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Ground Hog Day on Asset Allocation
Old 09-13-2016, 01:54 PM   #1
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Ground Hog Day on Asset Allocation

Can't help myself... while I try and turn off the pundits, can't help but make my own observations about this economy which has me second guessing my near term strategy. Quite frankly, at the advice of some of you on this site I ratcheted down my more aggressive AA to a 70/30 mix last year mainly because I discovered I didn't need to take the unnecessary risk to hit my RE target (+/- 3 yrs away), provided of course, my AA averages its historical returns. None the less, here we go again... stock market feels over priced, interest rates just have to start going up, the bulls appear to have run an extended cycle, and my own personal sniff test tells me to buckle up within 12 - 18 months. Funny, I went back and looked at my Bond fund/ETF YTD performance (Intermediate) expecting returns no greater than 2% and they are showing around 4% annual returns! However, my gut tells me they are about to take a fall along with my stocks. There is a part of me that is screaming sell all my bonds and reduce my stocks to 50% and wait for the sale. Of course, that would be market timing. Anyone else feeling the tension??
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Old 09-13-2016, 02:55 PM   #2
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There's nothing wrong with market timing if you can do it successfully.

Unfortunately, I know perfectly well that I can't. YMMV.
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Old 09-13-2016, 03:00 PM   #3
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Bonds with a long duration in Europe, and possible most of the US, are as close to return-free risk as you can get.

Stocks .. harder to say.

Been sitting at 50% equities/50% CDs and cash, roughly, for some years. Want to move to 80/20 eventually, but not in this climate.
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Old 09-13-2016, 03:19 PM   #4
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Bonds with a long duration in Europe, and possible most of the US, are as close to return-free risk as you can get.
Help me on this... risk free?? Maybe I am missing something, but not sure how they would be risk free in an interest climbing environment??
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Old 09-13-2016, 03:20 PM   #5
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....Anyone else feeling the tension??
Not a bit.
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Old 09-13-2016, 03:32 PM   #6
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no tension here at a 60/40 AA. Plus I'd have to pay CG taxes on any sales.
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Old 09-13-2016, 03:36 PM   #7
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Help me on this... risk free?? Maybe I am missing something, but not sure how they would be risk free in an interest climbing environment??

Read it again. It's return-free, not risk-free.


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Old 09-13-2016, 03:37 PM   #8
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Ok, you "no tension" peeps, your strategy is to effectively take the Bogglehead approach, make no adjustments, let the chips fall where they fall? Don't get me wrong, I get that approach and that's what part of my brain is telling me to do, but the other part of my brain that thinks its smarter than the 1st half, just keeps getting in the way. You remember that scene from Animal House...
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Old 09-13-2016, 03:44 PM   #9
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I have no tension and also no idea what boggleheads are or what they do.

I'm too busy stacking dough to care. I just look at the monthly statements and smile.
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Old 09-13-2016, 06:24 PM   #10
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Anyone else feeling the tension??
No I am mentaly ready to go 7 digits up or down with no change to 100% equities portfolio.
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Old 09-13-2016, 06:29 PM   #11
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Tax loss harvest, rebalance and repeat. Say it with me....
No need to feel tension, unless you have a bad allocation.
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Old 09-13-2016, 09:51 PM   #12
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Of course I feel the tension.
But while stuff may dive down for a few or couple of years , maybe instead it just flattens.
Since I cannot predict, I cannot make any big bets in any direction.

So I sit still like a rabbit, collect my dividends, keep a few years spending money in interest earning accounts and think am I sure being 90% stocks is a good idea
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Old 09-13-2016, 11:00 PM   #13
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Yes, I do. I don't have 7 digits to work with. For unrelated reasons, I am heavy in cash at the moment but will be buying again later in the year.

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Old 09-14-2016, 03:45 PM   #14
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Personally, I don't see much of a likelihood of a 2002 or a 2008 event and, after weathering those, what is ahead will be more like ripping a large bandaid off my hairy legs.
I take for granted 20-25% dips, but the 60-25-15 allocation should cushion the blow. I have increased EM bond somewhat and kept cash high, in that I don't think most bonds pay enough for the risk. I only put about 1% to work in stock funds in the last 10% dip, because it recovered so quickly, which was annoying.
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