Telly
Thinks s/he gets paid by the post
- Joined
- Feb 22, 2003
- Messages
- 2,395
I'm E/R'd. My target AA is 60/40, and I decided some years ago to set the rebalancing threshold at 5 percentage points above or below the 60%, and when triggered, to rebalance all the way back to 60%, no half-hearted moves.
I had no problem sticking to the program, selling off a percentage of some winners when equities hit the 65% high trigger. And last fall, I think it was, I had no problem buying equities when they had dropped to hit the 55% of allocation trigger.
But over the weekend I re-ran all the numbers with Friday's close, and now equities are down to only about 50%. So to stick with the concept, I really should rebalance, I'm way past the trigger. I can rebal back up to ~56% just by using some dry powder (MM's in IRA, they got there via $ from a portion of previous equity sales). To go more than 56%, I would need to sell some bond fund(s) which are also down. I neglected to mention that my cash buffer is >6 years of recent year's expenses, and remains the same regardless.
But I'm a bit stalled on the decision to act. What if the downturn we are in gets worse, and is real real long? Then maybe I would rather have had the MM $ instead. Which sounds like in a really bad time, that I'm wavering on rebalancing... well...
Conversely, what if I don't act, and leave the AA at 50% equities now? Seems that could be a safe course of action, FOR NOW! But that could be the WRONG course for long-term. My thoughts are this: If I wimp out on rebalancing now, I have less total equities ---> maybe this present market is just another event in history ---> by not rebalancing, when the market turns up, I have less total $ ---> which in the future, in another downturn, I might not have enough $ to get over that hump. That wimping out now could setup a failure in the future.
In the past when I have looked at the FireCalc spreadsheet outputs and played around, there were times if you had just a relatively small amount of extra $ in your invested pot, you could have made it over a hump and survived to try others to come.
Future SS makes this not a life-or-death Walmart Greeter question.
And I just let another market close slip by...
I had no problem sticking to the program, selling off a percentage of some winners when equities hit the 65% high trigger. And last fall, I think it was, I had no problem buying equities when they had dropped to hit the 55% of allocation trigger.
But over the weekend I re-ran all the numbers with Friday's close, and now equities are down to only about 50%. So to stick with the concept, I really should rebalance, I'm way past the trigger. I can rebal back up to ~56% just by using some dry powder (MM's in IRA, they got there via $ from a portion of previous equity sales). To go more than 56%, I would need to sell some bond fund(s) which are also down. I neglected to mention that my cash buffer is >6 years of recent year's expenses, and remains the same regardless.
But I'm a bit stalled on the decision to act. What if the downturn we are in gets worse, and is real real long? Then maybe I would rather have had the MM $ instead. Which sounds like in a really bad time, that I'm wavering on rebalancing... well...
Conversely, what if I don't act, and leave the AA at 50% equities now? Seems that could be a safe course of action, FOR NOW! But that could be the WRONG course for long-term. My thoughts are this: If I wimp out on rebalancing now, I have less total equities ---> maybe this present market is just another event in history ---> by not rebalancing, when the market turns up, I have less total $ ---> which in the future, in another downturn, I might not have enough $ to get over that hump. That wimping out now could setup a failure in the future.
In the past when I have looked at the FireCalc spreadsheet outputs and played around, there were times if you had just a relatively small amount of extra $ in your invested pot, you could have made it over a hump and survived to try others to come.
Future SS makes this not a life-or-death Walmart Greeter question.
And I just let another market close slip by...