With markets higher than any time in history

[FLSUnFIRE]

I just hope the current gains hold until I sell in Dec. I'll be selling MF so they'll execute at EOD NAV. I'll try to warn all of you that the market is about to crash in the afternoon when I put my order in that day.

It seems high looking at charts but I'm no longer in the game of trying to time the market. I do think there will be policy disruptions and also believe that the disruptions that AI and advancements in space are just beginning and that all could prove to boost the US and global economies which would eventually be reflected in market valuations. Will remain ~100% equities other than short term cash.

 

[DrRoy]

I already trimmed equities this year and I do not respond to individual events. Holding course.

 

[Ian S]

The last big round of tariffs set off a trade war that predictably hurt our farmers to the extent that taxpayers were forced to bail them out. Don't we learn? I guess maybe not.

 

[target2019]

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.

There are different methods used to rebalance. My opinion is that when you watched your equity increase to 15% over target that was a decision to disregard your rebalancing rule and make a strategic change. Or perhaps you did not have a rebalancing rule?

This article about rebalancing can help you decide which method, or combination of methods, to use.

Rebalancing - Bogleheads

 

[audreyh1]

There are different methods used to rebalance. My opinion is that when you watched your equity increase to 15% over target that was a decision to disregard your rebalancing rule and make a strategic change. Or perhaps you did not have a rebalancing rule?

This article about rebalancing can help you decide which method, or combination of methods, to use.

Rebalancing - Bogleheads

It can happen quickly.

I also feel like there is no rush. It’s more convenient for me to rebalance when I take my annual withdrawal in January. My mutual funds pay distributions in Dec complicating the picture. Plus rebalancing in Jan moves the tax consequences into the new year.

Most models for long term performance and for portfolio survival rebalance annually at the beginning of each year anyway.

 

[target2019]

Some people see events. I consider the cycles that events fit into. That helps me understand the background before making rash decisions.

I do think some rebalancing should always be on the table. The once-a-specific-date method seems simple enough for many.

I tally everything at the EOM, look at the AA and Target, and then make new contributions or move assets. Most adaptation is on a small scale for us.

 

[chemEguy]

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.

Exactly, the labor cost and tighter regulations simply don’t make it attractive. We can go on about the decades of policy and corporate decisions that off shored, but the truth is…companies will always look to find their lowest COGS. In todays world, travel and communication open up the entire globe as possible sites for labor.

When I hear messaging that XYZ will bring jobs back, it’s simply not true. Tariffs have a purpose if truly unfair business practices are happening (dumping for example) but that’s not what’s being peddled here.

Again, I know very little about timing and investing beyond the simple fact that buying the market and owning it for decades works. I won’t change from that.

 

[target2019]

It can happen quickly.

I also feel like there is no rush. It’s more convenient for me to rebalance when I take my annual withdrawal in January. My mutual funds pay distributions in Dec complicating the picture. Plus rebalancing in Jan moves the tax consequences into the new year.

Most models for long term performance/portfolio survival rebalance annually at the beginning of each year anyway.

True that. We haven't encountered the time when regular withdrawals are necessary, or forced, on a larger scale.

I'm already looking ahead to what happens when I take my 2026 RMD, and know the possible impact on our measured Asset Allocation (AA).

I went to Perplexity AI to ask about the changes which would precipitate a 15% move. These are the kind of events I would think about, but of course it would take 100's of posts to gather such a list.

Q: What kind of economic or market events could quickly shift my 50% equity asset allocation to 65%? Use brief bullet style.

A: Several economic or market events could quickly shift a 50% equity asset allocation to 65% without any active rebalancing:

• A sharp stock market rally, causing equities to appreciate rapidly
• A significant bond market selloff, reducing the value of fixed income holdings
• High inflation eroding the value of cash holdings
• An unexpected surge in corporate earnings, boosting stock valuations
• A major geopolitical event triggering a flight to equities
• Aggressive monetary easing by central banks, driving investors into stocks
• A technological breakthrough sparking an equity boom in certain sectors
• A sudden increase in risk appetite among investors globally

These events could cause the equity portion of a portfolio to grow disproportionately, shifting the overall allocation without any action from the investor.

Q: I was thinking more of rapid changes.

A: I apologize for the misunderstanding. You're right to focus on rapid changes. Here are some events that could quickly shift a 50% equity allocation to 65% in a very short timeframe:

• Flash crash in bond markets
• Sudden currency devaluation affecting non-equity assets
• Overnight stock market surge (e.g., due to unexpected positive news)
• Abrupt commodity price collapse affecting non-equity holdings
• Surprise central bank action causing instant market reaction
• Major geopolitical event triggering immediate flight to equities
• Unexpected merger or acquisition news spiking specific stock prices
• Instant regulatory changes impacting asset valuations differently

These events can cause dramatic shifts in asset values within hours or even minutes, rapidly altering portfolio allocations.

 

[sengsational]

Q: What kind of economic or market events could quickly shift my 50% equity asset allocation to 65%?

My triggers are relative, so this would be a 30% deviation. Each of my 7 asset class buckets have the same trigger percentage.

 

[sengsational]

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.

What made this possible is that nobody shoots at ships and planes in international waters / airspace. If there's more risk in the supply chain, that's what will onshore stuff again. I sure hope that doesn't happen.

 

[chemEguy]

The last big round of tariffs set off a trade war that predictably hurt our farmers to the extent that taxpayers were forced to bail them out. Don't we learn? I guess maybe not.

This article just needs to be updated to correct the cited numbers for inflation since it was published and it can be reused again next year.

 

[Teacher Terry]

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.

This is exactly what is going to happen and inflation will skyrocket. Besides putting more of my money in a fixed rate account I have bought a year’s worth of paper products, toiletries, cleaning supplies, etc.

Although many of these products won’t be subject to tariffs prices are going to rise and at least for a year I won’t be paying them. I bought 4 months of coffee and filled my freezer with meat.

Since cars will be affected I took my 16 year Toyota Corolla into my mechanic to check it out. He couldn’t find any leaks, etc and thinks I will have it for a long time. It only has 72k miles on it.

My friends are buying any new appliances and furniture that they need. I bought new when I moved into my condo 3.5 years ago. If for some reason tariffs aren’t enacted then I will not have to buy many things for the next year so no loss.

 

[VanWinkle]

This type of market and emotions just make me sleepy- maybe sleep for the next 4 years and see what happens.

 

[foxcreek9]

As Yogi would say "It's tough to make predictions, especially about the future"

Good article on all the predictions of gloom after Obama, Trump, Biden, and now Trump again

Election Market Overreactions - A Wealth of Common Sense

Some thoughts on overreactions after an election.

awealthofcommonsense.com

 

[chemEguy]

As Yogi would say "It's tough to make predictions, especially about the future"

Good article on all the predictions of gloom after Obama, Trump, Biden, and now Trump again

Election Market Overreactions - A Wealth of Common Sense

Some thoughts on overreactions after an election.

awealthofcommonsense.com

100% correct.

I believe my assessment of the tariffs is accurate, but how it plays out to the market and timing I’ve no idea.

So I remain a faithful Boglehead and just stay the course I e followed for close to 30 years.

 

[jebmke]

100% correct.

I believe my assessment of the tariffs is accurate, but how it plays out to the market and timing I’ve no idea.

So I remain a faithful Boglehead and just stay the course I e followed for close to 30 years.

Same; on balance, I agree with your take on tariffs. I will also add, from experience, tariffs are easier to avoid than people realize. While it can take some time, armies of lawyers and accountants work non-stop on these issues. They are highly technical (more so than taxes) and, as a result with patience and creativity companies (multinationals especially) get adept at creating wormholes through these.

 

[MichaelB]

<mod note> Let’s please be careful not to let politics take over this thread.

 

[chemEguy]

Same; on balance, I agree with your take on tariffs. I will also add, from experience, tariffs are easier to avoid than people realize. While it can take some time, armies of lawyers and accountants work non-stop on these issues. They are highly technical (more so than taxes) and, as a result with patience and creativity companies (multinationals especially) get adept at creating wormholes through these.

Indeed.

I’ve sat in numerous meetings to discuss classification of our equipment made at our Chinese facility and also how slight alterations could be made on what is done and where to reclassify the same equipment to avoid those tariffs. Our compliance department will be working long hours with the expertise you describe to ensure everything is above board while at the same time seeking to avoid.

My role gives me some unique insight to a lot of this stuff and I whenever I hear sound bites talking up how this policy did this or that I can’t help but give a sarcastic laugh as I recall the meetings where strategies were developed to avoid it all.

And then I go to Holiday family gatherings where much, much less knowledgeable family members talk up what they clearly don’t understand.

In those situations I usually smile and refill my drink.

But getting back to the OP…I think market timing is rarely a smart move. For the typical investor, select a bond/equity ratio you’re happy with and then set it and forget it and buy regularly. Be happy with the highs and be cranky with the lows but stay the course.

 

[jazz4cash]

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.

CD rates are pretty good compared to all those years of near zero. Treasuries too. I am sticking to longish ladders and using MYGAs as a proxy. As for cap gains I haven’t had that issue due to being overweight in tax deferred accounts. It’s a good reminder to be diversified tax-wise also for ease of rebalancing.

 

[Mark1]

Only change for me was to rebalance my US equities last week, and take some money off the table. I will admit that when the Fed lower interest rates a quarter point and mortgage rates went up (instead of down), it got my attention.

 

[Rickt]

Staying the course!!
We will rebalance if the rebalance bands are breached. Have enough in safe assets for rolling 7 Years' expenses and EF so not worried if we have a recession in 2025 or an inflation induced bear market.

 

[corn18]

It's funny how lazy portfolios can fix themselves. I got a little heavy in fixed income after the 2023 bear market and didn't do anything. Now I am right at my target 60/40 allocation. Life is good.

To the poster that has an in law with an equity heavy portfolio and is hinting to their FA to make a change: just stay out of it. My MIL is 82, in poor health and has an 80/20 AA. I talked to her financial manager about it and he thought that was just right. We chatted about my portfolio and he thought my 60/40 AA was ridiculously conservative. I thought about talking to my MIL about it but then thought better of it. I like her having someone else to blame if something goes wrong. She looks at her returns every month. She only talks about them when they go down. She has plenty of money and her heirs will benefit from the aggressive AA.

 

[jebmke]

It's funny how lazy portfolios can fix themselves. I got a little heavy in fixed income after the 2023 bear market and didn't do anything. Now I am right at my target 60/40 allocation. Life is good.

To the poster that has an in law with an equity heavy portfolio and is hinting to their FA to make a change: just stay out of it. My MIL is 82, in poor health and has an 80/20 AA. I talked to her financial manager about it and he thought that was just right. We chatted about my portfolio and he thought my 60/40 AA was ridiculously conservative. I thought about talking to my MIL about it but then thought better of it. I like her having someone else to blame if something goes wrong. She looks at her returns every month. She only talks about them when they go down. She has plenty of money and her heirs will benefit from the aggressive AA.

We started ER heavy in fixed by design and the market is gradually making the adjustment. I intentionally stopped re-balancing in 2018. I will likely not touch our portfolio ever again other than a few items of simplification that I have in mind which don't affect the allocations. Most of the fixed is in IRAs and RMDs start in 2026. That will also start to drive down the overweight in fixed.

 

[MuirWannabe]

There are different methods used to rebalance. My opinion is that when you watched your equity increase to 15% over target that was a decision to disregard your rebalancing rule and make a strategic change. Or perhaps you did not have a rebalancing rule?

This article about rebalancing can help you decide which method, or combination of methods, to use.

Rebalancing - Bogleheads

Well, it happened over time. I purchased equities during the downturn in 2020. Intentionally buying on dips. Now those same equities have grown a lot. On top of that, my long term equity has grown. So sis boom bah, I’m well over my desired target. I can tolerate deviation from my AA targets. I’m not militant about it. But 15% seems too much, especially with these frothy equity levels.
Guess I can explore treasuries in my TIRA. I’ve not learned about these much but can explore.

 

[kite_rider]

What a lively discussion! I'm 100% behind the camp that thinks increased deficit spending, high tariffs, and mass deportation of millions of working age people will drive inflation way up. Not sure all those things will actually happen; but that's the current narrative I'm working with.

I'm already almost 100% in equities (mostly tech) since I just don't like bonds. In my mind my rental real estate was the 'bond' part of the portfolio, but now I don't have much apatite to take on new rentals.

So that leaves me with trying to rotate my equities into ones that should perform well in an inflationary environment. I'm leaning towards commodities but don't have a lot of experience there. Maybe some more gold (which I think is an outdated store of value)? Or more of the asset class that can not be discussed here. I'm reluctant to pick up more of that asset since what I already have has grown so much that it's already over allocated.

Curious what other's are buying to protect themselves from inflation.