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Rebalanced on the "way up" 8-4-09!
Old 08-04-2009, 04:03 PM   #1
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Rebalanced on the "way up" 8-4-09!

I finally rebalanced my AA retirement portfolio today.

I had rebalanced on the "way down" 3 times - ugh! 7/11/08 - ouch!!!, 10/22/08 - not so bad but still Nov was not pleasant, 1/15/09 - at the lowest point for me but still had to experience that miserable March. By Jan 15 I had pretty much used up all that I could invest, so even though the March selloff triggered rebalance again, I was really out of "ammo".

It's so nice to finally rebalance the other way! After this past year's experience I've decided to "widen" my trigger slightly so that I won't rebalance so often. I used that wider trigger on the way up.

As of yesterday, the retirement portfolio was up over 20% since I sold bonds and bought stocks on 1/15/09. My equities were just shy of 60% of the portfolio. My target for equities is 55%.

Over the past several months, my bond funds have recovered as well as my stock funds, so they both went up and I have had to wait for enough divergence between them to trigger the rebalancing. I compare bonds+cash versus stocks to track divergence from target asset allocation.

Have other people been rebalancing or taking profits? I haven't really noticed much discussion recently.

Audrey
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Old 08-04-2009, 04:12 PM   #2
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Originally Posted by audreyh1 View Post

Have other people been rebalancing or taking profits? I haven't really noticed much discussion recently.

Audrey
Is this rally for real?
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Old 08-04-2009, 04:12 PM   #3
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Originally Posted by audreyh1 View Post
Have other people been rebalancing or taking profits? I haven't really noticed much discussion recently.

Audrey
Rewahoo has been. But we all know he is a dirty market timer.

Is this rally for real?

Edit:beat me to it.
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Old 08-04-2009, 04:15 PM   #4
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Oh - I missed that because it was on the stocking picking forum. Thanks!

Audrey
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Old 08-04-2009, 04:17 PM   #5
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Edit:beat me to it.
Confession is good for the portfolio...
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Old 08-04-2009, 04:29 PM   #6
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I rebalanced on the way down- sold TIPS to buy stocks, much too early as it turned out.

I have also rebalanced recently on the way up, or at the apex depending on what happens going forward.

The viciousness of the decline made little sense to me. Same with this rally. The stocks that have done best appear to me to be junky.

Just proves that I don't know from Shinola.

Ha
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Old 08-04-2009, 04:31 PM   #7
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I have not rebalanced on the way up even though I know I should . I 've just been letting my overweight stock portfolio ride and hopefully recoup some of my losses .
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Old 08-04-2009, 04:32 PM   #8
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When my equities fell below the trigger point during the market free-fall last Sept/Oct, I couldn't get myself to rebalance in one step. Instead, I chose to do it stepwise, once a month, with the intention to be fully re-balanced in 12 months.

I did this from Nov to Feb. Lost my nerve in March. Then, in April, the portfolio was repairing itself, so I left it alone.

I'm happy to say, its finally rebalanced - almost exactly at 60/40. Last May, it was 65/35, but I'm more comfortable with 60/40 & will re-balance back to 60/40 if the current rally continues.

I have resolved to be more disciplined next time. I could have come out ahead just like Audrey if I had rebalanced in Oct.

Another change: I am going to widen my trigger band on the downside. eg. trigger when an asset class is 25% less than desired, or 20% more than desired.
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Old 08-04-2009, 04:55 PM   #9
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I could have come out ahead just like Audrey if I had rebalanced in Oct.
I don't know if I came out ahead - LOL! Not yet anyway.

The retirement portfolio is still down 19% from it's peak in Oct of 2007. But it was down 32% from that peak when I rebalanced Jan 15! It was down 28% from peak when rebalanced last Oct.

I don't even want to remember at how far down it was from peak on Mar 9th of this year. [OK - I peeked, on Mar 6 (closest date I have) it was down 40% WOW!]

So maybe I am getting ahead! LOL!

Audrey
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Old 08-04-2009, 04:58 PM   #10
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Still buying in, I had a few days of weakness where I decreased monthly contributions to stocks and hid in cash. But I took heart for a day or two of stocks ticking up a bit, and went right back to my usual AA.

I can really relate to the paralysis feeling.
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Old 08-04-2009, 05:43 PM   #11
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Yup. Like you, I rebalanced my 401k on the way down, eventually shifting my starting asset allocation from 70/30 to 90/10 equities/bonds. I rebalanced my 401k back to 80/20 today. I will probably keep it there until my regularly scheduled rebalancing in January. I may be a "dirty market timer", but I've recouped most of the losses from this debacle.
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Old 08-04-2009, 05:56 PM   #12
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I take the return of the expression, "dirty market timer" as a positive sign. Yes, Ive been selling GNMA and buying the S&P index. Today Im getting mixed messages from Schwab. Their sign indicates Up but it could be brighter if only they would go to the trouble of changing the burnt out bulbs.
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Old 08-04-2009, 06:41 PM   #13
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I was sorely tempted today to log on to Schwab and sell a couple of stocks that have made big gains. I also have an equal amount of dogs in this mix. Considered selling one of the latter for the tax loss and to gain some liquidity for a future buy. But I got greedy on the winners and lazy on the losers, and I lost my inertia after the closing bell. I'll see what the next couple of days bring.
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Old 08-04-2009, 07:26 PM   #14
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Bought too soon on the way down several times so I'm trying to compound that error by selling too fast on the way up Currently 73/27 I did make a little back buying in November and again this spring and selling it back in Dec and May unfortunately it wasn't enough to make up for what I lost being to quick. Hoping to burn off these hormones so when I retire I keep my hands off for a year or two or three at a time, reacting to bands last year was not helpful.
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Old 08-04-2009, 08:15 PM   #15
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I rebalanced on the way down- sold TIPS to buy stocks, much too early as it turned out.
Same here.

Threw a bunch of cash in when the market first went vertical and was off 30% from its peak (10/8). Threw some more money at a specific investment (11/21). And then it dawned on me I was throwing money in a wood chipper and decided to pull in the reigns a bit. I found a new appreciation for the wisdom of "annual" rebalancing. But in March I decided I was going to start buying on a monthly basis to average back in to my stock allocation (I'm a sucker for trying to catch falling knives). I made exactly one purchase on March 2. One month later the market was up so much I decided to hold off on buying again. One month after that the market was up more . . . rinse, repeat.

Now with the rally I'm back to my target allocation. And each and every one of those purchases is in the money today. So while I could have timed things better, all is well that ends well.
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Old 08-04-2009, 08:45 PM   #16
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You're a sucker for falling knives?!? At least you waited until October to start catching them! I'm still smarting from first my 7/11/08 rebalancing. I think I caught a giant meat cleaver because dismemberment followed shortly thereafter!

Oh well, whenever the S&P crawls back to 1250 those limbs will be made whole, we hope

Audrey
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Old 08-04-2009, 09:09 PM   #17
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Still buying in ...
You da man!

I am not buyin', but not sellin' either.

I like Maria Bartiromo's signature line of "It's four o'clock on Wall Street. Do you know where your money is?". Yes, Maria, I keep a diary, and I know my portfolio to the last dollar on any day.

My high watermark came on 10/31/07. My stock AA was 80% then. It's a good thing I sold throughout 08, er revising my AA down to 40%. I then started to buy near the end of 08 and early 09. My lows in 11/08 and 03/09 were within a few $K of each other, and were 37% down from the high in 07.

I am now 17% below the 07 high, and at 67% equity AA. And no, I am not selling.
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Old 08-04-2009, 11:16 PM   #18
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I can really relate to the paralysis feeling.
You want paralysis? I'll show you paralysis!

Through mostly luck I was about 70% in cash when the bottom fell out. Just sold an expensive home, pulled a bunch of money out of my FI's grasping paws, had to cash in an annuity from MILs estate, etc. So suddenly I was sitting pretty, took about 10% of the loss I might have otherwise. Put all those beautiful dollars into my VG MM account.

Where it still sits today. I'm absolutely sure we're in a short term bull market. We have to be. TheSweetLife says so - Is this rally for real?. But seriously, I don't see the underlying economy supporting the recent upswing.

But who cares? Right or wrong, I haven't been able to pull a trigger. I've made ~.7% on my money, minus whatever inflation has been, for the last 8 months. I've got my AA all set to go, and am just suffering from analysis paralysis. Luckily I do have a few years cash to cover me during this period of stupidity.

So I've decided to implement my strategy. Slowly. I've divided my investable cash into 8ths, and I'm going to buy in once every three months over the next two years. I just can't take the pressure of this indecision anymore! Aaaargghhh! I'm freaking out!

The moral of the story is - good luck can be just as bad as bad luck. Timing is everything, and mine sucks, except when I get lucky.

Hmmm, maybe if I got lucky more often I wouldn't be worrying so much about money!
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Old 08-05-2009, 08:44 AM   #19
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Quarterly, or even twice yearly is a good approach for averaging in. When I was averaging in a lump sum over a couple of years in the early 2000s I finally slowed down to twice yearly - Mar 15 and Oct 15. That seemed to capture some of the swings without so much work.

I don't know how "short" this bull run is, because I do see a rationale for it. In March we thought the world was ending and the economy was broken. Every month since has shown us that neither was true, and not only is the economy not broken, but we are coming out of recession, home prices are bottoming and the economy is improving.

That doesn't mean that we will run back to S&P500 1500 anytime soon. But I don't see why current levels aren't justified.

Nevertheless - in the multi-year view - I don't think we have entered a long bull market phase either. I expect that the recovery will be weak and the economy will be weak (weak but not broken, and not in recession) for several years. For me this indicates a few more years of rollercoaster in market averages. This doesn't bother me because I rebalance when things get sufficiently out of whack.

Audrey
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Old 08-05-2009, 09:38 AM   #20
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Still working and contributing here. I have been throwing all new money into stocks since the crash, as my way of "rebalancing" my portfolio (although the majority of my current stash is in target retirement funds anyway, and so auto-rebalanced for me).

By throwing new money at stocks, I pretty much maintained my asset allocation throughout the downfall. But I've reached a point where I will start overweighting stocks if I keep throwing all new money at stocks. So far I haven't changed anything but I will need to do that soon to keep my AA in check.

It's good to feel that I'm not throwing money down a black hole anymore, but almost makes me nostalgic for those sales we were having back in Feb/Mar ...

:-)
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