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03-07-2020, 10:29 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Mar 2010
Location: Chicago
Posts: 1,154
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rebalance bands
I am halfway to my rebalance band of 5%. Anybody here going to rebalance when they hit their mark or are some of you going to sit tight and avoid catching the falling knife.
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03-07-2020, 10:57 AM
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#2
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Full time employment: Posting here.
Join Date: May 2010
Posts: 659
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Rebalance bands are there to stop you being too clever.
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03-07-2020, 11:08 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,001
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Quote:
Originally Posted by captain3d
Rebalance bands are there to stop you being too clever.
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Good one!
After 2008 I think I've set mine wide enough to only catch a falling knife once, and that's OK with me.
I caught a falling knife three times during 2008 and that was a nasty feeling - fortunately saved by the very fast recovery in 2009.
In my retirement fund I'm about half way through my rebalancing bands and this last week didn't change that status.
I've already modified my automatic investments for my HSA to try to rebalance via new contributions.
__________________
Retired since summer 1999.
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03-07-2020, 11:45 AM
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#4
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Recycles dryer sheets
Join Date: Aug 2013
Posts: 212
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To be honest I am afraid to look.
I have been toying with the idea of going 60/40 from 65/35, so I guess I am not in to big a rush.
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03-07-2020, 11:48 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,003
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Quote:
Originally Posted by Hopeful
I have been toying with the idea of going 60/40 from 65/35...
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Bet you are already there - and then some!
__________________
Numbers is hard
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03-07-2020, 12:07 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,001
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Quote:
Originally Posted by Hopeful
To be honest I am afraid to look.
I have been toying with the idea of going 60/40 from 65/35, so I guess I am not in to big a rush.
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Quote:
Originally Posted by REWahoo
Bet you are already there - and then some!
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Yep!
__________________
Retired since summer 1999.
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03-07-2020, 12:17 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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The whole idea behind mechanical rebalancing is to take the twin terrors — greed and fear — out of the picture. If you commit to it, stick with it.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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03-07-2020, 12:20 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Syracuse
Posts: 3,501
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Made me look.
Not surehow, but according to the Fido analysis tool I was 62/38 (last I checked which was within a few days of the top), and now am 58/42.
I'll start sniffing around for a bargain if I get to 55/45. Hoping more that real life items go on sale like in 08. Been holding off on buying an RV or van.
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
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03-07-2020, 01:07 PM
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#9
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Recycles dryer sheets
Join Date: Aug 2013
Posts: 212
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Ok, you guys made me look too. Actually if I compare to end of year it doesn't seem as painful as comparing to all time highs. I have drifted to 63.5/36.5. Not going rebalance yet.
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03-08-2020, 06:54 AM
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#10
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,876
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That's not catching a falling knife; that's following your IPS.
Will I rebalance? Of course.
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03-08-2020, 08:45 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 2,998
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This had me thinking, Although I don't rebalance, I was curious as to what the market had to drop to see a 5% change in my AA. I just ran some numbers. Assuming that the bonds and cash stay put, my equities have to drop 24% in order to see a 5% change in AA. Then the market has to drop from there another 23% (-42% overall) to change AA another 5%. I really think a +/- 5% AA as a rebalance trigger may be a bit too wide for those who are squeamish.
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03-08-2020, 09:48 AM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,001
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Quote:
Originally Posted by CRLLS
I really think a +/- 5% AA as a rebalance trigger may be a bit too wide for those who are squeamish.
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I have done the exact opposite. I changed to a 10% rebalance trigger after 2008 because my 5% rebalance trigger fired too often during 2008.
If the market keeps dropping for a long period, rebalancing more often due to narrower rebalance bands isn’t necessarily going to make you feel better and will use up your cash and fixed income more quickly as you draw on it to repeatedly rebalance.
__________________
Retired since summer 1999.
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03-08-2020, 10:00 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Posts: 2,525
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Quote:
Originally Posted by audreyh1
I have done the exact opposite. I changed to a 10% rebalance trigger after 2008 because my 5% rebalance trigger fired too often during 2008.
If the market keeps dropping for a long period, rebalancing more often due to narrower rebalance bands isn’t necessarily going to make you feel better and will use up your cash and fixed income more quickly as you draw on it to repeatedly rebalance.
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+10
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03-08-2020, 10:05 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Feb 2009
Location: Cville
Posts: 1,600
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Not sure what you mean here by falling knife.i understand the idea, but if I were set to rebalance now, past 2 weeks would have me selling bonds and buying stocks. The idea behind AA rebalance is to sell high and buy low. Please forgive me if I’m missing something here.
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FIRE 31 Aug, 2018 - Always leave every place better than you found it, always give more than expected or Due
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03-08-2020, 10:58 AM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,001
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Falling knife means you buy something low and it keeps dropping even more.
So, maybe you end up with another opportunity to rebalance again a while later. No big deal, IMO.
__________________
Retired since summer 1999.
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03-08-2020, 11:38 AM
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#16
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Thinks s/he gets paid by the post
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 2,998
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Quote:
Originally Posted by audreyh1
I have done the exact opposite. I changed to a 10% rebalance trigger after 2008 because my 5% rebalance trigger fired too often during 2008.
If the market keeps dropping for a long period, rebalancing more often due to narrower rebalance bands isn’t necessarily going to make you feel better and will use up your cash and fixed income more quickly as you draw on it to repeatedly rebalance.
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Maybe I misread this audience. Perhaps this group is more stoic in declining markets than the majority of investors. In my case, if 10% was a trigger point the market would have to drop 42% before rebalancing. As I mentioned earlier, I don't have a rebalance plan at all and don't have rebalance triggers.
I understand that having to rebalance could cause a person to be depressed more often. on the other hand, on the recovery side ......
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03-08-2020, 09:22 PM
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#17
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Recycles dryer sheets
Join Date: Oct 2018
Posts: 241
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10 year yield below 0.5%, have anyone thought of rebalance by reduce the amount of Wellesley holdings to reduce bond in the portfolio?
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03-08-2020, 09:36 PM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,001
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A 0.52% 10 year treasury is just crazy! We are seeing some definite panic in the markets. But the equities have been so richly valued that we are still up there valuations wise. But who knows - maybe after next week.....
Seriously though, it takes months to work through all this stuff. So it just might be a wild and crazy ride until the end of the year.
__________________
Retired since summer 1999.
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03-08-2020, 09:43 PM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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A market correction usually works itself out fairly quick, but is this just a correction? If you think so, then step up and buy, buy, buy...
In the 2000-2003 rout, it took more than 2 years for the market to find bottom.
In the 2007-2009 Great Recession, it took 1-1/2 years.
I am not going to rush in and trip on myself to buy.
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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03-08-2020, 09:46 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2012
Location: Seattle
Posts: 6,005
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0.5% 10 year is not healthy.
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