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You are correct except that doing this over 10 years somewhat removes the 'ignoring the volatility' argument.

• icelancer 9y ago
  >>You are correct except that doing this over 10 years somewhat removes the 'ignoring the volatility' argument. Only lessens it slightly. There are plenty of bad 10-year periods you wouldn't be happy with if you were 50-55 years old with all your money in stocks, not to mention an index fund tracking the S&P500 rather than the full index. Obviously holding index funds that are primarily stocks is the play when you are younger, but risk-adjusted returns matter a lot more for someone with big money as they approach retirement. It's worth exchanging returns for lower volatility down the line. Not that I think this bet could have turned out any other way, of course...
• TuringNYC 9y ago
  Depends on whether there was a major market correction in those 10 years. A better betting period would be 20 years, which almost certainly guarantees 1 and possibly 2 or 3 market corrections. Hedge funds would argue that they perform better in downcycles, possibly even with negative correlation to the market.