Poll: Has your AA changed in the last 18 months

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.

Has your AA changed in the last 18 months

Yes - I became more conservative. My need or ability to take risk has changed
41
20%
Yes - I became more conservative. Valuations drove decision.
18
9%
Yes - I became more aggressive. My need or ability to take risk has changed
17
8%
Yes - I became more aggressive. Valuations drove decision.
2
1%
No
123
61%
 
Total votes: 201

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Longtimelurker
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Poll: Has your AA changed in the last 18 months

Post by Longtimelurker »

12345
Stay the course. If you can't resist greed, and fear is proven to be 2x as strong, you are doomed as an investor.
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midareff
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Re: Poll: Has your AA changed in the last 18 months

Post by midareff »

The last 18 months of bull and following my balance bands took me to Dr. B's won the game. Reduced equities to 45%.
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Re: Poll: Has your AA changed in the last 18 months

Post by TomatoTomahto »

I am gliding toward 50/50 at a leisurely pace.
I get the FI part but not the RE part of FIRE.
wastenot
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Re: Poll: Has your AA changed in the last 18 months

Post by wastenot »

I voted for "becoming more conservative" because in early 2013 I switched from an orthodox "age in bonds" BH allocation to putting most of my savings in Harry Browne's Permanent Portfolio (*not* in the commercial, and rather flawed, PERM and PRPFX funds.) For this move I thank Taylor, who posted a generally favorable review on this listserv of a new book on the PP, which I found enlightening.

I believe that the PP, while retaining key aspects of the BH viewpoint, provides similar long-term results with far less volatility than the standard BH portfolio. I was a grateful, committed and successful practitioner of the BH approach during my working career, but now that I am retired I no longer enjoy the teeth-grinding "roller coaster effect" of the BH allocation, with its abrupt ups and downs, despite the many virtues and slightly higher long-term results of the BH way.

As a brief summary, the PP calls for investing equal amounts ("4x25") in stocks, long term bonds, gold and cash. This allocation, at first glance, appears alarming and even shocking to orthodox BH investors, but upon deeper analysis I believe the PP is a flexible, effective and sophisticated way to defend a lifetime's accumulated investments while offering generally smooth returns.

That said, I did lose about 2% during my first year as a PP investor, due to a huge drop in the value of gold and a smaller but still significant drop in long term bonds. But I recognize that even the most optimal investment philosophy will have losing years now and then. Over the long term, I believe the PP offers the best solution to my quest for profitable returns with sleep-friendly low volatility. As Mr. Bogle says, there are many roads to Dublin.
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Re: Poll: Has your AA changed in the last 18 months

Post by Crow Hunter »

I became more conservative.

I received an inheritance that pushed me much closer to my "number" and thereby reduced my risk profile.

I was Age-20 bonds with a 50/50 international split.

I changed to a Age-10 in bonds with a 70/30 international split. Mostly this was due to what I inherited (almost 100% bonds/domestic stock) with just a little tweaking on my part.

Right now I am staying the course and going with Vanguards recommended 30% International but I am still wondering if I need to go back to my 50/50 international. Old habits die hard. I was 50/50 from the time I started investing in 1997.
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Re: Poll: Has your AA changed in the last 18 months

Post by cheese_breath »

Rebalanced but haven't changed my target AA.
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sscritic
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Re: Poll: Has your AA changed in the last 18 months

Post by sscritic »

I voted no because I didn't have an AA then and I don't have one now. I am assuming by AA you mean some sort of target that I am to cling to slavishly and not the result of knowing how to add and divide, i.e., find various percentages of interest.
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iceport
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Re: Poll: Has your AA changed in the last 18 months

Post by iceport »

I picked the top option, but I don't know if you really meant it the way it applies to me. I'm on a predetermined slide towards a 20% "risk-free" asset allocation as I approach retirement. Strictly speaking, it's because I consider my ability to take risk to be lower the closer I get to retirement. But this does not represent a change in plan.

--Peter
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iceport
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Re: Poll: Has your AA changed in the last 18 months

Post by iceport »

sscritic wrote:I voted no because I didn't have an AA then and I don't have one now. I am assuming by AA you mean some sort of target that I am to cling to slavishly and not the result of knowing how to add and divide, i.e., find various percentages of interest.
Wow. You've said this recently, and I'm a bit surprised. I consider setting a target AA, writing it down, and re-balancing to it to be absolutely one of the most critical means I've employed to end a cycle of performance chasing. Before learning a better way to invest, the performance chasing was a conscious, if ignorant, decision. Now that I've been here long enough to know better, my target AA saves me from chasing performance and justifying it with an elaborate rationalization that I've learned some new investing nuance from the Bogleheads. I don't follow it "slavishly", but I do have a target AA.

I don't question your ability, sscritic, to succeed with whatever approach you have chosen to take. What I question is whether any of your readers would be encouraged toss out their AA, following your example, with worse results.

Maybe this is just a matter of semantics?

--Peter
"Discipline matters more than allocation.” |—| "In finance, if you’re certain of anything, you’re out of your mind." ─William Bernstein
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Re: Poll: Has your AA changed in the last 18 months

Post by Tyrobi »

No, target AA is still the same.
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sscritic
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Re: Poll: Has your AA changed in the last 18 months

Post by sscritic »

Petrico:

But I don't performance chase, for the most part. I really buy and hold. Here are some performances I have chased:

1) I bought some TIAA Real Estate after listening to the folks on morningstar. I listened to them again when I sold in 2008 and yet again when I bought back in in 2010. That is my one and only market timing in the past 30 years. I can't speak for what I did when I was 30.

2) I bought some small value after listening to folks here. I still have it, I haven't sold any, but I haven't bought any more.

3) I bought a fund that invests in TIPS after listening to folks here. I still have it, I haven't sold any, but I haven't bought any more.

4) I bought some Tax Managed International after listening to folks here, that is if here existed in 2006, which was later TLHed into Total International. If here didn't exist back then, I must have listened to someone else. I did buy more Total International in 2011, so I guess I must have changed my "AA" to have more international, but it wasn't on the basis of wanting a particular percentage. I just decided my percentage was too low, so I put more dollars into international. I increased my percentage, but I didn't really look at the percentage. I haven't sold any.

5) I bought CA IT TE when the world was collapsing and prices were good. (I didn't have the courage to buy more equities.) I sold most of them to buy a house, but I still have the rest.

I don't rebalance, with the one exception of market timing the TREA, but that wasn't really rebalancing in the sense of trying to get anywhere except out of TREA.
Last edited by sscritic on Sun Jul 20, 2014 9:52 am, edited 1 time in total.
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Aptenodytes
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Re: Poll: Has your AA changed in the last 18 months

Post by Aptenodytes »

In November 2013 I bumped fixed income up 10 percentage points. I had set a very aggressive AA when I drank the BH Kool Aid in 2011, and by the end of 2013 I judged that I no longer needed such high risk in order to meet my goals. In fact, the returns over those two years meant that I was going to hit my de minimus target just through expected contributions. I still have a lot of equity exposure (62% of portfolio at age 55) so I am confident that I'm not over-correcting and have a decent chance of doing better than de minimus.

Within fixed income, I'm fluid across TIAA Traditional, intermediate Treasuries and intermediate investment-grade corporate bonds. I don't consider such shifts to alter the AA; they are guided by my IPS in a fairly explicit rule-based manner.
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Aptenodytes
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Re: Poll: Has your AA changed in the last 18 months

Post by Aptenodytes »

petrico wrote:I picked the top option, but I don't know if you really meant it the way it applies to me. I'm on a predetermined slide towards a 20% "risk-free" asset allocation as I approach retirement. Strictly speaking, it's because I consider my ability to take risk to be lower the closer I get to retirement. But this does not represent a change in plan.
Holy smokes, you are moving toward 20% risk-free? You must have nerves of steel, a huge portfolio, or a big pension.
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Re: Poll: Has your AA changed in the last 18 months

Post by livesoft »

I read that last bit as "or a big penguin."
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Re: Poll: Has your AA changed in the last 18 months

Post by tennisplyr »

Was at 40/60 a few years ago and am moving towards 50/50.
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Re: Poll: Has your AA changed in the last 18 months

Post by sscritic »

livesoft wrote:I read that last bit as "or a big penguin."
You must have wandering eyes.
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Re: Poll: Has your AA changed in the last 18 months

Post by chaz »

Stay the course.
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Re: Poll: Has your AA changed in the last 18 months

Post by ks289 »

I voted no.
At the moment I plan on keeping 60/40 equity/bond forever with eye towards leaving something for heirs.

Possible reasons for changes in future:

Unforeseen changes in finances, family, etc.

Negative bond folks may convince me I can take MORE risk as time goes by since in actuality my risk profile is decreasing as my mortgage (negative bond) shrinks.

The anti-tilters may eventually cause me to rethink the whole slice and dice and simplify.
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Re: Poll: Has your AA changed in the last 18 months

Post by Rodc »

Aptenodytes wrote:
petrico wrote:I picked the top option, but I don't know if you really meant it the way it applies to me. I'm on a predetermined slide towards a 20% "risk-free" asset allocation as I approach retirement. Strictly speaking, it's because I consider my ability to take risk to be lower the closer I get to retirement. But this does not represent a change in plan.
Holy smokes, you are moving toward 20% risk-free? You must have nerves of steel, a huge portfolio, or a big pension.
Or is that something like 20% cash/TIPS/CD and 80% in a stock/bond portfolio?

(Or 20 is a typo and it should be some other number?
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Re: Poll: Has your AA changed in the last 18 months

Post by Aptenodytes »

livesoft wrote:I read that last bit as "or a big penguin."
There are worse misreadings of that word.
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Re: Poll: Has your AA changed in the last 18 months

Post by iceport »

Rodc wrote:
Aptenodytes wrote:
petrico wrote:I picked the top option, but I don't know if you really meant it the way it applies to me. I'm on a predetermined slide towards a 20% "risk-free" asset allocation as I approach retirement. Strictly speaking, it's because I consider my ability to take risk to be lower the closer I get to retirement. But this does not represent a change in plan.
Holy smokes, you are moving toward 20% risk-free? You must have nerves of steel, a huge portfolio, or a big pension.
Or is that something like 20% cash/TIPS/CD and 80% in a stock/bond portfolio?

(Or 20 is a typo and it should be some other number?
You got it: 20% in cash or near equivalents (stable value/CDs/etc.) and 80% in a 70/30 stock/fixed income portfolio. That produces an overall final (and static) equity allocation of 56%.

No nerves of steel, no huge portfolio, and my penguin is not germane to this discussion.

--Peter
Last edited by iceport on Sun Jul 20, 2014 11:05 am, edited 1 time in total.
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Re: Poll: Has your AA changed in the last 18 months

Post by iceport »

@sscritic -- thanks for the explanation. Those look like relatively minor adjustments around the edges? Just out of curiosity, do you think, on average, your returns were helped or hurt by your adjustments over the years?

--Peter
"Discipline matters more than allocation.” |—| "In finance, if you’re certain of anything, you’re out of your mind." ─William Bernstein
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Re: Poll: Has your AA changed in the last 18 months

Post by sscritic »

petrico wrote:@sscritic -- thanks for the explanation. Those look like relatively minor adjustments around the edges? Just out of curiosity, do you think, on average, your returns were helped or hurt by your adjustments over the years?

--Peter
I really don't know. I think the big picture is that they really didn't make a big difference either way. I do know I am a little more comfortable now knowing I have more international and some TIPS. Comfort is the key word: my AA is whatever lets me sleep at night, but it is not a bunch of numbers.

I know I made out on the market timing of TREA. In fact, the money from TREA went into CREF Stock and Inflation-Linked bonds. I sold CREF Bond to get back in. Relative to where I would have been (retaining the pre-trade holdings), I am up $80k for having gotten out and up $25k on getting back in.
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Re: Poll: Has your AA changed in the last 18 months

Post by grabiner »

I became slightly more aggressive because I acquired a non-financial asset, a condo which will provide me with a place to live. I was 90% stock before buying the condo (not counting the money intended for the condo down payment), and am now 100% stock.

However, this is 100% net stock; I could have paid cash for the condo and put all my investments in stock, but instead I borrowed (on a mortgage) and lent (bonds in my retirement plan) equal dollar amounts.
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Re: Poll: Has your AA changed in the last 18 months

Post by berntson »

I increased my target international allocation from 50% to 60%. I'm not sure whether this counts as being more aggressive or less. On the one hand, I expect that more international means less valuations risk. International stocks are cheaper, so don't have as far to fall if valuations change. On the other hand, lower valuations probably mean that international markets have more fundamental risk than US markets. So perhaps holding more international stock is more aggressive.
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Re: Poll: Has your AA changed in the last 18 months

Post by Median Joe »

Missing option:
Yes, became bogleheadish.
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Re: Poll: Has your AA changed in the last 18 months

Post by cfs »

Changes made in the past couple of months.

Retired and made changes back in May 2014. Plan to make additional changes after my dw retires and we transfer the retirement plan investments to Vanguard. As I have said before, we rely on our pillow test and our current SWAN or sleep well at night portfolio is around 35/65 including cash reserves--sleeping well at night.

Thanks for reading.
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Re: Poll: Has your AA changed in the last 18 months

Post by Aptenodytes »

petrico wrote: You got it: 20% in cash or near equivalents (stable value/CDs/etc.) and 80% in a 70/30 stock/fixed income portfolio. That produces an overall final (and static) equity allocation of 56%.

No nerves of steel, no huge portfolio, and my penguin is not germane to this discussion.

--Peter
Got it. I translated "risk-free" into Treasuries. In my case I wouldn't consider shifting from Treasuries to CDs or stable-value to be a change in AA.
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Re: Poll: Has your AA changed in the last 18 months

Post by GerryL »

After getting a financial plan done last year and working the numbers, I realized that SS and some annuities will pretty much take care of me in retirement. (I live simply.) That is not even counting the RMDs I will eventually have to take. I'm tentatively planning to stash half (after tax) of my RMDs in savings. With the realization that I do not need to draw down my savings to live (and play) I switched from a 40/60 AA to a 60/40 figuring the investments are actually long term. I consider that a revision due changing situation.
Bracket
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Re: Poll: Has your AA changed in the last 18 months

Post by Bracket »

No. Stable income, no change in risk tolerance, 20+ years until retirement.

Is the market booming? Is a crash imminent? Are small tech stocks "overstretched?"

I have no idea, so I'll stay the course.
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Re: Poll: Has your AA changed in the last 18 months

Post by DFrank »

I voted for the 1st option. Consistent saving and recent market performance have pushed us to the point where we are pretty close to our "number." We plan to retire in about 3 years, and at this point our savings over that time period will carry us to the finish line without any additional earnings from investments, so I've moved to a more conservative AA.

I have to say that my reading here on the forum has been very influential as I've begun the process of shifting my focus from accumulation to how we manage our assets for income in retirement.

Dave
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Re: Poll: Has your AA changed in the last 18 months

Post by bcjb »

No change. We're too far from retirement to have to worry about valuations etc.
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Re: Poll: Has your AA changed in the last 18 months

Post by steve roy »

Nope. Same 30% stock/70% bond with small value cap tilt. No plans to change.
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Re: Poll: Has your AA changed in the last 18 months

Post by pascalwager »

I sold some IT bond funds last year, at a loss, and bought TSM. I discovered that I can't accept IT bond fund losses because of the assumed prolonged restoration period, but more easily accept stock losses. Also, I moved my large bank savings from a 0.1% account to an internet bank savings and CD ladder. My natural inclination is to avoid risky bond funds, and find it very difficult to pull the trigger on a new bond fund purchase, although, for 15 years, I willingly put all of my savings into three-month T-bills.

Recent public statements from Ellis, Buffet, and Bogle provide some moral support for staying high in stocks, but I may (or may not) gradually add some ST bonds/CDs up to about 20% maximum FI. Right now, I'm at 11% FI (savings, CDs, I-Bonds).

I'm retired (72), but still somewhat in the accumulation stage.
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Re: Poll: Has your AA changed in the last 18 months

Post by mickeyd »

As I approach RMD time in 2015 I am slowly changing my AA from 60/40 to 50/50 and making the whole portfolio much more simple. Not there yet, but I realize that I do not need as much growth/risk as I thought I needed several years ago.
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Re: Poll: Has your AA changed in the last 18 months

Post by longinvest »

I added bonds (TBM) to my portfolio, after learning about them and how they work on this site. This change of AA was not made quickly; I waited for a period of many months and asked for the opinion of Bogleheads before making the change. I also simplified my portfolio into a 3-fund portfolio as soon as it became possible to do so.

I do not intend to make any further adjustment to my AA in the future.
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Re: Poll: Has your AA changed in the last 18 months

Post by Kevin M »

No change to major asset class policy allocations, so voted no. However, I did recently move another 3% of portfolio from bond funds to a direct 5-year CD earning 2.3%. I also modified my REIT rebalancing band from -10%/+25% to -20%/+15% based in supposedly rich valuation.

I also haven't been waiting to hit any upper rebalancing limit to sell equities, but sell down to policy target now and then. Since I'm retired, that is justified as a way of raising cash to meet expenses (but I also might do it to take advantage of good CD deals and fund I Bond purchases).

I have to admit that I've been thinking of lowering my policy allocation to equities. I don't need to take the risk, and want to ensure that I have the willingness to rebalance back to target when the next big plunge occurs.

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Re: Poll: Has your AA changed in the last 18 months

Post by Investor2 »

grabiner wrote:I became slightly more aggressive because I acquired a non-financial asset, a condo which will provide me with a place to live. I was 90% stock before buying the condo (not counting the money intended for the condo down payment), and am now 100% stock.

However, this is 100% net stock; I could have paid cash for the condo and put all my investments in stock, but instead I borrowed (on a mortgage) and lent (bonds in my retirement plan) equal dollar amounts.
I'm a little surprised that you've became more aggressive, even if only slightly. Are you not too concerned about U.S. stock valuations, or do you have a significant percentage in international?

I voted for the first option because the change in my allocation was largely due to being a couple of years from retirement.

I was 100% stocks for most of my investing career, went to 95/5 in late 2012 and to about 75/25 by the end of 2013 (and in equities went from 28% international to 40% international due to valuations.)

I've found I don't really like having so much in fixed income, perhaps partly because if I include the value of pension and SS my allocation becomes 37 stocks/63 fixed, and partly because my fixed is all TSP G Fund, plus a few I bonds, so it's basically guaranteed to lose money after taxes.
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Re: Poll: Has your AA changed in the last 18 months

Post by Kevin M »

Investor2 wrote:
grabiner wrote:<snip>
However, this is 100% net stock; I could have paid cash for the condo and put all my investments in stock, but instead I borrowed (on a mortgage) and lent (bonds in my retirement plan) equal dollar amounts.
I'm a little surprised that you've became more aggressive, even if only slightly.
Note that David is treating his mortgage as a negative bond, and holds bonds equal to the value of his mortgage. I doubt many people do this (even though the arguments for doing so are pretty compelling); if they did, I think we'd find that many people have more than 100% allocations to stocks, due to the leverage of the mortgage.

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Re: Poll: Has your AA changed in the last 18 months

Post by IlliniDave »

More conservative but just by a token amount (5%). Both valuations and having turned 50 influenced the decision.
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Re: Poll: Has your AA changed in the last 18 months

Post by LateStarter1975 »

No....I wrote my IPS last November and this is my first year of having a real clear AA in my ultra-short investing life (3 years). No plans on changing it; will only rebalance as stated on my IPS
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Re: Poll: Has your AA changed in the last 18 months

Post by Dale_G »

I am one of the guys people who is becoming more "aggressive". I modified my IPS in January 2013. I've been resetting upper and lower rebalancing bands upward (while taking just a bit out of equities) as the market has risen.

The portfolio is at a level that far exceeds anything that I anticipate spending at this stage of my life, so I am effectively investing for heirs. So 77 YO and 70% equities. I have no Idea when I will stop, but it won't be because of hiccup in the market.

It is always a balancing act.

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Re: Poll: Has your AA changed in the last 18 months

Post by Leif »

Equities reduced 2% per plan at the beginning of 2014. I voted for the first option. Need or ability did not really change in the last 18 months, but following glide path.
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Re: Poll: Has your AA changed in the last 18 months

Post by grabiner »

Kevin M wrote:
Investor2 wrote:
grabiner wrote:<snip>
However, this is 100% net stock; I could have paid cash for the condo and put all my investments in stock, but instead I borrowed (on a mortgage) and lent (bonds in my retirement plan) equal dollar amounts.
I'm a little surprised that you've became more aggressive, even if only slightly.
Note that David is treating his mortgage as a negative bond, and holds bonds equal to the value of his mortgage. I doubt many people do this (even though the arguments for doing so are pretty compelling); if they did, I think we'd find that many people have more than 100% allocations to stocks, due to the leverage of the mortgage.
And without that adjustment, I would have become slightly more conservative but returned to the original allocation. At my last check, 89% of my market investments were in stock, compared to 90% before I started saving for the down payment. (I had less than 89% stock when I bought my condo, but since then, my mortgage balance and thus my bond allocation have decreased, and new money and a rising market have caused my stock allocation to increase.)
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Re: Poll: Has your AA changed in the last 18 months

Post by Longtimelurker »

Very interesting results.

1: Clearly the largest population of Bogleheads are staying the course. Great discipline.
2: The second largest population are Bogleheads adjusting their AA because the run up in equities allowed them to de-risk in achieving their goals. Congrats
3: The third largest population (very small) are Bogleheads following valuations. This is a form of market timing and in my opinion a slippery slope.

All in all, the results are impressive and expected from this group of investors.
Stay the course. If you can't resist greed, and fear is proven to be 2x as strong, you are doomed as an investor.
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Index Fan
Posts: 2587
Joined: Wed Mar 07, 2007 11:13 am
Location: The great Midwest

Re: Poll: Has your AA changed in the last 18 months

Post by Index Fan »

No, still at 50/50 as planned.
"Optimum est pati quod emendare non possis." | -Seneca
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Toons
Posts: 14467
Joined: Fri Nov 21, 2008 9:20 am
Location: Hills of Tennessee

Re: Poll: Has your AA changed in the last 18 months

Post by Toons »

The 5 year bull market has pushed my equity allocation to 78/22,,,,,Stock,(bond,cash). :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
feh
Posts: 2011
Joined: Sat Dec 15, 2012 10:39 am

Re: Poll: Has your AA changed in the last 18 months

Post by feh »

Slowly reducing equities in anticipation of retirement. Current markets/valuations are not considered.
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ofcmetz
Posts: 2465
Joined: Tue Feb 08, 2011 7:09 pm
Location: Louisiana

Re: Poll: Has your AA changed in the last 18 months

Post by ofcmetz »

I voted, changed it to be more aggressive due to new circumstances. After spending a third of our portfolio to purchase 5 years of credit in my police retirement system, I adjusted our asset allocation from 60% stocks to 70% stocks. I know this change probably won't make much difference, but I feel comfortable taking a bit more risk knowing I can walk away at any point with a pension check now.
Never underestimate the power of the force of low cost index funds.
rkhusky
Posts: 17766
Joined: Thu Aug 18, 2011 8:09 pm

Re: Poll: Has your AA changed in the last 18 months

Post by rkhusky »

TomatoTomahto wrote:I am gliding toward 50/50 at a leisurely pace.
+1
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