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How's your Asset Allocation holding up?
Old 03-01-2007, 06:42 PM   #1
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How's your Asset Allocation holding up?

Now that the stock market has had the predictable correction, how has your asset allocation survived this?

I recently went from a 70/30 mix to a 60/40 mix, so I look like a genius, which is pretty unusual for me! Have your FI funds done what you expected them to do ( you know, level out your ups/downs) or has your AA disappointed you once again?
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Re: How's your Asset Allocation holding up?
Old 03-01-2007, 06:47 PM   #2
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Re: How's your Asset Allocation holding up?

In January I rebalanced to 58/42 (started at 60/40 two years ago, and each year I reduce equity by 1%).

By 2/26/27 the allocation was back to 61/39, and today it is at 58/42.
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Re: How's your Asset Allocation holding up?
Old 03-01-2007, 06:48 PM   #3
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Re: How's your Asset Allocation holding up?

Too soon to tell. A "correction" is not a 3% dip. We need a 10% drop or more.
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Re: How's your Asset Allocation holding up?
Old 03-01-2007, 07:16 PM   #4
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Re: How's your Asset Allocation holding up?

you really think it will go down that much?
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Re: How's your Asset Allocation holding up?
Old 03-01-2007, 07:31 PM   #5
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Re: How's your Asset Allocation holding up?

After years of going back and forth with AA, we finally realized what we needed to do to made ourselves comfortable and to be able to achieve our goal.

50/50. We have lost a little, but we're going hang in there with the "set it and forget it" plan. Probalby won't do anything until there's a 5% difference.
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Re: How's your Asset Allocation holding up?
Old 03-01-2007, 07:50 PM   #6
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Re: How's your Asset Allocation holding up?

I would like to say I don't know and I don't care like the super diehard asset allocators.

Unfortunately I don't know(until I check my Vanguard account) and the pucker factor factor has not been fully conquered.

But as of Jan 2006 - went to full autopilot TR 2015 - and at least try to don't know, don't care.

Chickenheartedness says I take a quick look at the Norwegian widow factor first(current yield) from time to time.

Theoretically I should be mentally prepared for a -18.5% dip should a 1974 worst case reoccur per the online Vanguard backtest calculator.

I like the part where the trusty Vanguard computers rebalance their little hearts without any emotion or discipline pep talk.

That way I can indulge in full fledged fear and greed in my individual stocks - loss will not derail my ER, and a winner/s may move me from Chevrolet up to a Buick or at least bragging rights.

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Re: How's your Asset Allocation holding up?
Old 03-01-2007, 08:09 PM   #7
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Re: How's your Asset Allocation holding up?

YTD = 1.12%.

I guess it is okay. I will be happy to get 8% by year end.
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Re: How's your Asset Allocation holding up?
Old 03-01-2007, 08:23 PM   #8
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Re: How's your Asset Allocation holding up?

Like unclemick, most of my retirement funds are in a Target Retirement fund. I do have a few other assets but don't bother rebalancing.
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Re: How's your Asset Allocation holding up?
Old 03-01-2007, 08:44 PM   #9
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Re: How's your Asset Allocation holding up?

Quote:
Originally Posted by newyorklady
you really think it will go down that much?
No, it will go down by more at some point in the future.

Check out this math. Suppose you were 80% equities and 20% bonds. If equities dropped by 10%, then you would have 92% of the assets you had before. 72/92 would be equities and 20/92 would be bonds, so you would be 78.3% equities and 21.7% bonds. That change would not put me in a hurry to rebalance.

So your asset allocation will hold up just fine no matter what happens. Whether your portfolio holds up, who knows?
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Re: How's your Asset Allocation holding up?
Old 03-01-2007, 09:21 PM   #10
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Re: How's your Asset Allocation holding up?

Quote:
Originally Posted by LOL!
Too soon to tell. A "correction" is not a 3% dip. We need a 10% drop or more.
Yeah, it also looks like I need a 10% equity drop to justify rebalancing my portfolio.

How is my AA doing? On 2/27/07 I was down 2.9% on equities and up 0.43% on bonds. Cash, of course, was neutral. Overall my portfolio was only down 1.82%. This is just a blink. Still up over 1% YTD.

We used to see this kind of volatility all the time in the late 90s and early 2000s. People have been lulled with the recent years of low volatility. 3% really is no big deal - even if it all happens in one day.

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Re: How's your Asset Allocation holding up?
Old 03-01-2007, 09:41 PM   #11
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Re: How's your Asset Allocation holding up?

Quote:
Originally Posted by TromboneAl
In January I rebalanced to 58/42 (started at 60/40 two years ago, and each year I reduce equity by 1%).

By 2/26/27 the allocation was back to 61/39, and today it is at 58/42.
I rebalanced in January too, to 60/40. I'm back to 60/40 now.
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Re: How's your Asset Allocation holding up?
Old 03-02-2007, 08:19 AM   #12
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Re: How's your Asset Allocation holding up?

Quote:
Originally Posted by unclemick2

Theoretically I should be mentally prepared for a -18.5% dip should a 1974 worst case reoccur per the online Vanguard backtest calculator.
Hey Uncle- Where do I find this Vanguard backtest calculator?

Thanks
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Re: How's your Asset Allocation holding up?
Old 03-02-2007, 08:58 AM   #13
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Re: How's your Asset Allocation holding up?

Quote:
Originally Posted by Mysto
Hey Uncle- Where do I find this Vanguard backtest calculator?

Thanks
Hmmm - good question cause I have a Vanguard account(password and all that) it's under portfolio performance(roughly 66/31/3 cash) - Which checking this morning is only a nit 0.1% off a standard 60/40 backtest I found on the general VG website researching asset allocation.

Handgrenades are good. How bout that!

Like the good plan versus 'perfect plan' cliche - I can be reasonably messy and still be in the ballpark.
You gave me a good reminder this morning.

Thanks.

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Re: How's your Asset Allocation holding up?
Old 03-02-2007, 09:16 AM   #14
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Re: How's your Asset Allocation holding up?

YTD: +.79% here. My AA still isn't where I want it though.
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Re: How's your Asset Allocation holding up?
Old 03-02-2007, 09:47 AM   #15
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Re: How's your Asset Allocation holding up?

Quote:
Originally Posted by LOL!
Too soon to tell. A "correction" is not a 3% dip. We need a 10% drop or more.
I agree - when I make changes to my portfolio I usually do it in several steps or over several months depending upon the amount --- similar to dollar cost averaging.
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Re: How's your Asset Allocation holding up?
Old 03-02-2007, 10:28 AM   #16
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Re: How's your Asset Allocation holding up?

I rebalance every December.............and currently at 70/30. However, the 70 has about 20% global, so keeping a watchful eye............
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Re: How's your Asset Allocation holding up?
Old 03-02-2007, 06:17 PM   #17
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Re: How's your Asset Allocation holding up?

I survived the first few days of this, but today I went negative. I'm about -1% YTD now.
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Re: How's your Asset Allocation holding up?
Old 03-02-2007, 06:22 PM   #18
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Re: How's your Asset Allocation holding up?

Went negative today as well, .1%. Just one day in a 14,000 day plan.
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Re: How's your Asset Allocation holding up?
Old 03-02-2007, 08:00 PM   #19
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Re: How's your Asset Allocation holding up?

i'm still positive y.t.d. -- but just barely. am happy that i didn't try to "catch the falling knife", but will likely rebalance some cash into equities as soon as i sense that things have settled a bit.
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Re: How's your Asset Allocation holding up?
Old 03-03-2007, 04:27 AM   #20
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Re: How's your Asset Allocation holding up?

I was @ 100% equity in Feb. Planning to ER in 1/2012. I had just started to reallocate the portfolio. Before the correction I had move 15% to intermediate bond (funds). As luck would have it, we moved another 15% the day before the drop (after trading hours)... So that 15% was moved after the hit.

We are now at an alloc of 70/30. I will move that to 60/40 over the next 5 years prior to retirement. Plus build a cash pool (Money martket/short-term bonds) for our minimum LBYM lifestyle for 2 years.

Bottom line. Lucked out on the timing and preserved part of the 2007 gain.
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