am wrote:We all live by the notion that the market will go up in the long run otherwise we would not invest.
"In the long run, we are all dead."--Keynes
So 100% equities will give us the highest return.
No. 100% equities will not necessarily give
us the highest return. It just gives us a darn good
chance at a darn good return. State lotteries are
statistical losses, but individuals do win; 100% equities may be a
statistical win, but it is possible to lose.
Since we are all bogleheads and are all disciplined, we will not touch our portfolios during bear markets.
Sorry, that's a hypothetical and you must show me the evidence for that. The long-term statistics for any long-term investment plan
must be weighted by the probability that the investor will actually follow that plan. That is a huge hypothetical. I'd like to find the actual source but I've seen several throwaway statements that say most investors will sell if their portfolio drops 25%. You are saying that all Bogleheads are well above average. You are saying you, yourself are well above average.
If we are in the accumulation phase, than we will continue to buy more shares during bear markets even as the rest of our portfolio drops.
We may not have a choice. Either a) we may not have the money to buy stocks with, or b) nobody may have the money to buy stocks with. During the Depression it wasn't necessarily that people didn't
want to buy stocks. It wasn't necessarily a failure of will or weakness of character.
In his diary, Benjamin Roth is constantly wringing his hands over the incredible bargains he sees if only he had money to buy them. But not only was he short of money, money itself was in short supply. People who
had money often had them in banks that were refusing withdrawals. To get any money from their bank account, their only options were a) to wait for years, or b) to sell their bankbooks on the market that developed for them, at perhaps $0.30 on the dollar.
If we are in stable professions like medicine, tenured professor, etc. than 100% equities makes more sense since our human capitol is like a bond.
Nonsense. In the first, place, we do not own our jobs. In the second place, most people with money to invest--not all, but most--have always been in stable white-collar professions. So nothing has changed. This "discovery" of human capital may provide a different way of doing the internal accounting, but it shouldn't lead to a different answer. If it wasn't prudent for people in stable jobs to invest in 100% stocks five decades ago, then it still isn't. You can't say "those jobs weren't bonds before, but they are now, so the prudent stock allocation should increase." In fact, I think most doctors and tenured professors would probably say that there jobs are not as secure as they were five decades ago.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.