Thinknewfound on "The New Glidepath"

The New Glide Path, Corey Hoffstein

Excerpts

"In practice, investors and institutions alike have spending patterns that makes the sequence of market returns a relevant risk factor…

For retirees making constant withdrawals, sustained declines in portfolio value represent a significant risk. Trend-following has demonstrated historical success in helping reduce the risk these types of losses…

Using backward induction and a number of simplifying assumptions, we generate a glide path based upon investor age and level of wealth...

We find that trend-following receives a significant allocation – largely in lieu of equity exposure – for investors early in retirement and whose initial consumption rate closely reflects the 4% level…"