Sanity check on investment ideas

Research on Safe Withdrawal Rates

Moderator: hocus2004

peterv
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Sanity check on investment ideas

Post by peterv »

Hi all. This is my first post so allow me to introduce myself. Hit the big 60
last September and retired on Nov. 1 after 25 years in various jobs with a
LARGE computer company. Lastly doing remote network support for some
of the biggest firms in the country. The pay was good but the job stopped
being fun after too many management changes. Finally I got fed up and pulled
the plug - a year or so earlier than I originally planned but still with what I believe
are sufficient funds to ensure never having to w**k again. Not exactly as well
planned as it should have been but I don't regret it for a minute. I'm loving
retirement so far.

I had been following the SWR threads on the REHP (Dorey36) and a couple
weeks ago found out about this board from something hocus2004 said in
the never ending I'm better than you are SWR pissing contest. Hocus,
please don't take offence, I'm just puzzled as to why all the hostility between
you and intercst. There's got to be room for both sides to co-exist don't you
think? At any rate getting over here has been a breath of fresh air and I'm
finding plenty of new insights. Which leads me to the reason for this post.

I've got a bunch of money from retirement and 401k plans that I'm rolling over to
Vanguard. Because of the size I qualified for a no charge planning consultation
which sounded good initially but I'm having second thoughts
now. They had what I consider good suggestions for some funds;
Wilshire 5000, Total International Fund, Intermediate Term bond fund but also
wanted to get me into some managed funds, Explorer, Strategic Equity,
Windsor II, and US Growth. I initially agreed to this and now have some money
in each of these. However, I've just sent them an additional
rollover check for $223K which will bring the total to about $1000K and I'm
thinking I need to make some changes.

Just yesterday I finished _The Four Pillars of Investing_ and with Bernstein's
recommendations in mind here's the allocation I've come up with:

Cash and CDs: 10%
Bonds: 40%
Stocks: 50%

I'll have two accounts at Vanguard, taxable and IRA.
For the taxable I plan on;

S&P 500: 15%
Tax Managed International Fund: 12.5%


For the IRA:
Intermediate Term Bond Index Fund: 40%
Small Cap Index: 2.5%
Small Cap Value: 7.5%
Value Index: 12.5%

Not everything he recommends but close enough I think and
will be easy to rebalance when the time comes. And I can
sleep at night.

I'd consider TIPS but not sure I can hold them in Vanguard.
I'll have to check that out. If so some (all?) of the bond money
could go to TIPS until the stock market looks to be a better
value.

No mortage and an OK medical plan from my employer.
I don't have an extravagant life style so 2% or so SWR would
be fine. In fact, with the agressive savings program I've been
on the last 10 years it will probably be hard for me to let myself
spend that much. Social Security will start in Sept. 2006 and I
expect something like $1400/mo.

Only one major expense on the horizon that I can see; my
truck is showing it's age and will probably be replaced in the
next year or two. I figure that will run $30-35k.

Any comments or suggestions anyone would care to make about
this would be appreciated.

Thanks,
Peter
hocus2004
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Post by hocus2004 »

Welcome to the community, peterv.

Your plan sounds to me to be a reasonable one. A 50 percent stock allocation at today's valuation levels is a wee bit on the high side for my tastes, but you say that you can get by with a 2 percent take-out. The SWR for an 80 percent S&P portfolio is about 2.5 percent today and the SWR is a worst-case scenario number. In all likelihood, you are not going to get a worst-case returns sequence popping up in your retirement. You have a good bit of slack in your plan and you don't have an 80 percent S&P allocation. So I personally do not see any cause for alarm (not that I possess any special expertise at portfolio allocation strategies--my sole claim to fame in this area is that I happen to be the person who came up with the idea of adjusting SWRs for changes in valuation levels, and I did that only because I needed to do it to put together a reaonably safe retirement plan for myself).
hocus2004
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Post by hocus2004 »

I'm just puzzled as to why all the hostility between you and intercst. There's got to be room for both sides to co-exist, don't you think?

I feel no personal hostility toward intercst. I learned some important things from him in earlier days. He gave me a warm welcome to the Motley Fool board, and that gave me the confidence to begin posting regularly. I like his REHP study and have recommended it to aspiring early retirees on numerous occasions. It gets the SWR number wrong, but it accurately reports the Historical Surviving Withdrawal Rate (HSWR), and that's an important number to know. So I think the study has considerable value. I am grateful to intercst for starting the Motley Fool board, which is the board that got our movement off the ground. I had some of the best times of my life posting at the Motley Fool board. That board was at one time the most thought-provoking board on the face of the internet, in my estimation, and I am grateful to all of the community members who made it so (and that obviously includes the board founder, intercst).

I had a good relationship with intercst for a number of years. I advertised on his web site when I was offering my "Secrets of Retiring Early" report for sale. I gave five star reviews to the two reports that he published at Soapbox.com. I very much wanted to have a blurb from intercst on the back cover of my book on "Passion Saving." I ultimately decided not to ask him to provide one only because he made clear in a number of posts that he was not willing to do so. I expect to be writing and speaking about early retirement for many years to come, and I hope that I will have dealings with intercst in future days. Perhaps we will do some public debates or radio interviews together or some other things along those lines. I will of course do all that I possibly can do to make those interactions positive and constructive ones for all concerned.

I ain't gonna lie for him, peterv. It is not reasonable to expect me to do that, is it? The entire Motley Fool board now lies on his behalf on a regular ongoing basis. Some lie in a direct manner by putting up posts which they know to be deceptive. Others lie in an indirect way by sitting on their hands rather than speaking up and taking exception to the deceptive posts they see appear at the board. All who have been around long enough to know the score with this guy are participating in the propagation of untruths. It is a mistake.

They degrade themselves with this behavior. They should stop doing it. They should tell intercst in unmistakable terms that they are going to permit the truth to be spoken re SWRs whether he likes the idea or not and that, if he feels strongly enough that he simply cannot tolerate the truth to be spoken at a board at which he participates, there are lots of other discussion boards to be found on This Magnificant Planet of ours.

There is no place for this individual on any board that purports to help people learn how to win financial freedom early in life. In the work that I do, one of my responsibilities is to advise people as to where to go to find more information about the subject of early retirement than I am able to supply to them. How would intercst supporters have me carry out this responsibility? Am I to engage in the deceptions and half-truths that people like raddr and FoolMeOnce and Wanderer now regularly put forward? These three people are great posters, giants of our community. But they have diminished themselves with the nonsense gibberish they have spouted on behalf of this other individual.

For what? Has he ever so much as extended a "thank you" to any of the three of them? I've been watching the proceedings for a long time and I have never heard a "thank you" pass his lips. These individuals have done damage to their reputations for an individual who laughs at them for having done so. Intercst said in a recent post that he is thinking of changing the board title of the Motley Fool board to "I'm Retired--Screw You!" That about tells the story of where this individual is coming from. I like to think that I avoid dishonesty as a general practice. I sure as heck ain't gonna make an exception to serve the interests of an individual who publicly announces his utter contempt for the community I love. Do that, and you are not just dishonest--You are dumb on top of it. No sir. Not this boy.

Intercst does not belong in a board community that deals with money issues. That's the bottom line on this matter. When you are offering advice on money matters, you are obligated to talk straight. You can tell jokes, of course. You cannot deliberately deceive people on a question of objective fact. That is what intercst has been doing for 32 months now--he has been deliberately deceiving people on a question of objective fact. It is not OK. It is so far over the line of what is OK that it is insulting to the community that I have to explain that it is so in a post like this. It is insulting that I have to say it, but I do, don't I? Because if I don't, who the heck will?

It's not intercst vs. hocus. It's intercst vs. the Retire Early Community. We are one thing and he is something very different. It's a quirk of fate that he happened to be the person who founded the first board. You wouldn't intuitively expect for it to be the person who founded the first board to be the person who is Public Enemy Number One of the community that came to be as a result. But that is indeed the way it worked out.

Arrete put up a post at the Motley Fool board the other day where she quoted from an Ariechert post from sunnier days. He went on and on in this post saying how wonderful intercst was. It's clear from the other things he says in the post that the real source of his praise should be the community that intercst founded, not intercst himself. Ariechert is quite properly grateful for all that he had learned from the community about how to manage his money. It is the community that does these wonderful things, not the person who founded the first board.

The person who founded the first board has absolute unmitigated contempt for the community. There are scores and scores of posts in the archives in which large numbers of community members express the desire that intercst knock off the funny business. He never does it. He never will. He is a multi-millionaire Mastermind investor, don't you know? The community is his play thing. He sees us as a bunch of yes men and yes woman who he keeps around to encourage his fantasies of having "invented" the concept of early retirement. When he is done with us, he will throw all those who lied on his behalf in the trash heap like a dirty smelly old rag.

Intercst will never do for Wanderer what Wanderer did for intercst. Intercst will never do for FoolMeOnce what FoolMeOnce did for intercst. Intercst will never do for Raddr what Raddr did for intercst. The train moves in one direction only. Wanderer and FoolMeOnce and Raddr are worth pulling back. They are community-minded guys at heart and they will be offering help free of charge to aspiring early retirees for a long time to come. Intercst? He's retired, don't you know? Those waiting for a community-minded thought to ever pass through intercst's mind can just go screw themselves. What a funny, funny joke!

Intercst is not one of us, peterv. Intercst has to go so that the rest of us can get about the business of winning back our self-respect. It's us or him, that's what it comes down to. Either the community has to go or he has to go. He has never showed the slightest inclination of permitting it to be done any other way.
hocus2004
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Post by hocus2004 »

I'd consider TIPS but not sure I can hold them in Vanguard.

I am holding my TIPS in a Vanguard account. So I don't think that that should be a problem.
unclemick
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Post by unclemick »

Take the following tongue in cheek (since I don't always follow my own advice).

Remember POGO - you are now free to look in the mirror and decide who you are - and can blissfully ignore any advice that doesn't suit your truck.

Now that Vanguard has 'retired' Bogle - they suffer from a serious lack of grumpy old phartness. The website recently noted - you can do with one fund -i.e. Target Retirement. At the same time they have all these rookie (success can be dangerous) advisors who apparently went to slice and dice school.

Remember it's male and biological ( I currently don't golf or fish) - hence I gotta putz.

Putz light - ? could be as simple as picking Target Retirement Series to reflect P/E 10 and changing as valuations change.

Putz heavy - ? Raddr's forum for 'advanced slice and dice'.

If you follow this forum - there are ways to avoid the shoals of high stock valuations/low interest rates currently existing.
peterv
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Post by peterv »

Hocus and Uncle Mick, thanks for the feedback.

Hocus, good to know that I can hold TIPS at Vanguard, thanks. BTW, do you have a web site?

I can't help but wonder why intercst would ever leave voluntarily. After all he gets some income from selling his report (intercst is Greaney, right?) and no doubt plenty of ego gratification. It would seem unlikely that anything you or anyone else says could overcome either of those incentives. To my way of thinking the best path would be simply to state your own case as clearly as possible and let the cards fall where they may. Some people will go with the standard theory and others will be attracted to your alternative. The market will tell us who's right. So be it. We're all adults and free to choose any path we like. And none of us are responsible for the decisions of others.

You said; "Intercst has to go so that the rest of us can get about the business of winning back our self-respect." (Haven't figured out how you do the italics yet.)

My self respect doesn't depend on anyone else, it's generated internally. Saves me a lot of time not fretting about what others think of me that I can spend obsessing about my SWR and asset allocation. :smile:

Uncle Mick, had to read your post two or 3 times and am still not sure I understand it completely. :roll: Perhaps after some coffee (or beer?) it will come into focus. However, I do get the part about the Target Retirement series and have given them some thought. Just wasn't sure they had the same sort of exposure to value stocks I was looking for. Haven't run across Raddr's board yet but "advanced slice and dice" sounds like it would result in a more complicated portfolio than I'd like. I think I'm a medium putz kinda guy.

Cheers,
Peter
JWR1945
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Post by JWR1945 »

peterv wrote:You said; "Intercst has to go so that the rest of us can get about the business of winning back our self-respect." (Haven't figured out how you do the italics yet.)
You can use the little i along the top line that includes several other options. The buttons toggle between the start and the end of an action.

Another way to do it is to use brackets:
text[ /i] without the spaces produces text.
text[ /b] without the spaces produces text.
text[ /quote] without the spaces produces
Quote:
text
.
Those are ones that I use. I also use

Code: Select all

table[ /code], which helps in making tables for data.

If you are still confused, click the quote button on some posts. You can see what the writer wrote as well as how it turned out.

Have fun.

John R.
JWR1945
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Post by JWR1945 »

For peterv:

Be sure to read unclemick's War games - 2% vs 4% today thread. It may give you some additional ideas.

unclemick asked exactly the kind of question that you are after.

Have fun.

John R.
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Post by JWR1945 »

peterv wrote:I can't help but wonder why intercst would ever leave voluntarily. After all he gets some income from selling his report (intercst is Greaney, right?) and no doubt plenty of ego gratification. It would seem unlikely that anything you or anyone else says could overcome either of those incentives....
The core problem is that the Motley Fool stopped enforcing their own posting rules. They did so without telling anyone. They now use a Board General approach. It is a modified version of mob rule.

The Motley Fool is horribly inept as a commercial enterprise. Their discussion boards could be a gold mine. They get free contributions from their members, many of financial value, and they charge for their services. But they run people like me away from their site specifically because they have allowed their discussion boards to go down hill.

Hocus and others contributed greatly to the success of the Motley Fool's discussion boards (and the Retire Early Home Page board in particular) because of the posting rules. They Motley Fool has trashed those contributions.

Hocus feels a responsibility to the community which he helped to build up. Many others do not. Many people just walk away.

The Motley Fool attracts a large number of readers. Eventually, the market will determine who to follow, but not right away. Hocus does not want those who aspire to a retire early to be harmed along the way. Those following intercst's dogma are highly likely to end up with busted retirements. Hocus would prefer to prevent their suffering.

Have fun.

John R.
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Post by ElSupremo »

Greetings peterv :)
Haven't run across Raddr's board yet but "advanced slice and dice" sounds like it would result in a more complicated portfolio than I'd like. I think I'm a medium putz kinda guy.
There are plenty of folks right here that know as much or more about "advanced slice and dice" or whatever you want to call it if you are really interested. However being a medium putz kinda guy myself I could care less. ;)

Welcome to NFB! :D
"The best things in life are FREE!"

www.nofeeboards.com
hocus2004
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Post by hocus2004 »

I can't help but wonder why intercst would ever leave voluntarily.

I don't think he will leave voluntarily, Peterv. Fortunately, we don't have to count on him leaving voluntarily. I was aware of the problems that come with intercst-type posters before I put up my first post at the Motley Fool board. I specifically elected to post at that board because the rules for that board provide the community with rock-solid protection against the intercst-type poster. There is a link to the posting rules provided at the bottom right-hand corner of each page at the Motley Fool boards. It is titled "Learning Together."

Anyone who posts or lurks at the Motley Fool has both a right and an obligation to insist that intercst's posting privileges be revoked. The question of whether he has crossed the line or not is not a close call. He is far, far, far on the wrong side of the line, and has been for over two year's time now. Motley Fool charges for admission to their boards. So this is a consumer rights issue. Part of the $30 that each particpant at the Motley Fool board pays to Motley Fool goes to cover the salary of the site administrators. We have every right to ask that they earn the money they are paid by enforcing the rules in a reasonable manner.

I put up a post on November 23, 2002, arguing that intercst's posting privileges should be revoked. That post won 25 recommendations. So it isn't just me who wants Motley Fool to take action. My guess is that, if we had gotten 50 recs on that post, intercst would have been gone a long time ago. So we were halfway to where we need to be over two years ago. I think that it is just a question of continuing to work the issue. We need people to be more vocal. It is one thing to rec a post asking for intercst's removal. It is something else to say the words in a post that goes up with your name on it. We need more people saying the words. We need more people writing e-mails to Motley Fool demanding that prompt action be taken.

Motley Fool is a business. A business needs to serve its customers if it is to succeed. I have asked many people what they see as the good and bad points of discussion boards, and probably the most common bad points cited are that the information posted is not reliable and that there is too much abusive posting. Intercst is a poster who puts up unreliable information and then relies on abusive posting to block people from engaging in reasoned discussion on the topic on which he has misled them. There is a reason why Motley Fool wrote their rules the way they did. They want the business to succeed, and they know that they will attract more people to the boards if they promise to keep them reasonably clean. If they feel enough pressure to take actiion, I believe that they will.

If mankind can figure out a way to put a man on the moon, surely it can figure out a way to get an abusive poster removed from a discussion board community. These boards matter. Financial freedom is a subject that a lot of people want to learn about, and achieving financial freedom opens up a lot of exciting possibilities for those who do. So I think it makes sense for all of us to do what we can.
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Post by hocus2004 »

BTW, do you have a web site?

Soon.

I have been saying that for a long time.

This time it's true.
hocus2004
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Post by hocus2004 »

After all he gets some income from selling his report (intercst is Greaney, right?) and no doubt plenty of ego gratification.

Yes, intercst is Greaney. I don't believe that it is a financial motivation driving intercst in this matter. I believe that you are right about the ego gratification thing, though. It appears to me that that is the source of the problem.
hocus2004
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Post by hocus2004 »

The best path would be simply to state your own case as clearly as possible and let the cards fall where they may. Some people will go with the standard theory and others will be attracted to your alternative.

You have described perfectly the way it is supposed to work, Peterv. It is certainly not my intention to persuade everyone to my point of view. That would obviously be a futile effort. It wouldn't even be a healthy thing for future community discussions for that to take place. We want a diversity of viewpoints. We want things to play out exactly as you say here. I should state my case, others should state their cases, and the readers of the various viewpoints should then make up their own minds as to which way to go with the information presented.

We don't have that today.

We don't have it at the SWR board because there is a boycott on this board being enforced by Defenders of the Conventional Methodology (DCMs). There were a great number of community members who participated in SWR discussions at this site in earlier days. Not too many do today. It's not an accident that that happened, and it is not that all these people ran out of questions or things to contribute to the discussions,. It is that they did not want the penalties that have been imposed on those who have posted in an honest and informed way on the SWR matter imposed on them. I want those posters participating here again.

We don't have it at the Motley Fool board. I was one of over 100 posters who built that board into a powerful learning resource for aspiring early retirees. It is not that today. Just about all posters in that community who had an interest in the topic of early retirement left the board as a result of their frustration with intercst's tactics for limiting the scope of acceptable debate at the board. I want those people back at the Motley Fool board.

We don't have it at the raddr-pages.com board. See what happens to you if you go over there and put up a post reporting on what the historical data really says re SWRs. JWR1945 has been banned from that board for life. I have been banned for that board for life. Neither of us has ever put up a post there. Our "crime" is that we both have a reputation for posting in an honest and informed manner on the SWR matter. Raddr has not specifically said that William Bernstein is banned from that board for life. But I think it is fair to say that the logic follows. I want JWR1945 to be able to participate at that board, I want to be able to partiicpate at that board myself, and I want William Bernstein to be able to participate at that board. I want anyone who has something to offer aspiring early retirees to be able to participate at that board.

We don't have it at the Early Retirement Forum. There are two threads on SWRs that are among the most popular threads in the history of that site. There is a great community desire there to be able to discuss the issue without having to deal with the poison that intercst and his supporters bring to the table. I have hopes that things are beginning to come around at the board. Cut-Throat put up a post last week in which he said that he has no problem with me stating my views on SWRs at that board. I take that as a very positive sign. I will put up a thread-starter on SWRs at some future date and see how things go. We don't today have what we need to have to be able to have community members hear both sides, but I believe that we are getting close. We will have to wait and see how things go.

The state of play that you describe as ideal is the state of play that I see as ideal too, Peterv. My goal from the first day has been to achieve that state of play. If this were a case where there were reasonable points of view on both sides, I think we would have it. The problem from intercst's point of view is that there is no reasoned defense of his position possible. The SWR is a mathematical construct. When you are calculating a number, there are right and wrong answers. He came up with a wrong answer in the study published at RetireEarlyHomePage.com. He doesn't want to acknowledge it. Given all that, he feels that he has no choice but to disrupt the conversations that other community members want to have amongst themselves and thus far he has had enough influence in the community to pull it off.

It's not going to work forever. My sense of things is that as time marches forward more and more community members are getting sick of his monkey business. The community has the power to defend itself when it sees that it must, and there is going to come a day when intercst plays one too many games and a large enough number of community members comes to the decision that it simply must.

I doubt very much that there will be too many who will mourn the day. Intercst will go back to whatever he did with his time before he joined this community and the rest of us will go back to exchanging ideas on how to achieve successful early retirements. We will be a lot happier and my guess is that he will probably be a good bit happier too. The reality is that he lost interst in the subject matter a long time ago. It appears to me that he sticks at this due to some sort of feeling of wounded pride or something. He would be happier doing other things with his time, or possibly posting at a board that deals with subjects in which he holds a current-day interest (televsion and politics and such). Intercst supporters do him no favor by stretching this thing out, according to my assessment of things.
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Post by hocus2004 »

My self respect doesn't depend on anyone else, it's generated internally. Saves me a lot of time not fretting about what others think of me

I understand. But how about the boards at which you post--Do you care about what people think about the boards at which you post?

I am in a position where I need to care about that. I'm not just your average run-of-the-mill poster in this board community. I have devoted years of my life building up these boards into powerful learning resources for the community of people with an interest in learning what it takes to retire early. I didn't do that as a vain exercise. I did it for a purpose.

Say that after I publish my book, someone sends me an e-mail asking me "What can you tell me about investing in real estate for the purpose of being able to retire early?" I have never invested in real estate, so what am I going to tell them? I'm going to tell them to check out the work done at this community by FoolMeOnce, and provide them with some links.

Say that someone asks me about the idea of livng overseas to be able to retire early. I am going to point them to Wanderer's work and to Ben's.

Say that someone asks me a numbers question. I am going to point them to raddr's work and to JWR1945's work.

Say that someone asks me about whether it is possible to retire early on a really low budget? There is a great poster over at Motley Fool who did this. I can't recall his name at the moment, but he does a good job. I will point to his work.

Say that someone asks if it is possible for workers with modest incomes to retire early. I will point to Mazke's posts.

I am one person. I know a thing or two about how to win financial freedom early in life, but obviously I do not know it all. If I want to help people learn about this stuff, I need to supply them with more than just my own insights. I need a community of people possessing scores of different perspectives and goals to really make this stuff work for all the people who are interested in learning about it.

What happens when I advise someone to take a look at Wanderer's work, or raddr's, or JammerH's that's the name I couldn't remmeber!) or FoolMeOnce's? I help the person seeking information. And I help the community. Because then we have one more person participating, one more person generating insights, one more person sharing one more perspective.

When this Learning Together thing is working right, it is a win/win/win/win. By sharing, we leverage our knowledge. I only know so much. But when I share with the community, the community grows, and then, through the benefits I receive from the community, I know more. It just grows and grows and grows and never stops growing.

That's when it is working right. The leverage principle works in reverse too. When one individual places his selfish interests above the interests of the community, things go down, down, down. He posts a deception to protect himself, and then someone else posts a deception to defend his deception, and then a third person posts a deception to defend the second guy's deception, and newcomers to the board community don't know what to make of us. "It's an interesting concept, this financial freedom thing," they think to themselves, "but they all appear to be a bunch of liars posting there." And they walk away without sharing what they know.

I want to see the leverage working the right way again. When I say that people have lost their self-respect, I don't mean that they have lost it because they were smeared. You don't lose your self-respect because you are smeared. But you do give up some of your self-respect when you partiicipate in deception. Deception is wrong. If there is no way to defend a point of view other than with deception, it is time to go looking for a new point of view. We have seen a lot of fine posters engage in deception, and my sense is that they don't feel too good about it. The rest of us need to be doing what we can to help those people feel better about themselves again, if for no other reason than that we want to enjoy the benefit of their insights for the long term.

When I suggest that people visit these boards, I have an obligation to shoot straight with them. I of course want to tell them all the good, and there is a lot of it to tell. But I must also tell the bad, and in recent years there has been a good bit of that too. We are not going to get good people to pay us a visit and then to participate unless we clean the place up a good bit.

We should all get about that important business as soon as is humanly possible, in my view. It's the right thing for the various board communities. And it is the right thing for each of us who built them too. It's even the right thing for intercst in the long run. He doesn't fit in here, and he would be happier engaging in his shock jock routine at some board that didn't have the words "retire early" in the title so he wouldn't have newcomers asking all the time "Why is there so little discussion of early retirement at this early retirement board.?" What I am proposing is a win/win/.win/win.
hocus2004
Moderator
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Joined: Thu Jun 10, 2004 7:33 am

Post by hocus2004 »

Those following intercst's dogma are highly likely to end up with busted retirements. Hocus would prefer to prevent their suffering.

I think that the intercst SWR claims are dangerous claims, that's fair to say. But I don't see myself as Mother Teresa going door to door helping out the poor souls who have been duped by that big bad wolf of an SWR analyst named "intercst." That is not what this is about.

People are going to invest how they are going to invest. What intercst says is going to affect a small number of people, and what I say is going to affect a small number of people, but to a large extent the issues are bigger than both of us. People are going to do what they do not because of what one person says on a discussion board. People spend years reading about this stuff, and their decisions are the end point of years of investigations. Intercst and I (and all the others who post at these boards) have a small impact. Neither of us is the sole cause of just about anything.

My primary concern is the integrity of the board discussions.

Say that I had never put up the May 13, 2002, post that kicked off The Great SWR Debate. There is a sense in which we would be in a better place if that were so. If I had never put up the post, there would have been no deception. People would have been unhappy when their retirements went bust, but they wouldn't be able to blame the boards for what happened to them. Life would go on. The boards would be damaged in the fall-out, but they would get back on their feet in time.

You can't say that today. The reality is that I did put forward the May 13, 2002 post. Another reality is that scores of posters expressed great enthusiasm for the idea of learning about the realities of SWRs. Then there was the intercst deceptions and the Smear Campaigns and all the rest. Now people can blame the board communities for what happens to them. We are now all complicit in the deception. Motley Fool is certainly complicit. Motley Fool failed to honor its side of an agreement it struck with its customers. But it's not just Motley Fool. Anyone who sat on his or her hands while deliberate deception was being practiced is to some extent complicit in what went down.

No other poster would have gotten away with what intercst did. There are posters who try these sorts of things from time to time. How long does it usually last? Perhaps a thread, perhaps two. Not 32 months. Anyone who says that we do not have a responsibility to deal with the intercst problem needs to ask himself why we feel a responsibility to act when some other poster deliberately deceives fellow community members about some money question or another. It's not just deception that usually prompts us to speak up. People speak up when other posters just happen to get some factual question wrong by mistake, even when there is no deliberate deception. For a poster to engage in deliberate deception on a money question is just flat-out over the line. There is just no reasonable grounds for making an argument the other way.

The boards are going to get hurt if we do not bring this matter to a satisfactory resolution. Look at the Dan Rather matter. Why were people fired from CBS? It's not because they made an error. That happens all the time, human beings make errors. It's because the integrity of the news-gathering enterprise was in question, and steps had to be taken to assure people that the entity possessed the integrity needed to do the job. That's the situation we are in here. We should not have allowed our integrity to be compromised in the first place. We can't turn back the clock, that part is over. We now need to take the steps needed to assure reasonable people that we possess the integrity needed to do the job.

Scores of people have left the community. Some of those people had contributed hundreds of posts. They had a right to believe that reasonable rules were going to be followed in our board deliberations. They contributed because they wanted to enjoy the benefits that came with building up the board community. Something important was taken from them. That something should be given back. That something was the integrity of the board experience.

It is none of our business what people end up believing about SWRs. That is out of our hands. It is very much our business to see that both sides of the story can be told. When raddr imposes board bannings, we should be standing up to him and letting him know in no uncertain terms that that is not going to fly. When intercst disrupts a thread, we should be letting him know in no uncertain terms that the same rules that apply to all other posters apply to board founders too. When someone is smeared solely because he or she told the truth about what the historical data says re SWRS, we should be letting the poster putting forward the smear know in no uncertain terms that there are limits as to the sorts of trash talk that we will permit at out boards and that he or she had better move himself or herself to the right side of the line pronto.

We are a community. A community looks out for its own. The scores of fine posters who have been smeared in this matter are good, fine, helpful, sharing people. We need to stand up for them, we need to send them a loud and clear signal that we are on their side. Otherwise, how can we in fairness expect them to jump forward with a useful insight when we need the benefit of their experience?

People don't get paid for posting here. Not in cash anyhow. They get paid via the benefit they gain from the success of the community. There are some payments due outstanding that we need to be getting about the business of taking care of before too much more sand passes through the hourglass. We owe the hundreds of people who built this community a lot. We owe Mr. Multi-Millionaire MasterMind Investor precisely zero. The debt we once owed him has been paid off many, many, many times over.

It's time to tell our old friend intercst that we can't afford to put any more on his tab. He is either going to have to start paying for his drinks or find some other place to go where everybody knows his name.
peterv
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Joined: Mon Jan 17, 2005 1:13 pm
Location: Reno, Nevada

Post by peterv »

Hocus wrote:Your plan sounds to me to be a reasonable one. A 50 percent stock allocation at today's valuation levels is a wee bit on the high side for my tastes
A few days ago I was firmly in the 70% stock camp. Amazing what some surfing and a good book will do to change your attitude. The only reason I'm allocating as much to stocks is that I don't much like trying to time the market which is what you propose using the PE/10 theory. I'm sympathetic to the argument but feel the need to hedge some considering as you point out I have plenty of slack in my plan. If your analysis says a 2.5% SWR is about right for 80% stocks what does it say for 50% stocks? Or maybe a better question is, is the tool you use available online somewhere?

Never been to the Motly Fool board, only the Dorey36 board so pardon me if I'm woefully uninformed. :?

Cheers,

Peter
JWR1945
***** Legend
Posts: 1697
Joined: Tue Nov 26, 2002 3:59 am
Location: Crestview, Florida

Post by JWR1945 »

peterv wrote:A few days ago I was firmly in the 70% stock camp. Amazing what some surfing and a good book will do to change your attitude. The only reason I'm allocating as much to stocks is that I don't much like trying to time the market which is what you propose using the PE/10 theory. I'm sympathetic to the argument but feel the need to hedge some considering as you point out I have plenty of slack in my plan. If your analysis says a 2.5% SWR is about right for 80% stocks what does it say for 50% stocks? Or maybe a better question is, is the tool you use available online somewhere?
You are at the right location.

Read the two posts with stickies. They are at the top when you display the list of threads. They have lots of links that put everything together in a quick and efficient manner.

From the May 2004 Overview post dated Wed May 19, 2004.
http://nofeeboards.com/boards/viewtopic.php?t=2505
We have found that switching portfolio allocations according to P/E10 would have improved past results considerably. The 30-year Historical Database Rate with switching is 5% as opposed to 4% without switching, but that was when dividends and valuations were inside of the historical range. The historical range for dividends extended down to 3% as opposed to less than 2% today. The historical range for valuations as measured by P/E10 extended up to 24 or 27 before the bubble. To bring today's numbers into the historical range, you might adjust the 30-year withdrawal rate to be 5% times the ratio of 24 (or 27) and today's P/E10. Without switching, you would use 4% times the same ratio.
One approach for today is to vary allocations, waiting for reasonable prices. To the extent that one could ever have withdrawn 4% (plus inflation) safely, standing on the sidelines would have increased his withdrawal rate to 5%.

Dr. Robert Shiller of Yale showed that P/E10 has an ability to predict stock performance in the intermediate term (10 years). Dr. Shiller wrote the book Irrational Exuberance. This kind of timing works. What usually fails are very short-term trading strategies that hold stocks for a year or less (sometimes weeks).

Technically, even rebalancing is a form of market timing.

We have examined dividend-based strategies. They offer an attractive alternative in today's market.

If you interpret tools to mean calculators, I have some posted in the special SWR Research section. You can see a link at the left side when you first come to the NFB site.

What hocus means when he mentions the data-based SWR tool has to do with examining what history has to say about an investment when there is a very high level of safety. This constraint makes comparisons meaningful. What history says is objective. It is determined mathematically. How you use that information is subjective.

I have written a post on this board that explains hocus's data-based SWR tool in greater detail.

Have fun.

John R.
JWR1945
***** Legend
Posts: 1697
Joined: Tue Nov 26, 2002 3:59 am
Location: Crestview, Florida

Post by JWR1945 »

Here is the link to my post about SWR as a Tool dated Mon Jun 14, 2004.
http://nofeeboards.com/boards/viewtopic.php?t=2607

Have fun.

John R.
hocus2004
Moderator
Posts: 752
Joined: Thu Jun 10, 2004 7:33 am

Post by hocus2004 »

I don't much like trying to time the market, which is what you propose using the PE/10 theory

This is so. I am very much advocating that people aim to "time the market." The reason why there is such resistance to the idea is that there is a lot of confusion about research that people have heard about that shows that "timing is impossible." There is indeed research that shows that short-term timing is very difficult to pull off successfully. There is no research that I know of that shows that long-term timing is impossible.

Any time that you start feeling queasy about long-term timing, take out your copy of William Bernstein's book "The Four Pillars of Investing" and reread Chapter Two. He discusses in great depth why long-term stock returns (but not short-term stocks returns) are highly predictiable. It is because short-term returns are so unpredictable that short-term timing generally does not work. It is because long-term returns are so predictable that long-term timing generally does.

The single biggest conceptual problem that people have with the Data-Based SWR Tool is that this difference between the efficacy of short-term timing and long-term timing is counter-intutive. Our natural inclination is to believe that it should be harder to predict what is going to be at the end of 30 years than it is to predict what is going to be at the end of 30 months. Our natural inclinations mislead us.

To understand why, think about how it works with a slot machine. Can you be sure that the house is going to win when someone pulls the lever 10 times? You cannot. How about when someone pulls the lever 10,000 times? The results become more predictable as there are more pulls of the lever.

Why? Because you are dealing with probabilities. Probabilities are real, but they do not always assert themselves in the short term. Valuations make a big difference, but in the short term there are other factors that often dominate. In the long term, you can count on valuations playing a significant role in determining the result obtained from your stock investment. Or at least so the historical data indicates.
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