I’ve posted Entry #628 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Standard Buy-and-Hold Allocation Advice Is More Dangerous Than It Seems.
Juicy Excerpt: I knew many investors who swore fealty to Buy-and-Hold principles who went with stock allocations of a good bit higher than 60 percent at times when the CAPE value suggested a stock allocation of 30 percent. Stock allocations of 80 percent were common. In fact, it became standard practice in Buy-and-Hold retirement studies purporting to reveal the safe withdrawal rate to use an 80 percent stock allocation as the default assumption. Huh? It’s conventional wisdom that retirees should be going with lower stock allocations than younger investors. So what sense does it make for researchers who follow Buy-and-Hold principles in their work to assume 80 percent stock allocations for retirees?
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