A study by three finance professors is attracting controversial attention among financiers.

In "Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice," the professors challenged two standard recommendations in the 401(k) era. First, the idea that investors should diversify across stocks and bonds and, second, the advice that young adults should hold more stocks than older folks.

Instead, they calculated investing in a 100% stock portfolio — 50% domestic stocks and 50% international stocks — is the best strategy throughout a lifetime. Households following their 100% stock portfolio recommendation are "less likely to exhaust their savings and more likely to leave a large inheritance," they wrote.

The numbers might work out on paper, but count me among the skeptics. The analysis has echoes of the dot-com era book some readers might remember, "Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market" by James Glassman and Kevin Hassett. Published in 1999 and written when the Dow was around 9,000, the authors argued stocks were deeply undervalued. Investors had mistakenly been taught stocks were riskier than bonds and, therefore, demanded higher returns to compensate for the nonexistent extra risk.

"The Dow should rise to 36,000 immediately, but to be realistic, we believe the rise will take some time, perhaps three to five years," they wrote.

The stock market boom went bust the following year. Their core idea was wrong then and today, even with the Dow around 39,000, after crossing 36,000 in early November 2021. Stocks are riskier than bonds since equities represent the uncertain rewards for entrepreneurship.

"There is no predestined rate of return, only an expected one that may not be realized," Laurence Siegal wrote in an article more than a decade ago when he was director of research in the investment division at the Ford Foundation.

Glassman and Hassett also wrongly looked at risk as synonymous with market volatility, a too-limited definition for workers saving for retirement. In "Beyond the Status Quo" the professors also emphasized their portfolio comes with periods of downside market volatility. Their strategy assumes workers will stay the course during market declines, an unrealistic assumption, especially for workers nearing or in retirement and worried about their future income in retirement.

Nobel laureate Robert Merton has criticized the 401(k)-era strategy that emphasizes investment returns and accumulating portfolio wealth, an approach taken to extremes in "Beyond the Status Quo." Diversification remains the best risk-management strategy in an uncertain world for savers looking to maintain their quality of life in old age.

Chris Farrell is senior economics contributor, "Marketplace"; commentator, Minnesota Public Radio.