Aggressively Rebalancing Now

[GravitySucks]

Getting that feeling in my gut again. The S&P just feels to frothy so I’m “Aggressively Rebalancing” and pulling all 2024 spending from equities this week. No math. No expert recommendations. No Technicals. Just gut feeling.

Not really a large enough amount to make any difference really. 62/38 to 58/42 AA

It’s worked out well a few times now.
https://www.early-retirement.org/forums/f28/dirty-market-timer-100610.html

Hope the Santa Rally continues. Might pull 2025 spending too.

 

[yakers]

As DW & I have to take RMDs there is a small rebalance every year as we look at what funds to draw down. Nothing radical just usually take from whatever is doing best. It may be better to 'let the winners run' have not done a formal study, just what we do, draw down from the 'winners'.

 

[Closet_Gamer]

It does feel to me like the market is being a bit manic and pricing in a lot of future expectations about lower interest rates. Could be a very big case of buy on the rumor and sell on the news.

What your suggesting doesn't seem crazy to me in your circumstances.

Of course, that is a free opinion from an random person on the Internet with zero skin in the game on your decision ... so YMMV is an understatement. LOL.

 

[Midpack]

Assuming it’s at zero cap gains tax, as you say that shift isn’t enough to hurt anything. Why not.

 

[audreyh1]

End of year market run-ups are very common.

Since I use the Dec 31 portfolio value to determine my early Jan annual withdrawal I’m always pleased by this.

It just so happens the FireCalc type long-term models use the same timing.

 

[Onda]

Assuming it’s at zero cap gains tax, as you say that shift isn’t enough to hurt anything. Why not.

Because any type of timimg on the long run does not work.

 

[target2019]

Market timing in this moment is guaranteed to succeed until the next moment.

I love a frothy drink.

 

[Dtail]

Well one way to think about it is if it is within your range of your AA, then you are getting the "selling high" part of the allocation.

 

[Onda]

Well one way to think about it is if it is within your range of your AA, then you are getting the "selling high" part of the allocation.

Yea that is true if you are keeping same target allocation and you rebalance at the same time every year. This is not the case.

 

[Exchme]

Could we at least wait until we are at an inflation adjusted market peak before jinxing the current rally?

 

[GravitySucks]

It worked out in 2018, 2019, and accidentally in 2022.
Sometime charts and numbers don’t matter as much as gut feeling.

2022 was a great accident. Was having knee surgery and called the surgeons business office to find what my out of pocket would be. They used the last years bronze plan to estimate but I had a gold plan that year. Between that and the hard to spend money when you can’t walk I sold what turned out to be 8 months worth when i meant to sell a quarters on Jan 3 top of the market.

Lucky is better than smart.

 

[Sunset]

^^^ You reminded me of a lucky guy at a previous job.

He had invested for years in the stock market, then found a house he really wanted, so he sold all his stock just before 2008 and paid in full for the house. Then the stock market crashed ~35%->40% !!

 

[Montecfo]

Outside of the magnificent 7, the other 493 companies are not outrageously valued on average.

 

[ut2sua]

Getting that feeling in my gut again. The S&P just feels to frothy so I’m “Aggressively Rebalancing” and pulling all 2024 spending from equities this week. No math. No expert recommendations. No Technicals. Just gut feeling.

Not really a large enough amount to make any difference really. 62/38 to 58/42 AA

It’s worked out well a few times now.
https://www.early-retirement.org/forums/f28/dirty-market-timer-100610.html

Hope the Santa Rally continues. Might pull 2025 spending too.

The "risk" is much less than past years when cash was earning close to zero. Now, my math is: if the stock market goes up another 10% next year, the cash will give ~5% in short term CDs (not too bad). If the market goes down 10% next year, the gain on the cash part will be fantastic in comparison.

 

[GravitySucks]

Outside of the magnificent 7, the other 493 companies are not outrageously valued on average.

True, but I only own them via FXAIX which is up almost 25% this year. Happy it is but I don’t understand why it is.

If I miss out on a tiny bit of more I’ll chalk it up to the price of another years worth of peace of mind.

 

[audreyh1]

Sounds like you don’t have a regularly scheduled annual withdrawal strategy for your spending needs.

 

[GravitySucks]

Sounds like you don’t have a regularly scheduled annual withdrawal strategy for your spending needs.

Used to sell and withdraw once a quarter. It’s gone screwy since 2020 as I have troubles spending since then.
I need Robbie back to post those BTD inspirations. Going to use this run up to pay off the HELOC I took out to help DD2 buy her house.

 

[Stormy Kromer]

I have an IRA with a FA since 1997. It rebalances quarterly.

I've been selling winners (US funds such as SP500) and buying loosers (International) for 25 years now every quarter.

I know there are people smarter than me that can show me pages of how diversification and rebalancing is good. I'd bet any one of them I'd been better off putting everything in the SP 500 index and let it ride for any 25 year period. If I got beat in any example, it wouldn't be by much and it would be rare.

 

[SunGuy]

Yeah, doing the same thing, taking profits and allocating towards new positions.

Sold a few positions in my Roth IRA this month, all were at least up 50%, three over 100%. Still holding 8 more over 50%, one gained about 35% last Friday alone.

I have four limit orders sitting, ready to buy some time arbitrage plays this week, and hopefully flip before March for at least 30% profit from each of them.

Total value across all my various accounts has grown with contributions and gains about 330% this year. Very happy.

 

[GhostofTomJoad]

Jan. is when I grab an annual chunk. After the stinky poopy 2022 and 2023---until 2 months ago, the portfolio is a fraction above the previous high. Bonds had their worst year in '22 and now are flying high. I own junk. Let's see what happens in the week after Christmas. All the single stocks (only 5) are dividend-payers, and they are all in taxable. I don't need to take RMDs from the IRA yet, but I suppose I'm limiting the amounts on the RMDs-to-come in a couple of years by putting this "lid" on the portfolio total. The "chunk" I take is always from the IRA.

 

[ejman]

Outside of the magnificent 7, the other 493 companies are not outrageously valued on average.

I'm old enough to remember "the nifty fifty". If memory serves that did not end well. Any similarities between the magnificent 7 and the nifty fifty are strictly coincidental I'm sure.

 

[DrRoy]

The S&P just feels to frothy so I’m “Aggressively Rebalancing” and pulling all 2024 spending from equities this week.

I always pull the next year's spending in late Dec.

 

[Onda]

I'm old enough to remember "the nifty fifty". If memory serves that did not end well. Any similarities between the magnificent 7 and the nifty fifty are strictly coincidental I'm sure.

They had PE of 42 with slow growing earning.

Even sky high flying NVDA has forward PE of 24-25 and high earnings growth. You may have missed the train.

 

[GhostofTomJoad]

Still not aggressively rebalancing. Just moving proportions from retirement to taxable, since taxes are not a worry at all.

As for P/Es that are way too high: I steer clear of the big, monster, global stocks whose popularity has driven demand for shares too high, and the PE along with it. in other words: before you can even think about the prospect of buying, it's a "too crowded" trade. I search extensively for low P/E, low-ish stock price, good results on investments over at least several years. Stocks that are a step or two away from the bright lights and all the attention.

Rarely, I'll put money into a newer stock. Like Postal Real Estate. PSTL. A very small holding, still.

 

[stephenson]

Ya know, I see restaurants full, hotels full, lots of buying, new stuff everywhere ... it seems to me (famous last words) 2024 is going to be positive ... the only weird stuff is the presidential election.