I cant "Stay the Course" - Rebalance/IPS

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confusedinvestor
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I cant "Stay the Course" - Rebalance/IPS

Post by confusedinvestor »

Folks,

Is there anyone who is NOT Rebalancing per their IPS Rebalance Band % and/or Time ?

What is the reason you are Rebalancing or NOT Rebalancing ?

eg: I'm 45 yrs, 12 yrs away from retirement, I'm 75:25 today with 1M portfolio and, today, I'm 68:32 but I'm having a hard time sell 7% bond and buy 7% stocks which is $70K per my IPS Rebalance Band of 5% drift...…..Does this mean I'm FAILING to 'Stay the Course' ?

Note: My IPS says to glide 2% every Dec until it reaches 60:40 or ReBal 5% Absolute

Does this mean I'm failing as a Boglehead as I cant stick to my Rebalance Band per my IPS ?

I'd like to hear some wisdom from experienced BHs who is following or Not following the IPS Rebalance during such challenging times...

ps: I already directed my and DW 401K max contributions to 100% stocks for the rest of the year until IPS mandated AA review in Dec.
Last edited by confusedinvestor on Fri Mar 20, 2020 11:25 pm, edited 1 time in total.
ML 59
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by ML 59 »

Take a deep breath. It's Friday afternoon. No need to do anything today that can wait until Monday. Take some time over the weekend to re-study the pros and cons of rebalancing. Read your IPS carefully and think about why you wrote it at the time you wrote it. Re-visit why you specifically included your rebalance rule(s).

The more you learn and understand about the mechanics of finance, the more you can distance yourself from emotions and reactionary actions - or in this case not acting. Re-evaluate your risk tolerance if necessary. If all else fails, just don't do anything. Several percentage points won't make much difference in the longer run.

All of this will pass and life will go on. Stay safe.
retired@50
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by retired@50 »

Selling some stocks after a bull run and using the proceeds to buy some bonds is a lot easier than selling some bonds after a downturn and using the proceeds to buy stocks. It takes courage, and an adequate supply of bonds, and an adequate emergency fund, and a secure job to re-balance in a market like we're seeing now. In my own case, I'm nearing my re-balancing band, but have not yet met it, so I don't know if I personally have the courage or not.

Regards,
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BillyK
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by BillyK »

My IPS includes a statement not to rebalance by selling fixed income during a market crash. Past crashes have driven home the point to me that the market bottoms can be a long way down. An overweighting in fixed income assets is less disconcerting to me than an overweighting in equities. Ultimately, I view rebalancing as a means of risk control, more so than a means to pick up more equities on the cheap. However, I will invest all new monies into equities as a means of rebalancing.
Unladen_Swallow
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Unladen_Swallow »

confusedinvestor wrote: Fri Mar 20, 2020 2:50 pm Does this mean I'm failing as a Boglehead as I cant stick to my Rebalance Band per my IPS ?
I'd like to say one thing. Being a Boglehead is the least of your concerns - as it should be. Your concern is your financial and mental health. This community is very valuable in sharing ideas and experiences, and we benefit from it.

That being said, it is wise to reevaluate your risk tolerance, your behaviour, and your goals. This pandemic has made many face reality which until now was just a hypothetical "I'm ready to face a 50% drawdown...no problem" situation.

I could tell you to rebalance. It will help you. It is the right thing to do. It will be beneficial. Etc etc. But the decision should be yours. At the moment you are scared and can't trust. So perhaps your AA is changing to the AA it should have always been.

Rules and advice written on paper mean nothing unless our behaviour, personal fears and risk tolerance are in sync.

Before making any moves, take some time for introspection. Read threads, articles, make your own spreadsheets etc. Then see if you want to rebalance or not. Following a rule that makes you deathly afraid will only result in panic decisions. There can be a balance.

I am 45yrs old and planned to evaluate retirement in 5 years, with some flexibility in date and spending. I am 100% stock, my current losses are nightmarish. I constantly review my strategy, my goals, my current situation etc. I keep an open mind to change. There are no sacred cows. At this moment I am still good with carrying on the same way. So I am.

Don't make any moves right now. Sit on it. Let it marinate. If the market goes up, you won't have to make changes. If the market goes down, you will still have opportunity to rebalance.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman
7eight9
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by 7eight9 »

There is a point in time where one comes to a floor of fixed assets that they are not willing to gamble invest in equities. I don't personally see a failure to follow your IPS as a failure. Odds are when you wrote it you weren't contemplating a world-wide pandemic which would effectively shut down large sections of the economy and throw the country into a likely recession. Now that you have new information it makes sense to consider the information and make changes as appropriate. Including not rebalancing. Good luck in your decision.
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mrspock
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by mrspock »

I rebalanced today, it definitely was harder mentally that buying up bonds last year, especially since I had to sell my VWITX bonds at a small loss to execute my plan. But after I did it, I felt pretty good, it will be good for a 6 figure *tax free* gain courtesy of the TLH'ing once we get back to even .... hard to feel bad about an investment like that. Right now a dollar invested returns 40% once we get back to even -- which we will!

I also upped my 401k/Roth contributions by 40%, to accelerate my 401k purchases over the next few months.

Taking these actions give me a sense of control over some variables in this equation, when there are so many others I don't control. I don' think the next rebalance is until somewhere around -45% or so I'll go back to eating popcorn for a while.

Good luck everyone, these are trying times but we'll all get to the other side.
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Sandtrap
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Sandtrap »

Also consider only partial rebalancing to a different (perhaps more conservative) allocation over time if you choose to modify your IPS.
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JoMoney
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by JoMoney »

I don't really use a constant-mix allocation, so there's no need to rebalance... even if I did, if I followed it on an annual schedule I would rebalance once a year.. that's it... the rest of the time, just get on with other unrelated to your portfolio.
Being a "passive" investor shouldn't involve making adjustments too often.
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WoodSpinner
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by WoodSpinner »

OP,

Going through some similar tribulations. Would be interested in your take on this post. Still struggling, but much less concerned at this point.

In the end, it’s not nearly as an important issue as we think it is.

WoodSpinner
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confusedinvestor
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by confusedinvestor »

Thanks. I need to take a hard look at my IPS Rebalance policy, maybe - i'll put a 1 way rebalance band like many BH Retirees do, less upside potential but better drawdown or downward protection.

thanks again!
Sandtrap wrote: Fri Mar 20, 2020 3:17 pm Also consider only partial rebalancing to a different (perhaps more conservative) allocation over time if you choose to modify your IPS.
j :happy
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iceport
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by iceport »

A few quick comments, confusedinvestor (before I head off for a short immune system boosting hike...):

1) You don't need to rebalance all the way back to your targets. It's not all-or-nothing.
2) You might want to get used to directing all new contributions to only those funds that are below target. It won't fix the kind of crash we're experiencing right now, but it helps — particularly if you're maxing out all your contribution limits.
3) Larry Swedroe used to speak of not rebalancing after a crash as a minor sin, compared to the mortal sin of capitulation and bailing on equities near the bottom. I tend to agree. You might still regret not rebalancing fully when it's all over, but not nearly as much as if you had actually dumped equities at fire sale prices.

Good luck!
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snowman
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by snowman »

I did it 2 days ago. You have to be ruthless, unemotional about it. It's just numbers. But it's hard, I give you that. My wife said I am crazy, I said what else is new. She knows the drill, been together almost 30 years, yet she gets terrified every time. She asked if we will be OK, I said yes, we will be, and that was that.
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Sandtrap
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Sandtrap »

iceport wrote: Fri Mar 20, 2020 3:45 pm A few quick comments, confusedinvestor (before I head off for a short immune system boosting hike...):

1) You don't need to rebalance all the way back to your targets. It's not all-or-nothing.
2) You might want to get used to directing all new contributions to only those funds that are below target. It won't fix the kind of crash we're experiencing right now, but it helps — particularly if you're maxing out all your contribution limits.
3) Larry Swedroe used to speak of not rebalancing after a crash as a minor sin, compared to the mortal sin of capitulation and bailing on equities near the bottom. I tend to agree. You might still regret not rebalancing fully when it's all over, but not nearly as much as if you had actually dumped equities at fire sale prices.

Good luck!
+1
Good points.
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gr7070
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by gr7070 »

I'm 48 a 75:25 AA and just last night put in my rebalance order. Ignoring the real world impact on all out there I'm happy the DOW didn't jump today.

Monday the DOW can run up and Corona can disappear...
hopefully

I would absolutely rebalance this weekend and capture the discount. You're, far away from withdrawing any.
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gr7070
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by gr7070 »

BTW you're only talking $70,000 of $1M. Meh. If the market went down another 50%!! it's only another $35k. And it's not like your total bond fund is going up. So The net loss is something less than that 35k.

Go rebalance.
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Ged »

confusedinvestor wrote: Fri Mar 20, 2020 2:50 pm Folks,

Is there anyone who is NOT Rebalancing per their IPS Rebalance Band % and/or Time ?

What is the reason you are Rebalancing or NOT Rebalancing ?
When I got close to retirement I changed my IPS to exclude re-balancing into stocks because of the example of the market crash and long time to recover in Japan. Re-balancing into bonds is still on the table, and in fact I've been doing that as stocks have increased in value over the past few years.

I think the answer is that you need to look at your age when you set this policy.
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by ishkadetto »

gr7070 wrote: Fri Mar 20, 2020 4:02 pm BTW you're only talking $70,000 of $1M. Meh. If the market went down another 50%!! it's only another $35k. And it's not like your total bond fund is going up. So The net loss is something less than that 35k.

Go rebalance.
This reframing was actually extremely helpful for me as I am in a similar mental position as OP. I will rebalance Monday. Thank you :)
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Call_Me_Op »

Since I am getting close to retirement, my IPS says that I "may" rebalance if I reach a rebalancing threshold - not that I "must." You can build flexibility into your IPS, but the best time to do it is before a crisis. That said, it does not say I can sell stocks after they have tanked.
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by jumppilot »

OP,

I increased my stock allocation this week for my 401k.

Who knows the the future will bring, but history has shown that this is where the real money is made.

I plan to go 100% stocks if the market falls further. If it doesn’t, I still have more stock exposure than I did 1 month ago.

I don’t have an ISP, but I do have 20 years until I can touch my 401k money. I’ll report back in 2040.
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Grt2bOutdoors »

You don't have to re-balance in one fell swoop. You could do it in increments, say $5K at a time, your gains could be as much as 50% but if it went down another 50% you'd only be down $2,500. You could frame your thoughts like that. Our retirement plan is on auto-pilot, it will rebalance quarterly back to the stated allocation. My other accounts are not automatic and my rebalancing has been more controlled, doing as I suggested above, moving money in set increments back into equities.
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by rbaldini »

confusedinvestor wrote: Fri Mar 20, 2020 2:50 pm Does this mean I'm FAILING to 'Stay the Course' ?
Yes, it does. But that doesn't make you a bad person. Perhaps you have learned, rationally, that you need a more conservative portfolio? Or maybe that is just your brain rationalizing a decision made by your gut? Who knows?
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Rosencrantz1 »

snowman wrote: Fri Mar 20, 2020 3:47 pm I did it 2 days ago. You have to be ruthless, unemotional about it. It's just numbers. But it's hard, I give you that. My wife said I am crazy, I said what else is new. She knows the drill, been together almost 30 years, yet she gets terrified every time. She asked if we will be OK, I said yes, we will be, and that was that.
+1 except my wife wants to buy MORE stock (I think she wants to adjust our 70/30 up to 80/20)
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Quaestner »

7eight9 wrote: Fri Mar 20, 2020 3:13 pm There is a point in time where one comes to a floor of fixed assets that they are not willing to gamble invest in equities.
+1. I rebalanced this week, but I know there could be a point coming when I won't rebalance. That point is written into our IPS. Rebalance, but know your limit, is my advice.
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zaboomafoozarg
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by zaboomafoozarg »

One option is to change your 401k contributions to be all stocks for a while.
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Kenkat
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Kenkat »

What has worked for me before is to:

1) switch all new purchases to 100% equities
2) if I can’t bring myself to do a 7% rebalance in one fell swoop, do 1% a month for the next 7 months. It doesn’t have to happen all at once if you’re going to stress out after it’s done and the market continues to fall.
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by averagedude »

I would recommend that you follow your IPS. If this seems impossible, perhaps you could nibble a bit by taking your 68/32 to 70/30. A week or two later, if the market is still falling, perhaps nibble to 72/28. I believe over the long term, you will be glad you did so. I'm sure you was buying 2 months ago. Wouldn't you rather buy stocks at lower prices instead of inflated prices?
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Tamarind
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Tamarind »

I recently rebalanced. I have the same target AA as you, though I'm a few years further from retiring. I took a deep breath before pulling the trigger. But rebalancing is, I believe, the right thing to do.

You wrote your IPS in the belief that crashes would happen, yes? Well, here one is. The data that leads to BH recommendations for bonds and rebalancing and staying the course includes wars, disease, and the collapse of nations. While this time is a little different, it is not so different as all that.
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by bgf »

my funds, target date and balanced, automatically rebalance for me.

its nice.
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confusedinvestor
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by confusedinvestor »

Thank you.

That is exactly what I was thinking today. "Nibble/Glide/Average out my rebalance" back to my IPS mandated AA.

If I cant enforce my IPS during such crash, I'm failing as a disciplined non-emotional investor.

I plan to rebalance back to 70/30 on Monday and maybe I will feel better that I'm "within" my rebalance band per my IPS

This crash is exposing "holes" in my IPS. Oh well...

averagedude wrote: Fri Mar 20, 2020 8:06 pm I would recommend that you follow your IPS. If this seems impossible, perhaps you could nibble a bit by taking your 68/32 to 70/30. A week or two later, if the market is still falling, perhaps nibble to 72/28. I believe over the long term, you will be glad you did so. I'm sure you was buying 2 months ago. Wouldn't you rather buy stocks at lower prices instead of inflated prices?
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confusedinvestor
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by confusedinvestor »

Now, I think BH 3 Fund Asset location Tax advantages, TLH benefits, challenges of sticking to rebalance bands etc may not yield long term "complexity premiums" vs simple Target date funds.
bgf wrote: Fri Mar 20, 2020 8:20 pm my funds, target date and balanced, automatically rebalance for me.

its nice.
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by mhalley »

I’m retired with a 50/50 and 5% for band rebalancing but have chosen to not rebalance yet. This is not rational, but I believe we are in a catch a falling knife scenario and the market is going to continue to go down for a while. If I was accumulating I wouldn’t have a problem.
In the meantime, this you tube video on the history of bear markets might be soothing.
https://m.youtube.com/watch?v=SkE7w7DG16Q
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confusedinvestor
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by confusedinvestor »

Yes.

I maybe have more aggressive AA = Bonds = Age - 20 but I came up with this AA based on my need, else I may run of $ in retirement - maybe I just have to work longer...
rbaldini wrote: Fri Mar 20, 2020 5:10 pm
confusedinvestor wrote: Fri Mar 20, 2020 2:50 pm Does this mean I'm FAILING to 'Stay the Course' ?
Yes, it does. But that doesn't make you a bad person. Perhaps you have learned, rationally, that you need a more conservative portfolio? Or maybe that is just your brain rationalizing a decision made by your gut? Who knows?
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by CodeMaster »

confusedinvestor wrote: Fri Mar 20, 2020 2:50 pm Folks,

Is there anyone who is NOT Rebalancing per their IPS Rebalance Band % and/or Time ?

What is the reason you are Rebalancing or NOT Rebalancing ?

eg: I'm 45 yrs, 12 yrs away from retirement, I'm 75:25 today with 1M portfolio and, today, I'm 68:32 but I'm having a hard time sell 7% bond and buy 7% stocks which is $70K per my IPS Rebalance Band of 5% drift...…..Does this mean I'm FAILING to 'Stay the Course' ?

Note: My IPS says to glide 2% every Dec until it reaches 60:40 or ReBal 5% Absolute

Does this mean I'm failing as a Boglehead as I cant stick to my Rebalance Band per my IPS ?

I'd like to hear some wisdom from experienced BHs who is following or Not following the IPS Rebalance during such challenging times...
my friend went all out few weeks ago...

i sold around 15% in retirement fund to go cash as it dropped 1.5 weeks ago or so. have been buying individual tech stocks since to over weigh on tech and obvious oversold stocks.

got in uber at $15, tsla $400... still have plenty of ammo left, waiting for bigger crash to move in. this is life changing type times where you sohuld be greedy when people are fearful
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confusedinvestor
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by confusedinvestor »

Thanks, but, I'm not good in picking individual stocks and/or market timing. My friend made lot of $$$$$ in last few week in shorting the market with puts etc and I wish him good luck.

I am neither greedy nor fearful - I just want to stick to my IPS and my plan.

My post was my challenge in sticking to my rebalance bands per my IPS

CodeMaster wrote: Fri Mar 20, 2020 11:03 pm
got in uber at $15, tsla $400... still have plenty of ammo left, waiting for bigger crash to move in. this is life changing type times where you sohuld be greedy when people are fearful
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confusedinvestor
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by confusedinvestor »

+1

Thank you zaboomafoozarg

Yep, I already did that last week for my and DW 401Ks. and review the AA again in Dec. I will edit my original post to update this information. thanks again.

I plan to rebalance our portfolio back to 70:30 next week which will bring my portfolio back to my rebal band drift with target AA 75:25.

DW wants to talk to Schwab Planner / Financial Advisor before letting me do this rebalance - which I'm fine with me.

I feel much better now after your and everyone's feedback. :sharebeer

zaboomafoozarg wrote: Fri Mar 20, 2020 7:21 pm One option is to change your 401k contributions to be all stocks for a while.
Beliavsky
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Beliavsky »

confusedinvestor wrote: Fri Mar 20, 2020 2:50 pm Folks,

Is there anyone who is NOT Rebalancing per their IPS Rebalance Band % and/or Time ?

What is the reason you are Rebalancing or NOT Rebalancing ?

eg: I'm 45 yrs, 12 yrs away from retirement, I'm 75:25 today with 1M portfolio and, today, I'm 68:32 but I'm having a hard time sell 7% bond and buy 7% stocks which is $70K per my IPS Rebalance Band of 5% drift...…..Does this mean I'm FAILING to 'Stay the Course' ?

Note: My IPS says to glide 2% every Dec until it reaches 60:40 or ReBal 5% Absolute

Does this mean I'm failing as a Boglehead as I cant stick to my Rebalance Band per my IPS ?
Unconditional rebalancing out of bonds into stocks is too risky IMO, and I suggested an alternative in the thread Conditional rebalancing into stocks using VIX.
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confusedinvestor
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by confusedinvestor »

Thanks.

That was my concern that rebal now from 68:32 to 75:25 is taking more risk, given such volatile market and black swan events

that's why I was thinking to rebal gradually (eg 2% every 2 months ) and DCA my 401K contributions to 100% stocks and review my AA quarterly

Does this sound reasonable ?

Maybe this sounds too much tinkering with my portfolio. I don't understand VIX etc technical terms.
Beliavsky wrote: Fri Mar 20, 2020 11:24 pm
Unconditional rebalancing out of bonds into stocks is too risky IMO, and I suggested an alternative in the thread Conditional rebalancing into stocks using VIX.
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Beliavsky »

confusedinvestor wrote: Fri Mar 20, 2020 11:31 pm Thanks.

That was my concern that rebal now from 68:32 to 75:25 is taking more risk, given such volatile market and black swan events

that's why I was thinking to rebal gradually (eg 2% every 2 months ) and DCA my 401K contributions to 100% stocks and review my AA quarterly

Does this sound reasonable ?
Yes, that is in the same spirit as what I suggested. VIX is not going to stay above 30 forever, and my suggestion delays the rebalancing until it does.
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confusedinvestor
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by confusedinvestor »

Thanks, in simple words, ride the wave/ turbulence and do nothing, until things calm down - meaning - using a quantifiable metric of "wave" - VIX.

Gotcha.
Beliavsky wrote: Fri Mar 20, 2020 11:39 pm
confusedinvestor wrote: Fri Mar 20, 2020 11:31 pm Thanks.

That was my concern that rebal now from 68:32 to 75:25 is taking more risk, given such volatile market and black swan events

that's why I was thinking to rebal gradually (eg 2% every 2 months ) and DCA my 401K contributions to 100% stocks and review my AA quarterly

Does this sound reasonable ?
Yes, that is in the same spirit as what I suggested. VIX is not going to stay above 30 forever, and my suggestion delays the rebalancing until it does.
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9-5 Suited
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by 9-5 Suited »

JoMoney wrote: Fri Mar 20, 2020 3:18 pm I don't really use a constant-mix allocation, so there's no need to rebalance... even if I did, if I followed it on an annual schedule I would rebalance once a year.. that's it... the rest of the time, just get on with other unrelated to your portfolio.
Being a "passive" investor shouldn't involve making adjustments too often.
What is your non-constant-mix strategy?
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by michoco911 »

BillyK wrote: Fri Mar 20, 2020 3:09 pm My IPS includes a statement not to rebalance by selling fixed income during a market crash. Past crashes have driven home the point to me that the market bottoms can be a long way down. An overweighting in fixed income assets is less disconcerting to me than an overweighting in equities. Ultimately, I view rebalancing as a means of risk control, more so than a means to pick up more equities on the cheap. However, I will invest all new monies into equities as a means of rebalancing.
Yes but cash is even safer than bonds during this crash.
So why are you willing to invest new cash in equities while you dont accept to sell bonds to buy equity and rebalance.
I am not criticizing, just trying to understand as i always have this dilemma
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Ari
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Ari »

Isn't this what an IPS is for? To make decisions when you're not emotionally charged, rather than when emotions are running high? If you can deviate from it because of how you're feeling, it seems to me there's no point in writing an IPS at all.

Which, fair enough, you can come to the conclusion that having an IPS is not for you (I don't have one), but writing one and then deviating from it in times of stress sounds to me somewhat pointless.
All in, all the time.
north2016
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by north2016 »

Following my IPS, I always rebalance once a year on January 1st.
SandysDad
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by SandysDad »

The future is sometimes clear.

Here are some easy ones:
1. It is far more likely the stock market will be lower on Monday than it was on Friday because bad news piles up over the weekend. Only way it will be up Monday is if something really good happens over the weekend or during the day on Monday.

2. The market will be lower in a month or two than it is now. This is because most people are not working and are stuck in their houses. This results in people and companies going bankrupt.

On which planet exactly does this drive valuations to remain at December 2018 levels?
panhead
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by panhead »

confusedinvestor wrote: Fri Mar 20, 2020 2:50 pm Folks,

Is there anyone who is NOT Rebalancing per their IPS Rebalance Band % and/or Time ?

What is the reason you are Rebalancing or NOT Rebalancing ?

eg: I'm 45 yrs, 12 yrs away from retirement, I'm 75:25 today with 1M portfolio and, today, I'm 68:32 but I'm having a hard time sell 7% bond and buy 7% stocks which is $70K per my IPS Rebalance Band of 5% drift...…..Does this mean I'm FAILING to 'Stay the Course' ?

Note: My IPS says to glide 2% every Dec until it reaches 60:40 or ReBal 5% Absolute

Does this mean I'm failing as a Boglehead as I cant stick to my Rebalance Band per my IPS ?

I'd like to hear some wisdom from experienced BHs who is following or Not following the IPS Rebalance during such challenging times...

ps: I already directed my and DW 401K max contributions to 100% stocks for the rest of the year until IPS mandated AA review in Dec.
Yeah, I'm cheating a little too. I'm at 50:50 and I just hit my 5% band. I had some bonds in my Roth as the Mega Backdoor Roth was adding a lot of funds here, and I had to buy bonds in my Roth to try and control my AA. Before all of this, I was up to about 54:46. Once I hit the 45:55 rebalance trigger, I sold all the bonds in my Roth and rebalanced. Like some others here, I also switched all future 401k to equities from bonds where they were previously. This didn't get me back quite to 50:50, but i'm above my rebalance band anyway. I'm not going to do anything else for now except for check in each quarter to put my distributions to work.

When this is all over I think I may add a line in my IPS to keep "xx" number of years in bonds. Maybe related to how far off from social security I am. Still thinking through this.

So, do what you can that still lets you sleep. As long as you don't sell equities my bet is you'll be fine.
bgf
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by bgf »

confusedinvestor wrote: Fri Mar 20, 2020 10:21 pm Now, I think BH 3 Fund Asset location Tax advantages, TLH benefits, challenges of sticking to rebalance bands etc may not yield long term "complexity premiums" vs simple Target date funds.
bgf wrote: Fri Mar 20, 2020 8:20 pm my funds, target date and balanced, automatically rebalance for me.

its nice.
its just become so obvious to me over the past few weeks how true this is. if a 3 fund is managed electronically by a computer simply following algorithms or by another person who follows the IPS rules without any behavioral hesitation, then it might be better. we still don't know even in that situation because TDF and Balanced funds rebalance daily, and most 3 Funds rebalance with bands, quarterly, annually, etc. so you don't know which strategy will outperform in any given period. we do know that in that case the 3 fund has a bit of a head start based on the tiny advantages you listed.

but when it comes to being a normal person running a 3 fund for yourself/family in the real world, the kinds of behavioral errors we make during market panics, the mistakes we always have made and always will make, the size of the consequences of those errors easily outweigh years of the lower expense ratios and tax benefits of a 3 fund... they just get completely wiped out in one fell swoop.

this day and age, with TDF, balanced funds, betterment, etc. WE truly are the greatest risks to our portfolios. transaction costs of $0 and ETFs and Mutual Funds with expense ratios below 0.1% mean that focusing on the minutiae is really kind of missing the point.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"
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Leif
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Leif »

I've been TLH. The underwater equity I sold was sent to cash. I've been tracking how that has worked out for me. So far the money moved to cash, which I'm calling loss avoidance, is 5X higher than the tax savings I'll realize from selling my stock. At 31 days I'll reinvest. I learned in 08-09 that I don't want to catch a falling knife and then immediately queue up another knife. I will, however, start a new knife after one month.
Ferdinand2014
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by Ferdinand2014 »

confusedinvestor wrote: Fri Mar 20, 2020 2:50 pm Folks,

Is there anyone who is NOT Rebalancing per their IPS Rebalance Band % and/or Time ?

What is the reason you are Rebalancing or NOT Rebalancing ?

eg: I'm 45 yrs, 12 yrs away from retirement, I'm 75:25 today with 1M portfolio and, today, I'm 68:32 but I'm having a hard time sell 7% bond and buy 7% stocks which is $70K per my IPS Rebalance Band of 5% drift...…..Does this mean I'm FAILING to 'Stay the Course' ?

Note: My IPS says to glide 2% every Dec until it reaches 60:40 or ReBal 5% Absolute

Does this mean I'm failing as a Boglehead as I cant stick to my Rebalance Band per my IPS ?

I'd like to hear some wisdom from experienced BHs who is following or Not following the IPS Rebalance during such challenging times...

ps: I already directed my and DW 401K max contributions to 100% stocks for the rest of the year until IPS mandated AA review in Dec.
I don't rebalance. Per my IPS. I keep enough cash (3 years expenses) and invest everything else in a low cost S&P 500 index fund every Friday set to autoinvest. I could care less if my cash (T-bills) represents 5% or 50% of my portfolio. I do care that it represents 3 years of expenses though. No decisions to make.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
bgf
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Re: I cant "Stay the Course" - Rebalance/IPS

Post by bgf »

Ferdinand2014 wrote: Sat Mar 21, 2020 11:03 am
confusedinvestor wrote: Fri Mar 20, 2020 2:50 pm Folks,

Is there anyone who is NOT Rebalancing per their IPS Rebalance Band % and/or Time ?

What is the reason you are Rebalancing or NOT Rebalancing ?

eg: I'm 45 yrs, 12 yrs away from retirement, I'm 75:25 today with 1M portfolio and, today, I'm 68:32 but I'm having a hard time sell 7% bond and buy 7% stocks which is $70K per my IPS Rebalance Band of 5% drift...…..Does this mean I'm FAILING to 'Stay the Course' ?

Note: My IPS says to glide 2% every Dec until it reaches 60:40 or ReBal 5% Absolute

Does this mean I'm failing as a Boglehead as I cant stick to my Rebalance Band per my IPS ?

I'd like to hear some wisdom from experienced BHs who is following or Not following the IPS Rebalance during such challenging times...

ps: I already directed my and DW 401K max contributions to 100% stocks for the rest of the year until IPS mandated AA review in Dec.
I don't rebalance. Per my IPS. I keep enough cash (3 years expenses) and invest everything else in a low cost S&P 500 index fund every Friday set to autoinvest. I could care less if my cash (T-bills) represents 5% or 50% of my portfolio. I do care that it represents 3 years of expenses though. No decisions to make.
people can quibble with you over "mental accounting" and this and that, but the bold is what matters. stay invested and minimize action and decisionmaking. far more important to "optimize behavior" than optimize most of the other little quibbles we used to fight over til the world started unraveling.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"
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