Have you bumped up your equity allocation?

[pb4uski]

No.

Just funning with you ob, but you need to have an equity allocation to begin with in order to increase it.

In answer to the OP, No. My AA has been the same for the last 5 years or so.

 

[ejman]

This is my 12th year of retirement and at sixty three I like a conservative 50/50 split. I do use a wide 10% reallocation band so that most of the time nothing happens and I can go back to my usual slumber. Since the start of retirement there have been only two re allocations, in February of 2007 and May of 2013 (both from equities to bonds). I almost reallocated in the other direction (from bonds to equities) in early 2009 but just as I was getting ready to do it the equities market took off and took care of the reallocation.

I'm currently at about 53.7% equities so the market still has a way to run (in either direction) before I have to wake up. My NW has doubled since I retired almost a dozen years ago so this system works for me. What I particularly like about it is that it allows me to pretty much ignore all of the news and expert guru's "noise making"

I should also mention that about 40% of my NW is in Wellsi/Welltn/Target Retirement so that part automatically rebalances.

 

[Spanky]

Agreed that 50/50 is still pretty conservative, but chasing returns is not wise. Do you have an Investment Policy Statement? If so, stick with that. If not, you might think about creating one. Please read Investment policy statement - Bogleheads

My AA used to be 60/40. Since ER is at least a few years away, I am fine with 50/50.

BTW, thanks for the link for investment policy.

 

[Spanky]

Here's what happens when you chase returns.

Mind the Gap 2014

A permanent AA change is not necessarily chasing returns, but the timing is a bit suspicious. If you don't like bonds, cash like CD's and online savings accounts will work while bonds recover.

We are not chasing return but feel our AA is too conservative.

 

[Major Tom]

Just funning with you ob, but you need to have an equity allocation to begin with in order to increase it.

He does though. I think his equity allocation is something like .1%, give or take, due to that purchase of Wellesley (or was it Wellington?) a while back!
I have to admit that I laughed out loud when I saw Ob's one word reply. Ob - you are nothing if not predictable

Oh yes, as for the OP, I have not changed my AA, though every good day in the market makes me nervous. I almost feel as if I don't deserve to be doing this well. No doubt the next correction will take care of that

 

[ripper1]

I usually go with about 90% stocks and 10% bonds. Do not bother with reallocation just let it go up and down.

But I am still working and do not need the money for a few years. Plan on keeping 3-5 years income in cash (or pension, or salary).

If your avatar reflects your age I would be 100% stocks

 

[pb4uski]

He does doesn't he? I think his equity allocation is something like .1%, give or take, due to that purchase of Wellesley (or was it Wellington?) a while back!
I have to admit that I laughed out loud when I saw Ob's one word reply. Ob - you are nothing if not predictable

Oh yes, as for the OP, I have not changed my AA, though every good day in the market makes me nervous. I almost feel as if I don't deserve to be doing this well. No doubt the next correction will take care of that

Yes, IIRC he bought some Wellesley in the first half of last year.

I rounded the 0.1% down to zero.

 

[Major Tom]

I rounded the 0.1% down to zero.

Good decision. I mean - rounding it up to 1% would be an irrationally exuberant move

Just having some good-natured fun. Please don't hold it against me Ob!

 

[nash031]

In anticipation of low return from bonds, have you bumped up your equity allocation? We are currently at 40/60 (equity/fixed-income) but thinking about increasing the allocation of equity to 50%. It's true that motivation for a change is heavily influenced by recency of stellar equity return relative to bond.

Changing your asset allocation due to expected returns is also called "market timing".

 

[nash031]

We are not chasing return but feel our AA is too conservative.

If this is true, it's a perfectly good reason to change your AA. Your OP said you were doing it because of low expected bond returns and the recent success of equity. That's pretty much the worst reason to change your AA.

Stick to your plan until your risk tolerance changes for some reason.

 

[SJ1_]

In anticipation of low return from bonds, have you bumped up your equity allocation? We are currently at 40/60 (equity/fixed-income) but thinking about increasing the allocation of equity to 50%. It's true that motivation for a change is heavily influenced by recency of stellar equity return relative to bond.

No - we have been selling.
Keeping in the 25% range equity

 

[Donzo]

Went down to a 50/50 last year. I am about 60/40 now(equity growth). I tend to over think my buying and selling. Going to sell about 3% to up my cash holding from equities. Other than that nothing this year unless we see a heavy correction. Have realized I am usually wrong when trying to predict where the market is going - so I'm just gonna ride it up or down

 

[photoguy]

On a relative basis my equity allocation has gone down since I've had various cash incoming from bonus, house sale etc.

On an absolute basis I'm still putting more new money into equities.

 

[growing_older]

I usually keep pretty broad rebalance bands, so the market has to run pretty far before I re-balance back to my target asset allocation. But the equity run up is so great even I am selling equities to rebalance into bonds. I think fear of rising interest rates has been bandied about for the last few years, so it's hard to see why now, today, anything is different that would make me want to abandon bonds and increase equity allocation. That kind of tactical choice is the kind of market timing that if you hit it right can be profitable, but if you hit it wrong can be costly, and there seems to be plenty of evidence that I (and most everybody else) will be wrong more often than right. I'll settle for my market returns at my target allocation and leave the brilliant timing to those with stronger nerves.

 

[FIREd]

I have not bumped our equity allocation on purpose. But DW keeps getting awarded company stock and it is pushing our equity allocation beyond our target. Rebalancing would trigger a sizable tax bill, so we are letting it be for the time being. In the mean time, all new money goes to cash and i-bonds.

 

[photoguy]

I don't mean to be too challenging but if you have data that shows expected future returns and how those methods have done in actually predicting the future returns, then I'd like to see it.

Vanguard has a paper on this where they look at multiple indicators (10 and 1 year forecast):

https://personal.vanguard.com/pdf/s338.pdf

See Figure 2 on page 7 which has a comparison of methods. PE10 is the best but is barely better then PE/1 at 10 years. Other methods are even worse.

 

[growing_older]

But DW keeps getting awarded company stock and it is pushing our equity allocation beyond our target. Rebalancing would trigger a sizable tax bill, so we are letting it be for the time being. In the mean time, all new money goes to cash and i-bonds.

Seems like the best approach. You may have to consider at some point how much you are willing to be invested in a single issue (especially one you are also employed with) and reluctantly take some tax hit to avoid too much risk in a single company.

 

[W2R]

In anticipation of low return from bonds, have you bumped up your equity allocation? We are currently at 40/60 (equity/fixed-income) but thinking about increasing the allocation of equity to 50%. It's true that motivation for a change is heavily influenced by recency of stellar equity return relative to bond.

No, I will not do this.

I am a rebalancer - - I have a specific asset allocation, and written rules for when I can rebalance. I can rebalance during the first week in January when I withdraw the entire year's spending money, and also I can rebalance at other times depending on how far I have drifted from my AA.

Right now, my AA just hasn't drifted that much.

On the other hand, I just wanted to slip into this thread with yet another excited Wheee!!! The market is just BOUNDING upwards. I just love looking at my balances these days and you probably do too. It seems like almost every day I have a greater net worth than ever before in my lifetime. Including yesterday.... What a great ride this is and has been. Let's savor the moment, and when the market finally crashes, as it always seems to, let's remember how we feel about the market on this day.

 

[karluk]

On the other hand, I just wanted to slip into this thread with yet another excited Wheee!!!

That does it. I'm selling everything and moving to cash. We're all doomed!

 

[foxfirev5]

No, I will not do this.

I am a rebalancer - - I have a specific asset allocation, and written rules for when I can rebalance. I can rebalance during the first week in January when I withdraw the entire year's spending money, and also I can rebalance at other times depending on how far I have drifted from my AA.

Right now, my AA just hasn't drifted that much.

On the other hand, I just wanted to slip into this thread with yet another excited Wheee!!! The market is just BOUNDING upwards. I just love looking at my balances these days and you probably do too. It seems like almost every day I have a greater net worth than ever before in my lifetime. Including yesterday.... What a great ride this is and has been. Let's savor the moment, and when the market finally crashes, as it always seems to, let's remember how we feel about the market on this day.

Yep, if the markets still up at 3:55 PM I'm bailing out!!! It has been a long time since I've seen such a sure sell signal.

 

[Major Tom]

My usual modus operandus is to check my balances regularly (almost daily) when the market is going up and to not bother checking them very often in bear markets, so as to avoid that weird feeling in the pit of my stomach. Trouble is, all this near-constant up-movement in the market is making me nervous and I'm thinking about not checking my balances today, as I'm not sure if I can take all this excitement.

OK, I thought about it. I think I can handle it

 

[ripper1]

No, I will not do this.

I am a rebalancer - - I have a specific asset allocation, and written rules for when I can rebalance. I can rebalance during the first week in January when I withdraw the entire year's spending money, and also I can rebalance at other times depending on how far I have drifted from my AA.

Right now, my AA just hasn't drifted that much.

On the other hand, I just wanted to slip into this thread with yet another excited Wheee!!! The market is just BOUNDING upwards. I just love looking at my balances these days and you probably do too. It seems like almost every day I have a greater net worth than ever before in my lifetime. Including yesterday.... What a great ride this is and has been. Let's savor the moment, and when the market finally crashes, as it always seems to, let's remember how we feel about the market on this day.

Oh Oh, here comes the stampeding herd.

 

[Spanky]

On the other hand, I just wanted to slip into this thread with yet another excited Wheee!!! The market is just BOUNDING upwards. I just love looking at my balances these days and you probably do too. It seems like almost every day I have a greater net worth than ever before in my lifetime. Including yesterday.... What a great ride this is and has been. Let's savor the moment, and when the market finally crashes, as it always seems to, let's remember how we feel about the market on this day.

Yes, we update our portfolio on a daily basis and feel very fortunate that it continues to grow.

 

[karluk]

Not that anyone here really doubts W2R's power to move markets, but if anybody did, the action this afternoon should dispel all lingering doubt.

Stocks Plummet Into The Red - Yahoo Finance

Stocks Plummet Into The Red

By Matthew Boesler | Business Insider – 25 minutes ago

The S&P 500 has just fallen into negative territory after spending most of the day up nicely.

 

[ejman]

Not that anyone here really doubts W2R's power to move markets, but if anybody did, the action this afternoon should dispel all lingering doubt.

Stocks Plummet Into The Red - Yahoo Finance

Yes, I wonder if W2R would consider starting a 24 hr or so advance private Wheee! notification service so that when the public Wheee! appears we cognsoscenti are already multi millionaires...