Beware of Survivorship Bias When Investing
Money For the Rest of Us · Money For the Rest of Us
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Show Notes
Why long-term U.S. stock market outperformance could be because it has avoided major catastrophes. Does an over-reliance on historical U.S. stock returns when modeling retirement outcomes lead to spending rates that are too high?
Topics covered include:
- Why you might consider earthquake insurance
- What is survivorship bias and what are some examples
- Why the U.S. is an outlier when it comes to stock market performance
- Why the 4% retirement spending rule might be too high
- If the 4% spending rule is too high, what can retirees do instead to have enough for retirement
- Why the size and scale of the U.S. economy provide some resistance to catastrophes
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Show Notes
Survivorship Bias—Matt Rickard
The Financial History of Emerging Markets: New Indices by Bryan Taylor—SSRN
The (Time-Varying) Importance of Disaster Risk by Ivo Welch—Financial Analyst Journal
The 2.7% Rule for Retirement Spending by Ben Felix—YouTube
Related Episodes
250: Investing Rule One: Avoid Ruin
326: The New Math of Retirement Spending and Investing
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