audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Anyone who observes the markets over long periods of time - equities, bonds, etc., can't help but notice some annual patterns that seem to repeat most years. Sure - some years don't follow the pattern, but it's amazing how many do.
When I initially set up my withdrawal calendar, I chose using the first week of the year to do my annual withdrawal and rebalance, as it was a practical choice for several reasons:
But, I have also noticed over the past two decades that this early January time is usually (but not always) favorable in terms of common market patterns:
Just an observation.
I do use "out of range" limits on my AA in case there is a year with extreme moves. But I notice much of my rebalancing is accomplished by distributions paid out in December, because if it has been a strong stock market year, distributions seem to be proportionally higher.
When I initially set up my withdrawal calendar, I chose using the first week of the year to do my annual withdrawal and rebalance, as it was a practical choice for several reasons:
- Most of my distributions are paid out in December with I take in cash, and from that I withdraw my annual income, and rebalance what remains back to my AA.
- Rebalancing is a taxable event for me, and so I prefer to do it in the new tax year.
- My withdrawal is based on the Dec 31 value of the portfolio.
- I run my budget based on the calendar year.
But, I have also noticed over the past two decades that this early January time is usually (but not always) favorable in terms of common market patterns:
- Most years see a "Santa Claus" rally where the equity market runs up in late December and continues into early January. In many years this is an extension of a late Q4 rally.
- Most years also see an early January bump because is seems that a lot of pension? money is invested at the first of the year.
- Bonds seem to follow the opposite pattern - interest rates seem to run up late in the year and early in the next (making bonds cheaper), and then drop to lows mid year.
- Municipal bonds have their own pattern. For some reason issuance is higher very late in the year and early in the next, and this puts downward pressure on bond prices near year end.
Just an observation.
I do use "out of range" limits on my AA in case there is a year with extreme moves. But I notice much of my rebalancing is accomplished by distributions paid out in December, because if it has been a strong stock market year, distributions seem to be proportionally higher.