RSS 2.0 Feed
DATA CONNECTION
Source: "When to Commence Income Annuities," Jeffrey K. Dellinger, Retirement Income Solutions Enterprise, Inc., 2011
September 8, 2010, Cover Stories
“What Investors Really Want”
That’s the name of behavioral economist Meir Statman’s new book. We all yearn for upside potential and downside protection—and maybe a weekly Lotto ticket, he says.
When managing his own savings, the behavioral economist Meir Statman practices what he teaches. If his emerging markets equities fund loses value, for instance, he doesn’t panic and go to cash. Nor does he “rebalance” by shifting assets from bond to stocks.
More likely, he would move the depreciated stock fund into a similar stock fund to capture the tax-deductible loss (without engaging in a wash sale). He wouldn’t touch his bond money, which he regards as protection against future poverty.
“I’m very risk-averse with downside money,” he told RIJ recently. “I think that the idea of looking at the portfolio as a whole, and having the same risk tolerance for all of your money, is wrong. I wouldn’t recommend any change based on a prediction of what stocks will do, or on the belief that stocks were cheap.”
To continue reading this article, login below or....
For group discounts, licensing, and reprints, contact kerry.pechter@retirementincomejournal.com.
