Market Timing = Always Bad?
- MoneyIsTime
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Market Timing = Always Bad?
I have a question regarding the dreaded “market timing”. I know, it’s been dragged around routinely as bad, and I certainly get the idea about impulse reactions biting you.
My basic situation is this (let me know if I didn't detail something that is important for this question):
• I am 60 yrs old and newly retired (6 months) and have my portfolio assembled and allocated.
• I have approx 60% stocks and 40% bonds+cash. Total value is approx $3.2 mil.
• Stock portion is approx $2 mil.
• Included in that portfolio I have a 5 year cash/CD ladder built ($500k at $100 each). OK, since it’s March, I guess I have 4.9yrs.
• My bond fund is 6 years of money if it doesn’t crash horribly.
• So I have 11 years (5+6) of my budget before touching stocks if I need or if market is bad.
• I have no pension and plan to collect SS at 70.
Anyhow, here is my question: If the stocks go up to a high enough percent, should I cash out another years worth at that time to add another CD ladder rung? For my situation, that would be about 5% further stock increase. And the market is on a current upswing.
I have searched the bogleheads forum and most people in my situation seem to recommend just withdrawing “blindly” once a month or once a year/etc from their portfolio. This is mostly justified as steady investing means steady withdrawing. I am so newly retired I haven’t gotten into any routine for the withdrawing part. I have read the Withdrawal Methods section of the wiki and the many accompanying posts, so I know there are a LOT of ideas out there. I’m still thinking, but I am currently drawn to these methods:
a) Spend only the dividends
b) Variable Percentage Withdrawal (VPW), which user "longinvest" has done an amazing job detailing.
I could imagine several responses to my question:
1) Duh! Sell when the market is high man! Do the 5% cashout.
2) Don’t do it, the market on average will go up even more after I go through a rung or 2 of my CD ladder.
3) Go with a steady withdraw rate, looking at current markets will only torment me.
4) Others responses.
I’m looking to learn here, let me know your ideas. I’m a newbie at this withdrawing part and frankly it feels really scary since I’ve been only saving my whole life. How do you current retirees do the withdrawing?
My basic situation is this (let me know if I didn't detail something that is important for this question):
• I am 60 yrs old and newly retired (6 months) and have my portfolio assembled and allocated.
• I have approx 60% stocks and 40% bonds+cash. Total value is approx $3.2 mil.
• Stock portion is approx $2 mil.
• Included in that portfolio I have a 5 year cash/CD ladder built ($500k at $100 each). OK, since it’s March, I guess I have 4.9yrs.
• My bond fund is 6 years of money if it doesn’t crash horribly.
• So I have 11 years (5+6) of my budget before touching stocks if I need or if market is bad.
• I have no pension and plan to collect SS at 70.
Anyhow, here is my question: If the stocks go up to a high enough percent, should I cash out another years worth at that time to add another CD ladder rung? For my situation, that would be about 5% further stock increase. And the market is on a current upswing.
I have searched the bogleheads forum and most people in my situation seem to recommend just withdrawing “blindly” once a month or once a year/etc from their portfolio. This is mostly justified as steady investing means steady withdrawing. I am so newly retired I haven’t gotten into any routine for the withdrawing part. I have read the Withdrawal Methods section of the wiki and the many accompanying posts, so I know there are a LOT of ideas out there. I’m still thinking, but I am currently drawn to these methods:
a) Spend only the dividends
b) Variable Percentage Withdrawal (VPW), which user "longinvest" has done an amazing job detailing.
I could imagine several responses to my question:
1) Duh! Sell when the market is high man! Do the 5% cashout.
2) Don’t do it, the market on average will go up even more after I go through a rung or 2 of my CD ladder.
3) Go with a steady withdraw rate, looking at current markets will only torment me.
4) Others responses.
I’m looking to learn here, let me know your ideas. I’m a newbie at this withdrawing part and frankly it feels really scary since I’ve been only saving my whole life. How do you current retirees do the withdrawing?
“You are free to do whatever you like. You need only face the consequences.” — Sheldon B. Kopp |
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AA 60/40 = Stock/Bond+Cash. MFJ, Ages 60/59, Retired 6/2023, Still figuring out retirement.
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Re: Market Timing = Always Bad?
Only when you guess incorrectly. You may get lucky!
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Re: Market Timing = Always Bad?
Investing is about discipline. You need to set up a plan and stick to it. If you want a 60/40 portfolio that is what you should have as long as it provides the cash flow needs that you have. So if you want the 11 years in cash and bonds then you can rebalance each quarter or annually. I have a bond fund and CDs to provide me with 5 years cash flow that I will need. I will adjust it periodically to ensure I keep around 5 years of cash flow needs. It doesn’t matter if the market is up or down, I will need to have the cash.
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Re: Market Timing = Always Bad?
If the stock market continues to outpace other markets, I would assume at some point your AA will drift and you will sell some stock to buy fixed income assets and bring your AA back to target. In this regard, you are not market timing.
Re: Market Timing = Always Bad?
+1 for this simple and clear response!johnegonpdx wrote: Sat Mar 02, 2024 11:00 am If the stock market continues to outpace other markets, I would assume at some point your AA will drift and you will sell some stock to buy fixed income assets and bring your AA back to target. In this regard, you are not market timing.
OP, you have a stated AA of 60/40... just rebalance annually and if stocks have been high, then you'll be selling some to buy more bonds low. That's a plan that you should stick to, rather than using some other measure than your current AA vs your target AA to determine "the market is high so I should sell some stocks and buy some bonds." Inversely, if your current AA falls below 60% stocks, you should be selling bonds or using cash to buy stocks and bring your AA back into alignment.
Don't do what Bogleheads tell you. Listen to what we say, consider other sources, and make your own decisions, since you have to live with the risks & rewards (not us or anyone else).
- MoneyIsTime
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Re: Market Timing = Always Bad?
Thanks all for the replies so far. Feel free to chime in if you have added ideas. Yes, I guess re-balancing the AA makes the most sense, rather than thinking of it like what should I sell when type problem. On a related note, what time frame do some of you retirees use for re-balancing? Once or twice a year?
“You are free to do whatever you like. You need only face the consequences.” — Sheldon B. Kopp |
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AA 60/40 = Stock/Bond+Cash. MFJ, Ages 60/59, Retired 6/2023, Still figuring out retirement.
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Re: Market Timing = Always Bad?
There's a lot of language in there about things going up and down. That's a red flag that you're likely to do something you regret one day by worrying about the state of the market imo. Best advice I have is turn the news off. They are always wrong, anyway. Never listen to any financial guru about the state of the market, they are always wrong, too but they will claim the same wrong assertion for decades if need be so they can suddenly declare they were right (as long as you ignore all the decades they were wrong). It's like the weather man saying it's going to rain 363 days in a row then the 364th time it finally does and he tells you "called it". Yes, I would blindly withdraw a safe amount and enjoy life focusing on other items. It's hard for most of us to accept that we don't need to "do something". 60/40 sounds like a fine ratio to me, I would sleep just fine.
Last edited by investuntilimrich on Sat Mar 02, 2024 2:04 pm, edited 1 time in total.
- arcticpineapplecorp.
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Re: Market Timing = Always Bad?
usually when a predetermined rebalancing band is breached.MoneyIsTime wrote: Sat Mar 02, 2024 1:52 pm Thanks all for the replies so far. Feel free to chime in if you have added ideas. Yes, I guess re-balancing the AA makes the most sense, rather than thinking of it like what should I sell when type problem. On a related note, what time frame do some of you retirees use for re-balancing? Once or twice a year?
if you read the article, you can see it may take large swings to actually require rebalancing depending on the allocation of your portfolio.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions |


- MoneyIsTime
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Re: Market Timing = Always Bad?
Good point. I likely inadvertently emphasized the up/down market thing. My past 35 yrs of investing has been set a plan and just keep saving, never really looking at the markets. True Bogle. I got to stick to that idea in reverse. I think my hang up is the withdrawing part, as saving is so much easier for me than spending a finite resource. Long years ahead = saving no problem. Limited time and money = spending is tough if you're a belt and suspenders type guy like me.investuntilimrich wrote: Sat Mar 02, 2024 1:56 pm There's a lot of language in there about things going up and down. That's a red flag that you're likely to do something you regret one day by worrying about the state of the market imo. Best advice I have is turn the news off. They are always wrong, anyway. Never listen to any financial guru about the state of the market, they are always wrong, too but they will claim the same wrong assetion for decades if need to be so they can suddenly declare they were right (as long as you ignore all the decades they were wrong). Yes, I would blindly withdraw a safe amount and enjoy life focusing on other items.
“You are free to do whatever you like. You need only face the consequences.” — Sheldon B. Kopp |
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AA 60/40 = Stock/Bond+Cash. MFJ, Ages 60/59, Retired 6/2023, Still figuring out retirement.
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Re: Market Timing = Always Bad?
Ya I see what you're saying sorry I just skimmed the question. I have not hit the withdrawing period yet so I am no help there!
Re: Market Timing = Always Bad?
It's not always bad. But when it is good, it is generally due to luck and not skill.
Re: Market Timing = Always Bad?
I have a 60/40 portfolio as well, and rebalance via bands when the major asset allocation—stocks/bonds—are out by 5%, which in this case is about 62.5/37.5. I also rebalance the assets that are a smaller portion of my portfolio with bands of 25%. I’ve been following this method satisfactorily since Larry Swedroe published it in one of his earlier books.MoneyIsTime wrote: Sat Mar 02, 2024 1:52 pm Thanks all for the replies so far. Feel free to chime in if you have added ideas. Yes, I guess re-balancing the AA makes the most sense, rather than thinking of it like what should I sell when type problem. On a related note, what time frame do some of you retirees use for re-balancing? Once or twice a year?
Re: Market Timing = Always Bad?
Normally you would do this through rebalancing.MoneyIsTime wrote: Sat Mar 02, 2024 10:33 am I have a question regarding the dreaded “market timing”. I know, it’s been dragged around routinely as bad, and I certainly get the idea about impulse reactions biting you.
My basic situation is this (let me know if I didn't detail something that is important for this question):
• I am 60 yrs old and newly retired (6 months) and have my portfolio assembled and allocated.
• I have approx 60% stocks and 40% bonds+cash. Total value is approx $3.2 mil.
• Stock portion is approx $2 mil.
• Included in that portfolio I have a 5 year cash/CD ladder built ($500k at $100 each). OK, since it’s March, I guess I have 4.9yrs.
• My bond fund is 6 years of money if it doesn’t crash horribly.
• So I have 11 years (5+6) of my budget before touching stocks if I need or if market is bad.
• I have no pension and plan to collect SS at 70.
Anyhow, here is my question: If the stocks go up to a high enough percent, should I cash out another years worth at that time to add another CD ladder rung? For my situation, that would be about 5% further stock increase. And the market is on a current upswing.
Another 5% up in the stock market would bring you to $2.1 million, with still $1.2 million in bonds/cash.
So that would put you around 64/36, so you could sell some stocks and buy some bonds or a CD, and get back to 60/40.
Selling the full 100k gain would put you back at $2 million in stocks, and $1.3 million in bonds/cash is actually very close to 60/40.
So I think it's a fine idea.
I also very much understand the psychological boost one gets, "locking in" a stock market gain, being very close to retirement. I've been doing it too.
The first couple of years are the most-nerve wracking, worrying about finances, so adding to the buffer does help one ease one's mind a bit.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Re: Market Timing = Always Bad?
That's not the Swedroe method. He prescribed a 5/25 rule, where an asset class goes an absolute 5% off the target or a relative 25%, whichever is reached first. Using that method, a 60/40 would need re-balancing when it gets to 65/35 or 55/45 (because using the 25% would require a 60/40 allocation to get 75/25 and 65/35 would come first). You don't apply the 5% on 60%, which would require re-balancing at 63/37 (not sure how you applied either side of 5/25 to get 62.5/37.5). The 25% rule would trigger first on smaller chunks, such as someone using 15% International stock allocation would hit 18.75% (or 11.25%) before hitting 20%.tetractys wrote: Sat Mar 02, 2024 3:48 pmI have a 60/40 portfolio as well, and rebalance via bands when the major asset allocation—stocks/bonds—are out by 5%, which in this case is about 62.5/37.5. I also rebalance the assets that are a smaller portion of my portfolio with bands of 25%. I’ve been following this method satisfactorily since Larry Swedroe published it in one of his earlier books.MoneyIsTime wrote: Sat Mar 02, 2024 1:52 pm Thanks all for the replies so far. Feel free to chime in if you have added ideas. Yes, I guess re-balancing the AA makes the most sense, rather than thinking of it like what should I sell when type problem. On a related note, what time frame do some of you retirees use for re-balancing? Once or twice a year?
OP, Re-balancing using the method above is not market timing.
I personally don't think buying stocks by selling cash/bonds is necessary re-balancing needed for retirees unless they also have additional conditions set forth that guarantees they have an X number of years of spending in cash/bonds secured. For instance, you may hit 55/45 band which would require you to sell 5% cash/bonds to bring equities to 60%. However, if you also have a rule that says you need at least 10 years worth of living expenses in cash/bonds (because equities could stay down for that long or even more), then if you do not have in excess of that many years (say 11 or 12 years if 10 is your baseline), you do not sell cash/bonds to re-balance equities.
This method is what I intend to follow. Obviously, some people may disagree and that's okay, because everyone has different risk levels, some may have other sources of income such as pensions, rentals, etc. I would draw this line by writing down how many years you need in cash/bonds, below that you won't sell them to buy equities, then only do sell equities re-balancing as an always on rule. Hope that helps.
Last edited by Elysium on Sat Mar 02, 2024 6:53 pm, edited 2 times in total.
Re: Market Timing = Always Bad?
You concisely stated my response.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
Re: Market Timing = Always Bad?
Another concise statement of what I also believe.the_wiki wrote: Sat Mar 02, 2024 2:25 pm It's not always bad. But when it is good, it is generally due to luck and not skill.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
Re: Market Timing = Always Bad?
You can rebalance to your heart's content when stocks go up a high enough percent. You don't have to buy another years worth to add to your CD ladder rung because you can still sell equities and buy fixed income. Example: Your 60/40 becomes 61/39. In that case you can sell equities and invest in a money market fund, a bond fund, CDs, or something non-equity. You can also take some bond fund money and buy a CD whenever you want.MoneyIsTime wrote: Sat Mar 02, 2024 10:33 amAnyhow, here is my question: If the stocks go up to a high enough percent, should I cash out another years worth at that time to add another CD ladder rung? For my situation, that would be about 5% further stock increase. And the market is on a current upswing.
And don't forget that if stocks go down, then you will probably want to buy more equities, right?
And I market time all the time, so if you market time, then I won't hold it against you.
Re: Market Timing = Always Bad?
Your post implies you are withdrawing to cover for spending needs. So if your stock allocation is too high, just sell some of that to cover your spending needs. Effectively, that's your re-balance. The decision to add it to your ladder can be a separate consideration.MoneyIsTime wrote: Sat Mar 02, 2024 10:33 am
• I have no pension and plan to collect SS at 70.
Anyhow, here is my question: If the stocks go up to a high enough percent, should I cash out another years worth at that time to add another CD ladder rung? For my situation, that would be about 5% further stock increase. And the market is on a current upswing.
I also withdraw from my IRA's for spending. I've kept a small spending bucket. I reconcile it's balances every 6 months. My Investing Policy Statement says to sell either equities or fixed income, whichever went up the most, into this bucket.
Once a year in January I re-balance (5 % window) all accounts regardless as to whether or not it is a withdrawal account. This includes our Roth's. I do a quick check mid-year but seldomly change anything. Re-balancing on a schedule is not "timing".
It's OK to use whatever mental gimmicks help you keep the path you've chosen.
Re: Market Timing = Always Bad?
When I was still working I did active rebalance using bands (5/25 per Larry).MoneyIsTime wrote: Sat Mar 02, 2024 10:33 am I’m looking to learn here, let me know your ideas. I’m a newbie at this withdrawing part and frankly it feels really scary since I’ve been only saving my whole life. How do you current retirees do the withdrawing?
Now that I'm retired I do passive rebalancing. If I need money from my portfolio I withdraw from the asset class that is over my AA.
Re: Market Timing = Always Bad?
Oh, thanks for the correction. I’ve actually never had to use the 5% part, and forgot how it works. Yea you’re right, it’s coming back now.Elysium wrote: Sat Mar 02, 2024 6:48 pmThat's not the Swedroe method. He prescribed a 5/25 rule, where an asset class goes an absolute 5% off the target or a relative 25%, whichever is reached first.
Re: Market Timing = Always Bad?
+1livesoft wrote: Sat Mar 02, 2024 7:05 pmYou can rebalance to your heart's content when stocks go up a high enough percent. You don't have to buy another years worth to add to your CD ladder rung because you can still sell equities and buy fixed income. Example: Your 60/40 becomes 61/39. In that case you can sell equities and invest in a money market fund, a bond fund, CDs, or something non-equity. You can also take some bond fund money and buy a CD whenever you want.MoneyIsTime wrote: Sat Mar 02, 2024 10:33 amAnyhow, here is my question: If the stocks go up to a high enough percent, should I cash out another years worth at that time to add another CD ladder rung? For my situation, that would be about 5% further stock increase. And the market is on a current upswing.
And don't forget that if stocks go down, then you will probably want to buy more equities, right?
And I market time all the time, so if you market time, then I won't hold it against you.
Re: Market Timing = Always Bad?
+1Leif wrote: Sat Mar 02, 2024 7:41 pmWhen I was still working I did active rebalance using bands (5/25 per Larry).MoneyIsTime wrote: Sat Mar 02, 2024 10:33 am I’m looking to learn here, let me know your ideas. I’m a newbie at this withdrawing part and frankly it feels really scary since I’ve been only saving my whole life. How do you current retirees do the withdrawing?
Now that I'm retired I do passive rebalancing. If I need money from my portfolio I withdraw from the asset class that is over my AA.
"Rebalancing" doesn't have to be an annual/timed thing.
I'm currently working, my contributions are in part driven by which part of my AA is lower. If stocks have been doing great, I'm likely buying fixed income to nudge closer to target AA.
When we retire, I'll do the opposite with withdrawals, taking from whatever is higher, again nudging back towards target AA.
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Re: Market Timing = Always Bad?
Hello OP,
Your portfolio is large enough to give you much flexibility in your options.
Just make sure you understand all your options.
Your portfolio is large enough to give you much flexibility in your options.
Just make sure you understand all your options.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.
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Re: Market Timing = Always Bad?
MoneyIsTime wrote: Sat Mar 02, 2024 1:52 pm Thanks all for the replies so far. Feel free to chime in if you have added ideas. Yes, I guess re-balancing the AA makes the most sense, rather than thinking of it like what should I sell when type problem. On a related note, what time frame do some of you retirees use for re-balancing? Once or twice a year?
I don't rebalance based on time, I do so based on band.
Some people use 5% band which means every time your portfolio drifts up or down by 5%, you rebalance it back to whatever the target AA is.
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Re: Market Timing = Always Bad?
I think we need a better collective understanding of what "market timing" is. People often seem to think that anything other than robotically making regular contributions towards a target asset allocation is market timing. At its core, this view seems to be based on a belief that markets are generally efficient, or at least know more than you do, which is demonstrably and obviously untrue at times.
In my view, market timing is like the roulette player who bets on black because the last six spins were red. It is a form of gambling, based on some sort of hunch about what is going to happen next.
To me that is entirely different from recognizing when something is cheap, or expensive, and acting on it.
In my view, market timing is like the roulette player who bets on black because the last six spins were red. It is a form of gambling, based on some sort of hunch about what is going to happen next.
To me that is entirely different from recognizing when something is cheap, or expensive, and acting on it.
“The greatest shortcoming of the human race is our inability to understand the exponential function.” - Albert Allen Bartlett
- MoneyIsTime
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Re: Market Timing = Always Bad?
Thanks to the many who’ve chimed in. Excellent points. You've aptly pointed out my original misunderstanding.
That was my original error in calling it “market timing” in my head. It’s not, it’s re-balancing.
Regarding “market timing”, Stormbringer also makes an excellent analogy using the gambler versus the wise buyer type activity.
True market timing = Trying to buy/sell an asset at the low/peak, just right. I think we all agree, good luck on that one...it’ll never happen. And if it does, you're lucky, not smart.
Re-balancing is the proper way of thinking about it, not really “market timing”.
The percentages of being off on the AA makes sense. I hadn’t come across those Larry Swedroe specific percent rules before and that makes a good bit of sense. I will have to research that and define my process for what I want. That way if I can follow it without scratching my head each time. Also if I go insane or get hit by a bus, my spouse can follow the same process without re-inventing the process.
At the risk of re-inflaming the discussion, now I have to figure if set a reminder for once or twice a year, or set an “alert” on stock/bond prices to act. I’m a recovering engineer, so I might be getting too specific about having a trigger. Since this re-balancing is supposed to be a methodical and unhurried type activity, not a surgical strike type thing. My trigger would be an “oh ya, I should do that”, not a panicked drop everything and do this thing. The alert could be similar to the Vanguard’s Stock or ETF alerts you can sign up for. The alert price would indicate a target percent off on my AA if I figure the math right. I’ve played with this alert before as a gee whiz type experiment but did nothing further with it. Perhaps this is an application.
Feel free to add points or say what method you use as a reminder to re-balance. Good discussion! I’ve learned a lot. This Bogle board is pretty knowledgeable.
That was my original error in calling it “market timing” in my head. It’s not, it’s re-balancing.
Regarding “market timing”, Stormbringer also makes an excellent analogy using the gambler versus the wise buyer type activity.
True market timing = Trying to buy/sell an asset at the low/peak, just right. I think we all agree, good luck on that one...it’ll never happen. And if it does, you're lucky, not smart.
Re-balancing is the proper way of thinking about it, not really “market timing”.
The percentages of being off on the AA makes sense. I hadn’t come across those Larry Swedroe specific percent rules before and that makes a good bit of sense. I will have to research that and define my process for what I want. That way if I can follow it without scratching my head each time. Also if I go insane or get hit by a bus, my spouse can follow the same process without re-inventing the process.
At the risk of re-inflaming the discussion, now I have to figure if set a reminder for once or twice a year, or set an “alert” on stock/bond prices to act. I’m a recovering engineer, so I might be getting too specific about having a trigger. Since this re-balancing is supposed to be a methodical and unhurried type activity, not a surgical strike type thing. My trigger would be an “oh ya, I should do that”, not a panicked drop everything and do this thing. The alert could be similar to the Vanguard’s Stock or ETF alerts you can sign up for. The alert price would indicate a target percent off on my AA if I figure the math right. I’ve played with this alert before as a gee whiz type experiment but did nothing further with it. Perhaps this is an application.
Feel free to add points or say what method you use as a reminder to re-balance. Good discussion! I’ve learned a lot. This Bogle board is pretty knowledgeable.
- TimeIsYourFriend
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Re: Market Timing = Always Bad?
Rebalancing can be market timing. For example, if you say you are only going to rebalance when the market appears high to you. Or the stock CAPE is above some level. Or when interest rates are doing x. Or the fed announces y. Or the top 10 stocks are this much concentrated or higher. Or you skip your scheduled rebalancing or do it early or change the methodology mid-stream because you think the market is doing x. Those are all market timing.
"Time is your friend; impulse is your enemy." - John C. Bogle
Re: Market Timing = Always Bad?
I think it depends on how you track your portfolio now, and how your spouse would do so going forward, plus how frequently you'll "pay yourself".MoneyIsTime wrote: Sun Mar 03, 2024 12:06 pm At the risk of re-inflaming the discussion, now I have to figure if set a reminder for once or twice a year, or set an “alert” on stock/bond prices to act. I’m a recovering engineer, so I might be getting too specific about having a trigger. Since this re-balancing is supposed to be a methodical and unhurried type activity, not a surgical strike type thing. My trigger would be an “oh ya, I should do that”, not a panicked drop everything and do this thing. The alert could be similar to the Vanguard’s Stock or ETF alerts you can sign up for. The alert price would indicate a target percent off on my AA if I figure the math right. I’ve played with this alert before as a gee whiz type experiment but did nothing further with it. Perhaps this is an application.
Feel free to add points or say what method you use as a reminder to re-balance. Good discussion! I’ve learned a lot. This Bogle board is pretty knowledgeable.
In our case, I have all our accounts with actual stock holdings that get updated with the latest prices, classified by asset type. Since I already have that, it's an easy formula to look to see if I've "broken" a rebalancing band, if so calculate the amount I need to exchange to get back to target. If you don't have this today, you'll have to ask if it's with it to have/find/use something like this...
As we make frequent contributions (still in accumulation), we review what's over/under allocation and contribute accordingly.
During retirement, if we continue to make "monthly" withdrawals, we'd again do the same.
As such, it's very rare that we need to "manually rebalance". It would take a notable market event, or much smaller contributions/withdrawals that don't move the allocation enough on their own.
Now, my non-financially inclined spouse is not going to do any of this work... My recommendation to them when I'm gone is exchange everything in our tax-advantaged accounts to a "balanced" or "target date" fund that's "close enough" to our target AA. If I'm around long enough, I'll probably do that for them in advance (once taxable is a smaller percentage). This way, it's basically being done "automatically" and no thought, calculation, effort required. Can't get much simpler.
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Re: Market Timing = Always Bad?
Since you already have bond funds, CD Ladder, and cash for the near-term, you've already built a bucket strategy to avoid sequence of returns risk. As others have said, you can rebalance by spending from whichever asset has appreciated the most or is overweight according to your AA strategy.
https://www.bogleheads.org/wiki/Total_p ... eturn_Risk
https://www.bogleheads.org/wiki/Buckets_of_Money
IMHO, the Boglehead mantra to avoid market timing is for the accumulation phase not for decumulation.
Edit: I see that a lot of the links listed on the Buckets_of_Money wiki page are dead. Christine Benz is a regular on WealthTrack (TV show) which are posted to YouTube.
https://www.bogleheads.org/wiki/Total_p ... eturn_Risk
https://www.bogleheads.org/wiki/Buckets_of_Money
IMHO, the Boglehead mantra to avoid market timing is for the accumulation phase not for decumulation.
Edit: I see that a lot of the links listed on the Buckets_of_Money wiki page are dead. Christine Benz is a regular on WealthTrack (TV show) which are posted to YouTube.
- MoneyIsTime
- Posts: 166
- Joined: Tue Jan 23, 2024 6:11 pm
- Location: Wisconsin
Re: Market Timing = Always Bad?
@SnowBog
Good idea on the auto-updating of the portfolio values. I was thinking the same, but struggling with what software might update the live values on a spreadsheet or etc. What do you use...or any ideas? Or do you do it manually?
@AspirationalBH
Thanks for those links, I will click away and see how it adds to my existing strategy. Appreciate it!
FYI, I built a hybrid of this below Thornburg strategy. I haven’t been retired long, so I’m unsure how it will weather, but it seems very good and logical to me. And a key for me, low stress, given I have years to live on a bad market.
https://www.thornburg.com/article/build ... ve-ladder/
Edit: This bucket system seems to work well right now that I can get 5%-ish CD ladders. Perhaps in a different market it will be less desirable to have that much cash laying around.
Good idea on the auto-updating of the portfolio values. I was thinking the same, but struggling with what software might update the live values on a spreadsheet or etc. What do you use...or any ideas? Or do you do it manually?
@AspirationalBH
Thanks for those links, I will click away and see how it adds to my existing strategy. Appreciate it!
FYI, I built a hybrid of this below Thornburg strategy. I haven’t been retired long, so I’m unsure how it will weather, but it seems very good and logical to me. And a key for me, low stress, given I have years to live on a bad market.
https://www.thornburg.com/article/build ... ve-ladder/
Edit: This bucket system seems to work well right now that I can get 5%-ish CD ladders. Perhaps in a different market it will be less desirable to have that much cash laying around.
“You are free to do whatever you like. You need only face the consequences.” — Sheldon B. Kopp |
|
AA 60/40 = Stock/Bond+Cash. MFJ, Ages 60/59, Retired 6/2023, Still figuring out retirement.
Re: Market Timing = Always Bad?
It sort of sounds like you want more CDs because of a life-changing event, being newly retired and uncertainty with making withdrawals. If that's the case, then adopting a slightly higher allocation to CDs for this reason is not timing the market.
Market timing would be buying CDs because you think rates will drop and you want to sell them at a profit when they do (and earning 5% while waiting).
Market timing would also be waiting for stocks to rise before adjusting the CD allocation. (when it's the immediate goal)
In my book, both of these timing events in today's market are reasonable. In Jack's book, prob not.
Market timing would be buying CDs because you think rates will drop and you want to sell them at a profit when they do (and earning 5% while waiting).
Market timing would also be waiting for stocks to rise before adjusting the CD allocation. (when it's the immediate goal)
In my book, both of these timing events in today's market are reasonable. In Jack's book, prob not.
Re: Market Timing = Always Bad?
I use a paid version of Microsoft Excel, which has a Stock data type: https://support.microsoft.com/en-us/off ... a89e210877 I think Google Sheets may have something similar.MoneyIsTime wrote: Sun Mar 03, 2024 9:21 pm @SnowBog
Good idea on the auto-updating of the portfolio values. I was thinking the same, but struggling with what software might update the live values on a spreadsheet or etc. What do you use...or any ideas? Or do you do it manually?
In Excel, I create a "table" (named Table1 below) in my spreadsheet which includes:
Code: Select all
Ticker Type Price Shares Value
VTI Stock =[@Ticker].Price 10 =[@Price]*[@Shares]
FZROX Stock =[@Ticker].Price 15 =[@Price]*[@Shares]
FZNAX Bond =[@Ticker].Price 23 =[@Price]*[@Shares]
I also maintain a separate "summary" table (named Table2 below) with my "target" and "current" allocation. Using the simple Stock/Bond example above, it would look like for a 60/40 allocation.
Code: Select all
Type Target% Current% Current$
Stock 60% =[@[Current$]]/Table2[[#Totals],[Current$]] =SUMIFS(Table1[Value],Table1[Type],"="&[@Type])
Bond 40% =[@[Current$]]/Table2[[#Totals],[Current$]] =SUMIFS(Table1[Value],Table1[Type],"="&[@Type])
The "Current%" simply divides the Current$ from the "total" for all current values.
I didn't put it in the example table above, but there's an additional column I calculate for "Out of Balance $":
Code: Select all
=IF(AND(ABS([@[Target%]]-[@[Current%]])>=MIN(5%,20%*[@[Target%]])),[@[Target%]]-[@[Current%]],0)*Table2[[#Totals],[Current$]]
In the simple example (just stocks and bonds) above, if one is off, the other should be off, so the amounts should net out. In my table I actually have Stocks (US), Stocks (Int), Bonds, Muni [Bonds], and Cash (with them grouped into "Stocks" and "Fixed Income". In this scenario you might only show one line "off" enough to break the "band", and have to figure out where to withdraw/add across the other lines to bring it back in range.
Again in my full implementation, I also keep track of "planned contributions/withdrawals" - and re-check the "after adjustment" %'s. For example, let's say my Bonds are down 6% - but my "planned" contributions will add what works out to be 7% Bonds - "no further action is required" - I'll get back within range via planned contributions (or I'll likely switch any planned contributions that would have gone to stocks to bonds). So, I don't "actively rebalance" unless it's clear that our planned contributions/withdrawals aren't enough to get us back. In other words, it's very rare we rebalance... But I have something to "look at" to make that decision.
Plan to use this the same way in retirement/withdrawal. When we go to "withdraw", can look to see if anything is "above target %" and "plan" to withdraw those first.
However, as noted, my non-financially inclined spouse will not be using this... They won't keep the # of shares updated, or anything else in the spreadsheet... So, it helps me. But I know it's not a "long term" option...
- MoneyIsTime
- Posts: 166
- Joined: Tue Jan 23, 2024 6:11 pm
- Location: Wisconsin
Re: Market Timing = Always Bad?
SnowBog-
Thanks for the great reply and tips!
I’ve used MS Excel for decades (at work) and it was one of my go-to tools as an engineer, but never knew of the real-time auto-fill finance part. As an engineer, real-time fill tools weren’t really needed.
Being recently retired and Mr Cheap Pants, for Word/Excel I’ve used LibreOffice free at home for years. It works great, but doesn’t have the real-time auto-fill finance tools that I’m aware of.
I’ve looked, and Google Sheets does have real-time auto-fill. So that looks very promising for what I need for stock/bond price auto-fill ins. I’ve played with it for just about an hour and it looks like it will work very similar to Excel in the financial things. And it’s...free. Just what I need!
I will try to setup a sheet like you detailed. That looks really good. This Bogle board is as good as it is because of helpful and resourceful users like you. Thanks again for the detailed, excellent reply and pointers!
Thanks for the great reply and tips!
I’ve used MS Excel for decades (at work) and it was one of my go-to tools as an engineer, but never knew of the real-time auto-fill finance part. As an engineer, real-time fill tools weren’t really needed.
Being recently retired and Mr Cheap Pants, for Word/Excel I’ve used LibreOffice free at home for years. It works great, but doesn’t have the real-time auto-fill finance tools that I’m aware of.
I’ve looked, and Google Sheets does have real-time auto-fill. So that looks very promising for what I need for stock/bond price auto-fill ins. I’ve played with it for just about an hour and it looks like it will work very similar to Excel in the financial things. And it’s...free. Just what I need!
I will try to setup a sheet like you detailed. That looks really good. This Bogle board is as good as it is because of helpful and resourceful users like you. Thanks again for the detailed, excellent reply and pointers!

“You are free to do whatever you like. You need only face the consequences.” — Sheldon B. Kopp |
|
AA 60/40 = Stock/Bond+Cash. MFJ, Ages 60/59, Retired 6/2023, Still figuring out retirement.
Re: Market Timing = Always Bad?
FWIW the "free" online version of Excel might include stock data types as well. At least that's how I read: https://support.microsoft.com/en-us/off ... a89e210877
You need a paid version for the desktop app, but if you are considering an online only version with Google Sheets, again might be worth a quick look at Microsoft's online only equivalent.
If you already have an OneDrive account, think you can just open that up from a browser and create a new Excel file in the, it should open up in the web version.
.Note: The Stocks and Geography data types are only available to Microsoft 365 accounts or those with a free Microsoft Account
You need a paid version for the desktop app, but if you are considering an online only version with Google Sheets, again might be worth a quick look at Microsoft's online only equivalent.
If you already have an OneDrive account, think you can just open that up from a browser and create a new Excel file in the, it should open up in the web version.
Re: Market Timing = Always Bad?
Sounds like rebalancing and maintaining a 5-year CD ladder to me.MoneyIsTime wrote: Sat Mar 02, 2024 10:33 am Anyhow, here is my question: If the stocks go up to a high enough percent, should I cash out another years worth at that time to add another CD ladder rung? For my situation, that would be about 5% further stock increase.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
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- Posts: 6036
- Joined: Wed Mar 31, 2010 4:39 pm
Re: Market Timing = Always Bad?
I did a bit of buy low/sell high last week.
Why? I have a comfort level of anywhere from 60% to 80% stocks being mid forties and aiming to retire in 5 years.
My way of doing a bit of rebalancing was moving from Vanguard TDR 2040 to 2035. So down from 75% equities to 70%.
For me, this process is really figuring out my comfort level re: AA.
If markets tanked I’d be ok navigating back up to 80% in retirement accounts.
So, at least for now, I have a flexible AA which I’m ok with. Anything from 60/40, 70/30 to 80/20. Closest to 70/30 now.
The messages and advice here resonate to me. Just takes me my own time to adjust my ‘thinking’ to be a bit more conservative 5 years out.
Anyway, my 2 cents.
Why? I have a comfort level of anywhere from 60% to 80% stocks being mid forties and aiming to retire in 5 years.
My way of doing a bit of rebalancing was moving from Vanguard TDR 2040 to 2035. So down from 75% equities to 70%.
For me, this process is really figuring out my comfort level re: AA.
If markets tanked I’d be ok navigating back up to 80% in retirement accounts.
So, at least for now, I have a flexible AA which I’m ok with. Anything from 60/40, 70/30 to 80/20. Closest to 70/30 now.
The messages and advice here resonate to me. Just takes me my own time to adjust my ‘thinking’ to be a bit more conservative 5 years out.
Anyway, my 2 cents.
“At some point you are trading time you will never get back for money you will never spend.“ |
“How do you want to spend the best remaining year of your life?“