Moshe Milevsky wrote:And, if you believe that the end of March/2009 isn’t a fair ending point, consider the end-of-December/2008 values: Sally has $234,500 while “Buy and Hold” Robert has $226,500.
adrian2 wrote: Cherry picking is the correct term: I believe March 2009 isn't a fair end point and could be replaced with today's date, when the equity markets are about double that value. Changes the conclusions quite a bit, IMO.
As for looking in the rear view mirror, my view is that T-Bill real returns of the past 15 years are less likely to be repeated in the next decade and a half as opposed to equities.
Well, I suppose if you like looking in rear view mirrors, you could have a long glance back at the Great Depression era when a similar "Wow! See how the stock market has bounced back already!" sucker upturn occurred. And what followed that big bounce? A big, big drop. Maybe all you stock bulls haven't noticed but the governments on this side of the pond are propping up their economies with billions/trillions of dollars -- and those economies are still barely hanging on. A number of European countries are virtually bankrupt. If something unravels in Europe or elsewhere, would it not stand to reason that a worldwide financial contagion would erupt? For the moment, I prefer my cash or cash equivalents -- regardless of immediate or predicted future returns.
Milevsky again (from the article with link below): "Indeed, I believe that your equity allocation should depend much less on your so-called time horizon, hard-to-measure risk aversion or fickle confidence in the stock market, and much more on the composition and structure of your personal balance sheet. If your job is reasonably secure, your pension is protected and your income is predictable, then go ahead and take some stock market risk with the non-essential funds."
And if your job ain't secure, you don't have a protected pension and your income is unpredictable?
Read more: http://network.nationalpost.com/NP/blog ... z1EWCVaRmj