The Rational Reminder Podcast

Episode 350: Scott Cederburg: A Critical Assessment of Lifecycle Investment Advice

114 snips
Mar 27, 2025
Guest
Scott Cederburg
Scott Cederburg, Associate Professor of Finance at Eller College, returns to address lifecycle investment strategies. He critiques traditional beliefs about domestic versus international investments and highlights the advantages of an all-equity portfolio with higher international exposure. Cederburg discusses how US market trends influence global allocations and the necessity of dynamic asset allocation. He also examines the impact of smaller countries in investment analysis and the complexities of market correlations, emphasizing the need for tailored approaches in retirement strategies.
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INSIGHT

Data Setup

  • The study uses a broad dataset of 39 developed countries from 1890 to 2023.
  • This long-term, international perspective provides insights into lifecycle asset allocation.
INSIGHT

Domestic vs. International Assets

  • Domestic assets represent the investor's home country, while international assets encompass a value-weighted global basket.
  • All returns are considered in real terms, adjusting for inflation.
INSIGHT

Block Bootstrap

  • The block bootstrap approach accounts for time series dependencies, like volatility clustering and mean reversion in stock returns.
  • Bonds become riskier and more correlated with stocks over long horizons, offering insufficient reward.
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