Berstein on portfolio

[yankees60]

First of all, thanks to whoever recently put this somewhere in this forum. I've been listening to it repeatedly over the last four hours.

https://www.youtube.com/watch?list=RDCM ... mb_rel_end

The Only Black Swans with William Bernstein

If you go to about 23:45 you will hear him say.."For decades I thought the portfolio is the thing. It's what the portfolio does together is what matters." Which is always the response in this forum. Don't focus on any of the four components. Keep the focus on the overall portfolio.

His thinking has now changed as you will hear as you keep listening.

Do you agree / disagree with what he had to say?

Basically he is saying that in a crisis you cannot depend upon your stock investment. The bond portion is what you are going to live on. Your stocks are not for current consumption. In crunch your bonds will hold their value while your stocks will have little value.

VInny

[dualstow]

Bernstein
...
Do you agree / disagree with what he had to say?

Basically he is saying that in a crisis you cannot depend upon your stock investment. The bond portion is what you are going to live on. Your stocks are not for current consumption. In crunch your bonds will hold their value while your stocks will have little value.

In a crisis you can’t depend on stocks. ✓ Agree. I’ll collect the dividends that remain, but depend on them? No.
The bond portion is what you are going to live on. ✓ Agree. I hold treasurys directly. The payments don’t get cut.
Your stocks are not for current consumption. ✓ Agree. Except for dividends. Can reinvest them or spend them.
In a crunch your bonds will hold their value. ✓ I don’t know. Doesn’t it depend on the kind of crunch? Right now they’re doing great.

Nothing really controversial or out on a limb, right?

Depending on the crunch, maybe we’ll live on gold.

[mathjak107]

There is a difference in a crisis between bonds ...corporate bonds , munis , high yield , international and even total bond funds may act more like stocks then bonds and offer little or no protection .

There are treasuries and then there are bonds ....

100% equities in a crisis really has not been a problem at all , even in retirement.....the greater up years without the weight of cash and bonds has given 100% equities a very high success rate .....I think 94% for 100% equities vs 96% for 50/50

It has fared about the same as 50/50 has over the 119 30 year cycles we have had to date ....in fact for retirement time frames longer than 30 years it is actually higher ...

Mentally it would be a hell of a ride in retirement..but looking at all the black swans to date here it has not been a problem

[yankees60]

There is a difference in a crisis between bonds ...corporate bonds , munis , high yield , international and even total bond funds may act more like stocks then bonds and offer little or no protection .

There are treasuries and then there are bonds ....

100% equities in a crisis really has not been a problem at all , even in retirement.....the greater up years without the weight of cash and bonds has given 100% equities a very high success rate .....I think 94% for 100% equities vs 96% for 50/50

It has fared about the same as 50/50 has over the 119 30 year cycles we have had to date ....in fact for retirement time frames longer than 30 years it is actually higher ...

Mentally it would be a hell of a ride in retirement..but looking at all the black swans to date here it has not been a problem

We are looking at perhaps The Great Depression II.

At the worst of The Great Depression I how long would someone been able to live on retirement income (& principal) based upon 100% equities all the time and a 4% withdrawal rate before there was nothing left?

Vinny

[mathjak107]

There is a difference in a crisis between bonds ...corporate bonds , munis , high yield , international and even total bond funds may act more like stocks then bonds and offer little or no protection .

There are treasuries and then there are bonds ....

100% equities in a crisis really has not been a problem at all , even in retirement.....the greater up years without the weight of cash and bonds has given 100% equities a very high success rate .....I think 94% for 100% equities vs 96% for 50/50

It has fared about the same as 50/50 has over the 119 30 year cycles we have had to date ....in fact for retirement time frames longer than 30 years it is actually higher ...

Mentally it would be a hell of a ride in retirement..but looking at all the black swans to date here it has not been a problem

We are looking at perhaps The Great Depression II.

At the worst of The Great Depression I how long would someone been able to live on retirement income (& principal) based upon 100% equities all the time and a 4% withdrawal rate before there was nothing left?

Vinny

about the same at 4% swr as 50/50 ......you have to rember you would be going in with a far higher balance then had you been 50/50 prior years .

in fact the great depression was actually a lot better then the worst of times for retirees which were 1965/1966.

the worst time frames and the ones the safe withdrawal rates are based on are 1907 ,1929 ,1939 and 1965/1966...you have to remember the cpi fell 18% over the great depression years ....so to pay the same bills you really needed 18% less

[mathjak107]

here is 100% equities including the worst of times

FIRECalc looked at the 120 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 120 cycles. The lowest and highest portfolio balance at the end of your retirement was $-931,017 to $8,509,297, with an average at the end of $2,728,475. (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.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 8 cycles failed, for a success rate of 93.3%.


here is 50/50

FIRECalc looked at the 120 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 120 cycles. The lowest and highest portfolio balance at the end of your retirement was $-223,952 to $4,145,063, with an average at the end of $1,150,277. (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.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 6 cycles failed, for a success rate of 95.0%.