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Retire Early Home Page • View topic - Does VII work?

Does VII work?

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Re: Does VII work?

Postby Schroeder » 02/15/08 at 19:15:08

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Re: Does VII work?

Postby hocus » 02/16/08 at 13:00:05

Wonder which song lyrics he'll decide to use in response!

There's one sort of hidden in there.

Bruce Springstein has an unreleased song called "From Small Things, Mama, Big Things One Day Come." Someone else recorded it and I heard it on a collection of covers of Springstein songs entitled "Cover Me." I used that line in one of my responses.

None of the stuff on which Frank Sinatra is the leading authority has come up yet. You can't force this stuff. Nice 'n easy does it everytime.

Oops!

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Re: Does VII work?

Postby nfs » 02/16/08 at 17:00:00

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Re: Does VII work?

Postby hocus » 02/16/08 at 17:26:20

here's a good indicator of why taxes aren't going to help much.

This comment suggests that there are people (Schroeder for sure, possibly NFS too) who would like to see VII not work.

Why?

It's a win/win/win for investors to learn that it is possible to predict long-term returns with a reasonable amount of accuracy. Absolutely nobody loses.

This feeling certainly exists. There is no question whatsoever about it. But it is truly a strange phenomenon.

People are praying for bad news just because they find the good news surprising.

Yowsa!

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Re: Does VII work?

Postby Schroeder » 02/16/08 at 18:08:32

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Re: Does VII work?

Postby Yipee-Ki-O » 02/16/08 at 18:22:28

Work is the refuge of those who have nothing better to do, Oscar Wilde
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Re: Does VII work?

Postby Schroeder » 02/16/08 at 18:25:05

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Re: Does VII work?

Postby hocus » 02/17/08 at 04:20:56

I don't consider myself dogmatic on B&H.

There is nothing more dogmatic than favoring a ban on honest posting on the question, Schroeder. That is the most extreme position imaginable.

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Re: Does VII work?

Postby hocus » 02/17/08 at 04:27:22

My other comment is that we may have seen a permanent elevation of P/E10 levels. P/E10 level of 20 may be the lower boundary going forward. I find it highly doubtful that we'll see P/E10 much lower than 20 anymore.

This is a viewpoint. It is the purpose of our boards to facilitate the expression of such viewpoints. It is also the purpose of our boards to faciliate the expression of alternative viewpoints.

It is certainly not "100 percent safe" for people to plan retirements pursuant to your particular viewpoint without even being made aware that there are alternatives held by many people who have spent a great deal of time studying these questions.

Any board that prohibits the discussion of the alternative viewpoint, knowing that people are using what is said at the board to plan retirements, is a corrupt enterprise.

That is not a viewpoint. That's a fact that cannot be denied by any reasonable person.

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Re: Does VII work?

Postby Schroeder » 02/17/08 at 09:38:12

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Re: Does VII work?

Postby hocus » 02/17/08 at 12:06:27

VII has specific triggers when to change allocations

This is of course a false statement.

The goal of VII is to "Stay the Course," that is, to keep one's risk/reward profile roughly stable.

How many transactions the investor wants to engage in is up to the investor, as it is when an investor follows a rebalancing strategy.

Some investors following a rebalancing strategy rebalance frequently, some not so frequently. It is up to the individual. It's the same with VII.

The difference is that those following VII aim to "Stay the Course" in a meaningful way. The goal is not to keep the stock percentage roughly constant, but to keep the risk/reward profile roughly constant.

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Re: Does VII work?

Postby Schroeder » 02/17/08 at 13:17:45

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Re: Does VII work?

Postby hocus » 02/17/08 at 15:56:34

In my mind, the way to do this is to set trigger levels.

That's one way to do it. It's not the only way.

Does everyone who rebalances set "trigger levels" for rebalancing? That sure is not my impression.

Some do, some don't.

It's the same with VII.

If you want to make frequent changes, you can do it that way. If you want to avoid fees, you can do it that way.

It's up to the individual investor how he implements the concept. All that the concept requires is that the investor make efforts to "Stay the Course" in a meaningful sense (by keeping his risk/reward profile roughly constant).

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Re: Does VII work?

Postby hocus » 02/17/08 at 16:06:44

Is VII just an airy-fairy concept for you, hocus?

No. I've written about it extensively.

If you dont have fairly good idea how an investor is supposed to implement the VII strategy, how can you expect anyone else not familiar with the mechanics (i.e. trigger levels and such) to implement it?

It's a new idea. We have not yet done extensive research into the question of how best to implement it. As I learn new things, I report on them in articles at my web site.

Each investor needs to decide for himself or herself how to implement the concept.

I have heard from numerous people who have had no difficulty in figuring out how to implement it. I have also heard from some who have expressed uncertainty on how to implement it.

I have put forward guidance in response to questions that have been sent to me. But I obviously cannot put forward guidance on questions for which I do not know the answers. I do not know today what is precisely the best way to implement VII in every circumstance.

My opinion is that this question will likely never be answered in a definitive sense any more than the question of what is the best stock allocation can ever be answered in a definitive sense. There are too many factors to be considered for there ever to be one answer that applies to all investors and to all circumstances.

I do expect that we will learn more as time goes on. I feel that today we are in the middle innings of the ballgame. We know much more than we knew six years ago. But I expect that we still will be learning more six years from today.

It seems absurd to me that there is anyone who somehow came to expect different. How long has it been that people have been studying investing? Hundreds of years. And you expect the Retire Early Community to come up with the answer to every question in six years? It's not a reasonable expectation.

We will continue to learn. Good for us! That's why the community was founded in the first place. Our boards were intended to serve as learning resource.

Rob
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Re: Does VII work?

Postby Schroeder » 02/17/08 at 16:18:39

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