Do you think Dow 18,000 was the bottom?

[jollystomper]

Some food for thought:

As the market started to drop and continued to drop the end of February through March, many were not looking at it as a "normal" drop/recession/depression", but rather "we have never seen circumstances like this before, we cannot assume that, it probably will be much worse".

With the market rising again, and people putting some hope in it, we are often told "it is too soon for a recovery, this is not how a recovery has worked in the past".

Just as we have seen a drop that "has never been seen before", what are the odds that we are seeing a recovery that "has never been seen before"?

I am not agreeing with the above. I am too dumb to know either way. My AA is for the long run and does not need a fast (or any) recovery for me to continue to enjoy retirement. Just another "thing to think about", "point to ponder", "idea to intrigue"...

[targatom2019]

Quote:

Originally Posted by jollystomper Some food for thought: As the market started to drop and continued to drop the end of February through March, many were not looking at it as a "normal" drop/recession/depression", but rather "we have never seen circumstances like this before, we cannot assume that, it probably will be much worse". With the market rising again, and people putting some hope in it, we are often told "it is too soon for a recovery, this is not how a recovery has worked in the past". Just as we have seen a drop that "has never been seen before", what are the odds that we are seeing a recovery that "has never been seen before"? I am not agreeing with the above. I am too dumb to know either way. My AA is for the long run and does not need a fast (or any) recovery for me to continue to enjoy retirement. Just another "thing to think about", "point to ponder", "idea to intrigue"...

I am to dumb to know either so I stick with my AA, buy, hold, rebalance and not worry about the short term market movement and yet I am up 6% YTD because I over-rebalanced before March low.

[GravitySucks]

Not everyone who received the extra was making less than unemployment and the bonus.
The question I'm asking is what kind of society keeps bailing out the wealthy?
The money being shoveled to corporations and bond holders dwarfs the unemployment bonus and stimulus check payouts.

Quote:

Originally Posted by mckittri2000 That is exactly what they are talking about. What society has to bribe people to go back to work?

[WyomingLife]

Roughly (now) 60/35/5 here. Approaching a re-balance point.

We're now up circa 14% over the past 12 months (starting date: June 8, 2019). That's 10x our annual spend (assuming somebody else is paying for our HC; if we had to self-fund our HC, that multiple would drop, of course). So my data indicate that a diversified portfolio during the Great Depression 2.0 is doing ok. More than ok, actually.

I'm glad that I haven't been diverting cash from the market to apocalypse-related non-investment expenditures: e.g., concrete and re-bar for the bunker, guns, ammo, gold, pickaxes (in case the zombies breach the concertina wire outer perimeter), and so on and so on.

[Klubbie]

I don't know if 18k was the bottom, but this was my first big drop with any meaningful amount of assets. I learned one lesson in this and that was to prioritize an emergency fund. We had a small buffer when this all started, but lower expenses, paying off my student loan, and no daycare costs for a few months allowed us to fix that problem quickly. I feel very fortunate and blessed to be in that position.

All I sold was 3k I had in a taxable account because I realized my EF was not big enough. Since the pandemic started we have been fortunate to stay employed and expand our EF to be about 12 months of expenses and are going to add a bit more to that buffer.

If 18k isn't the bottom we will be more prepared of we see more big drops.

[Montecfo]

Quote:

Originally Posted by WyomingLife;2440236, I'm glad that I haven't been diverting cash from the market to apocalypse-related non-investment expenditures: e.g., concrete and re-bar for the bunker, guns, ammo, gold, pickaxes (in case the zombies breach the concertina wire outer perimeter), and so on and so on.

Go ahead, laugh, make fun.

[Montecfo]

Indexers, did you *really* not rebalance in March?

Puzzled about that.

[RunningBum]

Quote:

Originally Posted by Montecfo Indexers, did you *really* not rebalance in March? Puzzled about that.

I'm a little puzzled why you equate indexing with rebalancing.

Myself (an indexer), I harvested some losses, and in the process, I let my AA move away from my goal a few percent (reducing equities). Wish I hadn't done that , since things recovered around that time, but it's only a few %, and I still think the market is overpriced.

[Whisper66]

Quote:

Originally Posted by Montecfo Indexers, did you *really* not rebalance in March? Puzzled about that.

Happened to be looking today at the "rebalancing" I did in March. My financial plan allows for asset allocation to range from a low of 60/40 to a high of 90/10. This was specifically to allow buying into corrections and selling during strong bull markets. Before March, I was about 65/35 and happy staying at that target. The market correction dropped my allocation from 65% equities to 47% equities. I felt buying equities at those low prices would be a good deal in the long run even if we hadn't yet hit bottom. So bought some index mutual funds that got me to 80% equities. Looks like the funds I bought were up 22% as of today from when I purchased them. Didn't expect such a rapid rebound. So now I'm thinking through how / when I will move back to a more conservative asset allocation, probably back in the 60-65% equities range again.

[Fermion]

So I can answer the OP's question in the first post with

Yes

[Animorph]

I changed my AA from 75/25 to 85/15 during the downturn, 5% each at -20% and -30%. I'm a little suspicious of the quick recovery so I rebalanced back to 75/25 today. We'll see how that goes, but it is my normal AA so I won't complain if the market goes higher. If it goes down again I'm reloaded to do the same thing again.

[Montecfo]

Quote:

Originally Posted by RunningBum I'm a little puzzled why you equate indexing with rebalancing. Myself (an indexer), I harvested some losses, and in the process, I let my AA move away from my goal a few percent (reducing equities). Wish I hadn't done that , since things recovered around that time, but it's only a few %, and I still think the market is overpriced.

I did not equate them, but most people here seem to be indexers. Regardless, when people say they did nothing when the market dropped 30 pct but are going to rebalance in x months, it seems puzzling.

A 30 percent drop would I think trigger a rebalance for most people closely following an AA. I like discipline, but there is little science behind only rebalancing at a specific time, say a specific annual date. I get that facilitates the discipline in some ways.

It sounds like you agree you should have been buying in the decline instead of selling.

The discipline of rebalancing should not get in the way of buying stocks suddenly and dramatically marked down, in my opinion.

Just an observation. Not saying I have things all figured out.

[Montecfo]

Quote:

Originally Posted by Whisper66 Happened to be looking today at the "rebalancing" I did in March. My financial plan allows for asset allocation to range from a low of 60/40 to a high of 90/10. This was specifically to allow buying into corrections and selling during strong bull markets. Before March, I was about 65/35 and happy staying at that target. The market correction dropped my allocation from 65% equities to 47% equities. I felt buying equities at those low prices would be a good deal in the long run even if we hadn't yet hit bottom. So bought some index mutual funds that got me to 80% equities. Looks like the funds I bought were up 22% as of today from when I purchased them. Didn't expect such a rapid rebound. So now I'm thinking through how / when I will move back to a more conservative asset allocation, probably back in the 60-65% equities range again.

That sounds highly rational to me, Whisper66.

[RunningBum]

Quote:

Originally Posted by Montecfo I did not equate them, but most people here seem to be indexers. Regardless, when people say they did nothing when the market dropped 30 pct but are going to rebalance in x months, it seems puzzling. A 30 percent drop would I think trigger a rebalance for most people closely following an AA. I like discipline, but there is little science behind only rebalancing at a specific time, say a specific annual date. I get that facilitates the discipline in some ways. It sounds like you agree you should have been buying in the decline instead of selling. The discipline of rebalancing should not get in the way of buying stocks suddenly and dramatically marked down, in my opinion. Just an observation. Not saying I have things all figured out.

No, that (bolded part) is not the message I was sending. I said I wish I hadn't sold. I made an intentional decision to go away from my AA, based on a decision that the market was too high. It was not a panic or undisciplined sell.

I reviewed what I actually did. Right around the bottom I did the tax loss harvesting and exchanged some funds with losses to other index funds, different enough to avoid a wash sale. Around the start of May I exchanged some equity funds for bond funds because I thought the market had recovered too much too fast. This was the intentional shift I mentioned above. Turns out I was wrong as of today, but I'm not buying back in now.

[Montecfo]

Quote:

Originally Posted by RunningBum No, that (bolded part) is not the message I was sending. I said I wish I hadn't sold. I made an intentional decision to go away from my AA, based on a decision that the market was too high. It was not a panic or undisciplined sell. I reviewed what I actually did. Right around the bottom I did the tax loss harvesting and exchanged some funds with losses to other index funds, different enough to avoid a wash sale. Around the start of May I exchanged some equity funds for bond funds because I thought the market had recovered too much too fast. This was the intentional shift I mentioned above. Turns out I was wrong as of today, but I'm not buying back in now.

Well, wishing you had bought the decline instead of selling it would be rational, I think.

Since we are having the discussion, when will you rebalance? Do you do that on a certain day?

I review my portfolio regularly with an eye toward not so much rebalancing as evaluating individual holdings. Being value oriented, I am frequently generating and redeploying cash. I did sell some bond/fixed during the selloff to add to my purchases. That was just a rare opportunity.

[RunningBum]

Quote:

Originally Posted by Montecfo Well, wishing you had bought the decline instead of selling it would be rational, I think. Since we are having the discussion, when will you rebalance? Do you do that on a certain day? I review my portfolio regularly with an eye toward not so much rebalancing as evaluating individual holdings. Being value oriented, I am frequently generating and redeploying cash. I did sell some bond/fixed during the selloff to add to my purchases. That was just a rare opportunity.

Yes, but wishing is not the same as saying I should have. I don't regret my decision, even though in hindsight I missed out on some gains with the small part I put out of balance.

I tend to rebalance after December fund distributions. When I have another reason to tap funds for expenses I take from the overweight part of my AA. Likewise if I have cash coming in, like a CD maturity, or the townhouse I had for my son selling early this year. Sometimes I will sell off a bit of equities in a rally, or buy on a dip. I don't have a specific range for doing that. It's more of a gut feel lthing.

[Montecfo]

Runningbum,

Fair enough.

[RunningBum]

I'm not saying what I did is perfect or right for anyone else. It's what I did, and I know I broke my own rule about holding to an AA, but I'm ok with my decision.

[Retch The Grate]

Quote:

Originally Posted by Montecfo Indexers, did you *really* not rebalance in March? Puzzled about that.

Well my AA is 100% of my investment funds in equities and my operating funds in cash. That's generally an 93/0/7 split, but I don't try and balance that. I did consider if I should add to my cash on hand, and ultimately chose not to, but that doesn't really feel like "rebalancing" either way.

[Montecfo]

Quote:

Originally Posted by Retch The Grate Well my AA is 100% of my investment funds in equities and my operating funds in cash. That's generally an 93/0/7 split, but I don't try and balance that. I did consider if I should add to my cash on hand, and ultimately chose not to, but that doesn't really feel like "rebalancing" either way.

Makes sense.

I was more curious about people who did not rebalance in March but are waiting till some fixed future date to do so.