Barry Ritholtz, Columnist

Tackling the 'Nastiest, Hardest Problem in Finance'

William Sharpe, creator of a model that measures risk and reward, turns to retirement planning.

June 5, 2017 at 4:20 PM UTC

Barry Ritholtz is a former Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

You still need to use sunscreen.
Photographer: Jeff Overs/BBC/Getty Images

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Consider some of the most challenging problems in finance: the equity-premium puzzle; binomial-option pricing models; do zero interest rates spur inflation or damp it; are stocks cheap or overpriced?

Challenging as those may appear, none compare to what Nobel laureate William Sharpe, 82, calls "decumulation," or the use of savings in retirement. It is, he says, “the nastiest, hardest problem in finance.”