For those using the PP or GB in retirement

General Discussion on the Permanent Portfolio Strategy

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murphy_p_t
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Re: For those using the PP or GB in retirement

Post by murphy_p_t » Sat Oct 23, 2021 12:54 pm

seajay wrote:
Sat Oct 23, 2021 8:06 am
For the method I outlined earlier and from 1900 ...

Image

4% was more a PWR, and in one case you ended with over seven times the inflation adjusted start date portfolio value after 4% SWR withdrawals (a additional 6,7% annualized real on top).

BUT that did direct towards around a 75/25 stock/Precious Metal broad average (since 1933).

Fundamentally stocks are leveraged, of the order $30T cap versus $9T for corporate bond cap. Leverage broadly just scales volatility, not rewards, so its reasonable to deleverage i.e. allocate $30 to stocks, $9 to corporate bonds, which with rounding is close to 75/25 stock/bond proportions. Corporate bonds pay higher premiums reflective of their default rate, so 10 year Treasury might be substituted in instead. Or even gold (or silver).

Mix in some averaging such as two timepoint entry to avoid loading fully in at the worst possible start date, and some relative valuation ... and overall rewards at least historically were satisfactory (good chance of your money outliving you).

Silver was used in the above on the grounds of the US outlawing investment gold between 1940's and 1970's. Outside of that and where investment gold was permitted it worked to similar effect.

To reiterate that is based on the assumption that pre 1933 when on the gold standard investors might have preferred to hold just bonds (T-Bills/whatever), but where during WW1 years the investor might have rotated into silver. From 1933 the relative Dow/Gold ratio directed the amount of PM to start each year with (relative valuation).
Seajay... Very interesting concept. I was recently thinking of deviating from the pp in a direction like this.

Can you include a chart showing percent PM versus year?

Also, what are the units in your first chart? Annualized real return?
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Re: For those using the PP or GB in retirement

Post by mathjak107 » Sat Oct 23, 2021 12:54 pm

in the wrong sequence the best of returns will fail .

drawing money out of our nest egg changes the results of even the biggest bull market returns . drawing out money is no different in flat or down markets to a trader having a string of loosing trades. the end result is the same.

while the 17 year period of 1987 to 2003 had the s&p averaging over 13% a year the returns a retiree saw werent even close to that because of the sequence in which the gains and losses came.

three years of negative returns for retires drawing out money right at the beginning negated one of the greatest bull markets ever.

they took a 100k portfolio and an almost 14% average return for 17 years and ran a few different sequence simulations on it.

using the rule of thumb of having an average long term return of 7% from a 50/50 mix which would allow 4% to be drawn and 3% to grow the portfolio by inflation they increased the withdrawl rate to match an almost 14% return and 4% inflation . they left 4% to grow the nest egg by the inflation rate and in this case were able to take a 10% withdrawl rate to keep the same ratio.

the results were mind blowing.

the balance ranged from a high of 76,629 left over to a low of minus 187,606 depending on the sequence of gains and losses.
.
thats amazing, because the return was a whopping average of almost 14% a year over that time frame and the only thing they changed was the order of the actual gains and losses.

it shows you that besides market rate risk and interest rate risk the biggest risk we take of all is sequence risk. it also shows you there is no such thing as a long term average return thats meaningful when it comes to the de-accumulation stage of our lives.

looking at past performance of funds and seeing the 6 % or 10% average return for a 10 year period is meaningless for predicting how you may do going forward. you cant say if i had this fund the last decade i would have been just fine. nope ,the order of events happening may still have wiped you out even though the average return says you should have been able to pull 4% a year and had more now then you started with.

if only it was that easy .
Last edited by mathjak107 on Sat Oct 23, 2021 2:06 pm, edited 1 time in total.
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Re: For those using the PP or GB in retirement

Post by seajay » Sat Oct 23, 2021 1:15 pm

murphy_p_t wrote:
Sat Oct 23, 2021 12:53 pm
seajay wrote:
Sat Oct 23, 2021 8:06 am
For the method I outlined earlier and from 1900 ...

Image

4% was more a PWR, and in one case you ended with over seven times the inflation adjusted start date portfolio value after 4% SWR withdrawals (a additional 6,7% annualized real on top).

BUT that did direct towards around a 75/25 stock/Precious Metal broad average (since 1933).

Fundamentally stocks are leveraged, of the order $30T cap versus $9T for corporate bond cap. Leverage broadly just scales volatility, not rewards, so its reasonable to deleverage i.e. allocate $30 to stocks, $9 to corporate bonds, which with rounding is close to 75/25 stock/bond proportions. Corporate bonds pay higher premiums reflective of their default rate, so 10 year Treasury might be substituted in instead. Or even gold (or silver).

Mix in some averaging such as two timepoint entry to avoid loading fully in at the worst possible start date, and some relative valuation ... and overall rewards at least historically were satisfactory (good chance of your money outliving you).

Silver was used in the above on the grounds of the US outlawing investment gold between 1940's and 1970's. Outside of that and where investment gold was permitted it worked to similar effect.

To reiterate that is based on the assumption that pre 1933 when on the gold standard investors might have preferred to hold just bonds (T-Bills/whatever), but where during WW1 years the investor might have rotated into silver. From 1933 the relative Dow/Gold ratio directed the amount of PM to start each year with (relative valuation).
Seajay... Very interesting concept. I was recently thinking of deviating from the pp in a direction like this.

Can you include a chart showing percent PM versus year?

Also, what are the units in your first chart?
Units in the first chart are multiples of original inflation adjusted start date amount remaining after 30 years, so 1 = 100% of the inflation adjusted original amount, 2 = twice as much ...etc.

Year start % PM ...
Image

Dow/Gold ratio data (year start values)

Code: Select all

1933	2.9
1934	3.1
1935	3.0
1936	4.1
1937	5.1
1938	3.5
1939	4.4
1940	4.3
1941	3.8
1942	3.1
1943	3.4
1944	3.7
1945	4.2
1946	5.2
1947	4.6
1948	4.2
1949	4.2
1950	4.9
1951	5.8
1952	6.7
1953	7.5
1954	7.9
1955	11.5
1956	13.9
1957	14.2
1958	12.4
1959	16.6
1960	19.3
1961	16.9
1962	20.6
1963	18.4
1964	21.6
1965	24.7
1966	27.3
1967	22.2
1968	25.5
1969	22.5
1970	22.7
1971	22.4
1972	20.5
1973	15.8
1974	7.6
1975	3.3
1976	6.1
1977	7.5
1978	5.0
1979	3.6
1980	1.6
1981	1.6
1982	2.2
1983	2.3
1984	3.3
1985	3.9
1986	4.7
1987	4.9
1988	4.0
1989	5.3
1990	6.9
1991	6.7
1992	9.0
1993	9.9
1994	9.6
1995	10.0
1996	13.2
1997	17.4
1998	27.3
1999	31.9
2000	39.5
2001	39.6
2002	36.2
2003	24.3
2004	25.1
2005	24.6
2006	20.9
2007	19.6
2008	15.9
2009	10.1
2010	9.4
2011	8.2
2012	7.8
2013	7.9
2014	13.8
2015	14.9
2016	16.4
2017	17.2
2018	19.1
2019	18.3
2020	18.9
2021	16.3

Year start Dow/Gold ratio

Stochastic of 1 lower, 50 upper
( current - lower ) / ( upper - lower )
So yearly value - 1 divided by 49
i.e. year start 2021 Dow/Gold ratio 16.3 so 15.3 / 49 = 0.31 (31% PM, so 69% stock).

Given a indicator of %PM, then on the stock side let Buffett take care of appropriate %cash reserves ...

Code: Select all

		Inflation	BRK		Gold		Dow/Gold %PM	Portfolio
1986	1.10%	14.17%	18.96%	4.7		7.6%	14.5%
1987	4.43%	4.61%	24.53%	4.9		8.0%	6.2%
1988	4.42%	59.32%	-15.26%	4		6.1%	54.8%
1989	4.65%	84.57%	-2.84%	5.3		8.8%	76.9%
1990	6.11%	-23.05%	-3.11%	6.9		12.0%	-20.6%
1991	3.06%	35.58%	-8.56%	6.7		11.6%	30.4%
1992	2.90%	29.83%	-5.73%	9		16.3%	24.0%
1993	2.75%	38.94%	17.68%	9.9		18.2%	35.1%
1994	2.67%	24.96%	-2.17%	9.6		17.6%	20.2%
1995	2.54%	57.35%	0.98%	10.1		8.4%	47.0%
1996	3.32%	6.23%	-4.59%	13.2		24.9%	3.5%
1997	1.70%	34.90%	-21.41%	17.4		33.5%	16.1%
1998	1.61%	52.17%	-0.83%	27.3		53.7%	23.7%
1999	2.68%	-19.86%	0.85%	31.9		63.1%	-6.8%
2000	3.39%	26.56%	-5.44%	39.5		78.6%	1.4%
2001	1.55%	6.48%	0.75%	39.6		78.8%	2.0%
2002	2.38%	-3.77%	25.57%	36.2		71.8%	17.3%
2003	1.88%	15.81%	19.89%	24.3		47.6%	17.8%
2004	3.26%	4.33%	4.65%	25.1		49.2%	4.5%
2005	3.42%	0.82%	17.77%	24.6		48.2%	9.0%
2006	2.54%	24.11%	23.20%	20.9		40.6%	23.7%
2007	4.08%	28.74%	31.92%	19.6		38.0%	29.9%
2008	0.09%	-31.78%	4.32%	15.9		30.4%	-20.8%
2009	2.72%	2.69%	25.04%	10.1		18.6%	6.8%
2010	1.50%	21.42%	29.24%	9.4		17.1%	22.8%
2011	2.96%	-4.73%	8.93%	8.2		14.7%	-2.7%
2012	1.74%	16.82%	8.26%	7.8		13.9%	15.6%
2013	1.50%	32.70%	-27.33%	7.9		14.1%	24.2%
2014	0.76%	27.04%	0.12%	13.8		26.1%	20.0%
2015	0.73%	-12.48%	-12.11%	14.9		28.4%	-12.4%
2016	2.07%	23.42%	8.10%	16.4		31.4%	18.6%
2017	2.11%	21.91%	12.66%	17.2		33.1%	18.9%
2018	1.91%	2.82%	-0.93%	19.1		36.9%	1.4%
2019	2.29%	10.98%	18.43%	18.3		35.3%	13.6%
2020	1.36%	2.42%	24.61%	18.9		36.5%	10.5%
								16.3		31.2%	
D1984
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Re: For those using the PP or GB in retirement

Post by D1984 » Sat Oct 23, 2021 6:50 pm

seajay wrote:
Sat Oct 23, 2021 1:15 pm
murphy_p_t wrote:
Sat Oct 23, 2021 12:53 pm
seajay wrote:
Sat Oct 23, 2021 8:06 am
For the method I outlined earlier and from 1900 ...

Image

4% was more a PWR, and in one case you ended with over seven times the inflation adjusted start date portfolio value after 4% SWR withdrawals (a additional 6,7% annualized real on top).

BUT that did direct towards around a 75/25 stock/Precious Metal broad average (since 1933).

Fundamentally stocks are leveraged, of the order $30T cap versus $9T for corporate bond cap. Leverage broadly just scales volatility, not rewards, so its reasonable to deleverage i.e. allocate $30 to stocks, $9 to corporate bonds, which with rounding is close to 75/25 stock/bond proportions. Corporate bonds pay higher premiums reflective of their default rate, so 10 year Treasury might be substituted in instead. Or even gold (or silver).

Mix in some averaging such as two timepoint entry to avoid loading fully in at the worst possible start date, and some relative valuation ... and overall rewards at least historically were satisfactory (good chance of your money outliving you).

Silver was used in the above on the grounds of the US outlawing investment gold between 1940's and 1970's. Outside of that and where investment gold was permitted it worked to similar effect.

To reiterate that is based on the assumption that pre 1933 when on the gold standard investors might have preferred to hold just bonds (T-Bills/whatever), but where during WW1 years the investor might have rotated into silver. From 1933 the relative Dow/Gold ratio directed the amount of PM to start each year with (relative valuation).
Seajay... Very interesting concept. I was recently thinking of deviating from the pp in a direction like this.

Can you include a chart showing percent PM versus year?

Also, what are the units in your first chart?
Units in the first chart are multiples of original inflation adjusted start date amount remaining after 30 years, so 1 = 100% of the inflation adjusted original amount, 2 = twice as much ...etc.

Year start % PM ...
Image

Dow/Gold ratio data (year start values)

Code: Select all

1933	2.9
1934	3.1
1935	3.0
1936	4.1
1937	5.1
1938	3.5
1939	4.4
1940	4.3
1941	3.8
1942	3.1
1943	3.4
1944	3.7
1945	4.2
1946	5.2
1947	4.6
1948	4.2
1949	4.2
1950	4.9
1951	5.8
1952	6.7
1953	7.5
1954	7.9
1955	11.5
1956	13.9
1957	14.2
1958	12.4
1959	16.6
1960	19.3
1961	16.9
1962	20.6
1963	18.4
1964	21.6
1965	24.7
1966	27.3
1967	22.2
1968	25.5
1969	22.5
1970	22.7
1971	22.4
1972	20.5
1973	15.8
1974	7.6
1975	3.3
1976	6.1
1977	7.5
1978	5.0
1979	3.6
1980	1.6
1981	1.6
1982	2.2
1983	2.3
1984	3.3
1985	3.9
1986	4.7
1987	4.9
1988	4.0
1989	5.3
1990	6.9
1991	6.7
1992	9.0
1993	9.9
1994	9.6
1995	10.0
1996	13.2
1997	17.4
1998	27.3
1999	31.9
2000	39.5
2001	39.6
2002	36.2
2003	24.3
2004	25.1
2005	24.6
2006	20.9
2007	19.6
2008	15.9
2009	10.1
2010	9.4
2011	8.2
2012	7.8
2013	7.9
2014	13.8
2015	14.9
2016	16.4
2017	17.2
2018	19.1
2019	18.3
2020	18.9
2021	16.3

Year start Dow/Gold ratio

Stochastic of 1 lower, 50 upper
( current - lower ) / ( upper - lower )
So yearly value - 1 divided by 49
i.e. year start 2021 Dow/Gold ratio 16.3 so 15.3 / 49 = 0.31 (31% PM, so 69% stock).

Given a indicator of %PM, then on the stock side let Buffett take care of appropriate %cash reserves ...

Code: Select all

		Inflation	BRK		Gold		Dow/Gold %PM	Portfolio
1986	1.10%	14.17%	18.96%	4.7		7.6%	14.5%
1987	4.43%	4.61%	24.53%	4.9		8.0%	6.2%
1988	4.42%	59.32%	-15.26%	4		6.1%	54.8%
1989	4.65%	84.57%	-2.84%	5.3		8.8%	76.9%
1990	6.11%	-23.05%	-3.11%	6.9		12.0%	-20.6%
1991	3.06%	35.58%	-8.56%	6.7		11.6%	30.4%
1992	2.90%	29.83%	-5.73%	9		16.3%	24.0%
1993	2.75%	38.94%	17.68%	9.9		18.2%	35.1%
1994	2.67%	24.96%	-2.17%	9.6		17.6%	20.2%
1995	2.54%	57.35%	0.98%	10.1		8.4%	47.0%
1996	3.32%	6.23%	-4.59%	13.2		24.9%	3.5%
1997	1.70%	34.90%	-21.41%	17.4		33.5%	16.1%
1998	1.61%	52.17%	-0.83%	27.3		53.7%	23.7%
1999	2.68%	-19.86%	0.85%	31.9		63.1%	-6.8%
2000	3.39%	26.56%	-5.44%	39.5		78.6%	1.4%
2001	1.55%	6.48%	0.75%	39.6		78.8%	2.0%
2002	2.38%	-3.77%	25.57%	36.2		71.8%	17.3%
2003	1.88%	15.81%	19.89%	24.3		47.6%	17.8%
2004	3.26%	4.33%	4.65%	25.1		49.2%	4.5%
2005	3.42%	0.82%	17.77%	24.6		48.2%	9.0%
2006	2.54%	24.11%	23.20%	20.9		40.6%	23.7%
2007	4.08%	28.74%	31.92%	19.6		38.0%	29.9%
2008	0.09%	-31.78%	4.32%	15.9		30.4%	-20.8%
2009	2.72%	2.69%	25.04%	10.1		18.6%	6.8%
2010	1.50%	21.42%	29.24%	9.4		17.1%	22.8%
2011	2.96%	-4.73%	8.93%	8.2		14.7%	-2.7%
2012	1.74%	16.82%	8.26%	7.8		13.9%	15.6%
2013	1.50%	32.70%	-27.33%	7.9		14.1%	24.2%
2014	0.76%	27.04%	0.12%	13.8		26.1%	20.0%
2015	0.73%	-12.48%	-12.11%	14.9		28.4%	-12.4%
2016	2.07%	23.42%	8.10%	16.4		31.4%	18.6%
2017	2.11%	21.91%	12.66%	17.2		33.1%	18.9%
2018	1.91%	2.82%	-0.93%	19.1		36.9%	1.4%
2019	2.29%	10.98%	18.43%	18.3		35.3%	13.6%
2020	1.36%	2.42%	24.61%	18.9		36.5%	10.5%
								16.3		31.2%	
A couple of quick questions:

1. In your 1900-present return chart did you use silver for 1914-1918 (or perhaps 1914-1919) or did you use T-Bills? If you used silver during the inflationary WWI years but then DIDN'T use it during the deflationary mid-year 1920 through late 1920s period then this is kind of "loading the dice" a bit and overstating portfolio returns for the whole period 1914-1929.

2. Did you use silver for 1933 or gold?

3. Did you stop using silver in 1971, 1972, 1973, 1974, or at the beginning of 1975? In other words, what year did you start using gold in the portfolio in lieu of silver? Or did you just always use silver from 1933 onward until today and never use gold?

4. While I personally have Berkshire annual returns back to 1964 and Buffett Partnership (LP) returns back to 1957 for before that if needed for backtesting something like this I do have to ask....don't you think it is a bit of a survivorship bias stretch to use only Berkshire as the "stock" portion of the holdings? One, not everyone knew about Warren Buffett and Berkshire Hathaway; he wasn't nearly as famous as he is now until (arguably) the mid-1980s; two, Buffet's returns from, say, 1957 to 1995 or so are unlikely to be repeated for several reasons (first, in the very early years of Buffet's investing career--say the late 50s to the mid-1970s--stocks were a lot cheaper and lower PE than they are now; second, from the mid-60s to the mid-90s Berkshire itself was a good bit smaller than today and thus could deploy its capital more nimbly into potentially higher returning smaller and midcap issues rather than only being able to focus on large caps like today's Berkshire is forced to do when it wants to acquire a company; and third, eventually Buffett--and for that matter Munger--will be dead and thus Berkshire won't have their investment expertise any more); three, using only Berkshire doesn't include the many insurance or reinsurance or holding companies that weren't nearly as successful as Berkshire Hathaway was (i.e. classic survivorship bias). FWIW I do think Berkshire will continue to beat the market over the long-run; using interest-free insurance premium float to buy good, stable, richly cash-flowing companies is an excellent business strategy.....I just don't think it will beat it by anywhere near the 8 or 9% annually on average that Buffett has beaten the market by since he started investing (indeed, as per Warren Buffett's own admission his returns over the last 20-25 years or so are nowhere near what he was able to achieve in Berkshire's earlier days).
Last edited by D1984 on Sun Oct 24, 2021 9:41 am, edited 1 time in total.
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Re: For those using the PP or GB in retirement

Post by mathjak107 » Sun Oct 24, 2021 3:59 am

Warren buffet was great in the 1980s and 1990s but he really lost his touch the last two decades as a simple s&p fund beat him not to mention will danoff blew Berkshire away without much added risk..my contra fund ran circles around Berkshire over the years
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Re: For those using the PP or GB in retirement

Post by seajay » Sun Oct 24, 2021 4:02 am

As its yearly data I assumed that the changes for WW1 were made in the year following the start of a event and ended in the year following the end of the event, so for WW1 1915 to 1918 inclusive years holding silver. For 1933 I assumed given the April 1933 executive order 'outlawing' investment gold that the investor rotated into silver from the start of that year being the closer rather than end of year. More ideally I'd like to have used actual intra-year dates for such changes but only have yearly granularity data available.

In that data/chart I assumed silver was held to date rather than rotating into gold. In other cases I have rotated into gold from 1976 i.e. the start of year following it becoming legal to hold again and the broad outcome (risk/reward) were very similar.

I agree about BRK, pretty much a general sampled index nowadays with insurance arm/risk strapped on, but he holds varying levels of cash so is also somewhat a stock/cash position that alongside also holding some PM is a nice combination. Risk/reward nowadays isn't really worth it, excepting perhaps if you might otherwise be paying 30% dividend withholding taxes that BRK avoids in paying no dividends. A straight 75/25 SPY/T-Bills might be a reasonable choice IMO, as stocks are leveraged via corporate bonds/debt and leverage just broadly scales volatility not reward. Of the order $30T stock cap, $9T corporate bond cap, so $30 stock/$9 bonds with some rounding is 75/25. On that basis with the stochastic suggesting 31% PM (gold), leaving 69% for stock where if held via 75/25 stock/bond exposure = 31/52/17 gold/stock/bonds from the start of 2021 that up to the end of September was up 4.8% but relatively lagging all-stocks 15.1% gain..

There are other alternatives that might be utilized to more dynamically identify appropriate amounts of stock/bonds each year such as PE based, or Robert Lichello's AIM ...etc. Like with using stochastic of Dow/Gold for identifying gold weighting that might be better than just blindly allocating fixed amounts no matter what the circumstances at the time. For me the indications are that applying reasoned adjustments broadly lowered risk/uplifted SWR.
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Re: For those using the PP or GB in retirement

Post by seajay » Sun Oct 24, 2021 4:23 am

The objective I have in mind is not directed towards maximizing rewards but rather minimizing risk (uplift of SWR). The worst case SWR's were improved by averaging, such as not loading all-in at the worst possible start dates but rather half in at start of year, half at end of year. Combined with relative valuations measures/methods such as Dow/Gold stochastic (and maybe others such as PE based/whatever). A general smoothing/averaging type objective that in improving the worst cases improves the SWR.

Many target having accumulated enough for a 4% SWR, 25 times yearly spending before retiring. A asset that provides a little over 1.3% real consistently results in a successful 30 year 4% SWR. Even a consistent 0% real has 4% last 25 years, sees a 65 year old through to 90 and more probably outlives them. Objectives to maximize rewards potentially leaves a massive legacy for others at greater risk to oneself. Better to be selfish and protect ones own self interest as likely the legacy might still be pretty good anyway.

There is no single consistently reliable/safe asset and in the absence of such using diversification, averaging and some reasoned dynamics such as relative valuation adjustments is appropriate. Ben Graham suggested 50/50 stock/bonds for most as the simplest choice, but did also suggest that could be varied between 25/75 and 75/25 according to valuations.
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Re: For those using the PP or GB in retirement

Post by mathjak107 » Sun Oct 24, 2021 5:01 am

Unless you never have a losing year and never get a change in inflation your thinking zero return can be adjusted for inflation and last 25 years is false..

It is a calculation that is really meaningless in the real world as sequence risk and inflation will make that untrue

zero growth and 2% inflation over 30 years and a 4% inflation adjusted draw has a zero percent success rate


FIRECalc looked at the 91 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 91 cycles. The lowest and highest portfolio balance at the end of your retirement was $-368,058 to $1,000,000, with an average at the end of $-368,058. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

Since you elected the "crystal ball" option for every year, every year will have succeeded or failed, so it is 0% or 100%. FIRECalc found that 91 cycles failed -- the portfolio was depleted before the end of the 30 years -- for a success rate of 0%
Last edited by mathjak107 on Sun Oct 24, 2021 3:04 pm, edited 1 time in total.
Kbg
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Re: For those using the PP or GB in retirement

Post by Kbg » Sun Oct 24, 2021 9:50 am

I find this to be a really good site on SWR

https://earlyretirementnow.com/

Great thread...worthy of the old days.
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Re: For those using the PP or GB in retirement

Post by murphy_p_t » Thu Nov 11, 2021 11:18 pm

Seajay wrote..."Start of 2021 and the Dow/Gold was at 16.3 which my relative valuation method suggests a 31% PM weighting. For that I use a simple stochastic with 1.0 lower, 50 upper i.e. (current - lower ) / ( upper - lower ) = ( 16.3 - 1 ) / ( 50 - 1 ) = 0.31 or 31% PM (gold), and hence 69% stock. Back in 1980 when Dow/Gold was 1.0 that would have indicated 0% PM. In 2000 when the Dow/Gold was at 40 that indicated 80% PM, 20% gold."

Following a similar method for dow/silver... i eyeballed the chart... I'm guessing we'd be at 90% silver, 10% stocks?

Maybe I'm just trying to justify loading up on precious metal miners, having seen many of them jump between five and 10% today.
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Re: For those using the PP or GB in retirement

Post by seajay » Fri Nov 12, 2021 7:20 am

murphy_p_t wrote:
Thu Nov 11, 2021 11:18 pm
Seajay wrote..."Start of 2021 and the Dow/Gold was at 16.3 which my relative valuation method suggests a 31% PM weighting. For that I use a simple stochastic with 1.0 lower, 50 upper i.e. (current - lower ) / ( upper - lower ) = ( 16.3 - 1 ) / ( 50 - 1 ) = 0.31 or 31% PM (gold), and hence 69% stock. Back in 1980 when Dow/Gold was 1.0 that would have indicated 0% PM. In 2000 when the Dow/Gold was at 40 that indicated 80% PM, 20% gold."

Following a similar method for dow/silver... i eyeballed the chart... I'm guessing we'd be at 90% silver, 10% stocks?

Maybe I'm just trying to justify loading up on precious metal miners, having seen many of them jump between five and 10% today.
I'm seeing more like a 2400 prior high, 24 low (approx) and 1500 recent. Simplistic stochastic (given the low is just 24 i.e. near zero) is current / high = 1500 / 2400 = 62% silver (so 38% stock).

For gold its more like 20 current, 40 high = 50% gold (50% stock). 50/50 blend that with bonds, perhaps holding a 50/50 STT/LTT barbell instead of a 10 year bullet and :)
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Re: For those using the PP or GB in retirement

Post by murphy_p_t » Fri Nov 12, 2021 10:17 am

Can we call this the Seajay portfolio?

Or has it been studied and commented on extensively by others?
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Re: For those using the PP or GB in retirement

Post by I Shrugged » Fri Nov 12, 2021 10:59 am

Just read a WSJ (I think) article saying that the backtests/math suggest that SWR going forward is about 3.3%, down from 4. Sorry I don't have the link handy.
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Re: For those using the PP or GB in retirement

Post by Xan » Fri Nov 12, 2021 11:09 am

I Shrugged wrote:
Fri Nov 12, 2021 10:59 am
Just read a WSJ (I think) article saying that the backtests/math suggest that SWR going forward is about 3.3%, down from 4. Sorry I don't have the link handy.
The 4% Retirement Rule Is in Doubt. Will Your Nest Egg Last?

Can anybody read that or is it paywalled?

It seems to be based on this MorningStar report:
https://www.morningstar.com/lp/the-stat ... ent-income
which is definitely paywalled. It's only an analysis of half-stock, half-bond portfolios, and comes up with 3.3%.
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Re: For those using the PP or GB in retirement

Post by Mark Leavy » Fri Nov 12, 2021 11:35 am

Xan wrote:
Fri Nov 12, 2021 11:09 am
Can anybody read that or is it paywalled?
It is paywalled.

Here's a link to the text.

The trick is to take the WSJ url, run it through an URL shortener, and then extract the text via outline.
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Re: For those using the PP or GB in retirement

Post by flyingpylon » Fri Nov 12, 2021 3:12 pm

Mark Leavy wrote:
Fri Nov 12, 2021 11:35 am
Xan wrote:
Fri Nov 12, 2021 11:09 am
Can anybody read that or is it paywalled?
It is paywalled.

Here's a link to the text.

The trick is to take the WSJ url, run it through an URL shortener, and then extract the text via outline.
There's also the Bypass Paywalls browser extension. Worked for me.
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Re: For those using the PP or GB in retirement

Post by sweetbthescrivener » Sat Nov 13, 2021 10:38 am

flyingpylon wrote:
Fri Nov 12, 2021 3:12 pm
Mark Leavy wrote:
Fri Nov 12, 2021 11:35 am
Xan wrote:
Fri Nov 12, 2021 11:09 am
Can anybody read that or is it paywalled?
It is paywalled.

Here's a link to the text.

The trick is to take the WSJ url, run it through an URL shortener, and then extract the text via outline.
There's also the Bypass Paywalls browser extension. Worked for me.
If you are using Firefox, use this extension.

https://addons.mozilla.org/en-US/firefo ... lls-clean/
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