New to the site and appreciate all of the input. I have a question about portfolio diversification. Market correlation for nearly all stock/bond ratios in a given portfolio is nearly 1 compared to the S&P 500. For example a 60/40 correlation is 0.98. Even a very conservative 30/70 mix has a correlation of 0.93. Difference in maximum drawdowns is only 5% for an 80/20 vs. 30/70. Sharpe ratios are 10 times lower for conservative mix. These numbers are over a 20 year period including the 2008 crash.
Is there any reason why anyone would diversify a portfolio and give up returns and risk recovery during a retirement (20-30 years) if a similar crash would occur as in 2008?
Is there any reason why anyone would diversify a portfolio and give up returns and risk recovery during a retirement (20-30 years) if a similar crash would occur as in 2008?
Statistics: Posted by PingPing — Wed Jan 24, 2024 5:36 pm — Replies 1 — Views 139