In my ChatGPT session, I also asked: "What does the evidence show about the benefit of dynamic asset allocation, based on the Merton share, as recommended by the TPAW tool and the "Missing Billionaires" book?"
I'll just post a summary of the extensive, referenced, response: "Use the Merton share as a slow-moving reference point, not a control knob. Update expected returns very rarely (every 5–10 years, or after true regime shifts), volatility only occasionally (about annually), and bond-like backing such as Social Security or a TIPS ladder only when facts change. Always impose hard equity caps (roughly 20–30% on the low end and 60–70% on the high end), no-trade bands of about ±5–10%, and rate-of-change limits (no more than ~10 percentage points per year). Do not change allocation in response to recent market moves, short-term volatility spikes, valuation-based return forecasts, or when taxes or ACA/IRMAA consequences dominate the decision. In retirement—especially when essential spending is already covered by bond-like income—the practical value of the Merton share is not fine-tuned optimality but preventing accidental over- or under-risking while keeping behavior, taxes, and long-term spending stability front and center."
I'll just post a summary of the extensive, referenced, response: "Use the Merton share as a slow-moving reference point, not a control knob. Update expected returns very rarely (every 5–10 years, or after true regime shifts), volatility only occasionally (about annually), and bond-like backing such as Social Security or a TIPS ladder only when facts change. Always impose hard equity caps (roughly 20–30% on the low end and 60–70% on the high end), no-trade bands of about ±5–10%, and rate-of-change limits (no more than ~10 percentage points per year). Do not change allocation in response to recent market moves, short-term volatility spikes, valuation-based return forecasts, or when taxes or ACA/IRMAA consequences dominate the decision. In retirement—especially when essential spending is already covered by bond-like income—the practical value of the Merton share is not fine-tuned optimality but preventing accidental over- or under-risking while keeping behavior, taxes, and long-term spending stability front and center."
Statistics: Posted by ConstantChrysalis — Wed Jan 07, 2026 9:05 am — Replies 1988 — Views 656637