post 10,000

raddr · Post by **raddr** » Fri Aug 22, 2003 1:06 pm

wanderer,

You're the voice of reason as always. Nice post.

The infusion of soft side folks needs to take place here not because this place is deficient but because it will make this place hum even more. For example, having raddr (just picking on him, no slight to others intended) here where only 100-200 people see him is like stashing the Mona Lisa in your attic. not only that, raddr will benefit, because these softer issues will get his creative computational juices flowing and we'll come up with another 50 ways to skin the FIRE cat/identify risks we haven't seen yet/become even more motivated, etc.

Thanks for the kind words. :oops:I think that you're right about this. As much as I like the nuts and bolts financial stuff, I do enjoy seeing a really well-crafted soft side post. You and hocus are masters of this. Sadly, hocus doesn't seem to write these kind of posts anymore but I would like to see them.

I hadn't really thought about it but I think you're also right about getting the juices flowing again. I think we need some posts that don't involve safe withdrawal rates or asset allocation for a change of pace. :wink:

ataloss · Post by **ataloss** » Sat Aug 23, 2003 3:42 am

some of those "soft posts" were probably a lot of work. Maybe we could repost some of the tmf ones (with the copyright holders permission :wink:)

[KenM] · Post by **[KenM]** » Sat Aug 23, 2003 10:54 pm

........all this 'soft" stuff....does that mean a big group hug? .......somehow most of the members of NFB seem too conservative for that :)

I tend to think that the FIRE board is more about Financial Independence than soft stuff. Should there be something like a "Life and Retirement" board ......... or wouldn't there be many posts? ...... just thinking aloud.

wanderer · Post by **wanderer** » Sat Aug 23, 2003 11:12 pm

I tend to think that the FIRE board is more about Financial Independence than soft stuff. Should there be something like a "Life and Retirement" board ......... or wouldn't there be many posts? ...... just thinking aloud.

an excellent rebuttal is the post that palavajjhala (sp?) just put up about happiness. Since almost no one disagrees that the SWR was no more than 4% (using std. allocation) in 2000, that means that you need at least 25X your living expenses. Get your mind around some of the ideas palavajjhala put up and you can understand why a) people kept their hands too close to the US LCG fire too long and b) they aren't perfectly happy living on lower amounts. Fix a) and b) and FIRE at a very young age becomes much more realistic. FIRE early enough and you might live a life where the life energy allocations are much more under your control and all sorts of alternative choices open up.

I continue to state my belief that the relationship is 90/10 emotions-psychology vs. financial-math in terms of determining FIRE-ability.

[KenM] · Post by **[KenM]** » Sun Aug 24, 2003 1:03 am

an excellent rebuttal is .....

Which bit of my somewhat ambiguous post were you rebutting? :)Perhaps all of it? :wink:

ChocoKitty likes the "soft" stuff and karma has said

When I get a chance, maybe I'll post more "soft" stuff on the FIRE board, if that's the right place for it

Perhaps the FIRE board sounds too "financial" and a "Life and Retirement" (or similar title) board might encourage people to post more "soft" stuff relevant to retirement .............. or again, perhaps not?

wanderer · Post by **wanderer** » Sun Aug 24, 2003 2:19 am

Which bit of my somewhat ambiguous post were you rebutting? Perhaps all of it?

Maybe 'rebuttal' wasn't the correct word. I'll let wordsmiths like yourself here sort that one out. However, I didn't find this statement (and the one that followed re: Life and Retirement) of yours the least bit ambiguous:

I tend to think that the FIRE board is more about Financial Independence than soft stuff.

Not that this is your position, kenm, but, from a pragmatic perspective, again, I submit that the financial thing is the skin of the apple. Practically a hand wave and an after thought. (That "fact" is something that causes me to chuckle when hocus says how much time has been wasted - because I can't think of a bigger time waster here than the SWR cluster ckuf.)

For me, it's the stuff bubbling underneath, the sorts of things that make generals in purple robes ride elephants over the Alps, that holds a lot more promise.

I just enjoy learning about personal finance and people here seem so inclined.

If there is some leadership, and a few more eyeballs, the softer topics will probably get a better airing. Unfortunately, those posts are more time consuming to write and require a community's agreement to support the people who negotiate that hard won ground.

hocus · Post by **hocus** » Sun Aug 24, 2003 10:45 am

That "fact" is something that causes me to chuckle when hocus says how much time has been wasted - because I can't think of a bigger time waster here than the SWR cluster ckuf.)

This is all so crazy.

The reason why I long identified you as my favorite FIRE poster is the emphasis you put on the soft side stuff, Wanderer. I don't know what post it is that you are referring to in which I said that something was a big time waster, but it is impossible for me to imagine that my reference was to soft side discussions--I love that stuff.

I'd bet $20 that any reference I made to time wasting was to SWR disucssions. The word game stuff and the ridicule stuff goes around and around in circles and never gets us anywhere.

I think the SWR stuff is of great importance, so we clearly disagree on that. But you will get no argument from me that it would be a good thing if the board spent a lot less time on SWR stuff and a lot more time on soft side stuff.

It doesn't have to be one or the other. I think that each community member should decide for himself or herself which sort of issue possesses the greatest appeal to him or her, and pursue those sorts of issues. In overall terms, however, I think there has been far too much focus on SWR issues thus far into the board's history and in particular far too much focus on the least constructive aspects of that debate.

That doesn't mean that we have not had some fantastic SWR threads. We have done some amazing work here on the hard side stuff. But I see no reason why the SWR discussions need to soak up all the oxygen in the room. I think it would be a encouraging sign to see the percentage of board posts devoted to SWRs drop dramatically in the months ahead. I think that would be just great.

It astounds me to think that you somehow have gotten the idea in your head that I think that this preoccupation with SWRs is a good thing or that discussions of the soft side are somehow a waste. Nothing could be farther from the truth. I like constructive SWR discussions. But I like constructive soft side discussions too. What is there not to like about them?

ataloss · Post by **ataloss** » Sun Aug 24, 2003 2:13 pm

This is probably what wanderer is referring to:

How many lost hours did BenSolar cause us with his idea to add little h's and f's to the letters SWR? Are there any "impressions" or "considerable feelings" as a result of that? Or are there only "impressions" and "considerble feelings" about posters who are proven right in the claims they make on behalf of the board community?
Hocus 8/17/03

That said, both raddr and BenSolar have made big mistakes in the course of this thing. The idea that <b<BenSolar was pushing for awhile, that we should put little "h's" and little "f's" in front of the capital letters "SWR" was a disaster. That lost us a lot of time. His intent was good. The initiative was a big mistake.
Hocus 7/27/03

I have coined a new term, the Historical Database Rate (HDBR) to draw attention to this distinction. This is essentially the same thing as the older term, the Historical Safe Withdrawal Rate (HSWR).
Jwr 8/8/03

Henceforth I will refer to this as the hdhswr (historically documented hypothetical safe withdrawal rate) since you won't let me call it the hswr.

ataloss 5/24

It appears to some of us that hdbr is the same as hswr and that the time wasted was due to hocus rather than bensolar

or maybe changing hswr to hdbr is one of those amazing advances in swr research and I am just not appreciating it

[KenM] · Post by **[KenM]** » Sun Aug 24, 2003 4:24 pm

I'll let wordsmiths like yourself here sort that one out

I'm not a very good wordsmith because obviously "ambiguous " was not the right word ...... "disjointed" or "rambling" perhaps? Also it would appear that I haven't conveyed properly what I meant to say....... so I'll try again :).

The FIRE board at NFB is in the "Personal Finance" section and is described as "Financial Independence/Retire Early -- Learn How!" . As a newcomer to NFB I wasn't sure if it was appropriate to post soft stuff on retirement which had no relevance to finance on the FIRE board but I've got used to it now. I'd like to see more soft stuff ......I was just wondering if a seperate board would encourage more of it ...... but only a minor point ........ :)

hocus · Post by **hocus** » Sun Aug 24, 2003 5:48 pm

It appears to some of us that hdbr is the same as hswr

The intercst study did not purport to determine either an hdbr or an hswr. It purported to determine the SWR.

We now have had reported to us three independent analyses of the data relating to the determination of the SWR for a high stock allocation at the top of the bubble. Each has shown that the number reported in the intercst study was off by a country mile.

The problem was that the methodology used in the intercst study is an invalid methodlogy for purposes of determination of the SWR, as defined in the study. It ignores a critical factor in the analysis, and thus always generates the wrong answer to the question posed.

wanderer · Post by **wanderer** » Sun Aug 24, 2003 10:10 pm

As a newcomer to NFB I wasn't sure if it was appropriate to post soft stuff on retirement which had no relevance to finance on the FIRE board but I've got used to it now. I'd like to see more soft stuff ......I was just wondering if a seperate board would encourage more of it ...... but only a minor point ........

Gosh, we have more boards than members. :wink:(just kidding). I tend to be a synthesist so I like to glop it all together in one place. Normally a problem finding stuff but with es' search function, not hard at all to find stuff.

Please post away in the 'soft core' vein, kenm. :wink:

ataloss · Post by **ataloss** » Mon Aug 25, 2003 3:24 am

The problem was that the methodology used in the intercst study is an invalid methodlogy for purposes of determination of the SWR, as defined in the study. It ignores a critical factor in the analysis, and thus always generates the wrong answer to the question posed.

your use of the term invalid requires explanation since it does not correspone to the usual use of the word, sorry to drag this over to town center but since the usual invalidity claim is being made here............
*****

Historical swr studies and inflation adjusted safe withdrawal rates

The rate is expressed relative to initial portfolio value. Withdrawals in subsequent years are adjusted upward for inflation.

There are two general approaches to estimating "safe" withdrawal rates from retirement portfolios.

Studies based on historical sequences of returns have looked at various portfolio compositions and based on the amount initially withdrawn have reported the probability of portfolio survival. (Example Trinity) or the maximum "100% Safe" withdrawal rate. (REHP) These studies have limitations. If planned withdrawals start at a period of overvaluation more extreme than occurring during the course of the study questions arise about the applicability of the historical swr. Interesting attempts to test the historical swr have included rearranging the yearly data, increasing the expense ratio to simulate possible lower future investment returns, and simply reducing "swr" in a linear fashion according to degree of overvaluation/ historical extremes.

Monte Carlo analysis allows computer simulation of safe withdrawal rates based on estimates of portfolio return and variability. One limitation of this type of study is that future portfolio returns and volatility are unknown.

Using a particular definition of "safe withdrawal rates" (swr) some people (mainly hocus) have argued that historically based swr analysis is invalid. Most people seem to use the term "safe withdrawal rates" as if it meant withdrawal rates which are safe. Hocus has a specialized meaning in mind:

Please explain how the Trinity study is invalid.

The Trinity study methodology does not take into account how the SWR changes with changes in valuation levels.
Hocus 6/3/03

And here by failure to account for changes in valuation, he means failure to explicitly include valuation in some sort of calculation.. Many of us, using the conventional meanings of words have disagreed.

I don't agree with this claim. In science of all sorts, researchers frequently chose to study one part of a problem and basically ignore everything else. I see it all the time in food and health studies. Just because a study doesn't present the whole picture doesn't mean it is invalid. Just that it is limited. Authors usually include some wiggle words to indicate that they haven't presented the entire picture. The REHP study does that. Bensolar 7/20/03

About the Trinity Study:
It shows what would have happened had you invested this way or that, in the past.
It doesn't make any claims about the future.
How can it possibly be "invalid"? (Unless, of course, their data was invalid.)

Are these also "invalid" studies?
http://home.golden.net/~pjponzo/sensible-1.gif
http://home.golden.net/~pjponzo/Losses-SPa.gif
Gummy 6/5/03

Further hocus on this matter:

The reason why I say that the 2.0 percent number is valid and the 2.3 percent number is valid, but the 4.0 percent number is invalid, is that the first two numbers both are the product of methodologies which consider the effect of changes in valuation, while the latter is not.
Hocus 7/19/03

Some of us wasted effort trying to tell hocus that changes in valuation occurred during the historical period and were implicit in the study. A waste of effort since he has defined valid studies as those that make explicitly use of valuation in some sort of calculation.

Some of us wanted to say that perhaps a study could be valid but less applicable to current circumstances. For example at the peak of the market bubble the market's p/e ratio was above the range that existed in the 1870-1970 period studied. Monte Carlo analysis using expected future returns suggested a lower swr. Wasted words since for hocus the "invalidity" of the study is definitional and does not depend in any way on the study actually giving a wrong or unreliable swr estimate. The study is invalid even for the 1870-1970 period where the withdrawal rate is know to have been safe. Hocus has also criticized the study for giving too high a withdrawal estimate and for causing "busted retirements" but I think it is important to understand that the invalidity claim if definitional and is not subject to disproof.

Until 7/21 I had assumed that hocus understood the Trinity/REHP approach and simply rejected the embedded inclusion of valuation preferring a calculation based on an explicit valuation factor. Then hocus revealed that he completely misunderstood the studies:

What the conventional analysis tells you, I believe, is the average SWR over a long period of time. If you properly calculated all the SWRs for each of the past 100 years, added them together, and then divideded by 100, I believe that the number you would get would be something close to 4. I guess it's good to know that number. But that number is not the SWR as defiined for purposes of SWR analysis.

and then look at this:

The one thing that distinguishes me from all others in this matter is that I am the only one who understood the realities of SWRs from the first day.

hocus Sun Aug 17

and

There may be some who do not possess a clear understanding of exactly how a SWR is defined in the studies ......... If there are genuine points of confusion, I am happy to help out.

hocus Sat July 26

Hocus prefers to call studies based on sequential historical data the "traditional method."

I thought this was an interesting scattergram of maximal withdrawal rates vs. P/e ratio:
http://rehphome.tripod.com/pestudy1.html
Apparently even devoted followers of the historical approach are aware that there is an association between valuation, investment results, and safe withdrawal rates.
(Thanks to Intercst and BenSolar)

Alternatives to this type of withdrawal include:
Annual withdrawal of a fixed proportion of the portfolio
Preservation of capital with spending dividends/ income
Multiple sub-portfolios/ dynamic asset allocation
sensible withdrawal rates
http://home.golden.net/~pjponzo/sensible_withdrawals.ht

There is an "official" swr definition on the NFB FIRE board but hocus defines swr in a somewhat different manner.

ChocoKitty · Post by **ChocoKitty** » Mon Aug 25, 2003 3:30 am

KenM wrote:
As a newcomer to NFB I wasn't sure if it was appropriate to post soft stuff on retirement which had no relevance to finance on the FIRE board but I've got used to it now. I'd like to see more soft stuff ......I was just wondering if a seperate board would encourage more of it ...... but only a minor point ........

I think that what I consider "soft stuff" may be different than what you view as soft stuff -- to me, the "soft stuff" is the foundation on which the numbers of FIRE is built. I think my view is shaped by my attempts to teach finance to other people; I can go over the numbers until I'm purple, but if I don't address their underlying emotional issues about money and work, the numbers won't do any good. How can you explain SWRs, for example, to someone who still can't mentally grasp the concept of FIRE in the first place? It's like the difference between knowing that you have to run 26.2 miles in a marathon and developing the mental toughness to do it. Most runners will tell you that the mental training ("soft") is as important, or even more important, than the physical ("hard") training.

One classic "soft stuff" book I recently read is "The Joy of Not Working." There is NO number crunching in that book, yet I found it valuable because it helped create that mental and emotional shift that embraces FIRE and keeps me motivated. John O. Andersen's essays are in the same vein.

Anyway, that's just my $0.02.

hocus · Post by **hocus** » Mon Aug 25, 2003 3:46 am

your use of the term invalid requires explanation since it does not correspone to the usual use of the word

It would help if someone had access to a textbook on how to perform statistical research. I would imagine that such a textbook would state requirements that must be followed by researchers seeking to have their studies recognized as "valid."

I will make an effort to find such a textbook when I have some time open up to me, perhaps early next year. I will put up a post at the SWR board at that time reporting on what I learn.

ataloss · Post by **ataloss** » Mon Aug 25, 2003 5:27 am

Hocus: I encourage you to read, let us know what you discover

ChocoKitty: I liked the "joy of not working."

wanderer · Post by **wanderer** » Tue Aug 26, 2003 12:26 am

WARNING: looong post:

I think that what I consider "soft stuff" may be different than what you view as soft stuff -- to me, the "soft stuff" is the foundation on which the numbers of FIRE is built. I think my view is shaped by my attempts to teach finance to other people;

When I enumerate the keys to FIRE, the first item is something along the lines of "a sufficiently motivating purpose". For me, these are the things that make me cry because I love them so much (or because it would be the worst thing, to me, to lose them). My health, my family, my friendship with my best friend, my friendship with collection of 'dads', my independence, my ability to tell my boss to stick it, my mind/curiosity, etc.

A lot of my motivators are "sappy". For example, we watched "Finding Nemo" on the flight over and the story revolves around a fish dad whose entire family (wife and 10,000 egglets, except one [Nemo]) get wiped out. It's heart wrenching, for this dad, as the dad tries to make his way back and find his son. At the end they reunite, but the father is quickly confronted with needing to let his son go do something dangerous. I don't know if I could do that, but maybe it's necessary. It made me cry.

Anyway, it seems to me that's the way life is, for me, at least. You squander time and opportunities. Then you figure things out somewhat and pray like mad that you have enough time to really enjoy it sufficiently. You just don't want to let it go. Which makes you more vulnerable because that's the thing that people could use to hurt you.

Too often, it seems, we figure out how to love/appreciate those close to us, and ourselves and, one day, at the breakfast table, we have a heart attack, turn blue and expire in our Rice Krispies. Or cancer ravages us. Or, or, or...

So now I enjoy my life a lot. My only regret is that I didn't figure "it" out sooner. I just wish I had more 'moments'. This author put it well, i thought:

http://www.bobdevlin.com/erma_bombeck.html

The last bit, in particular: But mostly, given another shot at life, I would seize every minute...look at it and really see it...live it...and never give it back. Part of how I lost a considerable amount of weight (20kg) was that I made a list of consequences of my over eating and one of them was that I didn't experience emotions richly enough. Eating 'anesthetized' me. To anger and boredom and sadness and tension. Especially sadness. Now I find that I get sad, and really feel it, and then I stand on the other side and the sadness just sort of hangs there, like a curtain, that I can look through or like a blob off to the side. (The subject of "Tuesdays with Morrie" described the pain of his degenerative illness similarly.) And having 'stood outside' of my pain, I feel immensely calmer and more carefree, sooner. As a result I think I 'seize moments' much more than I used to.

but i digress... :wink:

aedelswil2429 · Post by **aedelswil2429** » Tue Aug 26, 2003 12:37 am

wanderer,

thank you for this post, this rings very true, both thinking and above all in my guts.

take care

philipp

ataloss · Post by **ataloss** » Tue Aug 26, 2003 7:50 am

good post W

I recently read How to Want What you Have:Discovering the Magic and Grandeur of Ordinary Existence by Timothy Miller. Hard to describe but I thought there was a lot to think about (the book was the source for my susan Ertz quote)

wanderer · Post by **wanderer** » Tue Aug 26, 2003 12:49 pm

I'm Paul McCartney and I just wrote a great song called "Hey Jude" and can't wait to share it with people. But there's this guy in the back of the room who keeps calling out for me to play "Can't Buy Me Love." What a drag.

Your analogy fails. You're actually Bob Dylan. You were hit on the head with a frying pan and now insist on jiggling your noggin like a bobble head doll, spouting highly debatable riffs as 'fact' and playing "Jet" or "Junior's Farm" instead of reprising more worthy works like "Highlands" or "Tangled Up in Blue" or "Love Minus Zero/No Limit".