Have you been following your IPS?

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remomnyc
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Have you been following your IPS?

Post by remomnyc » Thu May 28, 2020 12:53 pm

My IPS is 55%/45%, including 1x expenses in cash/savings and rebalancing using 5% bands. In March, as Rome burned, I couldn't wait for the 5% trigger and bought stocks at 20% down and again at 30% down to rebalance. This month, I decided 2x expenses should be my new normal cash holding level. When stocks reached 85% to 90% of their highs, I sold enough to bring my cash holdings to 2x expenses, so I don't have to sell stocks if there's another precipitous fall and the recovery is not as rapid. Given the super low bond yields, going forward I plan to shift some fixed income into taxable as rebalancing dictates. When the dust settles, I need to reconsider my 5% bands. I may switch to the lesser of 5% and $50k. Have you followed your IPS? If not, how have you departed from it or amended it?

b42
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Re: Have you been following your IPS?

Post by b42 » Thu May 28, 2020 1:16 pm

I've stuck to my IPS so far. My stock/bond ratio got close to the 5% rebalancing threshold, but I decided to wait it out and rebalance with new contributions over time. Since it was only a few thousand to rebalance in either direction, I decided it wasn't worth it. I do have language in my IPS that says if I want to make substantial changes I can, but I have to wait 6 months and consult outside advice (either fee based or the Bogleheads forums) before I make a change.

NerdicSkier
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Re: Have you been following your IPS?

Post by NerdicSkier » Thu May 28, 2020 1:22 pm

Yes, I have followed my IPS. 70/30, rebalance twice a year in January and July. I stuck to my guns and am maxing out his and hers retirement accounts. However, I am also increasing my cash buffer - this has both felt prudent and been a natural consequence of reduced spending and COVID payment.

Chris K Jones
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Re: Have you been following your IPS?

Post by Chris K Jones » Thu May 28, 2020 1:39 pm

I follow it very carefully but I did make two changes recently. I had a wonky rebalancing policy which I changed to rebalance at 5% bands. I also limited my municipal holdings to 25% of fixed income. They were unlimited before. Some people refer to the US Constitution as a "Living, breathing document". So is my IPS. LOL. Best wishes.

sean.mcgrath
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Re: Have you been following your IPS?

Post by sean.mcgrath » Thu May 28, 2020 1:51 pm

I'm mostly following it. I put new money into my Value funds (which had dropped like a rock) to stay at my planned allocation. I never sell, so that side is pretty easy. My only deviation is that I was supposed to put in more new money in April, and decided I'll leave it in the savings account until the fall.

I don't have a good argument for doing that, but decided I want to get a bit more of a feel for whether "things really are different this time."

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White Coat Investor
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Re: Have you been following your IPS?

Post by White Coat Investor » Thu May 28, 2020 1:54 pm

Been following one for nearly two decades.
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theorist
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Re: Have you been following your IPS?

Post by theorist » Thu May 28, 2020 1:57 pm

Yes. I’m 70/30 with various sub-allocations to international and small value etc., and have stuck with it. I was not too frazzled in late March, and am wondering whether a slight shift up to 75/25 is merited.

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Clever_Username
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Re: Have you been following your IPS?

Post by Clever_Username » Thu May 28, 2020 2:01 pm

Yes, although I changed it slightly. I had written that I would re-balance by buying bonds, starting at taxable. My IPS forgot that stocks can decrease too! So I adjusted it by saying I would re-balance, and I have drafted more specific rules. In the meantime, all my tax-advantaged space is 100% stocks, so I bought $28k of total US (VTSAX) two months ago in taxable.

I still need to figure out exactly how I'll word it that my priority will be to re-balance using tax-advantaged accounts and that I (at the moment at least) don't plan to take the tax hit for selling in taxable for the sake of re-balancing. The good news is I have a ton more tax-advantaged space coming soon than previously anticipated, now that I have access to both a 457 (in addition to the 403(b) that I already had) and a mega-backdoor Roth. So I might even have some bonds in tax-advantaged space by year's end!

Since whatever happened earlier this year is the first significant drop I was invested and paying attention for, I will use it to reevaluate my risk tolerance and desired asset allocation at a later time -- but not during the crisis. Whatever that last part means. But I was both able to tolerate the drop without losing sleep, but I might not need a higher stock allocation to reach my goals, so the net result might be that I stay put on the previous allocation plan (age-in-bonds, reconsider at 40 and after first significant drop).
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.

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Noobvestor
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Re: Have you been following your IPS?

Post by Noobvestor » Thu May 28, 2020 2:03 pm

The bigger stuff (stock/bond ratio w/high-quality fixed income), yes. The smaller stuff is wonky due to rebalancing + tax considerations. So my tilts are, well, tilted, and I'm light on TIPS compared to Treasuries. In hindsight, I wonder if I couldn't have spaced things out better across accounts, but things were tax-optimized, so seemed OK at the time. I also did something like you and ignored rebalancing bands - I generally bought on the way down on big down days, sold on the way up on big up days. I stayed within brackets rather than waiting on bands.

Unfortunately, the vast majority of my stocks are in taxable accounts, so rebalancing to maintain tilts remains challenging. Oh well. Anyway, things aren't radically off-kilter, but I'm slightly vexed and (yes yes, you total-market indexers can say you told me so!) slightly regretting my slicing and dicing strategy - not because it's lagging (though it's doing that, too) but because it's harder to manage across accounts. :annoyed
Last edited by Noobvestor on Thu May 28, 2020 2:09 pm, edited 4 times in total.
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Sandtrap
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Re: Have you been following your IPS?

Post by Sandtrap » Thu May 28, 2020 2:04 pm

Our IPS says, "do nothing", so we've been trying hard to "do nothing".

ME: "you know the market dropped 12% this past week. . . "
DW: "what are we going to do about it?"
ME: "I guess, nothing. . . although it sure feels like we should be doing something sometimes."

j :happy
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singledigit12b
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Re: Have you been following your IPS?

Post by singledigit12b » Thu May 28, 2020 2:04 pm

No changes here. 35/65 and actually up YTD. I’m risk averse and know it. Retired end of May last year and planing a rising glide path. Steady as she goes.

dvvader
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Re: Have you been following your IPS?

Post by dvvader » Thu May 28, 2020 2:09 pm

Yes, I am at 70/30. I did some tax loss harvesting and rebalancing in March/April per my IPS. I re-directed my normal monthly taxable contributions to savings in January/February/March to prepare for some upcoming lumpy expenses but have since resumed them. Onward and upward (hopefully).

sailaway
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Re: Have you been following your IPS?

Post by sailaway » Thu May 28, 2020 2:25 pm

Of course! The whole point of the IPS is to limit the number of decisions I have to make so that I can put that energy to better use than trying to predict the market!

NotWhoYouThink
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Re: Have you been following your IPS?

Post by NotWhoYouThink » Thu May 28, 2020 2:44 pm

Of course. Really.

Trader Joe
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Re: Have you been following your IPS?

Post by Trader Joe » Thu May 28, 2020 6:12 pm

remomnyc wrote:
Thu May 28, 2020 12:53 pm
My IPS is 55%/45%, including 1x expenses in cash/savings and rebalancing using 5% bands. In March, as Rome burned, I couldn't wait for the 5% trigger and bought stocks at 20% down and again at 30% down to rebalance. This month, I decided 2x expenses should be my new normal cash holding level. When stocks reached 85% to 90% of their highs, I sold enough to bring my cash holdings to 2x expenses, so I don't have to sell stocks if there's another precipitous fall and the recovery is not as rapid. Given the super low bond yields, going forward I plan to shift some fixed income into taxable as rebalancing dictates. When the dust settles, I need to reconsider my 5% bands. I may switch to the lesser of 5% and $50k. Have you followed your IPS? If not, how have you departed from it or amended it?
Yes I have been following my IPS. 100% VFIAX/VTSAX. Perfection.

UpperNwGuy
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Re: Have you been following your IPS?

Post by UpperNwGuy » Thu May 28, 2020 7:18 pm

Yes, of course. When I wrote my IPS, I took into consideration the possibility that the market might someday have significant declines. So when such a market decline happened in early 2020, I was ready for it. Isn't that how an IPS is supposed to work?

REITired
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Re: Have you been following your IPS?

Post by REITired » Thu May 28, 2020 7:47 pm

Yes I have. Thank goodness.

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JonnyDVM
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Re: Have you been following your IPS?

Post by JonnyDVM » Thu May 28, 2020 7:53 pm

Over rebalanced into equities. Now at 95/5. Regret level 0.
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smitty1515
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Re: Have you been following your IPS?

Post by smitty1515 » Thu May 28, 2020 8:32 pm

Yes 90/10. We have actually been trying to buy more the last 3 months. We're very comfortable with 90/10 AA.
Be fearful when others are greedy and greedy when others are fearful. -Warren Buffett

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grabiner
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Re: Have you been following your IPS?

Post by grabiner » Thu May 28, 2020 9:40 pm

Yes, and it served its intended purpose; the two moves I made in March (paying off my mortgage, and rebalancing into stock at the market bottom) were the result of decisions I had made years ago. If the market keeps going up, I may need to rebalance back out of stock, also according to my IPS.

Edited to add: I just made two more uses of the IPS. I have new money to invest, so I used the established asset allocation to see where to invest it; I am currently most underweighted in international small-cap and thus will buy Vanguard FTSE All-World Ex-US Small-Cap (VSS). And whenever I check my allocation, I see whether I need to rebalance; I am not close to the bond/stock rebalancing trigger yet, with 11% bonds and a target of 12%.
Last edited by grabiner on Sat May 30, 2020 8:36 pm, edited 1 time in total.
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ram
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Re: Have you been following your IPS?

Post by ram » Thu May 28, 2020 10:14 pm

In 2008 I had my IPS in my head but not written down. The IPS included 'be greedy when others are scared' and it worked well at that time.

Later when I wrote down the IPS I put numbers on that concept. My IPS said that I could increase stock allocation by 5%age points during a >20% stock market decline. (Can go from 65/35 to 70/30)

I actually went up by 8%age points. I was 63:37 pre Covid and went to 71:29 at the stock market nadir. Currently I am at 69:31.

I am thinking of changing the IPS to allow me to increase stocks by upto 10% points at least as long as I am working. The idea is if this turns out badly I will have to work longer.
Ram

Wanderingwheelz
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Re: Have you been following your IPS?

Post by Wanderingwheelz » Fri May 29, 2020 6:33 am

I’ve stuck to my IPS, but since my wife and I are a long way from penalty free tax deferred withdrawals, I rethought my strategy of holding fixed income in our tax deferred accounts. Yields are so low that to me it felt okay to do this, and also with the current “Almost anything imaginable can happen” environment we are in I figured it would be best to have less risky assets in our brokerage account in case things get 1929ish. (Laugh if you want)

So now we have about 10 years of expenses in bonds outside of tax deferred retirement accounts rather than 6 months. My wife and I are feeling less stress about a possible depression now, especially since we are both small business owners who have been heavily impacted by events of this year. I mean HEAVILY. Neither of us imagined anything that’s occurred since March, we literally could not have made it up if we tried. It was time to view our assets in a new way, for better or worse.

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dwickenh
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Re: Have you been following your IPS?

Post by dwickenh » Fri May 29, 2020 7:29 am

Yes and No! I did Tax loss harvest both US and Foreign Stock index funds, re-balanced a total of 3 times including selling stocks to buy bonds at the latest move. The No is for my Foreign Fund as I harvested losses there and then bought into an extended market fund for more mid/small cap exposure. My IPS says no less than 10% of equities in Foreign index, but I have not sold out of the extended market at this time. I currently hold less than 5% in Foreign equities. This is not a change in direction for my investments, but more a confirmation of my own bias. I have invested in Foreign Funds for over 25 years during accumulation, but I have doubts about the value going forward. I know the studies show a better risk adjusted return if Foreign equities are included at a higher percentage.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

Topic Author
remomnyc
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Re: Have you been following your IPS?

Post by remomnyc » Fri May 29, 2020 7:49 am

It appears many Bogleheads have stomachs of steel.

DesertDiva
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Re: Have you been following your IPS?

Post by DesertDiva » Fri May 29, 2020 7:51 am

UpperNwGuy wrote:
Thu May 28, 2020 7:18 pm
Yes, of course. When I wrote my IPS, I took into consideration the possibility that the market might someday have significant declines. So when such a market decline happened in early 2020, I was ready for it. Isn't that how an IPS is supposed to work?
+1 Precisely!

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Re: Have you been following your IPS?

Post by Call_Me_Op » Fri May 29, 2020 7:58 am

I have followed my IPS. I did make one minor tweak to it - which is I no longer hold munis, since my taxable bond allocation is intended to be "safe." The term "safe" may mean different things to different people (in the context of bonds), but to me it means guaranteed by the US Government. I like having a portion of the portfolio that is guaranteed.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

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WoodSpinner
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Re: Have you been following your IPS?

Post by WoodSpinner » Fri May 29, 2020 8:12 am

OP,

It sounds like you are trying to establish dry powder rather than shifting to a new AA. Check some of the recent threads for a discussion on this strategy.

Could you explain how you are using your 5% bands? Are they Relative or Absolute?

FWIW, I did follow my IPS but was a bit shaken with the suddenness and swiftness of the decline. Also the up and down of the market right around my rebalancing band. I did a post-mortem on my actions and IPS rules (see viewtopic.php?t=308117). I did have to clarify my language and add some additional analytics to my toolset to clearly explain the bond floor that I should maintain. I am already retired so protecting the LMP portion of the portfolio became one of the key mindsets that helped me weather the market turbulence.

WoodSpinner

UpperNwGuy
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Re: Have you been following your IPS?

Post by UpperNwGuy » Fri May 29, 2020 9:10 am

WoodSpinner wrote:
Fri May 29, 2020 8:12 am
Also the up and down of the market right around my rebalancing band.
Exactly! My target allocation is 60/40, and I was 62/38 when the crisis began. My portfolio dropped to 55/45 and bounced around there for an annoyingly long time. I almost rebalanced twice, but each time the market brought my stocks back up above 55%. My rule is that stocks have to remain below 55% for five consecutive days before I initiate a rebalancing exchange from bonds to stocks.

wanderer
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Re: Have you been following your IPS?

Post by wanderer » Fri May 29, 2020 10:03 am

UpperNwGuy wrote:
Fri May 29, 2020 9:10 am
My rule is that stocks have to remain below 55% for five consecutive days before I initiate a rebalancing exchange from bonds to stocks.
5 day rule - Thank you for the good suggestion!

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Third Son
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Re: Have you been following your IPS?

Post by Third Son » Fri May 29, 2020 10:05 am

I don't have one so yes....or no. My portfolio is so boring that I don't need one. But then I am retired and lead a pretty simple life.
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cashboy
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Re: Have you been following your IPS?

Post by cashboy » Fri May 29, 2020 10:27 am

yes.
no changes.
Three-Fund Portfolio: FSPSX - FXAIX - FXNAX (with slight tilt of CDs - CASH - Canned Beans - Rice - Bottled Water)

KirklandCoug
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Re: Have you been following your IPS?

Post by KirklandCoug » Fri May 29, 2020 1:05 pm

In other big drops, I followed my IPS. As I've gotten older, I realized that my allocation was too heavy in stocks. I made a change in the last week to stomach it better. I've never done that. Felt like a wuss!

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cashboy
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Re: Have you been following your IPS?

Post by cashboy » Fri May 29, 2020 3:10 pm

KirklandCoug wrote:
Fri May 29, 2020 1:05 pm
In other big drops, I followed my IPS. As I've gotten older, I realized that my allocation was too heavy in stocks. I made a change in the last week to stomach it better. I've never done that. Felt like a wuss!
FWIW, to me, it sounds like an act of strength. :happy
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Horton
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Re: Have you been following your IPS?

Post by Horton » Sat May 30, 2020 12:50 pm

My IPS allows me to buy "cheaper stuff", so my 401(k) contributions have been buying 100% small, value, and international equities.

gamboolman
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Re: Have you been following your IPS?

Post by gamboolman » Sat May 30, 2020 7:34 pm

Yes, we have pretty well followed our IPS.

We rebalanced after the big drop in 1st Quarter this year.

Having gone thru the discipline of writing and rewriting the IPS - I have found it really helped us.

Would definitely recommend that new investors and folks just learning - such as ms gamboolgal and I were/are - write their own IPS. It was hard for us but worth it.

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FIREchief
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Re: Have you been following your IPS?

Post by FIREchief » Sat May 30, 2020 9:16 pm

I’ve never had an IPS.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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BroIceCream
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Re: Have you been following your IPS?

Post by BroIceCream » Sat May 30, 2020 9:42 pm

Oh, yes... and happily. I normally re-balanced in June due to new contributions, but around March 23, my IPS indicated I was way out of my band tolerances for my bond allocation.... I re-balanced a chunk in to my under-weighted SCV position, and have been very happy with the rebounding that followed.
My new contributions will go in this week as additions, with no rebalancing required, per the IPS.

The mechanics of it all is very freeing.

heyyou
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Re: Have you been following your IPS?

Post by heyyou » Sun May 31, 2020 3:06 pm

Have you been following your IPS?
My monthly balance reports show that my total assets have noticeably shrunk. Some of those periodic market fluctuations have probably occurred, but having just started delayed SS, my income has gone up. I suppose that I should rebalance someday, if I get around to it.

Thales
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Re: Have you been following your IPS?

Post by Thales » Sun May 31, 2020 3:43 pm

Certainly not why should I. Anyway I haven’t got one.

I use excel for a monthly report. Currently I have 53% in equities as a total for all my finances. I am retired. I won’t pay myself much this year as markets have been pulverised.

I normally operate at 40% to 60% equities but after the financial collapse I did go to 100% equities for a year or two before trimming back.

This time I feel less confident of myself and am also retired. So whilst I have a buy signal seemingly confirming that the market has bottomed I am cautious about global trade and potential conflicts.

For a retiree 40% equities is plenty.

And that is why I don’t have an ips. Where’s the fun in that.

I am a freewheeling hippy baby boomer

reln
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Re: Have you been following your IPS?

Post by reln » Sun May 31, 2020 3:50 pm

remomnyc wrote:
Thu May 28, 2020 12:53 pm
My IPS is 55%/45%, including 1x expenses in cash/savings and rebalancing using 5% bands. In March, as Rome burned, I couldn't wait for the 5% trigger and bought stocks at 20% down and again at 30% down to rebalance. This month, I decided 2x expenses should be my new normal cash holding level. When stocks reached 85% to 90% of their highs, I sold enough to bring my cash holdings to 2x expenses, so I don't have to sell stocks if there's another precipitous fall and the recovery is not as rapid. Given the super low bond yields, going forward I plan to shift some fixed income into taxable as rebalancing dictates. When the dust settles, I need to reconsider my 5% bands. I may switch to the lesser of 5% and $50k. Have you followed your IPS? If not, how have you departed from it or amended it?
Yes, I've stuck with it so far. It's simple, just stocks.

J295
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Re: Have you been following your IPS?

Post by J295 » Sun May 31, 2020 3:53 pm

Yes.

But I will admit I was uncomfortable with the rapid big drops and the uncertainty worldwide of addressing covid.

With equity snapping back so quickly (thus far) and bonds and tips performing well, it feels like I got away with just a warning ticket

REITired
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Re: Have you been following your IPS?

Post by REITired » Sun May 31, 2020 5:10 pm

I will say though, this crash has made me feel like I'm too conservative with my current bond holdings... will continue to monitor the situation :D

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Horton
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Re: Have you been following your IPS?

Post by Horton » Sun May 31, 2020 6:42 pm

REITired wrote:
Sun May 31, 2020 5:10 pm
My vote for best user name! :beer

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