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Old 03-26-2011, 08:28 PM   #41
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Asset allocation, asset allocation, and asset allocation.....oh- and I'm trying to ignore the news.
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Old 03-26-2011, 08:47 PM   #42
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It's really wierd, I keep selling equities over the last year and my AA just stays the same. Must be some kind of new math, but I like it.
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Old 03-26-2011, 08:52 PM   #43
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Surely, that is better than when one keeps buying stocks and yet his AA stays the same!

I have not sold much, perhaps just around 2% worth. I am willing to ride this market up a bit longer. Currently at 70% equities.
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Old 03-26-2011, 09:01 PM   #44
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Originally Posted by slingshot View Post
'switched garbage service from container rental to stickers'
I'm having trouble conceptualizing? what are stickers?

We can pay $18 a month to rent a 64 gallon container from the garbage company. Each week, whatever is in it is taken.

Alternatively, we pay $3 for a sticker that is attached to the handle of our own 32 gallon garbage can. Each week the garbage company empties the can and rips the sticker off of it.

My wife and I don't make much garbage. 32 gallons a week is plenty.
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Old 03-26-2011, 09:28 PM   #45
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Originally Posted by pimpmyretirement View Post
We can pay $18 a month to rent a 64 gallon container from the garbage company. Each week, whatever is in it is taken.
Alternatively, we pay $3 for a sticker that is attached to the handle of our own 32 gallon garbage can. Each week the garbage company empties the can and rips the sticker off of it.
My wife and I don't make much garbage. 32 gallons a week is plenty.
Here in paradise that direct fee would result in even more littering and roadside dumping. Our trash fees are hidden in our property taxes.

Of course that means we have no incentive to minimize what we put into the waste stream, but much of it is burned at the HPOWER plant for electricity. They already generate 7% of Oahu's power and they're adding a third boiler next year.
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Old 03-27-2011, 08:58 PM   #46
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I think I'm wired a bit odd. Whenever I see stocks going down I'm more happy that they're on sale than upset that it may be eating away at my principle. Or maybe if you're accumulating, that's normal?
I am in the accumulation phase and this is exactly how I feel. Turning 29 last month and just got out of grad school this past spring, so really had to kind of start over saving for retirement since most of my 20's was spent getting degrees with little or no income coming in. That said, I feel I got in at a good time.

As for how things will be for me in the future - my 401K is set at an asset allocation I am comfortable with. I will probably review to rebalance once a year, maybe twice. I will not change my 401K contribution unless it is to increase the percent of my income that I am saving in my 401K.

I will, however, keep a cash reserve on hand separate from my emergency fund that I intend to use to go into the market the next time there's a big dip. It will be a small fund, but nonetheless I am hopeful I can gain some benefits in a down market in the future. But all things considered, my assets are allocated in a way I am comfortable, and I have a savings strategy in place. That's enough to help me sleep at night.
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Old 03-28-2011, 02:23 AM   #47
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Hello Steelyman - to answer your question, I have not changed my AA since 2008. I am still 100% in CDs, money market, etc. I do not own shares.
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Originally Posted by steelyman View Post
I am wondering, though, what most people are doing at present in response to where things were then, where they are now, and where they may go. Are you going to stand pat and say you were very smart since 2008, or are you changing your tune and approach?
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Old 03-28-2011, 05:53 AM   #48
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Someone will remind you of this post sometime down the line.
Well, the S&P is still 250+ points below its all time high set in 2007. We have a ways to go to even reach a level we've seen before, let alone advance to new highs.

There's room to run on this leg. Will the market just be able to match its former self? Who knows...
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Old 03-28-2011, 08:02 AM   #49
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I am wondering, though, what most people are doing at present in response to where things were then, where they are now, and where they may go.
My thoughts on asset allocation and 'market timing' have changed since I stopped working. I think it's safe to say that your financial goals change (or should change) once you move from the accumulation phase to the decumulation phase. Most importantly, I realized that during decumultion I have a hurdle rate of return that my portfolio must meet equal to my withdrawal rate. I can use that hurdle rate (which I didn't really have during accumulation) as a governor on the level of risk I need to take. With a larger portfolio, I can hit my hurdle rate with safer, lower return assets.

In my case, my portfolio is a third larger today than it was when I decided to quit my job. Conventional wisdom says I should simply rebalance into the same asset allocation I had then. Does that make any sense at all? I have 33% more assets today (inflation adjusted) than I did when I was confident enough in my financial plan to quit my job. Do I need to take the same level of financial risk with a 33% larger portfolio than I did with a smaller one. Of course not. So why rebalance to the same risk profile?

Incidentally, valuations are also worse today than they were a year and a half ago, which is another reason to take risk off the table. So I'm selling stocks and selling bonds and lowering my risk profile with an eye toward achieving an inflation adjusted return that more than covers my planned withdrawals. If markets continue skyward, I'll continue reducing my risk profile. If markets fall and valuations become more attractive, I may increase my risk to capitalize on the opportunity, but I won't have to.
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Old 03-29-2011, 04:44 PM   #50
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Hopefully next time the exuberance of the market will make me take notice and I'll take a chunk off the table and hold it in cash.
That is what I did last month. We were thinking about buying some land, so I wanted to raise some cash. I looked at our portfolio value getting close to its pre-crash high, and decided to "adjust" our AA from 66.6% equities to 60% equities to raise the cash. The land deal did not survive due diligence. However, I'm planning to stick with the new 60% AA until stocks go back on sale.

My new personal rule is I'm allowed to lower my equity percentage if my portfolio value is up year-over-year, and I am allowed to increase my equity percentage if my portfolio value is down year-over-year. The rule is only about a month old, but I like it so far.

My wife had already quit, and I thought I was only months away from giving my notice when the last crash occurred. Unfortunately, I had let our AA sneak up past 75% equities pre-crash. I pretty much held it there for the first half of the current bull, but then dialed it back to 66.6% and now 60%. If we get a nice big crash, I think/hope I'll dial it back up to 66.6%. We will see how that works out.
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Old 03-30-2011, 07:57 PM   #51
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I am mostly in equities and I had to sell some low during the crash for living expenses.
To get ready for next time I am in the process of making a 2 year cash reserve and moving some of my high volatility stuff into bonds over time so that my volatility will be at least less than the S&P 500.
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Old 03-30-2011, 08:56 PM   #52
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I sold a few growth stock and bought REITs to up our Real Estate exposure which I know do poorly in high interest rate environments, but you can't allocate into Real Estate or fixed income now without catching some part of the falling knives.

I allocate 1/3 of new cash flow to go into short term fixed income which I regard as near cash.

I intend to pull out from mutual funds (large cap, intermediate cap, and small cap) enough to sit in cash to fund an annuity of a certain yield size should interest rates go to 7-8% or better.

We will still be too high in stock, but at least the dividends are also funding non stock or dividend producing stock.
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Old 03-30-2011, 11:43 PM   #53
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Developed a market timing methodology based on equity/bond returns with valuation parameters of PE10 and yield slope. It has worked decently in backtests to 1920's. Forward, who knows. Ask me in 10 years .

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Old 04-01-2011, 11:07 AM   #54
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Yesterday, I reduced my small-cap, European, Japanese, and emerging market allocations from 10% to 5%, 7.5% to 5%, 7.5% to 5%, and 5% to 2.5%. I upped short-term bonds from 5% to 15%, and cash from 10% to 12.5%. Currently 40% stocks, 40% bonds, 5% REIT, 5% PCRIX, and 12.5% cash equivalents.

This wasn't really to get ready for "next time", per se; mostly I'm gradually adjusting my risk for age reasons, though there is some defensive posturing involved. No beever cheese futures or tinfoil options, yet...
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Old 04-01-2011, 08:57 PM   #55
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Well, I'm within spitting distance of another all-time high, so I cashed out a little. I figure if things drop enough, I'll buy back at lower prices. And if they don't, I'll just let it sit for awhile. I'm sure we'll get some major "correction" here, sooner or later!
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Old 04-02-2011, 03:09 AM   #56
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While the markets are not as cheap as they were in late 2008/early 2009, a number of markets are still selling at well below pre-crisis levels while earnings are actually higher. As an example, the Hang Seng Index is on a prospective PE for 2011 of a little bit over 11x which compares with its historical average of more than 16x. The H share index (which is one of the proxies for the China market) is also trading at well below its average PE. Even allowing for the estimates of future earnings being overly optimistic (a point on which I am agnostic) and assuming higher inflation and higher interest rates going forward, its too soon to be positioning for "next time". In so far as these markets are concerned I'm happy to maintain my equities exposure as is for now.

No doubt I will get reminded of this in due course.
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Old 04-02-2011, 10:46 AM   #57
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Yesterday, I reduced my small-cap, European, Japanese, and emerging market allocations from 10% to 5%, 7.5% to 5%, 7.5% to 5%, and 5% to 2.5%. I upped short-term bonds from 5% to 15%, and cash from 10% to 12.5%. Currently 40% stocks, 40% bonds, 5% REIT, 5% PCRIX, and 12.5% cash equivalents.

This wasn't really to get ready for "next time", per se; mostly I'm gradually adjusting my risk for age reasons, though there is some defensive posturing involved. No beever cheese futures or tinfoil options, yet...
Make that 37.5% stocks. Number is hard...
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Old 04-02-2011, 11:29 AM   #58
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We are paranoid:
stock 38.15%
bond 33.67%
cash 28.19%
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Old 04-02-2011, 11:37 AM   #59
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Well, I'm within spitting distance of another all-time high, so I cashed out a little. I figure if things drop enough, I'll buy back at lower prices. And if they don't, I'll just let it sit for awhile. I'm sure we'll get some major "correction" here, sooner or later!

That is exactly how I feel and the one thing that really bothered me last time was thinking about what I could have done with that money .
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