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I have yet to read or see any data following a high valuation that indicates that the return was lower from that point on and by how much. I would like to see this in respect of the changing valuation levels too, not just one figure changing to another figure, because we both agree that valuation ch...

Hi hocus, A couple of long posts there from you. I think your weather analogy for SWR predictions was as master stroke. We should use that in the future. It is a very visual way of explaining the purpose and limitations. It will prove especially useful to new visitors who wish to join the discussion...

Ben, ben.. You're missing all the fun! Petey :shock: Wow, John You've been putting some extensive thought into this, eh? It will take me a read or two (or three or four) to absorb it and comment quasi-intelligently, but I wanted to say 'good work' before then! Good work! :)

John, I actually have a book out from the library called " Rainbow's End " all about the crash and the reasons for it. It will no doubt talk about unchecked margin borrowing, bankruptcy of individuals unable to make the margin calls, nor sell property as many were in the same position. Thi...

Ah. That makes sense then. Thank you for the clarification. Petey Are you saying that the withdrawal rate is 2% and not 4% in general or are you saying that like our previous discussion it varies depending on the level of overpricing It varies according to the level of overvalution. The 2 percent nu...

I thank you and I concur. I have just finished writing a reply which extends out your example of different valuations points on FIRE and major rises or drops after that. I found that you didn't include all possible scenarios and your analysis was getting blindsided as it was incomplete. I hope I was...

This is patently wrong and the opposite of what is true. (Explanation below) Higher initial valuations mean less safety during retirement, statistically, even when annualized returns are identical. If a high valuation reduces down to a more rational valuation over time, that doesn't necessarily crea...

Hocus, Are you saying that the withdrawal rate is 2% and not 4% in general or are you saying that like our previous discussion it varies depending on the level of overpricing to the mean P/E? For example: a stock portfolio priced at $200,000 sitting on a P/E of 28.2 (2x the mean average). This is 2%...

Hi Chips, I have Four Pillars arriving Friday in the mail. The intrinsic value on a P/E basis is in fact the average P/E ratio over 200 years of investing. So it in fact works along the lines you are happy to work within. I don't myself believe in Efficient Market Theory. EMT usually is associated w...

Chips, I have to totally disagree with you here. Lucking into the right result by excluding some data and still coming up okay isn't a good solution. When relying on the result to plan how much you need invested before FIRE in order to supply your annual spending budget, you need to know that the me...

<cough> Err. sorry? 8) Well I'll speak for myself when I say that almost all of the formulas went right over my head. The only possible way I might be able to understand them is if I see numbers in an example, with the example explained every single step along the way. Having said that, clearly four...

Hi, It is simply selling high and avoiding selling low by holding cash. It is not an attempt at forecasting, it just a realistically honest assessment of your net worth at that time (excluding out speculation in the pricing). Adjusting the valuation based on intrinsic valuation and not fairytale tem...

Sounds like you missed out something here. You're making the intercst mistakeTM. How would the radio host know if the portfolio was valued fairly or overvalued using a 4% withdrawal rate? You've said yourself, if the valuation is double the historical norm, the rate would halve from 4% to 2%. So if ...

Well you certainly win the award this month for the most inventive English! My proposal is to de-fluffify SWR calculations. See, the way you do it, I find that confusing. The rate moves about depending on the valuation at the time of FIRE. When you adjust the portfolio back down to intrinsic value, ...

Ataloss, I have in fact discussed matters relating to suggested asset allocation, cash buffers to prevent loss of value over sustainted dips in the market and various other issues. If the matter had been just valuation I would have simply said I felt portfolios should be calculated down to average P...

Perhaps this is true but only where you are willing to move your w/d rate up and down depending on the valuation. That approach isn't practical for most people trying to set a budget and know what their target sum is (valuation adjusted or not). In other words, it is no good being 2% at one point in...

Hi hocus, To appreciate your point, I would need to understand what calculation has been done to generate the 2% number from the inflated figures, and whether the same calculation could be applied on figures less inflated or even undervalued. I certainly apprecaite your point that the end figure is ...

It would produce the same end result, but it would seperate out corrected valuation from safe withdrawal calculation. As I mention to Ben, this has considerable benefits as most people are presumably out there working from wrong valuations (basically whatever number is detailed in their brokerage ac...

I concur. My point exactly. Petey I would say it is not a conservative viewpoint, simply a correct one....I think it is an important distinction. I agree. When you are purporting to rely on data to help you analyze a question, you must look at all the data that bears on that question to have any hop...

I do agree there, Ben. I think though that it is wrong to hide the new valuation in the calculation of the swr. You should first reach the right valuation. Then later determine a safe withdrawal rate. That calculation is completely seperate and is unaffected by whether the asset base is $100k or $1m...