15. Why Investing Depends on Luck Flashcards
(20 cards)
What was the publishing view in the late 1970s regarding authors?
An author should never produce more than one book a year.
What pen name did Stephen King use to publish additional works?
Richard Bachman
What happened when the secret of Richard Bachman was revealed?
King re-released all of Bachman’s works under his real name, and they skyrocketed in sales.
How many copies did the first run of Thinner sell before the reveal?
28,000 copies
What was the sales figure for Bachman’s books after being revealed as Stephen King?
Sales reached quickly to 3 million copies.
What percentage increase in sales did The Cuckoo’s Calling experience after J.K. Rowling was outed?
Over 150,000%
How does luck play a role in the success of authors like King and Rowling?
Their sales success is hard to explain without considering luck.
What impact does your birth year have on investment returns?
It can significantly affect your ability to build wealth.
What was the S&P 500’s annualized return spread over a decade since 1910?
20 percentage points
What were the annual returns from 1960 to 1980 compared to 1980 to 2000?
1.9% from 1960–1980; 13% from 1980–2000.
True or False: The order of investment returns does not matter when making a single investment.
True
What is the term for the risk associated with the sequence of investment returns?
Sequence of return risk
What happens to portfolio value when negative returns occur later in the investment period?
It results in a lower final value compared to negative returns occurring earlier.
What impact can a bad decade have on retirement savings?
It can cause serious financial harm.
What decade is critical for investment returns based on a birth year of 1960?
2025–2035
What are some strategies to mitigate bad luck as an investor?
Adequately diversify, withdraw less during downturns, consider part-time work.
Fill in the blank: The best way to mitigate bad luck for younger investors is _______.
time itself
What is the importance of the first decade of returns in retirement?
It can significantly impact the safe withdrawal rate.
What should investors do if they are concerned about a market downturn as they approach retirement?
Consider diversifying with low-risk assets.
What did Michael Kitces discover about the impact of the first year or two of retirement on withdrawal rates?
There is remarkably little relationship between early returns and sustained withdrawal rates.
