Comments on: Why You Want Your Investments to Dance Like Elaine Benise, not Ginger Rogers and Fred Astaire

By: Are Correlation Coefficents Converging Among Previously Disparate Asset Classes (i.e., is diversification dead?) - The Dough Roller

Sun, 27 Jul 2008 20:29:16 +0000

[...] correlation coefficient (or just correlation for short) is new to you, check out my article about Elaine from the Seinfeld Show (seriously) and my series on Asset Allocation.) So I dug into some research and found some good [...]

By: Dancing news blog » Why You Want Your Investments to Dance Like Elaine Benise, not …

Thu, 06 Dec 2007 13:45:11 +0000

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By: Stop frittering away the fruits of your frugality - Smart Spending

Stop frittering away the fruits of your frugality - Smart Spending — Wed, 21 Nov 2007 14:49:37 +0000

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By: Are Correlation Coefficents Converging Among Previously Disparate Asset Classes (i.e., is diversification dead?) » The Dough Roller

Fri, 14 Sep 2007 15:55:38 +0000

By: Guest Post at Moneyning and some Carnival Roundups | I've Paid For This Twice Already...

Mon, 10 Sep 2007 16:34:36 +0000

[...] enjoyed investments dance like Elaine from Seinfeld? from Dough Roller because it made me laugh out loud thinking about Elaine’s crazy dancing. I [...]

By: Al Brockman

Al Brockman — Fri, 07 Sep 2007 21:56:51 +0000

Thanks for the reply. You’re generally right, particularly if the portfolio is the primary/only source of income. However, there are reasonable growth alternatives to the traditional fixed asset ladder. ETFs such as PID or some others are meant to give a reasonable dividend plus, in a decent market, provide some growth of principal. However, with that choice comes additional risk.
Again, thanks for the comments on my comments.

By: DR

DR — Fri, 07 Sep 2007 10:34:43 +0000

Al, I do think the asset mix should be different for mid-lifers than those at retirement. I agree that even at 65 one may have an investing horizon of 20 years or more (at least we hope). The difference, however, is that a retiree has an immediate need for cash, while a mid-life does not. Therefore, I think a shift toward more fixed income is necessary to meet the short-term cash needs of retirees. Full Disclosure: I’m a mid-lifer, so maybe I’ll view it differently in 20 years. As for recent correlation, I’m researching the question now and hope to post a response tomorrow. Best, DR

By: Al Brockman

Al Brockman — Thu, 06 Sep 2007 13:15:53 +0000

Hi – Thanks for the nice comment. My frustration is that the Ferri data is for the period through 2001. My layman’s guess is that the impact of globalization really hit after 2001. If true, then the correlations are probably much higher since then. I don’t want to harp on this element of asset allocation but how do you find asset classes with low current (e.g. 2001-2006 correlations? Obviously, fixed assets should have a very low correlation – but the recent returns have been less than stellar.
Another element – I’m not sure why the retiree’s portfolio would be different from the mid-life portfolio. It used to be suggested that there should be a quantum shift after retirement from equity emphasis to fixed assets. The problem in today’s world is that a person retiring at 65 probably has a retirement period of as long as 20 years. He or she should still be looking at a longer term planning/investing horizon.

Any comments?