Aug 2015 correction: what Bogleheads did...

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siamond
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Aug 2015 correction: what Bogleheads did...

Post by siamond » Sat Aug 29, 2015 5:09 pm

We just had our quarterly Metro-Boston Bogleheads meeting (a bit of a small committee this time), and we had a discussion on the recent correction. I suggested various possible actions and asked who did what:
- Sell everything and stay in cash or gold: nobody
- Change your AA on the spot: nobody
- TLH move: 1
- Rebalancing move: 2
- Do nothing, stay Zen: 7

Well, call me impressed! John Bogle would be proud!

WHAT ABOUT YOU, WHAT DID YOU DO?

PS. would have been a good topic for a forum poll... Oh well.
Last edited by siamond on Sat Aug 29, 2015 7:04 pm, edited 1 time in total.

livesoft
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Re: Aug-15 correction: what Bogleheads did...

Post by livesoft » Sat Aug 29, 2015 5:12 pm

I think it is a shame that 7 did nothing. Was their asset allocation 100% bonds or 100% stocks?

Maybe clarify that it was the August-2015 correction and not the August the 15th correction? :)

What did I do? Zen-like, I stayed-the-course and followed my Investing Policy Statement: I rebalanced from bonds to equities early in the week, then rebalanced back from equities to bonds later in the week. I also did a little tax-loss harvesting.
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Re: Aug-15 correction: what Bogleheads did...

Post by Sunflower » Sat Aug 29, 2015 5:31 pm

siamond wrote:WHAT ABOUT YOU, WHAT DID YOU DO?
Just stood there looking stupid, but that's my natural visage. :wink: I haven't had the guts to look at my account and don't think I will for a while.

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Re: Aug-15 correction: what Bogleheads did...

Post by Artsdoctor » Sat Aug 29, 2015 5:39 pm

I tax-loss harvested which gave me a zen-like moment.

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wbond
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Re: Aug-15 correction: what Bogleheads did...

Post by wbond » Sat Aug 29, 2015 5:41 pm

You call that a correction? It's over?

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Re: Aug-15 correction: what Bogleheads did...

Post by livesoft » Sat Aug 29, 2015 5:47 pm

wbond wrote:You call that a correction? It's over?
Well, stock market closed higher this week than last week, so everyone's portfolio made money this week. Yep, it is over. That doesn't mean the next one does not start this coming Monday or is it next Monday?
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Re: Aug-15 correction: what Bogleheads did...

Post by wbond » Sat Aug 29, 2015 5:51 pm

livesoft wrote:
wbond wrote:You call that a correction? It's over?
Well, stock market closed higher this week than last week, so everyone's portfolio made money this week. Yep, it is over. That doesn't mean the next one does not start this coming Monday or is it next Monday?
PM when you remember which Monday!

Oh, and remember: volatility presages larger falls - except for when it doesn't.

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Re: Aug-15 correction: what Bogleheads did...

Post by Lafder » Sat Aug 29, 2015 6:12 pm

My AA was off by a few points, but still did not move beyond a 5 point rebalancing band.

I made my 401k purchases, and changed nothing.

lafder

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Re: Aug-15 correction: what Bogleheads did...

Post by logicteach » Sat Aug 29, 2015 6:20 pm

Read a lot of posts here to help me keep my cool, recited a few Bogle aphorisms to myself (stay the course, invest we must, etc.) and rested easy with my decisions. All thanks to learning about BH investment philosophy a few years ago. Thanks, from a member of BH silent majority!

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Re: Aug-15 correction: what Bogleheads did...

Post by tomd37 » Sat Aug 29, 2015 6:23 pm

The only thing I did was to hiccup! It certainly wasn't anything more than that :oops:
Last edited by tomd37 on Sat Aug 29, 2015 7:51 pm, edited 1 time in total.
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Re: Aug-15 correction: what Bogleheads did...

Post by IPer » Sat Aug 29, 2015 6:27 pm

There was no correction, what are you blathering about?!
I finally sold two positions that had higher expense ratios.
This was not related to the down/ups just something I had
decided to do previously but hadn't pulled the trigger on. I had
also thought that it might have corrected and thereby corrected
my AA / rebalanced a bit towards equilibrium, however, it did not,
so I still need to DCA into that balance unless some larger cash
comes my way as I do not want to sell anything.
Read the Wiki Wiki !

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Re: Aug-15 correction: what Bogleheads did...

Post by Maynard F. Speer » Sat Aug 29, 2015 6:44 pm

I swear the sheer level of self-righteousness around here sometimes (j/k :beer )

I rebalanced Europe a day after the dip (which was technically a correction, I believe, being over 10%) and Emerging 2 days after, when it was clear the tide had changed (at least in the immediate term) ... If things bounce back over the next week and I rebalance again, I might have cleared an easy $6k (without ever changing risk exposure, btw :smugface: )
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Re: Aug-15 correction: what Bogleheads did...

Post by siamond » Sat Aug 29, 2015 7:02 pm

Yes, technically, a correction is a selloff of 10% or more. Which did occur, even if it didn't last long!

For the record, I was the most active of the group, seeking an opportunity (rebalance *and* TLH). And I was a tad surprised to see everybody being so Zen about the whole thing. Pretty cool to see, actually. Quite at odds with the headlines we've seen floating around in newspapers in the past few days.

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Re: Aug 2015 correction: what Bogleheads did...

Post by kenyan » Sat Aug 29, 2015 7:09 pm

I would have rebalanced, had I not been on a business trip. For one thing, I was too busy to log in and figure out what needed to be done; for another thing, I make it a point never to log in to my secure financial accounts over various brands of hotel wi-fi or other connections with dubious security. By the time I returned from my trip, my tripped band had gone back "in the black," so to speak. Oh well.

Therefore: I did nothing. Had I been home, I would have rebalanced.
Retirement investing is a marathon.

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Re: Aug 2015 correction: what Bogleheads did...

Post by crg11 » Sat Aug 29, 2015 7:14 pm

Had no need to rebalance on my end, my allocations were pretty spot on even after the "correction."

Stay the course.

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Re: Aug 2015 correction: what Bogleheads did...

Post by stemikger » Sat Aug 29, 2015 7:17 pm

Confession: In my 401K I changed my asset allocation from 60/40 to 70/30. I couldn't pass up the bargain. My new money is still going in at 60/40. I did it on the second day when the S&P was at its lowest. Got lucky I guess. I want to retire in 10 to 15 years and I don't think I will get many more opportunities to get these kinds of bargains before I go with 60/40 for life.

My IRA is all in the balanced index fund. Didn't have to do a thing. Now I know why I love this fund so much.
Last edited by stemikger on Sat Aug 29, 2015 7:24 pm, edited 4 times in total.
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Re: Aug 2015 correction: what Bogleheads did...

Post by Traveller » Sat Aug 29, 2015 7:17 pm

TLH. :beer

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Re: Aug 2015 correction: what Bogleheads did...

Post by MitchL » Sat Aug 29, 2015 7:19 pm

Wasn't enough of a drop for me to TLH.
I adjusted the qualified plan contributions to all international/EM, small rebalance in tax-deferred accounts to the same.
I was pleased that I did not feel anxious during the brief dip and I "slept well at night."
Mitch

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Re: Aug-15 correction: what Bogleheads did...

Post by denovo » Sat Aug 29, 2015 7:28 pm

livesoft wrote:I think it is a shame that 7 did nothing. Was their asset allocation 100% bonds or 100% stocks?
Some people do calendar-based rebalancing
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Re: Aug 2015 correction: what Bogleheads did...

Post by livesoft » Sat Aug 29, 2015 7:29 pm

I think it's a shame some people do calendar-based rebalancing.
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Re: Aug 2015 correction: what Bogleheads did...

Post by Leeraar » Sat Aug 29, 2015 7:35 pm

I rebalanced my retirement funds on Monday Aug 24. I have no clue what I gained or lost, since there are other transactions in there that I am too lazy to unravel.

I do not have rebalancing criteria other than looking at it when I prepare my tax forms in late January. Oh, and I look at it when the noise about a market high or dip gets very loud. I would say I rebalance no more than three times a year, based on the amount of assets that need to be moved. More than $20,000, I'll generally do it.

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Re: Aug 2015 correction: what Bogleheads did...

Post by LateStarter1975 » Sat Aug 29, 2015 7:38 pm

livesoft wrote:I think it's a shame some people do calendar-based rebalancing.
It may be a shame Livesoft, but this is how some of us can stay the course. My IPS says to rebalance only on January 1, and I only check my accounts at the end of every quarter. So I haven't really checked my account in the past 2 months. Not all of us are as experienced and disciplined as you...hopefully, we'll get there someday. For me, peeking only quarterly and rebalancing once a year helps me not make stupid mistakes
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Re: Aug 2015 correction: what Bogleheads did...

Post by nedsaid » Sat Aug 29, 2015 7:46 pm

I didn't do anything during the August 2015 correction. When I checked my accounts the last couple of days, I was very happy to find that my losses were about 4%. Not bad. I am putting 401k money 60% into stocks and 40% into bonds as I have for years. In my IRA, I put money into an International Bond Fund. That's about it.

It was a good feeling to know that I had been mildly rebalancing my portfolio since July of 2013. I neglected to rebalance in 2008 before the financial crisis so I am glad I didn't miss the opportunity this time. I also had a stock that skyrocketed and I sold, part of the proceeds went to buy the Vanguard Total Bond Market Index ETF which aided my rebalancing program. That also was done before the correction. My portfolio was 68% stocks and 32% bonds and cash when the correction hit.
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Re: Aug 2015 correction: what Bogleheads did...

Post by FreeAtLast » Sat Aug 29, 2015 7:49 pm

Nada. Niente. Ningun cosa. Zilch. Zippo. Zero. Nothing. 8-)
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Re: Aug 2015 correction: what Bogleheads did...

Post by RockOn » Sat Aug 29, 2015 7:51 pm

TLH for me as well. :sharebeer

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Re: Aug 2015 correction: what Bogleheads did...

Post by jstash » Sat Aug 29, 2015 8:00 pm

My regular monthly deposit happened to fall on August 25, so I bought mostly equities to return my AA to balance. Otherwise nothing.

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Re: Aug 2015 correction: what Bogleheads did...

Post by abuss368 » Sat Aug 29, 2015 8:01 pm

We stayed the cours with our regular investing and purchased anything underweight.
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Re: Aug 2015 correction: what Bogleheads did...

Post by yukonjack » Sat Aug 29, 2015 8:08 pm

I TLH thanks in large part to the help from the Boglehead experts. There was some great advice throughout the week that helped me with this TLH as well as planning for future opportunities. Thanks again.

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Re: Aug 2015 correction: what Bogleheads did...

Post by Riceman » Sat Aug 29, 2015 8:10 pm

100% equities so nothing to do. And did nothing.

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Re: Aug 2015 correction: what Bogleheads did...

Post by MKP » Sat Aug 29, 2015 8:12 pm

I tax loss harvested and bought some energy index and small value with some play money.

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Re: Aug 2015 correction: what Bogleheads did...

Post by Toons » Sat Aug 29, 2015 8:13 pm

I yawned a couple times,,then spent most of my time outdoors. :happy
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Re: Aug 2015 correction: what Bogleheads did...

Post by packet » Sat Aug 29, 2015 8:18 pm

I did do a little tax loss harvest.

No re-balancing done this time... but I am trying to decide if the LSRBD* re-balancing optimization program is right for me... :)

:beerCheers,
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Re: Aug 2015 correction: what Bogleheads did...

Post by Twins Fan » Sat Aug 29, 2015 8:24 pm

I went to work, came home, watched the guy re-siding my house, enjoyed my kiddos... :D

I didn't do a thing investment-wise. But, I'm also small time, so... no TLH to think of or anything. My Roth is in the Balanced Index Fund, so nothing to do there. My deferred comp. is also set to 60/40, but I didn't even look to see if anything got too out of whack. I doubt it.

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Re: Aug 2015 correction: what Bogleheads did...

Post by randomizer » Sat Aug 29, 2015 8:27 pm

Did a small TLH.

Also, bought a bunch of stock on the cheap, not because of the dip but because I received a sum of money and my plan tells me to put it into the market whenever I get it (which is once per quarter). So, that was lucky, but I would have done it anyway regardless of the price.
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Re: Aug 2015 correction: what Bogleheads did...

Post by Traveller » Sat Aug 29, 2015 9:02 pm

Oh... One other thing I did beyond TLH was to change where my 401k contributions and my automatic investments go. Not far enough out of band to rebalance, but enough to change where the new money is going.

Other than that, I went sailing a few afternoons and spent time with my family. Overall, it was a very enjoyable correction.

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Re: Aug 2015 correction: what Bogleheads did...

Post by 22twain » Sat Aug 29, 2015 9:07 pm

My % of stocks was originally about 1.5% above where it should have been, then it dropped to about 1.5% lower than it should have been, and now it's right about where it should be. And I'd already set aside cash last month for expenses till the end of the year and don't need to withdraw any more. So I've done nothing.
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Re: Aug 2015 correction: what Bogleheads did...

Post by John3754 » Sat Aug 29, 2015 9:08 pm

I haven't even looked at my portfolio in weeks and I don't care what Livesoft says.

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Re: Aug 2015 correction: what Bogleheads did...

Post by cheese_breath » Sat Aug 29, 2015 9:09 pm

Other than reading a few Boglehead threads about the correction I did nothing.
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Re: Aug 2015 correction: what Bogleheads did...

Post by bengal22 » Sat Aug 29, 2015 9:10 pm

Pretty much just held the course because I don't rebalance on such short term dips. I was actually right on with my targeted percentages. It really is an individual decision and not anything to feel shame. Plus, I am not even close to having anything in my taxable portion to tax loss harvest. I still have pretty sizable gains. So I mainly just played golf this last week.
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Re: Aug 2015 correction: what Bogleheads did...

Post by abyan » Sat Aug 29, 2015 9:14 pm

It wasn't time for me to rebalance. I contribute a set amount every two weeks. And had I moved the money over earlier, to take advantage of the mid week dip, the market would have continued plummeting after that. So you can thank me for the net-gain at the end of the week :-)

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Re: Aug 2015 correction: what Bogleheads did...

Post by thx1138 » Sat Aug 29, 2015 9:15 pm

livesoft wrote:I think it's a shame some people do calendar-based rebalancing.
Why do you think that? Do you have some evidence to support it? Why would immediate threshold triggers perform better than calendar based rebalancing based on the same thresholds? The threshold trigger rebalancer is more likely to catch a falling knife and follow the market down while the calendar based rebalancer is more likely to miss small duration dips like this.

I've looked at rebalancing schemes and back-tests a number of times and I've never seen any claim that threshold triggers outperform calendar based. In fact, the only evidence I've seen is exactly the opposite of that - a 1 to 2 year rebalance period typically slightly outperforms a shorter or continual trigger based one.

But perhaps I've missed some more recent study, if you've got a reference I'd love to read it.

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Re: Aug 2015 correction: what Bogleheads did...

Post by TomatoTomahto » Sat Aug 29, 2015 9:27 pm

I don't re-balance on a set calendar basis.

I bought more TSM when DW's tIRA was officially emptied of assets (into new employer's 401k) so that we could back door Roth.

I bought $75k of TSM, which follows a relaxed schedule to have our emergency fund diminish in size in the time between bonuses. We use it for non-emergency expenditures (tuition, automobiles, annual insurance premiums, etc.) and sometimes have more left over than we anticipated.
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Re: Aug 2015 correction: what Bogleheads did...

Post by Kevin M » Sat Aug 29, 2015 9:34 pm

I TLH'd some emerging markets (VWO -> IEMG), which I think is the only thing I had with any losses. I did massive TLHing in 2008/2009, and since I retired in 2007, haven't been purchasing shares on a regular basis, so mostly have huge gains.

I also couldn't resist using some money market cash in a couple of IRAs to buy a few additional shares of IEMG on Friday and Monday, but this was mostly just playing, since the amounts were too small to matter much.

I also helped a friend do some TLHing to harvest over $20K in losses, and while at it, we added additional cash to his two primary stock funds to bring them up to policy targets. He wasn't outside of his rebalancing bands, but had way too much cash from a recent inheritence, so this seemed like a good use of it.

Anyone who was anywhere close to their target stock/bond AA before the recent minor correction, and who is using a +/-5% rebalancing band, should not have done any rebalancing: +/- 5% Rebalancing Bands. Anyone who rebalanced was already pretty far from their target allocation, or is using a different rebalancing strategy.

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Re: Aug 2015 correction: what Bogleheads did...

Post by celia » Sat Aug 29, 2015 9:38 pm

I posted a lot on Bogleheads this past week. . . various topics, some newbie questions, some RMD and inheritance questions.
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Re: Aug 2015 correction: what Bogleheads did...

Post by livesoft » Sat Aug 29, 2015 9:40 pm

thx1138 wrote:Why do you think that? Do you have some evidence to support it? Why would immediate threshold triggers perform better than calendar based rebalancing based on the same thresholds? The threshold trigger rebalancer is more likely to catch a falling knife and follow the market down while the calendar based rebalancer is more likely to miss small duration dips like this.

I've looked at rebalancing schemes and back-tests a number of times and I've never seen any claim that threshold triggers outperform calendar based. In fact, the only evidence I've seen is exactly the opposite of that - a 1 to 2 year rebalance period typically slightly outperforms a shorter or continual trigger based one.

But perhaps I've missed some more recent study, if you've got a reference I'd love to read it.
I started a rebalancing thread this past week which is more appropriate for this discussion: viewtopic.php?t=172212

I did not state anything about "immediate threshold triggers" either.

I will state that I do not believe the published "studies" have studied the best way to rebalance yet. The best way is probably unknown at the present time. I suspect that roboadvisors probably have a whole crew of people looking at this issue.
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Re: Aug 2015 correction: what Bogleheads did...

Post by timboktoo » Sat Aug 29, 2015 9:44 pm

livesoft wrote:I think it's a shame some people do calendar-based rebalancing.
I get that you like rebalancing on RBDs, but how is it a shame that I rebalance quarterly? Whenever I've read about rebalancing, it never seemed clear that there was a way to do it that was superior to the other ways. I've got enough respect for you to take you seriously, though. So I imagine that you have evidence for RBDs. Is there a particular paper you think demonstrates this best? What do you do if a market continues to fall? How do I do this with Vanguard mutual funds, which try to prohibit market timing? If this is so demonstrable, why isn't it the method most strongly endorsed on the WIKI or by Vanguard?

- Tim

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Re: Aug 2015 correction: what Bogleheads did...

Post by timboktoo » Sat Aug 29, 2015 9:59 pm

siamond wrote: - Do nothing, stay Zen: 7
I got really excited by the fall. I paid a lot more attention to the market than normal and hoped for an opportunity to sell some bonds, but then ended up feeling disappointed when the market came back again so quickly. I didn't end up doing anything at all, buy/sell-wise, but I got the benefit of seeing how I react to downturns, which was very beneficial to me. Apparently, my asset allocation makes me feel very comfortable.

I didn't say the above to claim righteousness. I am surprised that market falls excite me more than market gains. Perhaps there's not enough going on in my life... I tend to get excited when things break at work as well. Maybe it's because something is finally happening that's worth waking up for.
siamond wrote: PS. would have been a good topic for a forum poll... Oh well.
Aye. I've wondered how long it'll be before people start building polls elsewhere and linking to them from the forum. I'm guessing those posts would disappear, though.

- Tim

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Re: Aug 2015 correction: what Bogleheads did...

Post by cfs » Sat Aug 29, 2015 10:16 pm

Steady as she goes.

On the Spiritual Fitness side, I had a good week.

On the Physical Fitness side, I had a great week workout-wise, just came back from my LUng distance workout at 1945 local.

On the Market Fitness side, I had a good week and our bi-weekly deferred compensation plan investment was our only activity.

Doing well, sleeping well, not thinking about Miss Market.
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Re: Aug 2015 correction: what Bogleheads did...

Post by JonnyDVM » Sat Aug 29, 2015 10:24 pm

Snapped up 10k of total international at the dip. Hollah!! Do nothing would have been a close second if we didn't happen to have 10k of dry powder ready to fire. Really enjoyed the action on the forum. Good reading. Some people freak out at the drop of a hat.
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Re: Aug 2015 correction: what Bogleheads did...

Post by Martin » Sat Aug 29, 2015 10:49 pm

OK, now a different view. I went from 100% equity to about 5%. Was I panicked? not at all. the momentum of US is negative with or without the alleged recovery. While the Buy and Hold crowd is happy to have held, I am equally happy to have sold pretty much on schedule and more importantly stay out as the market appeared to recover. Whether you are buy and Hold or follow a momentum strategy it is likely more important that the strategy is followed than which strategy.

So we end the week up from this bottom, but down from the peak. US equity is still expensive. Where it goes next nobody knows. I have my money earning 2% pretty much risk free. that sounds really good in the volitile environment where nothing looks particularly attractive.

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