With markets higher than any time in history

[MuirWannabe]

For those who are choosing to rebalance in their IRA’s, what are you rebalancing in to? I’d like to lower my equity AA as it’s 15% over my target. But I can’t do it my taxable account cause of gains. CD’s aren’t paying much. Are you just putting it in MM’s? I used to invest in bond funds but gun shy with those after the big losses these past few years.

Thanks for your thoughts.

 

[sengsational]

I rebalanced in September and just recently. It feels good to sell winners! It's like when you sit down at the table with $100, you look down and see so many chips, you put $100 worth in your pocket, and still keep playing.

 

[sengsational]

For those who are choosing to rebalance in their IRA’s, what are you rebalancing in to?

My target AA includes 5 buckets for equities (large cap, small cap, technology/staples, int'l developed, int'l emerging), plus hard assets/REIT, and bonds/cash. Almost nothing is after-tax, so I don't need to think about managing capital gains. I just take a snapshot into my rebalancing spreadsheet, then keep tweaking until I get back in balance. It's kind of a puzzle to get the variance for all categories down to a small fraction while keeping within the account boundaries (Roth, tIRA, HSA, etc). I don't have all seven asset classes in all accounts, of course. All that matters is the total across all accounts. So I very rarely need to completely add or remove a position...I just add or subtract from existing positions. Except bonds. I buy individual bonds and they come and go.

 

[rk911]

Our account mgr has us roughly 60/40, a mix of equity and fixed income mutual funds, ETF's, high yield CD's, muni bonds and cash. Our strategy since we began investing in the early 80's has been buy and hold. During that time we've sold shares just 3-times. Once to pay cash for our last motor home (that was a targeted investment), once to pay off a small loan and just the other day to fund our DAF). The buy/hold strategy has worked well for us so we don't envision making a change going forward.

 

[Gumby]

I expect renewed inflation, so it might be a good time to borrow money.

 

[FlaGator]

I expect renewed inflation, so it might be a good time to borrow money.

At some point maybe, by not for me right now. For mortgages and car loans, I'd pay cash right now. I don't see a meaningful drop in rates for in the near term. And I'm putting money where my keyboard is - paying cash for the new house in a few months.

 

[corn18]

The S&P 500 spends a lot of time at all time highs.

 

[audreyh1]

For those who are choosing to rebalance in their IRA’s, what are you rebalancing in to? I’d like to lower my equity AA as it’s 15% over my target. But I can’t do it my taxable account cause of gains. CD’s aren’t paying much. Are you just putting it in MM’s? I used to invest in bond funds but gun shy with those after the big losses these past few years.

Thanks for your thoughts.

Rebalancing means getting back to your initial AA, it doesn’t mean changing your AA.

 

[Saintor]

Despite Warren Buffet's claims to hold some stocks forever, Berkshire Hathaway now hold 325B or more than a 1/3 of their PF. They are not alone; Oaktree is building a massive cash pile.

It is not unreasonable to convert to more fixed income. I have 18% to cover more than 5 years of expenses. If things start to get ugly, I think they will be for quite a while.

 

[Ronstar]

I don't believe in market timing, but I think it's time that my 95 yo MIL gets out of stocks. I don't think that she can outlast a lengthy correction.

 

[street]

Some great views and thoughts. One of the reasons I asked this here is because I go to an outdoor site and the question was asked.
Of course, this group of site members are a far cry from being educated with investing and have many that will work till their last day of life. Paycheck to paycheck group.

There take is people are absolutely crazy being the markets and the few that are in the sky is falling when stocks go up or start to fall.

For me nothing will change and stay the course like you phrase it. I have no idea if cutting the prime will help or not with inflation. Tariffs I here both sides of that as well.

The one thing it is always nice to see markets go north instead of south. There will be always up and down in markets and markets are just a small part of what makes up the economy.

I just don't see the negative in stocks going up but always know what will happen next just don't know when.

 

[audreyh1]

I don't believe in market timing, but I think it's time that my 95 yo MIL gets out of stocks. I don't think that she can outlast a lengthy correction.

Are the stocks for her or for your wife and siblings-in-law?

 

[treeofpain]

I have only bet against the S&P500 a couple of times - and I lost both times. So I just stay in.

You could make a pretty compelling case in January 2023 and January 2024 that things were going to go south in those years. If you bailed, you would have missed out on serious gains.

2025 will be what it will be. Set your ratios based on your risk threshold and enjoy your life.

 

[MuirWannabe]

Rebalancing means getting back to your initial AA, it doesn’t mean changing your AA.

Yes. I typed that incorrectly. I’m 15% over my target equity in my AA.

 

[NeilDH]

Sorry for the blank response, clicked the wrong box.

In responding to your original question I think I am weaker at identifying long term solutions and better at making adjustments along the way to make money. For the past 2 years CDs and MM both paid 5%+ until just recently, ETFs have been very strong performers and within the past 6 months dated retirement funds and a dividend index fund have come back to life for us so shifted some MM to those categories this year. Our bills are paid with SS and a pension with a bit left over that I expected to expire in about 7 years. Starting year 6 of retirement and that "bit left over" is still there in full, so maybe it will last 6 years until RMDs.

My own goal is not to be in sub 5% investments. Expect to see rates on MM, CDs and Treasuries continue to slide for now, so will probably convert maturing CDs/Treasuries to dated retirement funds/ETFs with YTD returns ranging from 11%-27%. Not looking to purchase bonds, have enough exposure in dated retirement funds. MM compund yield just fell to 4.79% compound yield but will keep that ballast for now. Did shift some MM to settlement fund so we can act when the market has a drop.

So far we are performing beyond our projected income projections, so satisfied with that.

I am thinking most like Still Learning here. I'm not close to SS yet and won't have a pension, and I'm early in FIRE life. A 5-6% annual return won't cut it for me -- I need 7-8% and would feel better with 9-10%, so that says stock market. Despite Goldman-Sachs calling for a 3% annual return in the next decade and others like Vanguard doing similarly (though they say more like 6%), I feel comfortable with a longer time horizon. I have some ESOP payout money coming; I'll convert some of that into living money (via 72t), and then I have to decide what to do with other cash I have sitting. As Still Learning reminds me, I do have bond exposure in dated retirement funds (whose annual return isn't where I'd like but which will have their purpose if we have a flatter market coming), but I still may watch the bond fund market with share values lower now. Otherwise, I'm also curious about small caps (via an index) -- are they gonna have a run?

With money tied up in long range accounts CD's what happens to CD futures? I have money tied up for 8 more years getting 5.89% is that a good deal going forward or could I have done better just staying in the markets?

So for eight years, obviously some big financial institutions are bearish on the market over the next decade, suggesting this is a good deal (especially if there's no risk), and if your asset total is high enough, this may be just fine for you in any case, even if the market would do better on average beyond the next decade.

 

[audreyh1]

Yes. I typed that incorrectly. I’m 15% over my target equity in my AA.

Ah, I see. Thanks for clarifying!

That’s quite a deviation. I’ve hit about 8% above my target equity allocation.

 

[Ronstar]

Are the stocks for her or for your wife and siblings-in-law?

She's had the same FA for 50 years with approximately the same asset mix. DW and her 2 siblings will inherit whatever she has when she passes. I casually brought this issue up to her FA a few years ago and he dismissed it with a comment about how their modeling suggests the mix, and we left it at that. I'm going to bring it up again and see what he says. I suspect the FA already sees MIL's investments as being investments for her children.

 

[Ian S]

I'm doing some serious trimming of equities in my IRAs where most of our funds are. Also cutting back on plans for some expensive home improvement projects as we are realizing that we may not be in our forever home as long as we thought.

 

[Sunset]

I need to raise some cash for my regular quarterly withdrawal and have decided to, as Cramer says, "take a little off the table" and sell part of one of my equity positions- just haven't decided which. Sure, the market may go up some more but I have plenty left in equities.

Same here, I have a need for some cash, so will cash out some stocks now, rather than wait and be sad if there is a big drop and still have to cash out.

But the vast majority of my holdings are remaining the same.

 

[Sunset]

For those who are choosing to rebalance in their IRA’s, what are you rebalancing in to? I’d like to lower my equity AA as it’s 15% over my target. But I can’t do it my taxable account cause of gains. CD’s aren’t paying much. Are you just putting it in MM’s? I used to invest in bond funds but gun shy with those after the big losses these past few years.

Thanks for your thoughts.

I've bought some treasuries, the 5 and 7 year ones last week. DW stopped me from buying the 30 year one.... said I wouldn't live that long. .

 

[kgtest]

100% equities. Hopefully AAPL can work its magic around the tariff's again, get all those exceptions and have Tim Cook step in to save the day.

I zig when others zag. So I will be buying a little extra on every 5% dip I can.

 

[chemEguy]

100% equities. Hopefully AAPL can work its magic around the tariff's again, get all those exceptions and have Tim Cook step in to save the day.

I zig when others zag. So I will be buying a little extra on every 5% dip I can.

Perhaps, or perhaps a very great many people who have no idea how tariffs work or their ensuing ramifications are going to find out the hard way what they signed up for.

 

[jollystomper]

For what it is worth, and recognizing that past performance does not indicate future results, here is a quote from this article from 2020 (https://www.cnbc.com/2020/11/04/how...esidential-election-according-to-history.html ) regarding the S&P 500 the year after a Presidential election:

The best gains in the year after an election occurred when the president and Congress were under control of the same party, with the S&P 500 rising an average 10.6% across those 30 years, versus the average of 8.8% for all 76 years, according to CFRA. Its conclusion: when a president has a Congress which “rubber stamps” their agenda, stocks stand to benefit.

It also follows that a split in power between Congress and the executive branch has been second-best for stocks (8.6%), and a Congress unified in control against the president’s party has posted the worst results (7.4%), on average.

The years after an election when the same party won control of both the executive and legislative branches of government were the only when the average return posted by the S&P 500 (10.6%) was higher than the average stock gains across all 76 years (8.8%).

 

[VungTau]

I fail to see how anything good will come from the tariffs we are hearing about. It’s not going to shift manufacturing from China to the US. I work for a US multinational and other companies will do what we did, shift from China to other places like Vietnam or Malaysia. Those jobs will not come to the US because, a) the infrastructure is not in place for a rapid on-shoring, and b) companies will not be competitive if they have to pay US labor wages when competition is not. Or, if they do, you will have price increases as a result of the higher manufacturing costs paying US wages.

And then what happens? China retaliates with their own new policies? They stop selling to the US? They prevent US companies from operating in or selling to China? Existing JV partnerships lose IP or other rights in China?

It all sounds good on paper until you start to live it. The 25% manufacturing tariffs are already a problem.

So if this happens, I expect inflation and supply chain disruption and a global slowdown.


I’ll do what we’ve always done…stay the course.

I worked in China for 17 years automating factories with our software system. Most of our customers were multi-nationals. There were always issues - cost of doing business, anti-China backlash, unfair regulations against foreign firms, tax rules, IP issues and on & on. Companies did many things to overcome the challenges but one thing I sadly never saw - moving manufacturing back to the USA/EU. It just never made sense.

 

[Midpack]

I don't believe in market timing, but I think it's time that my 95 yo MIL gets out of stocks. I don't think that she can outlast a lengthy correction.

My Dad got completely out of the market in 2006 at 84 yo because he didn’t want to deal with another correction, and put everything in Treasuries. Just luck, but he was out when 2008-09 hit. $1.6M when he passed at 96 yo.