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Participant ○○○

Port at PV. What should we do now?

In Jan 2017 we reduced our equity allocation from 60% to 40%. In hindsight it was a mistake. But I must admit it was / is a less stressful ride vs 60/40.

The bear took us from 40/60 to 35/65. We over rebalanced to 45/65 on March 31. The bull has taken us to 50/50.

Vanguard Target Retirement Fund 2020 is at 50/50. VTRF 2025 is at 60/40.

Go back to 40/60? Stay at 50/50? 

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Participant ○○○

Re: Port at PV. What should we do now?

You were, apparently, comfortable at 40:60 for some years while the market went up and up, so go back to it.

If there is another bear soon - you look like a genius as you again get a rebalancing or over-rebalancing opportunity.

If the rally keeps going, you'll remain in your demonstrated comfort zone.  And, your wife and daughter will be happy - which is worth a lot more than the foregone gains if you had a little more equity.

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Frequent Contributor

Re: Port at PV. What should we do now?

@SJ60 has a good point. If you were comfortable with 40-60 when SP500 was at 2,270, why not when it is 3,180? 

YBB
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Participant ○○○

Re: Port at PV. What should we do now?

I hate situations where I'm damned if I do and damned if I don't.

My wife always trusts me with our investments. This is our 4th successful bear market. If things were up to my wife we would have cashed out in 2000. We'd be a LOT poorer. And I'd still be working. 

My pushy "know it all" oldest daughter was / is the real problem. Now that she's married, out of the house, and has her own stock and bond portfolio (which I set up for her) she decided to invest 5% of her port in COBALT. Why? Who knows? She's also decided lately to side with communists and feminists; both of which are my MORTAL enemies since forever. I don't listen to her AT ALL about ANYTHING anymore these days.

I was never really happy with 40/60. With super low bond yields I'm actually afraid for the LONG TERM  (running our of money before running out of life). The problem is I got USED to driving" slower.

So. 40/60 is too slow. 60/40 is too fast. 50/50 is just right? Heck if I know anymore. I've lost my MOJO.

The Rolling Stones are / were right. "What a drag it is getting old."

 

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Re: Port at PV. What should we do now?

Right now I would go back to 40 / 60. With the threat of additional Covid issues looming, I can’t imagine there is much upside in the equity market right now.

So, I would stick with 40 / 60 and if there is another down leg, once again over-rebalance.

But you are right to keep it within your own predefined limits of a 40/60 to 60/40 ratio. A man has got to know his limitations : )

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Participant ○○○

Re: Port at PV. What should we do now?

I made this mistake in Jan 2017. I listened to FEAR and cut back from 60% stocks to 40% stocks. What was the FEAR at that time? Trump had just won the US presidency. My wife and especially my daughter convinced me of this nonsense. I caved.

I then watched the stock market take off like a rocket for the next 3 years. I was NOT happy. At all.

Then the big bad mini BEAR showed up and pretty much wiped out all stock gains from the previous 3 years. The market was giving me some redemption. I took it and bought 22% more equity on March 31.

Now everybody is going nuts about Covid-19. As a retired physician I know the pandemic 2 step. 1. Expose the low risk. 2. Protect the high risk. The idea is to get to 70% herd immunity ASAP without overwhelming the healthcare system. That's just not happening. Covid-19 has become a political nightmare in the USA. And of course we in CR ALWAYS copy the USA. Step 1 is not happening. Step 2 has become "protect everybody".

So. Is it "Fool me once shame on you. Fool me twice shame on me"?


@PN wrote:

Right now I would go back to 40 / 60. With the threat of additional Covid issues looming, I can’t imagine there is much upside in the equity market right now.

I would stick with 40 / 60 and if there is another down leg, once again over-rebalance.

But you are right to keep it within your predefined limits of a 40/60 to 60/40 ratio. A man has got to know his limitations : )


 

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Contributor ○○○

Re: Port at PV. What should we do now?

In another thread the discussion turned to convexity and I was advised to completely get out of my balanced fund because of its bond position.  I'm going to stay in moderate-allocation funds.  They have the asset allocation I was shooting for, somewhere between 50-75% stock.

I guess I'm just an optimist.  The government is pumping trillions into the economy, and while not a hoax the Covid-19 pandemic was completely overblown.  We shut down our economy because a computer program predicted 4.8 million hospitalized.  It never came close. 

Random testing is showing that 40-45% of those who had Covid-19 never had any symptoms.  Heck, testing in one nursing home showed that 40% of its patients who are the most vulnerable had Covid-19 without knowing it. 

The media is trying to whip up more hysteria.  Its almost as if they want to keep the economy shut down.  They keep talking about increased cases.  With increased testing the asymptomatic are now being counted so of course there are more cases.  The number of Covid-19 cases is not a metric my state is using.  It's using number of hospitalizations and they are way down.  The state also tracks open emergency room beds and unused ventilators.  Both are around 80%.  Even with hospitals open to treat patients other than Covid-19 there is no danger of overwhelming the hospitals.

And, maybe a dozen vaccines are being developed.  Some are entering human testing.  Odds are there will be a vaccine before or early next year.

I can't see the future.  But pessimists see bonds as useless and a stock market on the verge of collapse.  I'm just not that pessimistic.   I'm staying where I am.  But I won't know until next year if I was right.

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Participant ○○○

Re: Port at PV. What should we do now?

Mark me down as a pessimist. Because that's EXACTLY what I believe SHOULD be happening. Bonds are useless. Sitting ducks for an increase in interest rates. Stock markets SHOULD collapse any day now. But they AREN'T.

"I can't see the future.  But pessimists see bonds as useless and a stock market on the verge of collaspe.  I'm just not that pessimistic.   I'm staying where I am.  But I won't know until next year if I was right."

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Re: Port at PV. What should we do now?


@galeno wrote:

Mark me down as a pessimist. Because that's EXACTLY what I believe SHOULD be happening. Bonds are useless. Sitting ducks for an increase in interest rates. Stock markets SHOULD collapse any day now. But they AREN'T.

"I can't see the future.  But pessimists see bonds as useless and a stock market on the verge of collaspe.  I'm just not that pessimistic.   I'm staying where I am.  But I won't know until next year if I was right."


If that is true, what do you think we should invest in?  Please don't say rental property.  I did that once.  The renters completely trashed the house.  It took thousands to repair it before I could even sell it.

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Participant ○○○

Re: Port at PV. What should we do now?

Definately not rental property. Everything looks terrible. So we stick to stocks and bonds.

"If that is true, what do you think we should invest in?  Please don't say rental property.  I did that once.  The renters completely trashed the house.  It took thousands to repair it before I could even sell it."

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Re: Port at PV. What should we do now?

Galeno, every a few years you have your doubts. Going to 40/60 was the right choice because you and especially your family felt better.  That's should be enough.

Mistake? I don't think so, hind 202/2020 is great.  If you owned QQQ instead of your stocks you could make more money  :-)

Why are you looking at VG 2020, you should look at Vanguard Target Retirement 2015 Fund (VTXVX) with 36% in stocks or in Vanguard Target Retirement Income Fund (VTINX) 30% in stocks "The Target Retirement Income Fund is designed for investors already in retirement." you are already retired several years ago.

Today would be a great time to revert back :-)

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Participant ○○○

Re: Port at PV. What should we do now?

The reason that I look at VTRF-2020 AND VTRF-2025 instead of VTRF-2015 is because of our ages.

Wife and I are 63. I believe that VTRFs are designed to use the USA's Social Security's FRA (full retirement age?) as the target date of retirement. My wife and I will be 68 in 2025. Our FRA is 66.5 yr.

Regarding VTRF-2015. In 2016 our daughter used this VERY fund to argue in favor of the "family port" going from 60/40 to 40/60 in 2017.

So. Is the target the date one retires? Or is it the FRA?

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Participant ○○○

Re: Port at PV. What should we do now?

My doubts.

Super low interest rates make me cry about our bonds.

Regarding equities Prince says it best.

https://youtu.be/rblt2EtFfC4

Prince's official music video for 1999 Listen to your favorite Prince tracks, all in one place: Spotify: https://Prince.lnk.to/SpotifyTopTracks!1999 Apple Mu...
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Participant ○○○

Re: Port at PV. What should we do now?

@galeno FWIW, I'd say target date funds you use should go with your age, rather than your actual date of retirement.  Their glide paths are designed based on your remaining life expectancy, which is a function of age. I agree with your rationale for 2025 and 2020 TDF being your benchmarks.

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Participant ○○○

Re: Port at PV. What should we do now?

Thanks everyone. We're going to stay at 50/50. See what happens. 

According to VTRF-2025 we should be at 60/40. So we're still holding a defensive portfolio.

Everyone is content. 

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