From the book:is there a summary of what you are using? Is the book useful for scenario planning specifically?I'm reading William Bernstein's "The Investor's Manifesto", and using his simple "formulas" for forecasting, your numbers hit the nail on the head.These are forecasts and guesses. Trying to get down to a fund level is a level of accuracy that just doesn’t exist.
When I plan in broad strokes I plan with an estimated real (after inflation return).
TIPS- bonds are currently at around 2% real. I’d probably plan for bond funds between 1-2% real.
For stock funds I’d probably use 3-4% real.
"The wise investor estimates future returns for stocks with the Gordon Equation by adding the dividend yield to the dividend growth rate. For bonds, the investor estimates future returns by subtracting the expected failure rate from the coupon."
I haven't finished the book so I can't fully answer your second question yet. But I'm enjoying it. It's like a less technical version of Four Pillars (in fact Dr. Bernstein describes it as so). So it's right up my alley. I read Four Pillars and just plain missed a lot. Fortunately, I'm a boring old index investor at an asset allocation I can sleep with.
Statistics: Posted by Charles Joseph — Sun Mar 10, 2024 6:01 pm — Replies 64 — Views 5357
