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URL:  http://boards.fool.com/db-quotregarding-the-predictive-value-of-25562694.aspx

Subject:  Re: Income Planning Assumption Date:  6/6/2007  1:26 PM
Author:  telegraph Number:  57798 of 76237

db: "Regarding the predictive value of history, absent other information, a long history is the best we have. One can always point to worse case scenarios and say it could be worse in the future, but then the logical extension is to hide your money (in gold) along with weapons of choice, because who knows what catastrophic event might occur. The withdrawal studies are based on modeling historical expectations."

Yes, one can point to 'worst case' scenarios that have happened in the past, and that means there is a definite possibility that will happen in the future if 'the future is like previous history'. Thus, you SHOULD take that as your worst case.

No, the logical extension to hide your money in gold has not proven to be a good strategy most of the time. As to weapons of choice, that might be the case if you believe in calamity. Some go that far, but not many.

If you don't have an inflation hedge, for at least part of your assets, then you maybe be in trouble. World wide, many societies have had hyper inflation. That is a reality.

You plan at the 95% level. Even Berstein suggests the probably that things will change drastically in the next 30-50 yearss is a lot higher than 5%, or your own mortality a bigger factor. But that doesn't mean not examining the worst case that has happened, and using that as 'safe' for the future.

If you think things will get worse, then plan accordingly.



t.



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