Housekeeping note: We have family and friends visiting from out of town this week and early next week, so there will be no article on Monday.
This week researchers Wade Pfau and Michael Kitces released a new paper looking at an assortment of different asset allocation strategies in retirement — ranging from various static allocations, to various “glide path” allocations that either increase or decrease the stock portion over time, to various valuation-based allocations that adjust the stock/bond ratio over time based on whether stock valuations are high or low.
The paper and the authors’ respective summary articles can be found here:
- “Retirement Risk, Rising Equity Glidepaths, and Valuation-Based Asset Allocation” from Michael Kitces and Wade Pfau
- Retirement Risk, Rising Equity Glidepaths, and Valuation-Based Asset Allocation from Wade Pfau
- The Impact Of Market Valuation On Declining And Rising Equity Glidepaths from Michael Kitces
If I were to offer my own very brief summary, it would be as follows:
- Based on historical US data, adjusting asset allocation based on market valuations has modestly improved results for retirement portfolios, and
- A fixed 60%-stock allocation is pretty darned good as well.
- Tactical Asset Allocation Pro/Con from White Coat Investor
- Financial Planners Should Be More Like Hairdressers from Stuart Armstrong II
- Avoid Being an Out-of-Style Investor from Rick Ferri
- Now is a Tough Time to Retire from Wade Pfau
- Has Indexing Gotten Too Big? from Vanguard
- The Academic Background of Your Humble Index Fund from Monevator
- Your 401(k) — A To-Do List for the Rest of 2014 from Roger Wohlner
- The Key Problem with Monte Carlo Software: The Need for Better Performance Metrics from Joe Tomlinson
- A discussion between Gus Sauter, Rob Arnott, and Jeremy Siegel about how to weight stocks in an index (The article is several years old, but a reader just brought it to my attention, and it’s still quite good.)
- How to Not Worry About Your Mutual Fund’s Performance (from me, at WSJ)
Thanks for reading!