No. of Recommendations: 2
DHatch writes:

<<Although one need not always totally agree with everything TMF Pixy writes, one must admit that he so often writes with such thoughtfulness, brilliance, passion, and clarity of expression that one just about wants to cry at the beauty openly revealed, the sounds seemingly heard, the colors almost felt, and the emotions actually touched by his excellent use of written words.>>

Good grief! Are you describing me? If so, I must heartily disagree that anything I write comes anywhere near to resembling that fulsome description. A Papa Hemingway I'm not!

Anyway, I like and encourage continued posts of this nature. It's the type of discussion I wish to foster for retirees. Further, I would like to see more examples of mechanical investing approaches discussed that would fit the needs of those who are retired. Preferably, ones supported by detailed backtesting in lieu of a 90-day comparison such as the one you have posted here, but any are better than none. We've had this discussion before, but for some reason you want to leave the backtesting work for me to do. I did mine in analysing the Foolish Four from 1961 to 1998. Now it's time for you to do yours. While the 90-day comparison you have made is certainly interesting, to me it is little more than a good illustration of what happened in that 3-month period. What did it do over time as measured in years as far back as you can go, and how did that compare to the FF over the same period? You don't tell us that, and would rather criticize than demonstrate. Show me the numbers, and perhaps you can influence my thinking more easily.

<<From time to time, please do compare the components and the numbers and decide for yourself which might be more comfortable, practical, and profitable for the retiree who might really have to rely upon it during actual retirement.>>

You won't get any disagreement on that from me. In fact, I strongly encourage it.

<<I do most strongly maintain that it is Ridiculously Risky and Totally Inappropriate to suggest or recommend, directly or indirectly, by example or otherwise, that the Foolish Four be the sole stock components of a Retiree's portfolio during retirement.

I know that TMF Pixy strongly, although mistakenly, believes in the Foolish Four and his faith is such that he has actually put his money where his mouth is and that he can well afford to do so, however many retires cannot afford to take that sort of risk and should not in any way be encouraged, by example or otherwise, to do so.>>


Maybe I am mistaken, but only time will tell that. All I know for a fact is that I have tested the model and found it works quite well. Will that continue? I certainly can't guarantee that anymore than you can guarantee an alternative approach. And as to recommending the Foolish Four approach either directly or indirectly, we've also had that discussion before, too. In fact, I've written about it quite extensively in "Who Woulda Thunk? (http://www.fool.com/retirement/retireeport/1999/retireeport991213.htm) and "Why the Foolish Four?" (http://www.fool.com/retirement/retireeport/2000/retireeport000103.htm). Both adequately state my position. Disagree as you wish, but I reject your notion that I am recommending anything. Instead, I'm showing what can and will happen to someone using this approach. Others are free to do what they wish with their stash, and should invest Foolishly. That means after they have done their homework and are comfortable with the approach they have chosen. As I've said before, I believe you have a poor opinion of your fellow man when you insist they will blindly follow an approach just because I or anyone else is using that method. My own belief is that they're much more intelligent and analytical than that.

<<I would respectfully, but most seriously, suggest that TMF Pixy and anyone who might consider risking it all on only the Foolish Four as the sole stock components of a retiree's actual retirement portfolio do ask first one simple question:

Since the Foolish four and various other DDA approaches relied primarily upon dividend yields during a certain historical period of time when dividends were believed to have accounted for approximately one-half of the total yield of the Foolish Four and/or various other DDA approaches, yet did not seem to work as well during earlier periods when dividend yields were higher and dividends were more significant and has not worked in later times as dividend yields became somewhat smaller and dividends became somewhat less significant, why should it logically be expected to work as well in future times when dividend yields are expected to become even smaller and dividends anticipated to become even less significant?>>


Perhaps and perhaps not. Again, that remains to be seen. And as to your statement it didn't work in the past, all I can say is that's definitely not what my analysis showed. All anyone has to do is read "Foolish Payouts" at http://www.fool.com/retirement/manageretirement/manageretirement8.htm to see what I mean. That does not mean it will continue to work in the future, but then we don't know that about your untested PPPP portfolio, either.

Believe it or not, I welcome your post and encourage more along those lines. I wish others would offer some alternatives as well. In fact, the more comparisons, the better. I continue to urge you to support your work with backtesting, though, to show folks what could have happened to better enable them to make a choice. Your data can't go back for the QQQ quite as far as mine did, so the validity would be more open to challenge. Nevertheless, it would go far in supporting your argument IMO, and reflect much more than a 90-day comparison does.

Regards..Pixy
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