i never got a response for this (Question about rebalancing)

[Animorph]

I don't remember anyone here increasing their stock allocation percentage in 2008, though I'm not known for my memory. I thought a few did the opposite, or couldn't stand even normal rebalancing into equities.

In my case, I had no bonds but had gone to 30% cash in 2007 just before retiring. Excluding the cash I was 100% equities, and that was my long-term allocation. I was concerned not so much about housing but the negative savings rate, and a possible downturn right as I retired.

During 2008 & 2009 I used chunks of cash to buy equities algorithmically as the market reached new lows. At the final 2009 low I was about out of cash, other than a few months of living expenses. So I was always sort of "100% equities", just adding to them from cash that was never part of my long-term allocation plan.

 

[NW-Bound]

Quite a few including myself did buy in late 2008, but as FIREd said (he was FIREDreamer then), it was like "throwing money into an abyss" as the market kept on diving deeper and deeper.

I made a few posts crying "Buy, Buy,Buy", which later became an anemic "buy, buy, buy".

Yep, I did buy, but then sold too soon. Darn!

Do we want to have another chance?

 

[SpinDr]

Yes, but the oldtimer regulars here are a pretty tight knit group, and we remember exactly what other oldtimer regulars were saying in 2008-2009 (even if they deleted it or had it deleted afterwards). Some were basically holding hands, verbally speaking, pretty scared, and urging others to hang tight. Others were posting wildly about selling everything and going to cash. There are a few of those who sold low and who do admit it freely. I think that is really admirable, because others can learn from this sort of post.

It must have been interesting times around here during that period! Did it seem that the mutual support among the members helped keep many folks from making rash moves that would have hurt them in the long run? I was not aware of this board at the time and luckily held tight and kept buying which worked out in the end. Being a bit younger, and being able to ride it out, though, is bit different from being close to retirement and having less time to mend a wounded portfolio.

 

[OldShooter]

Yes, but the oldtimer regulars here are a pretty tight knit group, and we remember exactly what other oldtimer regulars were saying in 2008-2009 (even if they deleted it or had it deleted afterwards). Some were basically holding hands, verbally speaking, pretty scared, and urging others to hang tight. Others were posting wildly about selling everything and going to cash. There are a few of those who sold low and who do admit it freely. I think that is really admirable, because others can learn from this sort of post.

Oh, I wasn't trying to pin the tail on anyone in particular. And this thread is not even the the type that is most prone to this kind of "survivor bias." But I still think that human nature makes seeking this kind kind of information on internet forums not just futile, but probably misleading. The plural of "anecdote" is not "data."

 

[Fedup]

I wish I can find the old thread. I want to see who panicked and who didn't. Just out of curiosity.

 

[REWahoo]

It must have been interesting times around here during that period! Did it seem that the mutual support among the members helped keep many folks from making rash moves that would have hurt them in the long run? I was not aware of this board at the time and luckily held tight and kept buying which worked out in the end. Being a bit younger, and being able to ride it out, though, is bit different from being close to retirement and having less time to mend a wounded portfolio.

Those who found it "really different" were those of us who were retired with no other source of income other than our portfolio.

Here are a few threads dating back to the "market unpleasantness" of 08/09:

http://www.early-retirement.org/forums/f28/its-a-depression-have-fun-with-it-42983.html
http://www.early-retirement.org/forums/f28/all-cash-low-equity-got-out-early-post-here-42912.html
http://www.early-retirement.org/for...h-cash-equilivents-do-you-have-now-42982.html
http://www.early-retirement.org/forums/f28/doctor-of-doom-with-a-new-prediction-43026.html
http://www.early-retirement.org/forums/f28/most-humbling-42869.html

 

[SecondCor521]

As I've written many times before, my AA was 100% stock index funds from at the latest in the early 1990's until June 2016, when I moved to 90%/10% stock/bond index funds. My investing plan calls for anywhere between 90/10 and 95/5.

So in the case of 2009 (and 2000), I held all the way down and all the way back. I was working at that time, so I was also buying into the market with my 401k and IRA contributions, which I always made as soon as possible regardless of market valuation.

Generally I have ice in my veins - because I'm an idiot. But I do remember the depths of 2009 wondering if maybe this time it was different. But I mull things over for long periods of time, so by the time I had any notion about changing things, the market had started its recovery.

 

[W2R]

It must have been interesting times around here during that period! Did it seem that the mutual support among the members helped keep many folks from making rash moves that would have hurt them in the long run?

I thought it did. Maybe I was reading things into various posts, but I felt like going through this created closer friendships too. We faced the same awful situation and got through it together.

 

[SpinDr]

The "It's a Depression... Have Fun with It!" thread looks like a pretty great example of Gallows Humor : )

 

[W2R]

Those who found it "really different" were those of us who were retired with no other source of income other than our portfolio.

Here are a few threads dating back to the "market unpleasantness" of 08/09:

http://www.early-retirement.org/forums/f28/its-a-depression-have-fun-with-it-42983.html
http://www.early-retirement.org/forums/f28/all-cash-low-equity-got-out-early-post-here-42912.html
http://www.early-retirement.org/for...h-cash-equilivents-do-you-have-now-42982.html
http://www.early-retirement.org/forums/f28/doctor-of-doom-with-a-new-prediction-43026.html
http://www.early-retirement.org/forums/f28/most-humbling-42869.html

That's a great list of threads! Even though the market bottom was in 3/2009, I felt like many of us were numb by that time, and were even worse off around maybe 10/2008 and 11/2008.

Here's a thread from that time that I thought was poignant:
http://www.early-retirement.org/for...n-or-how-much-more-can-you-stomach-40692.html

 

[splitwdw]

It may just be semantics. That person didn't say they "rebalanced" to 100% stocks. There are oops and typo on most of the threads. Half the time there are words left out of sentences and I can't figure out what some people are saying. Some people on this forum don't read ever post in a thread and give the same answer that's already been posted or maybe the person is away. Why is it so important to know if they changed from 100% stocks.

 

[Blue Collar Guy]

i dont want to hijack my own thread but...

Those who found it "really different" were those of us who were retired with no other source of income other than our portfolio.

Here are a few threads dating back to the "market unpleasantness" of 08/09:

http://www.early-retirement.org/forums/f28/its-a-depression-have-fun-with-it-42983.html
http://www.early-retirement.org/forums/f28/all-cash-low-equity-got-out-early-post-here-42912.html
http://www.early-retirement.org/for...h-cash-equilivents-do-you-have-now-42982.html
http://www.early-retirement.org/forums/f28/doctor-of-doom-with-a-new-prediction-43026.html
http://www.early-retirement.org/forums/f28/most-humbling-42869.html

i read one of the links above and i read a ton of people bragging about their stockpiles of cash , so it seems that rebalancing was not done by many, at least during the crash, i havent done it yet as i just moved out of the accumulation (100% equities) stage, but as i said earlier i got my answer about the "i rebalanced and im now at 100 % equities statements. during 2007-2009 crash i kept dollar cost averaging, from my paycheck, pension excess, & lump sum distribution. the i now have 10 years of cash on hand, and the i just went to 100 % equities ill take with a grain of salt.

 

[splitwdw]

Rewahoo, Thanks for the links. I like to see what the thoughts were of the people that were posting.

 

[REWahoo]

.

Here's a thread from that time that I thought was poignant:
http://www.early-retirement.org/for...n-or-how-much-more-can-you-stomach-40692.html

Interesting to note that 1/3 of the members posting to that thread are no longer on the board...

 

[W2R]

Interesting to note that 1/3 of the members posting to that thread are no longer on the board...

I try not to wonder what happened to them.

 

[W2R]

I try not to wonder what happened to them.

OK, I'm NOT going to swirl down into the abyss of reading posts from back then. Here are three more heartbreaking threads, and I'm done.
http://www.early-retirement.org/forums/f28/the-market-isnt-as-bad-as-it-seems-39437.html
http://www.early-retirement.org/forums/f28/ho-hum-s-and-p-down-6-12-to-806-58-a-40685.html
http://www.early-retirement.org/forums/f28/is-it-just-me-or-are-you-also-seeing-40538.html

 

[Fedup]

I think it's very unnerving to read through these old posts. Knowing now what the market would do, I'm not sure I wouldn't want to be in cash like I did. I know it's double negative. But in a nutshell, I'm glad I was in cash.

 

[NW-Bound]

Interesting to note that 1/3 of the members posting to that thread are no longer on the board...

I missed some of the above threads, but I never forget that it was an exciting time. There were threads where people tested each other about the knowledge of the Great Depression, the Dust Bowl, etc... Lots of commiserating.

Anyway, some of the people that were gone did not necessarily drop out due to financial reasons. Health issues might have claimed a few. Or some eloped.

 

[6miths]

One can't 'rebalance' to 100% equities can one? What would you be rebalancing with? One can decide to change one's AA to 100% equities. It is interesting to read the Fall 2008 threads. I'd love to read the Spring 2009 threads and see how many are saying they have gone all in. Those folks are probably not on the site anymore because the uplink speeds on their yachts in the Med aren't fast enough.

 

[pb4uski]

I remember that time very well as I was on the verge of retiring. I was like the proverbial deer in the headlights...I froze... I didn't rebalance but I didn't sell... I stood pat and kept my contributions on autopilot.... if I had rebalanced I would be a lot richer today... nd have more tax torpedo concerns.... so, c'est la vie!

 

[NW-Bound]

A quick look back at the threads near the bottom of the market in late 2008/early 2009 shows that people were still buying or rebalancing. There had to be buyers for all the shares that the sellers were dumping.

http://www.early-retirement.org/for...eets-even-if-the-blood-is-your-own-39232.html

http://www.early-retirement.org/forums/f28/once-in-a-lifetime-buying-opportunity-39710.html

http://www.early-retirement.org/forums/f28/let-the-good-times-roll-39839.html

http://www.early-retirement.org/forums/f28/should-i-dip-into-my-heloc-to-buy-39717.html

http://www.early-retirement.org/forums/f28/my-plan-to-leverage-into-the-market-39841.html

http://www.early-retirement.org/forums/f28/who-sold-bonds-to-buy-cheap-stocks-39742.html

http://www.early-retirement.org/forums/f28/strategy-for-entering-the-stock-market-40758.html

http://www.early-retirement.org/forums/f28/whos-buying-40739.html

http://www.early-retirement.org/for...ectors-have-the-greatest-beat-down-41701.html

http://www.early-retirement.org/for...utting-some-money-into-equity-etfs-41952.html

http://www.early-retirement.org/forums/f28/dollar-cost-averaging-anyone-still-buying-42439.html

 

[scrabbler1]

I was in my final days of working in late 2008 leading up to my ER at the end of October. As I have been doing since I ERed, I have different objectives with my retirement accounts than I do with my taxable account. Similarly, I have different AAs between the two accounts.


I did do some rebalancing in late 2008 and early 2009 in both accounts but not for the same reasons and not always between stock and bond holdings. In my 401k (which became my IRA), I wanted to narrow down the 401k's rollover part to only a single stock fund and a single bond fund before I ERed. I therefore moved a third fund's holding (another bond fund, about 20% of the non-ESOP total) into the stock fund whose value was, of course, on the decline in the third quarter of 2008. This pushed its AA back up to slightly over 55/45 in favor of stocks.


By the time I ERed at the end of October, the 401k's AA had fallen to about 53/47 and that is how I set up the rollover IRA in November. By the end of January, 2009, the IRA's AA had fallen to 50/50 so I did a small rebalancing move to push it back to 52/48. The rising stock market got my AA back to 55/45 and even a little higher until I rebalanced it back to 55/45 for a while.


Meanwhile, in my taxable account, many of my rebalancing moves were from one bond fund to another, as one fund had seen a bigger drop than the other. I used the big drop in my main bond fund as a buying opportunity to buy more shares of it so I could increase my monthly income a little. Also, I purposely used the proceeds of the sale of the company stock (ESOP) to buy shares of that main bond fund with the plan to pay most of the large income tax bills on that stock sale using shares of the other bond funds, an indirect rebalancing between bond funds. I made no sales or purchases of shares of the taxable account's stock fund.

 

[NW-Bound]

Being a market timer, I made more drastic move than just rebalancing to maintain a constant AA. In fact, my AA varied from 80% stock to 35%, with the balance mostly in cash as I never had much bond.

I described that here: http://www.early-retirement.org/forums/f28/how-i-did-during-the-great-recession-72184.html.

 

[6miths]

I was somewhat lucky in that although I had a fair amount of money in the market I had also fairly recently finished paying of my mortgage and had my income rise significantly so I really started to pile money into the market not because of any insights but just because I had it and it seemed like the most reasonable place to put it.

 

[Midpack]

I remember that time very well as I was on the verge of retiring. I was like the proverbial deer in the headlights...I froze... I didn't rebalance but I didn't sell... I stood pat and kept my contributions on autopilot.... if I had rebalanced I would be a lot richer today... nd have more tax torpedo concerns.... so, c'est la vie!

Same here. I did not sell, rebalance or buy other than investing all new 401k contributions throughout the meltdown and recovery.