The Stingy News Weekly: 12/19/2021
Is it now the '3.3% Rule'?
"Recently a highly respected financial publisher issued a research paper claiming that the 'safe' withdrawal rate from tax-advantaged retirement portfolios could be as low as 3.3%, due to the high valuations of financial investments. As you may know, as an outcome of ongoing research, I recently increased my estimate of the 'worst-case' withdrawal rate to 4.7% (for a 30-year time horizon). How do we make sense of these two widely disparate results?" [Retirement]
Investing in banks
"Local real estate prices have not just acted as a predictor over the full period, but they have also been a very consistent predictor. The spread between the top decile and bottom decile of stocks ranked by this factor has persisted through multiple market environments." [Real Estate]
"Mindless stock bulls talk of TINA [There Is No Alternative (to buying stocks)], as if there is no limit to how high stock prices can go when interest rates are low. I want to tell you about TIN. There Is Nothing (worth buying). This is the nature of financial repression." [Markets]
Estimating future market returns
"At the end of the third quarter, the S&P 500 was poised to nominally return -0.64%/year over the next 10 years. As of the close today, that figure was -1.83%/year, slightly more than the -1.84%/year at the record high last Friday." [Markets]
That's it, that's the blog
"They say a picture is worth 1000 words. I'm embracing the concept in this post, which is just a single graph presenting the value spread constructed using the methodology that most closely reflects how we actually view value at AQR. Spoiler alert: the spread continued to explode higher in 2021. Despite this, we still made some money on value this year, which makes us very excited for 2022 and beyond." [Value Investing]
This is the show
"Although it's difficult to know when volatility and opportunities will return, we are closely monitoring newly formed cracks in the small cap market. Specifically, as inflation has forced the Federal Reserve to reduce its bond purchases, we're noticing growing weakness in many of the stocks on our possible buy list. In effect, all boats are no longer rising. Even with the popular stock indices trading near record highs, several of the stocks on our possible buy list are becoming more attractively priced, with a growing number of stocks approaching their 52-week lows." [Value Investing]
S&P/TSX60 Value Screens
DOW 30 Value Screens
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