I realize that: A) simulators need to be taken, for a lot of
reasons, with a big fat grain of salt, no matter who designs or runs them, and
B) mine has an assortment of idiosyncratic design assumptions that might get
some derisory treatment from researchers or practitioners, but…I thought this
was interesting. The chart below uses a
grab bag of not completely realistic input assumptions (not to mention the
design assumptions again) -- that I won't regurgitate here -- that include a
mash-up of some of my own data as well as some generic hypotheticals…so that
this is probably not very practical in terms of being extensible to anyone
anywhere. But for the design and assumptions I did use it looks like it might
be fair to conclude that an expectation
of some reasonable probability of a spending shock[1] might require (if one has not reserved capital for the possibility, I guess) nudging
equity allocations a little higher…again, for this hybrid set of assumptions
only. At some point I'll run this either
on me or a more consistently generic and robust set of assumptions and seen
what happens.
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[1] in this particular case, one that I was just using to shake
out some software testing stuff, the
toggle variable was adding a 5% chance of a (3 x initial spend) shock to any
given sim-year.
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