Second guessing my asset allocation: Fear of missing out

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Jimsad
Posts: 223
Joined: Mon Mar 20, 2017 5:54 pm

Second guessing my asset allocation: Fear of missing out

Post by Jimsad » Wed Feb 12, 2020 5:13 pm

I had been happy with my asset allocation of 60:40 stocks and bonds till a year ago
As the market kept going up , I moved it to 70:30 over the last year and even made the 529s more aggressive
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Any one else going through this ?

BarbBrooklyn
Posts: 602
Joined: Fri Aug 24, 2018 9:33 am
Location: NYC

Re: Second guessing my asset allocation: Fear of missing out

Post by BarbBrooklyn » Wed Feb 12, 2020 5:28 pm

If you are in the accumulation phase, checking your account balances frequently, listening to the "financial" news or listening to what friends say about their market gains or losses is destructive and possibly just dumb.

Set your asset allocation so that if you were to lose 50% of your equity allocation, you could live with yourself. That is the reality of the marketplace.

Much of this is age-dependent I lived very happily with large equity risk when I was young and was still in earning mode. When you have a 20 year horizon for investing, you can recover from a 50% plunge.

If you are rounding the corner to retirement, you probably want to think about pulling back. The early years of retirement can be ruined by sequence of returns risk.
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."

User avatar
Artful Dodger
Posts: 856
Joined: Thu Oct 20, 2016 12:56 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by Artful Dodger » Wed Feb 12, 2020 5:33 pm

Reminds me of the articles I was reading after the dot com crash, and the one about the guy who put all his kid's college saving in some NASDAQ tech fund, and then lost about 90% of it.

I'd find an AA you're comfortable with that takes into account when you'll be needing the money. Retirement 10 to 20 years out may justify 70/30 or 80/20 or 90/10, whatever you're comfortable with. For the kids, I'd set it at a lower equity ratio the closer you get to needing those funds for college. Five years out - maybe 50/50 - maybe 40/60. Longer till college - you can go a bit more risky. Your call.

Triple digit golfer
Posts: 4100
Joined: Mon May 18, 2009 5:57 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by Triple digit golfer » Wed Feb 12, 2020 5:41 pm

Seems like you'll do it just in time to not miss out on a bear market. Not a good idea.

Do not buy high and sell low.

Your 60/40 returns have been great. Would you rather they have been lower?

sycamore
Posts: 275
Joined: Tue May 08, 2018 12:06 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by sycamore » Wed Feb 12, 2020 5:44 pm

Jimsad wrote:
Wed Feb 12, 2020 5:13 pm
I had been happy with my asset allocation of 60:40 stocks and bonds till a year ago
As the market kept going up , I moved it to 70:30 over the last year and even made the 529s more aggressive
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Any one else going through this ?
Not me. I've been through the 2000 dot com bust and 2008-2009 meltdown. I'm happy in the 60/40 - 65/35 range. Another 50% or more drop won't bother me so much.

What you're going through sounds like the "keeping up with the Joneses" disease. You have my sympathy. I suggest thinking of all the good things you've enjoyed in your life. Figure out what you need to be happy, come up with a plan to achieve it, and go for it. Try to keep a good, humble perspective on life. Best of luck!

Angst
Posts: 2143
Joined: Sat Jun 09, 2007 11:31 am

Re: Second guessing my asset allocation: Fear of missing out

Post by Angst » Wed Feb 12, 2020 5:50 pm

Jimsad wrote:
Wed Feb 12, 2020 5:13 pm
I had been happy with my asset allocation of 60:40 stocks and bonds till a year ago
As the market kept going up , I moved it to 70:30 over the last year and even made the 529s more aggressive
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Any one else going through this ?
Was your previous happiness rooted in your having consulted the Boglehead Wiki on creating an Investment Policy Statement (IPS) prior to committing to that 60:40 allocation? :) Go back and read or re-read it. In hindsight, it sure would have been nice if you'd been 100% equity last year. Then again, when equity dipped near the end of 2018, maybe you'd have posted about wanting to cut back to 60:40? I've been close to 85:15 most of my life, now closer to 80:20. It's nothing to brag about though. Everyone has different needs, strengths, etc. Know thyself! Here's the link:
https://www.bogleheads.org/wiki/Investment_policy_statement
Last edited by Angst on Wed Feb 12, 2020 5:56 pm, edited 1 time in total.

KlangFool
Posts: 15120
Joined: Sat Oct 11, 2008 12:35 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by KlangFool » Wed Feb 12, 2020 5:56 pm

https://personal.vanguard.com/us/insigh ... llocations

OP,

The difference between the average annual return of 60/40 and 70/30 is only 0.5% per year.

You are chasing return. Hence, you will buy high and sell low. You are selling 10% of your portfolio in the bond (Sell low) to buy the stock (buy high) now. That is a recipe to lose money.

If you stick with the fixed AA of 60/40, you will be buying the bond now.

KlangFool
Last edited by KlangFool on Wed Feb 12, 2020 5:59 pm, edited 1 time in total.

WarAdmiral
Posts: 47
Joined: Mon Jan 20, 2020 7:09 pm
Location: Boston

Re: Second guessing my asset allocation: Fear of missing out

Post by WarAdmiral » Wed Feb 12, 2020 5:58 pm

Jimsad wrote:
Wed Feb 12, 2020 5:13 pm
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Precisely the wrong time to increase exposure to stocks....let your friends brag. Trust me they won't be bragging when market drops 20%.

Topic Author
Jimsad
Posts: 223
Joined: Mon Mar 20, 2017 5:54 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by Jimsad » Wed Feb 12, 2020 6:01 pm

I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out

KlangFool
Posts: 15120
Joined: Sat Oct 11, 2008 12:35 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by KlangFool » Wed Feb 12, 2020 6:05 pm

Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
Why should you care if you can reach your goal with an AA of 60/40?

KlangFool

Pierre Delecto
Posts: 298
Joined: Tue Jan 28, 2020 9:45 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by Pierre Delecto » Wed Feb 12, 2020 6:08 pm

Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
I’m 100 percent equity and have been for years but I agree you should stick to your 60:40 allocation. It’s easy to stay 100 percent equity if you always were. Too switch from 60:40 to 100:0 — not so much. You’re likely to time a shift wrong and have serious regret. If you want to get to 100 percent, maybe chart out a multi-year written plan to do it and then follow it. Or wait until next recession and take the plunge then.

ochotona
Posts: 97
Joined: Thu Jan 29, 2015 2:08 pm
Location: Houston, TX
Contact:

Re: Second guessing my asset allocation: Fear of missing out

Post by ochotona » Wed Feb 12, 2020 6:26 pm

I'm cherry-picking dates to make a point, but it's a good point. Click here to see 60/40 vs 100% stock.

Since 1/1/2000, the two portfolios have been neck and neck. Lesson is, if you buy when the market is high, like it was in 2000, like it was in 2007, like it is now, that additional stock doesn't help looking out a long way into the future. If you overpay for something, the amount of value you get out of it is lowered.
Peter W., MBA, CRPC

User avatar
BolderBoy
Posts: 4658
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: Second guessing my asset allocation: Fear of missing out

Post by BolderBoy » Wed Feb 12, 2020 8:42 pm

Jimsad wrote:
Wed Feb 12, 2020 5:13 pm
I had been happy with my asset allocation of 60:40 stocks and bonds till a year ago
As the market kept going up , I moved it to 70:30 over the last year and even made the 529s more aggressive
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Any one else going through this ?
Sounds like you are wanting to dress-up "market timing" as simply changing your AA.

Don't do it.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

vipertom1970
Posts: 297
Joined: Fri Jun 21, 2019 7:06 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by vipertom1970 » Wed Feb 12, 2020 8:50 pm

Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
is that 33% avg per year or 33% total since 2009 ?

Topic Author
Jimsad
Posts: 223
Joined: Mon Mar 20, 2017 5:54 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by Jimsad » Wed Feb 12, 2020 9:03 pm

vipertom1970 wrote:
Wed Feb 12, 2020 8:50 pm
Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
is that 33% avg per year or 33% total since 2009 ?
He said average per year

User avatar
1789
Posts: 870
Joined: Fri Aug 16, 2019 3:31 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by 1789 » Wed Feb 12, 2020 9:16 pm

KlangFool wrote:
Wed Feb 12, 2020 6:05 pm
Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
Why should you care if you can reach your goal with an AA of 60/40?

KlangFool
Well said KlangFool
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

User avatar
1789
Posts: 870
Joined: Fri Aug 16, 2019 3:31 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by 1789 » Wed Feb 12, 2020 9:17 pm

Artful Dodger wrote:
Wed Feb 12, 2020 5:33 pm
Reminds me of the articles I was reading after the dot com crash, and the one about the guy who put all his kid's college saving in some NASDAQ tech fund, and then lost about 90% of it.

I'd find an AA you're comfortable with that takes into account when you'll be needing the money. Retirement 10 to 20 years out may justify 70/30 or 80/20 or 90/10, whatever you're comfortable with. For the kids, I'd set it at a lower equity ratio the closer you get to needing those funds for college. Five years out - maybe 50/50 - maybe 40/60. Longer till college - you can go a bit more risky. Your call.

Agreed. Nasdaq tech fund is probably the worst fund i could imagine. Well, some people leverage that fund. Good luck with that.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

bayview
Posts: 1907
Joined: Thu Aug 02, 2012 7:05 pm
Location: WNC

Re: Second guessing my asset allocation: Fear of missing out

Post by bayview » Wed Feb 12, 2020 9:22 pm

Jimsad wrote:
Wed Feb 12, 2020 9:03 pm
vipertom1970 wrote:
Wed Feb 12, 2020 8:50 pm
Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
is that 33% avg per year or 33% total since 2009 ?
He said average per year
(1) He may be “just sayin”
(2) He may not know how to interpret his returns

Very few people reveal their investment performances when they don’t do as well as hoped.
Last edited by bayview on Wed Feb 12, 2020 10:30 pm, edited 1 time in total.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

jj
Posts: 252
Joined: Sun Mar 04, 2007 9:44 am
Location: Texas

Re: Second guessing my asset allocation: Fear of missing out

Post by jj » Wed Feb 12, 2020 9:26 pm

Jimsad wrote:
Wed Feb 12, 2020 9:03 pm
vipertom1970 wrote:
Wed Feb 12, 2020 8:50 pm
Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
is that 33% avg per year or 33% total since 2009 ?
He said average per year
Beardstown Ladies?

https://en.wikipedia.org/wiki/Beardstown_Ladies

Please, for your own sanity, tune out this friend. Stay the course.
...it is madness to risk losing what you need in pursuing what you simply desire. Warren E. Buffett

User avatar
nedsaid
Posts: 13031
Joined: Fri Nov 23, 2012 12:33 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by nedsaid » Wed Feb 12, 2020 9:27 pm

Jimsad wrote:
Wed Feb 12, 2020 5:13 pm
I had been happy with my asset allocation of 60:40 stocks and bonds till a year ago
As the market kept going up , I moved it to 70:30 over the last year and even made the 529s more aggressive
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Any one else going through this ?
Don't do this please. This is a classic example of what causes bull markets to end. Pretty much bull markets end when the market runs out of buyers, when the last pessimist gives up and becomes an optimist. My advice is to return to your 60/40 allocation, whenever it is when the next bear market hits, you will be glad you did this. We all have high risk tolerances in bull markets, particularly in bull markets that have run as long as this one has. You don't know your true risk tolerance until a bear market hits, then you will wonder what the heck you were thinking. You are taking the route of zero to hero and back to zero again. The hero to zero part isn't fun.
A fool and his money are good for business.

User avatar
unclescrooge
Posts: 4360
Joined: Thu Jun 07, 2012 7:00 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by unclescrooge » Wed Feb 12, 2020 9:33 pm

Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
What was his return in 2018?

Flyer24
Moderator
Posts: 1378
Joined: Sun Apr 08, 2018 4:21 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by Flyer24 » Wed Feb 12, 2020 9:34 pm

Topic moved to Personal Investments.

User avatar
unclescrooge
Posts: 4360
Joined: Thu Jun 07, 2012 7:00 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by unclescrooge » Wed Feb 12, 2020 9:34 pm

Jimsad wrote:
Wed Feb 12, 2020 9:03 pm
vipertom1970 wrote:
Wed Feb 12, 2020 8:50 pm
Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
is that 33% avg per year or 33% total since 2009 ?
He said average per year
Hahaha.
Your friends is yanking your chain.

H-Town
Posts: 2418
Joined: Sun Feb 26, 2017 2:08 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by H-Town » Wed Feb 12, 2020 9:36 pm

Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
You’ll be in for a very costly lesson if you keep this up.

User avatar
9-5 Suited
Posts: 445
Joined: Thu Jun 23, 2016 12:14 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by 9-5 Suited » Wed Feb 12, 2020 9:40 pm

Pierre Delecto wrote:
Wed Feb 12, 2020 6:08 pm
Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
I’m 100 percent equity and have been for years but I agree you should stick to your 60:40 allocation. It’s easy to stay 100 percent equity if you always were. Too switch from 60:40 to 100:0 — not so much. You’re likely to time a shift wrong and have serious regret. If you want to get to 100 percent, maybe chart out a multi-year written plan to do it and then follow it. Or wait until next recession and take the plunge then.
A+ username

User avatar
RootSki
Posts: 436
Joined: Mon Feb 20, 2017 11:52 am

Re: Second guessing my asset allocation: Fear of missing out

Post by RootSki » Wed Feb 12, 2020 9:41 pm

I’m going the other way. I feel like we have made a lot of money the last few years and it’s time to move some of it to a less volatile environment. Our capital gains for last year exceeded both our salaries. That was a real sign for me to sell off some equities that I bought at a low price and move it into bonds. I went from 100/0 to 85/15. I’m 45 and probably have another 15 to 20 years of work left. Next year I’ll move to 80/20 and settle into a 70/30 mix by the time I’m 50.

User avatar
9-5 Suited
Posts: 445
Joined: Thu Jun 23, 2016 12:14 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by 9-5 Suited » Wed Feb 12, 2020 9:43 pm

Jimsad wrote:
Wed Feb 12, 2020 5:13 pm
I had been happy with my asset allocation of 60:40 stocks and bonds till a year ago
As the market kept going up , I moved it to 70:30 over the last year and even made the 529s more aggressive
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Any one else going through this ?
Everyone is correctly telling you why this is not a sound approach, but I will say I do understand. I think a good AA is right at the tipping point of FOMO and risk of loss. It’s never easy to really gauge if an AA is right for you, and it’s very easy to feel bad when things are going “against” you. All just part of the difficult emotional process of investing. Generally speaking, the less tinkering the better. Live with the imperfection. It’s fine not to be the best or the richest if you meet your own goals.

bikechuck
Posts: 643
Joined: Sun Aug 16, 2015 9:22 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by bikechuck » Wed Feb 12, 2020 9:44 pm

Jimsad wrote:
Wed Feb 12, 2020 5:13 pm
I had been happy with my asset allocation of 60:40 stocks and bonds till a year ago
As the market kept going up , I moved it to 70:30 over the last year and even made the 529s more aggressive
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Any one else going through this ?
Be fearful when others are greedy.

I am sort of tempted to cut back on equities right now to get them back to the lower bound of my asset allocation. They have crept up a bit out of my comfort zone.

Grt2bOutdoors
Posts: 21999
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Second guessing my asset allocation: Fear of missing out

Post by Grt2bOutdoors » Wed Feb 12, 2020 9:57 pm

Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
Think of your allocation like this and you will never fear missing out. You are 100 percent invested in equities for the 60% tranche of your portfolio. In the same manner, you are 100 percent invested in the fixed income category when stormy seas arrive! You will feel much better.

I lived through the day trading craze, the
Dot Com fad, 2008 near Depression and today’s mania in tech stocks. In the Dot Com era there were people who invested their down payment for their house in individual dot com stocks even though they had enough to buy the house, the thought of “just a little bit more” kept them in - they lost it all! Imagine saving for 15 years and losing it all in the span of a few weeks!!

You know who’s been swimming naked when the tide goes out. Don’t let that be you!!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

User avatar
Stinky
Posts: 3172
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: Second guessing my asset allocation: Fear of missing out

Post by Stinky » Wed Feb 12, 2020 9:59 pm

Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .
It sounds like your friend hasn’t been through a major bear market yet.

Let’s see if he sings the same tune, and keeps his equities at 100%, when the stock market declines 30%, 40%, or 50%.
It's a GREAT day to be alive - Travis Tritt

KlangFool
Posts: 15120
Joined: Sat Oct 11, 2008 12:35 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by KlangFool » Wed Feb 12, 2020 10:01 pm

Jimsad wrote:
Wed Feb 12, 2020 9:03 pm
vipertom1970 wrote:
Wed Feb 12, 2020 8:50 pm
Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
is that 33% avg per year or 33% total since 2009 ?
He said average per year
Jimsad,

If that is true, why is he still working?

1.33 to the power 11 years = 23 times.
1.33 to the power 10 years = 17 times.

Why would someone with his portfolio went up 17 to 23 times still need to work?

KlangFool

oken
Posts: 54
Joined: Thu Oct 10, 2019 7:00 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by oken » Wed Feb 12, 2020 10:13 pm

bikechuck wrote:
Wed Feb 12, 2020 9:44 pm
Jimsad wrote:
Wed Feb 12, 2020 5:13 pm
I had been happy with my asset allocation of 60:40 stocks and bonds till a year ago
As the market kept going up , I moved it to 70:30 over the last year and even made the 529s more aggressive
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Any one else going through this ?
Be fearful when others are greedy.

I am sort of tempted to cut back on equities right now to get them back to the lower bound of my asset allocation. They have crept up a bit out of my comfort zone.
You're fearful. He's greedy.
What do I do? :confused :confused

vipertom1970
Posts: 297
Joined: Fri Jun 21, 2019 7:06 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by vipertom1970 » Wed Feb 12, 2020 11:18 pm

Jimsad wrote:
Wed Feb 12, 2020 9:03 pm
vipertom1970 wrote:
Wed Feb 12, 2020 8:50 pm
Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
is that 33% avg per year or 33% total since 2009 ?
He said average per year
sounds about right, I maxed out my 401K every year from 1996-2019 with 100% equities and did a roll-over IRA 6 months ago for $1,050,000. Some body here could do the math, it was the easiest 1M I made in 24 years with 100% equities and I am teaching my 23 yo daughter to be in 100% equities until turning 50.
Last edited by vipertom1970 on Wed Feb 12, 2020 11:22 pm, edited 1 time in total.

J295
Posts: 2272
Joined: Sun Jan 01, 2012 11:40 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by J295 » Wed Feb 12, 2020 11:22 pm

Jimsad wrote:
Wed Feb 12, 2020 5:13 pm
I had been happy with my asset allocation of 60:40 stocks and bonds till a year ago
As the market kept going up , I moved it to 70:30 over the last year and even made the 529s more aggressive
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Any one else going through this ?
Fear and greed can be significantly reduced or eliminated with a solid IPS.

Pierre Delecto
Posts: 298
Joined: Tue Jan 28, 2020 9:45 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by Pierre Delecto » Thu Feb 13, 2020 10:46 am

vipertom1970 wrote:
Wed Feb 12, 2020 11:18 pm
Jimsad wrote:
Wed Feb 12, 2020 9:03 pm
vipertom1970 wrote:
Wed Feb 12, 2020 8:50 pm
Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
is that 33% avg per year or 33% total since 2009 ?
He said average per year
sounds about right, I maxed out my 401K every year from 1996-2019 with 100% equities and did a roll-over IRA 6 months ago for $1,050,000. Some body here could do the math, it was the easiest 1M I made in 24 years with 100% equities and I am teaching my 23 yo daughter to be in 100% equities until turning 50.
+ 1. If you’re always 100 percent equities it’s so much easier to stay through big market drops. It will be helpful if your daughter weathers a big percentage drop while her dollars are still relatively small. It’s a good resolve-building exercise and when the dollars are more meaningful she can look back at that experience with confidence.

flaccidsteele
Posts: 286
Joined: Sun Jul 28, 2019 9:42 pm
Location: Canada

Re: Second guessing my asset allocation: Fear of missing out

Post by flaccidsteele » Thu Feb 13, 2020 11:01 am

Jimsad wrote:
Wed Feb 12, 2020 5:13 pm
I had been happy with my asset allocation of 60:40 stocks and bonds till a year ago
As the market kept going up , I moved it to 70:30 over the last year and even made the 529s more aggressive
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Any one else going through this ?
You’re letting the emotional tail wag the investment dog

Your personality is at risk of moving into bonds during a crash which will be the exact WRONG thing to do
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

ThePensiveInvestor
Posts: 3
Joined: Wed Feb 05, 2020 11:40 am

Re: Second guessing my asset allocation: Fear of missing out

Post by ThePensiveInvestor » Thu Feb 13, 2020 11:05 am

This discussion is why I use the Vanguard Target Date funds. The biggest threat to my plan is me ... tinkering based on the latest that I've read on this forum or elsewhere, changing my AA due to FOMO but justifying it in my mind with some bs excuse, etc. Yes, I pay a few extra bps in ER over constructing my own 4-fund portfolio and manually re-balancing, but I think it's totally worth it to protect me from me.

I use one 10 years beyond my actual target retirement date as I want an overall more aggressive AA, made that decision over 10 years ago, and otherwise I just don't touch it.

For the true pros on these boards, constructing their own 3/4/5 fund portfolio and manually re-balancing is more optimal than a TDF. But I do think for the vast majority of folks, inc some folks who think they are pros immune to FOMO and counter-productive tinkering, they would be better off with a TDF or Life Strategy fund. (The big exception being a taxable account, where different considerations come into play).

User avatar
Peculiar_Investor
Posts: 1414
Joined: Thu Oct 20, 2011 12:23 am
Location: Calgary, AB
Contact:

Re: Second guessing my asset allocation: Fear of missing out

Post by Peculiar_Investor » Thu Feb 13, 2020 11:08 am

Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
The behavioural problem is you'll never hear from friends who have had lousy returns. For every winner there is someone on the other side. Accept average returns, less a small fee. Ignore the noise and stick to your investment policy statement.
Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams

imflyboy
Posts: 42
Joined: Thu Dec 15, 2011 12:55 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by imflyboy » Thu Feb 13, 2020 11:15 am

Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
I’m not an investing genius but it’s pretty easy to look good when the market’s been only going up. See how your friend is doing down the road. And I find it interesting....people love to tell you how much they’ve made, but it’s rare to hear anyone talk openly about their losses...

robphoto
Posts: 149
Joined: Tue Sep 25, 2018 12:42 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by robphoto » Thu Feb 13, 2020 11:24 am

Seeing a post asking if one should go to more stocks because of FOMO immediately makes me think it's a sign of a market peak.

Not that it can be predicted reliably!

GoldenFinch
Posts: 2060
Joined: Mon Nov 10, 2014 11:34 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by GoldenFinch » Thu Feb 13, 2020 11:28 am

KlangFool wrote:
Wed Feb 12, 2020 6:05 pm
Jimsad wrote:
Wed Feb 12, 2020 6:01 pm
I had been through 2008 and then settled on 60:40.
My friend who is 100% stocks and who invests through personal capital says his return is 33%. He started investing from 2009 .

This made me feel like I am missing out
Why should you care if you can reach your goal with an AA of 60/40?

KlangFool
What you are missing out on is having slightly more risk. Do you really want more risk? Why are you asking this now after a run up and not in December 2018? I think if you feel differently about the market (FEAR of missing out) it’s a sign that you should do nothing. Don’t invest emotionally. Find your inner robot.

KlangFool
Posts: 15120
Joined: Sat Oct 11, 2008 12:35 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by KlangFool » Thu Feb 13, 2020 11:33 am

Folks,

This is the reason why I am not worried about the forecasted low average return of the stock over the next 10 years. There will be plenty of capitulation over the coming recession. My 60/40 AA will serve me well when that happened.

KlangFool

User avatar
Quirkz
Posts: 280
Joined: Mon Jan 14, 2019 5:32 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by Quirkz » Thu Feb 13, 2020 11:56 am

Short answer is I agree with the others: don't take unnecessary risks out of a sense of greed, and try to balance the fear of missing out with the fear of what would happen if things go badly.

That said, we could probably all give a better longer answer if we knew your age, estimated time to retirement, current holdings, desired holdings at retirement, etc. If you're young and have a long way to go, 60/40 may be a bit conservative. But if you're three years out, you've got $3m in investments and only need $3.1m to retire, going aggressive would serve no purpose. As always, investment is highly personal.

wolf359
Posts: 2054
Joined: Sun Mar 15, 2015 8:47 am

Re: Second guessing my asset allocation: Fear of missing out

Post by wolf359 » Thu Feb 13, 2020 12:44 pm

Jimsad wrote:
Wed Feb 12, 2020 5:13 pm
I had been happy with my asset allocation of 60:40 stocks and bonds till a year ago
As the market kept going up , I moved it to 70:30 over the last year and even made the 529s more aggressive
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Any one else going through this ?
Absolutely! The strategy of picking an asset allocation and sticking to it is very simple to describe. It's the core of buy and hold. However, simple is hard (to do).

Volatility cuts both ways. When you see the markets dropping like crazy, you can take comfort in a large bond allocation. But when you see the markets climbing like crazy, you resent that same bond holding. You handle the positive and negative volatility the same way -- write down your reasons for your asset allocation in your investment policy statement. If you find yourself feeling like straying (in either direction), review your ISP and the actions you had previously outlined in those market conditions.

Automate your savings as much as possible, so you don't get tempted to shift your asset allocations or tilt them one way or another.

Look at portfolio visualizer using your asset allocation. Compare it to the more aggressive asset allocation that you've been drifting to. Run PV through bad market times as well as good. Which one do you want to stay with? Write it down, and stick to it. In particular, compare what happens to a 100/0 portfolio versus a 60/40 portfolio during a market downturn. The 60/40 does okay in all market conditions. The 100/0 will shine in a bull market, and collapse in a bear.

The Dalbar studies showed that even index investors underperform the market. What you are doing is why. When times are good, they increase the risk (buying more when it's high). When times are bad, they decrease risk (buy less when prices are low.) It's market timing, and is a behavioral issue.

I don't know if these tactics will work for you, but let me describe what I'm doing. I have allowed myself some leeway in my ISP to help me address my behavioral issues. The majority of my account is automated, and invested according to my asset allocation. I gave myself two decision points:

1) Once a year, at a specific date, I decide whether or not to rebalance, or let it ride. This allows my AA to get out of whack, but not by much. I also have an override rule such that if the AA exceeds the targets by more than 10%, I rebalance as well. This lets me feel like I'm tilting one way or the other, but there are limits.

2) Some of my investment funds don't arrive reliably, and can't be automated. I get to decide whether to add that to the stocks or bonds. Although this lets me tilt, the amounts are miniscule compared to the size of my portfolio. I've had some months where my portfolio moved by $100K, while I'm making a $2K decision. It doesn't really move the bar, but its sufficient for me to scratch that itch.

User avatar
Wiggums
Posts: 2741
Joined: Thu Jan 31, 2019 8:02 am

Re: Second guessing my asset allocation: Fear of missing out

Post by Wiggums » Thu Feb 13, 2020 1:35 pm

My brother has a maters degree in Finance and he laughed when I told him that I have low cost index funds. He said, “That’s OK if you ONLY want market returns.” My brother sold two loser stocks last year after holding them for years, when new types of energy didn’t materialize and the overall market was doing well. My portfolio did better than his. I’m retired and he is working until 65.

Your asset allocation is the most important investing decision that you make. Your friends income, liquidity and investing style might Be in total conflict with your situation. It’s a big mistake to Chase returns. Long periods of positive Volatility and low interest rates causes some people to feel left out. You choose 60/40 for a reason. I encourage you use the search button and read the posts in 2008. I am bullish on the markets over long periods of time, but there are no guarantees.

You should make decisions relevant to your own savings and retirement goals. If you are not maxing out your accounts, contributing more, would be a positive change.

Good luck to you.

Dandy
Posts: 6126
Joined: Sun Apr 25, 2010 7:42 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by Dandy » Thu Feb 13, 2020 1:46 pm

a long bull market dulls the sense of risk --. Your feelings about missing out and not being able to brag are not good reasons for upping your risk. It isn't as if a 60/40 won't have a decent growth when the market is good. Usually not the best time to up your equity allocation at the 10th or more year of a bull market.

User avatar
Wiggums
Posts: 2741
Joined: Thu Jan 31, 2019 8:02 am

Re: Second guessing my asset allocation: Fear of missing out

Post by Wiggums » Thu Feb 13, 2020 2:06 pm

Jimsad wrote:
Wed Feb 12, 2020 5:13 pm
I had been happy with my asset allocation of 60:40 stocks and bonds till a year ago
As the market kept going up , I moved it to 70:30 over the last year and even made the 529s more aggressive
Especially after a day like today, I am being tempted to make my allocation even more stock heavy due to fear of missing out especially as my friends with 100% stock allocations keep Bragging .
Any one else going through this ?
Individual stocks is another bad move for most investors. You posted this last week. I’m Gonna go out on a limb here, but I don’t think Tesla stock is going to $6000 a share anytime soon. I think the US will hit $1 trillion in debt first.
Image

Greaps
Posts: 13
Joined: Tue Sep 02, 2014 3:43 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by Greaps » Thu Feb 13, 2020 8:12 pm

John Bogle said he would never recommend a 20 year old to use his age in bonds, he should be in stocks, you transition over to bonds when you are interested in wealth conservation not during your accumulation.

Greaps
Posts: 13
Joined: Tue Sep 02, 2014 3:43 pm

Re: Second guessing my asset allocation: Fear of missing out

Post by Greaps » Thu Feb 13, 2020 8:26 pm

For example, I am 34 years old, 20 years away from retirement, $460,000 portfolio I am 100% stocks, invested in S&P500 index funds. A few years back I held bonds in my portfolio, my thinking was just encase a bear market develops it would preserve some of my gains. I came to the conclusion that a bear market wouldn't matter in my situation as I am accumulating wealth now and moved back into stocks. I am 34 years old and don't plan to hold bonds anytime soon.

Post Reply