and (4) investor speculation (i.e. irrational behavior, unless you count that in 3).
I don't think anyone said or implied that there is no connection between prices and dividends.
I think this is Elle's point?
-Will
While I agree with B on this point, it also seems that there is indeed a low correlation between dividend changes and price changes (for the S&P, using Shiller's data - note that I did not try to account for any time lag in the correlation).
This is a really interesting approach. When you play around with Monte Carlo simulations (and I know you have!), you quickly realize that bad years up front in retirement are much worse that bad years later on because you're drawing down. This seems like an interesting way to mitigate this risk. It seems like this would lessen (but probably not elinminate) your need for bonds/cash to cushion early market meltdowns.
-Will
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