Ha!
Joe, Janet and Jerome all agree it’s “way too high”. So, perhaps it is. Some of this, however, is political posturing. And Powell may be in sympathy with bankers who don’t like inflation because loans get repaid in cheaper dollars. Who knows?
I’ll take 8% annual inflation and 12% average portfolio returns any day over 2% inflation and negative portfolio returns. And, as long as wages and benefits (ex-taxes) stay ahead of inflation workers shouldn’t be too unhappy either. One “plus” to inflation is that fixed payments on a 30 year mortgage become less and less onerous over the years as they are repaid with cheaper and cheaper dollars, That’s a big help to young first time home buyers.

Fools wade in …
ISTM that sometimes rights guaranteed by the Constitution conflict with each other. “We the people“ and our legislators and courts need to sort that all out - establish priorities. Before the 2nd Amendment, in both actual placement and in time, is language guaranteeing people the right to life. With 18 year old kids, psychologically disturbed or angry individuals, and every Tom, Dick & Harry running around with military grade weapons capable of firing off 50 or 100 rounds in quick order there can be no guarantee of “life.” So those rights - both guaranteed in the Constitution - are in conflict and need to be resolved by “We the people.” Hell, you wouldn’t hire or trust some of these uneducated idiots to take care of your dog while away on vacation or unclog the toilet in your home. Yet, you allow the fools to go out and buy extremely potent armament. Reason needs to prevail. I taught high school for 29 years. My heart bleeds at the thought of those wonderful innocent children having their brains and guts blown away. These were your future doctors, clergymen, scientists, generals, great artists and thinkers of every type - all blown away in an hour’s time. And - they were somebody’s precious kids and grandchildren.
Here’s the Preamble to the U.S. Constitution: “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

So tell me, geniuses, how was the Fed and other policy makers supposed to:
- Anticipate the Russian invasion of Ukraine and its effects on gas prices?
- Prevent supply chain disruptions, which were caused by the pandemic and corporations faulty decisions to cut back too much on production?
- Labor shortages and resulting cost increases caused by the pandemic and years of corporations skimping on wages?
Too many people blame government leaders for problems outside of their control and often caused or made worse by poor corporate decisions.

My only concerns with "bucket" suggestions is that I think they underestimate how long the market can be down. While I do not think American Association of Individual Investors (AAII) is helpful most of the time, they did provide simple guidelines for withdrawals. When the SP500 is within 5% of its all time high, take money out of stocks. When it is not use your cash. This avoids selling in a down market
They think 4 to 5 years cash is enough, but if you go back to 1929 you can see years where the market took 7 to 8 years to recover.
I would keep at least 6 or 8 years of minimal expenses in cash or short term bonds
The worst thing that can happen in retirement is to go into it in the middle of a bear market

I haven't gone to the withdraw side yet, but I did set myself up very much like you @bee. I only set aside 2 years, but I will up it to 3-4 years when I do finally give up my part-time work and start withdrawals. My withdrawal bucket must be more conservative than yours. It's down about 2% YTD. The largest holding is RPHYX, about 40%. I have been pulling money out of the short-term bond holdings and putting it into short term CDs, 3-12 mo durations.
I like your withdrawal % reduction idea to compensate for loss in the bucket.

We all are pretty familiar with the 4% rule which provides a mechanism to adjust one's SWR or "safe withdrawal rate" based on one portfolio value. In a year like this, any percentage withdrawal feels anything but "safe".
For example, if one started the year with a portfolio value of$1M and took a 4% withdrawal for the up coming year, one would have pulled ($1,000,000* .04) or $40,000. If after that withdrawal one's portfolio fell 20%. That $1M portfolio minus $40,000 (withdrawal) minus a 20% market correction, is now $768,000.
This math frightens retirees. It's human nature to see this 24.2% portfolio drop as a permanent loss. This can trigger some of us to "sell low" and other poor timing strategies.
For me, years before pulling from my retirement portfolio, I tried to determine what my yearly withdrawal needs were going to be and decided to separate those 3-5 year needs into lower volatility assets. In a sense, try to insulated these near term withdrawals from near term volatility. I would give up some upside to protect against the downside. So instead of selling equities into down markets, I positioned 3-5 years of withdrawals in assets that were less exposed to equity assets volatility. For me, these lower volatility assets are CASH, ST Bonds (VFSTX), and conservative allocation funds (such as VWINX).

I position 20% of my retirement portfolio in low volatility assets. Collectively the losses in these assets YTD has been close to (-6.5%). with this in mind, I have reduced my 4% SWR by 7%. So instead of my normal 4% SWR of $20,0000, I limit myself to 7% less or $18,600. I am hoping it is a helpful adjustment that my budget can handle.
Any criticisms, comments or strategies welcome.

Thank you. I saw your earlier posting too. Just want to inform the broader audience on the longer duration TIPS (10 and 30 years) are also available.

Has any country ever targeted a set level of inflation and adhered rigidly to it? I’d be interested in examples. Sounds like a dubious proposition. Many external factors enter into the level of inflation - not the least of which are the prices of imported products. Than there’s immigration levels (supply of laborers), foreign currency exchanges, technological innovation, climate (effect on crops), wars, etc. I’m not aware of the U.S. ever having an official inflation target up until the time the Fed began targeting 2% (5-10 years ago) because they were scared silly of deflation developing (negative inflation / falling prices).
I don’t think Paul Volker ever set an “inflation target” either. What he did was jack up overnight lending rates to around 20%. That in conjunction with Regan’s war on PATCO (the opening salvo in a long running war on labor unions / diminishing pay and benefits for union members) threw the country into the worst economic morass since the Great Depression with unemployment remaining near 10% for two years. (Akin to swatting a fly with a ball bat.)
The Regan Recession
Inflation will vary year-to-year and region to region. CHART In 1990 it was running between 5,5 and 6% in the U.S. In Sweden it was 11%. In Japan about 4%.. And 7.5% in Great Britain.

Great cartoon. Anybody who shopped for home furnishings and/or wood products during the past couple years had to be struck by the scarcity of supply and exorbitant prices. Seems like everyone decided to add a new deck to their home or replace worn LR furniture at the same time. I really can’t explain it. Here’s an OT post I submitted more than a year ago voicing some of that frustration. It only got worse as the summer progressed. Furniture Shortage?
While I haven’t yet read it, Barron’s this week has an article about plummeting lumber prices. Go figure!

The captain obvious explanations are not needed for me. I know them. I have heard them. I view them as more lies told by the regulators/politicians.
Between Jan 2010 - May 2022, the price level has increased 35%. Since Jan 2000, a 73% increase in the price level.- That is using the CPI, which severely undercounts real changes in cost of living. - The source of that stat is from bls.gov's CPI price calculator.
A 35% debasement of buying power over 12 years is not "price stability"
These jokers have failed. The institutions have failed -- They have a "mandate" then they construct policies with the predictable result of avoiding the mandate.

OK, so what was the point of your smart drivel?

The captain obvious explanations are not needed for me. I know them. I have heard them. I view them as more lies told by the regulators/politicians.
Between Jan 2010 - May 2022, the price level has increased 35%. Since Jan 2000, a 73% increase in the price level.- That is using the CPI, which severely undercounts real changes in cost of living. - The source of that stat is from bls.gov's CPI price calculator.
A 35% debasement of buying power over 12 years is not "price stability"
These jokers have failed. The institutions have failed -- They have a "mandate" then they construct policies with the predictable result of avoiding the mandate.

Giruox has been a master in using bond & cash positions to counteract his equity risk. His goal is to provide equity-like return while maintain below market risk over a 5 years period.

+1. Yes indeed. Gotta remember to buy some more PRWCX if it falls a couple of bucks further.

Giruox has been a master in using bond & cash positions to counteract his equity risk. His goal is to provide equity-like return while maintain below market risk over a 5 years period.

There isn't much AUM at launch and PGIM hasn't seeded it with its own capital, so the ERs look huge but are capped. I have seen high but capped ERs at launches but not this high.
Alternative ways to launch funds are 1) use seed capital from the firm that is withdrawn a few years later, 2) lineup some institutional buyers/sponsors ahead, or launch a fund on institutional request(s) but open it to others, 3) use the weird subscription process of several weeks that Vanguard uses where the money collected just sits in m-mkt funds until deployed (I don't understand who these foolish investors are who fall for this).
PGAEX Prospectus from PGIM Site https://prospectus-express.broadridge.com/PNET/summary.asp?clientid=pi&fundid=74440K512&doctype=pros

The same manager in a related ~ 2 years old fund in UK : https://markets.ft.com/data/funds/tearsheet/summary?s=IE00BKV41X02:AUD

Ahhh someone's monetizing the famous buy-at-close, sell-at-open strategy that's worked well in the futures markets off-and-on for years. Interesting.

Any time I see a post about DSEEX or CAPE I think of poster @davidmoran, who from my memory was the first to bring attention to these funds years ago. I don't catch everything here, but I haven't seen David post lately. Hope all is ok.

Maybe, though recognize that correlation is not causation.
DoubleLine has not especially impressed with its enhanced version of CAPE (DSEEX). It has generated negative "enhancement" relative to CAPD over the past five years (11.13% vs. 12.50%), three years (11.35% vs. 13.50%), and one year (-8.01% vs. -5.86%).
No matter, they've both underperformed the S&P 500 over the past five years (13.09% return), three years (14.62%), one year (-1.23%). All figures from M*, through June 8th. At least through the last quarter (March 31st), CAPD has outperformed the S&P 500 over the past five, three, and one year periods, though DSEEX remains the worst of the three.
http://performance.morningstar.com/fund/performance-return.action?t=DSEEX
(Add CAPD for performance comparisons)
FWIW, M* reclassified DSEEX as large cap blend in 2019. Until then it had considered the fund to be a large cap value fund. In contrast, CAPD (formerly CAPE) maintains its classification as large cap value.
https://www.morningstar.com/etfs/arcx/capd/performance
DoubleLine could be taking a reputational risk as a bond house by starting a CAPE ETF that might outperform the bond-enhanced DSEEX, just as CAPD has outperformed DSEEX. Or perhaps not, since its CAPE ETF is not going to track the CAPE index (unlike the equity portion of DSEEX).
The ETF's stated "objective is to seek total return which exceeds the total return of the S&P 500 index." (One might ask why then is it using the Schiller CAPE index as a reference, since that's underperformed the S&P 500 for years; but that's a separate question.)
The ETF merely "considers the underlying constituents of the Shiller Barclays CAPE® US TR USD index ... Because the Fund is actively managed, the Adviser has the discretion to invest in securities not included in the index and may over or underweight a particular sector as it deems appropriate in seeking the Fund's investment objective."
In short, "the Fund does not seek to track or replicate the Index."
CAPE ETF Summary Prospectus

It appears that DoubleLine, which manages the CAPE-Shiller strategy in a new ETF, got the desirable trading symbol away from Barclays. From my observations, Barclays ran the ETN under the symbol CAPE for several years, but it had to change its symbol to CAPD when the Gundlach team got into the ETF game. DoubleLine has run the MF versions of the strategy since inception, I believe. No idea how this played out behind the scenes. Maybe Barclays isn’t as big a gorilla as the US firm.

Checking out TIPs (and bonds) performance for the past 10 years -- which coincidentally is where Portfolio Vizualizer shows to be FIPDX's commencement, annual CAGRs for TIP, VIPIX & FIPDX clock in at 1.83%-1.94%. The CAGR of the general bond market (VBMFX) was 1.54% (all through May 2022).
By replacing FIPDX in PortViz with TLT (nominal LT Trsys), history goes back to 2004. TIP CAGRs were 4%, VBMFX was lower at 3.27%. TLT was 5% --- but with materially greater volatility vs both TIP & VBMFX.
Looking forward, unless one's view is that deflation will take hold, TIPs, post-bond selloff, strike me a marginally more attractive than nominal Trsys.
Opinions, pro or con?