RR
Тәжірибелік нұсқаулар және стиль
Are stocks and bonds good in the long game? What are the best long-term investment options? In this episode, we speak to Professor Scott Cederburg about the nuance surrounding the stock market, bonds, and other investment types in the long term. He has a Ph.D. in Finance from the University of Iowa and is currently the Associate Professor of Finance at Eller College of Management at the University of Arizona. His research focuses on the long-horizon performance of a range of asset classes and investment types and has published in high-ranking academic journals, making him the perfect person to speak to about the subject. We discuss the topic through the lens of several papers he has written on stocks, bonds, retirement savings, and return predictability. In our conversation, we unravel the nuance of the returns on long-term stocks and bonds, hear details about his research design, and learn how unanticipated events can affect the market. He also provides insight into the different biases surrounding long-term investments, the block bootstrap approach, reasons why the block bootstrap approach is needed, and why bonds and bills may not be the long-term investment you were hoping for. We also discuss the best options for investors regarding pre-tax and post-tax accounts and the differences between high-beta and low-beta portfolios. He also shares some basic steps for investors to help them protect their investments. Join us as we dig into the past to uncover the financial future with Professor Scott Cederburg.
Timestamps:
0:00 Intro
4:45 Long-Horizon Losses in Stocks, Bonds, and Bills
35:20 Breakdown of what the Distribution looks like for Bonds & Stocks
1:00:06 Tax Uncertainty & Retirement Savings Diversification
1:17:29 Does It Pay to Bet Against Beta?
1:25:18 Prof. Cederburg's definition of success
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Prof. Scott Cederburg - eller.arizona.edu/people/scot...
'Long-Horizon Losses in Stocks, Bonds, and Bills: Evidence from a Broad Sample of Developed Markets' - papers.ssrn.com/sol3/papers.c...
'Stocks for the long run? Evidence from a broad sample of developed markets' - www.sciencedirect.com/science...
'Tax Uncertainty and Retirement Savings Diversification' - www.sciencedirect.com/science...
'Does it pay to bet against beta? On the conditional performance of the beta anomaly' - onlinelibrary.wiley.com/doi/a...
Пікірлер: 33
Just rewatched. This was a really good episode. Need the follow up for work he previewed at that time.
Sobering but valuable. Hoping Prof. Cederberg will continue dialogue on RR when new research is ready esp how now/close to retired are effected and how/if plans can be changed incl DIY. Thank you.
@rationalreminder
7 ай бұрын
He will be back next week!
Fascinating stuff. I'm thanking my lucky stars that I assumed a pessimistic 2% real return when I was trying to decide if I could afford to retire (although it seems that even that may be too optimistic !)
@rationalreminder
Жыл бұрын
A more recent paper from Scott (released the day we recorded - bad timing!) finds a 2.26% safe withdrawal rate for a retiree couple. papers.ssrn.com/sol3/papers.cfm?abstract_id=4227132 -Ben
Not everybody had to grow food anymore in the UK in 1841 because the UK had India in her pocket by that time 😉 I am a big fan of your podcast, just felt like making a comment on this particular thing about UK.
Love this interview. Thank you.
Benjamin getting excited about the data when hearing the 2% withdrawal rate was a great listen. My reaction exactly.
"Survival Bias", or "getting away with it" ignoring the consequences, this concept is very familiar, but what to do with the knowledge is the big problem, you can not use past Precedent to make reliable predictions for Future Markets. This presentation will make it clear and definite.
Amazing episode!
Awesome 😊👍 Thanks. Scott is super nice guy
Excellent video.
Ya Scott is a really good guy ;) I had a lovely chat with him back in Budapest at the FIRS conference
TY
Curious where the traditional notion of some of these asset types being uncorrelated came from. Maybe I just don't understand correlation... I'll add it to the list of things I have no idea about after all.
For pre-tax vs post-tax, if you do pre-tax does that leave more money in your paycheck that you could put into additional investments, thereby increasing the value of pre-tax?
@rationalreminder
Жыл бұрын
Pre-tax should always be viewed net of the future tax liability, which is an unknown. At a constant tax rate, pre-tax = post-tax. Pre-tax works well when the future tax rate is lower than the current tax rate. The difference is like a bonus, -Ben
@jaredcone
Жыл бұрын
@@rationalreminder I was thinking the following scenario: a person gets $1000 gross pay on paycheck, 50% tax bracket, and they want to put $100 into retirement account. Post tax would be $500 after taxes, then $100 into retirement resulting in net pay of $400. Pre tax would put $100 into retirement and net $450 after taxes. If that extra $50 gets invested, does this make pre tax more valuable than post tax if the tax rates are equal?
@rationalreminder
Жыл бұрын
To think through it properly you need to make the pre-tax contribution pre-tax, not with post-tax dollars. You put $100 (pre-tax) into the pre-tax account or $50 (post-tax) into the post-tax account. Once you withdraw from the pre-tax account you are in the same place. The extra $50 is still there pre-tax. Another way to think about this is that you never owned the extra $50. The government owns it and is letting you invest it on their behalf. At a constant tax rate any growth on that portion will always go to the government. At a lower future tax rate you get a bonus. -Ben
@gmh953
Жыл бұрын
@@rationalreminder another thing to consider in the US specifically is that pretax 401k can be used 100% tax free to pay for long term care costs and charity.
1:12:11
If the historic US data supports the 4% rule withdrawal approach but the international data supports a lesser withdrawal rate, say 2.25%, isn't this a strong argument to be a US-only investor? (See 56:00 to 57:12 in the video.)
@rationalreminder
6 ай бұрын
No. There is no reason to believe that the outlier of the last 120 years will be the same for the next 120 years. -Ben
do you think now is a good time to invest into the msci etf ? or the s&p etf?
@kerri648
Жыл бұрын
s&p
@SpaceTravel1776
Жыл бұрын
For a 30-year timeline, anytime is good time to invest. For a 1-year timeline, no one knows when a good time to invest is.
@colmtesticles
Жыл бұрын
Did you watch this video? International beats domestic. Therefore msci should beat s and p
That can lead to a miserly miserable retirement lifestyle to use 2%
@jmc8076
7 ай бұрын
Depends on situations and other sources of safe income incl pensions, large inheritance etc. Able/willing to retire to a place/country cheaper to live either half or full time is a factor.
@Will140f
Ай бұрын
You need to adjust your savings rate now to account for it and you’ll be okay
Idk man. I’m trying to stay open minded but I’m having a hard time believing some of this doom and gloom
@jmc8076
7 ай бұрын
Public info avail if willing/able to find it. Growing incr in tech/automation etc going fwd (ie ARK funds) key and some countries move from US$ (how long?) and EM predicted trend. Truthstream media not $ based but maybe interesting and diff doc videos on YT. DYOR and decide. You maybe right. Cheers