Timing Assets Within Your Portfolio

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
tchasteen
Posts: 40
Joined: Tue Oct 21, 2014 6:57 am

Timing Assets Within Your Portfolio

Postby tchasteen » Wed Apr 19, 2017 5:13 pm

Hello,

What am wondering is if I have a portfolio made up of US Stocks, International Stocks, and REITs, would it be wise to strategically invest in assets when they're "on sale" over keeping a perfectly balanced portfolio.

For example right now the US Stocks are at an all-time high and international is a little lower than it's all time high. So if I am willing to be flexible with the asset allocation within my portfolio would be a good idea to invest in International for the time being and rebalance later with US Stocks/REITS when prices dip?

I know this goes against Mr. Bogle's investing advice a little bit but it intuitively (at least at the moment) makes sense.

Thanks,
Tim
Last edited by tchasteen on Wed Apr 19, 2017 5:24 pm, edited 1 time in total.

jayhawkerbeef
Posts: 219
Joined: Tue Jul 22, 2014 11:10 am

Re: Timing Assets Withing Your Portfolio

Postby jayhawkerbeef » Wed Apr 19, 2017 5:20 pm

You came to the wrong forum for assistance with timing. My opinion though, try it with a small portion of your portfolio.

inbox788
Posts: 3571
Joined: Thu Mar 15, 2012 5:24 pm

Re: Timing Assets Within Your Portfolio

Postby inbox788 » Wed Apr 19, 2017 5:40 pm

Doing it with a small amount of your portfolio isn't going to yield any significant difference. Not worth doing small IMO.
Go big or go home!
I wouldn't do it, but hey, it's your retirement.

nlecaros
Posts: 13
Joined: Sat Jul 11, 2015 8:28 pm

Re: Timing Assets Within Your Portfolio

Postby nlecaros » Wed Apr 19, 2017 9:03 pm

I don't know if it would be "wise" though I do know it's a lot of work since I tried it myself. I also found out it wasn't worth the trouble. With all the tinkering of my portfolio that I've done in the past ten years, I have 8.1% annualized total return to show for it. On the other hand, over the same time period, I manage my wife's portfolio as well and left it pretty much alone with a 3-fund portfolio. She is running at 9.6% :(
Last edited by nlecaros on Wed Apr 19, 2017 11:31 pm, edited 1 time in total.

Tyler Aspect
Posts: 119
Joined: Mon Mar 20, 2017 10:27 pm
Location: California
Contact:

Re: Timing Assets Within Your Portfolio

Postby Tyler Aspect » Wed Apr 19, 2017 11:24 pm

Where's the bond? Re-balancing across stock versus bonds is the essence of taking advantage of on-sale situations. Without bond all you can do is to test the iron will when recession hits.

Nate79
Posts: 555
Joined: Thu Aug 11, 2016 6:24 pm
Location: Portland, OR

Re: Timing Assets Within Your Portfolio

Postby Nate79 » Wed Apr 19, 2017 11:31 pm

How do you define "on sale"? How do you define expensive? How do you know your definitions which must be based on past experience will hold true for the future?

And finally, what makes you think your method can be better than the experts running active funds where a vast majority can not beat the market? What do you know that these experts don't know?

Artisan
Posts: 254
Joined: Sat Oct 01, 2016 8:30 am

Re: Timing Assets Within Your Portfolio

Postby Artisan » Thu Apr 20, 2017 6:41 am

Markets are always making all time highs. If they didn't who would invest?

Just because international is off its high or hasn't performed doesn't mean it won't continue that performance.

What you are describing is market timing pure and simple. You can give it a nice new coat of paint, call it something else, rationalize why it is a good strategy but that is what you are suggesting.

There are many individuals who run multi million dollar mutual funds who cannot do this successfully and consistently. Unless someone gave you the recipe to the secret sauce, I doubt you will be able to either.

Invest in low cost funds.

Pick an asset allocation.

Rebalance based on deviations from your asset allocation.

Invest as much as you can.

Live below your means.

Accept what the market returns.

It really is that simple.

IHateCasinos
Posts: 13
Joined: Fri Jan 22, 2016 4:58 pm

Re: Timing Assets Within Your Portfolio

Postby IHateCasinos » Thu Apr 20, 2017 12:51 pm

Perfect.
Just perfect.
That's going on my refrigerator!!
:sharebeer
Marc

Artisan wrote:Markets are always making all time highs. If they didn't who would invest?

Just because international is off its high or hasn't performed doesn't mean it won't continue that performance.

What you are describing is market timing pure and simple. You can give it a nice new coat of paint, call it something else, rationalize why it is a good strategy but that is what you are suggesting.

There are many individuals who run multi million dollar mutual funds who cannot do this successfully and consistently. Unless someone gave you the recipe to the secret sauce, I doubt you will be able to either.

Invest in low cost funds.

Pick an asset allocation.

Rebalance based on deviations from your asset allocation.

Invest as much as you can.

Live below your means.

Accept what the market returns.

It really is that simple.

rkhusky
Posts: 3615
Joined: Thu Aug 18, 2011 8:09 pm

Re: Timing Assets Within Your Portfolio

Postby rkhusky » Thu Apr 20, 2017 1:03 pm

tchasteen wrote:Hello,

What am wondering is if I have a portfolio made up of US Stocks, International Stocks, and REITs, would it be wise to strategically invest in assets when they're "on sale" over keeping a perfectly balanced portfolio.

For example right now the US Stocks are at an all-time high and international is a little lower than it's all time high. So if I am willing to be flexible with the asset allocation within my portfolio would be a good idea to invest in International for the time being and rebalance later with US Stocks/REITS when prices dip?

I know this goes against Mr. Bogle's investing advice a little bit but it intuitively (at least at the moment) makes sense.

Thanks,
Tim

You should already have been rebalancing from US into Int'l. Some members of the forum play within their rebalancing bands too, e.g. if your allocation is 60/40 US/Int'l and you have 5% bands and you thought US was expensive relative to Int'l, you could move to 55/45 and still be within your bands.

NiceUnparticularMan
Posts: 721
Joined: Sat Mar 11, 2017 7:51 am

Re: Timing Assets Within Your Portfolio

Postby NiceUnparticularMan » Thu Apr 20, 2017 1:17 pm

There is no known profitable market timing scheme. That's because we don't actually know when they are "on sale".

Of course, it is undoubtedly true that any higher-risk equity class will have a significant dip in the future--indeed, it will likely have many. The problem is whenever that happens, it might not dip below where it is NOW. And you won't know how far it is dipping until well after it is over.

So, it sounds smart to wait to buy on a dip, but it really isn't.

rkhusky
Posts: 3615
Joined: Thu Aug 18, 2011 8:09 pm

Re: Timing Assets Within Your Portfolio

Postby rkhusky » Thu Apr 20, 2017 2:01 pm

Even the site's well known "dipster", doesn't keep his "dry powder" in cash, but in his previously determined asset allocation (AA). Keeping your "dry powder" in the US Market (or in bonds according to your previously determined AA) is what you want to do if you are going to try and market time a bit. Don't go to cash and hope the market drops in the future.

magneto
Posts: 813
Joined: Sun Dec 19, 2010 10:57 am
Location: On Chesil Beach

Re: Timing Assets Within Your Portfolio

Postby magneto » Fri Apr 21, 2017 4:52 am

Petula was moving the ever dwindling sickly Acer Palmatum again this week hoping for more success elsewhere, when our neighbour Rupert leaned disparagingly across the freshly trimmed privet and remarked “you won’t have much luck around these parts with that, it’s an acid lover. It’s much the same with investments according to the missus (Mrs R is reputedly very accomplished in that field). The missus says investments like plants need the right conditions to flourish and markets today she says are towards the top of their valuation ranges. So there’s not a lot of upside flourishing potential.”
“So Mr M shouldn’t have been chasing those stocks then?”
“Maybe or maybe not, depends, you’d have to ask the missus. But then as she always says, there is value and then there is price.”
“What does that mean?”
“Couldn’t say really.”
“Mr M says time in the market is more important than timing the market”
“That’s as maybe, but soil is either right or it ain’t.”

Now back indoors, Petula was pulling the remnants of last year’s goose grass from her hair.
“What do you think Mr M?”
“Well Mrs P could be right and we should hold off a bit on stocks, or then even bonds which might also be a bit toppy, and think again about those infrastructure funds as alternatives or quasi index linked bonds. So perhaps just top up that UK:INPP Infrastructure a little?”
“We will have some cash left as well won’t we Mr M?”
Last edited by magneto on Fri Apr 21, 2017 7:58 am, edited 1 time in total.
'There is a tide in the affairs of men ...', Brutus (Market Timer)

User avatar
just frank
Posts: 1075
Joined: Sun Nov 02, 2014 4:13 pm
Location: Philly Metro

Re: Timing Assets Within Your Portfolio

Postby just frank » Fri Apr 21, 2017 5:16 am

I believe that some light timing is a fun hobby....

My rationale is if I think about my AA and I can justify anything from 70:30 to 100:0, then I am allowed to slew between those limits without remorse. If I'm at 70:30, and the market booms (when I thought it might bust) I tell myself that I might have been at 70:30 all the time, and still missed the gain. Similarly, if the market tanks while I am at 100:0, I say 'stay the course' and am still happy with my AA.

This is in a pretax account.

Of course, if you do this, you need to **benchmark**. That is, you need to track what a 70:30 and a 100:0 portfolio would have done had you just bought and held. If you start lagging both your benchmarks, hang up your timing hat and stop. This would happen if, for instance, you were consistently selling low and buying high.

Within a portfolio, I really like REITs. Per the logic above, I am equally content holding up to 10% REITs, or none at all. So, If my REITs have been on a tear lately, like up 10% in 3 months, I can sell them into other index equities. If I'm out of REITs, and they have totally tanked 10% lately, I can buy up 10% of my portfoilio

And again...**benchmark**.

For all my fun and games....I've made about 1.5±0.5% per year over my 100:0 portfolio benchmark for the last several years, even better over the 70:30 one. And I think I sleep a little better too than if I was buy and hold at 100:0, since I am not there all the time.

tchasteen
Posts: 40
Joined: Tue Oct 21, 2014 6:57 am

Re: Timing Assets Within Your Portfolio

Postby tchasteen » Sat Apr 22, 2017 1:31 pm

Thanks Artisan, that's going on my fridge as well.

Very good point NiceUnparticular Man.

inbox788
Posts: 3571
Joined: Thu Mar 15, 2012 5:24 pm

Re: Timing Assets Within Your Portfolio

Postby inbox788 » Sat Apr 22, 2017 1:43 pm

just frank wrote:I believe that some light timing is a fun hobby....

My rationale is if I think about my AA and I can justify anything from 70:30 to 100:0, then I am allowed to slew between those limits without remorse. If I'm at 70:30, and the market booms (when I thought it might bust) I tell myself that I might have been at 70:30 all the time, and still missed the gain. Similarly, if the market tanks while I am at 100:0, I say 'stay the course' and am still happy with my AA.

This is in a pretax account.

Of course, if you do this, you need to **benchmark**. That is, you need to track what a 70:30 and a 100:0 portfolio would have done had you just bought and held. If you start lagging both your benchmarks, hang up your timing hat and stop. This would happen if, for instance, you were consistently selling low and buying high.

Within a portfolio, I really like REITs. Per the logic above, I am equally content holding up to 10% REITs, or none at all. So, If my REITs have been on a tear lately, like up 10% in 3 months, I can sell them into other index equities. If I'm out of REITs, and they have totally tanked 10% lately, I can buy up 10% of my portfoilio

And again...**benchmark**.

For all my fun and games....I've made about 1.5±0.5% per year over my 100:0 portfolio benchmark for the last several years, even better over the 70:30 one. And I think I sleep a little better too than if I was buy and hold at 100:0, since I am not there all the time.

Interesting. I probably went from 90:10 to 70:30 in the last 6 months with similar reasoning or rationale. I'm not sure what you're saying about benchmarking, but I use the SP500 because it's the simplest comparison I can easily make. And since I'm not 100% invested, I can expect to underperform, hopefully with less volatility. It would be harder to compare to 2 different benchmarks, but makes sense that one would want to outperform the other alternatives to continue this exercise.
Longer term, I've probably been running between 80:20 and 90:10 with the goal of 80:20 and heading towards a 60:40 allocation over long term. Problem was rising equities and lack of balancing.
Now that I'm at around 70:30, it's very comfortable, and I'll see if I have the stomach to amp up during the next downturn, or leave things be. And if the next leg is up instead, 70:30 should turn out decent.
In actuality, I'm keeping a long term retirement fund separate from a 10-20% spec fund, and that spec fund goes from 0% equities to 100% equities, while the retirement fund allocation barely changes. The changes in the spec fund have been dizzying at times.


Return to “Investing - Help with Personal Investments”

Who is online

Users browsing this forum: fire_rebel, mhalley, ProdigalSon, TexasAg06 and 57 guests