International Fund Down - What to do?

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WentzWagon
Posts: 203
Joined: Thu Jan 08, 2015 10:25 am

International Fund Down - What to do?

Post by WentzWagon » Tue Oct 16, 2018 3:33 pm

(Updated totals below including 401K)

I have a good amount of International Exposure in my 3 Fund Portfolio Brokerage (taxable) and notice that my International / Bond had been walloped and down 5% from when I purchased. What would be your guys suggestions moving forward and is there anything I can do? Any suggestions welcome. My weight might look a little off but thats because i hold a ton of Total US in my 401K. This is my brokerage account.

Fidelity Brokerage
Current breakdown
FSTVX (Fido Total US) +$44,427
Current : $227,914
Basis: $194,486.67


FTIPX ( Fido Total Intl ) -$6,060
Current: $99,987.32
Cash Basis: $106,047


VTEB (Vanguard Exempt Bond) - -$1,194.51
Current: $40,419.32
Cash Basis: $41,613.84


Fidelity IRA
FSITX - Bond - $17,663.84

FSTVX - $12,637.87


401K
BSPIX - SP500 Fund - $282,517.68

SLMCX - Tech Fun - $61,931.94

PTTAX - Bond - $31,011.98
Last edited by WentzWagon on Wed Oct 17, 2018 8:49 am, edited 7 times in total.

UniversityEmployee9
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Re: International Fund Down - What to do?

Post by UniversityEmployee9 » Tue Oct 16, 2018 3:36 pm

Don't chase performance. Is your current Asset Allocation in line with your IPS (presuming you have one)? If not, rebalance.
Last edited by UniversityEmployee9 on Tue Oct 16, 2018 3:38 pm, edited 1 time in total.

Soon2BXProgrammer
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Re: International Fund Down - What to do?

Post by Soon2BXProgrammer » Tue Oct 16, 2018 3:37 pm

buy more with current income? if not.. eventually re-balance and buy more.

jtravisdavid
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Re: International Fund Down - What to do?

Post by jtravisdavid » Tue Oct 16, 2018 3:40 pm

You could sell the fidelity fund, take the tax loss, and purchase the similar Vanguard international fund.

WentzWagon
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Re: International Fund Down - What to do?

Post by WentzWagon » Tue Oct 16, 2018 3:41 pm

Soon2BXProgrammer wrote:
Tue Oct 16, 2018 3:37 pm
buy more with current income? if not.. eventually re-balance and buy more.
Yes it is but I am thinking about shifting more into US Fund. At this point however is it worth moving funds or wait for things to go up. It would be a realized loss if I sell now.

UniversityEmployee9 wrote:
Tue Oct 16, 2018 3:36 pm
Don't chase performance. Is your current Asset Allocation in line with your IPS (presuming you have one)? If not, rebalance.
If I re-balance however wont it become a realized loss? Or do I just keep pumping money into the US one. I havent added money money to Intl since 2/2018

WentzWagon
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Re: International Fund Down - What to do?

Post by WentzWagon » Tue Oct 16, 2018 3:42 pm

jtravisdavid wrote:
Tue Oct 16, 2018 3:40 pm
You could sell the fidelity fund, take the tax loss, and purchase the similar Vanguard international fund.
Whats the advantage there? Also I have Fido account so it might cost me $25-50 to hold the vanguard in Fido .

UniversityEmployee9
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Joined: Wed Mar 18, 2015 10:01 am

Re: International Fund Down - What to do?

Post by UniversityEmployee9 » Tue Oct 16, 2018 3:42 pm

WentzWagon wrote:
Tue Oct 16, 2018 3:41 pm
Soon2BXProgrammer wrote:
Tue Oct 16, 2018 3:37 pm
buy more with current income? if not.. eventually re-balance and buy more.
Yes it is but I am thinking about shifting more into US Fund. At this point however is it worth moving funds or wait for things to go up. It would be a realized loss if I sell now.

UniversityEmployee9 wrote:
Tue Oct 16, 2018 3:36 pm
Don't chase performance. Is your current Asset Allocation in line with your IPS (presuming you have one)? If not, rebalance.
If I re-balance however wont it become a realized loss? Or do I just keep pumping money into the US one. I havent added money money to Intl since 2/2018
You would be selling your US fund to buy the International fund. Let's say your IPS calls for a 60/40 US/International split and right now you're sitting at 65/35, you'd sell enough of your US fund and use the proceeds to buy more of the International fund to get back to 60/40.

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dwickenh
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Re: International Fund Down - What to do?

Post by dwickenh » Tue Oct 16, 2018 3:43 pm

Only buy stuff that goes up!! If you can figure that out ahead of time, let me know. Re-balance is the best way if a tax deferred account, or tax loss harvest if a taxable account. I just harvested losses in International in my taxable and am smiling because of the tax break I am getting.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

WentzWagon
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Re: International Fund Down - What to do?

Post by WentzWagon » Tue Oct 16, 2018 3:44 pm

UniversityEmployee9 wrote:
Tue Oct 16, 2018 3:42 pm

You would be selling your US fund to buy the International fund. Let's say your IPS calls for a 60/40 US/International split and right now you're sitting at 65/35, you'd sell enough of your US fund and use the proceeds to buy more of the International fund to get back to 60/40.
I think I want to stay more US focused for the time being.

WentzWagon
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Re: International Fund Down - What to do?

Post by WentzWagon » Tue Oct 16, 2018 3:46 pm

dwickenh wrote:
Tue Oct 16, 2018 3:43 pm
Only buy stuff that goes up!! If you can figure that out ahead of time, let me know. Re-balance is the best way if a tax deferred account, or tax loss harvest if a taxable account. I just harvested losses in International in my taxable and am smiling because of the tax break I am getting.
So how would I TLH?

How much would I sell and what would I buy? I would need it to make sense to kick me down a bracket right?

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oldcomputerguy
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Re: International Fund Down - What to do?

Post by oldcomputerguy » Tue Oct 16, 2018 3:59 pm

My rough back-of-the-envelope calculation gives this:

Original asset allocation: 57% domestic stock, 31% international stock, 12% bonds
Revised asset allocation: 62% domestic stock, 27% international stock, 11% bonds

So your international allocation has drifted from 31% of total portfolio to 27%. I wouldn't call that "getting walloped", but it might be time to rebalance, depending on what your IPS says. In my own case, mine says to rebalance whenever my stock-to-bond allocation gets more than 5% away from target. Assuming your target allocation was at least in the neighborhood of your "cost basis" numbers, your stock-to-bond allocation has drifted just 1%, a negligible change.

Domestic-to-international is a bit different. Your original allocation gave a split (looking only at stock) of 65% domestic stock, 35% international. That equity allocation split is now 69% domestic, 31% international, a drift from target split of 4%. I'm not sure I'd even bother rebalancing this change, although I might check it again in six months.

If you feel you absolutely must do something, I'd recommend selling some domestic (FSTVX) and buying some international (FTIPX) to bring you back to your desired allocation. Other than that, I'd say walk away and go live life for now.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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dwickenh
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Re: International Fund Down - What to do?

Post by dwickenh » Tue Oct 16, 2018 4:01 pm

WentzWagon wrote:
Tue Oct 16, 2018 3:46 pm
dwickenh wrote:
Tue Oct 16, 2018 3:43 pm
Only buy stuff that goes up!! If you can figure that out ahead of time, let me know. Re-balance is the best way if a tax deferred account, or tax loss harvest if a taxable account. I just harvested losses in International in my taxable and am smiling because of the tax break I am getting.
So how would I TLH?

How much would I sell and what would I buy? I would need it to make sense to kick me down a bracket right?
1. You could just sell it, register the capital loss, wait 31 days and buy it back
2. You could sell it and buy something that is "not identical" but keeps you in the market. (example- Total International to Developed International.)
3 You can write off up to 3000.00 of the loss against your normal income and carry over the rest to next year.

In the 22% brkt that would save 660.00 in taxes.

Read up on Tax loss harvesting in the many threads before attempting. I am not an expert!

Good luck,

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

Thegame14
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Re: International Fund Down - What to do?

Post by Thegame14 » Tue Oct 16, 2018 4:04 pm

wait longer....

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vineviz
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Re: International Fund Down - What to do?

Post by vineviz » Tue Oct 16, 2018 4:39 pm

WentzWagon wrote:
Tue Oct 16, 2018 3:44 pm
UniversityEmployee9 wrote:
Tue Oct 16, 2018 3:42 pm

You would be selling your US fund to buy the International fund. Let's say your IPS calls for a 60/40 US/International split and right now you're sitting at 65/35, you'd sell enough of your US fund and use the proceeds to buy more of the International fund to get back to 60/40.
I think I want to stay more US focused for the time being.
Do you realize this is a bad idea?
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

WhiteMaxima
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Re: International Fund Down - What to do?

Post by WhiteMaxima » Tue Oct 16, 2018 4:44 pm

Reblane if it's tip off by 5% or even 10% off the target?

Walkure
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Re: International Fund Down - What to do?

Post by Walkure » Tue Oct 16, 2018 4:50 pm

WentzWagon wrote:
Tue Oct 16, 2018 3:33 pm
My weight might look a little off but thats because i hold a ton of Total US in my 401K. This is my brokerage account.
When you say the weight might look a bit off do mean you feel international is a high proportion relative to your portfolio? You're already more than 2-to-1 domestic in your brokerage, and you say your 401k also holds a "ton of Total US." So your total allocation to international can't be more than maybe ~20% of equities?

stocknoob4111
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Re: International Fund Down - What to do?

Post by stocknoob4111 » Tue Oct 16, 2018 4:53 pm

Thegame14 wrote:
Tue Oct 16, 2018 4:04 pm
wait longer....
lol, I like this idea the best! I'm down as well, i'm holding it for the next 25 years though so I have no interest if it is going up or down at the moment.

delamer
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Re: International Fund Down - What to do?

Post by delamer » Tue Oct 16, 2018 4:59 pm

WentzWagon wrote:
Tue Oct 16, 2018 3:44 pm
UniversityEmployee9 wrote:
Tue Oct 16, 2018 3:42 pm

You would be selling your US fund to buy the International fund. Let's say your IPS calls for a 60/40 US/International split and right now you're sitting at 65/35, you'd sell enough of your US fund and use the proceeds to buy more of the International fund to get back to 60/40.
I think I want to stay more US focused for the time being.
Don’t make changes to your allocation based on short-term changes in the markets.

Investing in stocks is a long-run process. Selling “low” after a recent downturn just depresses your long-run return.

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Phineas J. Whoopee
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Re: International Fund Down - What to do?

Post by Phineas J. Whoopee » Tue Oct 16, 2018 5:04 pm

WentzWagon wrote:
Tue Oct 16, 2018 3:41 pm
...
If I re-balance however wont it become a realized loss? Or do I just keep pumping money into the US one. I havent added money money to Intl since 2/2018
A loss is a loss, realized or otherwise. The only place it matters is in a taxable account, such as yours, because realizing a loss can bring tax advantages.

The value of your investment went down either way.

PJW

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ruralavalon
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Location: Illinois

Re: International Fund Down - What to do?

Post by ruralavalon » Tue Oct 16, 2018 6:08 pm

WentzWagon wrote:
Tue Oct 16, 2018 3:33 pm
I have a good amount of International Exposure in my 3 Fund Portfolio Brokerage (taxable) and notice that my International / Bond had been walloped and down 5% from when I purchased. What would be your guys suggestions moving forward and is there anything I can do? Any suggestions welcome. My weight might look a little off but thats because i hold a ton of Total US in my 401K. This is my brokerage account.

Current breakdown
FSTVX (Fido Total US) +$44,427
Current : $227,914
Basis: $194,486.67


FTIPX ( Fido Total Intl ) -$6,060
Current: $99,987.32
Cash Basis: $106,047


VTEB (Vanguard Exempt Bond) - -$1,194.51
Current: $40,419.32
Cash Basis: $41,613.84
Pick an asset allocation and stick with it regardless of current or recent market movements.

Short-term past performance is not a good predictor of future performance, international may well outperform in the future. Wiki article, "Callan periodic table of investment returns". That table shows annual returns for nine fund types ranked best to worst over the years 1999-2018 (20 years). There is no pattern, it is random.

So the answer to your question is either do nothing or buy more shares of the funds which are down.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

OregonDucksFan
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Re: International Fund Down - What to do?

Post by OregonDucksFan » Tue Oct 16, 2018 6:24 pm

In the worst case, stocks could be down 25% or more in a year. If being down 5% is a concern to you, then consider re-evaluating asset allocation with less in stocks on a permanent basis (not a temporary change). Re-evaluate in light of your risk tolerance and need to take risk.

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whodidntante
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Re: International Fund Down - What to do?

Post by whodidntante » Tue Oct 16, 2018 6:25 pm

Buy more. Use current income or sell American stocks.

DesertDiva
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Re: International Fund Down - What to do?

Post by DesertDiva » Tue Oct 16, 2018 6:27 pm

Review the basics:
The Bogleheads® Philosophy
1. Develop a workable plan
2. Invest early and often
3. Never bear too much or too little risk
4. Never try to time the market
5. Use index funds when possible
6. Keep costs low
7. Diversify
8. Minimize taxes
9. Keep it simple
10. Stay the course
♫ Stocks go up ♫ Stocks go down ♫ Stocks go up ♫ Stocks go down ♫ - Second verse same as the first

jalbert
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Re: International Fund Down - What to do?

Post by jalbert » Tue Oct 16, 2018 6:33 pm

WentzWagon wrote:
Tue Oct 16, 2018 3:42 pm
jtravisdavid wrote:
Tue Oct 16, 2018 3:40 pm
You could sell the fidelity fund, take the tax loss, and purchase the similar Vanguard international fund.
Whats the advantage there? Also I have Fido account so it might cost me $25-50 to hold the vanguard in Fido .
The main advantage is being able to take $3000/yr of the loss against earned income and carry the rest forward to subsequent years.

IXUS would be a more tax efficient holding. You want to be sure you don’t generate a wash sale. A different fund that tracks the identical index may be ok, but could be challenged by the IRS. Buying a fund that tracks a different int’l index should always be fine.
Last edited by jalbert on Tue Oct 16, 2018 10:12 pm, edited 1 time in total.
Risk is not a guarantor of return.

stocknoob4111
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Re: International Fund Down - What to do?

Post by stocknoob4111 » Tue Oct 16, 2018 6:38 pm

very slightly off topic but I read the Bogleheads plan above and it says never bear too much risk, yet I see hordes of ordinary people I know buying individual stock like Netflix saying it's a sure future bet while I think single stocks are too much risk for the average Joe long term investor. What is the Bogleheads philosophy on acquiring single stocks?

DesertDiva
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Re: International Fund Down - What to do?

Post by DesertDiva » Tue Oct 16, 2018 6:41 pm

stocknoob4111 wrote:
Tue Oct 16, 2018 6:38 pm
very slightly off topic but I read the Bogleheads plan above and it says never bear too much risk, yet I see hordes of ordinary people I know buying individual stock like Netflix saying it's a sure future bet while I think single stocks are too much risk for the average Joe long term investor. What is the Bogleheads philosophy on acquiring single stocks?
5. Use index funds when possible
♫ Stocks go up ♫ Stocks go down ♫ Stocks go up ♫ Stocks go down ♫ - Second verse same as the first

remomnyc
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Re: International Fund Down - What to do?

Post by remomnyc » Tue Oct 16, 2018 6:58 pm

ruralavalon wrote:
Tue Oct 16, 2018 6:08 pm
So the answer to your question is either do nothing or buy more shares of the funds which are down.
This, or tax loss harvest, which is what I did yesterday. I didn't buy more because I haven't hit my 5% rebalancing bands.

Grt2bOutdoors
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Location: New York

Re: International Fund Down - What to do?

Post by Grt2bOutdoors » Tue Oct 16, 2018 8:24 pm

WentzWagon wrote:
Tue Oct 16, 2018 3:33 pm
I have a good amount of International Exposure in my 3 Fund Portfolio Brokerage (taxable) and notice that my International / Bond had been walloped and down 5% from when I purchased. What would be your guys suggestions moving forward and is there anything I can do? Any suggestions welcome. My weight might look a little off but thats because i hold a ton of Total US in my 401K. This is my brokerage account.

Current breakdown
FSTVX (Fido Total US) +$44,427
Current : $227,914
Basis: $194,486.67


FTIPX ( Fido Total Intl ) -$6,060
Current: $99,987.32
Cash Basis: $106,047


VTEB (Vanguard Exempt Bond) - -$1,194.51
Current: $40,419.32
Cash Basis: $41,613.84
This is my suggestion - it's clear from your follow-up post that you are not an "international" kind of investor. That suggests that your original asset allocation was too "risky" and you realize that you are most comfortable holding a domestic weighted portfolio. No arguments from me, I get it. In your taxable account, you are 70/30 in equities, if it were me, I'd leave it right where it is. What I would not do is to sell International and lump it into US only.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

BoggledHead2
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Re: International Fund Down - What to do?

Post by BoggledHead2 » Tue Oct 16, 2018 8:46 pm

I just bought 1.5K worth of more shares

Why? Because it lowers my overall cost basis and will now spit out a bigger dividend in December, which I will also auto re-invest ... and I’ll continue to keep buying next paycheck if it’s lower

If you aren’t planning on tax lost harvesting, selling at a loss just to buy the current “better” performing fund is, quite frankly, a terrible idea.

Hold, harvest, or buy more (cheaper) shares

lostdog
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Re: International Fund Down - What to do?

Post by lostdog » Tue Oct 16, 2018 9:40 pm

vineviz wrote:
Tue Oct 16, 2018 4:39 pm
WentzWagon wrote:
Tue Oct 16, 2018 3:44 pm
UniversityEmployee9 wrote:
Tue Oct 16, 2018 3:42 pm

You would be selling your US fund to buy the International fund. Let's say your IPS calls for a 60/40 US/International split and right now you're sitting at 65/35, you'd sell enough of your US fund and use the proceeds to buy more of the International fund to get back to 60/40.
I think I want to stay more US focused for the time being.
Do you realize this is a bad idea?
Recency bias.

jalbert
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Re: International Fund Down - What to do?

Post by jalbert » Wed Oct 17, 2018 2:07 am

stocknoob4111 wrote:
Tue Oct 16, 2018 6:38 pm
very slightly off topic but I read the Bogleheads plan above and it says never bear too much risk, yet I see hordes of ordinary people I know buying individual stock like Netflix saying it's a sure future bet while I think single stocks are too much risk for the average Joe long term investor. What is the Bogleheads philosophy on acquiring single stocks?
You are correct it is off-topic, but more than slightly.
Risk is not a guarantor of return.

cegibbs
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Re: International Fund Down - What to do?

Post by cegibbs » Wed Oct 17, 2018 6:49 am

You don’t need international equities according to Bogle and Buffet. I don’t hold any and I’ve done well for forty years.

WentzWagon
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Re: International Fund Down - What to do?

Post by WentzWagon » Wed Oct 17, 2018 8:43 am

Walkure wrote:
Tue Oct 16, 2018 4:50 pm
WentzWagon wrote:
Tue Oct 16, 2018 3:33 pm
My weight might look a little off but thats because i hold a ton of Total US in my 401K. This is my brokerage account.
When you say the weight might look a bit off do mean you feel international is a high proportion relative to your portfolio? You're already more than 2-to-1 domestic in your brokerage, and you say your 401k also holds a "ton of Total US." So your total allocation to international can't be more than maybe ~20% of equities?
Updated totals in OG Post

WentzWagon
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Re: International Fund Down - What to do?

Post by WentzWagon » Wed Oct 17, 2018 8:50 am

oldcomputerguy wrote:
Tue Oct 16, 2018 3:59 pm
My rough back-of-the-envelope calculation gives this:

Original asset allocation: 57% domestic stock, 31% international stock, 12% bonds
Revised asset allocation: 62% domestic stock, 27% international stock, 11% bonds

So your international allocation has drifted from 31% of total portfolio to 27%. I wouldn't call that "getting walloped", but it might be time to rebalance, depending on what your IPS says. In my own case, mine says to rebalance whenever my stock-to-bond allocation gets more than 5% away from target. Assuming your target allocation was at least in the neighborhood of your "cost basis" numbers, your stock-to-bond allocation has drifted just 1%, a negligible change.

Domestic-to-international is a bit different. Your original allocation gave a split (looking only at stock) of 65% domestic stock, 35% international. That equity allocation split is now 69% domestic, 31% international, a drift from target split of 4%. I'm not sure I'd even bother rebalancing this change, although I might check it again in six months.

If you feel you absolutely must do something, I'd recommend selling some domestic (FSTVX) and buying some international (FTIPX) to bring you back to your desired allocation. Other than that, I'd say walk away and go live life for now.
Updated all totals

Admiral
Posts: 1392
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Re: International Fund Down - What to do?

Post by Admiral » Wed Oct 17, 2018 8:53 am

WentzWagon wrote:
Tue Oct 16, 2018 3:33 pm
(Updated totals below including 401K)

I have a good amount of International Exposure in my 3 Fund Portfolio Brokerage (taxable) and notice that my International / Bond had been walloped and down 5% from when I purchased. What would be your guys suggestions moving forward and is there anything I can do? Any suggestions welcome. My weight might look a little off but thats because i hold a ton of Total US in my 401K. This is my brokerage account.

Fidelity Brokerage
Current breakdown
FSTVX (Fido Total US) +$44,427
Current : $227,914
Basis: $194,486.67


FTIPX ( Fido Total Intl ) -$6,060
Current: $99,987.32
Cash Basis: $106,047


VTEB (Vanguard Exempt Bond) - -$1,194.51
Current: $40,419.32
Cash Basis: $41,613.84


Fidelity IRA
FSITX - Bond - $17,663.84

FSTVX - $12,637.87


401K
BSPIX - SP500 Fund - $282,517.68

SLMCX - Tech Fun - $61,931.94

PTTAX - Bond - $31,011.98
If you're going to sell due to a 5% paper loss, what will you do when you have a much larger loss? Why did you choose this AA in the first place? Has your thinking changed? Have your needs? Moving in and out of stocks based on small market movements is rarely a good idea long term. If you want to harvest some losses in a taxable account, fine. But that doesn't sound like your motivating factor.

Lafder
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Re: International Fund Down - What to do?

Post by Lafder » Wed Oct 17, 2018 9:00 am

List your desired asset allocation stocks/bonds and % International.

You should have this in WRITING somewhere so you don't change it on the spot during market fluctuations.

What is your rebalancing band ? My need to rebalance is only if my AA gets out of balance by more than 5%

My goal is 65/35, 35% of stocks International. I will only rebalance by selling and buying if I get to or beyond an AA of 60/40 or 70/30. As long as I am in that range I leave it alone and buy in the low category any time I am adding to an account.

List your current asset allocation stocks/bonds, % International.

It should be a cold hard numerical fact whether you should be doing any rebalancing, based on a plan you already have in place.

It is generally a bad idea to change your desired AA during market fluctuations as that is a reaction to current performance. If you are worried you have too much International, your % of allocation has already dropped on it's own during market drops so you are there already :) It would be silly to sell International low to buy the higher asset. If you are really uncomfortable with market activity, it could be a sign your AA is too aggressive towards stocks and you should increase your bond holdings.

If you really think about it and decide to lower your % International, then put it in writing and use that as your desired AA to decide when to rebalance in the future.

lafder

J295
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Re: International Fund Down - What to do?

Post by J295 » Wed Oct 17, 2018 9:31 am

Follow your IPS. Otherwise be prepared for ongoing uncertainty with fear and greed as your travel companions

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