The extended bull market
- tennisplyr
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The extended bull market
Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
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Re: The extended bull market
No.tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
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Re: The extended bull market
im considering taking some profits off the table and rebalancing to a lower stock allocation by ~5%-10%
Re: The extended bull market
Preface: I am a novice.
I am considering abandoning my mirror of vanguard target date fund 2045’s AA of 10% bonds for age-ish in bonds (30%).
I am considering abandoning my mirror of vanguard target date fund 2045’s AA of 10% bonds for age-ish in bonds (30%).
51% US / 34% ex-US / 15% “bond”
Re: The extended bull market
?? ??tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history...
Maybe we're only half way into it, and that's just to match the last two bull runs
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Re: The extended bull market
tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
I am retiring in 2018. Retirement is the only factor which has influenced my investing. I have 50/50 allication in stocks to bonds. I have 5 years cash equivalents i. FI. i don't want to sell stocks when they are down (sequence of events risk)
Stocks will crash. Iwill rebalance when that happens.
- CyclingDuo
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Re: The extended bull market
Influenced? Sure.tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
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Re: The extended bull market
Nope! Not the slightest bit. I retired last April, so my AA is now permanent, all transitioning and tweaking are done, and my investing plan is intended to balance the somewhat competing, somewhat overlapping demands of security and inflation protection. The fact that there has been a long bull market has absolutely no influence on my own plan.tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
When I retired, the portfolio balance was higher than expected, and it has grown more since then. In some ways, that's nice. But in no way has it altered my need, willingness or ability to withstand risk, if that's what you're asking about.
"Discipline matters more than allocation.” |—| "In finance, if you’re certain of anything, you’re out of your mind." ─William Bernstein
Re: The extended bull market
I guess I will 'fess up and await my citation from the market timing and "stay the course" police: The bull market in US equities along with the desire to further diversify did lead me to put about 15% of our nest egg in alternatives. A couple of years ago when the bull market in REITs resulted in them reaching prices I couldn't stomach I went back to just market weight in REITs. In the 2000s we were about 20% REITs. So, I will confess to tactical shifting of our allocations over time driven partly by valuations and partly by our changing need, willingness and ability to take "risk" along with evolving views of what "risk" entails. But, I have certainly never considered "going to cash and waiting for a crash".
Adapt or perish
Re: The extended bull market
When I retired about 2.5 years ago I had about six years until my wife and I would both start medicare and maybe start Social Security too, if I don't delay it until I am 70. I also budgeted more for things like travel which we will likely do a lot more of in our early retirement than when we are in our 70s and 80s.tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
The first six years of retirement will by far require the most income from our retirement savings of any years until long term care is needed. Once we don't need to pay for health insurance and we have two Social Security checks our need for investment income will be reduced by about two thirds.
I have not added up my year end numbers yet but with the bull market it looks like my portfolio is larger now than the day I retired.
With the high expenses in the first few years of retirement sequence of returns risk was always a concern for me but so far I have dodged that bullet.
With only another 3.5 high expense years left until I am 65 my numbers are looking a lot better so we are starting to spend a bit more on things like taking long workshops and classes in things that interest us. Very roughly we will be spending maybe an extra 10% of our planned budget but these are one time expenses that do not permanently increase the amount needed to support our lifestyle.
As far as the investing, I am still mainly invested in the same target date funds.
Last edited by Watty on Sat Dec 23, 2017 11:35 am, edited 1 time in total.
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Re: The extended bull market
No. I have a plan, and I will stay the course. I don't understand why so many participants in a Bogleheads forum keep getting spooked by market trends.
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Re: The extended bull market
I think this question is almost entirely age/stage of life dependent. We have no control over what the markets will do, but we hopefully know our own circumstances and can control how we respond to the markets. Personally, I’m 55 and don’t know how long I’ll be able to maintain my current income. I was about 80/20 through most of this bull, then started taking risk off the table about 2 years ago. I’ve come to appreciate the potential benefit of some of the alternatives despite their tax inefficiency. I’m now 42% equities/38% bonds/20% alternatives.
I think a lot about the behavioral finance finding that the pain of a loss is twice as much as the happiness derived from an equal sized gain. Moreover, I’m pretty sure that 2:1 ratio increases lots as one’s net worth increases.
Dave
I think a lot about the behavioral finance finding that the pain of a loss is twice as much as the happiness derived from an equal sized gain. Moreover, I’m pretty sure that 2:1 ratio increases lots as one’s net worth increases.
Dave
Re: The extended bull market
Apart from global apocalypse, I think the market will continue to trend upwards. (But don't quote me)
Re: The extended bull market
It has influenced me but only to a very limited extent. Maybe I've lowered my stock allocation by 5%.
Global stocks, US bonds, and time.
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Re: The extended bull market
I think this bull has been a once in a generation or lifetime event. I think taking some definitive action (more than modest change in AA at the fringes) can be very rational for many, especially anyone within a decade of retirement.
Dave
Dave
Re: The extended bull market
That's what I have done. I'm within a year or two of retirement, and I just decided to reduce my stock allocation about 5-10 percent to roughly 30 percent. I'm in good financial shape, so why risk it at this point? That's my reasoning.Random Walker wrote: ↑Sat Dec 23, 2017 12:15 pm I think this bull has been a once in a generation or lifetime event. I think taking some definitive action (more than modest change in AA at the fringes) can be very rational for many, especially anyone within a decade of retirement.
Dave
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Re: The extended bull market
Good question. Thanks for posting.tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it
has influenced the way any of you are currently investing?
Probably not. I am naturally cautious.
Is there anything you are doing more/less of or have changed what you were doing in the past?
Maybe riding on the not so conservative side of the 5% rebalancing targets according to my IPS. But my target allocations are ultra conservative anyway.
j
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Re: The extended bull market
Good point.JoMoney wrote: ↑Sat Dec 23, 2017 7:49 am?? ??tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history...
Maybe we're only half way into it, and that's just to match the last two bull runs
Thanks for posting the chart.
"Nisiprius" might find one that is unsportive of the OP's premise. . . "
Visual aids helps.
j
Re: The extended bull market
Seeing my retirement funds increase 6.5X from the trough in 2009 made moving from 90:10 to 60:40 seem like a good idea. I'm still roughly age-20 in bonds.
Re: The extended bull market
Can you elaborate? What you think you’re gonna do is easier said than done. You’re making a “Pascal’s Wager”. Because you don’t know when a crash is over. Crash to DOW 20,000? Rebal then? Ok, DOW goes to 14,000. Rebal yet again? Now to 10,000 and it stays around there for your remaining lifetime. Your retirement is toast!Dottie57 wrote: ↑Sat Dec 23, 2017 7:53 amtennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
I am retiring in 2018. Retirement is the only factor which has influenced my investing. I have 50/50 allication in stocks to bonds. I have 5 years cash equivalents i. FI. i don't want to sell stocks when they are down (sequence of events risk)
Stocks will crash. Iwill rebalance when that happens.
Re: The extended bull market
I mean that rebalancing will happen when my asset allocation is out of whack according to IPS. I assume a crash/downturn will force the rebalance due to changes in allocation.Leesbro63 wrote: ↑Sat Dec 23, 2017 12:48 pmCan you elaborate? What you think you’re gonna do is easier said than done. You’re making a “Pascal’s Wager”. Because you don’t know when a crash is over. Crash to DOW 20,000? Rebal then? Ok, DOW goes to 14,000. Rebal yet again? Now to 10,000 and it stays around there for your remaining lifetime. Your retirement is toast!Dottie57 wrote: ↑Sat Dec 23, 2017 7:53 amtennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
I am retiring in 2018. Retirement is the only factor which has influenced my investing. I have 50/50 allication in stocks to bonds. I have 5 years cash equivalents i. FI. i don't want to sell stocks when they are down (sequence of events risk)
Stocks will crash. Iwill rebalance when that happens.
Re: The extended bull market
A typical ratio is 2.5 to 1. And you are right, the ratio rises as the amount rises.Random Walker wrote: ↑Sat Dec 23, 2017 11:42 am I think a lot about the behavioral finance finding that the pain of a loss is twice as much as the happiness derived from an equal sized gain. Moreover, I’m pretty sure that 2:1 ratio increases lots as one’s net worth increases.
Dave
Victoria
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Re: The extended bull market
Speaking (or writing as the case may be) from the perspective of a 70 y/o (next Thursday) and being 6 years retired, my position is basically the same. Over the last decade my AA has ranged from basically 40/60 to it's current just rebalanced 44/56, from a recent 49/51. 90% of the portfolio is in Vanguard split roughly 40/60 taxable to IRA, RMD starting in January. About 6.5% is in a Roth at Fidelity and I play with Fidelity Sector Funds there, and have for a least a decade recently trying to be more systematic than seat of the pants doing that. I consider it a stand alone portfolio and it does have a monthly draw. The remaining 3.5% is at Ally Bank.
This Bull has brought significant changes to my/our lifestyle. I retired a two coma club member by the skin of my teeth, trying to do a little travel and keep the WR at or under 3%. At 5 years retired and significant portfolio growth I said this < 3% is not where I need to be. Now, a few months from starting year 7 retired, I'm at a VPW inspired 4.3% to 4.4% range of what the portfolio will close this year out. Frankly, it's made a huge difference in our ability to partake in luxuries we never thought would happen. As another poster cited, we went to a >$100 lunch for three and the only thing I needed to figure or think about was the appropriate tip.
Will the Bull continue? I'm firmly in the nobody knows nothing camp and I'm one of the nobodies. Will the market top and drop? I'm firmly in the nobody knows nothing camp and I'm one of the nobodies. So, both positions and the third, the market does nothing .... at 44/56 and 70 years old, it simply makes no difference to us anymore. While I follow the market with lots of interest and near zero activity (Roth excluded).
So... when I look at your question; "Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past? " My response would be, my age has changed, my employment status has changed, my AA really has not changed beyond ordinary rebalance parameters. What has changed is our lifestyle, much more frequent up scale travel and associated luxuries.
This Bull has brought significant changes to my/our lifestyle. I retired a two coma club member by the skin of my teeth, trying to do a little travel and keep the WR at or under 3%. At 5 years retired and significant portfolio growth I said this < 3% is not where I need to be. Now, a few months from starting year 7 retired, I'm at a VPW inspired 4.3% to 4.4% range of what the portfolio will close this year out. Frankly, it's made a huge difference in our ability to partake in luxuries we never thought would happen. As another poster cited, we went to a >$100 lunch for three and the only thing I needed to figure or think about was the appropriate tip.
Will the Bull continue? I'm firmly in the nobody knows nothing camp and I'm one of the nobodies. Will the market top and drop? I'm firmly in the nobody knows nothing camp and I'm one of the nobodies. So, both positions and the third, the market does nothing .... at 44/56 and 70 years old, it simply makes no difference to us anymore. While I follow the market with lots of interest and near zero activity (Roth excluded).
So... when I look at your question; "Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past? " My response would be, my age has changed, my employment status has changed, my AA really has not changed beyond ordinary rebalance parameters. What has changed is our lifestyle, much more frequent up scale travel and associated luxuries.
Re: The extended bull market
The stock market may decline due to increased sales of stocks. For example:
1. Next week people will be selling stocks to get capital gains before the new tax law goes into effect.
2. Next year people will be selling stocks to pay off their mortgages due to the reduction in the financial benefit of deducting mortgage payments.
These reasons may create a relatively minor decline, especially, because much of the U.S. stock market is held by international investors for whom the U.S. tax law is irrelevant.
Victoria
1. Next week people will be selling stocks to get capital gains before the new tax law goes into effect.
2. Next year people will be selling stocks to pay off their mortgages due to the reduction in the financial benefit of deducting mortgage payments.
These reasons may create a relatively minor decline, especially, because much of the U.S. stock market is held by international investors for whom the U.S. tax law is irrelevant.
Victoria
Inventor of the Bogleheads Secret Handshake |
Winner of the 2015 Boglehead Contest. |
Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
Re: The extended bull market
Thanks for posting. Looks like a pretty pathetic bull market to me.JoMoney wrote: ↑Sat Dec 23, 2017 7:49 am?? ??tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history...
Maybe we're only half way into it, and that's just to match the last two bull runs
- randomizer
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Re: The extended bull market
It's led me to expect lower returns in the future.
87.5:12.5, EM tilt — HODL the course!
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Re: The extended bull market
I will be buying more Total stock Market Index ETF on Tuesday.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."
Re: The extended bull market
I rebalanced when my equities were 3.5% over band, admittedly breaking my 5% rebalance criteria.
Re: The extended bull market
If any of us has literary aspirations, he/she should channel Samuel Beckett and write a play named "Waiting for the Crash".
As for me, if stocks go up another couple of %, I'll hit the upper edge of my rebalancing band and will act accordingly.
As for me, if stocks go up another couple of %, I'll hit the upper edge of my rebalancing band and will act accordingly.
Meet my pet, Peeve, who loves to convert non-acronyms into acronyms: FED, ROTH, CASH, IVY, ...
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Re: The extended bull market
Ha, there does seem to be quite a bit of anxiety among Forum posters around the current bull market, and "Waiting for the Crash" seems a common sentiment — even though none of the usual threats to bull markets appears imminent today, such as high inflation, a recession, excessive policy tightening, irrational exuberance, etc.
The start of the new year might be a good time to examine one's financial and psychological "crash protection kit":
- 1. Do you have sufficient emergency funds to meet your spending needs for the next two to three years?
2. Do you believe in global capitalism and its ability to create wealth over the long term?
3. Is your time horizon for your investment portfolio more than 20 years?
Last edited by SimpleGift on Sat Dec 23, 2017 4:35 pm, edited 1 time in total.
Re: The extended bull market
No. I'm 53 and still plan to work for 8 to 10 years. I will rebalance if we do experience a correction, but other than that, I will stick with my 60/40 AA.tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!
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Re: The extended bull market
Nope! Stay the course.tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
I was reading about how this current tax bill is likely to cause a housing market crash in about ~18 months. So, if that happens, I will definitely be looking to invest when the market is declining including buying homes to rent out. source: https://twitter.com/kurteichenwald/stat ... 5202595840
Re: The extended bull market
I fully understand what you are saying. But I don't think you understand what I am saying. What if the crash isn't a crash, but a 10 year grind down. You keep selling safe assets (bonds) and buying more stocks...that keep going down. How long do you think you'll stick to your plan?Dottie57 wrote: ↑Sat Dec 23, 2017 12:59 pmI mean that rebalancing will happen when my asset allocation is out of whack according to IPS. I assume a crash/downturn will force the rebalance due to changes in allocation.Leesbro63 wrote: ↑Sat Dec 23, 2017 12:48 pmCan you elaborate? What you think you’re gonna do is easier said than done. You’re making a “Pascal’s Wager”. Because you don’t know when a crash is over. Crash to DOW 20,000? Rebal then? Ok, DOW goes to 14,000. Rebal yet again? Now to 10,000 and it stays around there for your remaining lifetime. Your retirement is toast!Dottie57 wrote: ↑Sat Dec 23, 2017 7:53 amtennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
I am retiring in 2018. Retirement is the only factor which has influenced my investing. I have 50/50 allication in stocks to bonds. I have 5 years cash equivalents i. FI. i don't want to sell stocks when they are down (sequence of events risk)
Stocks will crash. Iwill rebalance when that happens.
Re: The extended bull market
I will need to find a way to survive. Part time work. Move in with a friend. Reduce expenses. I don't have a magic bullet, do you? My magic 8 ball isn't working.Leesbro63 wrote: ↑Sat Dec 23, 2017 3:31 pmI fully understand what you are saying. But I don't think you understand what I am saying. What if the crash isn't a crash, but a 10 year grind down. You keep selling safe assets (bonds) and buying more stocks...that keep going down. How long do you think you'll stick to your plan?Dottie57 wrote: ↑Sat Dec 23, 2017 12:59 pmI mean that rebalancing will happen when my asset allocation is out of whack according to IPS. I assume a crash/downturn will force the rebalance due to changes in allocation.Leesbro63 wrote: ↑Sat Dec 23, 2017 12:48 pmCan you elaborate? What you think you’re gonna do is easier said than done. You’re making a “Pascal’s Wager”. Because you don’t know when a crash is over. Crash to DOW 20,000? Rebal then? Ok, DOW goes to 14,000. Rebal yet again? Now to 10,000 and it stays around there for your remaining lifetime. Your retirement is toast!Dottie57 wrote: ↑Sat Dec 23, 2017 7:53 amtennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
I am retiring in 2018. Retirement is the only factor which has influenced my investing. I have 50/50 allication in stocks to bonds. I have 5 years cash equivalents i. FI. i don't want to sell stocks when they are down (sequence of events risk)
Stocks will crash. Iwill rebalance when that happens.
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Re: The extended bull market
I'm still accumulating for the next 10 - 15 years. My job is recession proof.
10 years of grinding down or a steep crash without recovery would suit me well... followed by the godfather of all bull markets preferably
10 years of grinding down or a steep crash without recovery would suit me well... followed by the godfather of all bull markets preferably
Re: The extended bull market
Dottie57 wrote: ↑Sat Dec 23, 2017 3:41 pmI will need to find a way to survive. Part time work. Move in with a friend. Reduce expenses. I don't have a magic bullet, do you? My magic 8 ball isn't working.Leesbro63 wrote: ↑Sat Dec 23, 2017 3:31 pmI fully understand what you are saying. But I don't think you understand what I am saying. What if the crash isn't a crash, but a 10 year grind down. You keep selling safe assets (bonds) and buying more stocks...that keep going down. How long do you think you'll stick to your plan?Dottie57 wrote: ↑Sat Dec 23, 2017 12:59 pmI mean that rebalancing will happen when my asset allocation is out of whack according to IPS. I assume a crash/downturn will force the rebalance due to changes in allocation.Leesbro63 wrote: ↑Sat Dec 23, 2017 12:48 pmCan you elaborate? What you think you’re gonna do is easier said than done. You’re making a “Pascal’s Wager”. Because you don’t know when a crash is over. Crash to DOW 20,000? Rebal then? Ok, DOW goes to 14,000. Rebal yet again? Now to 10,000 and it stays around there for your remaining lifetime. Your retirement is toast!Dottie57 wrote: ↑Sat Dec 23, 2017 7:53 am
I am retiring in 2018. Retirement is the only factor which has influenced my investing. I have 50/50 allication in stocks to bonds. I have 5 years cash equivalents i. FI. i don't want to sell stocks when they are down (sequence of events risk)
Stocks will crash. Iwill rebalance when that happens.
Perhaps there IS a magic bullet. Or at least half of one. This issue was discussed extensively during and just after the financial crisis. And that is that people with portfolios in withdrawal (folks in retirement) probably should not rebalance from bonds to stocks ever. Google “Pascal’s Wager”. If you sell your safe asset, bonds, to rebalance up the risky asset class, stocks, you will get a better return if you live long enough for stocks to recover. But the downside risk is greater in magnitude than that potential reward. Because if the bear market in stocks grinds on longer than you grind on, and there are many periods where this has happened, you die financially before you die physically. If stocks crash and don’t come back, at least you have your bonds to get by on, as long as you are not rebalancing from bonds to stocks in retirement. But if you keep selling those bonds and buying more declining stocks, you risk getting totally wiped out and negate a lifetime of saving and investing. The risk of this might not be great, but the magnitude of the consequences is so great that it’s probably not worth the risk for most ( unless you have a big pension or other safety net outside the portfolio).
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Re: The extended bull market
No changes. I'm a Class of 2017 Retiree at 60. My planning included the assumption that the market could tank by 30% to 50% sometime in the next ten years, i.e., 2008 level crash repeat. To me, the extension of the bull run is adding more and more cushion to the eventual downturn.tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 am Since we're in one of the longest bull markets in US history, I was wondering if it has influenced the way any of you are currently investing? Is there anything you are doing more/less of or have changed what you were doing in the past?
Our planning is based on the ability of our investments to fund our needed income stream. Whether the investments can fund 120% or 180% of the need is irrelevant. Any safe withdrawal rate that is over our income requirement is gravy.
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Re: The extended bull market
Not much. I guess the only thing we did was "sanity check" our AA relative to our debts and adjusted accordingly. But I think you can argue that this was a good idea regardless of where the market was.
For example, I did end up paying off our mortgage about a year ago. I just decided I would not be able to mentally handle a large loss in the market while still having a mortgage, and that I would never forgive myself for having passed up an opportunity to be debt free in that event. I used to check the market constantly and worry about it all the time, actually - especially with the news media consistently highlighting the perceived risk due to the long bull run.
So we paid the mortgage and rebalanced the remaining amount (along with all future amounts, including the former mortgage payment) between 60-70% equities and balance in bonds. And now? I sleep great, secure in the knowledge that I'm putting my money to the best use possible. If the market does drop out, I'll be able to say to myself that I did the best I could with the info I had. Works for me!
For example, I did end up paying off our mortgage about a year ago. I just decided I would not be able to mentally handle a large loss in the market while still having a mortgage, and that I would never forgive myself for having passed up an opportunity to be debt free in that event. I used to check the market constantly and worry about it all the time, actually - especially with the news media consistently highlighting the perceived risk due to the long bull run.
So we paid the mortgage and rebalanced the remaining amount (along with all future amounts, including the former mortgage payment) between 60-70% equities and balance in bonds. And now? I sleep great, secure in the knowledge that I'm putting my money to the best use possible. If the market does drop out, I'll be able to say to myself that I did the best I could with the info I had. Works for me!
Re: The extended bull market
Nope.tennisplyr wrote: ↑Sat Dec 23, 2017 7:17 amIs there anything you are doing more/less of or have changed what you were doing in the past?
I'm 65 and have been retired 2.5 years.
Re: The extended bull market
We hear this "nobody knows nothing" phrase a lot these days - and I fully agree with that.
But.. we do know a few things:
But.. we do know a few things:
- Volatility in the stock market has been basically absent in 2017
- Geopolitical risks may be being ignored
- P/E ratios are on the higher end of the range
Re: The extended bull market
Even if you know nothing you still have to decide whether to follow your old strategy or to change your strategy due to new circumstances. Moving money may lead to an error of commission; leaving money in place may lead to an error of omission. "To move, or not to move, that is the question" (William Shakespeare)
Victoria
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Winner of the 2015 Boglehead Contest. |
Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
Re: The extended bull market
I am just going to do what a Boglehead would do, stick with my AA and adjust my portfolio as needed.
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx
Re: The extended bull market
+1UpperNwGuy wrote: ↑Sat Dec 23, 2017 11:29 am No. I have a plan, and I will stay the course. I don't understand why so many participants in a Bogleheads forum keep getting spooked by market trends.
Stocks-80% || Bonds-20% || Taxable-VTI/VXUS || IRA-VT/BNDW
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Re: The extended bull market
I agree w all of this.Explorer wrote: ↑Sat Dec 23, 2017 6:34 pm We hear this "nobody knows nothing" phrase a lot these days - and I fully agree with that.
But.. we do know a few things:
- Volatility in the stock market has been basically absent in 2017
- Geopolitical risks may be being ignored
I think fear is absent in the stock market now. That is concerning.
- P/E ratios are on the higher end of the range
Minor quibble. The market has shown upside volatility in 2017? I.e. volatility but in a way we all like?
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Re: The extended bull market
from the IMF "The Year in Review: Global Economy in 5 Charts"
https://blogs.imf.org/2017/12/17/the-ye ... =sm-com-TWEquity valuations have continued their ascent and are near record highs, as central banks have maintained accommodative monetary policy settings amid weak inflation. This is part of a broader trend across global financial markets, where low interest rates, an improved economic outlook, and increased risk appetite boosted asset prices and suppressed volatility (as measured by the VIX, an index of volatility). While easier financial conditions bolstered growth momentum, they also pose risks if the search for yield extends too far.
Looking ahead to 2018
The bottom line: Don’t let a good recovery go to waste.
Re: The extended bull market
72/28 Stock Bond.
The Market takes care of asset allocation for me
The Market takes care of asset allocation for me
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Re: The extended bull market
One-sided moves are not considered volatility... you need up/down movementsValuethinker wrote: ↑Sun Dec 24, 2017 9:56 amI agree w all of this.Explorer wrote: ↑Sat Dec 23, 2017 6:34 pm We hear this "nobody knows nothing" phrase a lot these days - and I fully agree with that.
But.. we do know a few things:
- Volatility in the stock market has been basically absent in 2017
- Geopolitical risks may be being ignored
I think fear is absent in the stock market now. That is concerning.
- P/E ratios are on the higher end of the range
Minor quibble. The market has shown upside volatility in 2017? I.e. volatility but in a way we all like?
Re: The extended bull market
I do admit you have a point. Pascal's Wager is quite iffy in this situation , since Pascal Was concerned woth eternity and there are some logical flaws since he is obviously using only Christian ideas of Go). Mods - No more God talk.Leesbro63 wrote: ↑Sat Dec 23, 2017 4:03 pmDottie57 wrote: ↑Sat Dec 23, 2017 3:41 pmI will need to find a way to survive. Part time work. Move in with a friend. Reduce expenses. I don't have a magic bullet, do you? My magic 8 ball isn't working.Leesbro63 wrote: ↑Sat Dec 23, 2017 3:31 pmI fully understand what you are saying. But I don't think you understand what I am saying. What if the crash isn't a crash, but a 10 year grind down. You keep selling safe assets (bonds) and buying more stocks...that keep going down. How long do you think you'll stick to your plan?Dottie57 wrote: ↑Sat Dec 23, 2017 12:59 pmI mean that rebalancing will happen when my asset allocation is out of whack according to IPS. I assume a crash/downturn will force the rebalance due to changes in allocation.Leesbro63 wrote: ↑Sat Dec 23, 2017 12:48 pm
Can you elaborate? What you think you’re gonna do is easier said than done. You’re making a “Pascal’s Wager”. Because you don’t know when a crash is over. Crash to DOW 20,000? Rebal then? Ok, DOW goes to 14,000. Rebal yet again? Now to 10,000 and it stays around there for your remaining lifetime. Your retirement is toast!
Perhaps there IS a magic bullet. Or at least half of one. This issue was discussed extensively during and just after the financial crisis. And that is that people with portfolios in withdrawal (folks in retirement) probably should not rebalance from bonds to stocks ever. Google “Pascal’s Wager”. If you sell your safe asset, bonds, to rebalance up the risky asset class, stocks, you will get a better return if you live long enough for stocks to recover. But the downside risk is greater in magnitude than that potential reward. Because if the bear market in stocks grinds on longer than you grind on, and there are many periods where this has happened, you die financially before you die physically. If stocks crash and don’t come back, at least you have your bonds to get by on, as long as you are not rebalancing from bonds to stocks in retirement. But if you keep selling those bonds and buying more declining stocks, you risk getting totally wiped out and negate a lifetime of saving and investing. The risk of this might not be great, but the magnitude of the consequences is so great that it’s probably not worth the risk for most ( unless you have a big pension or other safety net outside the portfolio).
I am to retire at the beginning of March. Since I have a severance package through end of year and had planned to work 2.5 years more, I hadn't thought about rebalancing in retirement a lot. Withdrawl of funds , yes, but no rebalancing. I have to start thinking of changes retirement to my thinking in new status.
I would hope most would not keep doing something that was not working. I've thought a lot about purchasing an SPIA AT 70 or so. I suspect the business tax cut will buoy the stock market by quite a bit this year. If his happens, I will tax gain harvest.
I hope I stay sharp enough to realize as situations change, strategies may need to change.
Food for thought. Thanks.
Re: The extended bull market
Regardless of its origin, the term “Pascal’s Wager” has been used in finance discussions at least since the financial crisis. In reference to the unpleasant possibility of getting into a financial situation where you can’t bear the loss of the wager. Continuing to sell safe assets, to buy more risky assets, is that if you are in retirement with no “new” money coming in and a relatively short life expectancy.