Quote:
Originally Posted by manaboutown
In a nutshell, maintaining his prescribed asset allocation is the key to both optimizing and stabilizing one's safe maximum withdrawal rate. My asset allocation has drifted to 70-30 stocks/bonds&cash, well away from his model as the stock market has been on an upward tear.
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First, one can only backtest any asset allocation against known history. As long as history is similar to the past, which has a long track record of forging new paths, his allocation will work. .
Second, the stock market has no control group, and no counter factual, the future will be what the future will be regardless of the past, so IMHO, your equity position is too high, even though the current valuation feels very comfy and smart. .
of course, my opinion could be very wrong for a long time, or could be right sometime in the next X years, or both. . . having lost everything once in the stock market, I play much more risk adverse, and may not make a huge return, I just refuse to go backwards any significant amount. . . I have just seen a few people who have had very large amounts of money get very complacent or unable to sell, and have lost a substantial amount of money eventually. .
good luck. .