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Overshot my AA Target
Old 01-12-2018, 10:25 AM   #1
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Overshot my AA Target

I just raised the equity part of my AA, but overshot my target--which led me to recall Lsbcal's grid ("Setting AA and Remembering Past Bad Markets" thread) which, in turn, caused me to have two second thoughts. The first thought was a stirring in my bowels. I know that's probably not a thought to most people, but given my genealogy it passes for a thought (in truth, it passes for deep thinking). I imagine that right about now, some are thinking "Maybe redduck would benefit from working with a financial advisor--who also happens to be a pharmacologist. Or maybe he could work with that Doctor Johnny, The Chiropractor, D.C. who sells lots of medicine on Amazon. That guy has pills for everything." However, this is not the second of my two second thoughts.

Here is my second thought (and a question):

Suppose I want to get my AA down to something that I might be more comfortable with, but I'm fearful and greedy (more greedy at the moment), so I don't want to change my allocation at this time. Suppose I decide to alter my allocation on Aug. 10 (the date of my ex-wife's birthday), but only if the market is still moving up. If it's down, I would hold, I would not make any changes. Would that be considered market timing or would it be considered to be a brilliant way of investing? (I know, I know, it's probably both).
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Old 01-12-2018, 10:43 AM   #2
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Ignoring a predetermined allocation is market timing. I am guilty as well.

I did rebalance end of December, now out of whack again. Instead of selling I've set a few stop loss orders. I know they are I'll advised by many but that is what works for me.
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Old 01-12-2018, 10:48 AM   #3
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Suppose I want to get my AA down to something that I might be more comfortable with, but ...
If you already know that you would be more comfortable with a different AA, then you should change it now. Pretty simple to my simple mind.
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Old 01-12-2018, 11:01 AM   #4
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Did you mean proctologist? For pulling an AA out of your....
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Old 01-12-2018, 11:02 AM   #5
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A lot of IFs there redduck.

Sounds a bit like you'd be talking yourself into market timing disguised as modifying allocations.

Kind of like the college days of instead of writing a term paper, talking myself into doing something "productive" like the laundry .
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Old 01-12-2018, 11:09 AM   #6
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It's your money, why do you need to label what you are doing? It's all an educated guess anyway. If the market tanks, you're an idiot for overweighting stocks beyond the AA you had, and doing nothing about it. If it keeps going up, you're a genius. Do whatever you want. Unless your investments are complicated, I doubt it's that hard to correct it now.


How far off are you? If it's less than 5%, I probably wouldn't worry.
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Old 01-12-2018, 11:19 AM   #7
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I can't help you with the second second thought, but I do find it remarkable that your brain is evidently located, anatomically speaking, in the same part of your body where mine is located in my body. In fact when I pass gas, I never know for sure if it's something I ate, or just a bad idea I forgot to have.

I thought I was unique.

Good luck with the rest of it.
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Old 01-12-2018, 02:54 PM   #8
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It's your money, why do you need to label what you are doing? It's all an educated guess anyway. If the market tanks, you're an idiot for overweighting stocks beyond the AA you had, and doing nothing about it. If it keeps going up, you're a genius. Do whatever you want. Unless your investments are complicated, I doubt it's that hard to correct it now.

How far off are you? If it's less than 5%, I probably wouldn't worry.
Just a about 5% off. In this situation, I don't have a need to label, I was just wondering if it had a label. In any case, I think I'll just keep it where it is and report back on my ex-wife's birthday.
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Old 01-12-2018, 03:08 PM   #9
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I can't help you with the second second thought, but I do find it remarkable that your brain is evidently located, anatomically speaking, in the same part of your body where mine is located in my body. In fact when I pass gas, I never know for sure if it's something I ate, or just a bad idea I forgot to have.

I thought I was unique.

Good luck with the rest of it.
Guess you were unique until you weren't. That just leaves me.
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Old 01-12-2018, 03:49 PM   #10
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Just a about 5% off. In this situation, I don't have a need to label, I was just wondering if it had a label. In any case, I think I'll just keep it where it is and report back on my ex-wife's birthday.
5% doesn't significantly change risk or total return. i don't even think about doing anything till it's 10%.
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Old 01-12-2018, 04:57 PM   #11
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Here is what I did. I went from 60/40 to 50/50 around Dec 1st. Maybe it's been up about 6% higher since that brilliant move.

If I calculate the "lost" dollars I'm kind of like ... oh sh*t that could have been a nice vacation missed. But wait, that 10% of my portfolio means a missed opportunity of 6% * 10% = 0.6%. Not really that bad I guess. And the other 50% of the portfolio went up with the equities. I check my body over and all the parts are still there. We can still go on vacations. Our portfolio is hitting new highs. Life is good.

I don't have any problem with market timing based on a well researched plan. But very few investors have a well researched plan so maybe they should just do buy-hold? Not such a bad default.

Personally I don't think we are near a market top which could be brought on by economic issues. Retail sales are going fine, unemployment is going down, the yield curve is still positively sloped. But equities can have big corrections without recessions developing. For instance, think 1962 or 1987.

Have you considered selling on some dead president's birthday?
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Old 01-12-2018, 06:58 PM   #12
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I check my body over and all the parts are still there. We can still go on vacations. Our portfolio is hitting new highs. Life is good.

Yes, but are the parts where they should be and are they still the same size?

Have you considered selling on some dead president's birthday?

I can't think of a response that wouldn't be deleted.
Thanks again for the chart in the other thread. It was scary but helpful.
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Old 01-12-2018, 07:58 PM   #13
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Quote:
Originally Posted by redduck View Post
I just raised the equity part of my AA, but overshot my target--which led me to recall Lsbcal's grid ("Setting AA and Remembering Past Bad Markets" thread) which, in turn, caused me to have two second thoughts. The first thought was a stirring in my bowels. I know that's probably not a thought to most people, but given my genealogy it passes for a thought (in truth, it passes for deep thinking). I imagine that right about now, some are thinking "Maybe redduck would benefit from working with a financial advisor--who also happens to be a pharmacologist. Or maybe he could work with that Doctor Johnny, The Chiropractor, D.C. who sells lots of medicine on Amazon. That guy has pills for everything." However, this is not the second of my two second thoughts.

Here is my second thought (and a question):

Suppose I want to get my AA down to something that I might be more comfortable with, but I'm fearful and greedy (more greedy at the moment), so I don't want to change my allocation at this time. Suppose I decide to alter my allocation on Aug. 10 (the date of my ex-wife's birthday), but only if the market is still moving up. If it's down, I would hold, I would not make any changes. Would that be considered market timing or would it be considered to be a brilliant way of investing? (I know, I know, it's probably both).
LOL!
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Old 01-12-2018, 08:01 PM   #14
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Redduck, I enjoy your posts. I predict you will go far.
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Old 01-12-2018, 08:30 PM   #15
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Redduck, you have me questioning as to why you would use your ex-wife's birthday () to make a move to adjust your equity percentage? In my case, I would select the date the divorce was final as that was the "happy day" or the day you were released from prison. Thoughts?
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Old 01-13-2018, 04:19 AM   #16
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Start a plan to taper off every month on the 10th, hitting your final target by Aug. 10.
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Old 01-13-2018, 04:55 AM   #17
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Stick to your plan based on your risk tolerance, income needs and time horizon. If you don't have a plan work to outline one and then stick with it---if it's sound, the primary goal would be to have it work out no matter what Mr. market hurls at you. Understanding history is key but as we all know, the future could yield results that are worse than what has happened in the past.
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Old 01-13-2018, 10:19 AM   #18
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Redduck, you have me questioning as to why you would use your ex-wife's birthday () to make a move to adjust your equity percentage? In my case, I would select the date the divorce was final as that was the "happy day" or the day you were released from prison. Thoughts?
To answer your question: We celebrated maybe 17 of the ex-wife's birthdays when we were together. So, eventually, I started to remember the birthday date. We only got divorced once, so that date never sank in (for me). The only time I had to know it was when I setting up with Social Security. I had to call her to ask for the date. She recalled the date immediately. She also remembered the day, and the time, and the weather. She remembered where she was and what she was wearing (I think she might have mentioned scantily clad. But, I think she was probably joking). Anyhow, we still celebrate our birthdays with the kids (now adult kids) and continue to get along pretty well.
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