Market volatility and balanced allocation concerns

mikes425

Recycles dryer sheets
Joined
Mar 16, 2019
Messages
253
Location
Erie
Hi, been awhile since i dropped in. Just noticed the big market drop today and am interested in
any educated guesses on where we may be headed in '25, especially relative to those with a similar PF AA to mine. I'm 66, semi-retired, with no debt, investment assets (before today) just over 3M FWIW. Relatively low COLA. PF is 50/50 equity/bond ETFs. Large positions in ST bond (SCHO, SHY BILS ) TIPS and floating rate funds. I've reduced bond duration to mostly short term. Equities are mostly US based - Large cap dividend oriented, and recently boosted small cap exposure...

I'll be in the realm of 95k in div income for this year, roughly in line w/ 2023. I wasn't savvy enough to jump out of bonds ahead of the recent downturn so NAVs have been slow to recover. Bonds continue to frustrate me given that they no longer seem to behave inverse to equities. On days like this bonds AND equities are down in-tandem.

I have no idea what to expect in 2025 but hope we aren't due for panicky volatility for a sustained period. I'm already wary about my SS and ACA being unrightfully screwed with let alone any big market drawdown that could stall what's been pretty stable and steady growth in recent years.

Thanks for any thoughts: )
 
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As Jack Bogle would say, just stand there and do nothing.

Here are Bogle's top 10 rules for investing.
  • Remember 'reversion to the mean' ...
  • Time is your friend and impulse is your enemy. ...
  • Buy right and hold tight. ...
  • Have realistic expectations. ...
  • Forget the needle, buy the haystack. ...
  • Minimise the croupier's take. ...
  • There's no escaping risk. ...
  • Beware of fighting the last war.
 
Volatility is healthy and normal. It’s a feature of investing not a bug.

If a day like today has you spooked or “ reconsidering your asset allocation “ then you have too much money in stocks.
 
It will be a good bond buying opportunity with rates up-for now.

I generally expect the markets to gain in 2025 as I expect the new admin's policies to be good for the market generally, and earnings estimates looking good for now.

But if the rate environment worsens from here then all bets off.

As an aside, I think during the FED dominated era, people have gotten complacent since there has been little volatility, generally speaking. Now, when markets reflect normal volatility, it makes people nervous. It shouldn't. Volatility just creates buying opportunities as I see it.
 
It will be a good bond buying opportunity with rates up-for now.

I generally expect the markets to gain in 2025 as I expect the new admin's policies to be good for the market generally, and earnings estimates looking good for now.

But if the rate environment worsens from here then all bets off.

As an aside, I think during the FED dominated era, people have gotten complacent since there has been little volatility, generally speaking. Now, when markets reflect normal volatility, it makes people nervous. It shouldn't. Volatility just creates buying opportunities as I see it.
Agree with a good market next year. Tariffs can't go crazy though.
 
Hello OP. I appreciate your concern.

In reality a 1% daily decline doesn't worry me in the least.
 
SP500 is actually down 2.95% today, or right where it was the day before the election. No idea about 2025.

Instead of the Christmas rally, we got the Nightmare Before Christmas!
 
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Our JP Morgan financial advisor told me yesterday that JPM is bullish on the market in 2025 but it appears that Santa's bag of presents is full of coal...so far. We're so far ahead and still living day-to-day well beneath our means that we are not worried.
 
Our JP Morgan financial advisor told me yesterday that JPM is bullish on the market in 2025 but it appears that Santa's bag of presents is full of coal...so far. We're so far ahead and still living day-to-day well beneath our means that we are not worried.
Maybe not even coal but a bundle of switches!
 
Hello OP. I appreciate your concern.

In reality a 1% daily decline doesn't worry me in the least.
Yeah, not so much the 1 day but overall prospects for bonds especially... I became accustomed to bonds behaving inversely to stocks and that has not been the case for a few years...
 
As Jack Bogle would say, just stand there and do nothing.

Here are Bogle's top 10 rules for investing.
  • Remember 'reversion to the mean' ...
  • Time is your friend and impulse is your enemy. ...
  • Buy right and hold tight. ...
  • Have realistic expectations. ...
  • Forget the needle, buy the haystack. ...
  • Minimise the croupier's take. ...
  • There's no escaping risk. ...
  • Beware of fighting the last war.
I am a big Jack Bogle fan...especially his sentiments in his book, "Enough." - If more people adopted his perspective the world would be a far better place IMO.
 
Volatility is healthy and normal. It’s a feature of investing not a bug.

If a day like today has you spooked or “ reconsidering your asset allocation “ then you have too much money in stocks.
Yeah i do totally get that. It's more about the general and overall outlook for the year ahead...which i tend to be a bit more reflective about in political transition periods and at the end of the year. Thanks
 
SP500 is actually down 2.95% today, or right where it was the day before the election. No idea about 2025.

Instead of the Christmas rally, we got the Nightmare Before Christmas!
Yep...basically back to same level as 11/4 here
 
I did some market timing a few weeks ago, and sold off the portion of the SP500 fund that I’ll be doing a Roth IRA conversion in February. Looks I lucked out.
 
Today’s market behavior gives us no clue/insight as to what the market will do in 2025.
I am a very close match to your age and financial situation. No truer words have ever been spoken that Audrey's above. When interest rates rise, it is bad for both stocks and bonds, and the Fed disappointed both markets yesterday. My returns this year have been so far above my expectations that I have no concern about Wednesday's drop.
 
A day like yesterday is why there is a risk premium for owning stocks. You have to convince your mind/emotions that you are able to handle the highs and lows without flinching. Simple, but not easy.
 
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