Have you been reducing equities in recent years?

[Lsbcal]

The chart below would seem to indicate that investors are strongly increasing their bond allocations at the expense of equities. Somehow I do not get that impression with folks on the ER site mostly holding steady (Bogleheads?). FWIW, I have increased my equities strongly over the last year but AA was pretty steady before that.


From this Carlson article: https://awealthofcommonsense.com/202...-rates-higher/

Quote:

Baby boomers hold something like $70 trillion in wealth. They own most of the financial assets. Ten thousand people from this cohort are retiring every day through the end of this decade.

[Montecfo]

No, I have stayed pretty strong at about 70 pct equities.

To your point, there remains a lot of money on the sidelines, a good sign.

[MichaelB]

Is it possible this analysis only looks at mutual fund flows, not ETFs or direct holdings, and doesn’t capture a large part of asset purchases. If so, it would also cover mostly retail investors, as high net worth and institutional investors tend to avoid mutual funds.

[disneysteve]

I've reduced our equity allocation from about 70 down closer to 60 over the past few years. I'm approaching retirement (soon hopefully) and thanks to a large inheritance, our portfolio has grown significantly. So although the % in stocks is lower, the absolute $ amount is higher. I expect to keep it around 60 for the long term.

[Lsbcal]

Cumulative numbers in the chart means this includes ETFs.

[Lsbcal]

Quote:

Originally Posted by Montecfo ... To your point, there remains a lot of money on the sidelines, a good sign.

A comforting thought.

[Which Roger]

The chart shows inflow, not total assets. With the bull stock market in recent years, investors could increase their stock allocation without doing anything.

Uptick in bond inflow and downtick in stock inflow started roughly at the beginning of the current bull stock market. Maybe this just shows stocks are being sold and bonds are being bought to rebalance?

[MichaelB]

Quote:

Originally Posted by Lsbcal Cumulative numbers in the chart means this includes ETFs.

Yes, they do include ETFs. Not direct holdings, though. This is still a look at retail investors, not institutional. The source of this is a monthly analysis by Ed Yardeni, here.

The flow doesn’t tell us about asset allocation, because over time the equity holdings increase in value and the bond holdings don’t, or at least not as much. If my allocation is 60/40, equity prices are rising 8% yearly, and I’m adding 5% in new contributions, it would all need to go to fixed income.

[cooch96]

Not really. I was about 96% equities last March after I traded all my cash for stock funds (DW's and Megacorps' controlled Retirement Fund have some bonds). I'm haven't bought stocks outside my 401k since, so my cash reserves are climbing again. I'm about 93% equities now.

[SecondCor521]

Nope.

I was at 100% equities from at least 1987 until I retired in 2016. Sometime after that I went to 90% equities, then have let things drift / lazily rebalanced up to 97% equities.

But I'm weird. My AA is based on whatever the historically safest AA is for my situation in FIREcalc. I do make a complicated adjustment from there based on my spending level because I now don't expect to spend it all, so the leftover part that I think my kids will get is allocated 100% equities. I don't really vary it on either actual market performance, current events, what I think is going to happen, or my feelings.

[38Chevy454]

Due to mostly the increases in equities, my AA has drifted to 86% equities. I have no desire to rebalance now since I do not feel there are any real good fixed income investments at this time to put money into. Rising interest rates and inflation concerns me. I can handle the volatility of the equity markets just fine, I have a long term outlook.

[RobbieB]

I'm selling equities for cash to spend. Not buying either stocks or bonds. Current mix ~ 80/20

[Lsbcal]

Quote:

Originally Posted by MichaelB Yes, they do include ETFs. Not direct holdings, though. This is still a look at retail investors, not institutional. The source of this is a monthly analysis by Ed Yardeni, here. The flow doesn’t tell us about asset allocation, because over time the equity holdings increase in value and the bond holdings don’t, or at least not as much. If my allocation is 60/40, equity prices are rising 8% yearly, and I’m adding 5% in new contributions, it would all need to go to fixed income.

Good points. It looks like the retail investors are not running out and getting wildly bullish. Yes there is some speculation, but I would guess this is smallish in the broad sense of the US equity holdings and more confined to low net asset investors.

[street]

Not buying equities but have increased to ~80%. I don't rebalance ever, just let things ride the waves.

[Lsbcal]

Surprising to me how many so far have responded with high equity allocations. Maybe a poll on equity allocations is in order? Or has that been done recently?

[disneysteve]

Quote:

Originally Posted by Lsbcal Surprising to me how many so far have responded with high equity allocations. Maybe a poll on equity allocations is in order? Or has that been done recently?

I was thinking the same thing. Keep in mind that a lot of people may have pensions that cover all or most of their expenses so they can be more aggressive in their investments. I’ve got no pension so feel I need to be more balanced in my approach.

[Lsbcal]

Quote:

Originally Posted by disneysteve I was thinking the same thing. Keep in mind that a lot of people may have pensions that cover all or most of their expenses so they can be more aggressive in their investments. I’ve got no pension so feel I need to be more balanced in my approach.

Yes, forgot about that. I don't have a pension either. Pensions, vastly different safe withdrawal rates due to different net worths, inheritances .... lots of factors that can effect the AA choice.

[Time2]

I'm 66yrs old and have this internal dialog, that I should start to reduce my stock allocation. However, my net worth is up $251k in the last 6 months and $321k the previous 6 months and that's with spending withdrawn.

Also with bond yields so low, when interest rates do go up, I'm sure the bond principal will go down. I guess I could buy individual bonds and hold to maturity. That keeps up with inflation!
I still have 30 years of Bob Brinker in my head, one of his lines was,

"When you have Critical Mass, don't put it at risk."

[REWahoo]

Yes.

[Dtail]

Quote:

Originally Posted by Lsbcal Surprising to me how many so far have responded with high equity allocations. Maybe a poll on equity allocations is in order? Or has that been done recently?

Not sure how many of the high % equity holders truly rely on their portfolios for most of their retirement funding.