Comments on: This and That http://www.canadiancapitalist.com/this-and-that-87/ Helping you invest and prosper Sat, 11 Feb 2012 12:40:17 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Canadian Capitalist http://www.canadiancapitalist.com/this-and-that-87/#comment-130571 Canadian Capitalist Mon, 28 Apr 2008 01:09:32 +0000 http://www.canadiancapitalist.com/?p=933#comment-130571 Hi Michael: I won't be offended; I didn't do the study :) Your explanation makes sense because the article referred in this post didn't give many details of the study but just noted that increasing bond allocations over time didn't do as well as decreasing bond allocations, which I thought was curious. Glad we cleared that up. Hi Michael:

I won’t be offended; I didn’t do the study :) Your explanation makes sense because the article referred in this post didn’t give many details of the study but just noted that increasing bond allocations over time didn’t do as well as decreasing bond allocations, which I thought was curious. Glad we cleared that up.

]]> By: Michael James http://www.canadiancapitalist.com/this-and-that-87/#comment-130565 Michael James Mon, 28 Apr 2008 00:52:24 +0000 http://www.canadiancapitalist.com/?p=933#comment-130565 CC: I took a stab at writing up the main problem with this study: <a href="http://michaeljamesmoney.blogspot.com/2008/04/questionable-studies.html" rel="nofollow">link</a> I chose not to reference your Friday post because I didn't want to make it seem like I was being critical of you. CC: I took a stab at writing up the main problem with this study: link

I chose not to reference your Friday post because I didn’t want to make it seem like I was being critical of you.

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/this-and-that-87/#comment-130171 Canadian Capitalist Fri, 25 Apr 2008 16:22:39 +0000 http://www.canadiancapitalist.com/?p=933#comment-130171 Thanks for the link. I'll have to read the paper to understand it better but I find it surprising that the investor who started off with a higher allocation to equities (and reduced it over time) did worse than the investor who started off with a smaller allocation to equities and increased it over time. Thanks for the link. I’ll have to read the paper to understand it better but I find it surprising that the investor who started off with a higher allocation to equities (and reduced it over time) did worse than the investor who started off with a smaller allocation to equities and increased it over time.

]]> By: Michael James http://www.canadiancapitalist.com/this-and-that-87/#comment-130167 Michael James Fri, 25 Apr 2008 15:39:59 +0000 http://www.canadiancapitalist.com/?p=933#comment-130167 Here's the link: http://www.lclark.edu/faculty/schleef/objects/FSReview_schleef_eisinger.pdf I don't believe it does cast any doubt on the advice to reduce equity exposure as you age. Reducing your equity exposure is not done to maximize your odds of hitting a target portfolio amount. The only thing this study shows is that equities outperform bonds on average. Their results show that the 100% equities portfolio has the best chance of reaching the targets they set. The conclusions the authors draw about the value of reducing equity exposure with age are not justified by their study. Ziv Bodie also thinks that equity exposure should remain constant, but for different reasons. In his case, he clings to the principle of constant relative risk aversion, which I have shown to be silly in a couple of my posts. Here’s the link:

http://www.lclark.edu/faculty/schleef/objects/FSReview_schleef_eisinger.pdf

I don’t believe it does cast any doubt on the advice to reduce equity exposure as you age. Reducing your equity exposure is not done to maximize your odds of hitting a target portfolio amount. The only thing this study shows is that equities outperform bonds on average. Their results show that the 100% equities portfolio has the best chance of reaching the targets they set. The conclusions the authors draw about the value of reducing equity exposure with age are not justified by their study.

Ziv Bodie also thinks that equity exposure should remain constant, but for different reasons. In his case, he clings to the principle of constant relative risk aversion, which I have shown to be silly in a couple of my posts.

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/this-and-that-87/#comment-130163 Canadian Capitalist Fri, 25 Apr 2008 14:58:59 +0000 http://www.canadiancapitalist.com/?p=933#comment-130163 Micheal: I couldn't find a link to the original paper. Do you have a link? But, it raises questions about the conventional recommendation to reduce equity exposure as one ages (something I recall Ziv Bodie didn't agree with either). Micheal: I couldn’t find a link to the original paper. Do you have a link? But, it raises questions about the conventional recommendation to reduce equity exposure as one ages (something I recall Ziv Bodie didn’t agree with either).

]]> By: Michael James http://www.canadiancapitalist.com/this-and-that-87/#comment-130161 Michael James Fri, 25 Apr 2008 14:38:15 +0000 http://www.canadiancapitalist.com/?p=933#comment-130161 I read Mark Hulbert's article and the research paper behind it. All the study proved is that stocks have had higher average returns than bonds. It didn't prove anything about whether asset allocations should change over time. Based on this study, the only reasonable conclusion is that you should put 100% of your money in stocks to maximize the odds that you will hit target amounts between $500,000 and a million by saving $11,000 per year. I read Mark Hulbert’s article and the research paper behind it. All the study proved is that stocks have had higher average returns than bonds. It didn’t prove anything about whether asset allocations should change over time. Based on this study, the only reasonable conclusion is that you should put 100% of your money in stocks to maximize the odds that you will hit target amounts between $500,000 and a million by saving $11,000 per year.

]]> By: MillionDollarJourney http://www.canadiancapitalist.com/this-and-that-87/#comment-130099 MillionDollarJourney Fri, 25 Apr 2008 09:42:45 +0000 http://www.canadiancapitalist.com/?p=933#comment-130099 Thanks for the mention, enjoy the weekend! Thanks for the mention, enjoy the weekend!

]]> By: Canadian Mortgage http://www.canadiancapitalist.com/this-and-that-87/#comment-130064 Canadian Mortgage Fri, 25 Apr 2008 03:59:58 +0000 http://www.canadiancapitalist.com/?p=933#comment-130064 Thanks CC! Cheers, Rob Thanks CC!
Cheers,
Rob

]]> By: WhereDoesAllMyMoneyGo http://www.canadiancapitalist.com/this-and-that-87/#comment-130061 WhereDoesAllMyMoneyGo Fri, 25 Apr 2008 03:26:08 +0000 http://www.canadiancapitalist.com/?p=933#comment-130061 Thanks for the link CC - have a great weekend! Thanks for the link CC – have a great weekend!

]]> By: thickenmywallet http://www.canadiancapitalist.com/this-and-that-87/#comment-130059 thickenmywallet Fri, 25 Apr 2008 03:04:12 +0000 http://www.canadiancapitalist.com/?p=933#comment-130059 "That's gold, Jerry! Gold!" (ok, not a George quote). Thanks for the link. “That’s gold, Jerry! Gold!” (ok, not a George quote).

Thanks for the link.

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