Alypius Skinner wrote:
> People aren't always alive in the long-term! Lots of baby boomers are
> approaching retirement when they will begin to draw down their savings. If
> their savings are being decimated by a bear market at the same time, they
> may not have enough to last them until they die.
People retiring today can expect to live another 20 years or so. So
even there it's not clear that heavy equity investment isn't the smart
choice. As far as I understand the literature on the equity premium
puzzle, this explanation doesn't really work. And is % of assets in
equity really tightly linked to age anyway? I suspect that people who
avoid equity when old also avoided when young, and vice versa, but maybe
I'm wrong.
For people who have
> already accumulated a nest egg and may not be young enough to start over,
> capital preservation is rule number one. So it may be a wise precaution for
> these people to move their wealth into save havens, mainly bonds. In a few
> years, this movement of baby boomer money into safe havens should drive down
> both the price of stocks and the yield on bonds.
>
> ~Alypius Skinner
--
Prof. Bryan Caplan
Department of Economics George Mason University
http://www.bcaplan.com [EMAIL PROTECTED]
Mr. Banks: Will you be good enough to explain all this?!
Mary Poppins: First of all I would like to make one thing
perfectly clear.
Banks: Yes?
Poppins: I never explain *anything*.
*Mary Poppins*
