S&P at all time high .. Changing your Asset Allocation? More Bull run? Wait & see ?

[donheff]

Fidelity just posted what I found an interesting analysis of the market's new highs by Jurrien Timmer who find to be one of their better analysts. https://www.fidelity.com/learning-c...tors/stock-market-highs?ccsource=email_weekly
One of his more interesting comments was:
"While the SPX gained 0.8% to close at a new all-time high, every single sector in the US stock market had more decliners than advancers last week. All 11 sectors, even tech.
How rare is this occurrence? Extremely rare. In fact, since 1998 it has only happened 4 times.
Last week's return of +0.8% was the highest return since 1998 when this condition was met. Normally when all 11 sectors are in the red, the SPX return would be around −3%. One for the record books"
He goes on to say, while really rare, the outcomes after the previous are mixed with half the time market goes up and half the time down.

So the broad market indexes are up while the sectors are down. Does anyone know how actively managed funds are doing?

 

[OldShooter]

Fidelity just posted what I found an interesting analysis of the market's new highs by Jurrien Timmer who find to be one of their better analysts. https://www.fidelity.com/learning-center/trading-investing/markets-sectors/stock-market-highs?ccsource=email_weekly ...

He is good. I didn't see anything in the piece where he put himself on the line by actually predicting anything.

I am reminded of Harry Truman's plea: “Give me a one-handed Economist. All my economists say 'on hand...', then 'but on the other...”

So the broad market indexes are up while the sectors are down. Does anyone know how actively managed funds are doing?

Sure. They are below their benchmarks by the amount of their costs and below index funds by the cost difference. Thus it is and always will be; no research necessary. Nobel winner William Sharpe explains: https://web.stanford.edu/~wfsharpe/art/active/active.htm

 

[davidfin]

I’ve seen a significant run up as most have. Yesterday, I harvested a few gains and don’t mind sitting on a fairly large (at least to me) cash position. Current AA is 66/17/17. There comes a point where through a years long disciplined investment approach you’ve accumulated sufficient assets and have reached your objective that you can afford to dial down your risk profile. To me that’s winning the game as far investing to meet or exceed monetary requirements to fund my preferred lifestyle while still on this planet.

 

[Winemaker]

I reduced some equities yesterday to about 55%, raised my cash to my 3 years WD level, and the rest went to a TIPS fund. For the most part, we've won the war, but must stand on guard for those irritating attempts that try to claw some back.

 

[rkser]

Following

 

[Katsmeow]

We had been 60/40 when DH retired 10 years but had reduced it and was 50/50 for quite a while (DH is 72 and I am a few years younger) but was planning to go to 45/55 when the Covid recession started. I waited a couple of months and when things were around the first of the year I went ahead and switched to the 45/55.

I recently (last week) decided to permanently move to 40/60. This is not an attempt to market time. But all that has happened this year and how the market has reacted has given me pause. The market seems to be disconnected from economic reality. So decided to go to 40/60. I think of this as "permanent" but I do reserve the right to change. During the last 10 years I have changed somewhat at different stages. So I could change again. It is not so much the S&P being high specifically as just the market seeming to not reflect the real situation.

 

[rkser]

We are now at 60/40, wanting to get back to my IPS which says 50/50 or at least 55/45 to start with as arguably we have won the game, unless wanting to leave more of a inheritance.

A very timely thread, and like with many of us here, presently re balancing is on my mind

A part of me wants to take some stocks off the table in taxable accounts, & re balance into tax exempt Intermediate Bond Fund. I think our projected income for this year puts us squarely between 22% & 24% tax brackets & the resulting cap gains will definitely carry us in 24% territory.

My mind is playing tricks with me & trying to justify the newer 60/40 as probably OK/not bad for now, as 60/40 has been traditionally touted as ideal allocation in many studies (Rick Ferri comes to mind).More so because as the 40% of our fixed income will last about at least 12 years of our expenses unless undue Inflation raises its head. We have about 20 -25 more yrs ahead of us on this Planet.

When you do not know what to do, just stand there & do nothing. Let us see how it will play out.

 

[flyingaway]

Did rebalance $100k from stocks to bonds a few days ago. I don't know what is going on, so just try to maintain my asset allocation between 60/40 and 70/30.

 

[music-and-ski]

I have no interest in more RE then my two houses, but curious to understand more. Is this a short term play (essentially flip) or long term (rent)?

What about when companies realize productivity/engagement is down due overuse of remote? I don’t deny the trend, but I don’t think it’s sustainable at current levels.

"Telecommuting" was long promised, but not many firms seriously took it up. Anecdotally, in the past couple of years I've met a number of people on planes who had no office, but were flying to a business event where they could meet their co-workers. So, based on anecdote, I thought it was finally picking up.

Then, COVID came, everyone started working from home, and small town real-estate started booming and businesses started shedding office rental space.

So, my prediction is that a large portion of companies will embrace a large portion of their white-collar workforce working remotely, even after the COVID problem is solved. It was starting to happen before, but now it's been proven to be an ok way of working. The saved commuting time, saved office-rent, and increased home location options ("I can live at the beach!") will offset the productivity reduction, which is less than people feared AFAICT.

 

[harley]

The saved commuting time, saved office-rent, and increased home location options ("I can live at the beach!") will offset the productivity reduction, which is less than people feared AFAICT.

Hope so. We're about ready to sell our house at the beach, which has never recovered the 2009 housing collapse. I think the Zillow Estimate is just about back up to what we built it for 12 years ago, so we're thinking we should take the money and run. It will all be under water (literal version) in 100 years or so anyway. But I've been working from there and our other homes quite nicely for the past 11 years, so I'm all in with the telecommuting concept. If managers can't manage without having to see people as opposed to results, get new managers.