No. of Recommendations: 3
You say for "long term investors, no matter how old they are"...this sounds like a contradiction since the older you are, the shorter your time horizon. If you're 55 and 6 years into retirement, and making a 5% withdrawal per year (for example), you could be wiped out with a 90%/10% allocation if P/E revert to the mean over the next few years. That allocation is extremely aggressive.

I agree that 90/10 is extremely agressive for a truly retired person. At 55 however, I'm guessing he's taking these risks because he could always go back to work if he had to...

If you're 55, you must remember the 70s...

1/1/73 S&P 500 was at 118
1/1/75 S&P 500 was at 68
1/1/82 S&P 500 was at 122 (and then started heading up, up, up)

Anyone who was "really" retired (unable to work) and withdrawing money each year would have been seriously hurt if he or she was in 90/10 stocks/bonds from 1973-1982. However, at least the dividend yield was 4-5% during those years.

Now the dividend yield is less than 2%....

Do you really think that a stock market like 1973-1982 can't happen again? It can, and conditions are right for it do so - based on history. It doesn't mean it WILL happen, but it's certainly possible.

I wouldn't be 90/10 at this time if I was retiring soon.



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