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Once You’re Up, You’re Up For Good.

Once You’re Up, You’re Up For Good.

For decades now the conventional wisdom has favored a more aggressive investment portfolio for a person of a younger age — when he or she can afford to weather more volatility — and a more conservatively biased portfolio for persons at a more advanced age, when capital preservation takes primacy over higher returns. Such counsel rang true enough in its day, but over the next few minutes I hope to make the case that paradigms in finance have shifted so dramatically as to render this oldest of investing maxims all but toothless, if not actually flat-out wrong.

This is a long column but do bear with me because, at the end of it, I’ll be showing you what I think is the new, better way of managing risk across all segments of the age-and-demographic spectrum: an updated metric, functioning as the modern analog to our old rules about risk-return correlation, complete with a live example. The entire column will take about twenty-five minutes to read.… Continue reading