I’ve posted Column Entry #46 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called It’s Not Always a Good Idea to Lower Your Stock Allocation As You Age.
Juicy Excerpt: The full reality is that aged investors are better sticking with high stock allocations at times of moderate and low prices and all investors (not only aged investors) should be going with low stock allocations at times of high prices. Should age then not be a factor that investors consider when setting their stock allocations?
I think age should be a factor. The error in the conventional wisdom is in overstating the importance of this consideration while understating the importance of valuations. At times of moderate valuations the relatively small consideration of whether the investor will have enough years before his retirement to recover from losses suffered looms more important.