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Lifecycle Investing: A New, Safe, and Audacious Way to Improve the Performance of Your Retirement Portfolio Hardcover – May 4, 2010
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" A most provocative book. The real advantages of time diversification have never been laid out so clearly or with such a program of action."
Tim HarfordFinancial Times
"Here are the chief investment lessons of the financial crisis for today’s young people: they should be buying more shares and running up debts to do so. . . . [T]here is nothing intrinsically risky about regular borrowing to get that fund off to an early start. . . . Not only does the concept make sense, it has paid off in the past. . . . Ayres and Nalebuff have looked at historical stock market data. . . . For every single cohort, the early leverage strategy beat the conventional wisdom."
Moshe A. Milevsky, Ph.D., Finance Professor, York University, and author ofAre You a Stock or a Bond?
“This bold book promotes more early equity exposure for the masses, precisely at a time when many practitioners are re-thinking the ‘buy and hold stocks for the long run’ mantra. Whether you are comfortable with this strategy or not, the book is a must read for anyone who claims to think about their personal finances in a rigorous and logical manner.”
About the Author
Barry Nalebuff is the Milton Steinbach Professor of Economics and Management at Yale School of Management. He is the author of fifty scholarly articles and multiple books—including Co-opetition and The Art of Strategy—and is the cofounder of Honest Tea. A graduate of MIT and a Rhodes Scholar, he earned his doctorate at Oxford University. He lives in New Haven, Connecticut.
Top Customer Reviews
Before you try this, be aware of some red flags.
Red flags #1, #2, #3, #4, #5, and #6 come from Ayres and Nalebuff themselves, who say you should not try their strategy if ANY of these situations apply to you:
* You have credit card debt.
* You have less than $4,000 to invest.
* Your employer matches contributions to a 401k plan.
* You need the money to pay for your kids' college education.
* Your salary is correlated with the market.
* You would worry too much about losing money.
If any of these apply to you, save your time: you don't even need to read the book.
Red flag #7 is the book's title. It's self-contradictory! The dictionary says "audacious" means "fearless, often recklessly daring." Something cannot be both "safe" and "audacious." You'd better darn well decide for yourself which this plan is. Personally, I think it's audacious.
Red flag #8: the strategies they recommend involves the use of either investing on margin, or the use of "deep-in-the-money LEAP call options.Read more ›
Here's a summary:
1) Most folks tend to have the overwhelming majority of their exposure to the stock market (i.e., most dollar-years of stock market exposure) during a one-to-two decade period late in life (e.g., perhaps during their 50s). The reason for this is that folks tend to accumulate wealth exponentially -- they save exponentially and their investments tend to grow exponentially.
2) This generally works fine UNLESS they are unlucky and the stock market suffers through a bad decade when they have the most dollars exposed thereto.
3) The main idea here is that you would be better off, conceptually, if it were somehow possible to more evenly spread out your stock market exposure over your entire life. This idea of "time diversification" is quite sound. If you were somehow able to do that, and during the decade of your 50s the stock market goes to h*ll, so what! You've hot lots of other decades of stock market exposure to make up for it!
4) Of course, the devil is in the details. Is it possible to more evenly spread out your stock market exposure through your entire life? Yes.
a) The authors go into great detail about how you can move towards that goal by having greater than 100% exposure to stocks early in life. This can be done in many ways -- using options, futures, or buying on margin. And yes, this sort of thing can be dangerous for the layperson to attempt. I don't recommend it -- but keep reading.
b) Their recommended approach is to get roughly 200% stock exposure early in your adult life by buying deep-in-the-money call options on stock indexes, or perhaps broad market ETFs.Read more ›
Most Recent Customer Reviews
I picked up this book at the library thinking it was about lifecycle funds-aka target date funds. In the thrift savings plan, the federal government's version of a 401k, target... Read morePublished 2 months ago by kazper
Anyone interested in pension savings should read this book. Lifecycle investing is one of the most important book about retirement savings I have read.Published 24 months ago by Odd A. O.
Very nice work. Stock investing is and has been risky but the data in this book suggest the risk is less with the strategy presented.Published on July 4, 2014 by John Pemberton
I am extremely lucky to have read this book while just embarking on my life as an investor. The statistics that Ayres and Nalebuff are able to provide in support of their thesis... Read morePublished on January 17, 2014 by Stephen Aylward
I'll echo what Christopher said: this book is for people with basic money/budgeting skills and not the general population who hold high interest consumer debts. Read morePublished on January 17, 2014 by marc ufberg
This book should be required reading for anyone under the age of 55 who wants to maximize their retirement savings. Read morePublished on January 2, 2014 by David C Stewart
Good concepts on investing from an early age, and enduring market highs and lows. Sound strategy, but always consult a professional before diving in!Published on September 14, 2013 by A. Estrella
As a CPA and a person with a masters degree in finance, I found the book to be very interesting and I plan to apply the principles in my personal finances. Read morePublished on February 19, 2013 by Christopher Bahr
I recently received a stock inheritance, so I marched to the library and picked up every book I could to learn about the topic of investing! This was one of them... Read morePublished on June 27, 2012 by kjcontri