In the late first century, a Latin poet named Juvenal described something thought to be unlikely as “a rare bird in the lands and very much like a black swan”. At the time, black swans were thought to not exist at all and the idea was preposterous. The clever turn of phrase was both memorable and descriptive, and by the 16th century “black swan” was a common expression in London to describe the idea of impossibility. Of course there was a looming problem with this saying, and in 1697 Dutch explorers discovered that black swans really do exist in western Australia. What once was used to describe something impossible quickly changed meaning to connote ideas thought to be impossible that are later discovered to be real.
As a creative person inhabiting an engineer’s mind, I’m often a walking contradiction of organization. On the one hand, a messy desk does not bother me at all and I like having lots of information in front of me to draw from when I work. But on the other, eventually the collection of stuff reaches a critical mass where I can no longer find what I’m looking for, at which point I decide it’s time to clean up and organize. That tension between chaos and order is just part of how I think.
Along those lines, while I very intentionally keep Portfolio Charts simple and intuitive in the Assets, Portfolios, and Calculators I realize I’ve reached the point in the Commentary where the old system really isn’t doing the site justice and relevant posts are a bit too difficult to identify and track down. The logical next step would be to roll out a typical blog archive sorted by date or topic, but keeping with the spirit of designing the site primarily as a set of practical tools I’ve decided to build something a bit more comprehensive. As you may have already noticed up top, there’s now an entire new section called the Library.
I can’t claim to be much of a cook, and baking is one of those skills that even accomplished cooks can struggle with. But despite the heat, the effort, and the inevitable mess there’s something truly special about the smell of a freshly baked dessert as it first comes out of the oven. At that point the stress and frustration just melts away and it all seems worth it.
The New Year is officially underway. The holiday hangover is starting to wear off, resolutions have been made (and already broken), and bowl games are wrapping up. But most importantly, new 2016 data is available! I have actually been feverishly working for over a month now to prepare, and am proud to announce some exciting new updates to each and every calculator:
The magical week between Christmas and New Year’s Day is a common time of relaxation and reflection. It’s maybe a little more frantic on my end as I prepare for year-end market returns and some exciting accompanying updates I have in the works, but it’s always helpful to pause and take a moment to review the year that was.
There’s a decent chance that anyone who has considered retirement with some amount of self funding has heard of the concept of the safe withdrawal rate — the amount of money that one can safely spend every year without prematurely running out of money. First proposed by William Bengen in 1994, the math is pretty well established by now and many well-respected authors have written extensively on the subject dissecting it from different angles.
There’s also a pretty good chance that that the average person following a safe withdrawal rate does not actually understand how it works, and that lack of context can cause quite a bit of confusion. You see, the various studies and calculators that determine SWRs do so based on a myriad of very narrow assumptions, and breaking from those assumptions also breaks the conclusions. I’ve written quite a bit about the asset allocation assumption and the withdrawal method assumption, and I recently realized that I’m due for a discussion on another key assumption — how long do you plan to be retired?
After talking to a few people about my last calculator update, I found that perhaps I wasn’t clear enough about my motivation. I also realized that I cut unnecessarily deep with the changes, which probably added to the confusion. So allow me to offer both an explanation and a few improvements.
As Portfolio Charts has grown by leaps and bounds over the last year, so has my sense of responsibility for being a good citizen in the data-sharing community. In an effort to respect the underlying data that drives the site and to support the sources that provide it, I’ve made a handful of changes to the calculators to hide the detailed annual returns for individual assets:
Thanksgiving is maybe my favorite holiday of the year. Between family, football, and an insane amount of delicious food, the fourth Thursday of every November is something I always look forward to.
But while the traditions of Thanksgiving are something I hold dear, the traditions of the day that follows are something I’ve never really gotten into. Of course I’m talking about Black Friday, when shoppers get a day off of work to recover from eating too much and line up early in the morning to experience things like this in search of a good deal:
One of the things I’ve found most interesting in the feedback I’ve received with Portfolio Charts is the diversity of people who appreciate it. Whether it’s an investing newbie eager to learn about index investing, a an experienced investor comparing portfolio options, or even an occasional professional fund manager interested in the calculation methodology, it’s exciting to see so many people find value in the clear and unbiased representation of good data.
In an effort to offer a helping hand to the first of those groups, I created a new page to outline the basics of how to use the information on the site to build and manage a portfolio of your own. It’s just a start, and I do plan to expand that type of information over time, but luckily it’s really not that complicated! So if you’re new to investing or know someone else looking take the plunge, that’s a good place to start.
But every good explanation of “How” deserves an equally good explanation of “Why”. This is something we all need to be reminded of occasionally no matter where we are in our individual investing experience.