The Stockdale Paradox
As people (and investors) we need to find a balance between two competing thoughts: the realism of today’s circumstances, and the hope of long-term success.
Jesse Cramer created The Best Interest to explain personal finance and investing in simple terms. His writing has been featured by CNBC, MSN, The Motley Fool, and other national publications. He resides in Rochester, NY with his wife and their dog, where he works in wealth management. Follow Jesse on Twitter: @BestInterest_JC
As people (and investors) we need to find a balance between two competing thoughts: the realism of today’s circumstances, and the hope of long-term success.
Why do we keep discussing the 60/40 portfolio? Where did it come from? Why does it have so much staying power?
If a stock drops (-50%), it needs to grow +100% to breakeven. But…does this mean anything important to investors?
Are retiree’s who own bond funds setting themselves up for harm that a bond ladder could never inflict? Or is this six vs. half-dozen?
“The nature of human psychology is such that you’ll torture reality so that it fits your models.” Let’s not do that.
Some parts of the financial planning world are sheer cliffs. Take one step over that cliff and it’s a long way down.