Has anybody changed their mind about their investing strategy going forward?

[Toocold]

As I reflect back, I am glad that I have mix of 60/40 AA for long term assets, individual stocks for dividend investing, and rental portfolio. I also have about 1-2 years worth of cash. I have paid off our mortgages for my primary and my investment properties, despite the math that indicates over a very long term stocks over-perform real estate and bond.

Now of course, if I knew (not conjecture) that the market would drop 30%+ the last 3 weeks, I would have change my actions, but going forward, I am not planning to change anything about my overall portfolio allocation.

Reading everybody's post about their reactions, I'm sensing those that are buy /hold are still committed to that strategy, including those that are 100%. Those who sold to cash are still committed to that strategy. Those who invest in real estate are doing the same. I am guessing that outside of those that are panicking right now, most people will stick with their strategy.

Is this correct? If you plan to change, what was your strategy before and what changes are you planning to make?

 

[statsman]

For a longest time, we've been in bond funds, TIPs funds, and cash only. When our CA house sold in late 2018 and we moved into our new TX house in June 2019, we ended up with a lot more cash. Late last year, we decided we could afford to invest some in stock funds with the belief that if the funds magically disappeared, our retirement wouldn't be impacted.

After seeing what happened to our bond funds and how they failed us in terms of holding steady while the stock markets cratered, it actually may push us toward making the decision to go with some stocks. It won't be a high percentage of our AA, but likely better than what we have been doing. But when and how? I don't think anyone really knows at this point.

 

[braumeister]

I change my mind frequently. But I'm smart enough not to follow through on it.

 

[USGrant1962]

Just minor tweaks to my thoughts:

• I'm following a bond tent type of strategy and was thinking of ramping back up to 65/35 over the next decade - I now think I'll stop at 60/40. I'm really liking bond tents for early retirees now.

• When to rebalance? Wow. I have rebalance bands and in the past rebalanced immediately when I hit them. So on March 10 I did a relatively minor rebalance from total bond market into international stock - that wasn't helpful. Since then my AA has moved out of band and stayed there (with massive volatility). So now I'm thinking some kind of rule that allows momentum to do its thing before I pull the trigger. Maybe out of band on two or three consecutive weekends before rebalancing. I guess I could use moving averages but that would take a lot more tracking than I do now - so no.

• Glad I took money off the table and paid off the mortgage in 2017.

 

[Big_Hitter]

sort of - I have a CD maturing friday that I was going to dump into T - now I'm thinking I dump it into my savings account....

 

[mountainsoft]

I transferred 10K from our taxable brokerage account to our high interest savings account, but it had nothing to do with investing strategy. I just wanted more cash on hand in case we're out of work and need money to live on. My taxable account is in a tax free bond fund and hasn't lost much during this market drop, so the losses I locked in were minimal.

Otherwise, I'm sticking to my 50/50 allocation, though it's running a bit bond heavy now with the stock market down.

 

[target2019]

I change my mind frequently. But I'm smart enough not to follow through on it.

Good point. This is not the best time to change strategy. Thinking about how you feel is very important. But talk it over as much as possible.

We're looking very carefully at the expense side of the equation. Call it tactical rather than strategic.

 

[Toocold]

After seeing what happened to our bond funds and how they failed us in terms of holding steady while the stock markets cratered, it actually may push us toward making the decision to go with some stocks.

Now that I think about it, I did change my AA in terms of my fixed income. I was planning to do 40% total bond fund, but I am now 20% total bond fund / 20% MMF. After this scenario is over, I need to seriously think about what to do here - either continuing to shorten my duration or go laddered CDs.

 

[DrRoy]

I had been following a plan to reduce my equity AA by 1% with each ~4% rise in the market. When that comes back into play down the road I think I will increase it to 2% AA reduction.

 

[dixonge]

I've done just a couple of things differently, so far. I've not touched our main investment accounts. Hurts seeing them drop this far (back up 9.5% today - woot!) but un-needed. As an alternative short-term strategy, depending on how long this bear lasts, I plan on keeping more of our future income savings in cash. I doubt this strategy will last beyond the end of this year, but that's one way of playing it safe since these are uncertain times.

I have also made extra ATM withdrawals since it cost me less right now (peso moved from 20 to 25 pesos per dollar!) That's just a minor currency arbitrage.

I am also reminded that there are a couple of banks here with crazy CD rates. Time to maybe put some money there as well. Nothing crazy, just a slight amount of diversification.

 

[MikeyMarks]

The only thing I’m tweaking is to have my advisor shift a slightly greater amount of my AA to high quality dividend stocks to be sure my interest and dividends can meet my living expenses even if stocks dive 90 percent. In the last couple of weeks he had me in a couple non-dividend stocks which have performed well but he had reduced my investment income to below my annual expenses. I won’t let that happen again. Otherwise I’m a long-term holder (49 yo).

 

[GenXguy]

I don't know that I'll change my investment strategy any differently. I was conservative at about 40% equities back on Feb 19. By March 23, I dropped to the low to mid 30% range due to the market tanking with no change in my investments. However, I will rebalance after the market drops further. I see today as temporary gain based on potential/likely stimulus, and it will soon be back down even lower than the recent drop.

 

[MikeyMarks]

I don't know that I'll change my investment strategy any differently. I was conservative at about 40% equities back on Feb 19. By March 23, I dropped to the low to mid 30% range due to the market tanking with no change in my investments. However, I will rebalance after the market drops further. I see today as temporary gain based on potential/likely stimulus, and it will soon be back down even lower than the recent drop.

Given your username I assume you’re in your late 40’s (like me) or early 50’s, so I’m curious about your AA. You seem to have a very low equity concentration. How come?

 

[rk911]

nope. staying pat. long term investor.

 

[Dtail]

I've done just a couple of things differently, so far. I've not touched our main investment accounts. Hurts seeing them drop this far (back up 9.5% today - woot!) but un-needed. As an alternative short-term strategy, depending on how long this bear lasts, I plan on keeping more of our future income savings in cash. I doubt this strategy will last beyond the end of this year, but that's one way of playing it safe since these are uncertain times.

I have also made extra ATM withdrawals since it cost me less right now (peso moved from 20 to 25 pesos per dollar!) That's just a minor currency arbitrage.

I am also reminded that there are a couple of banks here with crazy CD rates. Time to maybe put some money there as well. Nothing crazy, just a slight amount of diversification.

Aren't the Mexican bank CD's lacking any FDIC type insurance?

 

[Which Roger]

I started investing about 30 years ago. 20 years ago, when the market dropped by half during the dot-com bust, I still had relatively little in savings, and a long way to go in the accumulation phase, so I did not panic. In 2008-09, I didn't change course after a 50% drop, having already experienced one a few years ago. But I did consider capitulating if the market dropped 70% (which thankfully it didn't), but then realized that made no sense because by then my stock allocation would be so small I couldn't lose much more and would lock out potential gains by capitulating. So now, faced with a current drop of about 30%, I've already seen worse twice in my investing lifetime, and know I can ride it out, so I have been less tempted than ever to change course.

 

[Markola]

nope. staying pat. long term investor.

+1. Everybody is an investing genius during a bull but bears are when mistakes get made.

 

[ERD50]

The only thing I’m tweaking is to have my advisor shift a slightly greater amount of my AA to high quality dividend stocks to be sure my interest and dividends can meet my living expenses even if stocks dive 90 percent. In the last couple of weeks he had me in a couple non-dividend stocks which have performed well but he had reduced my investment income to below my annual expenses. I won’t let that happen again. Otherwise I’m a long-term holder (49 yo).

Once again, divs are not magic. Dividends are the equivalent of the company selling off a portion of itself. If they didn't distribute that div, it would be retained on their balance sheet, and would be reflected in a higher NAV. You can do that yourself, sell a bit, when and in the amounts you wish.

If you look at total return, you'll see this. You can take the company's value out in divs, or take it out by selling a bit (that they retained because they didn't already give it to you). All else being equal, the results are equal.

-ERD50

 

[mistermike40]

High level, I'm 60/40... but as the market continues down, I've been bumping my equities by 4%... I'm now at 84/16.

The caveat: my pension covers all my current living expenses. Of course, it would be nice if the market does well, giving me some extra "play" money (e.g. I took $50K out this January and put in an online savings account.. haven't touched it yet, though I've used some of last year's withdrawal).

My rationale: I can go one, two, five, even ten years without having to make a 401k withdrawal. Again, I hope that's not the case, but I doubt I would make a withdrawal before the market recovered anyway (regardless of my AA)... I may as well buy "low" and wait it out.

 

[frayne]

Nope, using the Bogle model during these uncertain times, stand there and do nothing.

 

[USGrant1962]

Nope, using the Bogle model during these uncertain times, stand there and do nothing.

"Don't just do something, stand there!" is the usual quote. I'm kind of doing the same, other than dithering a bit on rebalancing.

 

[RobbieB]

Yeah, I'm going to more cash, like 10% enough to cover 2 to 3 years spending. I thought my bonds would be flat during this kind of crap, but they are down 10%.

So me thinks I'll alter my AA to 70/20/10: E/B/C

 

[GravitySucks]

It evolves. My FI has become more conservative over the last few years and will probably get even more so.

 

[RobLJ]

In retrospect, I'm glad a year and a half ago, that I decided to (temporarily) move down from my 60-30-10 allocation to 50ish-30-20, with a glide path back up (a la Kitces) when I reach full SS age. I temporarily reduced to 48% stocks in January, when I decided to skim off a bit more than 1/3 of 2019 gains, then skimmed off another 1/3 the last week of February after the market drifted down 10%, and then I briefly hit 40% stocks last week, before raising it about 3% by putting 8% of cash to work. Now I'm up to 46.5% stocks and if we go back down, I'll put another 7-10% of cash to work.

If the market had done a full-off final bull roar, as typically happens towards the end of bulls, I'm sure I would be looking at the 60-40 returns enviously. I have enough cash to make it to full SS--or more likely to put more cash back in, if the bear continues roaring.

This week and next will be interesting, to see whether this was a dead cat bounce. I'm curious how markets will take the unemployment claims/numbers next month.

 

[ExFlyBoy5]

Staying the course...not doing a thing. Odd that I haven't seen any "should I pay off my mortgage" threads in a couple of weeks...