Q: Your new edition analyzes the roots of the financial crisis of 2008-9. What is your take?

A: I don't blame (former Federal Reserve chairman) Alan Greenspan for keeping interest rates low. I don't think that is relevant. But I do blame him for not seeing the buildup of risky assets on the balance sheets of critical financial institutions. When Lehman Brothers and Bear Stearns started levering themselves up 50-1 or higher, on risky real estate securities that were wrongly stamped triple-A by (Standard & Poor's) and other ratings agencies, he should have sounded the alarm on that.

Q: Looking ahead for our society, one point you make is that retirement ages have to change.

A: When programs like Medicare and Social Security started, the average life expectancy was 67. But the world is changing. Back then, the costs of programs like that were tiny fractions of what we are now expecting today. Now we are much healthier, and 70 is the new 60 or even the new 50. There is no reason why we shouldn't work longer. If the retirement age doesn't change, that is not going to be good for equity returns going forward.

Q: It seems you are quite bullish on emerging markets, which are going through a rough patch at the moment.

A: Emerging markets valuations this year are going so low that I believe it is a very unique opportunity right now. Companies in emerging markets are selling at 10 or 11 times earnings; in some places like China valuations are even lower, at seven times earnings. This is remarkable.

These are opportunities you do not get very often. It is part of a common cycle, swinging between optimism and pessimism. If you recognize that, you go in. Just know that you might take some further short-term losses, before those markets hit absolute bottom.

Q: What does all this mean for allocation for individual investors?

A: If you are an aggressive investor, you might look at an equity allocation of one-third U.S., one-third developed ex-U.S. markets like Japan and Europe, and one-third emerging markets. I don't see much of a future in bonds, cash is yielding virtually zero, and commodities don't seem very attractive. My feeling is that stocks still offer the best long-run prospect for future returns. And if we were looking back at this market's price-earnings ratios two or three years from now, we would probably be very happy to get in on it.

Q: If you had to predict what your next book update is going to discuss in a few years - what would it be?