[Karl]

In accumulation phase, some say to be 100% equities. In the 70s/80s, CD’s were the hotness.

Does the equities asset class have staying power over all other asset classes to be the “100% during accumulation” go to, or can that shift over time to something…else?

[Frank]

Well, do you have a crystal ball that can predict the future? If not, I suggest the last 100 years or so might give you a better guess than other guesses.

The truth is nobody knows. But we do know what the average temperature in various seasons in our location has been in the past.

So that makes for a better guess than most for next year.

[Rick]

One key accumulation factor you did not mention but may have thought of is dollar cost averaging. And it’s bigger brother rebalancing.
Combining these factors so very often turns relative “loser” assets classes into winners, either or both on return and risk bases.

I have seen, but don’t have at my fingertips, analyses showing small cap value was handily beaten by s&p500 over a recent 5-7 year time frame (on only a pure time frame return basis) yet when biweekly dollar cost averaging (like vis paychecks) and once annually rebalancing (near year end) resulted in very similar returns and at many times lower portfolio volatility over the same time frame.

But this is hard to very hard for our brains to conceptualize.
Good question and topic for discussion.

Thanks for starting it.

[Matt]

Every single time the market drops, anytime, even just a couple years ago, THAT was the moment CASH/Savings did better than stocks… just sell at every top (impossible) and buy back every time it is about to go back up (impossible).

Savings typically loses to inflation.

Low-cost broadbased index funds (or equivalent stocks, before them), held for the long term, have performed the best in measured humanity.

Savings have a role in short term financial stability, equities have a much larger role in long term financial goals.

If you’re going to Die With Zero/”end of plan” in known 2 years, sure, liquidate any equities, lock it into cash and commence burning through it.. tomorrow is too uncertain for the volatility of stocks.

Or maybe it isn’t.

[Author]

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