I'm just reviewing some IPSs out there and I see some examples where they state, "willing to accept 20% loss with a 60% equity portfolio" or something to that effect. This strikes me as a bad idea. I'm just imaging someone getting down about their slumping portfolio, then seeing that the losses for the year have reached the loss limit (say 21 or 25%), then what? Sell your equities? At what could be the worst time to do so? I understand that one needs to still sleep at night, but isn't the purpose of the IPS to remind you not to panic? Am I missing something?
I like the idea of being reminded that losses could occur, but I would prefer to include actionable direction (like take no action, or rebalance, or wait a week before doing anything, go to the Boglehead board, something).