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My 401k has about 305k in there now. 35 years old.
last week 6/9/2016, i transferred all of it to CASH position (MMK) at DOW 17750, thinking that the markets will go down. Looks like it's going that direction (currently at 17500). We shall see.
eventually you will learn that you are doing more harm then good thinking your seat of the pants reaction to things will put you ahead .
everyone of us has visions of going to cash before the big drop . it rarely plays out that way and more often then not will leave you buying in higher then you sold out at .
when you are in the market your vision is to sell out before it drops and buy in after the smoke clears . .
more typically is once you are out you cringe every day it went up without you as you beat yourself up over not staying put and should have known better .
it rarely ends up being that vision in your head .
Last edited by mathjak107; 06-21-2016 at 04:34 AM..
eventually you will learn that you are doing more harm then good thinking your seat of the pants reaction to things will put you ahead .
Yep. Stocks up over 1% today. Glad I stuck with my asset allocation plan..75% in various stock funds 25% in a global bond fund. It's what I've stuck with since I finally wised up back in 2010. The computer rebalances it for me. It's tough to admit that you're not as smart as you think, but when you do, you are more likely to get better returns....but it's boring...To use a baseball analogy, you won't be hitting home runs, but you'll get a lot of singles and doubles...but those singles and doubles add up quite a bit when done consistently over a decade or more.
while i do like balanced funds under certain conditions like retirement there is no evidence that younger folks tend to stay in balanced funds during volatile times any longer then just plain stock funds .
if you look at the morningstar investor returns they are just as poor on balanced funds when compared to what the funds got . the flow of money in and out at the wrong times just is not any better .
i think when you are younger and have decades of time , worrying about short term temporary volatility and using bonds or other hedging methods will hurt you , as using bonds or hedging methods you end up with " a temporary solution for a short term problem that permanently reduces your gains forever" .
when you really think about the logic of what you are doing it actually makes little sense .
if the results for balanced funds were better in regards to keeping folks in then it would make sense but it does not . those who are inclined to run still seem to do so .
it is only when that money does not have decades to grow and you have time constraints that using bonds to shed volatility and risk makes sense .
especially at these levels on bonds .
even now in retirement i care more about controlling volatility then i do exact allocations to things .
because i don't have decades on much of our retirement money the parameters are different for investing it . balanced funds can be a nice core .
i use a balanced fund as a core but have a few growth funds , junk bond funds and other more conservative bond funds as the portfolio matches the time constraints on the money
Actually, you're wrong about that. There's still a gap in returns with balanced funds, but the gap is smaller than with stock funds or bond funds. The problem of investors being consistent is still there, but it's muted somewhat.
And if there's a rough decade in stocks, balanced funds will beat stocks, as was the case for 2000-2009. Granted bond yields are so low now, it's going to be tough, but I still think it's good to hedge your bets.
thiis is typically what burns folks . they get it in their head that they are going to outsmart things and bail before the fall and the vision in their head has them scoffing up stocks at lower prices .
but then reality is that markets go up , eventually you get tired of loosing more and more money because you sold out and your brain reminds you each day what you didn't make so you buy in higher .
Actually, you're wrong about that. There's still a gap in returns with balanced funds, but the gap is smaller than with stock funds or bond funds. The problem of investors being consistent is still there, but it's muted somewhat.
And if there's a rough decade in stocks, balanced funds will beat stocks, as was the case for 2000-2009. Granted bond yields are so low now, it's going to be tough, but I still think it's good to hedge your bets.
it really will be fund sensitive but over all balanced funds did just just as poor .
comparing fidelity balanced to contra , investor returns look worse on balanced then contra
Notes:
- 529 is a little behind. Will work on it this year
- Started a new job recently, need to think about transferring old 401k to IRA. May go with Vanguard
Nice!
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