Before 2008, I reviewed many Monte Carlo simulations showing 4% or more safe-spend rates, increasing annually with inflation. Not only did the assumptions generally ignore expenses, but they also included excess return from alpha. While the efficient market hypothesis can be debated forever, one thing is clear. In its sum, alpha is zero.

This was clearly illustrated back in 1981 by the Nobel laureate William F. Sharpe in his simple paper The Arithmetic of Active Management. Simply stated, these two statements must be true:

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