Four risks threaten any portfolio: inflation erodes buying power, deflation crushes asset values, confiscation means governments seize wealth, and devastation wipes out markets entirely. History shows all four have happened.
If you have a portfolio of broadly diversified index funds, the real risks are the Four Horsemen of the Apocalypse, as Dr. Bernstein has described them. The first and most common one is inflation. The next of the four horsemen is deflation. And the classic scenario, historically to think about this is the Great Depression, right? This is a time of economic contraction, and it really did a serious number on people's wealth. The next one is confiscation. And we all think we're dealing with confiscation every April 15th. And I suppose in some small way you are. But governments can do much more than what our government does to us. The final big risk to your portfolio is devastation. Just widespread economic, political, social devastation. Right. Imagine you're in Germany at the end of World War II.
Physician Takes a Youth Sports Team to the State Championship - MtoM Podcast #236
