Beware of Survivorship Bias When Investing

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 insuranceWhat is survivorship bias and what are some examplesWhy the U.S. is an outlier when it comes to stock market performanceWhy the 4% retirement spending rule might be too highIf the 4% spending rule is too high, what can retirees do instead to have enough for retirementWhy the size and scale of the U.S. economy provide some resistance to catastrophes

For more information on this episode click here.

Thanks to our Sponsors

Shopify

Masterworks – invest in contemporary art

Show Notes

Homefacts

Survivorship Bias—Matt Rickard

Is The United States A Lucky Survivor: A Hierarchical Bayesian Approach by Jules H. van Binsbergen, Et al.—SSRN

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 Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets by Aizhan Anarkulova, Et al.—SSRN

The 2.7% Rule for Retirement Spending by Ben Felix—YouTube

Trends in Retirement and Retirement Income Choices by Tiaa Participants: 2000–2018 by Jeffrey R. Brown, Et al.—SSRN

Related Episodes

250: Investing Rule One: Avoid Ruin

326: The New Math of Retirement Spending and Investing

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.