who here is tempted to pullback on stocks?

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gasman
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Re: who here is tempted to pullback on stocks?

Post by gasman » Sun Nov 24, 2013 8:54 am

I am often tempted to time the market.
I am also often tempted by dessert, sports cars, and attractive females.
I just know that other than an occasional dessert, all of the above are bad choices.

YDNAL
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Re: who here is tempted to pullback on stocks?

Post by YDNAL » Sun Nov 24, 2013 11:06 am

dickenjb wrote:
dickenjb wrote:My target AA is 60/40 and I am currently at 64.2% stocks. So yes, I am tempted to sell some stocks. But my IPS says my rebalance bands are +/- 5%. So I will wait a little longer.

When I do pull the trigger I will sell down to 60% per my IPS.
Now I am at 64.5% equities. When it gets to 65 I will be compelled (not tempted) to reduce my equities to 60%.
Actually, Equity risk is not materially different at 0.65 versus 0.60. This ain't rocket Science (not even Science), and to focus on a 3rd digit to the right of the decimal point (0.00X) seems that way. IMO, a plan to limit constant monitoring/tinkering - not that you do this, dickenjb :wink: - keeps our worse enemy away (ourselves).

FWIW, I updated our plan after the great recession loosely based on Benjamin Graham's philosophy, and use quintiles of Equity risk for different aspects (goals) of the overall plan.

Code: Select all

Equity		Rebalance band	
70		|	60/40	-	80/20
60		|	50/50	-	70/30
50		|	40/60	-	60/40
40		|	30/70	-	50/50
30		|	20/80	-	40/60
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

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Re: who here is tempted to pullback on stocks?

Post by linenfort » Mon Nov 25, 2013 7:20 am

I don't understand the table above. :confused

ot1138
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Re: who here is tempted to pullback on stocks?

Post by ot1138 » Mon Nov 25, 2013 9:54 am

With CAPE above 25, Cliff Asness article suggests that expected return of next 10 years will be 0.1% with the range of +6 and -6%.
That's based on a naïve model. Once you factor in interest rates (ERPs are not static - they expand and contract in conjunction with 10 year treasuries), one comes to very different conclusions. My model projects 10-year returns of 5.8% with a maximum historical range of 2.7% - 9.9%.

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HomerJ
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Re: who here is tempted to pullback on stocks?

Post by HomerJ » Mon Nov 25, 2013 11:04 am

ot1138 wrote:
With CAPE above 25, Cliff Asness article suggests that expected return of next 10 years will be 0.1% with the range of +6 and -6%.
That's based on a naïve model. Once you factor in interest rates (ERPs are not static - they expand and contract in conjunction with 10 year treasuries), one comes to very different conclusions. My model projects 10-year returns of 5.8% with a maximum historical range of 2.7% - 9.9%.
Nobody knows nothing. Buy and hold, pick an appropriate AA for your age and need to take risk, and rebalance occasionally. I'm not trusting anyone's "model".

Doesn't matter to me if Cliff is right or ot1138 is right. Either way, I'm sticking with my 50/50 stocks and bonds, and I'll get the market return, whatever it may be.

If I don't have my "number" in 11 years (when my youngest graduates college), then I'll either work longer (part-time hopefully), or cut back on my lifestyle a bit in order to retire.

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TinyElvis
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The Whoopee Allocation

Post by TinyElvis » Sat Sep 12, 2015 10:20 am

This is beautifully simple and straight-forward.
Phineas J. Whoopee wrote:I started contemplating all this as I thought about retiring early or switching to a financially riskier but more personally fulfilling career, and how those decisions might affect the age-in-bonds rough guideline.

If you're asking how I came up with the rule:
I began with the rough, planning-only guideline of taking an initial 4% of the portfolio, adjusted for inflation each subsequent year. That would mean having a portfolio value of 25 times expenses. The safer 3% would mean 33 times.
...
Mr. Whoopee, if you don't mind I would love to hear more about this.

This original post was about 2 years ago. Can you provide an update on what has changed since? Where are you in your steps?

Would you mind sharing what your fund allocation is and how it may have changed as you moved up into a new tier?

Being an engineering sort, I really like patterns; simple and repeatable patterns.

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Phineas J. Whoopee
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Re: The Whoopee Allocation

Post by Phineas J. Whoopee » Mon Sep 14, 2015 1:34 pm

TinyElvis wrote:This is beautifully simple and straight-forward.
Thank you. Here's a link to the specific post, to make it easier for others to find the whole thing.
TinyElvis wrote:
Phineas J. Whoopee wrote:I started contemplating all this as I thought about retiring early or switching to a financially riskier but more personally fulfilling career, and how those decisions might affect the age-in-bonds rough guideline.
...
...
This original post was about 2 years ago. Can you provide an update on what has changed since? Where are you in your steps?
The stock market went up a lot, which really helped me, but I've kept using the same plan, without any changes.
TinyElvis wrote:Would you mind sharing what your fund allocation is and how it may have changed as you moved up into a new tier?
...
Late last year I made it up and over 35 times expenses, so I'm at 40/60, where I plan to stay. I'll revisit it occasionally, of course, but I think it will get the job done the way it is.
25% total stock
15% international stock
40% inflation-protected fixed income
20% nominal fixed income

It's split across a 401(k), traditional IRA, Roth Ira, and taxable. In the first of those my choices are limited, but it includes Vanguard's Institutional Index fund, which tracks the S&P 500, Extended Market which I mix in to approximate total stock, FTSE All-world Ex-US, and Total Bond. I don't replicate the allocation in each account, but of course it's all one portfolio.

I'm not sure how much more I have to add to the post you quoted, but thanks for the kind words about it. Do you have any more specific questions?

PJW

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TheTimeLord
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Re: The Whoopee Allocation

Post by TheTimeLord » Mon Sep 14, 2015 1:39 pm

Phineas J. Whoopee wrote: Late last year I made it up and over 35 times expenses,......
PJW
Is that expenses over and above SS and pension or overall expenses? Thanks.
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Phineas J. Whoopee
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Re: The Whoopee Allocation

Post by Phineas J. Whoopee » Mon Sep 14, 2015 2:01 pm

TheTimeLord wrote:
Phineas J. Whoopee wrote: Late last year I made it up and over 35 times expenses,......
PJW
Is that expenses over and above SS and pension or overall expenses? Thanks.
Total expenses, not offset for future SS.

Here's why I decided to do it that way:

I'm assuming my expenses will inflate along with CPI. The latter is by no means certain, and I might end up taking a hit on SS, so I've built things to be pretty strong. Inflation is the biggest threat to the plan I've identified.

I've stress tested the plan by assuming I never earn another social security taxable dollar, and using the worst set of assumptions the AnyPIA tool makes available, and that I'll only get 75% of what the formulas say, and just for fun I threw in a permanent 50% decline in stocks (equities go down once, then resume their more usual behavior, but from the lower base). It survives all that happening simultaneously.

Most likely my returns and SS benefits will be better, but I'm prepared for a rough road. As time goes by, and far-off future events become less far off, I probably will be able to increase my spending above inflation, but I'm not comfortable assuming all that will happen at this early date.

I hadn't expected, by the way, ever to get to 35x, but the past three years in a row of double-digit stock market gains lifted me there.

PJW

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TinyElvis
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Re: The Whoopee Allocation

Post by TinyElvis » Mon Sep 14, 2015 2:13 pm

Hi.
Phineas J. Whoopee wrote:I hadn't expected, by the way, ever to get to 35x, but the past three years in a row of double-digit stock market gains lifted me there.PJW
Congratulations. :)

Please allow me to dig deeper and I apologize if these are amateur questions.,

In your original post, you mentioned:
Phineas J. Whoopee wrote:..the gains are being safely set aside in bonds, until I get up to 35 times expenses at which point the stock holding can start to grow again.
I assume this to mean the your net proceeds from your re-balancing is used to purchase more in your bond funds. Am I correct?

Do you reinvest dividends or use to add to your bond allocation?

How often do you re-balance.. only when you hit a threshold?

So now that you are at 35x, what happens?

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Phineas J. Whoopee
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Re: The Whoopee Allocation

Post by Phineas J. Whoopee » Mon Sep 14, 2015 2:45 pm

TinyElvis wrote:...
Phineas J. Whoopee wrote:..the gains are being safely set aside in bonds, until I get up to 35 times expenses at which point the stock holding can start to grow again.
I assume this to mean the your net proceeds from your re-balancing is used to purchase more in your bond funds. Am I correct?
It's less precise than that. If you start from 20x expenses (whatever the expenses are), 70% stock is around 14 years worth. At a multiple of 25, 60% stock is 15 years; 30x at 50% is 15 years; and 35x at 40% is 14 years.

Obviously the value of the stocks fluctuates, but as the portfolio grew from tier to tier I always had about 15 years worth of living expenses in equities. At a multiple of 35, the number of years worth in stocks can start going up, should Mr. Market decide to do things that way. New contributions, at this portfolio size, make little difference (but at least it's always a positive difference).
TinyElvis wrote:Do you reinvest dividends or use to add to your bond allocation?
The great majority of the portfolio is in tax-deferred accounts. I automatically reinvest dividends everywhere except taxable. I take a look to see how best to deploy those.
TinyElvis wrote:How often do you re-balance.. only when you hit a threshold?
I reallocate when I hit thresholds, and for rebalancing I use a 10%-of-porfolio wide tolerance band. I used to evaluate quarterly, but as I was getting close to my target multiple late last year I took to looking weekly. It really doesn't make a difference, and I'm not tempted to sell or buy because I have a strong and specific plan, and I know precisely why I wrote it that way.
TinyElvis wrote:So now that you are at 35x, what happens?
A question much on my mind. The reason for the plan being what it became was to enable a risky career change or early retirement, so now those appear to be options in front of me.

To quote myself from the post:
PJW wrote: ...
I've carved my policy with an axe, not a scalpel.
...
Hope that was helpful.

I'm happy to answer more questions if anybody wants to ask them. :happy

PJW

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TinyElvis
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Re: The Whoopee Allocation

Post by TinyElvis » Mon Sep 14, 2015 4:31 pm

Phineas J. Whoopee wrote:I'm happy to answer more questions if anybody wants to ask them. :happy
Very helpful.. thank you.

I've got another.. since you are sitting at 40/60 now, the whole 60 is in the Total Bond Fund? Your inflation protected fixed-income is coming via the TBF allocation?

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Phineas J. Whoopee
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Re: The Whoopee Allocation

Post by Phineas J. Whoopee » Mon Sep 14, 2015 4:43 pm

TinyElvis wrote:...
I've got another.. since you are sitting at 40/60 now, the whole 60 is in the Total Bond Fund? Your inflation protected fixed-income is coming via the TBF allocation?
No. Total Bond, despite its name, leaves out several types of bonds, among them inflation-protected ones. I'm pretty happy with what it is and what it holds, but some posters think it should be named differently.

My inflation-protected fixed income is in Series I Savings Bonds and TIPS funds.

Most of the nominal is in Total Bond in my 401(k), but some is in CDs and Series EE Savings Bonds.

The model is three-fund plus TIPS, but due to what's available to me where, and all the tax advantages and disadvantages, there are eleven holdings in my portfolio. That's not for market timing, or slicing and dicing, or anything else than being low-cost, tax-efficient, and within my 401(k) constraints which I really can't complain about because the expense ratios on Vanguard's Institutional Plus share class are so low.

PJW

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stemikger
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Re: who here is tempted to pullback on stocks?

Post by stemikger » Mon Sep 14, 2015 4:59 pm

Listen to Jack talk about it. As long as you are not an all or nothing investor. If you feel you want to change your asset allocation to a more conservative one, do it, but make sure it's for the right reasons.

With 12 to 15 more years of work ahead of me, I'm keeping my asset allocation where it is. I'm tired and done with trying to guess what the market is going to do and tired of worrying about it. So, I will just stay a bit on the conservative side and not even look at what the market is doing.

So sorry to say it, but I'm Staying the Course!

https://www.youtube.com/watch?v=k6ra5POdsYg
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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TinyElvis
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Re: The Whoopee Allocation

Post by TinyElvis » Mon Sep 14, 2015 6:08 pm

Phineas J. Whoopee wrote:That's not for market timing, or slicing and dicing, or anything else than being low-cost, tax-efficient, and within my 401(k) constraints which I really can't complain about because the expense ratios on Vanguard's Institutional Plus share class are so low.
PJW
Thank you for sharing your knowledge.

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Re: who here is tempted to pullback on stocks?

Post by goblue100 » Tue Jun 06, 2017 9:30 am

Don't know of a better way to bookmark a thread, so I'm posting in it. A lot of this has been much on my mind lately. My need to take risk is diminishing thanks to the bull market. My willingness is still there, and I've had a hard time dropping equity allocation, but I've probably shifted 5%, from 80/20 to 75 /25. I think the PJW formula makes sense, so wanted to save it for myself.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

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UpsetRaptor
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Re: who here is tempted to pullback on stocks?

Post by UpsetRaptor » Mon Oct 16, 2017 10:57 am

This thread is (another) great example promoting stay-the-course. 4 years ago, when opie noted stocks' nice run and inquired about taking profits, S&P was in the 1700s. We're now in the 2500s. Sure, another bear market will hit at some point, but we don't know when, and if you attempted to time the market by pulling back on equities four years ago, my condolences.

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Re: The Whoopee Allocation

Post by CedarWaxWing » Sat Nov 30, 2019 8:32 pm

Phineas J. Whoopee wrote:
Mon Sep 14, 2015 4:43 pm
TinyElvis wrote:...
I've got another.. since you are sitting at 40/60 now, the whole 60 is in the Total Bond Fund? Your inflation protected fixed-income is coming via the TBF allocation?
No. Total Bond, despite its name, leaves out several types of bonds, among them inflation-protected ones. I'm pretty happy with what it is and what it holds, but some posters think it should be named differently.

My inflation-protected fixed income is in Series I Savings Bonds and TIPS funds.

Most of the nominal is in Total Bond in my 401(k), but some is in CDs and Series EE Savings Bonds.

The model is three-fund plus TIPS, but due to what's available to me where, and all the tax advantages and disadvantages, there are eleven holdings in my portfolio. That's not for market timing, or slicing and dicing, or anything else than being low-cost, tax-efficient, and within my 401(k) constraints which I really can't complain about because the expense ratios on Vanguard's Institutional Plus share class are so low.

PJW
Series I bonds.... is there a way to buy them with Roth ira or t ira funds ?

Thx

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HomerJ
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Re: who here is tempted to pullback on stocks?

Post by HomerJ » Sun Dec 01, 2019 1:22 am

Heh, great Necro thread to show how people were thinking even back in 2013.
Ranger wrote:
Sun Nov 24, 2013 6:33 am
With CAPE above 25, Cliff Asness article suggests that expected return of next 10 years will be 0.1% with the range of +6 and -6%.
Well, we're only 6 years in, so I guess Cliff still has 4 years to go...

But he gave himself a range of 12% (-6% to 6%) which is a pretty wide hedge, but in the past 6 years, we've gotten 11.5% nominal (about 9.5% real?)

So far, he's not a little off... He's been way off, ridiculously off. It may be time to rethink the model.
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JoMoney
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Re: The Whoopee Allocation

Post by JoMoney » Sun Dec 01, 2019 1:34 am

CedarWaxWing wrote:
Sat Nov 30, 2019 8:32 pm
...
Series I bonds.... is there a way to buy them with Roth ira or t ira funds ?

Thx
If you have questions about I Bonds it would probably be best to start your own thread with that question rather than let this threads topic digress.
But to answer your question - No... There may be some weird way to have a trust within a self-directed IRA that can buy them, but the fees involved with administering it (if even possible) would make it extremely prohibitive.
The good news, is there is very little reason to do that - Savings Bonds accumulate in value without paying regular coupons, so the tax can be deferred for up to 30 years. I can't imagine what benefit there would be to holding them in an IRA, having them outside the IRA gives you even more tax advantage space to save.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: who here is tempted to pullback on stocks?

Post by bck63 » Mon Dec 02, 2019 1:28 pm

smpatel wrote:
Thu Nov 21, 2013 7:41 am
I follow absolute amount into equities, if it goes beyond it by certain amount I take profits. Last few years have been fantastic, these are all non taxable events!
Could you elaborate on how your profit-taking is non-taxable events? Is it because of your marginal tax rate? This interests me.

Thanks.

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Re: who here is tempted to pullback on stocks?

Post by pdavi21 » Mon Dec 02, 2019 1:48 pm

HomerJ wrote:
Sun Dec 01, 2019 1:22 am
Heh, great Necro thread to show how people were thinking even back in 2013.
Ranger wrote:
Sun Nov 24, 2013 6:33 am
With CAPE above 25, Cliff Asness article suggests that expected return of next 10 years will be 0.1% with the range of +6 and -6%.
Well, we're only 6 years in, so I guess Cliff still has 4 years to go...

But he gave himself a range of 12% (-6% to 6%) which is a pretty wide hedge, but in the past 6 years, we've gotten 11.5% nominal (about 9.5% real?)

So far, he's not a little off... He's been way off, ridiculously off. It may be time to rethink the model.
CAPE is right 40% of the time, which means it predicted there was a 60% chance that it would be incorrect. Sounds like the model is working perfectly to me.

EDIT: 2013 was a very strange year for valuations. Up there with the 90's, a great example of valuation methods failing terribly. Also, 2013 was a great example of relative US/INTL valuation methods failing terribly. I thought the same way as this original post in 2013.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

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HomerJ
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Re: who here is tempted to pullback on stocks?

Post by HomerJ » Tue Dec 03, 2019 1:21 pm

pdavi21 wrote:
Mon Dec 02, 2019 1:48 pm
HomerJ wrote:
Sun Dec 01, 2019 1:22 am
Heh, great Necro thread to show how people were thinking even back in 2013.
Ranger wrote:
Sun Nov 24, 2013 6:33 am
With CAPE above 25, Cliff Asness article suggests that expected return of next 10 years will be 0.1% with the range of +6 and -6%.
Well, we're only 6 years in, so I guess Cliff still has 4 years to go...

But he gave himself a range of 12% (-6% to 6%) which is a pretty wide hedge, but in the past 6 years, we've gotten 11.5% nominal (about 9.5% real?)

So far, he's not a little off... He's been way off, ridiculously off. It may be time to rethink the model.
CAPE is right 40% of the time, which means it predicted there was a 60% chance that it would be incorrect. Sounds like the model is working perfectly to me.

EDIT: 2013 was a very strange year for valuations. Up there with the 90's, a great example of valuation methods failing terribly. Also, 2013 was a great example of relative US/INTL valuation methods failing terribly. I thought the same way as this original post in 2013.
Heh, CAPE is always right 40% of the time!

I always cringe when people say "well, CAPE isn't very predictive but it's the BEST tool we have"

When people hear "BEST tool we have", they think it's a good tool. But it's not a good tool. Being the BEST of the worst doesn't automatically make you good.

If I have to drive in a nail, and all I have is a screwdriver and a saw, yes the screwdriver is the BEST tool I have, but it's still a terrible tool for the job.
The J stands for Jay

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Re: who here is tempted to pullback on stocks?

Post by michaeljc70 » Fri Dec 06, 2019 11:54 am

I am late 40s and retired with an AA of 75/25. I planned to stay at that AA forever (I am not very risk averse). However, today (well, I thought about it more than today) I decided to go to 70/30. Given the 10 year bull market it seemed like a reasonable thing to do. I don't plan on going back to 75/25 so I don't consider this market timing. Also, 5% difference in AA will frankly not make much of a difference return wise but will provide a little more peace of mind.

Tamalak
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Re: who here is tempted to pullback on stocks?

Post by Tamalak » Fri Dec 06, 2019 12:29 pm

I wouldn't pull the trigger even if I was tempted ("stay the course" blah blah), but I'm genuinely not tempted, either. VTI P/E is 20. VXUS is 14. Average 17. That anticipates a 6% real return, plus or minus good/bad news. I'm down for that.

Plus, what's the alternative? 2% bonds? There's just nothing competitive out there.

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Re: who here is tempted to pullback on stocks?

Post by Presintense » Fri Dec 06, 2019 1:07 pm

This has come up a lot lately. When it does, I question myself but not to the point of acting on it (unless acting on it includes rebalancing). Two things keep me on track: 1) Initially, I waited for years for a buying “opportunity” that never came. 2) If I got out now, and by luck it turned out to be close to the “top”, I have no reason to believe I could get lucky again on the right time to buy back in.
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Re: who here is tempted to pullback on stocks?

Post by Jack FFR1846 » Fri Dec 06, 2019 1:19 pm

sambb wrote:
Wed Nov 20, 2013 8:30 pm
My question is simply - if you are tempted to take profits and shift some to cash, .....?
Nope.

I bought stock early this week with money I moved while I was on a short vacation and will buy probably Monday when my more money clears that I initiated today.

If today is your birthday and it's time to rebalance, then by all means, do so. My birthday isn't until January, so there's no need to do that.
Bogle: Smart Beta is stupid

EnjoyIt
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Re: who here is tempted to pullback on stocks?

Post by EnjoyIt » Fri Dec 06, 2019 1:29 pm

This thread that was started in 2013 and is a great example of how impossible it is to predict future returns.

Back in mid 2013 people predicted poor returns and we were starting to hit market highs. People have been predicting low returns during those last 6 years. People have been predicting a market pull back and those who sold in 2013 made a huge mistake.

What this tells me is that everyone should be prepared for a market pullback by always having the right asset allocation for them today and not adjusting it based on some expert opinions or projections (which are often wrong.)

I am not tempted to pullback because my asset allocation is designed to accept a market correction or a recession. If it happens tomorrow, I am prepared. If it happens in 5 years I will still be prepared. Nothing to see here, just move along.

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Re: who here is tempted to pullback on stocks?

Post by midareff » Fri Dec 06, 2019 7:31 pm

The equity portion of my portfolio needs to increase another 3.32% before I hit a rebalance point. Until then nada, nothing, zippo, no activity.

Being tempted is an emotional state or response which acting upon will always lead to lower overall performance. There is nothing emotional about this, it's pure numbers... you got your number to do something you do it. You don't you don't.

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Re: who here is tempted to pullback on stocks?

Post by Triple digit golfer » Fri Dec 06, 2019 7:53 pm

midareff wrote:
Fri Dec 06, 2019 7:31 pm
The equity portion of my portfolio needs to increase another 3.32% before I hit a rebalance point. Until then nada, nothing, zippo, no activity.

Being tempted is an emotional state or response which acting upon will always lead to lower overall performance. There is nothing emotional about this, it's pure numbers... you got your number to do something you do it. You don't you don't.
Interesting. With markets at highs lately and up 80+% in six years, how are you still 3.32% away from rebalancing?

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midareff
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Re: who here is tempted to pullback on stocks?

Post by midareff » Fri Dec 06, 2019 8:15 pm

Triple digit golfer wrote:
Fri Dec 06, 2019 7:53 pm
midareff wrote:
Fri Dec 06, 2019 7:31 pm
The equity portion of my portfolio needs to increase another 3.32% before I hit a rebalance point. Until then nada, nothing, zippo, no activity.

Being tempted is an emotional state or response which acting upon will always lead to lower overall performance. There is nothing emotional about this, it's pure numbers... you got your number to do something you do it. You don't you don't.
Interesting. With markets at highs lately and up 80+% in six years, how are you still 3.32% away from rebalancing?
That's simple, every time I hit my balance band (as required by my written investment statement) I rebalanced. Obviously, this is not the first rebalance. As you noted, the market has increased significantly in the last 10 years or so..... my AA is set based on my ability, need and willingness to take risk within my overall financial structure. When I exceed a balance band I correct to mid-point. Many are lulled to sleep for their risk factors by this market.... like the re-awakening of the Vampires, the end results of this may not be pretty.... don't let your risk walk a plank based on past performance and failure to follow your IPO..

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WoodSpinner
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Re: who here is tempted to pullback on stocks?

Post by WoodSpinner » Fri Dec 06, 2019 11:09 pm

Well .....

I am so tempted but haven’t pulled the trigger.

Current plan was developed in 2017 when I prepared for an un-anticipated voluntary early retirement. General idea was to start at 52/48 and shift by 1% a year to 60/40. Certainly Influenced by the concept of a rising Glidepath and the analysis of Kitces and Pfau . After further review it seems like my plan really doesn’t change the odds (50/50->60/40 vs. static 50/50 is about 94.1% successful for a 30 year 4% SWR).

Which leaves me wondering if I should shift gears and move to a static 50/50 allocation (currently at 55/45). Intellectually I know that it’s a minor shift but acknowledge it’s driven by current valuations.

Either way, unless something major happens (e.g. a massive crisis) my Retirement is secure.

Which leaves me with my internal debate....

Sometimes I hate my IPS! It clearly says, stick with the plan ....

WoodSpinner

goldendad
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Re: who here is tempted to pullback on stocks?

Post by goldendad » Fri Dec 06, 2019 11:27 pm

I generally never sell stocks.When they seem to get overvalued I do donate them to the church we attend (instead of cash). Otherwise, when my portfolio gets stock heavy I just put new money into bonds. Been doing that since 1980.

aristotelian
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Re: who here is tempted to pullback on stocks?

Post by aristotelian » Fri Dec 06, 2019 11:41 pm

OP, without engaging in market timing, you could decide that reaching a certain portfolio milestone changes your risk tolerance. For example, if you are currently 60/40, you might decide that at 30X expenses you will go 50/50, 35X expenses you will go 40/60 etc. (You could also decide that hitting the milestone gives you ability to take more risk and adopt rising equity glidepath).

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steve roy
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Re: who here is tempted to pullback on stocks?

Post by steve roy » Fri Dec 06, 2019 11:55 pm

I THINK about it, but I'm at a 30/70 target currently and only need to get my 68% bonds back to 70%. I'm pretty much moving nothing, except I switched the duration of some of my bonds from short term to intermediate term.

I tend to sit and do nothing for years at a time. (The inner dialogue: "Maybe I'll tweak my TSM fund, add more small cap value. ... Naw. Why bother?")

Gnirk
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Re: who here is tempted to pullback on stocks?

Post by Gnirk » Fri Dec 06, 2019 11:57 pm

I wouldn’t call it a pullback. I’m retired and my IPS says I should rebalance when the stock or bond portion of my portfolio is more than 5% out of whack. My target has been 35/55/10 and today I rebalanced for the first time, reducing equities and increasing bonds.

I have to be honest, it was a little scary.

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HomerJ
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Re: who here is tempted to pullback on stocks?

Post by HomerJ » Sat Dec 07, 2019 12:16 am

Gnirk wrote:
Fri Dec 06, 2019 11:57 pm
I wouldn’t call it a pullback. I’m retired and my IPS says I should rebalance when the stock or bond portion of my portfolio is more than 5% out of whack. My target has been 35/55/10 and today I rebalanced for the first time, reducing equities and increasing bonds.

I have to be honest, it was a little scary.
Should never be scary to lock in gains.

What's scary is rebalancing in the other direction. When stocks are crashing and you buy more of them. It's the right thing to do, but that's hard.

Selling stocks at a high to get my risk profile back in balance is easy for me. I love that part.

I've rebalanced 7-10 times over the past 10 years. Even when the crash does happen (and it will happen someday), I'll feel good knowing I locked in a good chunk of the gains already.
The J stands for Jay

smectym
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Re: who here is tempted to pullback on stocks?

Post by smectym » Sat Dec 07, 2019 12:50 am

sambb wrote:
Wed Nov 20, 2013 8:30 pm
I know that bogleheads do not time the market. This thread isn't for you, or the "stay the course" comments. I know that, i get that, and I live that. My question is simply - if you are tempted to take profits and shift some to cash, are you going to do it or are you going to resist? I am trying to resist, but the profits have been really good,and I am tempted. End of 2000s were rough with the pullback.. concerned, but still in my asset alloc by my IPS.
To those who say “Stay the Course,” I take the point, but my rejoinder is, “Don’t Lose Money.” If you’re going to distill all financial wisdom into three words, which pithy aphorism is best?

I have a feeling that the answer must largely depend on whether we have just been through a devastating crash which has wiped out the fortunes of millions, or, in contrast, just enjoyed the 11th year of a stock rally such as the world has never seen.

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steve roy
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Re: who here is tempted to pullback on stocks?

Post by steve roy » Sat Dec 07, 2019 1:38 am

HomerJ wrote:
Sat Dec 07, 2019 12:16 am
Gnirk wrote:
Fri Dec 06, 2019 11:57 pm
I wouldn’t call it a pullback. I’m retired and my IPS says I should rebalance when the stock or bond portion of my portfolio is more than 5% out of whack. My target has been 35/55/10 and today I rebalanced for the first time, reducing equities and increasing bonds.

I have to be honest, it was a little scary.
Should never be scary to lock in gains.

What's scary is rebalancing in the other direction. When stocks are crashing and you buy more of them. It's the right thing to do, but that's hard.

Selling stocks at a high to get my risk profile back in balance is easy for me. I love that part.

I've rebalanced 7-10 times over the past 10 years. Even when the crash does happen (and it will happen someday), I'll feel good knowing I locked in a good chunk of the gains already.
Look at Boglehead posts from '08-'09, when some BHers were rebalancing into equities that were gripped in a death spiral ... and grinding their teeth. And many Bogleheads couldn't bear to rebalance. They just stood pat and watched stock valuations melt away, ignoring their IPS because they were frozen with fear.

minimalistmarc
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Re: who here is tempted to pullback on stocks?

Post by minimalistmarc » Sat Dec 07, 2019 1:56 am

smectym wrote:
Sat Dec 07, 2019 12:50 am
sambb wrote:
Wed Nov 20, 2013 8:30 pm
I know that bogleheads do not time the market. This thread isn't for you, or the "stay the course" comments. I know that, i get that, and I live that. My question is simply - if you are tempted to take profits and shift some to cash, are you going to do it or are you going to resist? I am trying to resist, but the profits have been really good,and I am tempted. End of 2000s were rough with the pullback.. concerned, but still in my asset alloc by my IPS.
To those who say “Stay the Course,” I take the point, but my rejoinder is, “Don’t Lose Money.” If you’re going to distill all financial wisdom into three words, which pithy aphorism is best?

I have a feeling that the answer must largely depend on whether we have just been through a devastating crash which has wiped out the fortunes of millions, or, in contrast, just enjoyed the 11th year of a stock rally such as the world has never seen.
When it comes to passive, global index investing “Stay the course” is best.

With a decent plan we can all stay the course, but none of us can avoid “losing” money as equities don’t go up in a straight line.

And the “stock rally” isn’t that impressive unless you were lucky enough to put a large amount in at or bear the bottom.

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