Solving Puzzles Can Yield Big Investing Insights
Note to Reviewer: Please arrange for posting of this article at 7:00 a.m. on Tuesday, May 4, 2021. By Rob Bennett Robert Shiller says that valuations affect long-term returns. That means that the riskiness of stocks varies with price changes. Yet the Buy-and-Holders say that the safe withdrawal rate — a risk assessment tool — is always the same number. It’s a puzzle. A regression analysis of the historical return data going back to 1870 shows that the most likely 10-year annualized return on stocks when they are priced as they were in January 2000 is a negative 1 percent real. Treasury Inflati...