Do you think Dow 18,000 was the bottom?

[RunningBum]

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]

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]

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.

 

[street]

^ I didn't rebalance in March and haven't rebalanced in 40 years. I let things ride and let it do it's own thing. I seem to have done just fine through the years with out rebalancing. I'm ~76/24 now. It has averaged about that ratio trough the years.

 

[Major Tom]

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

Nope. I'm an indexer but I rarely rebalance, if ever. It's too much trouble, quite frankly. The last time I checked my account balances was around the time of the peak in Feb. I'm thinking that if I hang on just a bit longer, the next time I check my portfolio balance, it will be at the same level it was before the big drop.

I find doing little or nothing very easy.

I didn't rebalance in March and haven't rebalanced in 40 years.

You are my hero.

 

[ejman]

^ I didn't rebalance in March and haven't rebalanced in 40 years. I let things ride and let it do it's own thing. I seem to have done just fine through the years with out rebalancing. I'm ~76/24 now. It has averaged about that ratio trough the years.

I see that St. Bogle agrees with you "Jack Bogle: I am in a small minority on the idea of rebalancing. I don't think you need to do it. The data bear me out, because the higher-yielding asset is going to be stocks over the long term. That's the way the capital markets work. Not in every 10-year period, or even for that matter every 25-year period. But the higher-returning asset you're getting rid of to go into a lower-returning asset, so it dampens your returns, and the differences turn out to be, if you look at 25-year periods, very, very small. And sometimes rebalancing improves your returns. Sometimes it makes them worse"



FWIW I rebalance when my wide 10% bands are breached - it seldom happens because a lot of my investments are in balanced funds (Wellesley/Wellington) which rebalance on their own.

 

[RunningBum]

It seems to me that if you aren't going to balance but would rather let stocks run (since stocks are almost always the higher-returning asset over time) you might as well have started with a higher stock allocation to begin with. Maybe I'm missing something.

 

[audreyh1]

Good point.

 

[BeachOrCity]

I get how lower interest rates both short term thru the Fed overnight rate and long term with quantitative easing make stocks look more attractive relative to bonds, but when everyone says “the Fed is propping up the stock market”, is there anything else people are referring to?

 

[Toocold]

I get how lower interest rates both short term thru the Fed overnight rate and long term with quantitative easing make stocks look more attractive relative to bonds, but when everyone says “the Fed is propping up the stock market”, is there anything else people are referring to?

The other action that they have taken is to buy corporate bonds (through blackrock) to add liquidity when it was seizing up.

What I don't understand is when people say the Fed prints money and our grandchildren will pay for it. Technically, only the treasury can print more money. The Fed's primary vehicle is through the discount window to lend to banks, in which they adjust interest rates to reflect their monetary policy, and they make money from it.

I suspect that many hear stuff from the social media and they spout it without fully understanding some of these concepts, and they probably can't distinguish between monetary vs fiscal policy.

 

[audreyh1]

I get how lower interest rates both short term thru the Fed overnight rate and long term with quantitative easing make stocks look more attractive relative to bonds, but when everyone says “the Fed is propping up the stock market”, is there anything else people are referring to?

Its also buying securities- bonds to keep interest rates low, corporate bonds to help liquidity and hopefully stave off some bankruptcies - in other words propping up some companies, and they might even buy some stocks, which would directly support the stock market.

 

[jollystomper]

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

Puzzled about that.

I focus more on harvesting losses than rebalancing. I did not feel the need to rebalance as my AA in March still met my needs.

 

[Toocold]

Its also buying securities- bonds to keep interest rates low, corporate bonds to help liquidity and hopefully stave off some bankruptcies - in other words propping up some companies, and they might even buy some stocks, which would directly support the stock market.

I think the Fed was considering buying bond ETFs, not stock ETFs. If the Federal Reserve buys stocks, directly or indirectly, it would certainly be another line they have crossed.

Not you AudreyH1, but as I read previous comments, people also seem to mix and interchange, the federal reserve (what most people call the "fed") with the federal government, and some of the comments are certainly true about the federal government's (mainly the treasury) willingness to print more money, take equity positions in ailing industries, and other actions that directly prop up the stock market and would impact long term debt. Theoretically, all these actions are authorized and directed by congressional action.

 

[VFK57]

Without additional $1 trillion QE to bail some bonds ETF and stocks, Market will visit below 20,000 again. The question is if the almighty US$ will keep up with all this extra created QE while GDP continue to decline.

 

[2177V]

I get how lower interest rates both short term thru the Fed overnight rate and long term with quantitative easing make stocks look more attractive relative to bonds, but when everyone says “the Fed is propping up the stock market”, is there anything else people are referring to?

When the fed buys long term treasury bonds, it increases liquidity by exchanging one asset (treasury bond) with cash. The cash circulates within the economy and finds it way into the stock market. It is called increasing the money supply for people who studied economic 1A. It appears to be printing money but it isn't ...since it is an exchange of assets similar to a person selling a house. After the house sale, that person now have liquidity but his net worth has not changed. This is where a balance sheet comes into play in business. The balance sheet has the total debt, income (taxes), assets, net worth, etc. Also...when the government issues $1200 checks to everyone, some of that $2T of government debt ends up in the stock market by retirees, millionaires, people who are still employed, etc. Once the stimulus ends and/or once the liquidity starts to dry up, the stock market may decline. Until then...the stimulus checks and the liquidity are propping up the stock market which explains why Warren Buffet has increased his cash position. Warren Buffet is waiting for the shoe to drop.

 

[donheff]

A bit of an uptick in Covid cases and a downbeat Fed forecast and today’s futures are in the dumpster. Where things go from here is a crapshoot. I’m still planning on years to recover. It will be a pleasant surprise if the recovery is rapid.

 

[2177V]

A bit of an uptick in Covid cases and a downbeat Fed forecast and today’s futures are in the dumpster. Where things go from here is a crapshoot. I’m still planning on years to recover. It will be a pleasant surprise if the recovery is rapid.

Dow dropped 1000+ points as of 9:30 PST June 11 since the Fed announced "they are not even thinking about thinking about raising rates". 0% interest is expected for the entire 2020 and 2021.

This is a signal from the Fed that they do not expect a recovery until 2022. 2020 and 2021 are expected to be high volatility years and probably between down -30% to -10% from the February 2020 highs. I will be surprised if it goes down less than -30% and I will be surprised if it goes higher than -10% or get close to a Dow of 29,568 until 2022.

I agree with the statement of : "I’m still planning on years to recover. It will be a pleasant surprise if the recovery is rapid." You made this statement before the Fed announcement.... so you know better than most of us.

 

[aja8888]

Dow dropped 1000+ points as of 9:30 PST June 11 since the Fed announced "they are not even thinking about thinking about raising rates". 0% interest is expected for the entire 2020 and 2021.

This is a signal from the Fed that they do not expect a recovery until 2022. 2020 and 2021 are expected to be high volatility years and probably between down -30% to -10% from the February 2020 highs. I will be surprised if it goes down less than -30% and I will be surprised if it goes higher than -10% or get close to a Dow of 29,568 until 2022.

I agree with the statement of : "I’m still planning on years to recover. It will be a pleasant surprise if the recovery is rapid." You made this statement before the Fed announcement.... so you know better than most of us.

A big part of today's drop today was the result of Delta Airlines announcements made yesterday regarding their 90% drop in revenue forecast and steps they are taking to cover the millions of dollars per day of cash bleeding.

 

[brewer12345]

A big part of today's drop today was the result of Delta Airlines announcements made yesterday regarding their 90% drop in revenue forecast and steps they are taking to cover the millions of dollars per day of cash bleeding.

Couldn't possibly be the RobinHood bubble bursting instead, could it?

 

[donheff]

Dow dropped 1000+ points as of 9:30 PST June 11 since the Fed announced...

I agree with the statement of : "I’m still planning on years to recover. It will be a pleasant surprise if the recovery is rapid." You made this statement before the Fed announcement.... so you know better than most of us.

I wish I was so prescient but I was reacting to this morning’s futures after the Fed statement.

 

[aja8888]

Couldn't possibly be the RobinHood bubble bursting instead, could it?

Could just be that! Maybe the "machines" are now re-programmed to take the market down to collect all the recent gains?

 

[VFK57]

Mr Powell clearly indicated that economy has no chance to recover till 2022 and that is Market reaction on it.

 

[Clone]

There were articles about people making multiples on buying bankrupt stocks and flipping them when the market was bouncing. To me, it was Deja Vu to those days before the tech market died. Folks were proclaiming that the old economic measures did not apply, there was no need to make a profit, teenagers could run the companies, manufacturing was a dirty and dead industry, etc. Irrational exuberance, and declaration that fundamentals do not matter. And we know how that all turned out.

Now we were seeing the same kinds of things. Perhaps nobody knows nothing, but, to me, at some point fundamentals have to have some correlation to market performance. If not, then the market is truly a game of some type. It is like buying a variable annuity- if you can't understand it, perhaps you should not buy it. Mr. Market has been very good to me in the past, but recently it has been very confusing. Today is not a confusing day, we will see what happens in the next week.