Who discovered "sequence of return risk"?

Retirement FIRE Wannabees
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In September 1995 Fidelity’s legendary fund manager, Peter Lynch wrote an article for Worth magazine saying that you could safely withdraw 7% per year from a 100% growth stock portfolio. It was magic.

Scott Burns, the MIT-trained financial columnist for the Dallas Morning News quickly discerned that the arithmetic didn’t add up, and that a 7% withdrawal would often leave you bankrupt. It seems 4% was the most you could safely withdraw over a 20-year period.

And of course, MIT-trained aerospace engineer turned financial planner, William P. Bengen, wrote his seiminal article " in October 1994, about a year before Peter Lynch published his nonsense (i.e., “Determining Withdrawal Rates Using Historical Data”.)

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And of course Peter Lynch was speaking of Fidelity’s Magellan fund in its glory days. If you have a fund that grows by 100% every year, 7% may be fine. Finding that 100% fund is the hard part.

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You can draw 7% or 9% from a 100% S&P 500 index fund portfolio if you choose the right start date – it works great with 1994, and would have left you bankrupt with a 2000 start date.

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