who here is tempted to pullback on stocks?

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

Post by hi_there »

To answer the original question, yes, I do think about de-risking at some point. However, this is a function of personal net worth rather than market prices. The market going up so rapidly has surely brought a lot of people closer to their ultimate financial goals. So, we have much more to lose by a market crash than from chasing further gains.
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HomerJ
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Re: who here is tempted to pullback on stocks?

Post by HomerJ »

HomerJ wrote: Thu Nov 21, 2013 10:21 am
sambb wrote:There is a point. The point is, similar to late 2000s, if market goes down, you get back in.
What if the market doesn't go back down? There were people in 1992 who sold out after a 200% gain from the bottom of 1987. I think they're still waiting for the DOW to get back to 3600
I am within my asset allocation, but it has been a long time to get to these levels. Who wouldnt be tempted to get some profits.
So you've been changing your asset allocation as you go.. The way it works is you pick an asset allocation (say 50/50) and you rebalance occasionally. That's how you take profits. Forces you to sell high and buy low. You don't try to predict the future, but you rebalance based on what has already happened in the past.

You don't change your AA based on predicting what will happen next (well, some here do), but it's better to only change your AA to reflect your personal circumstances (getting older, close to retirement, you've made enough you don't need to take extra risk anymore). Market-timing is mostly a fool's game.
Man I was smart even back in 2013. Thanks Bogleheads! (teaching me since 2008)...
Last year (2012) at this time, everyone was sure the Greek debt crisis was going to sink us into a new global Great Depression. Instead the market went up 25%...

No one knows nothing. OP, don't bother listening to anyone on TV, or think you can predict the future.
Last edited by HomerJ on Wed Apr 07, 2021 10:14 pm, edited 1 time in total.
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HomerJ
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Re: who here is tempted to pullback on stocks?

Post by HomerJ »

HomerJ wrote: 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.
Check out Asness's prediction back in 2013. And ot113

Cliff said 0.1% +/- 6%

ot113 said 2.7%-9.9%

So far (only been 7.5 years, granted), we've gotten around 13%-14% a year.

Nobody knows enough to predict the future.

By the way, I didn't have to wait 11 years to hit my number... I hit it last year.
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HomerJ
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Re: who here is tempted to pullback on stocks?

Post by HomerJ »

hi_there wrote: Wed Apr 07, 2021 8:52 pm To answer the original question, yes, I do think about de-risking at some point. However, this is a function of personal net worth rather than market prices. The market going up so rapidly has surely brought a lot of people closer to their ultimate financial goals. So, we have much more to lose by a market crash than from chasing further gains.
Exactly.

Don't make changes based on the market... Make changes based on your own personal situation.

Yes, a bull market is indeed more likely to change your personal situation, but recognize why you are changing your Asset Allocation. Not because you are predicting what the market will do in the short-term, but because your need, ability, or willingness to take risk has changed.

I hit my number last year... I changed from 50/50 to 40/60... I technically "pulled back on stocks", but not because of what I expected the market to do... I'm getting ready for retirement... I want to minimize the impact of a crash early in retirement. If the markets keep going up, great!! I'm not sad, I already hit my number, everything extra on that 40% is GRAVY at this point.
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UpperNwGuy
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Re: who here is tempted to pullback on stocks?

Post by UpperNwGuy »

My personal situation is that I need my portfolio to grow, so no pulling back on stocks for me.
B. Wellington
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Re: who here is tempted to pullback on stocks?

Post by B. Wellington »

HomerJ wrote: Wed Apr 07, 2021 10:13 pm
hi_there wrote: Wed Apr 07, 2021 8:52 pm To answer the original question, yes, I do think about de-risking at some point. However, this is a function of personal net worth rather than market prices. The market going up so rapidly has surely brought a lot of people closer to their ultimate financial goals. So, we have much more to lose by a market crash than from chasing further gains.
Exactly.

Don't make changes based on the market... Make changes based on your own personal situation.

Yes, a bull market is indeed more likely to change your personal situation, but recognize why you are changing your Asset Allocation. Not because you are predicting what the market will do in the short-term, but because your need, ability, or willingness to take risk has changed.

I hit my number last year... I changed from 50/50 to 40/60... I technically "pulled back on stocks", but not because of what I expected the market to do... I'm getting ready for retirement... I want to minimize the impact of a crash early in retirement. If the markets keep going up, great!! I'm not sad, I already hit my number, everything extra on that 40% is GRAVY at this point.
+1 We are in this camp as well. For those who have "reached their goals" the question now becomes, how much risk do I want to take? (For the record, we hit "goals" we never dreamed possible years ago. Sure we had goals. Saving, investing, travel, as well as paying off the house etc.

Now, to quote Rick Ferri, "how much gravy do you want?"...
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Re: who here is tempted to pullback on stocks?

Post by livesoft »

But some of the folks here on bogleheads.org must have to rebalance at least a little bit out of equities in the coming months, right? If y'all are all being so successful "staying the course" you certainly don't want to vary from the course and get overweighted in equities right?

Watch out for too much euphoria just as you dismiss too much doom & gloom.
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Re: who here is tempted to pullback on stocks?

Post by rascott »

livesoft wrote: Thu Apr 08, 2021 7:54 am But some of the folks here on bogleheads.org must have to rebalance at least a little bit out of equities in the coming months, right? If y'all are all being so successful "staying the course" you certainly don't want to vary from the course and get overweighted in equities right?

Watch out for too much euphoria just as you dismiss too much doom & gloom.
Some of us have been 100% equities forever..... so not much to really do to stay the course.
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Re: who here is tempted to pullback on stocks?

Post by livesoft »

rascott wrote: Thu Apr 08, 2021 8:00 amSome of us have been 100% equities forever..... so not much to really do to stay the course.
You have the "Easy" button permanently pressed. :)
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UpperNwGuy
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Re: who here is tempted to pullback on stocks?

Post by UpperNwGuy »

I don't consider rebalancing to be pulling back.
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Re: who here is tempted to pullback on stocks?

Post by atdharris »

So long as the money I have invested is not money I need to pay bills or feed myself, I don't see a reason to shift to cash because I have no idea what the market will do moving forward. And the money in my retirement accounts will be invested until I retire or have to begin taking withdrawals.
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Re: who here is tempted to pullback on stocks?

Post by dukeblue219 »

Tempted in my gut, yes, but then I look at bond yields and my gut feeling on where rates are headed and that balances it out.
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Re: who here is tempted to pullback on stocks?

Post by tiburblium »

If you are sell stock, what are you doing with the proceeds? Holding US Dollars? If so, how long will you hold it and why do you feel comfortable holding dollars/cash for this length of time?
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Re: who here is tempted to pullback on stocks?

Post by Garco »

My allocation is about where I want it. I'm not tempted to pull back. But there's a huge variety of ways to invest in stocks, and I've done more reallocating among alternatives there than I have pulling equities money into FI or cash. I'm referring to whether to expand my international holdings, whether to continue to ride a few of the high growth funds or rather to spread the risk across other (U.S.) holdings.

It's never an all or nothing decision. In diversifying my holdings, I haven't changed the basic asset allocation by much. But I'm not riding just one equities horse or one fixed income horse.
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Re: who here is tempted to pullback on stocks?

Post by bubbly »

I had allocated a portion of my taxable account to 60/40 stock/munis to fund the downpayment for a house. After last years’ performance and the possibility of purchasing a house in the next 3 years, I sold half of the stock portion and went to 30/70 for the house fund. The reasoning was that I was getting very close to the down payment threshold and didn’t need to take on additional risk. Will further reduce the stock portion as needed but would always like some stock allocation for diversification purposes.

Retirement and other long term accounts have remained unchanged.
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HomerJ
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Re: who here is tempted to pullback on stocks?

Post by HomerJ »

livesoft wrote: Thu Apr 08, 2021 7:54 am But some of the folks here on bogleheads.org must have to rebalance at least a little bit out of equities in the coming months, right? If y'all are all being so successful "staying the course" you certainly don't want to vary from the course and get overweighted in equities right?

Watch out for too much euphoria just as you dismiss too much doom & gloom.
Rebalancing is not "pulling back on stocks".

Maintaining the same Asset Allocation is not "pulling back on stocks".

And you've been here long enough to understand this.

And yes, I've rebalanced multiple multiple times since this thread was started in 2013.
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Re: who here is tempted to pullback on stocks?

Post by Nowizard »

Tempting, but more from the other side based on bond returns if allowing random thoughts. But........what would you do with the money, so no change with bonds. Same with stocks, though tempting there as well. It is not the thoughts, it is action that counts. For us, the key is that we are prone to listening to those who made a "killing" with Bitcoin or Tesla, but only respond by putting a small amount into speculative stocks to scratch the itch and enjoy looking at returns on that daily. The overall key for us is the unchanging belief that staying in for the long term is best and that trading typically reduces return below the return for the underlying equities.

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Re: who here is tempted to pullback on stocks?

Post by EnjoyIt »

I wonder, if one is financially independent, has won the game, has 10 years in bonds, but still employed for various reasons. Why hold more bonds? 10 years is a long time. Maybe it’s okay to drift past a 60/40 portfolio (10 years in bonds.) maybe it’s okay to change one’s IPS to go from 60/40 to 10 years spending in bonds instead. I guess it all depends on what allows one to sleep well at night and not make a mistake during the next correction.
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HomerJ
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Re: who here is tempted to pullback on stocks?

Post by HomerJ »

EnjoyIt wrote: Thu Apr 08, 2021 10:30 am I wonder, if one is financially independent, has won the game, has 10 years in bonds, but still employed for various reasons. Why hold more bonds? 10 years is a long time. Maybe it’s okay to drift past a 60/40 portfolio (10 years in bonds.) maybe it’s okay to change one’s IPS to go from 60/40 to 10 years spending in bonds instead. I guess it all depends on what allows one to sleep well at night and not make a mistake during the next correction.
I agree that maintaining a certain amount in bonds (like 10-15 years expenses) once you hit your number is a reasonable alternative to a percentage-based Asset Allocation.
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Re: who here is tempted to pullback on stocks?

Post by Beensabu »

I went from 75/25 to 45/55 and dumped small cap today ¯\_(ツ)_/¯
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HomerJ
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Re: who here is tempted to pullback on stocks?

Post by HomerJ »

Beensabu wrote: Thu Apr 08, 2021 6:15 pm I went from 75/25 to 45/55 and dumped small cap today ¯\_(ツ)_/¯
The important question is why did you do that?

This thread was started in 2013... If you did that in 2013 because you were pretty sure the market was due to crash, you would have felt extremely foolish 8 years later.

If you changed your AA today for the right reasons, you'll feel fine in 2029, regardless of how the markets go. If you changed it for the wrong reasons, let's hope you don't feel foolish in 2029... :(
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Beensabu
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Re: who here is tempted to pullback on stocks?

Post by Beensabu »

HomerJ wrote: Thu Apr 08, 2021 11:13 pm
Beensabu wrote: Thu Apr 08, 2021 6:15 pm I went from 75/25 to 45/55 and dumped small cap today ¯\_(ツ)_/¯
The important question is why did you do that?

This thread was started in 2013... If you did that in 2013 because you were pretty sure the market was due to crash, you would have felt extremely foolish 8 years later.

If you changed your AA today for the right reasons, you'll feel fine in 2029, regardless of how the markets go. If you changed it for the wrong reasons, let's hope you don't feel foolish in 2029... :(
I changed my AA today because I learned something new that made me want to lower risk in some areas and eliminate it in one area entirely. I'm not expecting anything terrible to happen tomorrow, but I'll be okay now if it does. I'm better off sticking around 50/50 for awhile (and perhaps forever), even if the stock market goes on a rip roaring tear to never before imagined heights for the next few years.

I understand why regularly rebalancing to a static/strategic AA is recommended. I understand why 2- and 3-fund portfolios are recommended. I also understand that I'm not in the situation of the investor that those recommendations are for. I need preservation and growth at the same time, and I'm not in the category of those who can brute force contributions later if bad stuff happens. So I have to de-risk now even if it's years too early, and use a non-BH portfolio mix (1/3 of it could be considered "core") to try to smooth out volatility without sacrificing too much growth. It's just that way for me.
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Re: who here is tempted to pullback on stocks?

Post by Always passive »

All those answering here seem to have a long time to go, so they can easily rationalize that even if the market falls, no matter how hard, there is enough time to recover. The challenge is for retirees that due to the incredible performance of equities in the past years, their portfolios have organically grown to a point that maybe they have become a bit too risky. Is it time for them to rebalance, in essence sell equities? I have been struggling with this issue for a few months as my earlier posts have shown. Notwithstanding my concern, I seem to be paralyzed by the lousy present situation of bonds. The Fed at its best, I suppose!
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Re: who here is tempted to pullback on stocks?

Post by coachd50 »

Reading the posts in this thread (new and old) reminds me of a thread about a year ago where it was obvious (and in my opinion dangerous- particularly to newer posters) that some people don’t understand or don’t care to differentiate the terms rebalancing from the concept of changing an Asset Allocation.

You rebalance because of what the market has done/does. You change an asset allocation because of changes in your personal situation (including simply getting older) regardless of what the market is doing.
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Re: who here is tempted to pullback on stocks?

Post by Robot Monster »

HomerJ wrote: Wed Apr 07, 2021 9:58 pm
HomerJ wrote: Thu Nov 21, 2013 10:21 am
sambb wrote:There is a point. The point is, similar to late 2000s, if market goes down, you get back in.
What if the market doesn't go back down? There were people in 1992 who sold out after a 200% gain from the bottom of 1987. I think they're still waiting for the DOW to get back to 3600
I am within my asset allocation, but it has been a long time to get to these levels. Who wouldnt be tempted to get some profits.
So you've been changing your asset allocation as you go.. The way it works is you pick an asset allocation (say 50/50) and you rebalance occasionally. That's how you take profits. Forces you to sell high and buy low. You don't try to predict the future, but you rebalance based on what has already happened in the past.

You don't change your AA based on predicting what will happen next (well, some here do), but it's better to only change your AA to reflect your personal circumstances (getting older, close to retirement, you've made enough you don't need to take extra risk anymore). Market-timing is mostly a fool's game.
Man I was smart even back in 2013. Thanks Bogleheads! (teaching me since 2008)...
I like that post of hours very much, alongside your trapdoor post.
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Re: who here is tempted to pullback on stocks?

Post by smitcat »

Always passive wrote: Fri Apr 09, 2021 12:34 am All those answering here seem to have a long time to go, so they can easily rationalize that even if the market falls, no matter how hard, there is enough time to recover. The challenge is for retirees that due to the incredible performance of equities in the past years, their portfolios have organically grown to a point that maybe they have become a bit too risky. Is it time for them to rebalance, in essence sell equities? I have been struggling with this issue for a few months as my earlier posts have shown. Notwithstanding my concern, I seem to be paralyzed by the lousy present situation of bonds. The Fed at its best, I suppose!
"The challenge is for retirees that due to the incredible performance of equities in the past years, their portfolios have organically grown to a point that maybe they have become a bit too risky."

Here is our summary view for what its worth...
We are retired, had planned for a moderate or typical stock performance, instead it was more 'incredible', as a result our portfolio is larger than we had planned.
Our view is that we are at less risk than originally planned, we are able to withstand a lower stock drop and/or a longer stock drop in the future.
We still have no way to predict future equity market moves in any way - just in a better place now.
YMMV
Tamalak
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Re: who here is tempted to pullback on stocks?

Post by Tamalak »

who here is tempted to pullback on stocks?
Me, but after reading the date on this post, I'm a whole lot less tempted. Thanks! :sharebeer
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Re: who here is tempted to pullback on stocks?

Post by garlandwhizzer »

Temptation is one thing. Acting on it is quite another. Pulling back on stocks at this point in time suggests one of two things. You either have too aggressive an asset allocation or you know with actionable certainty where the market is going in the near/intermediate term. The solution to the first problem is to adjust your risk versus safe assets until it aligns properly with your risk tolerance versus investment return goals. That is not easy to do but is very important to get right. It is a highly personal decision that you get from knowing yourself and your personal financial circumstances. Better to derive it that way rather than copying it from a book or media or a so called expert IMO. You want a mix can live with through thick or thin that also gets you to your financial goals with realistic assumptions. Risk assets can vary from 0% to 100% depending on circumstances.

As for the second problem that is easy. No one knows where the market is going with actionable certainty in the near or intermediate term. That goes for Nobel Prize winners as well as beginners. All we have is guesses and most evidence suggests that self-styled expert guesses are little if any better than amateurs. Skepticism is IMO the appropriate attitude to future market timing predictions regardless of who makes them.

It is normal for us to feel temptations. It is usually counterproductive to act on those temptations. Unless you're determined to self-destruct your investing career it is a good idea not to do emotionally based market timing decisions based on current market action.

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Re: who here is tempted to pullback on stocks?

Post by TomatoTomahto »

I’m somewhat tempted in the opposite direction. As part of a quasi-Liability Matching Portfolio (LMP) (emphasis on quasi rather than LMP :D ), I put $3M in “safe-ish” assets (eg, TBM, Stable Value, cash, etc). That has grown to $3.7M while I wasn’t watching.

Should I trim it to $3M? It’s tempting, but I think I’ll let it ride.
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Re: who here is tempted to pullback on stocks?

Post by watchnerd »

En lieu of reducing equity exposure, we'll be adding more negatively correlated hedging on the non-equity side.

Reducing equity exposure isn't the only defeasance.
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Re: who here is tempted to pullback on stocks?

Post by RAchip »

No way. In addition to money in the VG s&p fund, I have a fairly large account with individual blue chip dividend paying stocks that pumps out about $400k/year in qualified dividends. Whatever the stock market does is mostly irrelevant to this account. It just pumps out reliable growing qualified dividend income every year.
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Re: who here is tempted to pullback on stocks?

Post by mikejuss »

Beensabu wrote: Thu Apr 08, 2021 6:15 pm I went from 75/25 to 45/55 and dumped small cap today ¯\_(ツ)_/¯
That's called market timing--and not looked upon kindly by most Bogleheads. More likely than not, you've just forfeited future gains. My suggestion is to think harder about your asset allocation (based on your age, income, and savings), and lock it in through thick and thin.
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Re: who here is tempted to pullback on stocks?

Post by goodenyou »

I would pullback if I was retired and had exceeded my number by a significant amount during the recent run up in equities. If my re-balancing bands were exceed, that is. Since we are both still working and have human capital at work, we are adding a significant amount (2 years of expenses) to our portfolio every year. We can withstand a pullback in stocks.
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Re: who here is tempted to pullback on stocks?

Post by mikejuss »

goodenyou wrote: Fri Apr 09, 2021 2:03 pm I would pullback if I was retired and had exceeded my number by a significant amount during the recent run up in equities. If my re-balancing bands were exceed, that is. Since we are both still working and have human capital at work, we are adding a significant amount (2 years of expenses) to our portfolio every year. We can withstand a pullback in stocks.
Ideally, one's asset allocation has nothing to do with market movements (or one's hunch about future movements); it is determined according to one's age, income, and savings, translated into risk tolerance.
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Re: who here is tempted to pullback on stocks?

Post by goodenyou »

mikejuss wrote: Fri Apr 09, 2021 2:06 pm
goodenyou wrote: Fri Apr 09, 2021 2:03 pm I would pullback if I was retired and had exceeded my number by a significant amount during the recent run up in equities. If my re-balancing bands were exceed, that is. Since we are both still working and have human capital at work, we are adding a significant amount (2 years of expenses) to our portfolio every year. We can withstand a pullback in stocks.
Ideally, one's asset allocation has nothing to do with market movements (or one's hunch about future movements); it is determined according to one's age, income, and savings, translated into risk tolerance.
When market movements have distracted their AA outside their re-balancing bands, then one would "pullback" and re-balance. My personal preference is to reduce risk (change AA) once I have exceeded my number by a significant amount. I have less willingness and need to take more risk with a larger portfolio. But, that is me.
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Re: who here is tempted to pullback on stocks?

Post by watchnerd »

mikejuss wrote: Fri Apr 09, 2021 2:06 pm

Ideally, one's asset allocation has nothing to do with market movements (or one's hunch about future movements); it is determined according to one's age, income, and savings, translated into risk tolerance.
That's certainly the mantra.

I've always thought it was a bit silly, at least for me, as my risk tolerance varies by market conditions and perceptions of opportunity costs and risk/reward.

And I don't think I'm alone, given the number of people who cite TINA as one reason stocks are booming.
Last edited by watchnerd on Fri Apr 09, 2021 2:23 pm, edited 1 time in total.
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Re: who here is tempted to pullback on stocks?

Post by mikejuss »

goodenyou wrote: Fri Apr 09, 2021 2:17 pm
mikejuss wrote: Fri Apr 09, 2021 2:06 pm
goodenyou wrote: Fri Apr 09, 2021 2:03 pm I would pullback if I was retired and had exceeded my number by a significant amount during the recent run up in equities. If my re-balancing bands were exceed, that is. Since we are both still working and have human capital at work, we are adding a significant amount (2 years of expenses) to our portfolio every year. We can withstand a pullback in stocks.
Ideally, one's asset allocation has nothing to do with market movements (or one's hunch about future movements); it is determined according to one's age, income, and savings, translated into risk tolerance.
When market movements have distracted their AA outside their re-balancing bands, then one would "pullback" and re-balance. My personal preference is to reduce risk (change AA) once I have exceeded my number by a significant amount. I have less willingness and need to take more risk with a larger portfolio. But, that is me.
Recalibrating your asset allocation based on market movements is one thing, and rebalancing back into an established asset allocation is another. The former is not advisable.
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Re: who here is tempted to pullback on stocks?

Post by mikejuss »

watchnerd wrote: Fri Apr 09, 2021 2:22 pm
mikejuss wrote: Fri Apr 09, 2021 2:06 pm

Ideally, one's asset allocation has nothing to do with market movements (or one's hunch about future movements); it is determined according to one's age, income, and savings, translated into risk tolerance.
That's certainly the mantra.

I've always thought it was a bit silly, at least for me, as my risk tolerance varies by market conditions and perceptions of opportunity costs and risk/reward.

And I don't think I'm alone, given the number of people who cite TINA as one reason stocks are booming.
With all due respect, if that's the case, then you may not be cut out for investing (as least as the term was used by Jack Bogle). There are people who are paid to analyze market movements and make bets based on their perceptions. I for one am sure I can't possibly know more than they do about such things--and I don't want to spend all of my waking hours (as they do) studying them--so I don't waste my time on opportunity costs and whatnot. Do you believe that you have special insights into market movements that can consistently yield profits in excess of those related to a buy-and-hold strategy? If so, I suggest you monetize this skill immediately.
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Re: who here is tempted to pullback on stocks?

Post by TimeTheMarket »

dukeblue219 wrote: Thu Apr 08, 2021 8:39 am Tempted in my gut, yes, but then I look at bond yields and my gut feeling on where rates are headed and that balances it out.
This.

The only rebalance I’ve done lately is to pull even more away from bonds in my kids’ 529. My 401k is already 100% stocks.

This thread is like so many others: OP asks if they should market time, spends time arguing why what they are doing is not market timing (it always is) and is pretty much invariably proven by history, with subsequent thread bumps, as making a foolhardy move—if they ignore the universal advice not to do what they are thinking of doing.
Username is not serious :)
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Re: who here is tempted to pullback on stocks?

Post by mikejuss »

TimeTheMarket wrote: Fri Apr 09, 2021 2:48 pm
dukeblue219 wrote: Thu Apr 08, 2021 8:39 am Tempted in my gut, yes, but then I look at bond yields and my gut feeling on where rates are headed and that balances it out.
This.

The only rebalance I’ve done lately is to pull even more away from bonds in my kids’ 529. My 401k is already 100% stocks.

This thread is like so many others: OP asks if they should market time, spends time arguing why what they are doing is not market timing (it always is) and is pretty much invariably proven by history, with subsequent thread bumps, as making a foolhardy move—if they ignore the universal advice not to do what they are thinking of doing.
Your post is confusing: you're shaking your head over people who are market timing into bonds, while admitting to market timing into stocks. :confused
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Re: who here is tempted to pullback on stocks?

Post by Candor »

Yes and yes. I was tempted in 2013 when this tread was started and I'm tempted today. I didn't do anything in 2013 and I was probably 80-90% in equities at the time. I will be retiring in a couple of months relatively early and I'm currently at 62/38. I started moving to a more conservative aa in 2019 in anticipation of retirement and I was close to 50/50 just prior to the pandemic. I've been thinking a lot lately about going back to that aa or possibly 55/45 to lock in some more of these unexpected gains of the last year or actually the last 10 years since my emphasis is shifting towards preservation over growth but at these levels it doesn't make much difference one way or the other.
Time is your friend, impulse is your enemy. - John C. Bogle
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Re: who here is tempted to pullback on stocks?

Post by Broken Man 1999 »

I haven't been tempted to pull back in stocks, in fact I increased the equity portion of our AA last year from 50% to 55%. Part of my long-term plan to get to 60% equities for our final AA, 60/40.

I rebalance when needed, and after selling bonds and buying equities last year, everything since that has been selling equities and buying bond funds.

The higher our equity portion balance grows, the higher our bond funds balances grow, also. It is not a 1:1 trade, as bond funds are leaking a bit, but still desirable for us. We don't depend on the interest for expenses, what ever we get is fine. Little effort required, for rebalancing, I am pleased to do this activity as long as the market is rising, and I can reverse the holdings being sold, selling bond funds when needed. I am rather slothful, but rebalancing doesn't cause me to break into a sweat, so I'll keep doing it when needed.

Another ATH for our portfolio. What's not to like?

Broken Man 1999
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Re: who here is tempted to pullback on stocks?

Post by mikejuss »

Broken Man 1999 wrote: Fri Apr 09, 2021 3:22 pm I haven't been tempted to pull back in stocks, in fact I increased the equity portion of our AA last year from 50% to 55%. Part of my long-term plan to get to 60% equities for our final AA, 60/40.

I rebalance when needed, and after selling bonds and buying equities last year, everything since that has been selling equities and buying bond funds.

The higher our equity portion balance grows, the higher our bond funds balances grow, also. It is not a 1:1 trade, as bond funds are leaking a bit, but still desirable for us. We don't depend on the interest for expenses, what ever we get is fine. Little effort required, for rebalancing, I am pleased to do this activity as long as the market is rising, and I can reverse the holdings being sold, selling bond funds when needed. I am rather slothful, but rebalancing doesn't cause me to break into a sweat, so I'll keep doing it when needed.

Another ATH for our portfolio. What's not to like?

Broken Man 1999
That's interesting. I'm curious: why aren't you at 60/40 now? It seems weird to have a riskier asset allocation in retirement than preretirement.
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Re: who here is tempted to pullback on stocks?

Post by Carol88888 »

I didn't read the post because I had to smile when I saw that the date of the original post was back in 2013.

I hope that more of these posts will get revisited in the fullness of time.
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Re: who here is tempted to pullback on stocks?

Post by Carol88888 »

rascott wrote: Thu Apr 08, 2021 8:00 am
livesoft wrote: Thu Apr 08, 2021 7:54 am But some of the folks here on bogleheads.org must have to rebalance at least a little bit out of equities in the coming months, right? If y'all are all being so successful "staying the course" you certainly don't want to vary from the course and get overweighted in equities right?

Watch out for too much euphoria just as you dismiss too much doom & gloom.
Some of us have been 100% equities forever..... so not much to really do to stay the course.
I, too, am 100% equities. I have just been adding a little bit to what is down.
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Re: who here is tempted to pullback on stocks?

Post by Broken Man 1999 »

mikejuss wrote: Fri Apr 09, 2021 3:27 pm
Broken Man 1999 wrote: Fri Apr 09, 2021 3:22 pm I haven't been tempted to pull back in stocks, in fact I increased the equity portion of our AA last year from 50% to 55%. Part of my long-term plan to get to 60% equities for our final AA, 60/40.

I rebalance when needed, and after selling bonds and buying equities last year, everything since that has been selling equities and buying bond funds.

The higher our equity portion balance grows, the higher our bond funds balances grow, also. It is not a 1:1 trade, as bond funds are leaking a bit, but still desirable for us. We don't depend on the interest for expenses, what ever we get is fine. Little effort required, for rebalancing, I am pleased to do this activity as long as the market is rising, and I can reverse the holdings being sold, selling bond funds when needed. I am rather slothful, but rebalancing doesn't cause me to break into a sweat, so I'll keep doing it when needed.

Another ATH for our portfolio. What's not to like?

Broken Man 1999
That's interesting. I'm curious: why aren't you at 60/40 now? It seems weird to have a riskier asset allocation in retirement than preretirement.
I am planning to increase equity portion in five year intervals, started in 2015 with 50/50, in 2020 increased to 55/45, and plan to go to 60/40 in 2025. Our retirement is very well funded, I am investing in equities mainly for legacy reasons.

Each five year period that passes subtracts five years from our portfolio's need to support both/one of us.

In hindsight, given what the market has done, we could have started our retirement with a 60/40 AA, and been just fine. Of course the market could have been just as bad as it has been good.

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Re: who here is tempted to pullback on stocks?

Post by mikejuss »

Broken Man 1999 wrote: Fri Apr 09, 2021 3:51 pmI am planning to increase equity portion in five year intervals, started in 2015 with 50/50, in 2020 increased to 55/45, and plan to go to 60/40 in 2025. Our retirement is very well funded, I am investing in equities mainly for legacy reasons.

Each five year period that passes subtracts five years from our portfolio's need to support both/one of us.

In hindsight, given what the market has done, we could have started our retirement with a 60/40 AA, and been just fine. Of course the market could have been just as bad as it has been good.

Broken Man 1999
Hmm--I still don't get why you're ramping up risk as time goes by, but if you're comfortable with your final asset allocation, that's all that matters.

Turns out there's way more market timing and tweaking on this forum than I ever expected! An interesting phenomenon...
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Re: who here is tempted to pullback on stocks?

Post by Scott S »

watchnerd wrote: Fri Apr 09, 2021 1:32 pmEn lieu of reducing equity exposure, we'll be adding more negatively correlated hedging on the non-equity side.

Reducing equity exposure isn't the only defeasance.
I've been coming around to the same idea over the last year or so. 100% stocks is sexy in the best-case scenario, but shoring up our portfolio against worst-case scenarios stands to get us to retirement sooner with more confidence. So, more of our new contributions are going into those uncorrelated or negatively-correlated assets.
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Re: who here is tempted to pullback on stocks?

Post by secondopinion »

HomerJ wrote: Wed Apr 07, 2021 10:13 pm Don't make changes based on the market... Make changes based on your own personal situation.
Right on point. I take four variables (and their volatility counterparts) as part of the function of how to allocate: risk tolerance, present balance, time until withdraw, and risk behavior; only the last has anything to do the market changes. Since I am very concave in risk behavior (want to increase stocks during bears and want to decrease stocks during bulls), I pick investments prior that take more of certain risks and less of others; this way, I do not need to touch my investments. Anything that encourages you to stay out of it is better; a tilt is less harmful than being swayed by emotions.
It is better to be half-wrong than have a 50% chance of being all-wrong. With the former, you will learn and have money to try again. Otherwise, you will never learn and will have nothing eventually.
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Re: who here is tempted to pullback on stocks?

Post by Broken Man 1999 »

mikejuss wrote: Fri Apr 09, 2021 3:54 pm
Broken Man 1999 wrote: Fri Apr 09, 2021 3:51 pmI am planning to increase equity portion in five year intervals, started in 2015 with 50/50, in 2020 increased to 55/45, and plan to go to 60/40 in 2025. Our retirement is very well funded, I am investing in equities mainly for legacy reasons.

Each five year period that passes subtracts five years from our portfolio's need to support both/one of us.

In hindsight, given what the market has done, we could have started our retirement with a 60/40 AA, and been just fine. Of course the market could have been just as bad as it has been good.

Broken Man 1999
Hmm--I still don't get why you're ramping up risk as time goes by, but if you're comfortable with your final asset allocation, that's all that matters.

Turns out there's way more market timing and tweaking on this forum than I ever expected! An interesting phenomenon...
Read previous post:
I am investing in equities mainly for legacy reasons..

From the Boglehead's wiki:
Author Larry Swedroe defines asset allocation as "the process of investing assets in a manner reflecting one’s unique ability, willingness and need to take risk," with willingness referring to risk tolerance and whether investors have the “fortitude and discipline” to stay with an allocation during market downturns.

I don't need to take risk, but I have the ability, and willingness to do so. Some BH's start retirement with an AA of 100% stocks. I don't see 55/45 or 60/40 as being all that risky.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
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