An earlier blog entry described the background of my recent correspondence with Michael Kitces on safe withdrawal rates (SWRs). Set forth below is the text of an e-mail that Michael sent to me on September 24.
Very interesting! Thanks for sharing this material!
I think this is the exact road that I would look to go down as well. From the financial planner’s context, I don’t think that Switching Strategy B is likely viable – the planning community would view those changes as being “too extreme”. But something along the lines of Switching Strategy A is exactly what I had in mind, where equities might range from 25% to 75% or something along those lines, with an upper and lower P/E10 threshold.
Of course, it’s a lot for the planning community to absorb, because it challenges both the withdrawal rate beliefs as well as the passive investing beliefs. But I don’t mind making waves like that from time to time. 🙂
To say the least, I’m quite encouraged that with John Russell’s results, it seems pretty likely I’ll get similar results and will have something interesting to report from my perspective as well. After all, aside from some slight adjustments in assumptions, I’ll probably be building this in a very similar manner from the same Shiller data set!
Thanks again for sharing this!
With warm regards,