Hudson Hornet, age 50 and married, is a car gallery owner who has accumulated a substantial investment portfolio without a clear long-term strategy in mind. Two of his customers who work in financial Markets comment as follows: Mater McQueen: "My investment firm, based on its experience with investors, has standard investment policy statements in five categories. You would be better served to adopt one of these standard policy statements instead of spending time developing a policy based on your individual circumstances." Sally Carrera: "Developing a long-term policy can be unwise given the fluctuations of the Market. You want your investment advisor to react continuously to changing conditions and not be limited by a set policy." Hornet hires a financial advisor, Jay Limo. At their initial meeting, Limo compiles the following notes: Hornet currently has a $3.0 million portfolio that has a large con - centration in small-capitalization US equities. Over the past five years, the portfolio has averaged 15 percent annual total return on investment. Hornet hopes that, over the long term, his portfolio will continue to earn 15 percent annually. When asked about his risk tolerance, he described it as "low." He was surprised when informed that US small-cap portfolios have experienced extremely high volatility. He does not expect to retire before age 60. His current income is more than enough to meet his expenses. Upon retirement, he plans to sell his car gallery and use the proceeds to purchase an annuity to cover his post-retirement cash flow needs. Both his income and realized capital gains are taxed at a 20 percent rate. No pertinent legal or regulatory issues apply. He has no pension or retirement plan but does have enough health insurance for post-retirement needs. His children are 25 and 27 years old who are both university graduates with the ability to take care of themselves.

Explain return target, when the needs of investors change (Hint: consider children of Limo will leave their jobs and go for an expensive MBA in Wharton Business School)