Events | July 27, 2022

Investing for Retirement II: Modelling Your Assets

This research is related to the newly launched Nebo platform, a portfolio construction tool that helps RIAs build better portfolios. Nebo bridges the gap between financial planning and asset management, and recently won the 2022 Industry Disruptor award.

Learn more about Nebo >


In this webcast, James Montier and Martin Tarlie discussed the genesis of their latest White Paper, “Investing for Retirement II: Modelling Your Assets – Are Financial Planners Stuck in the 1970s?” We believe an approach to retirement investing that better models and understands the ways in which financial markets differ from the outdated academic assumptions of market efficiency and random walks will result in substantially superior portfolios.

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*This content is intended for accredited investors only

"For the sake of their clients, it is high time financial planners updated their beliefs, assumptions, and processes."

- James Montier

Key Points

  • Most out of the box Monte Carlo simulation engines assume asset prices follow a random walk, contrary to current understanding and evidence.

~200 responses to invitation survey

95% response rate–thank you!

Investing for Retirement II_7-27-2022_Exhibit 1.JPG

*Some form of yes.

  • This leads to simulations that underestimate long-run bond volatility and overestimate long-run stock volatility, which in turn leads to bond-heavy portfolios and a distorted view of long-run outcomes.
  • Return generating models that account for valuations are consistent with historical observations.
  • Combining these return generating models with a new definition of risk – not as volatility – but as ‘not having the money you need when you need it’ lowers the probability of ruin materially (see for more details).

Do your assumptions capture the key elements of reality?

All models are an abstraction, a map on a scale of 1:1 is no use to anyone

Investing for Retirement II_7-27-2022_Exhibit 2.JPG

Source: FRED, GMO


For additional information, please visit our Nebo website at nebo by GMO (


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