Anyone else taking less risk

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stemikger
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Anyone else taking less risk

Post by stemikger » Thu Mar 16, 2017 6:53 pm

I realize no one can predict the end of this rally and when the next correction will come, but has anyone else adjusted their asset allocation to a more conservative one because it has been a long bull market whether it was hated or not.

I went from 65/35 to 60/40 just in case. #1: Pigs Get Fat, Hogs Get Slaughtered! ... If you get too greedy like a hog, you can end up loosing it all.
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sport
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Re: Anyone else taking less risk

Post by sport » Thu Mar 16, 2017 6:55 pm

I reduced my allocation to stocks some years prior to retirement. My current allocation is sufficiently conservative that I just do not worry about the market any more, except to rebalance when necessary.

2comma
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Re: Anyone else taking less risk

Post by 2comma » Thu Mar 16, 2017 7:07 pm

I did the same - reduced as I approached retirement. Before that I was 80/20 thru thick and thin my whole accumulating life.
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livesoft
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Re: Anyone else taking less risk

Post by livesoft » Thu Mar 16, 2017 7:09 pm

I have not changed my asset allocation in a few years. People tell me that momentum is a factor, so what is going up, keeps going up, until it goes down. (That's a good and true statement! Ha!)

But I'm rebalancing whenever I exceed my equities high trigger point. I seem to buy equities before they ever go below my low trigger point.
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Re: Anyone else taking less risk

Post by malabargold » Thu Mar 16, 2017 7:15 pm

Not in 50 years, because I've never seen a big market
pull back that wasn't a great buying opportunity in retrospect.
My dividends do a lot of buying these days.

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knpstr
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Re: Anyone else taking less risk

Post by knpstr » Thu Mar 16, 2017 7:19 pm

I'm keeping my AA steady at 100% VTSAX... not looking to adjust it until about 20 years time. Hopefully, by then I won't need to adjust it.
:beer
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pennstater2005
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Re: Anyone else taking less risk

Post by pennstater2005 » Thu Mar 16, 2017 7:20 pm

Nope. 80/20. There at least for another 1.5 years until I re-evaluate per IPS. Although, I suspect I won't be changing anything.
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aqan
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Re: Anyone else taking less risk

Post by aqan » Thu Mar 16, 2017 7:26 pm

I went from 85/15 to 50/50.
I agree with pennstater2005 tho. There's something some time before the bubble bursts. [OT comment removed by moderator prudent]

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Ged
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Re: Anyone else taking less risk

Post by Ged » Thu Mar 16, 2017 7:50 pm

I have started selling an increased proportion of equities as the supplement to my pension income.

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Re: Anyone else taking less risk

Post by willthrill81 » Thu Mar 16, 2017 7:51 pm

I'm very close to 100% equities (tiny bit in REITs and part of my EF is in bonds). I have no intention of moving from that until (1) my portfolio reaches the point at which it is 25 times larger than my 'necessary' pre-tax expenses or (2) I'm within 10 years of my anticipated retirement, whichever comes first. At that point, I'll back down to around 70/30.
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Re: Anyone else taking less risk

Post by Random Walker » Thu Mar 16, 2017 8:04 pm

I've cooled off some. I'm currently 54, not sure when retirement might be forced upon me. Was 80/20 until about two years ago. Now I'm down to about 49% equities. My current target is 47% equities (50/50 US/Int), 35% bonds, 18% alternatives with low, no, negative correlation to both stocks and bonds.
It's painful paying the taxes to take risk off the table, but would be more painful not having a tax to pay.

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Re: Anyone else taking less risk

Post by kolea » Thu Mar 16, 2017 8:10 pm

It's hard to say. I went from 65/35 to 60/35/5 but that 5% is cash that is earmarked for something. Once it is spent, that will leave me at 63/37, so I guess I changed my AA.

But there is another axis here and that is the allocation between US and ex-US equities. I shifted about 3% to ex-US a few days ago. I might shift more.
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InvestorNewb
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Re: Anyone else taking less risk

Post by InvestorNewb » Thu Mar 16, 2017 8:13 pm

I'm still 100% equities. I hope the bull continues raging.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

Random Walker
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Re: Anyone else taking less risk

Post by Random Walker » Thu Mar 16, 2017 8:14 pm

Yes I went from US/Int 60/40 to 50/50.

Dave

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Re: Anyone else taking less risk

Post by radiowave » Thu Mar 16, 2017 8:17 pm

knpstr wrote:I'm keeping my AA steady at 100% VTSAX... not looking to adjust it until about 20 years time. Hopefully, by then I won't need to adjust it.
:beer


Stay the course :)

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Toons
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Re: Anyone else taking less risk

Post by Toons » Thu Mar 16, 2017 8:22 pm

The Same as it has been the last several years....
70/30.
I just let it ride,and
compound :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

GoldenFinch
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Re: Anyone else taking less risk

Post by GoldenFinch » Thu Mar 16, 2017 8:45 pm

I'm just staying the course like a good sailor would try to do. :happy

(Hoping for a red sky at night and not in the morning.)

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Re: Anyone else taking less risk

Post by gkaplan » Thu Mar 16, 2017 8:51 pm

How many different ways can this question be asked on this forum?
Gordon

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pennstater2005
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Re: Anyone else taking less risk

Post by pennstater2005 » Thu Mar 16, 2017 8:54 pm

gkaplan wrote:How many different ways can this question be asked on this forum?


Lots. And it will never end :twisted:
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Re: Anyone else taking less risk

Post by tomd37 » Thu Mar 16, 2017 10:29 pm

For the fifteen year period prior to retirement in 2002 I had a 60/40 stock/bond ratio, then I dropped it to 50/50, and now just two years ago I dropped it to (and will most likely stay there) a 40/60 ratio. Main reason for the last move; I have what I feel I need for another fifteen to twenty years (95 to 100) and, although I feel I have the ability and willingness to take the risk, I no longer have the need to take the risk.
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Re: Anyone else taking less risk

Post by Big Dog » Thu Mar 16, 2017 11:10 pm

was 75/25, but just got laid off, a few years short of planned retirement. Since future income is unknown, and can't risk a significant downturn, have quickly developed a revised Plan and will be reducing equities on a monthly basis over the next 12 months. (Kinda like dollar cost averaging down.)

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Re: Anyone else taking less risk

Post by itstoomuch » Fri Mar 17, 2017 12:21 am

Master IPS, dictates to "Don't get Greedy"
Annual IPS, says to protect assets for that retirement home we want buy.
It's Discretionary funds anyway.
We have enough.
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Re: Anyone else taking less risk

Post by Visitor » Fri Mar 17, 2017 1:02 am

I agree with the OP and have recently moved from 80/20 to 60/40. I've been 80/20 most of my accumulation years.

I have a meeting setup with a Vanguard Financial Adviser to assess where we are.

I'm trying to decide if we are going to stick with 60/40 or move to 70/30. I'd like to have a little more exposure in international but undecided at this point.

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Re: Anyone else taking less risk

Post by jackholloway » Fri Mar 17, 2017 1:28 am

A bit, but not because of current conditions, more because of a spot of luck.

I was at 70/30 some years back, then went to 65/35 after getting an inheritance that accelerated my FI timetable. I real8zed that I wanted to be a bit more cautious as I approach my number, so we have a 60/40 AA, plus 4 years of state college expenses in the Colorado stable value fund.

Our current goal is 33x, plus 4 years at a top school covered starting in 6 years. A flat market and a good job make that possible, but life happens. A bull run might get us there early, and a commensurate de-risk. A bear run would mean rebalancing back, and accepting that you do not hit all goals.

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Re: Anyone else taking less risk

Post by digarei » Fri Mar 17, 2017 3:20 am

stemikger wrote:I realize no one can predict the end of this rally and when the next correction will come, but has anyone else adjusted their asset allocation to a more conservative one because it has been a long bull market whether it was hated or not.

I went from 65/35 to 60/40 just in case. #1: Pigs Get Fat, Hogs Get Slaughtered! ... If you get too greedy like a hog, you can end up loosing it all.

Respectfully, you may be letting market valuations affect your good judgment.

Are you prepared to stick with your new AA if the market continues on an upward trend for the next two years? What is your investment plan? If the market declines 30% or 40% over the next several months or succumbs into a extended multi-year bear market do you plan to rebalance back to your present asset allocation?
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Sphinx
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Re: Anyone else taking less risk

Post by Sphinx » Fri Mar 17, 2017 4:09 am

I've been 60/40 for some time, but I made one tiny change earlier this week: I put my IRAs on autopilot. My Roth and SEP-IRAs are now 100% LifeStrategy Moderate Growth. This should remove the risk of human emotions from the IRA portion of my portfolio.

I'm still responsible for rebalancing my 401(k), though.

:sharebeer

Daryl
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Re: Anyone else taking less risk

Post by Daryl » Fri Mar 17, 2017 4:33 am

Yes, very much so! I've been selling equities for quite some time now. This long bull market has been awesome, and I've benefited from having a relatively high equity allocation throughout. Now I'm ahead of my retirement savings goals, so why take excessive risk?

why3not
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Re: Anyone else taking less risk

Post by why3not » Fri Mar 17, 2017 5:13 am

My plan is already more conservative than I would like. I feel no need to take less risk based on stock prices. I am sticking with my plan (was relatively well thought out & talked out with DW) regardless of what my current feelings of stock prices are.

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Re: Anyone else taking less risk

Post by herpfinance » Fri Mar 17, 2017 6:07 am

My asset allocation is already a bit conservative for my age (although not overly so).

As I invest globally and in different funds than most BH's, my equity benchmark is a combination of MSCI World + MSCI Emerging Markets. By using a weighted PE, we come up around 22 times earnings for the past 12 months, which is on the high side, but far from extreme.

It's going to take significantly higher valuations before I'll do anything. Figure a PE of 30+ times.

EDIT: Forgot to mention that bond yields would have to increase as well. At any rate, I don't see myself making any changes, barring an extreme case like the late 90's were valuations were astronomical, dividends were very low, and bonds were yielding a bit more than the historical average.
Last edited by herpfinance on Fri Mar 17, 2017 11:48 am, edited 1 time in total.
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lazyday
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Re: Anyone else taking less risk

Post by lazyday » Fri Mar 17, 2017 6:44 am

If you already wanted to reduce risk, then I think this is a great time to do it because of low expected returns today.

If you're only doing it because markets are expensive, then I would ask if you're ok keeping your new allocation forever, if there is never an opportunity to buy back cheaper than today. If so, then I think it's fine.

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Re: Anyone else taking less risk

Post by sid hartha » Fri Mar 17, 2017 6:51 am

If we are in a secular bull market (obviously I don't know for sure but it feels like it) it started in 2013 when it broke above both 2000 and 2007. Therefore, pretty young and not a good reason to change things in and of itself.

keystone
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Re: Anyone else taking less risk

Post by keystone » Fri Mar 17, 2017 7:21 am

I've been at 60/40 the last few years, but want to slowly drift closer to 50/50 over the next decade. Very recently I decided to direct all new money to bonds.

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Re: Anyone else taking less risk

Post by Artisan » Fri Mar 17, 2017 7:43 am

MMM sounds like market timing to me.

Actually we have been slowly increasing our % in stocks as per our IPS. We should be there within a few months.

Then we will maintain it based on what we have determined is the correct AA for us, balancing every year when out portfolio deviates beyond a certain percentage.

Our "guess" at whether the markets are undervalued or overvalued won't won't make us change our AA.

We can't predict the future and our crystal ball still remains cloudy :)

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Re: Anyone else taking less risk

Post by bloom2708 » Fri Mar 17, 2017 8:03 am

keystone wrote:I've been at 60/40 the last few years, but want to slowly drift closer to 50/50 over the next decade. Very recently I decided to direct all new money to bonds.


At 46 we are essentially at "age in bonds" 55/45. 50/50 is where we will stay. Depending on what the market does, we may go there over the next 5 years or very quickly if a correction occurs. New money going in is directed to stay at the intended allocation. We are definitely not looking to go to 60/40 or 70/30.
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KSOC
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Re: Anyone else taking less risk

Post by KSOC » Fri Mar 17, 2017 8:13 am

I changed my allocations in my 401k. Buying more Total Bond Market, Stable (3.10%) & Total International. Buying less Total Stock and selling it off when it exceeds a certain amount and directing that to Stable Fund. Trying to shore up my fixed and put myself in a position to buy low when the time comes. I'm down to about 60/40, but my allocations now are more 30/60/10 (Int). I'm 58 and really appreciate the market the last 7 years. Trying to hold on to what I've got and get ready for the sale, whenever that is.

Having two future pensions will allow me to be a buyer if it feels right.

But not shying away from investing. Any loose change I get goes into my taxable (Total Stock Market) because I have no idea where this ceiling is.
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Random Walker
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Re: Anyone else taking less risk

Post by Random Walker » Fri Mar 17, 2017 8:22 am

Daryl above said it well. It's not really about market timing. It's about where the market has taken us compared to our individual financial goals. If the market has us way ahead on our plan, then very rational to take risk off the table.

Dave

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Re: Anyone else taking less risk

Post by SGM » Fri Mar 17, 2017 9:10 am

Since I have been retired my AA has been lowered to 70/30 stocks to bonds. I last checked my AA in October and won't be checking it again until this coming October. If I had to guess maybe I am 75/25 now or 80/20. If I were still accumulating I would be 100% stock market.

Now I am much more focused on income rather than total portfolio value as I am a retiree. However, I do enjoy reading prognosticators. It seems like there is a wall of worry out there.

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Re: Anyone else taking less risk

Post by Dottie57 » Fri Mar 17, 2017 9:40 am

I'm 5 years out to retirement. The ratio is now 50/50 which I still think will cause the portfolio togrow.

B. Wellington
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Re: Anyone else taking less risk

Post by B. Wellington » Fri Mar 17, 2017 10:25 am

We are 5 years from "early" retirement, maybe less. ( At least the real possibility of only working part-time.)

60/40 AA. Directing dividends from taxable to our money market account. Okay, now we are at 59/41... :oops:

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Re: Anyone else taking less risk

Post by Artisan » Fri Mar 17, 2017 10:30 am

Random Walker wrote:Daryl above said it well. It's not really about market timing. It's about where the market has taken us compared to our individual financial goals. If the market has us way ahead on our plan, then very rational to take risk off the table.

Dave


He referred to taking "excessive risk".

If you consider it excessive because you have determined based on your financial goals and expenses that you have met your needs than I agree it is not market timing.

If you consider it excessive because "hogs get slaughtered" or you "feel" the bull market is over and you are changing your AA based on external factors of which you really cannot predict and have no control over then, in my mind, this is market timing.

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Re: Anyone else taking less risk

Post by onourway » Fri Mar 17, 2017 10:50 am

I have gone from nearly 100/0 as of last November to about 85/15 and am now moving to 80/20 with things arranged to slowly move us to 70/30 over the next couple of years. This is largely a result of realizing how well we have done over the past decade, and that optional retirement may come within 10 years or so. No need to take as much risk.

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Re: Anyone else taking less risk

Post by MnD » Fri Mar 17, 2017 11:04 am

I'm good at 70/30 for life.
20-year CAGR on Total Stock Market (VTSMX) is 7.87% nominal (maybe 5.5% real?)
Not exactly bull market of the millennium.

If you put up a long chart and squint your eyes really hard so you can see the trend but not the intermediate big dips and peaks, the market hasn't returned anything special or unusual that would warrant any action.

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Re: Anyone else taking less risk

Post by nofacetimber » Fri Mar 17, 2017 11:14 am

Coming from someone with a mortgage Yes,

I am aggressively paying off my mortgage while contributing up to the company match in the 401k and fully funding my Roth IRA. Would like to fully fund the IRA but am taking the guaranteed return to minimize risk.

Once the debts are taken care of I'm all in, and feeling pretty good about a 70/30 allocation. (31 years old)

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Re: Anyone else taking less risk

Post by orca91 » Fri Mar 17, 2017 11:17 am

stemikger wrote:I realize no one can predict the end of this rally and when the next correction will come, but has anyone else adjusted their asset allocation to a more conservative one because it has been a long bull market whether it was hated or not.

I went from 65/35 to 60/40 just in case. #1: Pigs Get Fat, Hogs Get Slaughtered! ... If you get too greedy like a hog, you can end up loosing it all.


Adjusting the AA due to the market, or what you think the market might do.....

Sounds a lot like market timing to me.

How is/was 65/35 greedy? If the market were to do a big correction would you switch back to 65/35?

TSWNY
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Re: Anyone else taking less risk

Post by TSWNY » Fri Mar 17, 2017 12:45 pm

DW and I both have pensions when we retire (I'm 37, she's 30), so we are a little more aggressive than a couple without that security, but I am starting to shift a little more towards bonds and cash. Going from 85/15 to closer to 70/30.

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Re: Anyone else taking less risk

Post by JoMoney » Fri Mar 17, 2017 12:57 pm

I have been increasing the amount of short-term savings I keep, primarily because my job is looking less stable and if I change jobs I expect to have some big expenses related to moving and buying a car.
I'm still maxing out retirement contributions to equities, but outside of that my cash/bond amount has been creeping up (almost 5% now, which is a lot for me in terms of dollar amount sitting around) ... as I get older I think I'll continue to go that direction. I wouldn't mind having a 90/10 allocation, especially while still working, for me that would give me several years of living expenses in safe cash/bonds.
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mc2
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Re: Anyone else taking less risk

Post by mc2 » Fri Mar 17, 2017 1:11 pm

It's tempting to reduce my stock allocation, but I'm sticking with the 70/30 plan for now.

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Re: Anyone else taking less risk

Post by cfs » Fri Mar 17, 2017 1:26 pm

Back from my LUng Distance Workout and ready to add my daily contribution or my two Reales. I have not made any changes to The Lowest Rated Fund [my aggressive growth portfolio]. It makes no difference what Miss Market is doing today. The Lowest Rated Fund is not closing today, tomorrow, next week, next month, or next year. The Lowest Rated Fund remains BULLISH on America. And now we return to your normal programming with "Anyone else taking less risk." Thanks for reading ~cfs~
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Re: Anyone else taking less risk

Post by Fallible » Fri Mar 17, 2017 1:58 pm

stemikger wrote:I realize no one can predict the end of this rally and when the next correction will come, but has anyone else adjusted their asset allocation to a more conservative one because it has been a long bull market whether it was hated or not.

I went from 65/35 to 60/40 just in case. #1: Pigs Get Fat, Hogs Get Slaughtered! ... If you get too greedy like a hog, you can end up loosing it all.


Moves to lessen risk can have less to do with market predictions than how one reacts emotionally to those predictions, meaning one's risk tolerance and how much money one can afford to lose in a downturn before it's needed. In that case, an IPS can help to remind why an allocation was set and why it should now be changed - or not - and by how much.
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Re: Anyone else taking less risk

Post by kathyauburn » Fri Mar 17, 2017 2:52 pm

stemikger wrote:I realize no one can predict the end of this rally and when the next correction will come, but has anyone else adjusted their asset allocation to a more conservative one because it has been a long bull market whether it was hated or not.

I went from 65/35 to 60/40 just in case. #1: Pigs Get Fat, Hogs Get Slaughtered! ... If you get too greedy like a hog, you can end up loosing it all.


Yes. I'm in this fund and I like it.

https://www.tsp.gov/InvestmentFunds/Fun ... ncome.html

It rebalances daily and gives me peace of mind. Plus the G component is currently throwing off 2.35% with no downside risk.

I wish I had been able to get into the federal government sooner than I did, but I consider the investment options in the TSP, and particularly the G fund, to have been worth the abbreviated ride.

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