Skip to main content
Update
Non-financial boards have been closed.

Non-financial boards have been closed but will continue to be accessible in read-only form. If you're disappointed, we understand. Thank you for being an active participant in this community. We have more community features in development that we look forward to sharing soon.

Fool.com | The Motley Fool Community
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 34
Everyone wants predictive power. For just about everything. Heck, if there was a way to perfect predictive power, one could rule the world. This whole debate about SWR has as its thrust whether The Study utilizes predictive power and, if so, is it the best predictive power that can be had?

hocus seems to want everyone to pitch in and analyze "methodologies" and "data" to refute and/or replace The Study.

hocus: To determine the SWR for all the various asset classes is going to require an examination of lots of different types of data and the use of lots of methodologies.

When someone suggests that he do that work himself, he calls demands for such data a red herring to shut him up.

hocus: The demand for data in every post on this subject is a tactic being used by those who want to block debate. It is not a demand generally being voiced by those who want the debate to go forward.

I think, hocus, that the practical reality is that if you want a tool to determine whether 2% or 4% or 6% is "right" for you, or anyone else for that matter, you'll have to hire the brains to find out.

A similar dilemma faced the residential lending industry a few years ago. Investors wanted to know if they could fine-tune risk predictors so they could charge higher interest rates to those who represented greater risk of default. A company emerged to bring automated decisioning to the lending process.

From their website:

The number of niches is enormous because of all the different combinations of the features [of the borrower, subject property and/or other factors] that define niches. Software developed by GHR Systems, Inc., which many major lenders use to make pricing adjustments, allows lenders to enter up to 40 million prices for each loan program. A second loan program could have a different 40 million. While no one lender uses any significant part of this capacity, in combination the lenders using the system price for several million niches at least. Shoppers need to understand that no lender operates in every niche, and the narrower the niche, the fewer the lenders.

Now, if you were to replace "niches" with "asset classes" or "number of years to retirement" or any number of variables you seek to analyze, you would have one Hellacious spreadsheet in which you could plug in variables to hypothecate just about any situation you cared to fathom. The lending industry didn't pull a discussion board together to debate all day and all night about whether John Doe's 600 FICO score is a greater risk than Mary Jones' 650. It recognized its need for more refined predictive power and set about to get it by hiring brains to formulate software for this very purpose.

To ask this board to go much beyond The Study so as to refute its author is too large a task, I think, as you yourself acknowledged.

hocus: It [the gathering of data] is a project that will keep this board tied up in on-topic posts for years.

But, hocus, if you were to be really honest, it's more the following, isn't it?

hocus: My claim is that The Study does not provide the last word on the question.

The problem is the exaggerated claims made re The Study on this board.

If he [intercst] acknowledges that The Study does not tell us which asset classes provide the quickest and safest early retirement, then we have no problem.


In any event, it's a personal thing, hocus, between you and intercst, except that intercst doesn't seem to care what you think. You want intercst to cry "Uncle!" and he's clearly not going to do so. You want the board to help you overthrow him as "board leader" when it's clearly not interested in that, either. You want the entire board's support in helping you analyze Bernstein's 2% theory when, if you really want the job done, you should do it yourself.

I submit that the brain power to create the statistical model to evaluate every asset class in every month of every year in every conceivable scenario exists...you just have to hire it.

hocus: My purpose from the start was not to tell anyone what the safe withdrawal rate is. It was to ask a question. I want to know the safe withdrawal rate so that I can make better decisions about my own investments. I have used this board as a resource to learn things about early retirement in the past, and I see no reason why I should not be permitted to use it for that purpose now.

I don't think this board is the place to get the information you need. Why not call GHR Systems and see if the brains behind that company can develop a gigantic spreadsheet to backtest, forwardtest and hypothecate every scenario you care to plug into it until you're satisfied with the SWR it generates?

Seems to me you'd also discover an irrefutable foundation for your book. You'd become rich, Rich, RICH in the process by becoming The Authority About The Study. You could overhaul the Social Security System by having a fool-proof way to help people retire. And, most importantly, intercst would become a speck of dust on the fabric you wove of the Final Definitive Intergalactic Study of the Safe Withdrawal Rate.

I happen to know the chairman and founder of GHR Systems. Want me to find out if he's got a spare statistician for hire?







Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.