Say that my net worth is X.
Say that I put X into index funds that have a dividend yield of 2-3% (This is typical in Europe where I live).
Worst case scenario: There is a recession. Index funds lose 70% of value, dividend yield drops to 1%.
I don't want to eat up my capital unless it's an emergency. So the lower bound for my income is X*0.3*0.01.
Plugging in the numbers, this lower bound is about 150% of my current expenses.
Am I safe to go for 100% stocks? Or should I go for a mix of stocks and bonds? Did I miss something? Are my numbers realistic? I must admit that I find something emotionally disagreeable about bonds, and that this is influencing my decision.
It looks like you are asking if you can have a withdrawal rate of 0.2% to 0.3% from a portfolio of all stocks. The answer is Heck Yes!
Let's give it some numbers (using Early Retirement Extreme levels of spending):
Current Yearly Expenses: $8,000
Current Net Worth: $4,000,000
dividends: $80,000 to $120,000
Net Worth after a stock crash: 4,000,000 * 0.3 = $1,200,000
Dividends after a stock crash: 0.01 * $1,200,000 = $12,000
From a 100% stock portfolio of this size, I would be comfortable withdrawing $120,000, or ten times as much as you're looking to withdrawal. With withdrawals this low, I think a better system would be to keep 5 to 8 years in cash to give you enough to weather any depression. Then you don't need to worry about what the market does during a crash. You'll just know that before you're done spending your cash on hand, it will be back to throwing off 10 times the dividends you spend.