Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

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NeedsHelp!
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Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by NeedsHelp! » Tue Aug 14, 2018 10:01 am

Hi,

This is the first time I am posting. I have both my 401 K and personal investments with Vanguard.

I am 40 years old and have my funds diversified 85% stocks, 15% bonds.

I read a NYT article "Vanguard Warns of Worsening Odds for the Economy and Markets" published August 10.

https://www.nytimes.com/2018/08/10/busi ... onomy.html

My question is:

1. Do I hold steady as of today with an 85% distribution of stocks (50-50 mix of US and international) and 15% bonds?
2. OR would you redistribute funds to a more conservative mix (increase bond percentage)?

My impression of the Bogleheads approach would be "Hold steady" and ride out any stock market drops, but the article is Vanguards own prediction of a possible downturn of the market within the next 12 months.

Thanks for any advice!

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Duckie
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Re: Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by Duckie » Tue Aug 14, 2018 4:45 pm

NeedsHelp!, welcome to the forum.
NeedsHelp! wrote:1. Do I hold steady as of today with an 85% distribution of stocks (50-50 mix of US and international) and 15% bonds?
2. OR would you redistribute funds to a more conservative mix (increase bond percentage)?
I would "hold steady" as long as you're comfortable with only 15% bonds. At age 40 that's aggressive and I'd be 25% to 30% bonds. But this has nothing to do with the possible downturn.

jumppilot
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Re: Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by jumppilot » Tue Aug 14, 2018 4:50 pm

"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves."

-Peter Lynch

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JMacDonald
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Re: Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by JMacDonald » Tue Aug 14, 2018 4:51 pm

There was a discussion on this issue here:

viewtopic.php?f=10&t=256237&newpost=4067954

Also your asset allocation should reflect your willingness, ability, and need to take risk.

http://www.kevinoninvesting.com/2010/04 ... rance.html
Best Wishes, | Joe

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vineviz
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Re: Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by vineviz » Tue Aug 14, 2018 5:09 pm

jumppilot wrote:
Tue Aug 14, 2018 4:50 pm
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves."

-Peter Lynch
Nice quote.

I'm making this my signature.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

jumppilot
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Re: Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by jumppilot » Tue Aug 14, 2018 5:18 pm

vineviz wrote:
Tue Aug 14, 2018 5:09 pm
jumppilot wrote:
Tue Aug 14, 2018 4:50 pm
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves."

-Peter Lynch
Nice quote.

I'm making this my signature.
:thumbsup

retiredjg
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Re: Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by retiredjg » Tue Aug 14, 2018 5:30 pm

NeedsHelp! wrote:
Tue Aug 14, 2018 10:01 am
1. Do I hold steady as of today with an 85% distribution of stocks (50-50 mix of US and international) and 15% bonds?
You should always be invested in a way that you can tolerate a stock market downturn/extended bear market that starts today. You should be invested that way even during the good times because you never know when the bad times are going to start.

If you are there, hold steady. If not, adjust it now and NEVER EVER get more aggressive than what you change to.

2. OR would you redistribute funds to a more conservative mix (increase bond percentage)?
If your AA (stock to bond ratio) scares you, you are not in the right AA for your temperament. This has nothing to do with what the market is doing. Do not change your AA because a crash is coming. Change your AA if you realize you would not be able to tolerate the crash at your current ratio.
My impression of the Bogleheads approach would be "Hold steady" and ride out any stock market drops,
This is correct, but it only works if you are at the right ratio to begin with. Since you are worried about this, you are probably invested too aggressively.

...but the article is Vanguards own prediction of a possible downturn of the market within the next 12 months.
I didn't read it all. The fact that Vanguard believes a downturn is coming is not the same thing as saying Vanguard thinks you should change your stock to bond ratio because a crash is coming.

If you now realize you are in the wrong place, change it. But do not ever consider changing it back after that.

staythecourse
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Re: Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by staythecourse » Tue Aug 14, 2018 5:51 pm

Okay forget about the argument that economists have ALWAYS been wrong on any prediction and has been backed up by every study out there. Let us say they are correct on this one. If you are 40 and don't need the money for 20+ years then WHO CARES even if they are right. Then lets consider even if you still do care where are you going to put the money and when and then when will you switch it back and based on what?

As you can see even if you play out the mental thought process out the only logical move IF said money is not needed until the distant future is simply to do NOTHING at all.

I like Vanguard for its stewardship for its passive investments, but don't trust them any more then any other con artist financial person out there when it comes to do what it takes to generate a profit.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

JBTX
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Re: Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by JBTX » Tue Aug 14, 2018 10:29 pm

I suspect if you are worrying about corrections, age minus 25 in bonds is too aggressive.

WanderingDoc
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Re: Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by WanderingDoc » Tue Aug 14, 2018 10:45 pm

NeedsHelp! wrote:
Tue Aug 14, 2018 10:01 am
Hi,

This is the first time I am posting. I have both my 401 K and personal investments with Vanguard.

I am 40 years old and have my funds diversified 85% stocks, 15% bonds.

I read a NYT article "Vanguard Warns of Worsening Odds for the Economy and Markets" published August 10.

https://www.nytimes.com/2018/08/10/busi ... onomy.html

My question is:

1. Do I hold steady as of today with an 85% distribution of stocks (50-50 mix of US and international) and 15% bonds?
2. OR would you redistribute funds to a more conservative mix (increase bond percentage)?

My impression of the Bogleheads approach would be "Hold steady" and ride out any stock market drops, but the article is Vanguards own prediction of a possible downturn of the market within the next 12 months.

Thanks for any advice!
Not sure about stocks. In real estate, I've read dozens of articles and heard even more predictions every year since about 2013, "downturn in the market within the next 12 months". Those of us that kept buying real estate, are doing pretty well. The ones that didn't, they are still listening to Harry Dent and Peter Schiff and complaining about life.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

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Re: Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by AlphaLess » Tue Aug 14, 2018 10:48 pm

DUPLICATE thread alert.
"You can get more with a kind word and a gun than with just a kind word." George Washington

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Re: Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by LadyGeek » Wed Aug 15, 2018 4:35 pm

^^^ Yes, There is an existing thread here: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets, which is intended as general discussion of the article.

However, the OP is asking what to do with his own portfolio.

NeedsHelp!, Welcome! Did we answer your questions?

(To get our attention sooner, report the post using the "!" in the top-right corner of the post. One of the reasons is "Duplicate thread". Thanks to the member who did just that.)
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

tesuzuki2002
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Re: Vanguard Warns of Worsening Odds for the Economy and Markets [Portfolio help]

Post by tesuzuki2002 » Wed Aug 15, 2018 5:07 pm

Duckie wrote:
Tue Aug 14, 2018 4:45 pm
NeedsHelp!, welcome to the forum.
NeedsHelp! wrote:1. Do I hold steady as of today with an 85% distribution of stocks (50-50 mix of US and international) and 15% bonds?
2. OR would you redistribute funds to a more conservative mix (increase bond percentage)?
I would "hold steady" as long as you're comfortable with only 15% bonds. At age 40 that's aggressive and I'd be 25% to 30% bonds. But this has nothing to do with the possible downturn.
With the yield curve flattening... possibly heading towards an inversion.... I'm Leary of increasing my bond position...

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