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Grant

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    • I disagree. You can only eat returns, not risk adjusted returns.

      Post: Sea Change?

      Link to comment from October 29, 2023

    • To be fair, Howard Marks is talking about a very different security than what manyinvestors use to decrease the volatility of their portfolio - the former being junk bonds that carry equity like risk and return, and the later being government bonds that do not, and also have a low or negative correlation to equity risk. I’m sure Howard Marks is not suggesting that those invested in government bonds to smooth he ride, should sell their government bonds and buy junk bonds.

      Post: Sea Change?

      Link to comment from October 29, 2023

    • I disagree. The primary advantage of tax deferred accounts is the tax free compounding over many decades. A lower marginal tax rate in retirement is a bonus, but the main advantage is the tax free compounding. We are not hardwired to easily understand the powerful effect of compounding over long periods of time, but if you run the numbers you will see this to be the case, when compared to a taxable account.

      Post: Wrong Bucket

      Link to comment from February 7, 2022

    • I think you are making the mistake of focusing on taxes paid in retirement rather than money left to spend after taxes paid. Years of tax free compounding in your 401k more than makes up for being bumped into even the highest tax bracket, when you look at money left after taxes paid. Tax protected accounts should be funded ahead of taxable accounts.

      Post: Wrong Bucket

      Link to comment from February 7, 2022

    • I agree simplicity is important especially as we age. One interesting point - you are not selling stocks when they are down when you sell a Life Strategy fund in a bear market. As explained to me by Ben Felix of Rational Reminder podcast (which I highly recommend), these asset allocation funds rebalance daily (largely with cash flows), so when you sell in a bear market, the stocks you sell have been bought that same day with the proceeds of bonds that have been sold as part of the rebalancing process. So you are really just selling bonds, not stocks. So there is no problem with keeping everything in a Life Strategy fund and selling off slivers as needed regardless of market conditions. I also wouldn’t move away from small cap and value tilts in retirement. In fact, according to Larry Swedroe, that diversification across risk factors is particularly important in retirement as it’s not predictable when factors, including market beta (total market) will do best. Eg retirees in 2000 only in total market funds go hammered, whereas those diversified into small cap value had a better experience.

      Post: Mix and Match

      Link to comment from December 4, 2021

    • Yes, it sounds logical to do that. In practice the data shows you are better off indexing.

      Post: Why They Believe

      Link to comment from August 15, 2021

    • Not if we know there’s a high chance of underperformance. I’d say there’s better ways to de risk your portfolio.

      Post: Why They Believe

      Link to comment from August 15, 2021

    • You mention the figure of 75% underperformance over 5 years. More importantly, as the time period increases, the underperformance increases. SPIVA has only been around 15 years, after which time underperformance is in the 90% range in all asset classes. Larry Swedroe estimates by 25-30 years only about 2% of actively managed funds outperform their appropriate risk adjusted index. It really is a loser’s game.

      Post: Why They Believe

      Link to comment from August 15, 2021

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