i never got a response for this (Question about rebalancing)

[Blue Collar Guy]

re balancing, i read a few posts in here from folks that claim that in 2008-2009 they re balanced to 100 % equities, and they reaped the huge rewards, i even read one post where he claimed he re balanced every day. the posters that went to 100 % equities arent they violating their asset allocations? if they started at 70/30 or 80/20 how do u go to 100 % equities, and didnt they switch back to their original allocation?, im a skeptical guy , i view some of these posts as suspect, , just like my tax guy who cold cold feet in 2007 went to money market, bragged he avoided the 2007-2009 carnage, i wonder when and if he went back to equities. so im fuzzy on this rebalance to 100 % equity thing, . for full disclosure i dont rebalance untill its really out of whack, during the last 2007-2009 blood bath i was 100 equities so no rebalance needed, i was mostly small cap,sp500 and the still terrible international. now im 80/20 and thats my mix probably till the end. thank you in advance for any info u can provide me

 

[MichaelB]

So, is this question about people who say they rebalanced in '08 & '09, or is it about when to rebalance? Or something else entirely?

 

[LOL!]

Don't believe everything you read on the internet.

I rebalanced back to my desired asset allocation which was not 100% equities several times.

 

[Fedup]

I was in cash 100%. But I didn't sell at the bottom. Only made back to the market in late 2009 when my husband got a job, but very slowly. Glad to miss the dip. My AA is always fluid. Heck I didn't know what AA was.

 

[Blue Collar Guy]

thank you, i know i rambled

So, is this question about people who say they rebalanced in '08 & '09, or is it about when to rebalance? Or something else entirely?

my question is if ur asset allocation is 70/30 how do u re balance to 100 % equity during the down turn?

 

[Fedup]

my question is if ur asset allocation is 70/30 how do u re balance to 100 % equity during the down turn?

They probably have a fluid AA or they are lying. Oops! I said a mean and bad word.

 

[Blue Collar Guy]

yeah thats what im thinking too

They probably have a fluid AA or they are lying. Oops! I said a mean and bad word.

 

[Blue Collar Guy]

if the premise is to stick to ur AA how do you become 100% equity? they dont say they are fluid , this is why im skeptical, i read some where that re balancing once a year is the method, all of a sudden i read daily re balanceing etc.., im not looking to call people out, i want to learn , but i think im getting some "noise"

 

[W2R]

if the premise is to stick to ur AA how do you become 100% equity?

You don't, unless your AA is 100:0.

In my opinion, probably they think that saying they rebalanced will sound more praiseworthy than saying that they were market timing. Rebalancing means going back to your planned AA according to everything I have read about it.

A lot of members here really DID rebalance during that time. Like many I did a lot of rebalancing in 2008-2009, but never bought equities beyond my 45:55 AA IIRC.

 

[Fedup]

if the premise is to stick to ur AA how do you become 100% equity? they dont say they are fluid , this is why im skeptical, i read some where that re balancing once a year is the method, all of a sudden i read daily re balanceing etc.., im not looking to call people out, i want to learn , but i think im getting some "noise"

I have a minimum AA that I stick to, but a times I'm fluid. Sometimes unintentionally so. Some people are more opportunist, they see an opportunity and they take advantage of it. Throw AA out of the window.

 

[razztazz]

They probably have a fluid AA or they are lying. Oops! I said a mean and bad word.

But a right and true word

I refrained because I didn't want to get bounced for impugning
people's alleged investing acumen...

 

[cooch96]

One index to track is the CAPE 10 number. It's a rolling average of the Price/Earnings number mostly assigned (I believe) to the S&P 500. When the CAPE10 is below average, it's a strong indicator that future returns will be above average.

Of course, the past is no promise the future will be the same, etc. etc.

A lot of folks use an AA of varying fluidity. Common methods are based on your age or your personal stage relating to retirement.

To get your personally perfect AA requires a special level of self-awareness. How much volatility and risk can you stomach without making a rash decision?

Sorry, I'm a bit all over the board. I hope that helps answer your question.

 

[Whisper66]

In the 2008 dump, I was still working. My asset allocation was "fixed" at basically 100% equities. Throughout the dump, I held onto all equities and continued buying new equities with any new, available cash I had.

Today, I am retired. I have a "fluid" asset allocation which is documented in my finanical plan. My finanical plan allows for an equity range of 65% to 90%. When the market is highly priced, I tend to sell off winners and move toward the lower end. When the market tanks, I plan to buy as much equities as I can afford to and still have 3 years of fixed assets left to live through a downturn. At the beginning of this year, I felt the market was highly valued and had gotten down to 70%/30%. Was going to stay there but saw a buy that fit my needs and my plan allows for (very solid stock that was down 20%, close to it's 52 week low, pays >3% dividends). So now I'm back up to 85%/15%. If that stock comes back up anytime soon....I'll sell it off and return to 70/30. If not, I'm happy collecting the dividends.

 

[Midpack]

I see you joined the forum last month. I don't remember anyone doing that, especially going to 100% equities, but rebalancing does not include changing your AA. Rebalancing often includes limits/bands, but usually no more than 5% if that, otherwise you're AA would be off some almost daily. Changing your AA is either part of your (predetermined) plan, or it's market timing.

 

[Blue Collar Guy]

thank you

You don't, unless your AA is 100:0.

In my opinion, probably they think that saying they rebalanced will sound more praiseworthy than saying that they were market timing. Rebalancing means going back to your planned AA according to everything I have read about it.

A lot of members here really DID rebalance during that time. Like many I did a lot of rebalancing in 2008-2009, but never bought equities beyond my 45:55 AA IIRC.

this is how i thought it worked

 

[Blue Collar Guy]

i can post the statements if you like

I see you joined the forum last month. I don't remember anyone doing that, especially going to 100% equities, but rebalancing does not include changing your AA. Rebalancing often includes limits/bands, but usually no more than 5% if that, otherwise you're AA would be off some almost daily. Changing your AA is either part of your (predetermined) plan, or it's market timing.

im not trying to call people out,

 

[OldShooter]

I don't have much interest in this type of discussion for the following reason: Even setting the liars aside, there is an unknown but probably large effect that is sort of like survivorship bias. For everyone who is posting about how wonderful their judgment was, there is an unknown number of people who screwed up and are not going to embarrass themselves by posting about it.

Also, people who have lost money ten times and made money once are going to be posting only about that one time. Down the road, the behavioral psychologists tell us, they will eventually forget all the losses and remember only the gains. We're just wired that way. (Let me tell you about the time I made $3K in just three trading days ... )

One of the themes of Nassim Taleb's book, Fooled by Randomness, is the phenomenon of people who have gotten lucky and, from that, have concluded that they are geniuses. This is very common. I am acquainted with several myself.

 

[W2R]

I don't have much interest in this type of discussion for the following reason: Even setting the liars aside, there is an unknown but probably large effect that is sort of like survivorship bias. For everyone who is posting about how wonderful their judgment was, there is an unknown number of people who screwed up and are not going to embarrass themselves by posting about it.

Yes, but the oldtimer regulars here are a pretty tight knit group, and we remember exactly what other oldtimer regulars were saying in 2008-2009 (even if they deleted it or had it deleted afterwards). Some were basically holding hands, verbally speaking, pretty scared, and urging others to hang tight. Others were posting wildly about selling everything and going to cash. There are a few of those who sold low and who do admit it freely. I think that is really admirable, because others can learn from this sort of post.

 

[Blue Collar Guy]

i want to thank everyone here who commented, you cleared up this mystery to me

 

[Alan]

From Investopedia

What is 'Rebalancing'
Rebalancing is the process of realigning the weightings of a portfolio of assets. Rebalancing involves periodically buying or selling assets in a portfolio to maintain an original desired level of asset allocation.

Rebalancing

 

[Blue Collar Guy]

yeah thats what i thought too

From Investopedia



Rebalancing

but i had the "i rebalanced to 100 % stocks during the downturn" posts confusing me, its been cleared up now, thanks

 

[Midpack]

but i had the "i rebalanced to 100 % stocks during the downturn" posts confusing me, its been cleared up now, thanks

And you were right to question anyone who said that, that's not rebalancing. It's market timing unless it was part of the investors plan beforehand.

 

[NW-Bound]

Never could do 100% stock. I did buy quite a bit to raise stock AA in early 2009, which was the right time. But then, when I got some good gains during the recovery in late 2009, started to sell too soon as I was afraid of a W-shaped market performance. I keep records of everything, and now look back and kick myself for not hanging on these good buys.

Woulda, shoulda. Well, the market may just give us another chance to prove our mettle. Didn't I hear a "Wh***" recently?

 

[Chuckanut]

What MidPack said in reply #14.....

 

[Alan]

And you were right to question anyone who said that, that's not rebalancing. It's market timing unless it was part of the investors plan beforehand.

+1