I can't believe you didn't mention a real estate allocation!
![Laughing :lol:](./images/smilies/icon_lol.gif)
That's all you need to make this work.
BB
![Cool 8)](./images/smilies/icon_cool.gif)
hix9 wrote: on the other hand if the comment re: speculative return/metric contraction was the basis for some sort of optimization strategy i guess i can see the origin of the (pre-emptive?) critique but if a switching technique was presented by jwr i missed it.
beachbumz wrote: As far as would anyone invest 80% in something that they think will drop 40 to 70% at some point in the next 10 years, I think the answer is a pretty easy no. In fact if you read the original post in this thread, JWR was discussing a 40% TIPS allocation as an alternative to Petey's 20% scenario example. (Based on past posts, I personally don't think he would put 60% in stocks right now.)
Just my 2 cents...
Beachbumz![]()
ES wrote: Greetings John :)Peteyperson's original idea was to use up his entire TIPS holdings if necessary. If the bear market were to continue, he still would be satisfied. He would have come through the first ten years OK. [But not everyone would agree. That is the reason that I have considered other ladder lengths.]
Ok ten years. Thanks John. That clears things up a bit for me. But what if the bear were really severe? Then all the TIPS would be gone and you'd still be bleeding all over the place. :shock:I know this is a severe example but I always like to consider the worst case scenario. I would not want to see the bond portion of my port evaporate and still be leaking market stuff after it happened. I'm just thinking out loud a bit.
I would think a rebalancing DCA approach would come out well ahead in such a scenario. What do you think?
JWR1945 wrote:beachbumz wrote: As far as would anyone invest 80% in something that they think will drop 40 to 70% at some point in the next 10 years, I think the answer is a pretty easy no. In fact if you read the original post in this thread, JWR was discussing a 40% TIPS allocation as an alternative to Petey's 20% scenario example. (Based on past posts, I personally don't think he would put 60% in stocks right now.)
Just my 2 cents...
Beachbumz![]()
The answer is far from an easy no because it is not my decision.
It can be an easy no for me
But I don't insist that anybody follow my advice. Unclemick has the right idea. Take advantage of what you find useful and make your own decisions.
From our investigations, rebalancing adds nothing except in times of high valuations. And even then, it adds very little. The big payoff is from sitting on the sidelines, waiting for conditions to improve. TIPS and ibonds make this possible. Otherwise, we would have to pay a lot of attention to inflation.
There was also some talk about tax consequences. With today's low rates, they are not a big deal (amazingly). Who knows how long that will last, but in tax planning you can only plan based on current law and adjust as changes are made.
At the old SWR Research Group discussion board, we successfully identified and developed three major approaches for retirees with stocks at today's valuations. They are allocation switching, dividend-based strategies and our TIPS baselines.
I've never been a fan of sitting on the sidelines because no one knows what the market will do.
Cos they mess with the numbers. Period. There is no other reasonable explanation! If they were not messing with the numbers and yet the basket of goods were not going up in the same manner then they are calculating their math wrong.. Pretty simple.
So yes, it is a con job. The inflation figure put out does not match how fast goods in the shops are going up by, which defeats the object of the whole exercise! Ergo, I bump my inflation estimate by 1% from the UK gov't published numbers. I shouldn't have to guess at this because the numbers are a sham! Public information should be helpful
The big payoff is from sitting on the sidelines, waiting for conditions to improve. TIPS and ibonds make this possible. Otherwise, we would have to pay a lot of attention to inflation.
ben wrote: I am also not certain that waiting for a decade will ensure that the dividends get to 5-6%? What do I do if no real change in valuations or divs? Wait out another 10 years burning through TIPs?
Like petey and Bill Gross I also believe the official nos are of with about 1%. How does that affect my real ending nos living of TIPs?
But JWR; maybe we can run some nos on TIPs today combined with DVY in a 50/50% portfolio? I am guessing at a FSWR of a bit less than 4% but not much.
Cheers!