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Yet another timing thread
Old 03-30-2016, 09:29 AM   #1
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Yet another timing thread

I have a contract on my weekend house so I will have a large infusion of cash in a few weeks. So the deliemna arises, just dump it into the portfolio proportional to my AA? Worry that the Schiller PE/10 is high so I should wait for a dip? When is a dip a big enough dip? And on and on. I guess the reason these questions come up again and again is that they expand in importance when each of us has to face them ourselves.

My inclination is to leave enough cash for this year's expenses with my bank and convert the rest to equities in VG taxable. At the same time I would increase bond holdings in 401Ks to maintain the AA. OR I could go with bonds for the whole amount in the 401Ks and wait for a dip or slowly drip into equities.

Any thoughts?
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Old 03-30-2016, 10:36 AM   #2
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At the beginning of this year I rolled over my 403b to a Vanguard IRA. To process the rollover I had to temporarily be 100% in cash. Once my money was in the IRA I had the option of staying in cash and waiting for a dip (lots of doom and gloom projections for 2016), dollar cost averaging back in, or immediately reinvesting to my desired AA. It turned out that I was more worried about not being in the market than I was about being in the market. I immediately invested to my desired AA.
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Old 03-30-2016, 10:45 AM   #3
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We are also selling our weekend cabin - should be closing next week.


I plan to invest over several months (probably 3), just for peace of mind, to get to my AA by, say, end of June. Just a preference; not really because I am worried about the Schiller P/E. YMMV
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Old 03-30-2016, 10:47 AM   #4
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You could put in half at your desired AA and average the rest in over what ever period you choose.
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Old 03-30-2016, 10:57 AM   #5
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I would dump it into the current AA now. PE10 is a poor timing tool and is not high by my methodology. I could go into this more if someone wants more info.
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Old 03-30-2016, 11:10 AM   #6
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Quote:
Originally Posted by donheff View Post
So the deliemna arises, just dump it into the portfolio proportional to my AA? Worry that the Schiller PE/10 is high so I should wait for a dip? When is a dip a big enough dip? And on and on.
Shiller's PE-10 is perhaps a useful guide for thinking about long-term returns. It's a lousy tool for timing the market. If you're waiting for valuations to return to some kind of long-term historic average, you could be waiting decades.

My advice would be to bite the bullet and invest in the AA you're comfortable with. If you're uncomfortable committing new money to your existing AA, it says to me that you're not comfortable with your existing AA. So maybe it's a good time for a re-think about a higher fixed income allocation.
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Old 03-30-2016, 03:41 PM   #7
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I just happens that today I decided to up our equity stakes for long term tactical reasons. Moved 5% from bonds to stocks.
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Old 03-31-2016, 09:48 AM   #8
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We are also selling our weekend cabin - should be closing next week...
Didn't you just buy the place only a few years ago?

If so, dang, my memory remains superior.
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