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Old 10-26-2012, 11:49 PM   #41
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I recently realized there was one other benefit to frequent rebalancing as I'm doing. Generating cash for spending. It turns out that when one rebalances after equities go 1% above the max equity mark, there are on average 4 of these 1% events per year. So many years (but not all of them) one generates much of the cash needed for spending. This year I've rebalanced only twice in 9+ months so this mechanism is a bit short and I take the remaining needs from short term bonds.

I just realized this thread is now morphing towards rebalancing instead of future returns, sorry to the OP (oops, that's me).
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Old 10-27-2012, 12:09 AM   #42
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Eh, we already reached the consensus that investment return will most likely suck in the decade ahead. What more can we say about that?

The thread was slow-going until we started to talk about how to deal with this bleak future. Things get more lively, don't you think?
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Old 10-27-2012, 07:51 AM   #43
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My passive rebalancing by allocating new $ into the lagging class and selling off when that class exceeds my AA has helped in reducing overall volatility. I also feel that has helped me ride out some pretty good downturns without panic or selling low. While I agree with Bogles most basic advice I don't blindly follow every statement made, which can at times be slightly contradictory.
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Old 10-27-2012, 09:56 AM   #44
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Eh, we already reached the consensus that investment return will most likely suck in the decade ahead. What more can we say about that?

The thread was slow-going until we started to talk about how to deal with this bleak future. Things get more lively, don't you think?
What to do about the bleak projections is a fine direction IMO.

My own thought is to engage in very limited market timing. That's after a very careful data analysis and what is sometimes called data mining -- fitting the method to what has happened in the past.

My feeling is that even if the longer term returns are more modest then historical returns, there will be periods of speculative returns before the inevitable correction. But my primary purpose for doing this is to reduce risk. I don't want to go through another 2008 without at least trying to avoid it. So instead of buy-hold I'm doing buy-mostly-hold.
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Old 10-27-2012, 10:53 AM   #45
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Eh, we already reached the consensus that investment return will most likely suck in the decade ahead. What more can we say about that?
This is good news for the contrarians in the group!
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Old 10-27-2012, 10:57 AM   #46
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Perhaps all stocks is the best way to go in theory. But, remember men like John Bogle (who I have great respect for) could lose 90% of their assets in a down market and still live far better than that vast majority of us here. Most of us are middle-class folks who need to protect what we have earned if we don't want to see a huge and permanent drop into a poverty standard of living. Thus, what makes sense for the wealthy may not make sense for us.
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Old 10-27-2012, 11:27 AM   #47
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My own thought is to engage in very limited market timing. That's after a very careful data analysis and what is sometimes called data mining -- fitting the method to what has happened in the past.

My feeling is that even if the longer term returns are more modest then historical returns, there will be periods of speculative returns before the inevitable correction. But my primary purpose for doing this is to reduce risk. I don't want to go through another 2008 without at least trying to avoid it. So instead of buy-hold I'm doing buy-mostly-hold.
I agree. But even B&H/indexing is based on "fitting the method to what has happened in the past", it assumes the market will be higher at some point in the future, hopefully when you need it.

What one might do going forward may depend on where one is in their investment lifetime. Currently I'm more interested in aquiring dividend payers than maxing CGs. One thing I've done to take advantage of the volitilty is to put good-till-canceled buy orders at some "crazy" price for the stock. I picked up some nice chunks during the "flash crash" and the sell off in 2011. I have no plans to sell them going forward. Never say never, hope I don't buy any Enron/Worldcomm types.
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Old 10-27-2012, 12:07 PM   #48
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This is good news for the contrarians in the group!
My AA is 70% equities. So, am I one of those contrarians or not?

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What to do about the bleak projections is a fine direction IMO.
Being a self-admitted timer, I have exercised my right to vary AA as I see fit. In the past, it has gone from 80% equities down to 50% in a matter of a month, although in most years, my portfolio turn-over is very low, and even lower than Wellesley.

As I own individual stocks as well as sector ETFs, I like to watch how they move, then try understand the reasons. I have been trying to "rebalance" between sectors, but my results have been mixed. Some years I did better than just holding S&P500, some years not as well.

I am leaning more and more towards dividend stocks for income, as I own little bonds at this point. And some of those dividend stocks are international companies too, which serve the need for diversification out of the US market.
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Old 10-28-2012, 04:38 AM   #49
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I pay close to $400 a month for TV cable, phone, and wireless bills. And I don't watch football.
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That is my monthly for phone, internet and cable as well. And no NFL Package either.
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Old 10-28-2012, 04:41 AM   #50
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I am quite pessimistic about the future, and this is why I have started to buy some deferred annuities this year, as discussed in other threads. I guess I will continue to buy deferred annuities until I reach 62, or until I reach the $250-300k limit.

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Nice short 5 minute interview with Bogle where he discusses future guesses at stock/bond returns: Bogle's Outlook for the Market

Short summary: nominal returns for stocks = 7%, bonds = 2% ... maybe

I liked the way he mentioned "speculative returns". Might we see a little of this as bonds end their path down the rate declines and start some sort of upward rate journey? My guess is ... maybe.
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