Well that's good at least. I can think of a couple reasons to think that it's not valid:
1. The future will be significantly different from the past.
2. The past's SWR does not apply to me because I will achieve market-beating returns
I must not have written my response well.
1. The future will be a lot like the past. That's why I have a variable rate ARM on my house and have fared much better than a 30 year fixed mortgage.
2. I have no plans to achieve market beating returns. Actually, I plan on "making the market." This can be done, without thought, with an SP500 index fund or ETF. Easy Peasy.
Ah, yes, market-timing! Sounds simple, and it is, except that it's impossible to do correctly in practice, and actually hurts your chance of success rather than helping.
No market timing is involved at all, simply cash out investments, over time (over months, not all at once), as the market INCLINES into a safer bond or money market vehicle. Always have two years of cash equivalents on hand. Why is this market timing? The only market timing involved is, as there will be more BIG market declines, you simply deplete your cash position and wait for the inevitable recovery. Why is this hard to understand?
I'm not sure why a nominal, greater-than-0% yearly return is a valuable cutoff metric. Between 1965 and 1982, the S&P 500 returned an inflation-adjusted 0%. You're right, there were no 3-year-periods of nominal, less-than-0% returns in there, but so what? You would have run out of your two years of living expenses in bonds by 1967, and then watched your nest-egg get decimated through 15 more years of withdrawals that far exceeded market gains. Even if you had reduced your withdrawals to 4% in 1967, you would have run out of money before 1994. But I guess we'll never see a period like 1965-1982 again, because...?
Hold your horses sparky, you are not dealing with an uninformed amateur here. You CHERRY PICKED 1982, a year of severe recession when my father's bonus plan at work was SIGNIFICANTLY reduced. A year when his sales declined considerably and my mother feared his losing a job and not being able to find another. Where do you want me to start? Let's pick a REAL year, like 1985? Let's include the PHENOMENAL bull market that took place RIGHT AFTER 1982. Come on, this is silly stupid.
The dow is an index that ignores dividend reinvestment. Dividend reinvestment makes up 50% of market returns over time. How can you ignore 50% of a gain? Fact is, you WILL see a period like 1965-1982 again, and I will be reinvesting my dividends the whole time, keeping two years in cash, and riding down the downturns. You act as if this was a STRAIGHT LINE return. NO, there were significant up years and down years during this time. Also, I am starting out with a TON of cash, this is a position of strength, NOT a position of weakness.