StreetEYE Blog

Druce Vertes, CFA


‘Cat Food’ revisited – testing dynamic spending rules – Part 3

In the last part of our look at dynamic rules for spending in retirement, we discussed how changing the allocation between stocks and bonds affects the maximum sustainable spending rate. We can summarize this relationship by plotting the highest feasible initial spending rate for any acceptable shortfall level.1

‘Cat Food’ revisited – testing dynamic spending rules – Part 2

The last post discussed a framework for evaluating simple dynamic spending rules. We defined a spending factor s as spending each year at a rate of s/(remaining life expectancy); and lifetime spending expectancy as the total amount you could expect to spend over your lifetime. We showed how, as you increase the spending factor, lifetime […]

‘Cat Food’ revisited – testing dynamic spending rules – Part 1

How much can you safely spend out of a portfolio in retirement? Spend conservatively and you may be unnecessarily curbing the lifestyle and aspirations of you and your loved ones. Overspend and risk a shortfall and painful adjustment – in the extreme, the (hopefully apocryphal) “cat food” diet. A traditional rule of thumb is a […]

What’s the worst that could happen?

It’s not whether you get knocked down, it’s whether you get up. – Vince Lombardi Playing around with DataNitro, an add-in that lets you run Python in Excel1. What is the worst that could happen to someone who owns stocks, bonds, bills, over a 1-, 5-, 10-year time-frame? Here are the worst rolling periods for […]

‘Big Data’

If ‘The Graduate’ were made today, Benjamin Braddock might hear a well-meaning uncle stage-whisper ‘Big Data’ instead of ‘Plastics.’ (Runners-up: ‘The Cloud’, ‘Social Discovery’, ‘Gamification’, the list goes on.) ‘Big data’ is a buzzword that people throw around a lot. What does it mean? Large data sets are not new. The IRS, the Census, Walmart, […]

What I Learned

I didn’t really post as much as I would have liked this year. I envy people whose thoughts come out in a more or less coherent, finished form. When I post something, I always think of what I really wanted to say after hitting ‘publish’. Today, I’m going to just try to write for an […]

Social capital – or, the lost art of not taking a dump in the community pool

The first casualty when war comes is truth. – Hiram Johnson Everybody talkin’ to their pockets Everybody wants a box of chocolates And a long-stemmed rose – Leonard Cohen Let’s talk a little about social capital. According to studies, Greeks work the longest hours in Europe, and their retirement age is in the middle of […]

Broken Windows

So, some people are talking about Hurricane Sandy putting people back to work, and others are pointing out that this is the ‘broken windows fallacy.’ True, a massive superstorm is usually not a good thing. Nevertheless, three quick points.

The Paul Ryan plan

The Paul Ryan plan ‘Promotes saving by eliminating taxes on interest, capital gains, and dividends; also eliminates the death tax.’ So people like Mitt Romney, and all his heirs in perpetuity, would never pay another dime in income tax. How sweet is that? How fair is that? It’s shocking that in this day and age, […]

A Target2 Thought Experiment

Suppose a Greek shipping magnate decides he’s not comfortable keeping his wealth in Greece, and decides to buy some nice real estate in Berlin. (As if most of the Greek wealthy hadn’t removed as much as possible to Germany, the US and UK long ago.) He writes a check for €1m on his Greek bank […]

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