For a number of years after my quiz show, "Win Ben Stein’s Money," ended production after about 900 episodes, one of my main activities was public speaking. I spoke mostly to business people and investors, all across the country and in cities large and small, and often spoke at universities as well.
One of my favorite people in that world of public speaking was Raymond J. Lucia, also known as Ray Lucia. Ray had a money management firm. He put on seminars all over the land and he often asked me to say a few choice words about the state of the economy generally after Ray discussed his preferred investment strategy for his attendees, whom I guessed to be modestly well-to-do retirees or pre-retirees who wanted to do something smart with their money.
His proposals, which he called "Buckets of Money," were extremely conservative and basic. He advised saving as much as possible, then putting that money in widely diversified stock funds. He also advised owning Real Estate Investment Trust (REIT) stocks.
Most intelligently of all, he advised keeping lots of money in highly liquid entities such as cash or very short term bonds.
The idea was that if the market tanked, the investor would have cash to ride out the storm and would not have to sell huge gobs of his stock to get by — thus selling into a down market. This seemed like a sensible, down to earth policy, not reliant on anything exotic or hard to understand, like commodities.
I often talked to attendees at the seminars and without exception, they were happy with their association with Ray. Ray’s strategy was called "Buckets of Money," as I noted, because the idea was that in retirement, one would spend the money in the various baskets (or buckets) — stocks, short term bonds, REITs, and gradually draw them down until the grim reaper came to carry the investor home.
Ray’s calculations were that based on postwar experience, the growth in each asset class would be enough to keep the buckets filled to what one needed until the Big Sleep intervened. Those calculations were extremely specific and made sense to me.
And, for 99 percent of the investors, or maybe more, Ray’s plans worked beautifully. The investors had enough to live on in their accustomed way, and even to leave something to their heirs.
But then one day, someone came forward and said that Ray’s estimates of inflation were too low. This worthy soul said that if investment income were offset by a higher rate of interest than Ray used in his calculations, the very long lived retiree would be in trouble.
Never mind that the usual retiree spends less in retirement than he did in his work years or that his or her home would likely be paid off, there would still be too little at the end of a lengthy period of retirement and high inflation for an attendee to live comfortably.
Note that Ray had spoken to over 50,000 men and women and had received complaints about this issue from exactly none. In fact, Ray had received almost no complaints about anything. "The mills of heaven grind slow," as the shibboleth says, "but they grind exceeding small."
The complainer went to the SEC. He or she found a lawyer who was looking for blood sport and he went after Ray. So writes Ben Stein in The American Spectator.
Ben Stein is a writer, actor, and lawyer who served as a speechwriter in the Nixon administration as the Watergate scandal unfolded. He began his unlikely road to stardom when director John Hughes as the numbingly dull economics teacher in the urban comedy, "Ferris Bueller's Day Off." Read more more reports from Ben Stein — Click Here Now.
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