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What about the transfer of stock funds to bonds when markets appear high (currently?)? I see this used as reasoning by many. They claim taking 10-20% of stock funds that have had great gains and transition that to bonds when markets appear high, only to re-enter that 10-20% of money in bonds back to stocks on a dip. This mitigates loss potential, helps lock in some gains of high grossing funds and promotes a better return on investment when re-entered into the market on a dip.
I'm currently 32 years old and sit 95/5 in ratio, however.
it is a foolish game thinking you are going to time out and back in again , and do better than just ride the cycle .
Like, say you have an equity allocation of 65% and you decide to reduce your allocation down to 55% because you think the market will drop. Then the market drops into a correction and starts to head back up, so you put that 10% back into the market to try and catch the wave, only to have the market drop yet again a few weeks later, to a level just as low as before.
it very well could be , except if it does just what you said ,you did pick up more shares than you had if you didn't do that ..so no it is not entirely a wasted move .
however if it did not give you that opportunity to put that money back in lower then yes a wasted move . it is irrelevant that it fell again after you put the money back in .if you managed to gain more shares for the ride back up .
the real foolish game is all in or out that people play. not adjusting allocations in a narrow range. our own newsletter does that . the growth and income model has ranged from 60 to 70% equities at times , the growth model from 90-100% equities at times as well as i range from 40-50% equities at times .
fidelity has short term trading restrictions or i would definitely keep playing the tactical allocation game ,it is so predictable with trump . every time the markets attempt recovery he drops another monkey wrench in the works .odds are you will just keep adding a bit more shares each time until things bottom . the fact it falls farther is irrelevant as you add more shares each time.
eventually the tide will shift when he realizes his antic's ain't making america great , just americans poorer and the extra shares you bought each time will be worth it if you can do this in a retirement account where selling has no consequences .
the difference is if you go all in or out or greatly reducing allocations ,you can get hurt to bad if wrong . with slight tactical adjustments basically most of your money unchanged and invested if markets don't co-operate you will get a tad less instead of a tad more . MOST investors do some form of tactical allocation all the time as we switch fund types which hold different types of funds as the newsletter just did or go to funds with more or less beta or different weightings .
some form of tactical allocation is used by anyone who decides to rebalance not based on the same point in time yearly .
there is nothing in our investing that does not have some element of market timing to it either imposed by us or imposed by the market cycles when we add money to our ira's or positions when we pick the time .
Last edited by mathjak107; 04-06-2018 at 04:36 AM..
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eventually the tide will shift when he realizes his antic's ain't making america great .......
You are giving Trump way, way more credit than he deserves. He lives in his own world of paranoia and delusion. He never recognizes or admits to a mistake.
Location: Unlike most on CD, I'm not afraid to give my location: Milwaukee, WI.
1,789 posts, read 4,154,552 times
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Quote:
Originally Posted by jrkliny
You are giving Trump way, way more credit than he deserves. He lives in his own world of paranoia and delusion. He never recognizes or admits to a mistake.
So what's your point?
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