Sold some U.S. equities today . . . large, mid, and small caps.
Before I did I wanted to do a sanity check to see how much my previous sales had cost me in foregone gains. I've been a net seller of equities since 2013. Some of those sales have been quite good (Domestic Mid-Caps in 2015 are still down 6% as of today, International Large Caps in 2013 are still down 9%) but most sales have been losers, as you'd expect in a generally rising equity market.
So what's the opportunity cost I've paid to reduce my equity exposure over the past three years?
My IRR on all of those sales combined is (2.4%)
Considering current equity valuations and the extended age of both this bull market and the business cycle, 2.4% is a very attractive insurance premium to have paid for the downside protection it bought me.
After doing this calculation, I went ahead and sold more equities today.