Fine and dandy, though the example he chose was extremely far fetched. And ultimately you have to quantify whatever approach you plan to use. But I'll try to avoid asking again...
Yes, the overall message is good, but it is so far fetched that I think it goes beyond being 'illustrative' to the point of being downright silly, and may just end up feeding the fear-mongering over those 'risky' equities. In the end, I think it actually ends up being a disservice to many listeners.
The main problem with the 70 year old couple he used as an example is NOT that they were in equities, but that they were concentrated in tech stocks. Had they had a balanced portfolio, their wealth might have dipped ~30% and then recovered but 70% would not have evaporated.
Exactly. I had to replay that to make sure I heard it right. Nobody following any kind of reasonable diversification/AA for a 70 YO would have gone from $13M to $3M. That's ludicrous. I might as well post a video about the danger of fixed income, by finding some outlier case where someone had all their money in a bond that defaulted. So don't buy bonds? That's not reasonable either.
Even an aggressive 75/25 AA would have seen something like the more modest 30% dip you mention, not the 77% dip used in this example. And then recovered. Not the end of the world at all.
Less important, but it still bugs me, is that they probably would not have had that $13M w/o the concentration in high tech. So if they were in something 'safer', they would not have had the dip, but they would not have been at that high level to fall from. Maybe if we could see their actual portfolio, we might find that they were still ahead at $3M. But those important details were not shared (I think he alluded to it, but not emphasized enough for me). That's often the case when people point to a dip in equities to highlight the 'risk' - they ignore there was a run-up that the 'safe' investments did not share. It's not apples-apples, and it's not helpful.
I've enjoyed reading some of Larry's posts over at Bogleheads, and I'm sorry, but that lack of detail and emphasis on the negative w/o acknowledging the positive makes this video less than useless, IMO.
-ERD50