Asset Allocation-What have you learned about yourself?

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PoultryMan
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Asset Allocation-What have you learned about yourself?

Post by PoultryMan »

I understand AA is a highly personal matter with no right or wrong guidelines (Well, some general guidelines). Having said this, what have you learned about yourself over the years that maybe surprised you? For example, I have found I am WAY more conservative on my risk tolerance than I was 10 years ago.

TO make this actionable I would say NEVER to have all equities as I did back in 2008. Thats a good example of where I have changed.
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Toons
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Re: Asset Allocation-What have you learned about yourself?

Post by Toons »

To
Know Thyself
Is Most Important.
Kudos to you

: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
Dottie57
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Re: Asset Allocation-What have you learned about yourself?

Post by Dottie57 »

I am conservative in allocation.

Never go all in on one specific position: all stocks, all bonds etc. hedge your bets.

I get way too invested in a given tock if I purchased it. It drives me nuts to watch the daily ups and down - much better with index funds.
flaccidsteele
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Re: Asset Allocation-What have you learned about yourself?

Post by flaccidsteele »

PoultryMan wrote: Fri Sep 11, 2020 12:05 pm I understand AA is a highly personal matter with no right or wrong guidelines (Well, some general guidelines). Having said this, what have you learned about yourself over the years that maybe surprised you? For example, I have found I am WAY more conservative on my risk tolerance than I was 10 years ago.

TO make this actionable I would say NEVER to have all equities as I did back in 2008. Thats a good example of where I have changed.
I was indoctrinated by Warren Buffett’s writings in the 80s and 90s: Pro-US, be greedy when others are fearful, etc.

He never discussed rebalancing or pre-set asset allocations so I took them as unimportant.

From my experience Buffett has been correct and portfoliovisualizer has shown it to be true - pre-set asset allocation and rebalancing offers no financial benefit in long term volatility management, risk or performance.

They only increase complexity

I started investing in the 1990s and my methods haven’t changed. I invest regularly and I buy more during crashes (dot com, credit crisis, US housing crash, virus crisis, etc.)

Retired in my 40s

What have I learned over time?

I learned that Buffett’s and Bogle’s ideas (pro-US stocks, be greedy when others are fearful, US market always recovers (implicit in all their advice), etc) is a simple way to win the game

In retrospect, investing has been and continues to be, mindlessly simplistic. Like whack-a-mole

Actionable: I decided to go on social media to increase the financial literacy of the next generation. I have 50,000 followers who watch my 1400+ videos and live streams, and I’ve been invited to speak on a few podcasts. It’s been fun contributing
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
asif408
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Re: Asset Allocation-What have you learned about yourself?

Post by asif408 »

I learned I underestimated my risk tolerance initially (which is a good thing; apparently more people overestimate their risk tolerance). I started out with 30-40% in bonds when I began really learning and handling my own investments about 7 years ago. I've gradually upped my stock allocation over the last several years, and am now 100% in stocks.
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9-5 Suited
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Re: Asset Allocation-What have you learned about yourself?

Post by 9-5 Suited »

I heard this from another Boglehead poster first, but definitely one thing that sticks with me is that the right allocation is when you go back and forth between thinking you have too much vs. too little in a given asset class. I've now learned to read the noise of that oscillation as a signal that I've got the right setup, which was fairly liberating mentally. I've also had times where I consistently felt I was too light or heavy in a particular area, and made changes after ~6 months of having the same feeling. Like I used to be 20% small value, felt it was too much, too much, too much, so made it 15%. I like to make small changes, which perhaps is another thing I've found about myself. Big shifts make me uncomfortable.
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Re: Asset Allocation-What have you learned about yourself?

Post by tennisplyr »

That I'm tremendously strong-minded. Been in the market for roughly 30 years and no matter how severely the market drops, it doesn't seem to faze me....and I don't have millions. Guess I have a strong belief that no matter what life deals me, I can handle it.
Those who move forward with a happy spirit will find that things always work out.
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zaboomafoozarg
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Re: Asset Allocation-What have you learned about yourself?

Post by zaboomafoozarg »

I'm not a smart man
Explorer
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Re: Asset Allocation-What have you learned about yourself?

Post by Explorer »

I have learnt that the AA my "eyes" like, my "stomach" does not. The GFC 12 years ago did not faze me (I was that much younger), but the Feb/Mar 2020 did.

Fortunately, I did not sell a single thing in the midst of the storm... but... recently I retooled my AA to a level my stomach agrees with.

Thanks for starting this thread.
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Re: Asset Allocation-What have you learned about yourself?

Post by guppyguy »

I've learned that asset allocation only works if you stop reading about other asset allocation models and just leave your investments alone...for a very long time.

In fact, I now really don't have an AA. I think, at least for me, there was too much of a tendency to think of the AA/rebalancing part as an active strategy, like I was going to outsmart everybody else with my superior spreadsheet or something. I traded individual stocks a long time ago, and can recognize the similarities in self-destructive behavior now.

Just pick a strategy and sit on your hands.....
corp_sharecropper
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Re: Asset Allocation-What have you learned about yourself?

Post by corp_sharecropper »

guppyguy wrote: Fri Sep 11, 2020 5:32 pm I've learned that asset allocation only works if you stop reading about other asset allocation models and just leave your investments alone...for a very long time.

In fact, I now really don't have an AA. I think, at least for me, there was too much of a tendency to think of the AA/rebalancing part as an active strategy, like I was going to outsmart everybody else with my superior spreadsheet or something. I traded individual stocks a long time ago, and can recognize the similarities in self-destructive behavior now.

Just pick a strategy and sit on your hands.....
I agree with you and I think bogleheads.org is almost a paradox for many/most. First you don't really know what to do or what you've even been doing. Then you end up here and fix your situation, having been indoctrinated or won over by a 3 fund portfolio. Next you keep lingering on bogleheads and read conversations about factors, leverage, rebalancing strategies, interest rates, tax optimization strategies. Before you know it you are convinced that 3 fund portfolios are boring and suboptimal so you decide to try something more complex like a factor tilt. Then you decide on a different, boglehead recommended AA that you just read a compelling post about. Rinse and repeat. After awhile, and possibly after some behavioral damage inflicted on your portfolio you realize that your balance would be higher if you had just continued with that target date fund you were using before you even heard about bogleheads.org.
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Re: Asset Allocation-What have you learned about yourself?

Post by DaufuskieNate »

My risk tolerance is higher than I thought, allowing me to reduce my allocation to fixed income. The experiences of the dotcom and U.S. housing market bubbles have made me very adverse to speculative excess, leading to a focus on value investing and broad diversification. The underperformance of value has taught me that I am more than willing to stay the course with a well-thought-out strategy.
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Re: Asset Allocation-What have you learned about yourself?

Post by flaccidsteele »

guppyguy wrote: Fri Sep 11, 2020 5:32 pm I've learned that asset allocation only works if you stop reading about other asset allocation models and just leave your investments alone...for a very long time.

In fact, I now really don't have an AA. I think, at least for me, there was too much of a tendency to think of the AA/rebalancing part as an active strategy, like I was going to outsmart everybody else with my superior spreadsheet or something. I traded individual stocks a long time ago, and can recognize the similarities in self-destructive behavior now.

Just pick a strategy and sit on your hands.....
+1 ^bingo
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
rockstar
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Re: Asset Allocation-What have you learned about yourself?

Post by rockstar »

AA doesn't matter. Having a plan matters that you can act on matters. Following through on the plan is as important as having one. Buy and forget is a terrible idea. Stressing about corrections accomplishes nothing. I can't call tops. I can't call bottoms. What worked in the past might not work in the future. Chasing after what's not working usually ends badly for me. Chasing after what's working generally works. But ignore short term volatility.
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Re: Asset Allocation-What have you learned about yourself?

Post by amillionshort »

I learned that while I thought I would be generally ok with x% drawdown, it can become a problem when some psychologically important number is hit (like net worth dropping under $1M, or losing more than 100k in a few days.

Dropping from 700k to 560k: "it's ok it will come back"
Dropping from 1.1M to 880k -> panic

So I need to either adjust AA to more conservative or hack my mind by ensuring I never see the net worth or short term losses.
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Taylor Larimore
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Re: Asset Allocation-What have you learned about yourself?

Post by Taylor Larimore »

PoultryMan:

I think my biggest investing lesson was how difficult it is to "beat the market." I tried investing in individual stocks, market timing, using investing consultants, reading over 250 investment books, and thousands of Morningstar and Boglehead posts.

None helped me "beat the market" I began to realize that if mutual fund managers with all their education and resources can't "beat the market" (except by luck) it was ludicrous for me to think that I can.

I recently learned that if I had simply invested just $1 in the S&P 500 Index stocks in 1950 (when I was 26 working in my first job) and done nothing, that dollar would now be worth $1,120 (before inflation and taxes).

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "The total market index is by definition the perfect investment, and the S&P 500 is virtually as good. They cannot be improved on. They will give you virtually all of the market's return, provided that the costs are minimal. No other form of indexing will give you that."
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Re: Asset Allocation-What have you learned about yourself?

Post by Portfolio7 »

I've learned that my risk tolerance is reasonably high, but not as high as it used to be, going from 100% stocks before the GR to 60% after the GR, then creeping back up to around 70-75% and staying within a few percent of that range.

I've learned that I don't need to care much about portfolio construction as long as the equity/fi mix is something I and DW can live with.

I have learned that I am a tinkerer by nature. I've developed rules that allow activity but guide and set boundaries to any changes, and force constant re-evaluations. This keeps me both aware and content. It also means that if I have to step away from managing the portfolio, it doesn't matter, since the portfolio metrics are always within a small range of acceptable parameters.

Safety > optimization. I try to be 'not stupid', rather than trying to be smart. I focus on risk a lot more than I do on return.
"An investment in knowledge pays the best interest" - Benjamin Franklin
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Re: Asset Allocation-What have you learned about yourself?

Post by CyclingDuo »

flaccidsteele wrote: Fri Sep 11, 2020 12:27 pmActionable: I decided to go on social media to increase the financial literacy of the next generation. I have 50,000 followers who watch my 1400+ videos and live streams, and I’ve been invited to speak on a few podcasts. It’s been fun contributing
What? No link?
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Nate79
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Re: Asset Allocation-What have you learned about yourself?

Post by Nate79 »

I like big emergency funds and I can not lie.
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Re: Asset Allocation-What have you learned about yourself?

Post by flaccidsteele »

CyclingDuo wrote: Fri Sep 11, 2020 9:40 pm
flaccidsteele wrote: Fri Sep 11, 2020 12:27 pmActionable: I decided to go on social media to increase the financial literacy of the next generation. I have 50,000 followers who watch my 1400+ videos and live streams, and I’ve been invited to speak on a few podcasts. It’s been fun contributing
What? No link?
Don’t want to get in trouble w the mods

Posters can PM for the link
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
Kompass
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Re: Asset Allocation-What have you learned about yourself?

Post by Kompass »

Nate79 wrote: Fri Sep 11, 2020 9:59 pm I like big emergency funds and I can not lie.
+1
The large print giveth and the fine print taketh away.
Bridgebumbob
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Re: Asset Allocation-What have you learned about yourself?

Post by Bridgebumbob »

I learned that while asset allocation decisions are important while growing your portfolio, now that I am in my 70s and retired, My approach is different. I think in terms of actual dollars instead of asset allocation strategies. I keep about $1 million in treasury bond funds (now short term) and the remainder, around $400k in the S&P. My other main asset is a home valued around $850k.
My plan is to gradually spend down the bonds, including SS and a modest pension and not worry about the market. Let the equities do what they will and, combined with house value, to be a decent inheritance for my 2 children.
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StevieG72
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Re: Asset Allocation-What have you learned about yourself?

Post by StevieG72 »

I have learned that I am a strange bird!

Account value drops by thousands in a given day, meh.

A $50 late payment fee, my feathers are ruffled for days!
Fools think their own way is right, but the wise listen to others.
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zaboomafoozarg
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Re: Asset Allocation-What have you learned about yourself?

Post by zaboomafoozarg »

Nate79 wrote: Fri Sep 11, 2020 9:59 pm I like big emergency funds and I can not lie.
Same, I've had like 3 years worth of liquid emergency funds for the last decade.

It was probably dumb when it was a larger portion of my portfolio, but the smaller the percentage the less I care.

Some of that money was intended to be a house down payment but I could never pull the trigger.

Seeing where house prices are now vs. 10 years ago, that was definitely stupid of me.
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Re: Asset Allocation-What have you learned about yourself?

Post by sailaway »

StevieG72 wrote: Sat Sep 12, 2020 1:13 am I have learned that I am a strange bird!

Account value drops by thousands in a given day, meh.

A $50 late payment fee, my feathers are ruffled for days!
Oh yes, I can handle fluctuations, but judge my own mistakes very harshly.

We never set a cash balance/EF goal. At first, we both just managed our own accounts, but when we had added up our pooled resources, we found that we were each individually so consistent that the total was consistent. As we combined finances more and more over the years, that number hasn't really changed, although it does represent fewer months of average spend these days and it is spread across accounts differently.
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Re: Asset Allocation-What have you learned about yourself?

Post by BernardShakey »

PoultryMan wrote: Fri Sep 11, 2020 12:05 pm I understand AA is a highly personal matter with no right or wrong guidelines (Well, some general guidelines). Having said this, what have you learned about yourself over the years that maybe surprised you? For example, I have found I am WAY more conservative on my risk tolerance than I was 10 years ago.

TO make this actionable I would say NEVER to have all equities as I did back in 2008. Thats a good example of where I have changed.
Most important, I've learned how little I know!

With experience though, I seem to have zeroed in on an allocation that is "right" for me. As it has fluctuated over the years, I now sit in a spot where I am constantly bouncing back and forth between feeling I am missing out (too conservative) and thinking I'm off my rocker for having so much in equities. It seems that as of now this tug of war is strong and consistent, and I've finally got the AA where it needs to be for me to sleep well and not do something stupid. It took a long time to get to this point. Long may you run :beer
An important key to investing is having a well-calibrated sense of your future regret.
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Re: Asset Allocation-What have you learned about yourself?

Post by soccerbogle »

Have read a lot here over a couple years and over those years I have learned:

For me, the AA is the end result. I set my EF and short term requirements, and then everything else into stocks (so currently, my contributions all go into stocks). Whatever AA that ends up being, is fine.
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Re: Asset Allocation-What have you learned about yourself?

Post by Buddtholomew »

Investing is psychological and it is awfully difficult to break from behavioral pitfalls.
My primary phobia is “fear of loss” so I continue to obsess over daily fluctuations and since retiring equate S declines with years of income lost.
Also learned that I rebalance during declines and advances to maintain my AA
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
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Re: Asset Allocation-What have you learned about yourself?

Post by Christine_NM »

I don't think my risk tolerance has changed since I was working -- I've always considered 20% of portfolio to be an acceptable loss, and if the loss is greater I'd have to look at my situation at the time to decide whether to change my allocation.

The steady acceptable loss leads to a decreasing stock allocation as the dollar amounts increase. IOW, 20% of a 500k is 100k, that was my maximum acceptable loss in 2000-01, with about 80% stock. But now I have half that stock allocation and can lose 100k in a couple of days and it's only about 0.5% of the whole portfolio.

What I'm trying to say is that the more money you have, the more risk you can take. You can lose a lot more dollars before it impacts your allocation. I guess everyone knows that in theory but I'm learning it in real life.
18% cash 44% stock 38% bond. Retired, w/d rate 2.5%
Woodshark
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Re: Asset Allocation-What have you learned about yourself?

Post by Woodshark »


I agree with you and I think bogleheads.org is almost a paradox for many/most. First you don't really know what to do or what you've even been doing. Then you end up here and fix your situation, having been indoctrinated or won over by a 3 fund portfolio. Next you keep lingering on bogleheads and read conversations about factors, leverage, rebalancing strategies, interest rates, tax optimization strategies. Before you know it you are convinced that 3 fund portfolios are boring and suboptimal so you decide to try something more complex like a factor tilt. Then you decide on a different, boglehead recommended AA that you just read a compelling post about. Rinse and repeat. After awhile, and possibly after some behavioral damage inflicted on your portfolio you realize that your balance would be higher if you had just continued with that target date fund you were using before you even heard about bogleheads.org.
Exactly. I think this applies to many of us here and bears repeating.
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1210sda
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Re: Asset Allocation-What have you learned about yourself?

Post by 1210sda »

I've been 60/40 since the mid 80's.

I didn't confirm that it was the right AA for me until 2000 to 2003 and Oct 2007 to Mar 2009. I cringed a bit but didn't sell a single position during either of those periods.

Cringing but not selling told me it was right for us.
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Re: Asset Allocation-What have you learned about yourself?

Post by BernardShakey »

Christine_NM wrote: Sat Sep 12, 2020 4:52 pm I don't think my risk tolerance has changed since I was working -- I've always considered 20% of portfolio to be an acceptable loss, and if the loss is greater I'd have to look at my situation at the time to decide whether to change my allocation.

The steady acceptable loss leads to a decreasing stock allocation as the dollar amounts increase. IOW, 20% of a 500k is 100k, that was my maximum acceptable loss in 2000-01, with about 80% stock. But now I have half that stock allocation and can lose 100k in a couple of days and it's only about 0.5% of the whole portfolio.

What I'm trying to say is that the more money you have, the more risk you can take. You can lose a lot more dollars before it impacts your allocation. I guess everyone knows that in theory but I'm learning it in real life.
Wow, that's some portfolio. 100k = 0.5% of $20M.
An important key to investing is having a well-calibrated sense of your future regret.
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Re: Asset Allocation-What have you learned about yourself?

Post by Christine_NM »

BernardShakey wrote: Sat Sep 12, 2020 5:51 pm
Christine_NM wrote: Sat Sep 12, 2020 4:52 pm I don't think my risk tolerance has changed since I was working -- I've always considered 20% of portfolio to be an acceptable loss, and if the loss is greater I'd have to look at my situation at the time to decide whether to change my allocation.

The steady acceptable loss leads to a decreasing stock allocation as the dollar amounts increase. IOW, 20% of a 500k is 100k, that was my maximum acceptable loss in 2000-01, with about 80% stock. But now I have half that stock allocation and can lose 100k in a couple of days and it's only about 0.5% of the whole portfolio.

What I'm trying to say is that the more money you have, the more risk you can take. You can lose a lot more dollars before it impacts your allocation. I guess everyone knows that in theory but I'm learning it in real life.
Wow, that's some portfolio. 100k = 0.5% of $20M.
Well, I wish. I shouldn't try to do arithmetic and write at the same time. You get the idea, the need to take risk decreases as portfolio grows.
18% cash 44% stock 38% bond. Retired, w/d rate 2.5%
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Re: Asset Allocation-What have you learned about yourself?

Post by HenryG »

soccerbogle wrote: Sat Sep 12, 2020 3:36 pm Have read a lot here over a couple years and over those years I have learned:

For me, the AA is the end result. I set my EF and short term requirements, and then everything else into stocks (so currently, my contributions all go into stocks). Whatever AA that ends up being, is fine.
I like this. It is very practical to think about AA as the outcome of specific decisions, and not strictly as a top-down number to dictate portfolio changes.
I've learned that while I'm generally comfortable with a more aggressive AA, this has shifted over time and with circumstances. For example, we're building larger bond holdings (with new money coming in), and therefore a more conservative AA, as we plan a transition from a two-income household to a single-income household.
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Re: Asset Allocation-What have you learned about yourself?

Post by MotoTrojan »

I’ve learned I seek risk. The only thought in my mind in March 2020 was how much more small-value should I buy (tilted my portfolio permanently).
nigel_ht
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Re: Asset Allocation-What have you learned about yourself?

Post by nigel_ht »

flaccidsteele wrote: Fri Sep 11, 2020 12:27 pm
pre-set asset allocation and rebalancing offers no financial benefit in long term volatility management, risk or performance.

They only increase complexity

I started investing in the 1990s and my methods haven’t changed. I invest regularly and I buy more during crashes (dot com, credit crisis, US housing crash, virus crisis, etc.)
The question then would where does the money to buy more during a crash come from?

I’ve settled on 50/50 and going more and more stock allocation during crashes.

That’ll work until someday the US market actually stops recovering.
Redlion
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Re: Asset Allocation-What have you learned about yourself?

Post by Redlion »

corp_sharecropper wrote: Fri Sep 11, 2020 5:48 pm
guppyguy wrote: Fri Sep 11, 2020 5:32 pm I've learned that asset allocation only works if you stop reading about other asset allocation models and just leave your investments alone...for a very long time.

In fact, I now really don't have an AA. I think, at least for me, there was too much of a tendency to think of the AA/rebalancing part as an active strategy, like I was going to outsmart everybody else with my superior spreadsheet or something. I traded individual stocks a long time ago, and can recognize the similarities in self-destructive behavior now.

Just pick a strategy and sit on your hands.....
I agree with you and I think bogleheads.org is almost a paradox for many/most. First you don't really know what to do or what you've even been doing. Then you end up here and fix your situation, having been indoctrinated or won over by a 3 fund portfolio. Next you keep lingering on bogleheads and read conversations about factors, leverage, rebalancing strategies, interest rates, tax optimization strategies. Before you know it you are convinced that 3 fund portfolios are boring and suboptimal so you decide to try something more complex like a factor tilt. Then you decide on a different, boglehead recommended AA that you just read a compelling post about. Rinse and repeat. After awhile, and possibly after some behavioral damage inflicted on your portfolio you realize that your balance would be higher if you had just continued with that target date fund you were using before you even heard about bogleheads.org.
I agree, quite a few people on this site and elsewhere tend to be reactive, When the Pandemic started the posts were to sell, now that Bonds and International are down there is lots of post about getting rid of Bonds and selling International.
Redlion
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Re: Asset Allocation-What have you learned about yourself?

Post by Redlion »

StevieG72 wrote: Sat Sep 12, 2020 1:13 am I have learned that I am a strange bird!

Account value drops by thousands in a given day, meh.

A $50 late payment fee, my feathers are ruffled for days!
I am also that way, The reason being is a late fee is something you could have prevented, A drop in the market is beyond your control.
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Re: Asset Allocation-What have you learned about yourself?

Post by flaccidsteele »

nigel_ht wrote: Sun Sep 13, 2020 9:30 am
flaccidsteele wrote: Fri Sep 11, 2020 12:27 pm
pre-set asset allocation and rebalancing offers no financial benefit in long term volatility management, risk or performance.

They only increase complexity

I started investing in the 1990s and my methods haven’t changed. I invest regularly and I buy more during crashes (dot com, credit crisis, US housing crash, virus crisis, etc.)
The question then would where does the money to buy more during a crash come from?
It comes from any source that isn’t already invested in stocks
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
chuckb84
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Re: Asset Allocation-What have you learned about yourself?

Post by chuckb84 »

PoultryMan wrote: Fri Sep 11, 2020 12:05 pm I understand AA is a highly personal matter with no right or wrong guidelines (Well, some general guidelines). Having said this, what have you learned about yourself over the years that maybe surprised you? For example, I have found I am WAY more conservative on my risk tolerance than I was 10 years ago.

TO make this actionable I would say NEVER to have all equities as I did back in 2008. Thats a good example of where I have changed.
I was still working a Federal government job during the Great Recession, so I was utterly unfazed. Retired now since 2015 and the Covid flash crash was my first experience watching funds that provide my income just vanish. The live fire exercise is different! The good news is that I dug out the IPS and blindly followed it and we made money.

So, right now, while you're calm and clear-headed, write that IPS, as a "policy" statement, and also as a note to your future self to read during the next future crash.

The other major takeaway is that guaranteed income, SS, and in my case, Federal pension, is the best palliative for nerves, especially if you keep your expenses at/near your level of guaranteed income.
Candor
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Re: Asset Allocation-What have you learned about yourself?

Post by Candor »

The older I get and the wealthier I get the more I am concerned with capital preservation over maximizing potential returns. Nothing earth shattering.
nigel_ht
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Re: Asset Allocation-What have you learned about yourself?

Post by nigel_ht »

flaccidsteele wrote: Sun Sep 13, 2020 10:12 am
nigel_ht wrote: Sun Sep 13, 2020 9:30 am
flaccidsteele wrote: Fri Sep 11, 2020 12:27 pm
pre-set asset allocation and rebalancing offers no financial benefit in long term volatility management, risk or performance.

They only increase complexity

I started investing in the 1990s and my methods haven’t changed. I invest regularly and I buy more during crashes (dot com, credit crisis, US housing crash, virus crisis, etc.)
The question then would where does the money to buy more during a crash come from?
It comes from any source that isn’t already invested in stocks
Lol, it's not likely real estate since that's not very liquid. It's not likely cash.

So where do you keep money that's not in stocks and why?
flaccidsteele
Posts: 984
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Location: Canada

Re: Asset Allocation-What have you learned about yourself?

Post by flaccidsteele »

nigel_ht wrote: Sun Sep 13, 2020 8:39 pm
flaccidsteele wrote: Sun Sep 13, 2020 10:12 am
nigel_ht wrote: Sun Sep 13, 2020 9:30 am
flaccidsteele wrote: Fri Sep 11, 2020 12:27 pm
pre-set asset allocation and rebalancing offers no financial benefit in long term volatility management, risk or performance.

They only increase complexity

I started investing in the 1990s and my methods haven’t changed. I invest regularly and I buy more during crashes (dot com, credit crisis, US housing crash, virus crisis, etc.)
The question then would where does the money to buy more during a crash come from?
It comes from any source that isn’t already invested in stocks
Lol, it's not likely real estate since that's not very liquid. It's not likely cash.

So where do you keep money that's not in stocks and why?
Easy. Things aren’t all in stocks because the US market always crashes. Always. It’s never different this time

The quote to be greedy when others are fearful helped me to retire in my 40s. It’s a cool little phrase

FYI The dot com crash and credit crisis took the market down for 24 and 16 months respectively. It only takes a couple months to sell real estate
Last edited by flaccidsteele on Sun Sep 13, 2020 9:04 pm, edited 1 time in total.
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
otinkyad
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Re: Asset Allocation-What have you learned about yourself?

Post by otinkyad »

PoultryMan wrote: Fri Sep 11, 2020 12:05 pm TO make this actionable I would say NEVER to have all equities as I did back in 2008. Thats a good example of where I have changed.
Why is that, since 100% stocks was the optimal strategy? Did you sell during the crash, not sleep nights, or need the money?

I was 100% stocks until roughly $1m at 45, and now I’m on a glide path to 60/40 around age 58 to 60. I recently dropped my REIT and EM tilts when they were diluted below 5% by the bonds. I’ve still got and intend to keep a SCV tilt. I haven’t made any decisions since I wrote my IPS 18 years ago. That’s also when I got married, and I haven’t changed my mind about that, either. I’m not sure they’re unrelated. ;-)
BernardShakey
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Re: Asset Allocation-What have you learned about yourself?

Post by BernardShakey »

otinkyad wrote: Sun Sep 13, 2020 9:01 pm
PoultryMan wrote: Fri Sep 11, 2020 12:05 pm TO make this actionable I would say NEVER to have all equities as I did back in 2008. Thats a good example of where I have changed.
Why is that, since 100% stocks was the optimal strategy? Did you sell during the crash, not sleep nights, or need the money?

I was 100% stocks until roughly $1m at 45, and now I’m on a glide path to 60/40 around age 58 to 60. I recently dropped my REIT and EM tilts when they were diluted below 5% by the bonds. I’ve still got and intend to keep a SCV tilt. I haven’t made any decisions since I wrote my IPS 18 years ago. That’s also when I got married, and I haven’t changed my mind about that, either. I’m not sure they’re unrelated. ;-)
Haha, I was 45 in 2008 and 100% stocks. Trust me, it was hard to sleep.
An important key to investing is having a well-calibrated sense of your future regret.
FIby45
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Re: Asset Allocation-What have you learned about yourself?

Post by FIby45 »

Big "emergency/opportunity fund" to ride out any downturn for several years if need be. Then I'm less concerned about "risk" as I know I won't be tempted to sell much during big downturns.
Darwin
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Re: Asset Allocation-What have you learned about yourself?

Post by Darwin »

corp_sharecropper wrote: Fri Sep 11, 2020 5:48 pm
guppyguy wrote: Fri Sep 11, 2020 5:32 pm I've learned that asset allocation only works if you stop reading about other asset allocation models and just leave your investments alone...for a very long time.

In fact, I now really don't have an AA. I think, at least for me, there was too much of a tendency to think of the AA/rebalancing part as an active strategy, like I was going to outsmart everybody else with my superior spreadsheet or something. I traded individual stocks a long time ago, and can recognize the similarities in self-destructive behavior now.

Just pick a strategy and sit on your hands.....
I agree with you and I think bogleheads.org is almost a paradox for many/most. First you don't really know what to do or what you've even been doing. Then you end up here and fix your situation, having been indoctrinated or won over by a 3 fund portfolio. Next you keep lingering on bogleheads and read conversations about factors, leverage, rebalancing strategies, interest rates, tax optimization strategies. Before you know it you are convinced that 3 fund portfolios are boring and suboptimal so you decide to try something more complex like a factor tilt. Then you decide on a different, boglehead recommended AA that you just read a compelling post about. Rinse and repeat. After awhile, and possibly after some behavioral damage inflicted on your portfolio you realize that your balance would be higher if you had just continued with that target date fund you were using before you even heard about bogleheads.org.
Yep. The paradox of this site is that:
1) reading about fellow-member's experiences can help prepare for the inevitable repeats of history, and
2) thinking about it too much can result in changing the plan too often. I owe a lot to my DW for pointing out when my "new insights" are not in step with the "Don't just do something, stand there!" Boglehead view. I might be the one who thinks about this more, but she's my financial check-point.
No planet, no business. Earth bats last.
flaccidsteele
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Re: Asset Allocation-What have you learned about yourself?

Post by flaccidsteele »

Darwin wrote: Sun Sep 13, 2020 10:40 pm
corp_sharecropper wrote: Fri Sep 11, 2020 5:48 pm
guppyguy wrote: Fri Sep 11, 2020 5:32 pm I've learned that asset allocation only works if you stop reading about other asset allocation models and just leave your investments alone...for a very long time.

In fact, I now really don't have an AA. I think, at least for me, there was too much of a tendency to think of the AA/rebalancing part as an active strategy, like I was going to outsmart everybody else with my superior spreadsheet or something. I traded individual stocks a long time ago, and can recognize the similarities in self-destructive behavior now.

Just pick a strategy and sit on your hands.....
I agree with you and I think bogleheads.org is almost a paradox for many/most. First you don't really know what to do or what you've even been doing. Then you end up here and fix your situation, having been indoctrinated or won over by a 3 fund portfolio. Next you keep lingering on bogleheads and read conversations about factors, leverage, rebalancing strategies, interest rates, tax optimization strategies. Before you know it you are convinced that 3 fund portfolios are boring and suboptimal so you decide to try something more complex like a factor tilt. Then you decide on a different, boglehead recommended AA that you just read a compelling post about. Rinse and repeat. After awhile, and possibly after some behavioral damage inflicted on your portfolio you realize that your balance would be higher if you had just continued with that target date fund you were using before you even heard about bogleheads.org.
Yep. The paradox of this site is that:
1) reading about fellow-member's experiences can help prepare for the inevitable repeats of history, and
2) thinking about it too much can result in changing the plan too often. I owe a lot to my DW for pointing out when my "new insights" are not in step with the "Don't just do something, stand there!" Boglehead view. I might be the one who thinks about this more, but she's my financial check-point.
+10 ^ my vote for best chain of replies
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
Robot Monster
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Location: New York

Re: Asset Allocation-What have you learned about yourself?

Post by Robot Monster »

flaccidsteele wrote: Sun Sep 13, 2020 10:43 pm
Darwin wrote: Sun Sep 13, 2020 10:40 pm
corp_sharecropper wrote: Fri Sep 11, 2020 5:48 pm
guppyguy wrote: Fri Sep 11, 2020 5:32 pm I've learned that asset allocation only works if you stop reading about other asset allocation models and just leave your investments alone...for a very long time.

In fact, I now really don't have an AA. I think, at least for me, there was too much of a tendency to think of the AA/rebalancing part as an active strategy, like I was going to outsmart everybody else with my superior spreadsheet or something. I traded individual stocks a long time ago, and can recognize the similarities in self-destructive behavior now.

Just pick a strategy and sit on your hands.....
I agree with you and I think bogleheads.org is almost a paradox for many/most. First you don't really know what to do or what you've even been doing. Then you end up here and fix your situation, having been indoctrinated or won over by a 3 fund portfolio. Next you keep lingering on bogleheads and read conversations about factors, leverage, rebalancing strategies, interest rates, tax optimization strategies. Before you know it you are convinced that 3 fund portfolios are boring and suboptimal so you decide to try something more complex like a factor tilt. Then you decide on a different, boglehead recommended AA that you just read a compelling post about. Rinse and repeat. After awhile, and possibly after some behavioral damage inflicted on your portfolio you realize that your balance would be higher if you had just continued with that target date fund you were using before you even heard about bogleheads.org.
Yep. The paradox of this site is that:
1) reading about fellow-member's experiences can help prepare for the inevitable repeats of history, and
2) thinking about it too much can result in changing the plan too often. I owe a lot to my DW for pointing out when my "new insights" are not in step with the "Don't just do something, stand there!" Boglehead view. I might be the one who thinks about this more, but she's my financial check-point.
+10 ^ my vote for best chain of replies
^ yes
"Happiness comes from being connected in the right ways to: other people, your work, something larger than yourself."
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bertilak
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Re: Asset Allocation-What have you learned about yourself?

Post by bertilak »

I've learned I am a bit wishy-washy but have it under control! A little wish and a little wash.

My biggest sin was moving from 50/50 to 60/40 while the market was soaring. Now I'm thinking perhaps that was rash!

I can tell myself that buried in that 60/40 there is a 50/50 (now a 40/40) plus an extra 20/0 as an aggressive bonus. ("Look Ma, no hands!")
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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