How did you arrive at your asset allocation and what drives those numbers?

[gavinsiu]

I was listening to a Rick Ferri interview where he describe how he arrived at a client's allocation by what appears asking them a series of question where he then teases the client's personal allocation out of them. He points out that a lot of the CFP often use some sort of questionnaire method that really doesn't work.

My mom's CFP did use some sort of questionnaire back in the late 2000's and arrive at 40/60 stock/bond. She eventually drift to 30/70, so he wasn't too far off.

Personally, I started with 100% stock allocation, which I carry until about 5 years ago, where I then started to shift to a more 70/30 position. My reasoning is that I needed those bonds to smooth out the decade to decade returns now that I am closer to retirement and also because my portfolio is grown to a size where I am unable to contribute enough to affect the recovery.

In the past, there have been things like age in bonds, but for some reason that seems less prevalent these days.

What are the ways you arrived at your numbers? What drive that numbers, is it some sort of stats or is it emotional? Part of my curiousity is if you arrived your numbers from an emotional sense or a more systematic path? My particular conclusion comes from

• 30% is about 10 years of expense assuming your portfolio is for 30 years. I don't think we have had a 10 year bear market.
• The Monte Carlo numbers show that I only have slightly reduced return for the next 10 years for going with 70/30 over a 100.
• Backtesting over some bad time period like 1972-1981 (high inflation) and 2000-2009 (Dot Com bubble and Global Financial Crisis) shows a more acceptable numbers for 70/30.
• Unlike most people I am not too concern when my portfolio loses 50%, but I recognized that we may hit a period like 2000 where stock recover slowly.
• My contribution is now about 2-3% of portfolio even when maxed out, this is not enough to speed up recovery.

[Makaveli]

Short answer:

I’m single. I have ample ability and willingness to take risk. However, as my assets have grown, I do not have the need. Hence, I’ve become more defensive.

AA 85:15 age 22-35
AA 70:30 age 36

Some background:

I stole and modified another contributors glide path that I found logical. Based on X years saved.

His was more conservative.
Mine slightly more aggressive.

> 25X = 70:30
> 35X = 60:40

[dlm2827]

We are age 66 and 65 retirees with an AA at 71/29. We each have defined benefit pensions with COLA's, DW will wait to FRA for Social Security and I'll wait until age 70, barring some surprise medical diagnosis. Our pensions more than cover all our monthly bills and we are also able to save a nice chunk each month. 71/29 might not work for all, but for us, it seems right.

[Beensabu]

I balanced things against each other until I got to all-weather market conditions with a pretty good likelihood of riding 3% real over the long-term without any big drawdowns along the way. That's the rate of return I need until FRA (and beyond) at expected contribution ability to be able to retire. But if I need to spend it all before then to get my family through a few more years, I will, so it better be there.

[BirdFood]

I'll be retiring in a year or three.

My assets can be viewed as either LMP plus risk portfolio, or a 50/50 allocation, because once I put together the bond portion of the LMP (after calculating decaying pension and future Social Security, the bonds went into TIPS ladders to fill the gap between that and projected basic living expenses) that's how the allocation came out--50% of my retirement assets fills that gap plus an added modest ladder for unexpected lumpy expenses.

That means that in theory, the equities are bonus money, and that means that I'll probably be able to grit my teeth and leave them in place if they crash.

If equities do crash, the only source of money for replenishing them is my retirement contributions until I stop working. If equities grow...I can't decide. Sometimes I think I'll keep rebalancing toward bonds for a while, increasing the bond ladders for a more comfortable base income. Sometimes I think I'll just let them grow. I really need to make a choice.

[heyyou]

Been at 60/40 since my 401k opened in 1981.
My enduring focus was on saving more for early retirement, but to include sleeping well at night (SWAN). That was best for me to avoid fear and loathing, but others are welcome to do whatever suits them. In our low cost area, we did retire when I was 55 with a barely two comma portfolio, and now my delayed-to-70 SS is more than my no-COLA pension. We were college drop-outs, blue collar workers, so our numbers are mere fractions of what others are posting here these days.

[gunny]

As I said in another thread, I've been extremely aggressive over the years and tapering down some as I near retirement, but still staying aggressive (80/20 is my current target). Some seem to think that merits a derisive sneer, but it's served me well over the years and happily such people aren't in charge of my portfolio. A military pension gives me more leeway to afford to do that, so that factors in as well.

[Tib]

For me, FOMO vetoes anything less than 50% stock. And as a retiree without a pension (other than SS), the risk of having to kick myself for recklessness nixes anything above 60. Since my fixed income consists almost entirely of MMFs, which can be depended on not to be down when needed, and which have a lower expected return than bond funds, I narrow the range to 55%-60%. Within that range, greed tugs in one direction, fear the other.

[Wannaretireearly]

Mid/late forties. Recently changed from 80/20 to roughly 70/30.
I want to be done in 2-4 years. I may not get the option to choose.

I’d like a bigger cash cushion. At roughly 25X.

[carminered2019]

debt free and mortgage free at age 31 helped me to stay in 100% stock during my accumulation years.

[cheese_breath]

I used to be age -5 in fixed income, rest in TSM or S&P 500. Now I'm at the age I want to preserve what I have for my heirs. So I'm 100% fixed income.

[CraigTester]

Landed right on the fence at 30-20-25-25 (VTI-VEA-TIPS-ST)

It's a trade-off between wanting to float with the market's 10% long-term CAGR.., while respecting the below periods of time required for the US market to sustainably break-even.

20 yrs. May 1901-Aug 1921
20 yrs. Aug 1929–May 1949
15 yrs. Nov 1968-Mar 1983
13 yrs. Mar 2000- Jan 2013

[Lawrence of Suburbia]

Interesting topic, as there's been a lot of chat about asset allocation lately, both here and in the financial media I peruse. Plus there's Goldman's and Vanguard's estimates of bleak equity returns for the decade going forward (not that I lose much sleep over those).

In retirement I've loosely hung around 50/50 stocks/bonds, initially for no other reason than fear of big losses in a prolonged downturn. After joining Bogleheads, I became aware of Mr. Bogle's own 50/50 a.a. in retirement (do I have this right?) and decided that I'd do the same -- essentially being agnostic about the likely future returns of stocks and bonds. Plus Bill Bengen's research that 50% equities was probably a minimum to maintain a safemax withdrawal rate.

However I may shift to a lower stock allocation going forward as I head into my mid-70s, as health issues make their appearance (this by allowing Target 2025 to drift along to 30/70 in about 7-8 years).

[best2u]

I have always been a “nervous Nelly” concerning my investments. Initially I tried 80-20 never being able to throw caution to the wind and invest 100% in the stock market. When the Great Recession happened it was sickening. 80% exposure was far too risky for my temperament. I promised myself that I would gut it out, but if I ever got back to near my high water mark I would reduce my exposure big time. I took advantage of the recovery wait by learning about fixed income options and opportunities and reconfigured my strategy.

Fortunately for me the post recession recovery was rapid. I think by 2010 I was able to reduce my stock market exposure by another 20% and have settled at 50/50 now that I am retired. Still hate seeing several thousands go down the toilet in the down drafts but I comfort myself by knowing that losing 25% of my wealth may be somewhere in the realm of risk that I am taking. Just have never found a way to experience the wealth building provided by the stock market without the sell offs. Coulda woulda shoulda been much more wealthy, but I don’t have the stomach for it. Do what works for me.

[TipsQuestions]

During my working years, I had a mortgage (negative bond) so owning 100% stocks and paying that down over time made sense. Then I coasted on 100% stocks for a few years, then found I had more than enough money to retire early, and coincidentally interest rates had become attractive, so retired last year and switched to a 60/40 port. Owning a good chunk of bonds mitigates SORR, and it's one of those "won the game no need to keep playing" setups.

[remomnyc]

During my working years, I was 80/20. I shifted to 55/45 when I retired to guard against SORR. 5 years into retirement, I decided I was overly cautious and pared down to 10 years of expenses in fixed income, which eventually brought me back to 80/20. Once I start SS, my dividends and SS will cover 100% of my expenses. My biggest expenses (new home, parental support, college tuition), aside from future medical, are behind me.

[learn2]

This is an interesting topic. I think of 2 major known risks (inflation, recessions or depressions) and then acknowledge the many unknowns (health, work, local crises due to weather, etc). I then consider what it would have been like in other financial crisis times, and then I look at the target retirement funds at vanguard.

30s-40s: basically 100/0 and 50/50 seem to both poorly address the 2 known risks (particularly if unknown risk is then added: health, job, etc). So to me 60/40, 70/30, 80/20, and 90/10 are the only options (or the in between) so I then chose what feels best for our risk tolerance which is currently 80/20.

[jebmke]

About 50 /50 - equity has had a good run so it is up from 40/60

[Parkinglotracer]

I have always looked for a market mind set and asset allocation that will allow me to stay the course, that I can be financially successful with even with a market decline, and one that seems prudent to me. At age 63, retired w/ cola pensions that cover our needs, I have found 65/35 to be that AA. Market goes up or down, and we only experience 1/3 of the gain or decline. I can live with that.

The market has had a run and I have considered changing our AA to closer to 50/50 at this stage of life.

Money that I know will likely never be spent and left to kids in our Roth is all in equities.

We do a three fund portfolio with a 5 year treasury ladder for fixed income. Love seeing bonds pay yield and then return face value.

[dcabler]

During my working years, it came from backtesting as the base for which I made the decision but it's not like I took the outcome and said "let's use this!". It was only to guide my decision. And it wasn't just for a stock/bond split but the actual choices for those two major asset classes. Between the two asset classes 60/40 worked for us.

As I approached retirement, we moved the bond allocation to duration targeting using TIPS funds. At that point, we stopped rebalancing between stocks and bonds because we could see that TIPS was going to provide the base of income we were looking for. The first year of retirement, we continued with duration targeting and withdrew from TIPS funds accordingly. We've begun our second full year of retirement and this year, we'll be moving from duration targeting to a TIPS ladder (3 ladders: 2 SS bridges and one that lasts to our mid 90's).

For our daughter, we've suggested a different approach inspired by TPAW, which over time will create a dynamically updated glidepath for her. Because she has most of her human capital still ahead of her, she's starting out 100% stock with a US + International developed mix. Guided by TPAW, she'll start to add bonds to the mix, starting off with duration targeted TIPS funds and continuing rebalancing until she's close to retirement. Then following what we did from that point onwards with TIPS. This of course assumes that consumer investment choices remain as they are today.

Cheers.

[dogagility]

During accumulation: highest growth potential without using leverage... 100% equity

Plan during retirement: asset allocation that provides the most acceptable withdrawal amount balanced by how low the withdrawal could be during a bear market. Used VPW and TPAWPlanner on this. Will be somewhere between 60 - 70% equity.

[Target2019]

60/40 moderate, age 50.
50/50 balanced, age 65.
65/35 moderate growth, age 71.
Pension and two SSA checks.

Late starter, maybe too conservative, but that helped cushion the blow during the Great Recession.

[TexNewMex]

Just retired at 67 so I am unwrapping from an array of questionable funds from my employer into a manageable set of low ER index funds, i.e. Bogle-style. My SWAN is an AA of 50/50. My DW has done well over the years with a target date fund that is approaching 30/70, resulting in a family portfolio AA of 40/60. The next "big event" in our retirement life is starting RMDs in 6 years. If the Retirement Gods are good to us between now and then, I plan to let the equity side of my portfolio drift up about 10% to 15%. If the Gods are not so good, I plan to "set it and forget it" at 40/60.

[srblanco7]

Planning retirement for the end of this year. Over the past few years we've increased our allocation to fixed income/cash from <20% of our portfolio to about 30%. We did this with money that we earned/invested as well as cap gains/dividends that we received from our current portfolio.

The 30% in fixed income/cash represents about 10x annual planned expenses. Knowing that the stock market provides positive returns for 95% of 10 year windows, this felt right to us in terms of asset allocation entering retirement.

[Capster1]

Mid 40’s, I’m somewhere between 70/30 and 75/25.
I looked at the max drawdown numbers and decided I could stomach a 70/30.
I think I’d have less doubts at 60-65% equities.
I’m self-employed and don’t make lots of money. I often feel I should be more defensive and preserve what I have…but for now I’m sticking with it.

[student]

I was 90% equities until mid-40's, then I switched to 115-age in equities for a few years. Once it reached 60/40, it became the target. Actually my target is 60/35/5 with 5 meaning 5% cash. Currently it is out of target at 62/31/7. I plan to hold around 60/35/5 for a few more years until my retirement date is set. I use this because it seems reasonable based on my age and risk tolerance.

[sailaway]

Originally, I used Fidelity's AA tool. The result was 80/20. Turns out, I didn't think about applying that outside of my 401a at the time and so I was actually started getting more aggressive.

Several years later, when my partner asked me to take over our joint finances, I suggested this include a joint AA for tax efficiency. They looked at the total, ran some numbers in how much they were willing to lose and suggested 70/30. I figured that was close enough to 80/20, and much better than our existing 93/7, and we ran with 70/30.

We don't have a cash target, but we count our cash in with bonds when running the numbers.

[firebirdparts]

My volatility tolerance is basically infinity, and I have had a lot of experience, so I am very aware intellectually of what the real risks are (having suffered them).

So I am looking at the likely outcomes and the effect of my age and basing it on that.

I am a total fundamentalist, and I just look at what the asset really is rather than what people say it is.

I have had very limited experience with people who chose a financial advisor lifestyle, but I think they struggle to truly believe in these questionnaires. Obviously, they listen great when the answer is 40/60 to 70/30. If it's not, they might just ignore it.

[ondarvr]

100/0 and very comfortable with it until 60, life changed at that point, wife became disabled and I was laid off. I set aside enough in an emergency fund to last until I was 67 and planned to collect SS. Got another job and all 401K contributions went to 100/0 again, but kept the EF. As each month passed I reinvested that months portion of the EF back into 100% equities. At 68 and still working I rebalanced my current 401k to 70/30 and changed my future contributions to match that balance. Most of the other accounts are still at about 100/0. Now at 69 I'm about 70/30 and still investing 35% of my gross to my 401K at 50/50. Probably waiting until 70 for SS, but all of our living expenses will be covered by fixed income at that time, so there's no need to withdraw from investments to continue with our current lifestyle.

[shm317]

42, married, 3 kids. Will likely be done as a high earner in 1-5 years, one way or another, but wife has a small steady income and I will be too bored not to earn a little as well....I kept flip flopping between 75/25 and 80/20. Finally decided to split the difference at 78/22 haha

[jaytee52]

Just retired 2 weeks ago at age 72. I read Bogleheads for 3-4 months (should have done that long ago!) to help decide AA for retirement. I rolled assets into a tIRA at Fidelity. I settled at 60/30/10-stock/bond/cash. Equity has a slight mid-cap value tilt and portfolio mirrors performance of Vanguards VBIAX balanced index fund. I need to take RMD's this year so the cash portion is larger than if I were younger. I have 3 years of RMD's in MM/CD's and another 7 years of RMD's in total bond. Theoretically I should not need to sell any stock for 10 years. I am very thankful for this forum as it really helped with planning. During my accumulation years I never really considered AA. I more or less just bought funds that were recommended by TIAA/CREF and was probably around 50/50 during my career. Not a bad AA but I could have done better.

[Mrbogleheads]

Risk tolerance, age, U.S supremacy yes or no, historical performance, etc

[ad2007]

We retired with AA set at 50:50. Covid happened and I rebalanced a lot into stocks during the dip. The subsequent rebound has us at 90:10 (now in our early / mid 50s). The reason I've not rebalanced back is most of our money in taxable and I really don't want to pay taxes I don't need to pay at the moment. Hope I'm not letting the tax tail wag the dog here.

[Gecko10x]

Started with about 70% equities because I'm conservative by nature. Eventually realized I probably should have been more aggressive because I can tolerate it. During covid crash I increased to 80%. I've now largely drifted back down to around 70% since I'm hopefully <10 years to early retirement.

[goblue100]

I narrow the range to 55%-60%. Within that range, greed tugs in one direction, fear the other.

I like that, true for me as well. 60/30/10. 15% international equity, any moves this year will be rebalancing equity to get to 20% international. Not in a big hurry to do that.

[Wanderingwheelz]

70/30 for life was where I was at over the last few years. Currently 71.5/28.5 as very near retirees.

I give a lot of thought to the need, willingness and ability to take risk quandary so many of use find ourselves in. I don’t think we are 70/30 lifers anymore, but I’m unsure what I’ll do.

[KEotSK66]

My draw and inflation determined my needed annualized TR, then I picked a fund which had a good chance of delivering on that annualized TR.

So my needed TR drove my fund choice, with the AA and SD/risk associated with that fund embraced.

(I had a tough time deciding whether to select Wellesley or Wellington and even considered using both for a brief time, but in the end Wellesley's good portfolio efficiency and income won the day. I recently added PRCFX (40/60), in good part because of the manager.)

[KEotSK66]

I was listening to a Rick Ferri interview where he describe how he arrived at a client's allocation by what appears asking them a series of question where he then teases the client's personal allocation out of them. He points out that a lot of the CFP often use some sort of questionnaire method that really doesn't work.

Neither of those methods seem practical to me, a financial plan has to be based on the numbers and if it isn't...you in trouble bro.

That's why I say the needed TR drives the portfolio design or fund selection and the associated risk has to be assumed/embraced, makes no sense to hold all your money in a safe checking account when you need 8% annualized TR. (The needed TR is derived from the draw and inflation.)

[Chicagoprof]

In my 30s and 40s, I remained at 100% U.S. equities because I was behind in savings and was willing to take some risk in a bid to catch up. I also had much more volatility tolerance. I'm now about 4-7 years from a planned early-ish retirement and have moved to 70/30 and then to 65/35 with a market weight US/intl allocation, where I plan to stay for the time being. I've been convinced by arguments that retirees planning for a long retirement should have at least 50% equities to keep up with inflation; but as I get closer to my retirement "number," I've felt more defensive because (1) I have less time (and ability, as portfolio has grown), to overcome market downturns through savings; and, I think, (2) higher loss aversion as my portfolio has grown--I really felt the 2022 downturn in a way that I didn't with other big crashes (Dot Com, Great Recession) when I was younger. In addition, higher projected bond returns seem to argue for holding somewhat more bonds to maximize risk adjusted returns. I've also been convinced it makes sense to hold more international as a hedge against a lost decade in US equities like the 2000s. In addition adding more equity diversification helps me mentally embrace retaining some significant equity side risk in spite of my growing risk aversion. The above explanation probably overstates how thoughtful recent AA decisions have been--in practice, I have kind of picked an AA based on a gestalt sense of risk tolerance (and then rationalized it to myself), and then adjusted with experience. [Edit: It is interesting to look back at old posts on asset allocation. At the beginning of 2023, I was still relatively unaffected by the 2022 decline and declaring myself to be tolerant of volatility. As I think back, it was by the end of 2023--when my portfolio still had not recovered--that the decline began to weigh on me. It is easy to say you will tolerate a downturn, but it is the real-world experience of one, especially one that lingers, at this stage in life that has proven instructive for me about my real risk tolerance. Turns out it is less than I thought it was.]

[CFR]

I've vacillated between wanting 60/40 to 70/30 for a long time now, mainly because I suffered from FOMO. But ultimately, I let the math and tools we all use to make the decision for me.

My favorite at this time is:
https://earlyretirementnow.com/
And while studying the results for a long time, I simply settled to the fact that either of those two ranges should carry me until I am gone. Today as I write, I think it is at 61/39, but will let it ride up to about 65/35. I think many here will have the opinion that there is not much difference between 60 and 70 percent stocks.

I also check those evaluations with Fidelity's tools. They appear to correlate reasonably well, taking into account each has different assumptions and methodologies.

CFR

[Zetorman]

For me, FOMO vetoes anything less than 50% stock. And as a retiree without a pension (other than SS), the risk of having to kick myself for recklessness nixes anything above 60. Since my fixed income consists almost entirely of MMFs, which can be depended on not to be down when needed, and which have a lower expected return than bond funds, I narrow the range to 55%-60%. Within that range, greed tugs in one direction, fear the other.

Couldn't have said it any better myself!

[KEotSK66]

I think many here will have the opinion that there is not much difference between 60 and 70 percent stocks.

That's in the eye of the beholder.

But you can get a feel for various AAs by comparing annualized TRs for VG's Target Retirement funds, maybe even the LifeStrategy funds. You'll probably see a slight increase in annualized TR as the AA gets more aggressive.

[RetirementClass2021]

We are retired in our 60s and 70s.
80% Equity 20% Fixed Income. And plan to stay this way.
Own our home.
SS and pension covers all our expenses.

[RadAudit]

My DW and I were discussing future AA possibilities. I wanted 60/40. She wanted 40/60. We compromised on 50/50. It's been that way for about 10 years with a very slight tilt to a higher stock percentage due to the reinvesting of money leftover at year end in taxable stock index funds.

So far (I'm 77) it seems to be working. The total portfolio has doubled since retirement about 14 years ago. (I guess that means real wealth has staid about constant.) Don't know if it'll be enough for all of her future plans - college for the grandkids, small distributions of the estate to the kids at Christmas, various charities, etc. Might have to make a mid-course correction in a couple of years on AA. Or - since I might be out of the picture in about five years = I could just let her figure it out on her own.

[djm2001]

I don't want to make such decisions so I use market cap weights across everything, including stocks vs bonds and US vs international. Sharpe's free RISMAT book has a chapter on how to do this quite easily. It results in a reasonably well-rounded portfolio, currently roughly 63/37 global stocks vs global bonds.

[majiaknight]

My AA has shifted from 70/30 in my 30s to 80/20 in my early 40s. The primary reason for this change is reaching the 25x financial milestone and experiencing peak earnings during the accumulation phase, which has increased my risk appetite.

[gavinsiu]

I was listening to a Rick Ferri interview where he describe how he arrived at a client's allocation by what appears asking them a series of question where he then teases the client's personal allocation out of them. He points out that a lot of the CFP often use some sort of questionnaire method that really doesn't work.

Neither of those methods seem practical to me, a financial plan has to be based on the numbers and if it isn't...you in trouble bro.

That's why I say the needed TR drives the portfolio design or fund selection and the associated risk has to be assumed/embraced, makes no sense to hold all your money in a safe checking account when you need 8% annualized TR. (The needed TR is derived from the draw and inflation.)

I would say that a time factor has to be considered. The total return of stock may not be realized for over a decade, but your retirement may not wait. I do not have 100% now because I may not be able to recover fast enough if there is a prolong stock market crash, but because I was aggressive in my youth, I can afford to dial back.

The other factor consider is your mental capacity for risk. You should pick a portfolio that you can hold without freaking out and selling out and start a death spiral where you sell out because there is a small drop on the market and then stay on the sideline not knowing when to get back in only to get back in time for another drop. This is mostly what Rick Ferri and what the advisor questionnaire is tyring to do.

[KEotSK66]

I would say that a time factor has to be considered. The total return of stock may not be realized for over a decade, but your retirement may not wait. I do not have 100% now because I may not be able to recover fast enough if there is a prolong stock market crash, but because I was aggressive in my youth, I can afford to dial back.

That's why I used the word "annualized". You have to design your plan to deal with what annualized implies/means...SD.

The other factor consider is your mental capacity for risk. You should pick a portfolio that you can hold without freaking out and selling out and start a death spiral where you sell out because there is a small drop on the market and then stay on the sideline not knowing when to get back in only to get back in time for another drop. This is mostly what Rick Ferri and what the advisor questionnaire is tyring to do.

How does mental capacity for risk pay the bills, last time I checked people only accept payment in dollars.

[MathWizard]

I was 100% stocks until 10 years from projected retirement,
because I needed the return that stocks could give, and I had
time on my side.

At that point I went to 65/35 as I was approaching the amount
needed to retire and less time to recover from a large loss.

I have shifted to 60/40 now, since I think stocks are very
overvalued, and I could easily lose half my stock allocation.
Also, Klangfool's argument for 40% bonds/fixed income being
10 years of 4% withdrawals is intellectually appealing.

If a large drop of 25% to 50% occurs, I'll rebalance and perhaps shift back to 65/35, because I'll be less nervous.

At current stock valuations, I'm at 40x so I can afford
to be a little wrong. At 60/40, even if I lose 30% of my portfolio ,
I'd still be at 28x.

[gavinsiu]

How does mental capacity for risk pay the bills, last time I checked people only accept payment in dollars.

Mental capacity for risk is mostly about how much volatility and down market you can stand. Let's say this is the accumulation stage, and you follow the guideline have having 80% stock when you are in your 20's, this is a good allocation for that age, but it may not be the best allocation for that person. The person may ber unwilling to have a 80% allocation and sell out constantly. The best allocation is the allocation you can maintain, but it's not easy to figure out that allocation. This is probably something that Rick Ferri and other financial planner face when they try to help their customer to find their allocation. Part of the issue is emotional. If a person is purely logical they would feel that they have 40 years go to and so should not care about However, most people are not purely logical and so will exit the portfolio after suffering a high enough loss.