Wade Pfau, an Associate Professor at the National Graduate Institute for Policy Studies in Tokyo, wrote a comment to an earlier blog entry this morning that describes a research paper he has written (the paper is still in its first draft) about the New School Safe Withdrawal Rate concept that I developed with John Walter Russell (and with the help of hundreds of our fellow community members in the Retire Early and Indexing discussion-board communities). Set forth below is the text of his words. I sent an e-mail to Wade thanking him for letting us know of this exciting development. Who could have predicted on the morning of May 13, 2002, where this New School SWR business was going to lead?
I just became aware of your past research in September. Since then, I’ve read archives from many Discussion Boards and websites, and I always find your writing to be very interesting and intriguing.
I just finished writing up a paper about using earnings valuations to predict withdrawal rates. But I think it is also important to consider dividend yields and bond yields as well, since these are the income sources of returns. With these measures, I find that withdrawal rates continue falling even after 2000. With PE10, you found the lowest withdrawal rates in that year.
I do cite you and John Walter Russell in my paper as the earliest and strongest advocates of this approach. I understand that John Walter Russell has passed away, sadly.
If you wish to see my paper, it is at:
I’m hoping it will be publishable in a finance journal. This is just the first draft, so if you have some comments or anything, I can still make revisions. Thank you very much for your consideration.