Originally Posted by Bullwinkle
Sorry to hijack a bit, but I've been wondering about this for a while, and it's a small question. And I don't know how to split into a separate thread!
Anyway, when people say they "bailed" I assume that means sold a bunch of the equities for something more conservative. People make it sound like something done quickly, but I looked into doing that and to move the AA a significant amount that's going to look like a huge income that year and 20%+ tax rate on the capital gains. I would have to move gradually over several years if I don't want that. I know everyone's different but... do they just accept the inefficiency as the cost of "sleep at night"? Or I suppose they could be doing the adjustment in an IRA? Though if you're young there's little point since you won't get that money anyway until well after whatever it is the market might do in the short term.
Or... and I guess this is more likely considering where I am, perhaps most people saying that are retired and have no normal income, at which point they can absorb a lot more capital gain with low taxes.
So it seems that AA adjustment in the conservative -> risky direction can likely be done freely, but the other way must be done gradually... am I missing something?
I guess this is the opposite problem from the OP!
i don't 'bail-out as such , i REDUCE when a stock is at 'nose-bleed levels ' ( but normally keep more than half the holding ) if i sell out , completely from a stock that is for a completely different reason ( lack of confidence and patience with THAT company )
and NORMALLY i don't 'rebalance ' ( deliberately sell a stock/sector to reinvest elsewhere ) what i normally do is put new cash into the desired area
i am not a US resident so cannot help you with tax suggestions the minefield is different over here .
but break out your trusty calculator maybe BIG moves aren't that bad ( sure you pay more tax , but lock in certain gains )
i like small cautious moves ( normally ) but that is just me
from reading the reports of one local fund manager , they sold 80% of the entire portfolio in February 2020 ( 85% by the end of March 2020 ) and have reinvested since ( now holding 29% cash , but that decreased to less than 10% around December 2020)
BUT this is an aggressive opportunistic fund manager ( not the average long-term holder )
in February/ March 2020 i had accumulated some cash ( without deliberately selling down as the market dropped ) and cherry-picked some attractive prices and proceeded to do so as late as August 2020 .
currently i am calmly accumulating cash once more ( from dividends and take-over cash mostly )
i realize this will annoy those who routinely invest every month , but i have time to watch the markets ( most days )