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Normally I don't ask for advice but
Old 08-17-2012, 03:48 PM   #1
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Normally I don't ask for advice but

This afternoon I turned on CNBC at 2:59 PM and when I heard the DJIA was a few points from a 4+ year high I turned it off at 3:04 PM, you know what that high means! This way I couldn't do anything, I don't know how the market closed.

My "problem" is I have 37% in equities and 63% in fixed income. I want my AA to be 50/50. I want to take some profits off the table - Vanguard TSMI up 23% in almost 2.5 years and the Vanguard REIT up 27% in just 54 weeks but I don't want to rebalance because I want my equity allocation higher. If I exchange from either of these 2 funds I am locked out from repurchasing them for 60 days.

So I (oh boy here it comes!) think we have topped out (see the bold above) and are due for a pull back and would like to take the profit and then get back in after a pullback but the 60 day restriction may well prevent that.

I could exchange into say the S&P 500 and a SC fund to try to replicate the TSMI but I don't want to own funds for a short time and get a bunch of funds showing up on my statements when I just have TSMI, TISMI, GNMA, REITs and High Yield Corporate Bond. KISS but how to capture the profit and then up the equity portion?

Any ideas?

ETA I don't understand how to buy ETF's I do understand the nav of a mutual fund. Etf's would be a solution but at what price are you paying? This is why I stay in mutual funds.
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Old 08-17-2012, 03:56 PM   #2
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I'm not quite sure I understand what you want to do.

You want to sell equities now because you think the run-up is flagging, but you want to buy equities now because you want to be at 50:50? Is that what you want? If so, you cannot do that.

I exchanged from S&P500 to bonds recently. I certainly am poorer than if I did not do that.
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Old 08-17-2012, 03:57 PM   #3
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Just because prices are going up doesn't mean they won't continue to go up.

I think you may be falling victim to the market timing fallacy. Better to just reallocate according to your plan, and ignore current events.

IM [extremely] HO
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Old 08-17-2012, 03:58 PM   #4
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Here is what I did about 5 years ago. Pick the asset allocation you would like and invest it all in a Target Retirement Fund. I never have to think about my portfolio again. My best moves over the last 20 years have been to do nothing.

Now, I truly have nothing to do.
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Old 08-17-2012, 03:58 PM   #5
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One reason to have accounts at multiple financial institutions is that you don't need to worry about trading restrictions. Sell Vanguard TSMI in account A, then buy TSMI in account B the next day. Easy.

Even with ETFs held at a single vendor, you may have problems because the settlement is T+3. One has to avoid "free riding" (google it) if you do not have a margin account.
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Old 08-17-2012, 03:59 PM   #6
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ETFs trade like stocks. If you have a brokerage account, you can buy/sell ETFs like you would any stock.
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Old 08-17-2012, 04:06 PM   #7
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So I (oh boy here it comes!) think we have topped out (see the bold above) and are due for a pull back and would like to take the profit and then get back in after a pullback but the 60 day restriction may well prevent that.
Go for it amigo, the world is your oyster!
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Old 08-17-2012, 04:18 PM   #8
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You are trying to be a dirty market timer.

Rather than try to market time and sell equities and buy them back later, given that you are underweight, you should just develop a plan as to the time period that you want to get to 50/50 and then move money from fixed income to equities periodically to get to 50/50.

You could be dead wrong and equities could continue going up as the equity markets improve and the sheep return.

May the force be with you.
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Old 08-17-2012, 04:28 PM   #9
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So I (oh boy here it comes!) think we have topped out (see the bold above) and are due for a pull back and would like to take the profit and then get back in after a pullback but the 60 day restriction may well prevent that.
DMT!
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Old 08-17-2012, 04:51 PM   #10
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So even though the DJIA is near a 4+ year high, you have to realize that if it goes higher from here, every single day will be at new intermediate term high. Then it will go past the all-time high which will disturb some folks. Then every day higher will be a new all-time high. This could go on for months or years, so the media will be filled with these statements from now on.

So the only answer is to ignore the news of "a new high" and use other criteria such as your asset allocation, rebalancing, and tax-loss harvesting to make decisions.
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Old 08-17-2012, 05:18 PM   #11
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So even though the DJIA is near a 4+ year high, you have to realize that if it goes higher from here, every single day will be at new intermediate term high. Then it will go past the all-time high which will disturb some folks. Then every day higher will be a new all-time high. This could go on for months or years, so the media will be filled with these statements from now on.
And I will be yelling "WHEE!!!!! Wheee!!! wheee! wheee" the whole time, until I am hoarse and then lose my voice, falling into a giddy little heap...

Do not trust the Wheee... just enjoy the Wheee!!
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Old 08-17-2012, 05:29 PM   #12
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And I will be yelling "WHEE!!!!! Wheee!!! wheee! wheee" the whole time, until I am hoarse and then lose my voice, falling into a giddy little heap...

Do not trust the Wheee... just enjoy the Wheee!!
Uh-oh
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Old 08-17-2012, 06:07 PM   #13
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And I will be yelling "WHEE!!!!! Wheee!!! wheee! wheee" the whole time, until I am hoarse and then lose my voice, falling into a giddy little heap...

Do not trust the Wheee... just enjoy the Wheee!!
You do that one more time and I will be forced to post a GEICO commercial. For now, I will just say: "W2R! You're home!"
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Old 08-17-2012, 06:11 PM   #14
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And I will be yelling "WHEE!!!!! Wheee!!! wheee! wheee" the whole time, until I am hoarse and then lose my voice, falling into a giddy little heap...

Do not trust the Wheee... just enjoy the Wheee!!
I rebalanced this morning. Bring it on!
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Old 08-17-2012, 06:11 PM   #15
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Not only that, my portfolio is at (yet another) all time high... while living off of it!


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Old 08-17-2012, 06:20 PM   #16
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due for a pull back and would like to take the profit and then get back in after a pullback
You're kidding, right?
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Old 08-17-2012, 06:32 PM   #17
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To the OP: You can go ahead and sell. The Oracle of New Orleans just gave you permission.

Uh oh, you didn't put in the order before the market close today? Oh man, Monday is going to be a bloodbath. Oh gosh! I did not sell anything either. We are going down together, my friend.
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Old 08-17-2012, 06:44 PM   #18
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I skimmed off some profits Tuesday !
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Old 08-17-2012, 08:18 PM   #19
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And I will be yelling "WHEE!!!!! Wheee!!! wheee! wheee" the whole time, until I am hoarse and then lose my voice, falling into a giddy little heap...
Do not trust the Wheee... just enjoy the Wheee!!
Cool. I'll be selling calls on Monday...
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Old 08-17-2012, 10:13 PM   #20
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So even though the DJIA is near a 4+ year high, you have to realize that if it goes higher from here, every single day will be at new intermediate term high. Then it will go past the all-time high which will disturb some folks. Then every day higher will be a new all-time high. This could go on for months or years, so the media will be filled with these statements from now on.

So the only answer is to ignore the news of "a new high" and use other criteria such as your asset allocation, rebalancing, and tax-loss harvesting to make decisions.
Exactly. There's nothing about a "new high" that is any different from any other number--it has zero impact on what stocks will trade at tomorrow, next week, or next year.
Pick an allocation and either re-allocate all at once or slowly over time (if it will help you sleep better).
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