rebalance bands

[ripper1]

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.

 

[captain3d]

Rebalance bands are there to stop you being too clever.

 

[audreyh1]

Rebalance bands are there to stop you being too clever.

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.

 

[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.

 

[REWahoo]

I have been toying with the idea of going 60/40 from 65/35...

Bet you are already there - and then some!

 

[audreyh1]

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.

Bet you are already there - and then some!

Yep!

 

[ziggy29]

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.

 

[GravitySucks]

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.

 

[Hopeful]

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.

 

[mrfeh]

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.

That's not catching a falling knife; that's following your IPS.

Will I rebalance? Of course.

 

[CRLLS]

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.

 

[audreyh1]

I really think a +/- 5% AA as a rebalance trigger may be a bit too wide for those who are squeamish.

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.

 

[ejman]

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.

+10

 

[RetireBy90]

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.

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.

 

[audreyh1]

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.

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.

 

[CRLLS]

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.

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 ......

 

[Eucerin]

10 year yield below 0.5%, have anyone thought of rebalance by reduce the amount of Wellesley holdings to reduce bond in the portfolio?

 

[audreyh1]

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.

 

[NW-Bound]

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.

 

[Fermion]

0.5% 10 year is not healthy.

 

[audreyh1]

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 ......

A big part is how people actually use triggers.

I generally rebalance annually. It’s convenient since in addition to taking annual withdrawals, I receive a lot of distributions in December. I usually have some tidying up to do.

So the triggers are really for a major market event during the year. Rare. Otherwise, any tweaks will be handled the next Jan.

 

[Scratchy]

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.

Judging from futures tonight, be ready to start sniffing tomorrow

 

[ERD50]

Judging from futures tonight, be ready to start sniffing tomorrow

It's tomorrow!

I spent some time reviewing my AA on Sunday. Not really all that out-of-wack, and I don't have any strict re-balance plans, but it made me more aware that my IRAs in particular have built up some cash from the divs.

Open looks bad, so I think I'll put at least half of that cash to work today, maybe all of it.

Same deal in my taxable account, but I need to 2x check my cash flow, I may want to keep some of that as cash on hand.

-ERD50

 

[HadEnuff]

2 years ago I was only 2 years into retirement, and realized that my AA was too heavily into equities for my risk tolerance. I changed it from 40% to 30%. To be honest, the calculators didn't move much with that change in AA. That 10% missed a lot of the big run-up, but I slept great.

Still sleeping great, as the market has made it almost all the way back to when I changed it. No changes in AA for me, unless this turns into a long (as in months and months) dive, in which case I may consider a slight upward change in equities.

 

[Montecfo]

I had trimmed profits in equities over the past few months and am using this downturn to redeploy those funds into equities. My range for equities is 60-70 pct. I was down to 60 so the very low end.

Seems like all working out fairly well. Still have some more investing to do, nibbled a bit today. We have low interest rates, low oil prices.