Stocks for the long run. The idea became popular in the 1990s, although these days it looks a lot less trendy. So it goes after a year of crushing losses in the equity market. Yet there’s a more fundamental reason for taking a fresh look at the conventional wisdom behind the idea of stock investing for the long term.
As the title of a new research paper asks: Are Stocks Really Less Volatile in the Long Run? In today’s episode of The Inside View podcast, we discuss the paper and some of its implications. We also hear from one of the co-authors, Lubos Pastor, professor of finance at the University of Chicago Booth School of Business. He co-wrote the paper with Professor Robert Stambaugh of the Wharton School.
The new research raises a number of questions about some popular notions of equities and the degree of risk they harbor in the long run. In the upcoming February 2009 issue of The Beta Investment Report, we’ll be looking closely at how these questions relate to designing and managing asset allocation. Meantime, here’s a preview…
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