"Path dependence refers to the fact that, once we begin spending from a volatile portfolio, the order of market returns can change the portfolio's value.... The best possible outcome is achieved when our market returns are ordered from best to worst. The worst possible outcome is the reverse.... Path dependent risk is not market risk, cannot be diversified away like market risk, and therefore we can't be compensated for it.... Path-dependence can lead to portfolio ruin, but it probably won't if we lower spending when our portfolio is stressed."  MORE >>