Stocks for the Long Run

Seen first at Dorsey-Wright

New paper by Blanchett, Finke, and Pfau details why stocks appear to be the best investment for time periods over 15 years.  They analyzed across 20 different global markets, and tested various % equities (vs bonds).  The analysis was done by optimizing returns over various levels of investor risk aversion.

The surprising part, to me, is that for a ONE YEAR time frame, the optimal equity allocation was 45% according to this analysis.  That’s a lot more than most advisors would probably consider appropriate for that time window.

Very interesting.  Confirmation bias.


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