Episode 336: Gold And Mental Models Of Crowds And History, The Truth About Inflation In Retirement, And More On Global Portfolios
Apr 25, 2024
36:53
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Topics discussed include gold market movements, mental models of crowds and history, the truth about inflation in retirement, and global portfolios. They address misconceptions about retirees experiencing inflation differently, avoiding physical metals investments, and analyzing ideal retirement portfolios based on global withdrawal rates.
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Quick takeaways
Gold prices are unpredictable, but gold remains a valuable portfolio diversifier amid global instability.
Retirees tend to spend less over time, challenging the assumption of increasing real spending in retirement planning.
Deep dives
Gold Stockpiling and Unconscious Collective Actions
There is speculation about the global elite and investors stockpiling gold, but the unpredictability of gold prices makes it hard to predict its future value. The traders' behaviors in response to global instability influence the price of gold. However, the unpredictability of gold prices makes it a valuable portfolio diversifier. The model of unconscious collective actions is questioned due to the difficulty in measuring or identifying such actions.
Retirement Spending Habits and Safe Withdrawal Rates
Research indicates that retirees tend to spend less over time, even those in higher wealth quartiles. The data suggests a decline in real spending as retirees age, challenging the common assumption of increasing real spending in retirement planning. Financial planning should adopt observed spending change rates for more accurate savings and spending estimations.
Diversification and Portfolio Allocation
Diversification is crucial for optimal investment results. A substantial allocation to gold can improve safe withdrawal rates, yet holding a portfolio of 100% gold is deemed the worst option. The importance of using diversified and uncorrelated assets in portfolios is highlighted for maximizing returns and risk management.
In this episode we answer emails from Zane, Slim Jim, and Jim Kirk. We discuss recent moves in world gold markets, good and bad mental models of collective action and critical events, including Mimetic Theory and fractal sand pile models, avoiding the physical metals racket, the data and evidence showing that retirees experience inflation at a much lower rate than the CPI (and most financial planners and DIYers get this completely wrong, resulting in bad planning), and the new global portfolio analysis article at Portfolio Charts (again).