I can't take this anymore=) I'm selling stocks and buying bonds!

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Alex GR
Posts: 53
Joined: Mon Jul 31, 2017 9:17 am

I can't take this anymore=) I'm selling stocks and buying bonds!

Post by Alex GR » Tue Nov 13, 2018 4:16 pm

Hi everyone,
With all the swings up and down recently I am finding that it's too much volatility for me. My portfolio has gone down by $12000 over the past few days. I know people on here say it's a blip on the radar, but when I think about what I have to go through to earn $12k ($12k = two months of STRESSFUL hard work) it doesn't seem that trivial any more.
I have sold some of my VBR, also selling some VOE and VOO.
I decided to increase international exposure slightly from 14% to 17%.
But of course I am reallocating into BIV. The question is, are you guys finding it hard to keep buying BIV(when rebalancing) considering it keeps going down? It has decreased in value by about $40k for me since I started the portfolio.
Here is what my portfolio will look like when I finish all adjustments. What do you think?

VOO Vanguard 500 Index Fund 33%
VOE Vanguard Mid-Cap Value ETF 5%
VBR Vanguard Small-Cap Value ETF 10%
POGRX PRIMECAP Odyssey Growth Fund 5%
BIV Vanguard Intermediate-Term Bond ETF 22%
PONAX PIMCO Income Fund Class D 8%
VXUS Vanguard Total International Stock ETF International 15%
VWO Vanguard FTSE Emerging Markets ETF International 2%

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Phineas J. Whoopee
Posts: 7699
Joined: Sun Dec 18, 2011 6:18 pm

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by Phineas J. Whoopee » Tue Nov 13, 2018 4:22 pm

Hi Alex GR.

I'm sorry to hear you're in distress. I'd like to make three points, none of which is me telling you what to do.

One: Feelings are real. They are real feelings and they're important. They aren't necessarily indicative of what markets will do in the future, but they're real and they're important.

Two: If for emotional self-preservation you have to sell, then of course you have to and you don't need our permission.

Three: If you can hold out for a little while you may have time to evaluate your jitters.

To sum up, I hear ya.

PJW
Last edited by Phineas J. Whoopee on Tue Nov 13, 2018 4:24 pm, edited 1 time in total.

TheOscarGuy
Posts: 621
Joined: Sat Oct 06, 2012 1:10 pm
Location: Where I wanna be.

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by TheOscarGuy » Tue Nov 13, 2018 4:23 pm

Alex GR wrote:
Tue Nov 13, 2018 4:16 pm
Hi everyone,
With all the swings up and down recently I am finding that it's too much volatility for me. My portfolio has gone down by $12000 over the past few days. I know people on here say it's a blip on the radar, but when I think about what I have to go through to earn $12k ($12k = two months of STRESSFUL hard work) it doesn't seem that trivial any more.
I have sold some of my VBR, also selling some VOE and VOO.
I decided to increase international exposure slightly from 14% to 17%.
But of course I am reallocating into BIV. The question is, are you guys finding it hard to keep buying BIV(when rebalancing) considering it keeps going down? It has decreased in value by about $40k for me since I started the portfolio.
Here is what my portfolio will look like when I finish all adjustments. What do you think?

VOO Vanguard 500 Index Fund 33%
VOE Vanguard Mid-Cap Value ETF 5%
VBR Vanguard Small-Cap Value ETF 10%
POGRX PRIMECAP Odyssey Growth Fund 5%
BIV Vanguard Intermediate-Term Bond ETF 22%
PONAX PIMCO Income Fund Class D 8%
VXUS Vanguard Total International Stock ETF International 15%
VWO Vanguard FTSE Emerging Markets ETF International 2%
I think you need to stop looking at your portfolio so much. I am guessing this is taxable account, if yes, what is the purpose of this money -- retirement, college education? What is the time horizon? If it is 10+ years, why do you care about daily/monthly/yearly swings?

I have a general rule -- unless I am rebalancing (once a year) to keep my AA, I don't look at my 401(k) when market is down :D I don't need the money until decades, so what is the point in stressing about it now?

MindBogler
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by MindBogler » Tue Nov 13, 2018 4:24 pm

When you sell you haven't accomplished anything other than realizing a loss. Instead, direct all new purchases to bonds, money market, etc. until your overall allocation is comfortable. Stop looking at your account(s) so often.

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Phineas J. Whoopee
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by Phineas J. Whoopee » Tue Nov 13, 2018 4:52 pm

MindBogler wrote:
Tue Nov 13, 2018 4:24 pm
When you sell you haven't accomplished anything other than realizing a loss. Instead, direct all new purchases to bonds, money market, etc. until your overall allocation is comfortable. Stop looking at your account(s) so often.
I completely disagree. If one's asset allocation turns out to be unsuitable make it suitable right away, of course taking tax considerations into account.

An unrealized loss is still a loss, and pretending it isn't leads to poor decisionmaking.

None of this is to tell OP what to do.

PJW

MJW
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Location: Pacific Northwest

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by MJW » Tue Nov 13, 2018 5:01 pm

I agree with PJW. If you’re this freaked out now, it’s probably better for you to make an adjustment that will prevent you from doing something even rasher if/when things get worse later.

With that said, a couple things worth taking into account:
1) You may not be able to control your emotions but you can control your behavior. The former does not have to dictate to the latter unless you choose for that to happen.

2) If you are uncomfortable with volatility as it is now, you will probably need to manage your expectations about your portfolio’s returns going forward. Are going to want to return to your previous allocations once you start to “feel better” about things?

Dottie57
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by Dottie57 » Tue Nov 13, 2018 5:04 pm

MindBogler wrote:
Tue Nov 13, 2018 4:24 pm
When you sell you haven't accomplished anything other than realizing a loss. Instead, direct all new purchases to bonds, money market, etc. until your overall allocation is comfortable. Stop looking at your account(s) so often.
+1. A very good way to go.

Do you believe the stock market will go up n time? IF so, please don’t sell. Do stop looking at your balances for a year or two. And start buying many more bonds.

If it helps, i’ve lost a lot more than you have and I am retired.

hayman
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Joined: Tue Nov 13, 2018 5:04 pm

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by hayman » Tue Nov 13, 2018 5:07 pm

Q. Taxable Account?
A. Tax Loss Harvest

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Artsdoctor
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by Artsdoctor » Tue Nov 13, 2018 5:12 pm

Alex,

I think that it's terrific that you're learning about your investment stress levels prior to any significant downturn. It allows you an opportunity to re-calibrate your asset allocation to a more comfortable level.

The reason why you're feeling the way you are is because your equity allocation is too high. You would be more comfortable dialing it back, but try to pick a percentage with which you can stay. You're going to be frustrated if you're continually adjusting that asset allocation to whatever you're feeling that week or month.

I'd recommend that you write down those anxieties and emotions that you're experiencing now. As PJW explained, feelings are real--but they also disappear quickly. When you write something down that results in making a significant change, you can look back at it at a later date when you start getting tempted to make changes again (say, when the market roars ahead, you'll be tempted to increase your equity allocation--and your notes may remind why you've done what you're doing).

Good luck.

barnaclebob
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by barnaclebob » Tue Nov 13, 2018 5:17 pm

Its best not to equate the swings in your portfolio with how long it would have taken to generate that amount of money in wages. Or at least don't do it on just the negative side. How much are you up overall in the past few years? I know what I'm up is many years worth of wages without having to lift a finger.

FWIW, my net worth was down 55k last month, maybe 6 months of savings. It was the first time it had been down in 32 months. The total increase for the prior 32 months is +851k and maybe about 300k of that was new contributions.
Last edited by barnaclebob on Tue Nov 13, 2018 5:25 pm, edited 1 time in total.

Momus
Posts: 538
Joined: Tue Feb 21, 2012 9:23 pm

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by Momus » Tue Nov 13, 2018 5:18 pm

That's only 10% of your net income yearly. Most of us who have been investing a long time lost about 1-2 yr of income. Just stay the course... Keep buying more.
Last edited by Momus on Wed Nov 14, 2018 2:12 am, edited 2 times in total.

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GerryL
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by GerryL » Tue Nov 13, 2018 5:25 pm

Alex,
I'm probably older than you. Already retired. I check my portfolio every week or two when I go into Quicken to manage bills, etc. Last week I was up about $80k. The previous week I was down over $60k, which is more than I spend in a year. That's what happens. But the numbers get bigger the longer you've been saving and investing.
As others have said, you need to figure out an asset allocation that works for your investing timeframe and your ability to deal with volatility -- and then let it go to work. Maybe look at a simpler portfolio.

dknightd
Posts: 1032
Joined: Wed Mar 07, 2018 11:57 am

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by dknightd » Tue Nov 13, 2018 5:26 pm

Alex GR wrote:
Tue Nov 13, 2018 4:16 pm

Here is what my portfolio will look like when I finish all adjustments. What do you think?

VOO Vanguard 500 Index Fund 33%
VOE Vanguard Mid-Cap Value ETF 5%
VBR Vanguard Small-Cap Value ETF 10%
POGRX PRIMECAP Odyssey Growth Fund 5%
BIV Vanguard Intermediate-Term Bond ETF 22%
PONAX PIMCO Income Fund Class D 8%
VXUS Vanguard Total International Stock ETF International 15%
VWO Vanguard FTSE Emerging Markets ETF International 2%
The way I read this you'll end up about 78/22 stocks/bonds
Still pretty aggressive in my mind. I guess it depends on when you will need this money.
It is good and fine to adjust your AA as your risk tolerance changes.

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Nestegg_User
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by Nestegg_User » Tue Nov 13, 2018 5:31 pm

also retired (@ ~ 45/50/5), but for me rather than bond funds I’ve been adding individual treasuries and CD’s (max 2 yr maturity, beyond doesn’t make sense to me) then at least if you hold on until maturity you get the gains.

That you are feeling that way now OP does mean that you need to further evaluate your risk tolerance and allocation.
Last edited by Nestegg_User on Tue Nov 13, 2018 5:32 pm, edited 1 time in total.

staythecourse
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Joined: Mon Jan 03, 2011 9:40 am

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by staythecourse » Tue Nov 13, 2018 5:32 pm

I have quoted before, but LOVE the quote from, I think, is Milton Friedman, "It is the duty of the equity investor to sustain losses from time to time and should do it without reproach of his original plan" or something like that. It is the second part that makes it a brilliant line. He understood even then when the market hits the skids it is natural for the investor to think he is doing something wrong. You aren't so don't act like you are. That money is meant for distant usage and the plan was built around that plan so who cares what happens now.

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

stimulacra
Posts: 383
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Location: Houston

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by stimulacra » Tue Nov 13, 2018 5:33 pm

Not quite sure if I follow, you say you've lost (according to your math) about 6.6 months of your hard work in terms of dollars in your bond allocation (BIV) since you've started your portfolio and you want to sell your equities at a loss to buy more?

If I were in your position I would consider directing all new cash flows, dividends and interest payments, either into additional shares of BIV or cash.

When do you rebalance? I would adjust your asset allocation then, rather then during an emotional moment.

Isn't there a famous thread here where a prominent boglehead couldn't take it anymore back in 2008 and cashed out a significant amount of their portfolio at the bottom? The thread was useful to read because it served as a sobering time capsule of the emotional stakes involved, the uncertainty, and during the later posts, useful reflection and insights to take away.

When you retire, how will you manage weekly swings to your portfolio that represents years of salary or expenses?

GibsonL6s
Posts: 258
Joined: Tue Aug 29, 2017 12:17 pm

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by GibsonL6s » Tue Nov 13, 2018 5:39 pm

Alex GR wrote:
Tue Nov 13, 2018 4:16 pm
Hi everyone,
With all the swings up and down recently I am finding that it's too much volatility for me. My portfolio has gone down by $12000 over the past few days. I know people on here say it's a blip on the radar, but when I think about what I have to go through to earn $12k ($12k = two months of STRESSFUL hard work) it doesn't seem that trivial any more.
I have sold some of my VBR, also selling some VOE and VOO.
I decided to increase international exposure slightly from 14% to 17%.
But of course I am reallocating into BIV. The question is, are you guys finding it hard to keep buying BIV(when rebalancing) considering it keeps going down? It has decreased in value by about $40k for me since I started the portfolio.
Here is what my portfolio will look like when I finish all adjustments. What do you think?

VOO Vanguard 500 Index Fund 33%
VOE Vanguard Mid-Cap Value ETF 5%
VBR Vanguard Small-Cap Value ETF 10%
POGRX PRIMECAP Odyssey Growth Fund 5%
BIV Vanguard Intermediate-Term Bond ETF 22%
PONAX PIMCO Income Fund Class D 8%
VXUS Vanguard Total International Stock ETF International 15%
VWO Vanguard FTSE Emerging Markets ETF International 2%
From your previous posts, you have seemed nervous, in 2017 you also worried about a loss, but probably made out well by staying the course. Without knowing how old you are, how far away from retirement you are etc etc, it is hard to offer help. After the changes you are 70/30, do you feel comfortable holding this for years?

H-Town
Posts: 1309
Joined: Sun Feb 26, 2017 2:08 pm

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by H-Town » Tue Nov 13, 2018 5:52 pm

Alex GR wrote:
Tue Nov 13, 2018 4:16 pm
Hi everyone,
With all the swings up and down recently I am finding that it's too much volatility for me. My portfolio has gone down by $12000 over the past few days. I know people on here say it's a blip on the radar, but when I think about what I have to go through to earn $12k ($12k = two months of STRESSFUL hard work) it doesn't seem that trivial any more.
I have sold some of my VBR, also selling some VOE and VOO.
I decided to increase international exposure slightly from 14% to 17%.
But of course I am reallocating into BIV. The question is, are you guys finding it hard to keep buying BIV(when rebalancing) considering it keeps going down? It has decreased in value by about $40k for me since I started the portfolio.
Here is what my portfolio will look like when I finish all adjustments. What do you think?

VOO Vanguard 500 Index Fund 33%
VOE Vanguard Mid-Cap Value ETF 5%
VBR Vanguard Small-Cap Value ETF 10%
POGRX PRIMECAP Odyssey Growth Fund 5%
BIV Vanguard Intermediate-Term Bond ETF 22%
PONAX PIMCO Income Fund Class D 8%
VXUS Vanguard Total International Stock ETF International 15%
VWO Vanguard FTSE Emerging Markets ETF International 2%
Well this is the first. It's better to found your risk tolerance now than during a real market downturn like 2000's and 2008's.

How much was your gain in 2016 and 2017? About 25-30% combined? Losing 5-10% of that gain isn't much, is it? You can still lose some more to get to average of 7-8% long term annual return.

retiredjg
Posts: 34385
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by retiredjg » Tue Nov 13, 2018 5:52 pm

Alex Gr, you set your portfolio up a little over a year ago at 73% stocks and 27% bonds. Within a few weeks, you were nervous about it because your portfolio took a dive of $7k. At that time you wondered if you needed to make a change but you decided to stick with it.

You are now considering setting your portfolio up at 70% stocks and 30% bonds which is no different from 73/27. And your post starts out with "I can't take this any more". These are not the actions or the words of an investor who is comfortable with how his assets are invested.

It seems obvious to me that you have set your asset allocation more aggressive than your temperament can tolerate.

When we actually have a correction or real bear market, you are going to be miserable and you will do one of two things. You will try to gut it out which means your health and family life and work life is going to suffer for a few years.....or you will sell at the worst possible moment and lose a boatload of money forever.

Even more likely is that you'll do both - be miserable for a few years trying to gut it out and then sell at the worst possible time. It's tough to recover from that kind of loss in your 40s.

I think you should immediately reallocate your portfolio to something more reasonable like 60% stocks and 40% bonds. Or maybe even 55/45. Yes, that would be a conservative portfolio but not ultra conservative. It is not even "age in bonds" which many people recommend.

Another alternative is to pay an advisor to keep you from doing stupid stuff. You might be able to have a slightly more aggressive portfolio but you would be paying for that to occur. The only advisory service I would suggest is the one at Vanguard. Their costs are rock bottom low and they will not steer you into products that are not in your best interest.

My view of your situation is that you have unknowingly set yourself up for failure. This is not because you are stupid. It is because you did not know your own tolerance for risk when you made those earlier decisions.

Many people don't get it right the first time. You can really know until it is tested. However these little "stress tests" should be talking to you loud and clear and you should be listening and reducing your portfolio risk by a lot more than you are considering right now.

Hope this does not sound harsh, but this is how I read your post.

Nate79
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Location: Delaware

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by Nate79 » Tue Nov 13, 2018 5:53 pm

The market has barely blipped. What are you going to do when it really crashes and your losses are 5X worse?

delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by delamer » Tue Nov 13, 2018 6:04 pm

Investing in stocks should be done for the long run. When you react to short term changes in the market, you hurt your long run returns.

If the recent volatility is upsetting you, then a 70% stock allocation is a bad idea.

Reverse your allocation between stocks and bonds (so 70% bonds instead); what you are finding out about yourself is that a lot of money in stocks isn’t for you. There is no shame in that.

260chrisb
Posts: 207
Joined: Wed Apr 28, 2010 7:26 pm

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by 260chrisb » Tue Nov 13, 2018 6:08 pm

These swings wear me out as well sometimes and admittedly I look at my portfolio a bit too often but never sell because I still have a few years until I need the money. I lost a bunch of money last month and I guess the good news is to lose a lot you have to have a decent amount. Seems like it's starting to maybe mean more now that the balances are getting up there and what made me wake up and pay attention in the first place years ago was the fact that I had some decent balances. I like your portfolio but personally wouldn't sell but perhaps rebalance with new money as it always comes back. The market is simply flat for the year at this point. Yes it's pulled back recently but look what it's done the past 2 years or past 8-10 years.

The other thing that has helped me is the fact that only 60% of my net worth has exposure to the volatility of the market. My home equity, my emergency fund, real estate, and a small car collection are not subject to this. Good luck.

mhalley
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Joined: Tue Nov 20, 2007 6:02 am

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by mhalley » Tue Nov 13, 2018 6:10 pm

In addition, you shouldn’t look at the dollar amounts of your gains and losses. As your portfolio grows, 12k may turn out to be a daily fluctuation of your very large portfolio.

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BL
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Joined: Sun Mar 01, 2009 2:28 pm

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by BL » Tue Nov 13, 2018 6:18 pm

Have you considered a balanced fund that requires no rebalancing or even looking at it? Perhaps a Life Strategy moderate (60/40) or target date fund of desired bond %, (or tax-managed balanced fund if high income). Find something close enough and leave it alone. Things will fall even more at some unknown time.

If you must have separate funds, perhaps Prime Money Market fund (yield: 2.25%) would give you something fixed to hold on to in your fixed income.

KlangFool
Posts: 10677
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by KlangFool » Tue Nov 13, 2018 6:32 pm

BL wrote:
Tue Nov 13, 2018 6:18 pm
Have you considered a balanced fund that requires no rebalancing or even looking at it? Perhaps a Life Strategy moderate (60/40) or target date fund of desired bond %, (or tax-managed balanced fund if high income). Find something close enough and leave it alone. Things will fall even more at some unknown time.

If you must have separate funds, perhaps Prime Money Market fund (yield: 2.25%) would give you something fixed to hold on to in your fixed income.
+1,000.

OP,

Unless you can buy, hold, and rebalance in the face of bull and bear market, do not buy separate stock and bond funds.

KlangFool

WanderingDoc
Posts: 1277
Joined: Sat Aug 05, 2017 8:21 pm

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by WanderingDoc » Tue Nov 13, 2018 6:40 pm

Alex GR wrote:
Tue Nov 13, 2018 4:16 pm
Hi everyone,
With all the swings up and down recently I am finding that it's too much volatility for me. My portfolio has gone down by $12000 over the past few days. I know people on here say it's a blip on the radar, but when I think about what I have to go through to earn $12k ($12k = two months of STRESSFUL hard work) it doesn't seem that trivial any more.
I have sold some of my VBR, also selling some VOE and VOO.
I decided to increase international exposure slightly from 14% to 17%.
But of course I am reallocating into BIV. The question is, are you guys finding it hard to keep buying BIV(when rebalancing) considering it keeps going down? It has decreased in value by about $40k for me since I started the portfolio.
Here is what my portfolio will look like when I finish all adjustments. What do you think?

VOO Vanguard 500 Index Fund 33%
VOE Vanguard Mid-Cap Value ETF 5%
VBR Vanguard Small-Cap Value ETF 10%
POGRX PRIMECAP Odyssey Growth Fund 5%
BIV Vanguard Intermediate-Term Bond ETF 22%
PONAX PIMCO Income Fund Class D 8%
VXUS Vanguard Total International Stock ETF International 15%
VWO Vanguard FTSE Emerging Markets ETF International 2%
I'm a simple person. I, too, don't like volatility and drama. Since the beginning of this year, monthly rent checks from my properties and quarterly distributions from passive investments came in like clockwork. Month after month. The value "effectively portfolio value" is meaningless to me when the income keeps flowing in, tenants keep paying my expenses and mortgage, and I will legally pay no taxes on rental income. Don't like portfolio swings? I suggest you look into real estate investing. As an interesting aside, I spent more time this year reading this forum than managing my real estate business.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

tesuzuki2002
Posts: 538
Joined: Fri Dec 11, 2015 12:40 pm

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by tesuzuki2002 » Tue Nov 13, 2018 6:47 pm

Alex GR wrote:
Tue Nov 13, 2018 4:16 pm
Hi everyone,
With all the swings up and down recently I am finding that it's too much volatility for me. My portfolio has gone down by $12000 over the past few days. I know people on here say it's a blip on the radar, but when I think about what I have to go through to earn $12k ($12k = two months of STRESSFUL hard work) it doesn't seem that trivial any more.
I have sold some of my VBR, also selling some VOE and VOO.
I decided to increase international exposure slightly from 14% to 17%.
But of course I am reallocating into BIV. The question is, are you guys finding it hard to keep buying BIV(when rebalancing) considering it keeps going down? It has decreased in value by about $40k for me since I started the portfolio.
Here is what my portfolio will look like when I finish all adjustments. What do you think?

VOO Vanguard 500 Index Fund 33%
VOE Vanguard Mid-Cap Value ETF 5%
VBR Vanguard Small-Cap Value ETF 10%
POGRX PRIMECAP Odyssey Growth Fund 5%
BIV Vanguard Intermediate-Term Bond ETF 22%
PONAX PIMCO Income Fund Class D 8%
VXUS Vanguard Total International Stock ETF International 15%
VWO Vanguard FTSE Emerging Markets ETF International 2%
How close are you to retirement? I really don't like seeing equity values in my portfolio drop.... On a screen I'm down over 1 year salary... but it's the cheaper valuations that I have been waiting for so I am still buying... on the back end of this some years from now... I will be glad for sticking to my guns... After all.. I was the last time this happened ...

tesuzuki2002
Posts: 538
Joined: Fri Dec 11, 2015 12:40 pm

Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by tesuzuki2002 » Tue Nov 13, 2018 6:49 pm

WanderingDoc wrote:
Tue Nov 13, 2018 6:40 pm
Alex GR wrote:
Tue Nov 13, 2018 4:16 pm
Hi everyone,
With all the swings up and down recently I am finding that it's too much volatility for me. My portfolio has gone down by $12000 over the past few days. I know people on here say it's a blip on the radar, but when I think about what I have to go through to earn $12k ($12k = two months of STRESSFUL hard work) it doesn't seem that trivial any more.
I have sold some of my VBR, also selling some VOE and VOO.
I decided to increase international exposure slightly from 14% to 17%.
But of course I am reallocating into BIV. The question is, are you guys finding it hard to keep buying BIV(when rebalancing) considering it keeps going down? It has decreased in value by about $40k for me since I started the portfolio.
Here is what my portfolio will look like when I finish all adjustments. What do you think?

VOO Vanguard 500 Index Fund 33%
VOE Vanguard Mid-Cap Value ETF 5%
VBR Vanguard Small-Cap Value ETF 10%
POGRX PRIMECAP Odyssey Growth Fund 5%
BIV Vanguard Intermediate-Term Bond ETF 22%
PONAX PIMCO Income Fund Class D 8%
VXUS Vanguard Total International Stock ETF International 15%
VWO Vanguard FTSE Emerging Markets ETF International 2%
I'm a simple person. I, too, don't like volatility and drama. Since the beginning of this year, monthly rent checks from my properties and quarterly distributions from passive investments came in like clockwork. Month after month. The value "effectively portfolio value" is meaningless to me when the income keeps flowing in, tenants keep paying my expenses and mortgage, and I will legally pay no taxes on rental income. Don't like portfolio swings? I suggest you look into real estate investing. As an interesting aside, I spent more time this year reading this forum than managing my real estate business.
I like your plan!!! I have 1 property that nets me about $11K annually... I'm working towards purchasing 2 - 3 more... I would like $35K ish passive cash flow as rental income in the next 10-15 years.

mortfree
Posts: 1319
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by mortfree » Tue Nov 13, 2018 6:55 pm

Probably reacts the same way when the portfolio drops $10 in a day.

Not much anyone can do to help.

epictetus
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by epictetus » Tue Nov 13, 2018 6:59 pm

would suggest lowering stock allocation to more comfortable level and staying there. Age in bonds, 50/50, or whatever you can stay with for the long haul.

would suggest reducing the number of holdings and simplifying

would suggest consideration of a balanced fund

would suggest putting X amount of money (one year worth of expenses, some dollar amount that is meaningful to you, etc) into cash/savings account/CD so that you know it is there
Focus on what you can control

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whodidntante
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by whodidntante » Tue Nov 13, 2018 7:06 pm

It's better that you discover you are taking on too much risk now versus in the throws of a deep bear market. I agree with your decision to sell stocks and buy bonds. I would encourage you not to trade in and out of the stock market based on your gut, but reducing to a new long term stock allocation % is fine. I also suggest that you consider moving up in credit quality to a bond fund that invests in Treasury bonds. Corporate bonds (like those held in BIV) can get spanked in a recession.

stocknoob4111
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by stocknoob4111 » Tue Nov 13, 2018 7:12 pm

barnaclebob wrote:
Tue Nov 13, 2018 5:17 pm
FWIW, my net worth was down 55k last month, maybe 6 months of savings. It was the first time it had been down in 32 months. The total increase for the prior 32 months is +851k and maybe about 300k of that was new contributions.
I think it's much easier if you've had a ton of gains in the market, infact, I think it would not affect me at all if I lose 50% of all the gains I had in the last few years. It's a much different emotion if you see new money that you've put into the money evaporate like it's nothing.

In my case I lost all my market gains since 2015 and then tens of thousands more within just first week of October which is tough. I'm staying in the market because my hope is that long term (10+ years) I will be ahead, I hope that is the case but it's a bet based on history. But on the other had we are also at a unprecedented time in history... radically high debt, radically low interest rates for radically long periods of time creating radical asset bubbles so who knows.. history may not be such a good guide anymore.

WanderingDoc
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by WanderingDoc » Tue Nov 13, 2018 9:15 pm

tesuzuki2002 wrote:
Tue Nov 13, 2018 6:49 pm
WanderingDoc wrote:
Tue Nov 13, 2018 6:40 pm
Alex GR wrote:
Tue Nov 13, 2018 4:16 pm
Hi everyone,
With all the swings up and down recently I am finding that it's too much volatility for me. My portfolio has gone down by $12000 over the past few days. I know people on here say it's a blip on the radar, but when I think about what I have to go through to earn $12k ($12k = two months of STRESSFUL hard work) it doesn't seem that trivial any more.
I have sold some of my VBR, also selling some VOE and VOO.
I decided to increase international exposure slightly from 14% to 17%.
But of course I am reallocating into BIV. The question is, are you guys finding it hard to keep buying BIV(when rebalancing) considering it keeps going down? It has decreased in value by about $40k for me since I started the portfolio.
Here is what my portfolio will look like when I finish all adjustments. What do you think?

VOO Vanguard 500 Index Fund 33%
VOE Vanguard Mid-Cap Value ETF 5%
VBR Vanguard Small-Cap Value ETF 10%
POGRX PRIMECAP Odyssey Growth Fund 5%
BIV Vanguard Intermediate-Term Bond ETF 22%
PONAX PIMCO Income Fund Class D 8%
VXUS Vanguard Total International Stock ETF International 15%
VWO Vanguard FTSE Emerging Markets ETF International 2%
I'm a simple person. I, too, don't like volatility and drama. Since the beginning of this year, monthly rent checks from my properties and quarterly distributions from passive investments came in like clockwork. Month after month. The value "effectively portfolio value" is meaningless to me when the income keeps flowing in, tenants keep paying my expenses and mortgage, and I will legally pay no taxes on rental income. Don't like portfolio swings? I suggest you look into real estate investing. As an interesting aside, I spent more time this year reading this forum than managing my real estate business.
I like your plan!!! I have 1 property that nets me about $11K annually... I'm working towards purchasing 2 - 3 more... I would like $35K ish passive cash flow as rental income in the next 10-15 years.
Go for it! Let me know how it goes through PM. Its amazing how this stuff starts to snowball. I bought one property in 2011, waited 2-3 years, bought my 2nd. Then waited only 1.2 years to buy my third. Now, I do 3-4 deals every year. I like private placements in large projects these days. My favorite thing about investing in real estate is not the cash flow, it is the tax benefits and inflation profiting. Fun fact, this year real estate surpassed oil and gas investing as the investment vehicle with the best tax treatment. Due to some tweaks in the tax laws that took effect in 2018 8-)
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

pascalwager
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by pascalwager » Tue Nov 13, 2018 10:41 pm

Seems like you need to permanently be in a 20/80 balanced fund for sanity preservation. Don't attempt to ignore the realities of your unique personal situation and emotional makeup.

I've lost about $100,000 over the last few months, but I have 50% in safe assets (short-term bonds, money market, checking) and don't worry much about the stocks volatility.

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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by MossySF » Tue Nov 13, 2018 11:02 pm

Alex GR wrote:
Tue Nov 13, 2018 4:16 pm
With all the swings up and down recently I am finding that it's too much volatility for me. My portfolio has gone down by $12000 over the past few days. I know people on here say it's a blip on the radar, but when I think about what I have to go through to earn $12k ($12k = two months of STRESSFUL hard work) it doesn't seem that trivial any more.
Could you take the volatility when the market was going up + up + up + up the past 8 years?

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munemaker
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by munemaker » Tue Nov 13, 2018 11:21 pm

A drop in the market is healthy in that it drives out excesses. This is an example.

AlphaLess
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by AlphaLess » Wed Nov 14, 2018 12:50 am

One thing that is worth repeating is that a lot of the discussions on drawdowns are abstract.

A very concrete way of looking at drawdowns is to identify a REAL DOLLAR AMOUNT, and imagine that it is gone from your portfolio.

For example, you have a $1MM portfolio, with 60% stocks and 40% in fixed income.

You plan for a 32% drawdown in stocks, and in worse case, bonds too go down 5%. That is like a 250K loss.

You really need to visualize a 300K loss. And the path to that $300K loss is painful. If you have a partner (wife, husband, etc), you need to talk to them like this: "We have $1MM today. If market goes down 30%, and it will happen, we will have $700K"

And then visualize your account balances being ONLY $700K.

Next, when the market goes down 7% and your portfolio is down $50K (5%), you need to look at it, and visualize the pain 6x. Now, in that state, you need to seriously consider: do you buy, sell, or hold. If that decision is NOT consistent with your investment strategy (set forth earlier), then you are done. You can not manage your own money.

A lot of times, your investment strategy will tell you to buy when stocks are down (as a matter of simple rebalance), or put new dollars into the asset class that is down (as a matter of simple rebalance). If you can not stomach the fact that stocks are down 10%, and you need to buy, then you are finished. You can not be your own money manager.
"You can get more with a kind word and a gun than with just a kind word." George Washington

Dontwasteit
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by Dontwasteit » Wed Nov 14, 2018 7:37 am

I have the unique ability to never check when markets are down. Different story when market is up.

lostdog
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by lostdog » Wed Nov 14, 2018 9:07 am

Dontwasteit wrote:
Wed Nov 14, 2018 7:37 am
I have the unique ability to never check when markets are down. Different story when market is up.
+1 Same here.

mmmodem
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by mmmodem » Wed Nov 14, 2018 9:13 am

lostdog wrote:
Wed Nov 14, 2018 9:07 am
Dontwasteit wrote:
Wed Nov 14, 2018 7:37 am
I have the unique ability to never check when markets are down. Different story when market is up.
+1 Same here.
+2 Ditto
And I have the non unique ability to search
viewtopic.php?f=10&t=203792&start=250#p3649525

ryman554
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by ryman554 » Wed Nov 14, 2018 9:40 am

Phineas J. Whoopee wrote:
Tue Nov 13, 2018 4:52 pm
MindBogler wrote:
Tue Nov 13, 2018 4:24 pm
When you sell you haven't accomplished anything other than realizing a loss. Instead, direct all new purchases to bonds, money market, etc. until your overall allocation is comfortable. Stop looking at your account(s) so often.
I completely disagree. If one's asset allocation turns out to be unsuitable make it suitable right away, of course taking tax considerations into account.

An unrealized loss is still a loss, and pretending it isn't leads to poor decisionmaking.

None of this is to tell OP what to do.

PJW
I 100% agree with PJW, but I will tell OP what do to....

OP, *if* you are worried about the volatility, then, please either reduce your equity allocation OR get yourself into a target date fund.

BUT, and I mean really but, IF the market turns for whatever reason and starts climbing.... you can't (and I mean CAN'T) get back on the equity train.

If you do this, you go down the path of selling low and buying high. I personally fear you are heading down this path already, and strongly urge a target date fund followed by a automatic investment plan followed by a local browser block of your accounts so you don't look at them.

All the best.

2pedals
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by 2pedals » Wed Nov 14, 2018 9:46 am

Alex

I would guess you are a very intelligent person trying to rationalize a very irrational world of investing. The problem is it does not help try to predict what the stock market will do next. Set your asset allocation and stick with it.

I would also recommend to read the following books, if you have not already done so.
A Random Walk Down Wall Street - Burton Malkiel
The Investor's Manifesto - William Bernstein
The Four Pillars of Investing: Lessons for Building a Winning Portfolio - William Bernstein

TonyDAntonio
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by TonyDAntonio » Wed Nov 14, 2018 9:57 am

You sound young. If you are, great! Here's how I thought about investing for 30 years: when the market went up, great I'm wealthier. Keep investing. When the market went down, great I'm buying on sale. Keep investing.

Get it. When you have time on your side investing is a win-win. You can't lose. Keep investing!!

barnaclebob
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by barnaclebob » Wed Nov 14, 2018 10:00 am

stocknoob4111 wrote:
Tue Nov 13, 2018 7:12 pm
barnaclebob wrote:
Tue Nov 13, 2018 5:17 pm
FWIW, my net worth was down 55k last month, maybe 6 months of savings. It was the first time it had been down in 32 months. The total increase for the prior 32 months is +851k and maybe about 300k of that was new contributions.
I think it's much easier if you've had a ton of gains in the market, infact, I think it would not affect me at all if I lose 50% of all the gains I had in the last few years. It's a much different emotion if you see new money that you've put into the money evaporate like it's nothing.

In my case I lost all my market gains since 2015 and then tens of thousands more within just first week of October which is tough.
How have you lost all of your gains since 2015 unless the bulk of your contributions were from this year?

snailderby
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by snailderby » Wed Nov 14, 2018 10:03 am

Alex GR,

From your previous posts, I gather that you are in your 40s and plan to continue investing for another 21-24 years. Your portfolio is in a taxable account, but much of your income is tax-exempt. Your current plan is to move to 30% bonds / 70% stocks (divided 76% U.S. / 24% international).

About a year ago, someone suggested VSMGX (Vanguard LifeStrategy Moderate Growth Fund) as a possible one-fund option. At that time, you asked whether there was a similar product with a smaller allocation to international stocks.
  • VBIAX (Vanguard Balanced Index Fund) is another Vanguard 60/40 balanced fund that has a 0.07% expense ratio and no international stocks.
  • SWBGX (Schwab MarketTrack Balanced Portfolio) is a 60/40 balanced fund with the stock portion split 75% U.S. / 25% international (i.e., almost exactly the same U.S. / international split that you have now). But it has a 0.50% expense ratio and it is at least partially factor-based (which some people like) rather than being purely market-cap weighted (which other people prefer).
Last edited by snailderby on Wed Nov 14, 2018 11:16 am, edited 5 times in total.

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goingup
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by goingup » Wed Nov 14, 2018 10:05 am

barnaclebob wrote:
Wed Nov 14, 2018 10:00 am
stocknoob4111 wrote:
Tue Nov 13, 2018 7:12 pm
barnaclebob wrote:
Tue Nov 13, 2018 5:17 pm
FWIW, my net worth was down 55k last month, maybe 6 months of savings. It was the first time it had been down in 32 months. The total increase for the prior 32 months is +851k and maybe about 300k of that was new contributions.
I think it's much easier if you've had a ton of gains in the market, infact, I think it would not affect me at all if I lose 50% of all the gains I had in the last few years. It's a much different emotion if you see new money that you've put into the money evaporate like it's nothing.

In my case I lost all my market gains since 2015 and then tens of thousands more within just first week of October which is tough. I'm staying in the market because my hope is that long term (10+ years) I will be ahead, I hope that is the case but it's a bet based on history. But on the other had we are also at a unprecedented time in history... radically high debt, radically low interest rates for radically long periods of time creating radical asset bubbles so who knows.. history may not be such a good guide anymore.
How have you lost all of your gains since 2015 unless the bulk of your contributions were from this year?
Had that same thought. The SP500 has had cumulative gains of nearly 40% over last 3 years (ending Oct. 31). Vanguard's Balanced Fund's cumulative 3 yr gains close to 24%. Trying to understand the scenario whereby someone could lose 3 years of gains during this minor pullback. :confused

JW-Retired
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by JW-Retired » Wed Nov 14, 2018 10:53 am

KlangFool wrote:
Tue Nov 13, 2018 6:32 pm
OP,
Unless you can buy, hold, and rebalance in the face of bull and bear market, do not buy separate stock and bond funds.
KlangFool
OP,
I don't think it needs to be so hard for you. Just do nothing in bear markets and wait patiently for the subsequent bull market to re-balance for you. Doing nothing is peaceful and easy. Re-balance only when your equity portion exceeds your high band again and you can stomach it. IMO, re-balancing when stocks are going down and then again when stocks are going back up is fairly futile anyway. It's especially bad if it makes you hold too small an equity portion in your portfolio in good markets.

Lots of us do this one way re-balancing. It has sure worked fabulously for me for going on 20 years.
JW
Retired at Last

2b2
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by 2b2 » Wed Nov 14, 2018 11:14 am

OP,

You've posted how much your portfolio has gone down lately.
Do yourself a favor and post how much your portfolio went up before that.

2b2

pkcrafter
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by pkcrafter » Wed Nov 14, 2018 11:50 am

Alex, you appear to have a portfolio of ~500k, so a 12k loss is 2.4%. For most investors, that isn't much to get excited about. It means you are more risk averse than average; therefore, you need a lower equity allocation than others in your position. It's also not helpful to watch your portfolio to closely.

Current portfolio, 70/30

VOO Vanguard 500 Index Fund 33%
VOE Vanguard Mid-Cap Value ETF 5%
VBR Vanguard Small-Cap Value ETF 10%
POGRX PRIMECAP Odyssey Growth Fund 5%
BIV Vanguard Intermediate-Term Bond ETF 22%
PONAX PIMCO Income Fund Class D 8%
VXUS Vanguard Total International Stock ETF International 15%
VWO Vanguard FTSE Emerging Markets ETF International 2%
I can't take this anymore=) I'm selling stocks and buying bonds!
Yes, and when you do, don't go back to current allocation.

Two possible changes.

1. 60/40 or 55/45

Total stock market
Total International
Total Bond (less volatile than BIV and PONAX)

2. LifeStrategy Moderate (60/40)
LS funds and target funds tend to mask stock volatility, but they should be in tax-deferred accounts. If this is all taxable, then you need different tax-exempt bond funds or Vanguard tax managed balanced 50/50 and TSM to get to target AA.



Paul
Last edited by pkcrafter on Thu Nov 15, 2018 10:16 am, edited 1 time in total.
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

robphoto
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Re: I can't take this anymore=) I'm selling stocks and buying bonds!

Post by robphoto » Wed Nov 14, 2018 12:57 pm

AlphaLess wrote:
Wed Nov 14, 2018 12:50 am
One thing that is worth repeating is that a lot of the discussions on drawdowns are abstract.

A very concrete way of looking at drawdowns is to identify a REAL DOLLAR AMOUNT, and imagine that it is gone from your portfolio.

For example, you have a $1MM portfolio, with 60% stocks and 40% in fixed income.

You plan for a 32% drawdown in stocks, and in worse case, bonds too go down 5%. That is like a 250K loss.
In that case, it's a 218K loss (600 * .32 + 400 * .05) still bad, but the bonds do mitigate the magnitude.

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