Page 119 - Ready Set Retire

Ready. Set. Retire!

long are you going to live,” thing. Nothing can reduce risk in a
retirement plan or shore up your income and confidence in it
like nailing down how long you must plan for.

It boils down to finding another risk class. In the market, there
is only one risk class…what other people will pay for what you
own. The market used to be based largely on things like PE
ratios, profit margins, etc. Today, however, it is so overvalued
these fundamentals seem to no longer apply. What is driving
today’s market is the market itself. Computerized trading,
derivatives, puts and calls, margin trading, arbitrage. These are
the fundamentals of today’s market. It is gambling, pure and
simple, driven almost entirely by investor behavior. And that
cannot be counted on for the rest of your life. Period.

It’s important to note I am referring here to most mutual funds
and buy and hold strategies. Things can be done which may
make markets more investor-friendly, like the tactical
management scenarios described earlier in this book.
However, even under those scenarios you never know for
certain, and income should only be planned for with certainty.
Therefore, even though I am a believer in markets and tactical
management, I am not a believer in using risk-based assets to
generate income. For that you need something else entirely.

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