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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76392  
Subject: Re: Hi gang... wow!!! Date: 9/20/2013 12:18 AM
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Ray & All,
I want to step back to 'ground one' and rebuild this conversation from complete clarity. I truly believe that rational minds will agree with logic, and differences in discretionary taste is tolerable among adults.

Having said that... I know in advance its going to suck me into careful, cautious writing, reveiwing & re-editing sans assumptions of common financial language... and tonight I don't have time. In fact, I'm on crunch time through this coming Tuesday, when I am taking my son on a road trip for a week, and returning to deliver a series of seminars the 1st two weeks of October, with their ensuing crush of client appointments... so, the reality is PSUE can raz me for 'taking forever' again, but i know it will be the case in advance.

Ray, I assume you're heading off on your cruise soon as well?

The underlying logic, market history, and math has not changed, so I'm confident we'll be able to pick this up where we left it (and who knows... maybe I'll get some solo quiet time unexpectedly in the coming 2 weeks to sit down & write... but I rather doubt it.)

I'll leave you with this seed of thought;
Once a person reaches their defined financial point of retirement (which is not an age, but a balance number,) and they sever their dependence on income producing employment, most consider it loathe to fall back underwater and be forced back into the paycheck grind. I assume that this is to be avoided at all costs. Losing *any* principal to market drawdowns at that point, when your retirement rests on 100% of your yield and principal, is unacceptable.

The working question becomes; If it is unacceptable to risk falling backwards at that point... is it really acceptable to risk falling backwards prior to reaching that point?

I suggest that the answer lies in game theory; Can you achieve a "real edge" of a higher return per degree of risk... or not?

The simple way to determine that is to standardize all options to the exact same levels of risk, to determine which then outperform at that level. Whichever outperforms at the same risk variable could be assumed to continue to outperform as risk is added on. (Its not a perfect assumption, as the risk/reward curves between two different strategies are not guaranteed to skew and curve exactly equal.)

In any case... comparing any two strategies without isolating and standardizing variables is futile.

So... I know protocol is to keep a topic in a uniform thread... but this one has gotten so scrolly & unruly I know there are details above I want to revisit, but its just not reasonable to go scrolling in hunt. Next time, let's make reasonable thread restarts by unique twists in the topic, with as descriptive headlines as possible.

Out for now... cheers!
Dave Donhoff
Leverage Planner
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