audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
The provocative title of an event more provocative interview with Efficient Frontier guru William Bernstein. It seems that he had a lot of clients bail out of the bottom in 2008, and not get back in, and thus suffer "permanent portfolio damage". And now he preaches the philosophy of keeping 20 to 25 years expenses of retirement assets in ultra-safe investments - cash, TIPs, annuities, very short-term govt paper. And only when you have a larger nest egg should you put money in riskier assets including equities. These riskier assets then should be only be counted on as "icing on the cake" i.e. for "play money":
This article came out a month ago, and I didn't get a chance to post about it here on this forum. I hadn't really seen a discussion either, other than Midpack's recent reference on a more general SWR discussion: http://www.early-retirement.org/for...factors-that-affect-it-63218.html#post1235810 Some of us did discuss it there today, but since it's so buried, I wanted to make sure it got more general attention.
I participated in a Morningstar discussion on the article (which is where I learned about it): The Worst Retirement Investing Mistake - Yahoo! Finance
Bernstein's new approach appears to fly in the face of needing equities to hedge inflation risk over the long term for portfolio survival.
from The Worst Retirement Investing Mistake - Yahoo! FinanceI wanted to deal with what happened in the 2008 financial crisis, which changed how people, myself included, think about risk. A lot of people had won the game before the crisis happened: They had pretty much saved enough for retirement, and they were continuing to take risk by investing in equities.
Afterward, many of them sold either at or near the bottom and never bought back into it. And those people have irretrievably damaged themselves. I began to understand this point 10 or 15 years ago, but now I'm convinced: When you've won the game, why keep playing it?
How risky stocks are to a given investor depends upon which part of the life cycle he or she is in. For a younger investor, stocks aren't as risky as they seem. For the middle-aged, they're pretty risky. And for a retired person, they can be nuclear-level toxic.
This article came out a month ago, and I didn't get a chance to post about it here on this forum. I hadn't really seen a discussion either, other than Midpack's recent reference on a more general SWR discussion: http://www.early-retirement.org/for...factors-that-affect-it-63218.html#post1235810 Some of us did discuss it there today, but since it's so buried, I wanted to make sure it got more general attention.
I participated in a Morningstar discussion on the article (which is where I learned about it): The Worst Retirement Investing Mistake - Yahoo! Finance
Bernstein's new approach appears to fly in the face of needing equities to hedge inflation risk over the long term for portfolio survival.
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