long-term diminishment of capital. Still, I worry that, when most stocks are overvalued, all are probably at least somewhat overvalued. I don't want to fool myself into thinking that I am so great at picking stocks that by superior selection skills I can completely overcome the risks that have caused some investors in earlier high-value markets to end up with losses from stock market investing rather than gains.

So I spent a little time playing with the numbers in the Safe Withdrawal Rate studies on I used the study put together by Dory36 because it did not require use of an Excel spreadsheet and I was just looking for some quick and dirty estimates of how things might turn out under different scenarios.

The assumptions I plugged in to get the calculator to run was that I was investing $800,000, with 80 percent in stocks and with the remainder in TIPS at a 3.5 percent real return, and withdrawing $32,000 per year to live on. None of these numbers are valid for my personal circumstances. I was just trying to plug in numbers to get the calculator to run.

The data that turned up for 1969 concerned me. As I read the data, it appeared to me that had I made an 80 percent stock allocation in 1969, I would now (31 years later) have lost all of my investment and be bankrupt. Is that true? It's possible that I don't understand how the calculator works, but that result was disturbing to me. The actual portflio figure that the calculator gave was that I would now have a negative $31,035. I don't understand the concept of a negative portfolio value. That's what makes me a little uncertain as to whether I am reading the results correctly.

Presuming that I am reading the results correctly, they make me uneasy about committing even a small amount of capital to stocks at the current prices. My understanding is that most historical valuation indicators show the stock market to be more overvalued today than it was in 1969. But I would like to have tools to use to determine when it is a good time to move into stocks (as I am persuaded by the historical evidence that in the long run stocks purchased at reasonable prices provide a better return than most other investment classes).

So I tried to think of a way to make the historical return data more relevant to the circumstances which people with money to invest today need to take into consideration. It seems to me that the big problem for people investing today is the high prices (in historical terms) attached to stock purchases today. So I think it would be a plus to have a calculator which allowed an adjustment in the safe withdrawal rate for people investing at time periods in which different price levels prevail.

What I am thinking would be useful is a calculator that allowed you to choose three options: (a) a purchase at a time period in which stocks were priced low, using the conventional valuation criteria; (b) a purchase at a time-period in which stocks were priced about average; and (c) a purchase at a time-period in which stocks were priced high. After entering your choice of (a), (b), or (c), the calculator would tell you what sort of long-term safe withdrawal rates were provided to other investors investing at similar price levels obtained in earlier historical periods.

My guess is that such a calculator would show an investor investing during a time when low stock prices prevail would be likely to obtain a safe withdrawal rate higher than the 4 percent return that the conventional calculators (those using all investment price levels in their data set) suggest.

Presuming that we see such prices again in the future, that would allow people with money to invest at that time to retire with confidence of obtaining a long-term safe withdrawal rate greater than the safe withdrawal rates suggested by the conventional calculators (higher than the 4 percent figure we often hear cited on this board, that is).

On the other hand, it would show a lower safe withdrawal rate for investors putting money into stocks today. Personally, I would be willing to accept a safe withdrawal rate assumption of less than 4 percent, given the low rates paid by safe investments like ibonds today.

However, if the modified calculator showed asafe wtthdrawal rate for stock investments made at today 's prices of less than 2 percent, my inclination would be to go with ibonds or some similar investment.

If anyone has seen any data of this type, I'd appreciate seeing a link. It may be possible for me to come up with rough numnbers myself using the data that Dory36 and intercst used in putting together their calculators, but I am less than comfortable with the use of spreadsheets, and I would have more confidence in the numbers put together by someone more math proficient than I.

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Post by hocus2004 » Sat Jun 12, 2004 6:54 am

AdvocatusDiaboli suggests in a post put to the Motley Fool board this morning that the reason why intercst is obsessed with hocus is that intercst and hocus have a sexual relationship.

People are reaching for implausible explanations because they don't want to accept the entirely plausible one that has been staring them in the face for close to 25 months now.

Intercst is obsessed with hocus because hocus proved beyond any reasonable doubt that intercst got a number wrong in the study posted at

It was a mistake. Human beings makes mistakes all the time, of course. No biggie.

The error needs to be corrected, of course. Biggie.

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Post by th » Sat Jun 12, 2004 9:57 am

Hocus -

Oddly, I havent even looked in here to any degree until I was bored this morning. Wow, a post addressed to me!

I didnt look here because I'm not terribly interested in SWR except as one of 30 or so exercises I ran to examine the academic aspects of ER.

I consider it academic because almost every aspect (valuations, returns, lifespan, etc) is arguable, unknowable, and therefore renders the entire thing moot.

Its certainly a good argument to say that "what has happened before will happen again", and that firecalc type results can be "taken to the bank". However, my key takeaway from the "6.21% swr" (or whatever the hell that thread was called) was that if you are starting a firecalc run with a puffed up portfolio due to high current valuations of investment vehicles, that your future is likely to be disappointing. Its like starting your run just before the 1929 market crash and the great depression. That in my opinion our current stock valuations are worse now than they were then doesnt improve the view.

In short, I'm mortified to be invested in stocks right now, but I think to completely turn away from them may not be a good idea. Cherry picking some segments that at least turn a nice dividend or have good short to intermediate prospects may work. I think holding broad large cap growth heavy indexes may get you killed however. My opinion...

Your strategy works great if, after taxes, you have enough to support the lifestyle you appreciate. It will continue to work if no large expenses cause you to have to eject a high yielding bond, if you have no need or interest in increasing your lifestyle, and if nothing happens in the future to increase your needed withdrawal rate. Except for the negative windfalls, at least you have some control over what happens, there will be no sudden moves or loud noises in your portfolio, and you're substantially inflation protected.

I dont even want to consider discussing the valuation switching, because the only thing that would bring valuations down to a level that would make you feel comfortable enough to buy would require a major crash or a very long sideways period. Since from what I've gleaned you've been on the sidelines of the stock market for about 8 years, I think you'll be there for at least 8 more. Maybe i'm wrong...

I'm straddling the line with 55% bonds, majority of them short term and the rest high quality intermediate, and 45% stocks, most of them large and small cap value paying a strong dividend and concentrated in predominately 40 large and mid cap companies that wont be going out of business or falling apart anytime soon. My yield is just enough to live on and my fiancee intends to work indefinitely and we can live off her income easily, which almost makes my entire portfolio "hobby money". But I wont consider it as such. My non-dividend capital gains should exceed inflation and then some. When the fed gets the short term rate over 2.25% I'll shift some of that short term bond back into intermediates and selected large cap value paying high dividends. Then probably do nothing for the forseeable future.

As far as you and intercst. Well, I didnt read any of the old stuff or the history of it, I have seen the current. Its unfortunate and non-constructive. As a long time very successful manager, I dont need to see the history, I've seen it a hundred times already. I became well known as the guy that you wanted to give the dysfunctional people and departments to for "fixing", and I made a lot of hay by taking on those challenges and succeeding.

Sometimes in these situations one of the two (or more) parties is simply an asshat and the situation there is simple: its an individuals problem and those need to be addressed individually by standard performance management.

98% of the time its simply that you have two reasonable people who miscommunicated on something that is often arguable, pointless or irrelevant, and through the miracle of modern electronic communications that allow people to disembody their ego and virtually smash each other in the face in front of an audience, became bitter enemies.

In most cases the content of the smashing wasnt even read or contemplated by one party before the rush to counter smash the other.

This is a relatively new phenomenon in modern business and I didnt see much of it until the advent of widespread email. The only analogs prior to the late '80's was seen by academics who would post papers counter to each other, followed by letters to the editor, followed by counter columns, etc. It was the same thing, only in print and in slow motion.

I've successfully resolved this almost every time by taking both people out to a long dinner where we talked about just about everything except the sore topic, then made them work together VERY closely, usually in the same cubicle, on a project that required a high level of cooperation, and I made it known that failure to successfully complete the project with quality goods and on time would result in a failing review for the year.

In most cases by the end of the dinner both parties discovered that the other guy really wasnt the huge asshat he thought he was, and actually wasnt a bad guy at all. Far more often than not the two forged a very strong personal and professional alliance out of it. Truly the worst enemies can make the best friends.

Sometimes it was just too bitter to fix. Or the means to get the two together tightly enough just wasnt there.

I think this may be one of those times. Both of you are convinced that your mutually exclusive approaches are strong, and the issue at hand isnt even the core topic of discussion.

You're both probably pretty reasonable guys. You probably both will have successful early retirements. You probably both will make adjustments to your plans to make that happen. Either, both or neither of your "systems", adhered to as published, may succeed, fail, or become marginal. Not one bit of that success, failure or marginalization will have anything to do with what you did or decided, but occur due to unforseeable happenstance that nobody can predict.

I feel that Intercsts approach to you is typical of the email asshattery I've seen before, and thought you were pretty reasonable about it all, continuing to push your agenda calmly. In the notes above, I can see that you are clearly frustrated and harboring extensive anger and sadness from the battles won and war lost. By the way, I think both sides lost the war.

They key thing I latched onto is the "intercst side" that has concluded and presented that your approach bears no merit, that you have intent to do no more than defraud, and that the dissemination of your thinking is poisonous to the community and must be supressed.

That makes me sick and I wont be a party to it, or part of a community that supports it. Period. I am neither an idiot nor a five year old child. I can read viewpoints and dissenting viewpoints, analyze their content and make my own decisions. I have no interest in someone else deciding what my viewable content is because they're mad at someone else for something that I dont care about.

That seems to be what the fight is about: should the average newbie or member inexperienced to investing be exposed to alternative ideas on investing that dont jibe with well established history and methods that have been pioneered or mastered by the self proclaimed experts, or those who have written books on the subject. I think the answer is obvious: of course! (by the way, as an aside, I've seen almost every book writing and investing "expert" actually speak, and with rare exceptions, I come away shaking my head thinking they're really kind of an idiot)

Its entirely possible that blind investing in 60/40 index funds and going on autopilot will end a lot of early retirements and postpone a lot of regular ones. Stocks could easily drop and the largely intermediate bond portion of the index fund will take a drubbing from rising interest rates. I'm really concerned about people who espouse taking on more debt to increase their exposure to this potential abyss.

Which brings me again to a frequent point: I dont think most people can "work their plan" in the face of a long term bad market. Historically they havent. The environment that we're in is frighteningly similar to the one that preceeded prior "bad times". In other words, bring your balls, you're going to need them. Hope they're brass.

Is that the advice you were looking for?
He who fights with monsters might take care lest he thereby become a monster. And if you gaze for long into an abyss, the abyss gazes also into you. - Nietzsche

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Post by bpp » Sat Jun 12, 2004 3:16 pm

[Intercst this, intercst that...]

Hocus, if you want other people to drop the meta-discussions and focus on the mechanics of SWR, you have to do the same yourself.


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Post by th » Sat Jun 12, 2004 3:28 pm


Its been written on every annual performance appraisal I ever received: "Needs to be more concise in written reports".

Which is about true. Curiously, I hardly ever string together more than 3-5 words at a time verbally, and those strings arent exceptionally frequent.

Go figure.
He who fights with monsters might take care lest he thereby become a monster. And if you gaze for long into an abyss, the abyss gazes also into you. - Nietzsche

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Post by hocus2004 » Sat Jun 12, 2004 4:22 pm

"Is that the advice you were looking for?"

You did a great job, TH.

You got one thing very wrong, the part where you said that I feel anger towards interest. The idea that I would feel animosity towards another human being because of a difference of opinion about the calculation of a number is just too silly.

You were a hero on the Early Retirement Forum thread, TH. You expressed clear disagreement with me on the substance issue and yet said that you would not tolerate the intimidation tactics that were being employed to sidetrack the debate.

We need more people doing that sort of thing. No one should feel that they need to agree with me on SWRs in order to stand up to trash posting tactics practiced by the other side. We all have to live in these communities and we all have a right to expect that they not be trashed.

If everyone played it straight down the middle like you play it., TH, we wouldn't have a problem.

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Post by hocus2004 » Sat Jun 12, 2004 4:35 pm

"Hocus, if you want other people to drop the meta-discussions and focus on the mechanics of SWR, you have to do the same yourself. "

No, that's not right.

That's like saying that, if you don't like violence, you must agree that police should never use force to stop the prevention of violent crimes.

The vast majority of people on these boards follow the rules all the time. There are a small number who do not. When posters engage in dirty posting practices, the rest of us need to come down on them and come down on them hard. If we send the message quickly, they get the message and the problem is solved.

What happened in this matter is that a lot of people had come to view intercst as exempt from the rules that govern the rest of us. He has come to rely on junk posting practices more and more over time because the lack of a reaction from fellow commnunity members has sent him the message that he possesses a special status and can post any way he pleases.

We have not done intercst any favor by sending him this message. We need to reintroduce him to the facts of life. The next time he engages in the trickery he engaged in on the Early Retirement Forum thread, we need to make it clear in no uncertain terms that his nonsense has no place at these boards. He will get the message if it is delivered in clear terms.

People seem to feel uneasy about standing up to intercst. They seem to believe that the problem will go away by itself or that some unknown "others" will do the job that needs to be done. There are no others. We all have responsibilities here.

When you enforce the rules evenly, you don't get meta discussions. You get substance. When you fail to speak up when you should, you duck one problem and create ten new ones down the line.

We all have been putting our heads in the sand re the intercst problem for far too long. It doesn't help him and it doesn't help us to continue to do so. There's no call for disliking him. He has done a lot for the community in the past. But we do him no favor when we allow the idea to grow in his head that he is above the rules that apply to all the rest of us. It has become a serious problem and it will only be solved by people coming to take the problem more seriously.

A few meta discussions now can save us a whole bunch of them down the road.

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Post by bpp » Sat Jun 12, 2004 4:43 pm

A few meta discussions now can save us a whole bunch of them down the road.

I disagree. Strongly.


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Post by th » Sat Jun 12, 2004 4:55 pm

I agree with bpp. Time to move on. Dont make me put you and Intercst into a workgroup together trying to figure out how to optimize factory techniques.

I hear you say that theres no anger. Perhaps you might want to reflect on that.
He who fights with monsters might take care lest he thereby become a monster. And if you gaze for long into an abyss, the abyss gazes also into you. - Nietzsche

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Post by hocus2004 » Sat Jun 12, 2004 5:07 pm

"I disagree. Strongly. "

You're allowed to disagree.

My guess is that the reason you disagree is that we come at this from different perspectives. I spent tens of thousands of hours of my life energy building the Motley Fool board into the most exciting board that existed on the face of the internet. That board today is a clown board. There is not one highly effective on-topic poster present in that board community today.

I watched that happen in painful slow-motion detail. I watched the most important work I have ever done in my life burned to the ground because of one individual's unwillingness to abide by the wishes of the community who built a wonderful place for people to learn about an important subject. The destruction of that board community has done a lot of harm to a lot of people who otherwise would have been able to make use of it achieve their most important life goals.

It wasn't one person who destroyed that board. It was one who led the effort, and others who sat on their hands while the thing burned to the ground.

It's over. I intend to build that board back into what it once was in days to come, but we can never get back the resource we lost for the time we have lost it. What we can do is learn from the experience. We can stop future destruction of the beautiful things that those of us who are able to manage to post within the rules build for ourselves.

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Post by hocus2004 » Sat Jun 12, 2004 5:30 pm

"I hear you say that theres no anger. Perhaps you might want to reflect on that"

You need to distinguish between my feelings about abusive posting practices and my feelings towards intercst as a human being.

I have had lots of positive experiences with intercst the person and I hope to have lots more in days to come. He's not my best friend in the entire world. But it is silly to say that I feel some sort of anomisity towards him as a human being.

I have extremely strong feelings about the posting practices he employs and the damage those practices have done to the various board communtiies. It would be hard to exaggerate the intensity of those feelings. I think this stuff is awful. When I see the destruction he did to that board, I see the faces of the thousands of people who could have benefitted from that board if that destruction had not taken place.

I have received e-mails from many people who were helped by that board during its Golden Age. Those people are not screen-names to me. They are real live flesh and blood people. I have heard their personal stories, their hopes for their futures, I know details of their financial circumstances.

These boards are important. That is probably the thing on which I seem to disagree about with most others more than anything else. People say "It's only a discussion board, why do you care?" and I want to get sick. I dreamed about the day I would achieve my early retirement every waking moment for years. There are others who do that. We owe a lot more to those people than the effort we put forward while the Motley Fool board was burned to the ground.

When I say that I don't feel anger towards intercst, I do not mean to suggest that I do not possess strong feelings about what was done. My feelings are intense, there is no question about that. My feelings are not in the least bit directed towards intercst as a person, however. The truth of this matter is that there is no one person who could have done this by himself. It happened because others permitted it to happen, others did not care enough to step forward and stop the destruction.

Some did. Some tried. Some were heros.

There was good that came of this as well as bad. The wonderful material now available to people on this board is the best of the good. This material wouldn't exist if the Great SWR Debate had never happened. I do not want to paint an overly negative picture.

What I am reacting to here is the shrug of the shoulders reaction of "well, sure, we allowed these posting practices to destroy a community that it took hundreds of people to build, but, hey, no biggie, right?" It is a biggie. We should learn from what happened. We should learn what we need to do to stop it from happening again. At a bare minimum we should learn something from what we have been put through.

"I agree with bpp. Time to move on."

It was time to move on 24 months and three weeks ago. That was when I first suggested the idea.

But we don't get to say when the moving on will happen. There were a lot of community members learning a lot about the subject of early retirement on the "Yahoo Quiz" thread until intercst showed up with the idea of pouring poison into the water supply. What do you think the chances are that he will not do the same the next time there is an outstanding SWR thread at the Early Retirement Forum? I would venture that, given the minimal consequences that followed from his use of those tactics this last time, the chances are pretty darn good that we will be seeing a repeat performance.

If not, great. If intercst and others permit us to move on, then we should by all means move on. It's they that get to make that decision, though, not us. My guess is that the moving on will actually take place when those employing dirty posting tactics begin to feel that it is no longer in their best interest to do so. That day will come when a good number of the rest of us get fed up enough about the damage that has already been done to become a little more determined to make it come to an end rather than just to put words forward saying that we would sort of kind of like to see it come to an end.

We are the community. We have the power to bring it to an end. We have to be willing to make use of the power we possess to achieve the results that we would all like to see achieved.

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Post by hocus2004 » Sun Jun 13, 2004 2:09 am

Altofiaco is trying.

Here is the post he put last night to the Motley Fool board. ... recscode=2

Author: altoflaco
Number: of 172754

Subject: In Defense of Hocus (No, really) Date: 6/13/04 12:06 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 5

Thank you for recommending this post to our Best of feature.

Hocus no longer posts here, yet we're treated to frequent updates and commentaries on his SWR-related ravings in other forums. Hocus' peculiar obsession with SWR, his turgid prose, and his apparent inability to write posts of fewer than 10,000 words make for easy fodder.

Instead of mocking him, however, perhaps we could just recognize that he is not well and leave him to tilt at windmills?

Why not remember instead that in his more lucid moments, hocus wrote persuasively on financial independence and early retirement?

My first real understanding of FIRE philosophy came from reading posts written by hocus. His posts (excerpted below) are some of the most valuable contributions to this board; he conveys the subversive, seductive, and empowering message at the core of FIRE.

To say hocus changed my life may give him too much credit, but he certainly helped focus it.
And for that I am eternally grateful.


Unwritten Rules of Wage Slavery

The purpose of the Retire Early approach to personal finance is not to stop working...The purpose instead is to stop the need for paid employment. Why is paid employment such a bad thing? Well, in many cases it's not. A great many people consider their jobs to be the best thing going in their lives.

The problem that the Retire Early philosophy aims to solve is that there is a risk in depending on paid employment for the money you need to live. Until you reach the day when you are independent of the need to work for pay, someone owns you. ... mendations

The New Luxuries

I don't think you can buy luxury with money anymore. Consumer goods have become too plentiful and too cheap to make ownership of them all that special. There have been efforts to add expensive attributes that increase the feeling of specialness for those who own them. But does a hamburger cooked on a $5,000 grill taste that much better? If not, I question whether the increased price delivers genuine luxury.

What are the true luxuries today, then? It's those things that are possessed only by a few, those things that offer an unusual degree of happiness and contentment. I can think of several things that fit the bill, but they aren't things you can attain by spending more. They are things you can only possess by saving more. ... mendations

Ten Mental Exercises Leading To Freedom

They say you are supposed to think before you spend. But think about what? When a salesman tries to sell you something, he has the edge. He's studied human psychology, and he knows which buttons to push to get you to part with a piece of your freedom...These ten mental exercises are intended as tools to help you push some buttons of your own. Think of them as weapons in your arsenal of self-defense. ... mendations

The High Cost of Flattery

Flattery is the enemy of Retire Early dreams. Once someone sees that retiring early is a goal within his reach, it is hard to talk him out of it. But flattery prevents many of us from ever seeing the possibilities. ... mendations

Altofiaco gets the idea. If you can't be with the one you love, love the one you're with. Something like that.

If you have access to the Motley Fool boards, get on over there and do the community-building thing. Give us a vote for normalization.

If you don't have access, pull out your credit card and have the good people at Motley Fool ring it up for 30 bucks. If the learning resourse provided by these boards isn't worth 30 bucks to you, you shouldn't be spending time here in the first place, in my view.

If circumstances have left you genuinely strapped for cash, drop me a private mail and I will pay the 30 bucks for you.

Altofiaco has caught on to the meaning of the newest word in our ever-growing Great SWR Debate lexicon--Normalization. You all go and do likewise.

Not for me, understand. I ask that you do this for the community. The community is worth saving.

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Post by unclemick » Sun Jun 13, 2004 3:09 am

In a prior lifetime, we used to make things and break them - wind tunnel, heat, vacuum, lightning, vibration, static. stc, etc. I always loved the part where the numbers guys said we made them wrong beside 'that' could not not under any circumstances happen - the numbers said so. Heh.heh - then again many times the numbers were spot on.

Meta discussiion ? - Live off interest and dividends, let the principle 'grow' (retro school?). My trusty balanced index went through the recent unpleasantness (2000 - 2003) with a ballpark 2% SEC yield. Computers and spreadsheets may catch on someday with a little more seasoning - and sometimes the nubers appear spot on.

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