Thinking about (temporarily) moving all *retirement* stock to bonds - please help

[CT-Scott]

I posted this in the Coronavirus thread, and decided that it's better served in a dedicated thread. Please pretend that Coronavirus isn't even a thing, because I'm really asking questions here about the process of moving (large) amounts of money from one fund to another *inside* of a 401k account, and whatever tax implications or other costs are involved, as well as any other risks/factors I might be missing.

First, some background: my wife and I are fully employed and our average age is about 50. Right now, the bulk of our funds are in 401k accounts, and let's say that we're allocated roughly 75% total US stock market (e.g., VTSAX), 10% international stock (e.g., VTIAX), and 15% bonds (e.g., VBTLX).

Now, after a rough week of the stock market plummeting, where I normally would "stay the course", let's say that I feel like things *might* be different and that things *might* get a whole lot worse. Some observations:

- VTSAX (stock market) - the last 3 months of gains have been practically eliminated in the course of just this last week. News might get a *LOT* better tomorrow, and stocks could start going up again, but it seems unlikely that the gains would happen as quickly and significantly as the losses. In other words, if things turn around tomorrow, it seems near impossible that VTSAX will regain the 8% it lost this past week in one week (correct me if you think I'm wrong, but please provide real examples of when that has happened).

- VBTLX (bonds) - this gained significantly over the last week, but even looking back over the last 1 year or 2 years, it's been up.

So...extreme scenario: If I were to move *EVERYTHING* in my *retirement* accounts (i.e., no tax implications) from VTSAX to VBTLX, what's the worst that would happen to my investments? VTSAX could rebound (slowly), and VBTLX could *maybe* (???) drop, but also would do so slowly (right?). In which case, then I just move things back again, taking a *temporary* but *mild* hit to the gains that I otherwise would have had, had I just left things as-is. Again, just to be super-clear, I'm talking about 401k accounts, where I can request moving 100% of my money from one fund to another one day, and then move 100% of my money to another fund right after, all without any tax implications (right?).

Am I overlooking something significant here? I'm not asking for your opinion about whether or not holding 100% of my money in bonds vs stock for a month or more is "dumb". I'm not asking you for your opinion (or John Bogle's opinion) on whether or not my fears are irrational. I'm asking specifically (and only) if I'm being stupid in assuming that there's no significant cost implications (or other implications?) to moving 100% of my money from one fund to another *INSIDE* of my 401k account, *other* than potential unrealized gains from leaving it as-is for that time duration.

[sergeant]

There are no tax implications. There may be rules by your 401k provider about moving back and forth between funds.

[lessismore22]

As long as you're just moving money inside of it, the tax man doesn't care what you do. Your plan may have a limit on how often you can buy/sell, but that's about it.

[Soon2BXProgrammer]

How will you decide when to get back into stocks?

[mhalley]

There are thousands of bogleheads posts on timing the market. If you are feeling a need to go 100% bonds, maybe you have misjudged your asset allocation that lets you sleep at night.
viewtopic.php?f=10&t=79324

[SteveJones]

Same thing happened at the end of 2018 and guess what. . . We had a great 2019. The reality is we just don't know. You aren't touching this money for a decade so just sit tight. You have time to allow for a correction. Remember, they aren't taking your shares. Only some of the value is going down.

[1789]

You can do what you mentioned without any tax implication. You need to check back what is frequent trading policy in your 401k.

Here is what would happen to me if i were to do what you are trying

First flag for VTSAX. Clock starts by Fido. If i were do do another exchange into VTSAX it will allow me but then send me an email couple days later : Fido will ban me for further exchanges into VTSAX for 90 days. If i try again within 90 days, they will extend it to 12 months. New money can be flown into VTSAX regardless.

Hope this will help

[F150HD]

where I can request moving 100% of my money from one fund to another one day, and then move 100% of my money to another fund right after, all without any tax implications

this implies you plan to move all your $$ to fund "A" tomorrow (Thursday). Then on Friday liquidate fund "A" and move all the $$ to fund "B".

why is it being moved twice

[delamer]

It isn’t really just a temporary hit in your scenario, nor is it just unrealized gains that you lose.

If you sell a stock fund today and it has gone up in price next week (or whenever) when you buy it back, you’ve sold low(er) and bought high(er). So you end up with fewer shares of your stock fund than if you hadn’t sold at all.

[aristotelian]

Maybe disruption of the supply chain causes massive inflation. Buying bonds at record low interest rates wouldn't be a great move.

What does your IPS say about reacting to markets going up and down?

[Mactheriverrat]

Relax.
If you try rebalancing every time the market takes a dump you going to be in for a long rough ride of following a black cat in a dark room that isn't there.

Stay the course.

Yes watching the market take a dump can be unnerving but you still buying VTSAX at a lower price.

[HomerJ]

You joined this site way too long ago (and you're too old) to be 85/15 and now thinking about going 100% bonds.

You must have read my million posts over this time period stating..

"You should ALWAYS be prepared for the market crashing 50% tomorrow. Because it might."

Did you think I was lying?

Obviously, your Asset Allocation is too aggressive... Drop to 70/30 or even 50/50 if you must, and STAY there. You're 50, 10 years or so years from retirement... Time to go more conservative... PERMANENTLY.

100% bonds is a bad idea. And thinking you can time your way back to 85/15 later is a bad idea.

Seriously, 100% bonds is bad bad bad. If you must do something to feel better, sell a bit... 70/30, 60/40, 50/50... Going ALL the way out is crazy.

[arcticpineapplecorp.]

First, some background: my wife and I are fully employed and our average age is about 50. Right now, the bulk of our funds are in 401k accounts, and let's say that we're allocated roughly 75% total US stock market (e.g., VTSAX), 10% international stock (e.g., VTIAX), and 15% bonds (e.g., VBTLX).

Now, after a rough week of the stock market plummeting, where I normally would "stay the course", let's say that I feel like things *might* be different and that things *might* get a whole lot worse. Some observations:

Am I overlooking something significant here? I'm not asking for your opinion about whether or not holding 100% of my money in bonds vs stock for a month or more is "dumb". I'm not asking you for your opinion (or John Bogle's opinion) on whether or not my fears are irrational. I'm asking specifically (and only) if I'm being stupid in assuming that there's no significant cost implications (or other implications?) to moving 100% of my money from one fund to another *INSIDE* of my 401k account, *other* than potential unrealized gains from leaving it as-is for that time duration.

You're looking for encouragement to market time. I won't give it. Look at your words. "a rough week", a "month or more", and so on. Investing is a marathon, not a sprint.

that being said I'll give you a few tidbits based on your situation:

1. "average" age of 50? What does that mean? You could be 60 and your wife could be 40. So what? What's the approprate allocation to meet your goals and only take as much risk as you can accept?

2. 85% in stocks could be too much risk if you're freaking out over a 7% or so loss (regardless of how quickly it happens). Did you react the same when the stock market fell 20% in 2018? If not, I doubt your diminished capacity to take risk is simply because you're two years older. It's because of bigger daily declines than you've grown accustomed to.

3. You don't need market timing advice, you need to pick an asset allocation you can stick with. You should always be prepared for X% decline, and how that has $Y impact on your portfolio. You can see what types of losses occurred in different portfolios:

https://www.bogleheads.org/wiki/Asset_allocation

An 85% stock portfolio could lose 40% or so if stocks fall by 50%. If you're not prepared to see your portfolio decline by 40%, then don't have 85% of your money in stocks.

But whatever allocation you decide upon, don't change it willy nilly in response to market events or world news. That's asking for trouble. Only change your allocation because your need, ability and/or willingness has changed.

Or just pick a target date retirement fund that automatically reduces risk as you get closer to needing the money (the "target date").

[Puretaxableindexer]

Dumping stocks into bonds is overreacting. What's more, you are basically trying to time the market, which never works. People who stay invested within their AA make out much better in downturns over the long run than people who sell today and buy back another time.

[CT-Scott]

You can do what you mentioned without any tax implication. You need to check back what is frequent trading policy in your 401k.

Here is what would happen to me if i were to do what you are trying

First flag for VTSAX. Clock starts by Fido. If i were do do another exchange into VTSAX it will allow me but then send me an email couple days later : Fido will ban me for further exchanges into VTSAX for 90 days. If i try again within 90 days, they will extend it to 12 months. New money can be flown into VTSAX regardless.

Hope this will help

Thank you. You have been one of the few to actually answer my specific questions without getting sidetracked into bringing up your opinion as to whether or not you agree with what I'm thinking of doing. And, yes, I was just logged into my account at Fidelity to check into how long the transfer would take (looks like it would happen tomorrow), and saw mention of a warning about "excessive trading" but the link didn't provide concrete info as to how that is defined. Can you (or anyone) provide more details on that?

I'm not completely following what you're saying when you say that it would "flag" you/me. Would it let me transfer all of my funds from stock to bonds this 1st time? If so, when would it be "allowed" for me to move most of it back to stocks again?

Just to be clear, I would not be looking to move all of my stock to bonds tomorrow and then move it all back the following day. I would *potentially* (extreme case) be looking to move all of my stock to bonds tomorrow, and then reallocate most of it back to stock in 30 days (at the earliest), and most likely somewhere farther out than that (60-90 days, unless I'm still not feeling good about the market, in which case I'd leave it in bonds for even longer).

[David Jay]

...unless I'm still not feeling good about the market...

And this why you need a written IPS - so you don’t make your investing decisions based on whether you are “feeling good” about the market.

[CT-Scott]

...and for those of you who are trying to convince me that I'm being irrational: please at least explain to me what the worst-case scenario is here. To be very clear, I'm *not* a nervous-Nelly when it comes to the ups & downs of the stock market. I get that it behaves unpredictably, and that doesn't phase me. I know that the long-term history of the US stock market is overall positive, and I don't have any plans of retiring in 10 years. In fact, I hope to work until I die, but transition (the sooner the better) to working for myself, rather than for an employer (as I currently am), as I am an entrepreneur at heart.

So, OK, some of you could say that I'm trying to time the market here. I don't do this once a week, once a month, once a year. This is a particular circumstance that has me very worried, and part of what II'm trying to figure out here is what the worst-case scenario is by me *temporarily* (e.g., 3 months) moving everything to bonds. Yes, if the stock market is still plummeting in 3 months and I am not hearing news that things are about to get better, then I might extend it longer. I'd re-evaluate the situation each month and, *believe me*, I would be very anxious to want to move back to an aggressive mostly-stock allocation as soon as possible.

[CT-Scott]

...unless I'm still not feeling good about the market...

And this why you need a written IPS - so you don’t make your investing decisions based on whether you are “feeling good” about the market.

Sorry, but this situation is different. I'm doing my best in this thread to *not* speak about the specific circumstance here, because I'm worried that the thread will get merged or locked, and I want to keep this specific discussion actionable. I'm not worried about "the market", I'm worried about something much more significant external to the market, that has market-implications. Let's just leave it at that, and please address my specific questions.

[CT-Scott]

So I did some more Googling on "excessive trading" and one of the first links returned was for this page by Fidelity (which is where the bulk of my 401k savings are):
http://personal.fidelity.com/products/t ... cies.shtml

Reading that, it sounds like 30 days is the magic number. So if I were to move all of my funds over to bonds tomorrow, and then moved it all back again 31 days or more later, then I should be fine. Right?

[BeneIRA]

You will want to review the Summary Plan Description (SPD) and any other applicable documents. They should explain what frequent trading is. Some of the documents on the 401k website should go into what funds have trading restrictions. I had a 401k once upon a time that had strict frequent trading rules, as in, you could not go back into the same fund when trading out of it for I believe 60 days. The fund also had one good, low cost index fund. "Low cost" was defined as an ER of 0.45 plus two other fees that I was charged quarterly. The other funds all had much higher ERs and were active funds or index funds that for some reason had pretty high ERs. The international fund's ER was over 1.00%. It was bad. I don't know what committee signed our souls away for this plan.

In any case, I would absolutely recommend reading the SPD because this is a significant transfer and I would take an hour or so and look at the relevant portions. It will be worth your while. The downside would be if you can't get back into the fund you want right away and you miss the upside. The site you linked to is the Personal Fidelity side. You want Fidelity Net Benefits in all likelihood and your specific company's 401k Plan SPD.

[climber2020]

...and for those of you who are trying to convince me that I'm being irrational: please at least explain to me what the worst-case scenario is here.

viewtopic.php?f=10&t=203792

We never heard from this person again, so I assume it went poorly. Even if we have an upcoming 30% drop on top of the 7% drop of the last few days, this person would still have been ahead after such a decline (even ignoring reinvested dividends) had she stayed put and not done anything. Not the worst case scenario, but certainly a ghastly one that I hope to never be part of.

Sorry, but this situation is different.

It's always different.

[VikingThor]

You are being irrational, no doubt, in making a temporary shift from 85% stock to 0%.

Yes the market could tank, that is always the case. This is a unique event, but always there are risks of unique events popping up.

If you go to 100% bonds and stay there you are pretty much guaranteeing poor returns long term. Unless you can retire with an extremely low withdrawal rate that won't work for you, which you seem to know by indicating you will get back in to stocks at some point.

Thus the crux of your strategy is to be a good market timer. This is a losing strategy for vast majority of people and you have no special knowledge of when exactly to buy back in.

[MotoTrojan]

So I did some more Googling on "excessive trading" and one of the first links returned was for this page by Fidelity (which is where the bulk of my 401k savings are):
http://personal.fidelity.com/products/t ... cies.shtml

Reading that, it sounds like 30 days is the magic number. So if I were to move all of my funds over to bonds tomorrow, and then moved it all back again 31 days or more later, then I should be fine. Right?

I can’t imagine a setup where you couldn’t move back 1-3 days later after the funds settle.

What you’re doing is timing and logically deeply flawed, even if you have a secret motive (I presume politically driven).

[CT-Scott]

...If you go to 100% bonds and stay there you are pretty much guaranteeing poor returns long term...

Sorry, but this is getting comical. How many times have I made it clear that I'm not planning on "staying there"? This would be a short-term (hopefully - and please don't make me mention the specific issue I'm' concerned about - you can read between the lines and see what the current news topic of the day happens to be).

[wshang]

Honestly, you are probably too late. To be perfectly honest, your AA was too aggressive.
Now I will share a few things which might help you:
1) There has never been a successful, tested coronavirus vaccine. If through some miracle of new biotech, we have an announcement, it will be too late to affect the course of this epidemic.
2) Coronaviruses are typically seasonal and warm temperatures are inamicable to the virus.
If you want to do something to mitigate the damage without too much risk, buy puts on SPY. You might lose your investment, but you would at least get some insurance. The good thing about BH's is that you are in the same therapy group.

[CT-Scott]

What you’re doing is timing and logically deeply flawed, even if you have a secret motive (I presume politically driven).

I'm not sure what you're hinting at with the "politically driven" comment. Rest assured, it is not political at all. Feel free to private message me on that, if you'd like. Let's leave that out of the discussion here, though, as I do not want this thread to get locked.

[VikingThor]

Right, so what's your strategy - wait until the market goes up 10% and then get back in? That would just mean you missed out on 10% return.

[rockstar]

...unless I'm still not feeling good about the market...

And this why you need a written IPS - so you don’t make your investing decisions based on whether you are “feeling good” about the market.

Sorry, but this situation is different. I'm doing my best in this thread to *not* speak about the specific circumstance here, because I'm worried that the thread will get merged or locked, and I want to keep this specific discussion actionable. I'm not worried about "the market", I'm worried about something much more significant external to the market, that has market-implications. Let's just leave it at that, and please address my specific questions.

Bonds yields have plummeted. Unless you’re buying on the really short end of the curve and holding to maturity, you are risking principal should bond yields go back up. Basically, you’re buying at a high for duration treasuries. High yield should follow stocks down.

I might sell off my International position this week. It passed through my floor. I’ll buy 3 month treasury bills as a cooling down period and reassess when they mature.

What’s your quantitative measure to buy back in?

[CT-Scott]

If you want to do something to mitigate the damage without too much risk, buy puts on SPY. You might lose your investment, but you would at least get some insurance. The good thing about BH's is that you are in the same therapy group.

I'm not going to quote the rest of your reply, because I don't want the "C" word repeated in this thread, as I do not want it to get locked or merged. I wish I was knowledgeable about "puts". Learning more about things like that is "on my list" but I am a dummy about that stuff right now, and I don't think I can get comfortably up-to-speed on it in the coming week, so let's assume that's not even an option.

But since you've engaged me with something other than dismissing my concerns, I would sincerely appreciate it if you would consider addressing my most recent questions. Specifically, what's the worst-case scenario of me moving all of my funds from stocks to bonds (or possibly even a "stable value" fund)?

[Nate79]

The worst that can happen is that your return over the next month could be zero or slightly negative nominal, and negative real return by being in low returning bonds. You could also miss out on a massive rebound in the market.

The other major negative, that happens all the time in threads like this is that 30 days from now when you planned to get back to stocks but you are frozen in uncertainty due to (pick your reason). So instead you stay out of the market for months or years frozen in inaction.

[fundseeker]

So...extreme scenario: If I were to move *EVERYTHING* in my *retirement* accounts (i.e., no tax implications) from VTSAX to VBTLX, what's the worst that would happen to my investments? VTSAX could rebound (slowly), and VBTLX could *maybe* (???) drop, but also would do so slowly (right?). In which case, then I just move things back again, taking a *temporary* but *mild* hit to the gains that I otherwise would have had, had I just left things as-is. Again, just to be super-clear, I'm talking about 401k accounts, where I can request moving 100% of my money from one fund to another one day, and then move 100% of my money to another fund right after, all without any tax implications (right?).

Am I overlooking something significant here? I'm not asking for your opinion about whether or not holding 100% of my money in bonds vs stock for a month or more is "dumb". I'm not asking you for your opinion (or John Bogle's opinion) on whether or not my fears are irrational. I'm asking specifically (and only) if I'm being stupid in assuming that there's no significant cost implications (or other implications?) to moving 100% of my money from one fund to another *INSIDE* of my 401k account, *other* than potential unrealized gains from leaving it as-is for that time duration.

Does it really matter if this thread gets locked? Hasn't your question about costs associated with moving back and forth within your 401k been answered? If this thread keeps going, people will keep writing that it is a bad idea.

[HomerJ]

unless I'm still not feeling good about the market

Recipe for disaster...

Investing based on your "feelings"...

[F150HD]

maybe you're a candidate for 60/40. Many like that conservative position (via threads I've read)

[tibbitts]

Am I overlooking something significant here?

No, you aren't missing anything.

[dmcmahon]

It sounds like your asset allocation is too aggressive. The fact that the market lost 3 months of gains in 2 days is beside the point.

Question for you: while it was rocketing up during those 3 months what were your thoughts?
Here were mine: this looks like a year’s worth of gains in a few months on very little actual real-world change. There’s bound to be a correction.

Corrections almost always have a “cause”. So it’s this virus, but it could have been an unexpected new round of trade fighting, or something some politician said, or a terror attack, or an escalation in any of a number of conflicts around the world. The point is, I and a lot of others have been expecting some sort of correction, and now we seem to be starting one. If I just looked at a chart and didn’t know the news, I wouldn’t even call this a full correction yet, just a pull-back.

I am not trying to minimize the virus’ human or economic impact, but if you’d asked me to speculate as to why the pull-back I expected was going to happen, I’d have guessed the US election to be the culprit. And I’d have been at least partially wrong.

[drg02b]

VTSAX Price history

9/21/18 - 73.59
11/30/18 - 65.69
12/14/18 - 59.77
1/25/19 - 66.44

Say you got out at the first dip on 11/30 and missed the "loss" in Dec, but when does you're feeling tell you to buy back in? A little over a month later, it recovered, and by late spring, all "losses" (from Sep) were recovered. For all we know the market could rebound next week and then you've lost ~7%. The only thing I'd consider when the market drops is accelerating new investments.

[HomerJ]

It sounds like your asset allocation is too aggressive. The fact that the market lost 3 months of gains in 2 days is beside the point.

Question for you: while it was rocketing up during those 3 months what were your thoughts?
Here were mine: this looks like a year’s worth of gains in a few months on very little actual real-world change. There’s bound to be a correction.

Corrections almost always have a “cause”. So it’s this virus, but it could have been an unexpected new round of trade fighting, or something some politician said, or a terror attack, or an escalation in any of a number of conflicts around the world. The point is, I and a lot of others have been expecting some sort of correction, and now we seem to be starting one. If I just looked at a chart and didn’t know the news, I wouldn’t even call this a full correction yet, just a pull-back.

I am not trying to minimize the virus’ human or economic impact, but if you’d asked me to speculate as to why the pull-back I expected was going to happen, I’d have guessed the US election to be the culprit. And I’d have been at least partially wrong.

This.

Every time I told my wife that the S&P 500 had gone up another 100 points (after 3000), she would just say "Oh, it's not real money... You know it will crash back at some point. It can't grow this fast forever"

(But I did rebalance in there around 3300, so I did lock in some of that "fake" money)

[CT-Scott]

Bonds yields have plummeted. Unless you’re buying on the really short end of the curve and holding to maturity, you are risking principal should bond yields go back up. Basically, you’re buying at a high for duration treasuries. High yield should follow stocks down.

I might sell off my International position this week. It passed through my floor. I’ll buy 3 month treasury bills as a cooling down period and reassess when they mature.

What’s your quantitative measure to buy back in?

So, you've touched on 3 things here. Let me try my best to answer them:

1) "Bond yields have plummeted." I'm looking specifically at VBTLX, which is an option in my 401K with Fidelity. It's been up over the last 10 years, up over the last 5 years, up over the last 2 years...etc., etc., etc., ...up over the last week. What am I missing here?

2) "I'll buy 3 month treasury bills." I'm talking about my 401k funds, so that seems inapplicable to my scenario.

3) "What’s your quantitative measure to buy back in?" My gut. That's unscientific, but I can at least feel confident that I'm doing something that *I* feel right/wrong and (somewhat) knowledgeable about, versus based on some other so-called "expert" telling me to do something that I don't fully understand or feel good about. Side-story:

About 10 years ago I bought some Apple stock. About $10K worth. First individual stock I had ever bought (and I still haven't bought any others). There were times when I thought that Apple was on the right track, but the stock would drop, and I couldn't understand why. But I still felt confident in the company and didn't sell. Conversely, there were times when I lost some faith in what the company was doing, yet the stock was rising. I still didn't feel great about what they were doing, but around this time I also realized that they had become a market leader, and the competition (e.g., Google) wasn't knocking it out of the park, and I knew that Apple's established userbase was extremely loyal. So while I was disappointed in the new product offerings by Apple, I also wasn't worried that they were in imminent danger of losing value quickly. So, I stayed the course, while keeping myself educated about what they were doing, and what their competition was doing. I saw no compelling reason to worry and sell my Apple stock, and I've been rewarded handsomely by keeping that stock.

...so to get back to your question (What's your quantitative measure to buy back in?), it will be my gut-feeling that the crisis has been averted, things have returned to normalcy, the future seems optimistic, etc. This may mean that I've "waited too long" and lost out on some gains that I could have otherwise have had (had I moved back in sooner, or possibly even had I never left in the first place). Worst-case, I'll have some regrets for having "panicked" unnecessarily. But I think that's a lot better than the worst-case that I fear now of being too optimistic today and seeing our life-savings plummet.

[HomerJ]

Worst-case, I'll have some regrets for having "panicked" unnecessarily. But I think that's a lot better than the worst-case that I fear now of being too optimistic today and seeing our life-savings plummet.

Go 50/50 and you don't have to worry about being wrong.

Seriously... I've been 50/50 for years... I'm never wrong.

When stocks are going up, I feel good because I have stocks. When stocks are going down, I feel good because I have bonds.

Getting 100% out based on your "gut" is crazy aggressive.

[wshang]

If you want to do something to mitigate the damage without too much risk, buy puts on SPY.

I would sincerely appreciate it if you would consider addressing my most recent questions. Specifically, what's the worst-case scenario of me moving all of my funds from stocks to bonds (or possibly even a "stable value" fund)?

I am not a financial expert, but a medical person who has been closely studying this disease outbreak. The human toll on those with co-morbidities, such as age >80, smoking, diabetes, chronic heart failure is considerable. (14% death rate) The system's medical expense and sickness of many healthcare workers considerable. But maybe you can make rational predictions based upon the timeline and the economic-societal tradeoffs necessary to ride this out. Or not.
Safe to say, you don't seem have a plan to get back in, let alone a plan of exit. This BH's forum will give you the strength to sit on your hands at this point. They certainly won't give you an exit or re-entry plan; for that, you have to join another forum.

[CT-Scott]

Go 50/50 and you don't have to worry about being wrong.

Seriously... I've been 50/50 for years... I'm never wrong.

When stocks are going up, I feel good because I have stocks. When stocks are going down, I feel good because I have bonds.

But looking back at the last week, you would have been better off if you were (temporarily) 100% in bonds, no?

[VikingThor]

For sure he would have been better 100% bonds the last week, and before that 100% stocks would have done much better the last 3 months.

He should just switch back and forth between the two right?

[HomerJ]

Go 50/50 and you don't have to worry about being wrong.

Seriously... I've been 50/50 for years... I'm never wrong.

When stocks are going up, I feel good because I have stocks. When stocks are going down, I feel good because I have bonds.

But looking back at the last week, you would have been better off if you were (temporarily) 100% in bonds, no?

While we are wishing for a time machine, can I get a pony too?

[_james]

3) "What’s your quantitative measure to buy back in?" My gut. That's unscientific, but I can at least feel confident that I'm doing something that *I* feel right/wrong and (somewhat) knowledgeable about, versus based on some other so-called "expert" telling me to do something that I don't fully understand or feel good about. Side-story:

About 10 years ago I bought some Apple stock. About $10K worth. First individual stock I had ever bought (and I still haven't bought any others). There were times when I thought that Apple was on the right track, but the stock would drop, and I couldn't understand why. But I still felt confident in the company and didn't sell. Conversely, there were times when I lost some faith in what the company was doing, yet the stock was rising. I still didn't feel great about what they were doing, but around this time I also realized that they had become a market leader, and the competition (e.g., Google) wasn't knocking it out of the park, and I knew that Apple's established user base was extremely loyal. So while I was disappointed in the new product offerings by Apple, I also wasn't worried that they were in imminent danger of losing value quickly. So, I stayed the course, while keeping myself educated about what they were doing, and what their competition was doing. I saw no compelling reason to worry and sell my Apple stock, and I've been rewarded handsomely by keeping that stock.

...so to get back to your question (What's your quantitative measure to buy back in?), it will be my gut-feeling that the crisis has been averted, things have returned to normalcy, the future seems optimistic, etc. This may mean that I've "waited too long" and lost out on some gains that I could have otherwise have had (had I moved back in sooner, or possibly even had I never left in the first place). Worst-case, I'll have some regrets for having "panicked" unnecessarily. But I think that's a lot better than the worst-case that I fear now of being too optimistic today and seeing our life-savings plummet.

You're basing your retirement savings on your feelings? Good luck with that.

[CT-Scott]

You're basing your retirement savings on your feelings? Good luck with that.

Sorry, you're suggesting that me moving to 100% bonds for 3 months is jeopardizing my retirement savings? Please elaborate.

[galawdawg]

...and for those of you who are trying to convince me that I'm being irrational: please at least explain to me what the worst-case scenario is here.

I'd suggest that selling all of your stock funds (which are at the low of the year) and using the proceeds to purchase all bond funds (which are all at the high of the year) is irrational. Unfortunately it is the same unwise investing move (sell when down, buy when up) that so many make during market downturns or volatility. That's why so many here are suggesting you decide what asset allocation is appropriate for you and your wife based upon your age, your risk tolerance, and other factors and then stick with it. What you are proposing is market timing, pure and simple. Stay the course.

But at the end of the day, only you know your personal circumstances and it is your money, do with it what you wish. And if you truly posted this to only find out what the "costs" and tax implications would be to buy and sell funds within your tax-advantaged 401k plan, you may want to edit the title of your thread and your OP to simply ask that question. Otherwise, I'm not sure why you explained all the reasons for your "plan" only to appear to take offense when your fellow BH's opine about the folly of this plan.

[MathIsMyWayr]

Now, after a rough week of the stock market plummeting, where I normally would "stay the course", let's say that I feel like things *might* be different and that things *might* get a whole lot worse.
...
So...extreme scenario: If I were to move *EVERYTHING* in my *retirement* accounts (i.e., no tax implications) from VTSAX to VBTLX, what's the worst that would happen to my investments? VTSAX could rebound (slowly), and VBTLX could *maybe* (???) drop, but also would do so slowly (right?). In which case, then I just move things back again, taking a *temporary* but *mild* hit to the gains that I otherwise would have had, had I just left things as-is. Again, just to be super-clear, I'm talking about 401k accounts, where I can request moving 100% of my money from one fund to another one day, and then move 100% of my money to another fund right after, all without any tax implications (right?).
...
I'm asking specifically (and only) if I'm being stupid in assuming that there's no significant cost implications (or other implications?) to moving 100% of my money from one fund to another *INSIDE* of my 401k account, *other* than potential unrealized gains from leaving it as-is for that time duration.

No, you may be brilliant. I am worried about those dumb investors who exchange their VBTLX for VTSAX in this time of looming trouble.

[MathWizard]

Move some, but not all.

It sounds like you have too aggressive an AA. Better to take a small loss now, selling after a small percentage drop than selling all at the bottom .

If you went to a 50/50 AA would you sleep better?

[7eight9]

I guess my question would be why you wouldn't move your funds to a stable value fund (assuming that one is on offer in your 401k) vs. bonds.

The only thing you might want to check is if your 401k has a "frequent trading policy" or something similar that would preclude you from moving back into VTSAX at your preferred time. That said, there is likely another investment option in your 401k that would be comparable if such a situation arose.

[CT-Scott]

Move some, but not all.

It sounds like you have too aggressive an AA. Better to take a small loss now, selling after a small percentage drop than selling all at the bottom .

If you went to a 50/50 AA would you sleep better?

"Better", yes. But I'd still be worried about that other 50% while I feared that things could get worse before they get better.