Adjusting your allocation for recession

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FBN2014
Posts: 219
Joined: Sat Mar 08, 2014 3:07 pm

Adjusting your allocation for recession

Post by FBN2014 » Wed Oct 04, 2017 7:03 am

I read this article last night by Daniel Solin and it got me thinking that I should perhaps adjust my stock/bond allocations of index funds in anticipation of the inevitable downturn in the market cycle. I am currently drawing 3% from a 40% stock, 60% bond index portfolio. My thoughts are to rebalance at 20% stock, 80% bond to avoid a large drawdown when this long in the tooth bull turns bearish. Are there any studies that illustrates how different stock/bond index allocations with various withdrawal rates have performed in a bear market?

Here's the article: http://www.huffingtonpost.com/entry/mar ... 9ee4a9c98f
Last edited by FBN2014 on Wed Oct 04, 2017 7:05 am, edited 1 time in total.

livesoft
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Re: Adjusting your allocation for recession

Post by livesoft » Wed Oct 04, 2017 7:04 am

At 40% stock, I think you are already adjusted for a recession.

And the studies you asked about are found in this series:
https://earlyretirementnow.com/2016/12/ ... t-1-intro/
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Ron Scott
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Re: Adjusting your allocation for recession

Post by Ron Scott » Wed Oct 04, 2017 7:29 am

livesoft wrote:
Wed Oct 04, 2017 7:04 am
At 40% stock, I think you are already adjusted for a recession
During a big bear a 40% stock allocation could morph into a 20% allocation pretty quickly by itself without incurring any transaction fees. Then you can get back to 40% by selling your bonds and buying more stocks. If you trust the past to predict the future, the market will rebound and you’ll be much better off in the next bull. Rinse and repeat...
Last edited by Ron Scott on Wed Oct 04, 2017 7:33 am, edited 1 time in total.

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Toons
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Location: Hills of Tennessee

Re: Adjusting your allocation for recession

Post by Toons » Wed Oct 04, 2017 7:33 am

Stick To The Asset Allocation that allows you to
Sleep Well At Night.
I wouldn't waste time trying to forecast the future,fruitless.
Control What You Can. :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

FBN2014
Posts: 219
Joined: Sat Mar 08, 2014 3:07 pm

Re: Adjusting your allocation for recession

Post by FBN2014 » Wed Oct 04, 2017 8:10 am

livesoft wrote:
Wed Oct 04, 2017 7:04 am
At 40% stock, I think you are already adjusted for a recession.

And the studies you asked about are found in this series:
https://earlyretirementnow.com/2016/12/ ... t-1-intro/
Excellent, thank you!

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