seattle prattle wrote:
Ghost of Igloi wrote:
Financial Advisor wrote:
That type of thinking is slowly being turned on its head. The reality is that someone retiring at 65 may have the need for 20+ years of investment survivability. Thus modern thinking is that stock allocations should remain higher than the traditional 40% at retirement.
You should test that assumption against facts. Research sequence of return and you will learn to be a better FA.
There is always the strategy to move to safer stock picks rather than moving out of stocks. Something like Berkshire Hathaway as opposed to Tesla or the FANG group, Similarly, moving towards dividend-paying stocks and out of the high growth ones. Of course, this is assuming one has the assets to outlast a market downturn.
I believe this would be more in line with what Financial Advisor is referring to.
Dividend stocks will likely be no refuge. Why, people have bought them as bond proxies and they have been distorted with the general market. In fact look at any stocks that are viewed as safe haven bond proxies and compare them to the market with the recent rise in the 10 Year Treasury. For example in my home state of Idaho our local electric utility is Idaho Corp (IDA). The stock has lost nearly 20% since December 1st largely with a move in interest rate. Many companies like McDonald’s have driven EPS and dividend payments via stock buybacks and leveraged debt. So I believe this theory is not supported by facts.