I don't think he made that distinction clear.While listening to a recent The Long View episode, Scott Bondurant, CIO of Bondurant Investment Advisory, was asked about sequence of return risk, particularly for retired investors with a higher than conventionally recommended equity allocation (he later seems to recommend a well-diversified 85/15 split). In response, he stated:
“Most importantly, is for our clients, we make sure everybody has got three years of either cash or visible income coming in for spending needs.”
Question: Did Scott Bondurant wasn't clear to me whether the three-year buffer—either in cash or "visible" income—is included within that 15% (presumably bonds or safer assets) of the 85/15 allocation, or is it in addition to that allocation?
Transcript of the podcast can be read here (not sure if I'm putting this link in correctly): https://www.morningstar.com/personal-fi ... ore-stocks.
My guess is, the three years' cash would be outside the 85/15 for most people, because it might lock up a huge % of that 15%. Obviously for those already pretty wealthy, it would be less; but those clients probably don't need to worry so much due to withdrawal rates being relatively small (I refer anyone to Bill Bernstein's idea about asset allocation not mattering too much if one's w.r. is <2%, or at least under the dividend distribution rate of their portfolio).
I found his arguments interesting, maybe even compelling; but for myself, going 85/15 would be stressful. So it remains academic.
Statistics: Posted by Lawrence of Suburbia — Wed Sep 10, 2025 11:44 am — Replies 1 — Views 130