At the same time, one can make financial decisions based on risk rather than longterm expected returns.
For instance, I'm happy with fixed income yields rn.
What would scare me is losing a big chunk of my portfolio in a downturn, exactly when I'm also most likely to lose my job.
There are a lot of failure modes. The dot-com bubble looked obvious in 1997; it popped in 2000. Anyone shorting in '97-'98 was carried out on a stretcher before being vindicated. In fact 2000-2002 fell in three brutal legs over two years, and anyone who leveraged up after the first 25% leg was destroyed by the next two.
which target date fund exactly? You can increase risk/reward buy choosing a target date fund far in the future or you can reduce risk/reward by choosing a target date fund closer to the present. The point of those funds is to gradually reduce your risk as you get closer to your planned retirement date. I moved my 401k into a target date fund about +10 years from my planned retirement (I'm 50). So a little bit on the risk++ side but not much.
https://workplace.vanguard.com/investments/product-details/f...
You want to search for the chart at "Allocation to underlying funds (actual)"
The AI crash is about stock market indicator ratios matching those that preceded other major crashes. That's what got me spooked. I don't want to be heavily invested in those companies when/if something bad happens.
> The AI crash is about stock market indicator ratios matching those that preceded other major crashes.
The way to put faith in such indicators is not (only) by looking at prior crashes, but by forward testing them. Over the last decade, it's been common for me to hear a sentiment like yours: "Indicator X has always resulted in a serious downturn in the past, and we're in X territory now" - and no crash ensued. Over and over again.
Find me an indicator that someone back tested, and then also actually predicted a real crash (with zero false positives). The cost of even a single false positive can be huge. Ask the guys who pulled out (or sold their houses) when COVID struck.
Don't become the person who predicts 7 of the last 2 recessions.
Most ppl are better off KISSing and lowering risk by selling equity for fixed income.
What? Absolutely not.
However! If you don’t want to learn and want to get rich quick instead, stay away.