[stinkypete]

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but what about the 1.15^19*.8...now it does have a very large impact since you've planned for presumably some # of years greater than 1 on that retirement income and BOOM all of a sudden you have a big loss in the last year that you didn't plan on.

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well, if you're in highly volatile investments you shouldnt be making plans like that. if you're going to make those plans, you're going to reconsider your positions if you're not a dumbass.

but that's no argument for investing like a nit for the first 15 or so years. yes, you should be trying to maximize your risk adjusted returns - within reason. over a long time period, you should first make sure you're maximizing your returns and worry about lowering your volatility second - within reason again, of course. leverage isn't always that easy to come by, particularly in retirement accounts. it's not as simple as finding a portfolio that maximizes your sharpe ratio and then leveraging the crap out of it. over a long time period, usually the portfolio that makes the most sense won't maximize your risk adjusted return (though it should come close), because it's impossible to get the returns you want with that particular portfolio because you can't leverage it easily.