Saturday, June 2, 2018
In their latest joint effort, Waring and Siegel write on the nature of investment risk. Read the comment draft here. The authors' experience suggests that few investment professionals articulate risk well to their investors. This research uniquely and graphically reveals the nature of strategic asset allocation (SAA) investment risk not only for single-period investors, but also for multi-period investors such as those whose savings are held for retirement consumption purposes. Informed by Monte Carlo simulations, they evaluate and picture the nature of that multi-period consumption risk with both efficient spending rules and inefficient spending rules. Risk in a multi-period context means that expected spending may increase with greater SAA risk, but it may instead be worse.
Posted by Barton Waring at 9:49 PM