Over rebalancing towards stocks during this market decline: good idea?

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thibaulthib
Posts: 103
Joined: Mon Nov 12, 2018 8:46 am

Over rebalancing towards stocks during this market decline: good idea?

Post by thibaulthib » Thu Mar 26, 2020 7:55 am

Hello BH!

I'm 30 yo, my current AA is 80/20 and I found out after this 35% market decline, that my risk tolerance is quite high.

I would like to over rebalance from 80/20 to something more aggressive towards stocks, but not "over-bet" either. I believe this market decline is a great opportunity to do so.

For every 10% decline I'm thinking of over-rebalancing by 2%, which today would lead me to 86/14.

What do you think about such "strategy" ? Does it still make sense to hold bonds if its allocation is less than 20% ?

Thanks
Last edited by thibaulthib on Thu Mar 26, 2020 7:59 am, edited 1 time in total.

3funder
Posts: 1253
Joined: Sun Oct 15, 2017 9:35 pm

Re: Over rebalancing toward stocks during this market decline: good idea?

Post by 3funder » Thu Mar 26, 2020 7:58 am

It's not necessarily bad. I'm 35, and I did something similar. That said, it was probably unnecessary and isn't likely to make a material difference in my ability to achieve my financial goals.

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