Looking Back

Talking Real Money - Investing Talk

Don McDonald

Education, Investing, Business, How To

4.5 • 811 Ratings

🗓️ 28 August 2025

⏱️ 29 minutes

🔗️ Recording | iTunes | RSS

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Summary

This episode of Talking Real Money digs into recency bias—our human tendency to expect the future to look like the recent past—and how it’s quietly reshaping retirement portfolios. Don and Tom examine rising stock allocations in 401(k)s and target-date funds, even among older investors, and why this performance-chasing is dangerous. They highlight the risks of target-date fund managers pandering to investors, the importance of rebalancing, and the need to stick to long-term allocation plans b...

Transcript

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0:00.0	Reality Radio for a really great future.
0:08.0	We're talking real money.
0:10.3	Well, we're supposed to be the big brain species on the planet, so you think we'd remember stuff longer than we do.
0:16.1	But we have a horrible tendency to look back at the very recent past and extrapolate that out into the future.
0:24.2	It has a name.
0:25.2	It has a name.
0:26.8	Hi, everybody.
0:27.4	I'm Don.
0:28.6	That's Tom.
0:29.5	Welcome to the Talking Real Money podcast.
0:32.1	And the name is, and its name is recency bias.
0:37.7	You get caught up in what is, you think, is going on when it in fact has been going on.
0:45.8	And then you adjust things based on the recent past.
0:49.7	And we're seeing that play out in our investment portfolios and retirement plans with an emphasis,
0:58.2	a higher level of emphasis in our portfolios on what's done well over the past decade or so
1:07.3	stocks.
1:09.0	Yeah.
1:09.3	More stocks in our portfolios than in a very long time. Yeah. And I get it. First of all,
1:17.1	I don't want this to come off wrong. I would still, for most people, suggest you have more
1:22.3	in stocks than in bonds. Most people. Not everybody. Right. That's generalizing. That's general. And there should be an
1:29.9	asset allocation that kind of follows based on your risk tolerance, your age, those kinds of
1:35.2	things. And it's a glide path. It's a step down. Yeah. And by the way, we have a free
	...

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