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Q. WHAT DO YOU THINK ARE THE GREATEST SHORT-TERM RISKS IN A VOLATILE MARKET LIKE THIS? A. That markets will behave normally — in other words, that even a cursory survey of history reveals

that price falls of 50 percent occur once or twice each generation and that even worse drops are possible. One time it'll be a banking collapse, another time a war, the next time an

epidemic, and the time after that, something that no one has ever thought of before. Bear markets are as much a feature of markets as bull markets are. Q. WHAT ARE THE LARGEST LONG-TERM

RISKS TODAY, AND HOW CAN ONE PREPARE FOR THEM? A. One is financial panics, which tend to produce deflation, a period of falling prices. The other is long-term inflation. Obviously, you

can't protect yourself completely against both, but you can partially hedge both by investing in short-term, high-quality bonds and by holding stocks, which are a fairly good inflation

hedge in the very long term. Q. BONDS HAVE BEEN THE TRADITIONAL DIVERSIFIER FOR MOST PORTFOLIOS, BUT IT'S HARD TO BE TOO ENTHUSIASTIC ABOUT THEM AFTER A NEARLY 40-YEAR BULL MARKET. WHAT

OTHERS WOULD YOU SUGGEST? A. Hold your nose and buy them. There's a reason why Warren Buffett likes Treasury bills, even at a near-zero yield: [When things go awry in the financial

system,] almost every other type of bond takes a haircut, and sometimes a very severe one. A half century ago, an analyst named Raymond DeVoe noted, “More money has been lost reaching for

yield than at the point of a gun.” Securities that carry a government guarantee, like treasuries and CDs, allow you to sleep at night, to pay your bills when things really get grim, like

now, and give you the courage to buy equities when it seems that everyone else is running away from them. SAVE 25% WHEN YOU JOIN AARP AND ENROLL IN AUTOMATIC RENEWAL FOR FIRST YEAR. Get

instant access to discounts, programs, services, and the information you need to benefit every area of your life. Q. THE BIGGEST RISK FOR A RETIRED INVESTOR IS RUNNING OUT OF MONEY. IS THERE

A GOOD RULE OF THUMB FOR TAKING WITHDRAWALS? A. Before age 70, you should spend no more than 3 percent of your portfolio a year; after that, you can increase that rate by perhaps a percent

every five years. There's a trade-off, of course, between safety and spending. Most people, if they want to be as safe as possible, may have to live like monks; they can, conversely,

have a good living standard, but only at the cost of risking an impoverished old age. Q. IF YOU HAD THE POWER TO CHANGE THE NATION'S RETIREMENT SYSTEM, WHAT WOULD YOU DO? A. The average

person has as much business managing their retirement portfolio as they do taking out their child's appendix or flying their own airliner. (That's not an exaggeration; doctors and

pilots are both notoriously bad investors.) I'd strengthen Social Security, and perhaps supplement it with a fully portable, low-cost, passively managed national pension system that

can't be borrowed against and which carries the same legal protections as Social Security.