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Norbert Schlenker
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Joined: 21 Mar 2005
Posts: 43
Location: The Dry Side of the Wet Coast

PostPosted: Wed Mar 23, 2005 8:16 am    Post subject: Reply with quote

JWR1945 wrote:
I am under the weather right now, which limits my ability to respond fully.

I hope you get better soon. I'm looking forward to our conversations.

Quote:
I urge all to read my May2004 Overview sticky post.

Will do.

Quote:
In addition, Hocus has provided an excellent illustration as to why SURVIVED = SAFE is nonsense.

It's a good analogy.

Quote:
We have a very strong case that past sequences were lucky sequences. Raddr showed this in the early days of the FIRE board.
He exchanged the returns from two years selected at random. They brought down the Historical Surviving Withdrawal Rates considerably. Yet, the mean and standard deviation of the stock market statistics were identical to the historical record. This indicates that, with a few notable exceptions possible, all Monte Carlo simulations must show that the past sequences were lucky sequences.

That's worth reading. Could you provide a url?

Quote:
The second factor is the sequence of returns. The worst-case historical sequences were typical in this regard, not anywhere close to being worst-case conditions. Less favorable sequences would have brought the Historical Surviving Withdrawal Rates down sharply.

Yes, but then you should explain why you claim elsewhere to believe in mean reversion of returns. Mean reversion lowers the probability of your "less favorable sequences". Have you taken that into account?



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JWR1945
***** Legend


Joined: 26 Nov 2002
Posts: 1697
Location: Crestview, Florida

PostPosted: Wed Mar 23, 2005 8:26 am    Post subject: Reply with quote

Norbert Schlenker wrote:
Quote:
We have a very strong case that past sequences were lucky sequences. Raddr showed this in the early days of the FIRE board.

He exchanged the returns from two years selected at random. They brought down the Historical Surviving Withdrawal Rates considerably. Yet, the mean and standard deviation of the stock market statistics were identical to the historical record. This indicates that, with a few notable exceptions possible, all Monte Carlo simulations must show that the past sequences were lucky sequences.

That's worth reading. Could you provide a url?

You are here! I am talking about our FIRE board at this NoFeeBoards website. Look at pages 1, 2 and so forth. I doubt that you have to go beyond page 3.

In addition, we have an excellent search feature at this site.

Have fun.

John R.


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JWR1945
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Joined: 26 Nov 2002
Posts: 1697
Location: Crestview, Florida

PostPosted: Wed Mar 23, 2005 8:34 am    Post subject: Reply with quote

Norbert Schlenker wrote:
JWR1945 wrote:
The second factor is the sequence of returns. The worst-case historical sequences were typical in this regard, not anywhere close to being worst-case conditions. Less favorable sequences would have brought the Historical Surviving Withdrawal Rates down sharply.

Yes, but then you should explain why you claim elsewhere to believe in mean reversion of returns. Mean reversion lowers the probability of your "less favorable sequences". Have you taken that into account?

Actually, mean reversion does not have a strong influence on Historical Surviving Withdrawal Rates. Mean reversion tends to be a long-term effect. Historical Surviving Withdrawal Rates are dominated by the returns during the first eleven years (this was one of my early findings). This is the intermediate-term.

Gummy developed an equation for the current balance of a portfolio during withdrawals. Inspecting his equation helps us understand that the first few years affect retirement survivability much more than later years. And it makes sense. If your portfolio has grown in the first decade, the odds are that it has grown enough to assure success. If it has fallen sharply right away, you are in a very poor position to recover.

Have fun.

John R.


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Norbert Schlenker
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Joined: 21 Mar 2005
Posts: 43
Location: The Dry Side of the Wet Coast

PostPosted: Wed Mar 23, 2005 9:01 am    Post subject: Reply with quote

JWR1945 wrote:
Norbert Schlenker wrote:
Quote:
We have a very strong case that past sequences were lucky sequences. Raddr showed this in the early days of the FIRE board.

That's worth reading. Could you provide a url?

You are here! I am talking about our FIRE board at this NoFeeBoards website. Look at pages 1, 2 and so forth. I doubt that you have to go beyond page 3.

In addition, we have an excellent search feature at this site.

John, I used the excellent search feature to look for posts by raddr in the FIRE forum with the word variance. No hits. With "deviation", I got five hits but (a) they don't address the issue of "lucky sequences" and (b) raddr seems pretty scathing about your methodology at first glance. I certainly hadn't noticed yet that you tossed a couple of inconvenient years in order to get a better r^2, but raddr filled me in right away. Are you sure you want me to read this stuff?

Quote:
Actually, mean reversion does not have a strong influence on Historical Surviving Withdrawal Rates. Mean reversion tends to be a long-term effect.

That may be. Your problem is that you are calculating SWRs and confidence limits using an unstated assumption that there is no mean reversion. You're trying to tell people that what is safe is so far below 4% because return sequences could be really unlucky, when mean reversion implies that really unlucky return sequences are really unlikely.

Quote:
Historical Surviving Withdrawal Rates are dominated by the returns during the first eleven years (this was one of my early findings).

I believe you're talking through your hat. Speaking loosely now, the classic 4% SWR is based on an assumption that the future will look like the past. You believe that's wrong. Hell, I believe it's wrong too. As far as I can tell, everyone else, even intercst, admits that it's wrong.

So what do you do instead? You run questionable regressions. Raddr's point re much too high estimates for r^2s and confidence because of sequence overlap cannot be dismissed here. You then take these regression coefficients and build equations, posting endless tables of numbers in numerous threads which can mean nothing to anyone.

The worst is yet to come. It turns out that everything, all these numbers, depends on knowing what returns will be for the next 11 (14?) years. You have "90% confidence in these limits" as long as you know this unknowable fact.

You and hocus are tearing strips off people for assuming an unknowable fact - that the future will be like the past. Then you turn around and build something new that depends on a different unknowable fact - returns for the next 11 or 14 years. What's the freaking point?



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ataloss
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Joined: 25 Nov 2002
Posts: 559

PostPosted: Wed Mar 23, 2005 9:20 am    Post subject: Reply with quote

Quote:
I believe you're talking through your hat. Speaking loosely now, the classic 4% SWR is based on an assumption that the future will look like the past. You believe that's wrong. Hell, I believe it's wrong too. As far as I can tell, everyone else, even intercst, admits that it's wrong.

actually intercst had a nice response to the "post that changed the world" within 90 minutes (if valuations are too high withdraw less)

http://boards.fool.com/Message.asp?mid=17209214&sort=threaded

despite this we have been treated to years of conspiracy thoeries and claims that itercst "got the number wrong"

?? he got the maximal future withdrawal rate wrong??



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Norbert Schlenker
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Joined: 21 Mar 2005
Posts: 43
Location: The Dry Side of the Wet Coast

PostPosted: Wed Mar 23, 2005 10:19 am    Post subject: Reply with quote

peterv wrote:
Norbert, you mentioned your web site. Care to give us the URL?

See the www button under my posts?



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MacDuff
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Joined: 18 Jun 2003
Posts: 31
Location: Centralia, WA

PostPosted: Wed Mar 23, 2005 1:00 pm    Post subject: Reply with quote

JWR 1945,

I am sorry to hear that you are not feeling well. Get better soon!

I hope you will consider starting a website that displays your work, and only your work. I and others sometimes need to ask questions; if that can be accommodated that would be good also.

Another possibility would be a Yahoo group type thing, with you as moderator and sole judge of who gets to join and who doesn't.

It seems clear that some like yourself are extremely valuable information sources. Others just enjoy fighting, or being "right". The smarter you are, the older that bickering gets!

I hope you will continue, but I would strongly hope also that you will shield yourself from attackers. If someone doesn't like your message, let him put up his own page, and choose his own members too.

You aren't asking for anything, therefore you don't owe anybody anything other than honesty. (And since there is precious little honesty in the world at large, I wonder if you even owe that!)

Mac


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JWR1945
***** Legend


Joined: 26 Nov 2002
Posts: 1697
Location: Crestview, Florida

PostPosted: Wed Mar 23, 2005 1:18 pm    Post subject: Reply with quote

Norbert Schlenker wrote:
Are you sure you want me to read this stuff?
...
Quote:
Historical Surviving Withdrawal Rates are dominated by the returns during the first eleven years (this was one of my early findings).

I believe you're talking through your hat.
...
So what do you do instead?...You then take these regression coefficients and build equations, posting endless tables of numbers in numerous threads which can mean nothing to anyone.

The worst is yet to come....
....
You and hocus are tearing strips off people for assuming an unknowable fact - that the future will be like the past. Then you turn around and build something new that depends on a different unknowable fact - returns for the next 11 or 14 years. What's thereaking point?

I believe that you have posted under false pretenses. I believe that you are NOT interested in learning from my research. Rather, you merely sought an opportunity to run a hatchet job.

I can back up all of my assertions. But because I do not have the time and energy AT THIS MOMENT to do everything for you RIGHT NOW, you have dismissed my findings wholesale. You did not even make an effort to learn the facts. You went out of your way to be abusive.

John R.


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JWR1945
***** Legend


Joined: 26 Nov 2002
Posts: 1697
Location: Crestview, Florida

PostPosted: Wed Mar 23, 2005 1:30 pm    Post subject: Reply with quote

MacDuff wrote:
JWR 1945,

I am sorry to hear that you are not feeling well. Get better soon!

I hope you will consider starting a website that displays your work, and only your work. I and others sometimes need to ask questions; if that can be accommodated that would be good also.

Another possibility would be a Yahoo group type thing, with you as moderator and sole judge of who gets to join and who doesn't.

It seems clear that some like yourself are extremely valuable information sources. Others just enjoy fighting, or being "right". The smarter you are, the older that bickering gets!

I hope you will continue, but I would strongly hope also that you will shield yourself from attackers. If someone doesn't like your message, let him put up his own page, and choose his own members too.

You aren't asking for anything, therefore you don't owe anybody anything other than honesty. (And since there is precious little honesty in the world at large, I wonder if you even owe that!)

Mac

I have no desire to start a website. I know of no other website where I would be comfortable posting my research.

I have had the opinion, and I still have the opinion, that if anybody can make a discussion board work, it is ES. Maybe ES will come up with something new that he finds satisfying. Or, maybe, it just can't be done.

I put these discussion boards in the hands of the LORD a long time ago. I am sure that everything will work out and the result will be much better than either of us can imagine. That has been my experience. I just don't know what the HE has in mind. It will be interesting to find out.

Have fun.

John R.


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hocus2004
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Joined: 10 Jun 2004
Posts: 752

PostPosted: Wed Mar 23, 2005 2:06 pm    Post subject: Reply with quote

I am sure that everything will work out and the result will be much better than either of us can imagine.

The historical data supports this viewpoint.

I am joking in a way and not joking in a way.

The Data-Based SWR Tool is a new idea. It has been true throughout history that many new ideas have been bitterly attacked when first brought forward, regardless of how much potential to do good they offered. There is something in people that clings to the old and hates the new and makes them feel that they must try to turn back the clock to an earlier time that somehow seems more comfortable. But eventually people get used to new ideas that provide big benefits because the benefits become just too enticing to resist.

Are the results of the conventional methodology more "comfortable?" I guess. They are also wrong. They are misleading. They are dangerous. We need a new methodology for SWR analysis, and thanks to JWR1945's fine work, we now have one.

The same thing that I said about the NFB site in my post to ES also applies to our SWR discussions of the past 34 months. There has been all kinds of bad stuff. But there has also been lots of wonderful advances. And none of those advances would have been possible had we not been willing to work through the bad stuff to get to them.

Was it worth it? I believe so. I sure wish that we had done it the other way. There was a lot of wasted time and a lot of harm done to your community. But the insights we gained from the discussions are pure gold. Now we just need to continue building on them.

In the end, I believe that the Data-Based SWR Tool will help many, many investors achieve their goals. What matters is that we continue to build and enhance the tool. The other stuff will be forgotten in the not-too-distant future. I believe that the Data-Based SWR Tool will be around for a long, long time making early retirement a realistic option for many thousands that otherwise could not have hoped to have pulled it off.

And it's not just me and JWR1945 who developed the tool. We were the two leaders. But there were important contributions from many other community members. There are probably some who today do not feel comfortable acknowledging the reality, but, like it or not, development of the Data-Based SWR Tool was a group project. That's what the community is here for, to put the power of a diversity of thought and experience building us great new tools for wiining financial freedom early in life.


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unclemick
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Joined: 12 Jun 2004
Posts: 231
Location: LA till Katrina, now MO

PostPosted: Wed Mar 23, 2005 2:11 pm    Post subject: Reply with quote

Ah yes Nobert the financial planner cannot find anything in long pointless strings onf numbers.

Whereas poor unclemick a math challenged ex left handed chemist seem to find thoughts to pursue for my ER.

Perhaps after eleven years of ER, I need a planner or leader to enlighten my ignorance.

Enough humor - hope your work finds a home JWR. Agree or disagree, I enjoyed your posts.


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hocus2004
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Joined: 10 Jun 2004
Posts: 752

PostPosted: Wed Mar 23, 2005 2:21 pm    Post subject: Reply with quote

I believe that you have posted under false pretenses. I believe that you are NOT interested in learning from my research. Rather, you merely sought an opportunity to run a hatchet job.

This one has even me wondering just a little if maybe he is just old bipolar hocus posting under a different name.

Just kidding, JWR1945. But it's good to see some fire from you every now and again. God is all merciful, but He is also all just. I think we need to make an effort to mix the two up a bit in our own feeble way of doing the Lord's work here in the valley of tears.


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hocus2004
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Joined: 10 Jun 2004
Posts: 752

PostPosted: Wed Mar 23, 2005 2:33 pm    Post subject: Reply with quote

I have no desire to start a website. I know of no other website where I would be comfortable posting my research.

You will always have a standing invitation to write articles on the Data-Based SWR Tool for posting at PassionSaving.com, JWR1945. I'm probably going to start out with a focus on the saving side, but I will be branching out to including stuff on the investing side in the not-too-distant future, and you know that I think your stuff is the tops.

I expect that I will be adding discussion boards to the site too somewhere down the road. When that happens, I hope you make the investing board there your new home. It's not my current plan to start the discussion boards this year because I have so much other stuff on my plate and I would like to have available to me the time that I think is needed to make a forum really cook. when I start one.

Given this new development, I am open to thinking over some new options. So please let me know if you come up with any that you think make sense and that you would like to run by me.

In any event, thanks a ton for the work you have done developing the tool. I asked for help from a Numbers Guy back on May 13, 2002. I didn't get help from any of the ones I thought I might get help from. But I sure did get the help I was asking for, and then a whole bunch more on top of that!

Your decision to join our community is the brightest spot in the entire 34-month record of events. That's not just my personal take. That's a cold hard fact.

The bottom line? I'd rather be in a community of two on your side than in a community of 5,000 that includes that other guy.


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beachbumz
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Joined: 07 Feb 2005
Posts: 79
Location: Cocoa Beach, FL

PostPosted: Wed Mar 23, 2005 4:07 pm    Post subject: Reply with quote

Hi Norbert!

Be careful man, that's dangerously close to "nonsense gibberish". It might get your post deleted. Laughing

Beachbumz Cool



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Norbert Schlenker
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Joined: 21 Mar 2005
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Location: The Dry Side of the Wet Coast

PostPosted: Thu Mar 24, 2005 7:37 am    Post subject: Reply with quote

It looks to me like it has gotten my post deleted. So much for hocus' fair play as moderator.

Where's my last post from yesterday, hocus? What was so terrible in that post, wherein I admitted to earlier impoliteness and rewrote what I had written earlier to John without the incendiary language? Was it that he would have to deal with substance rather than focusing on my intemperate language? Was it that he can't deal with substance?

I suppose you can delete this too. What a wuss.



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ataloss
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Joined: 25 Nov 2002
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PostPosted: Thu Mar 24, 2005 7:42 am    Post subject: Reply with quote

reasonable requests for answers to questions result in deleted posts- that's why we call it hocomania

btw sincerely hope jwr is well and just using illness as an excuse Wink



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