As a young person with reasonable job security and plans to work for decades, as long as the markets weren’t above their historical 2-sigma valuation levels, I would be (and was) excited to be 95% stocks. (Hoping for a crash so could accumulate cheap shares)
But as a retired person, there is no amount where I could personally justify continuously exposing all worldly wealth to the possibility of an 80% crash like we had during the Great Depression.
That’s because even if one still had enough to live comfortably after a crash like that, it would be psychologically devastating.
However, at say 100X expenses, if I had been 50-50 prior to such a crash, I believe I would be willing to go close to 100% stocks “after” such a crash.
But would also be fairly quick to return to 50-50 if/when the recovery began to take hold.
I would also be very mathematically methodical about determining the moments to both increase and decrease those described allocation changes.
PS. Interesting to note that the conventional advice for managing a 100X portfolio is to go very heavy with equity allocation, as you’re investing timeline is effectively extended to that of your heirs.
I intellectually understand that advice but would not enjoy following it.
But as a retired person, there is no amount where I could personally justify continuously exposing all worldly wealth to the possibility of an 80% crash like we had during the Great Depression.
That’s because even if one still had enough to live comfortably after a crash like that, it would be psychologically devastating.
However, at say 100X expenses, if I had been 50-50 prior to such a crash, I believe I would be willing to go close to 100% stocks “after” such a crash.
But would also be fairly quick to return to 50-50 if/when the recovery began to take hold.
I would also be very mathematically methodical about determining the moments to both increase and decrease those described allocation changes.
PS. Interesting to note that the conventional advice for managing a 100X portfolio is to go very heavy with equity allocation, as you’re investing timeline is effectively extended to that of your heirs.
I intellectually understand that advice but would not enjoy following it.
Statistics: Posted by CraigTester — Fri Jan 12, 2024 5:42 am — Replies 46 — Views 4134
