I don’t want anything invested in equities I might want to liquidate quickly or have to sell to live on.
What little I do invest in equities is long term on the side icing on the cake.
Some stock heavy portfolios are down 40 or 50 % now. Retired people don’t need to be tying up huge amounts of their life savings into investments they can’t access when needed without HUGE losses. Health problems family emergencies death etc. These people would be SCREWED.
It’s bad advice plain and simple. That’s why successful managers don’t recommend that type of high risk mix for non working retired clients unless they simply don’t have enough to make ends meet or unprepared financially and trying to make up for it after retirement with a high risk strategy used by young working adults or have a paycheck to live on
To your point, 7 of those funds are down 40% or more. But...wait for it... that's out of 44 funds. The PRNEX fund (energy) is up 4% since November.
Let's say someone had the misfortune of retiring the day Brandon entered the WH. Running my C# app from Jan 19 to yesterday (I haven't made it pull today's closing prices yet because these are mutual funds)...PRNEX (energy) is up 25%, TQMVX (U.S. value QM) is up 16%, PRDGX (dividend growth, way ta go, NWFRee!) is up 11%, PRAFX (real estate) is up 9%.
So a diversified portfolio gives better places to draw money from (the mutual funds that are up higher than the dividends fund) even during the current market environment that's, as you described it: "some stock heavy portfolios are down 40 or 50 % now".
Don't conflate total balance with dependable income stream. Yes, the overall portfolio amount can be down at times, but that doesn't interfere with the dependable income stream. As long as the portfolio has some winners (in my case I also have two money market mutual funds that never go down, just in case) there's an income stream to pull from.
And it's a simple algorithm to go by in retirement. Just log in at the patterned interval (i.e. once per year, once per quarter, or once per month) figure out the amount to withdraw (i.e 4% annual, 1/3rd of 1% monthly), then pull that amount whichever funds have the highest balance. No worrying if any of the blue bloods are slacking up on dividends this year (not all of your eggs are in that one basket).