Because that's the price of a ticket to the stock-market fair.
Gravy train ride over ? Time to reevaluate asset allocation
Re: Gravy train ride over ? Time to reevaluate asset allocation
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Gravy train ride over ? Time to reevaluate asset allocation
Yes, hello, 2000-2010 was technically 10 years of 0% real returns.TheDDC wrote: ↑Mon Dec 06, 2021 12:36 amOkay. As opposed to… what? Sitting in losers for 5-10 years? Is that the Boglehead way?000 wrote: ↑Mon Dec 06, 2021 12:35 amAh, yes, the good old 'sell the loser and buy the winner every five years' strategy. A time tested classic.TheDDC wrote: ↑Mon Dec 06, 2021 12:31 am Gee, I don’t know. Maybe after five years of not making any money at all in equities I’d get a clue and see what’s actually moving? Investing more in my business? Crypto? You know… actually watching money go to work… As opposed to what? Getting led to slaughter?
-TheDDC
-TheDDC
And that's okay, because all the money one saved during that time period got multiplied like 5x-6x from 2010-2021.
That's how it works.
It's not obvious when you are in a 10-15 year slump, because the markets bounce all over the place inside those years...
Markets recovered from 2000-2003, and headed up until 2007, then crashed again.
Even the 1966-1982 period, had some growth up to 1973, then a crash in 1974, then slowly rising again. But the DOW was at 1000 in 1966, and still at 1000 in 1982. But SP500 did better, and of course, dividends were larger back then, so there was some growth of your money (mostly erased by inflation in the late 1970s).
It's not obvious when you are in a 10 year or 16 year slump.
But the good news is that it doesn't matter anyway.
The long-term 6%-7% real return of the stock market INCLUDES all those bad years. So far, you still got rich just buying and holding through those bad periods. Which is a good thing, because it's really difficult to see that you are in a bad period.
This doesn't work: "Just get out of stocks when they ain't doing so well, get back in when they are doing well". Easy-peasy.
Last edited by HomerJ on Mon Dec 06, 2021 10:08 am, edited 4 times in total.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Re: Gravy train ride over ? Time to reevaluate asset allocation
I'm saying your "S&P 500 has underperformed riskless 1-month t-bills for 3 periods of 13-17 consecutive years, about 45 years of 90 years of US stock data?" is complete BS. Something you want to continue to dance around.burritoLover wrote: ↑Mon Dec 06, 2021 9:17 amSo you are arguing that you should make changes based on 10-20 years performance of funds?nigel_ht wrote: ↑Mon Dec 06, 2021 9:11 amNice clipping and dodging the point.burritoLover wrote: ↑Mon Dec 06, 2021 7:58 amWell, current inflation rate <> the inflation rate over the next 20 years. The stock market could very well have negative returns over a 15-ish year period and given today's high valuations, not completely impossible either. This idea that both poor bond and stock returns over long periods is impossible - as if the market wouldn't allow your portfolio to completely suck, is baffling to me.nigel_ht wrote: ↑Mon Dec 06, 2021 7:46 amCurrent tbills are what? 0.5? If S&P returns are below that for 20 years B&H indexing will be dead before we come out the other side given the current inflation rate.burritoLover wrote: ↑Mon Dec 06, 2021 7:23 am
Did you know that a diversified portfolio of U.S. and international developed funds invested in 1970 would have had the U.S. fund underperform international for about 25 years? And that the S&P 500 has underperformed riskless 1-month t-bills for 3 periods of 13-17 consecutive years, about 45 years of 90 years of US stock data?
Stock funds involve a lot of risk - when risk shows up, it can be persistent over many years. Reacting to that is what causes a lot of investors to underperform.
Show me a 15 year period where the market trailed t-bills for next decade using every two week period of that 15 year period as a start date. Why two weeks? Because that's about the DCA period for folks doing automatic investment in 401Ks.
Show me that for your 15 year periods that if I START with $1 in 1929, 2000 and 1966 that my returns will trail TBills over that period if I'm investing in my 401K at the max rate.
I'll do the easy one for you:
https://www.portfoliovisualizer.com/bac ... ion2_2=100
Nope.
US Large Cap:
Professor Kenneth French's Research Data1 1972-1976
Vanguard 500 Index Fund (VFINX) 1977+
Treasury Bills / Cash - Risk Free Return Benchmark:
3-month Treasury Bills (FRED Data) 1972+
Can we have a 15 year period where real returns are negative? Yes. If you pick the right start dates.
For early accumulators it doesn't matter. For late retirees it doesn't matter.
This is why folks worry about SORR but it's a 20 year window in your life and there isn't actually all that much you can do about it beyond save more, spend less and be a reasonable diversified. Or I guess retire later.
Bond tents, cash hoards, dividend shields, etc are tactical plays that have varying impact depending on what kind of negative outcome you have.
Better to be lucky.
Whether we have a hard or soft landing from current valuations are still TBD. IF we can avoid recession (great or otherwise) it'll be soft. Consumer expectations is soft so...it should be interesting to see December numbers.
If it WERE a true statement and meant what folks who trot out that data point want to imply then YES, you probably should consider 20 year performance because investing in the stock market as a passive investor would absolutely suck.
Also I would also say that folks near retirement or in early retirement today should be far more defensive than they otherwise could afford to be when valuations are low. The risk of SORR biting you is much higher than when valuations are low. So yes, you should make changes to your plan because of conditions. Not HUGE DRASTIC CHANGES but 10-15% swing from equities to fixed income and more diversification in fixed income. A 60/40 plan made a few years ago becomes 50/50. Simple 50% BND becomes 30% BND and a mix of iBonds, VGLT, BNDX, GLDM, etc. Simple 50% VTI becomes VTI + VXUS + VBR.
And this sort of tinkering that generally leads to sub-optimal performance is only desireable in that 20 year window near retirement.
The rest of the time VTI+BND or VT+BNDW should work just fine and you can ignore the market and just DCA in or RMD out.
Re: Gravy train ride over ? Time to reevaluate asset allocation
And thus, since the volatility of ‘08 shook you, I agree that a more conservative allocation with regard to volatility is a good idea for you. But again, that’s based on you and not the market.Jimsad wrote: ↑Mon Dec 06, 2021 8:40 amAs Mike Tyson famously said “everybody has a plan until they get punched in the mouth”mbasherp wrote: ↑Mon Dec 06, 2021 8:22 am In my handful of years as a boglehead, I’ve learned that my investing approach should be based on myself, not on the market.
While I can blab on for days about the negative real returns of bonds, the real reason I don’t own them (other than I bonds in emergency fund) is that, as someone in their 30’s, I would first like to buy all the stocks I expect to need to reach my goal, before buying the bond component. I haven’t hit that yet, so I’m still ~100% stocks.
The only other reason to buy bonds in my case would be if I couldn’t handle the volatility of an aggressive portfolio. Since I regularly plan for a 50% crash and I’m clear about my time horizon, that’s not an issue. (As I like to put it, you can’t ask to be a championship fighter without being punched in the face. You don’t need to dodge all the punches. Sometimes you’re just gonna take it square on - that’s part of it!)
Of course I can’t speak for you, OP, and your age/needs/circumstance, but putting some blinders on in relation to my own has made it very clear what I need to do. Wherever “the market” is isn’t nearly so relevant.
This happened to me in 2008 crash when I realized I overestimated my true risk tolerance
2008 shook me which was a major crash unlike the minor ones which occurred later ; I hardly felt those
You may overestimate your risk tolerance without going through a true test
If I’m becoming a championship fighter, I would know that I’m fighting Mike Tyson, and I will not be surprised by being punched in the mouth. “A plan until…” doesn’t quite stick in this scenario. I accept the inevitable!
In other words, I know that my emotions were my enemy, not the market/volatility. In fact, a down market increases my chances of reaching my goals sooner. Remember that MY goal is to buy all the stocks I need before buying the bonds I need. The market hosts untold participants with as many goals, but mine is specific and therefore actionable regardless of market conditions.
It’s a REAL plan.
Re: Gravy train ride over ? Time to reevaluate asset allocation
https://www.portfoliovisualizer.com/bac ... sisResultsHomerJ wrote: ↑Mon Dec 06, 2021 9:46 amYes, hello, 2000-2010 was technically 10 years of 0% real returns. It's not obvious is a 10-15 year slump, because the markets bounce all over the place inside...TheDDC wrote: ↑Mon Dec 06, 2021 12:36 amOkay. As opposed to… what? Sitting in losers for 5-10 years? Is that the Boglehead way?000 wrote: ↑Mon Dec 06, 2021 12:35 amAh, yes, the good old 'sell the loser and buy the winner every five years' strategy. A time tested classic.TheDDC wrote: ↑Mon Dec 06, 2021 12:31 am Gee, I don’t know. Maybe after five years of not making any money at all in equities I’d get a clue and see what’s actually moving? Investing more in my business? Crypto? You know… actually watching money go to work… As opposed to what? Getting led to slaughter?
-TheDDC
-TheDDC
Inflation adjusted you came out ahead of tbills from 2000-2010 during accumulation. Not much maybe but some.
Might not be true for 1966 although if your savings amount rises to match inflation along with natural salary growth as you move to mid career it might still be true.
Is a heavy SCV tilt still a viable long term play? Who knows...but that's more the comparison here than S&P500 performance vs RFRR. Folks who have dutifully held on to market weight (or overweight) international are still waiting for payday.
How long should you hold on to a bad tilt before you capitulate and go back to total market?
- burritoLover
- Posts: 4097
- Joined: Sun Jul 05, 2020 12:13 pm
Re: Gravy train ride over ? Time to reevaluate asset allocation
I don't get how you can call it BS in one breath and then make qualifications about someone retiring at that the start of those periods, saying they should be more defensive. Why should they be more defensive - for periods exactly like that. When the portfolio gets large, contributions have a smaller and smaller effect so to cherry pick a time period starting at $0 investment doesn't prove your point that the underperformance of the S&P 500 over t-bills is BS and should be ignored.nigel_ht wrote: ↑Mon Dec 06, 2021 9:51 amI'm saying your "S&P 500 has underperformed riskless 1-month t-bills for 3 periods of 13-17 consecutive years, about 45 years of 90 years of US stock data?" is complete BS. Something you want to continue to dance around.burritoLover wrote: ↑Mon Dec 06, 2021 9:17 amSo you are arguing that you should make changes based on 10-20 years performance of funds?nigel_ht wrote: ↑Mon Dec 06, 2021 9:11 amNice clipping and dodging the point.burritoLover wrote: ↑Mon Dec 06, 2021 7:58 amWell, current inflation rate <> the inflation rate over the next 20 years. The stock market could very well have negative returns over a 15-ish year period and given today's high valuations, not completely impossible either. This idea that both poor bond and stock returns over long periods is impossible - as if the market wouldn't allow your portfolio to completely suck, is baffling to me.
Show me a 15 year period where the market trailed t-bills for next decade using every two week period of that 15 year period as a start date. Why two weeks? Because that's about the DCA period for folks doing automatic investment in 401Ks.
Show me that for your 15 year periods that if I START with $1 in 1929, 2000 and 1966 that my returns will trail TBills over that period if I'm investing in my 401K at the max rate.
I'll do the easy one for you:
https://www.portfoliovisualizer.com/bac ... ion2_2=100
Nope.
US Large Cap:
Professor Kenneth French's Research Data1 1972-1976
Vanguard 500 Index Fund (VFINX) 1977+
Treasury Bills / Cash - Risk Free Return Benchmark:
3-month Treasury Bills (FRED Data) 1972+
Can we have a 15 year period where real returns are negative? Yes. If you pick the right start dates.
For early accumulators it doesn't matter. For late retirees it doesn't matter.
This is why folks worry about SORR but it's a 20 year window in your life and there isn't actually all that much you can do about it beyond save more, spend less and be a reasonable diversified. Or I guess retire later.
Bond tents, cash hoards, dividend shields, etc are tactical plays that have varying impact depending on what kind of negative outcome you have.
Better to be lucky.
Whether we have a hard or soft landing from current valuations are still TBD. IF we can avoid recession (great or otherwise) it'll be soft. Consumer expectations is soft so...it should be interesting to see December numbers.
If it WERE a true statement and meant what folks who trot out that data point want to imply then YES, you probably should consider 20 year performance because investing in the stock market as a passive investor would absolutely suck.
Also I would also say that folks near retirement or in early retirement today should be far more defensive than they otherwise could afford to be when valuations are low. The risk of SORR biting you is much higher than when valuations are low. So yes, you should make changes to your plan because of conditions. Not HUGE DRASTIC CHANGES but 10-15% swing from equities to fixed income and more diversification in fixed income. A 60/40 plan made a few years ago becomes 50/50. Simple 50% BND becomes 30% BND and a mix of iBonds, VGLT, BNDX, GLDM, etc. Simple 50% VTI becomes VTI + VXUS + VBR.
And this sort of tinkering that generally leads to sub-optimal performance is only desireable in that 20 year window near retirement.
The rest of the time VTI+BND or VT+BNDW should work just fine and you can ignore the market and just DCA in or RMD out.
Re: Gravy train ride over ? Time to reevaluate asset allocation
Also, one more thing... You talked about "piling in" if 2008 happens again and going 100% stocks. You're not telling him to wait and see if it's a short crash or a long crash. You're saying go all in right away. So this talk of well I won't invest in stocks if it's a long crash and stocks are losing money is silly. You're already 100/0, and telling others to committing to investing 100/0 very quickly into the crash, because you assume it will be a short one again.TheDDC wrote: ↑Mon Dec 06, 2021 12:13 amYou're right. If what happened in 1966-1982 happens again, no one will be sitting around keeping money in equities since that would be stupid. Why sit around and lose money?HomerJ wrote: ↑Sun Dec 05, 2021 11:40 pmI guess you weren't investing from 1966-1982. There's more to history than 2008-2009.TheDDC wrote: ↑Sun Dec 05, 2021 11:28 pmRight. And we remember what happened after 2008, right? Stay the course. I would actually pile in and go 100/0. Here's the good news: You now have a chance for a "do over" to buy equities at a better discount that you should have bought before! 100/0 is my AA.
-TheDDC
-TheDDC
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Re: Gravy train ride over ? Time to reevaluate asset allocation
Tyson had surprising hand speed and he was able to get close and throw powerful hooks without much if any telegraphing or he'd shift and go southpaw and hammer his opponent a huge uppercut. The dude was precise and powerful. He also made being shorter an advantage for him.mbasherp wrote: ↑Mon Dec 06, 2021 10:03 amAnd thus, since the volatility of ‘08 shook you, I agree that a more conservative allocation with regard to volatility is a good idea for you. But again, that’s based on you and not the market.Jimsad wrote: ↑Mon Dec 06, 2021 8:40 amAs Mike Tyson famously said “everybody has a plan until they get punched in the mouth”mbasherp wrote: ↑Mon Dec 06, 2021 8:22 am In my handful of years as a boglehead, I’ve learned that my investing approach should be based on myself, not on the market.
While I can blab on for days about the negative real returns of bonds, the real reason I don’t own them (other than I bonds in emergency fund) is that, as someone in their 30’s, I would first like to buy all the stocks I expect to need to reach my goal, before buying the bond component. I haven’t hit that yet, so I’m still ~100% stocks.
The only other reason to buy bonds in my case would be if I couldn’t handle the volatility of an aggressive portfolio. Since I regularly plan for a 50% crash and I’m clear about my time horizon, that’s not an issue. (As I like to put it, you can’t ask to be a championship fighter without being punched in the face. You don’t need to dodge all the punches. Sometimes you’re just gonna take it square on - that’s part of it!)
Of course I can’t speak for you, OP, and your age/needs/circumstance, but putting some blinders on in relation to my own has made it very clear what I need to do. Wherever “the market” is isn’t nearly so relevant.
This happened to me in 2008 crash when I realized I overestimated my true risk tolerance
2008 shook me which was a major crash unlike the minor ones which occurred later ; I hardly felt those
You may overestimate your risk tolerance without going through a true test
If I’m becoming a championship fighter, I would know that I’m fighting Mike Tyson, and I will not be surprised by being punched in the mouth. “A plan until…” doesn’t quite stick in this scenario. I accept the inevitable!
Everyone had a plan to mitigate his strengths. They got punched in the mouth anyway...a lot more than they had planned.
Your plan to buy stocks before bonds is a good one. Until you run into the Mike Tyson scenario whether that's 1929 or Nikkei or whatever your favorite black swan (job loss, health, whatever). Usually most plans don't fall apart after the first hit.In other words, I know that my emotions were my enemy, not the market/volatility. In fact, a down market increases my chances of reaching my goals sooner. Remember that MY goal is to buy all the stocks I need before buying the bonds I need. The market hosts untold participants with as many goals, but mine is specific and therefore actionable regardless of market conditions.
It’s a REAL plan.
Whats the plan for that?
“Peace-time plans are of no particular value, but peace-time planning is indispensable.”
and
"Plans are worthless, but planning is everything. There is a very great distinction because when you are planning for an emergency you must start with this one thing: the very definition of “emergency” is that it is unexpected, therefore it is not going to happen the way you are planning."
--Eisenhower.
Re: Gravy train ride over ? Time to reevaluate asset allocation
A statement made in support of an idea can be completely wrong without the idea itself being wrong. This is a pretty easy concept to understand.burritoLover wrote: ↑Mon Dec 06, 2021 10:07 amI don't get how you can call it BS in one breath and then make qualifications about someone retiring at that the start of those periods, saying they should be more defensive.nigel_ht wrote: ↑Mon Dec 06, 2021 9:51 amI'm saying your "S&P 500 has underperformed riskless 1-month t-bills for 3 periods of 13-17 consecutive years, about 45 years of 90 years of US stock data?" is complete BS. Something you want to continue to dance around.burritoLover wrote: ↑Mon Dec 06, 2021 9:17 amSo you are arguing that you should make changes based on 10-20 years performance of funds?nigel_ht wrote: ↑Mon Dec 06, 2021 9:11 amNice clipping and dodging the point.burritoLover wrote: ↑Mon Dec 06, 2021 7:58 am
Well, current inflation rate <> the inflation rate over the next 20 years. The stock market could very well have negative returns over a 15-ish year period and given today's high valuations, not completely impossible either. This idea that both poor bond and stock returns over long periods is impossible - as if the market wouldn't allow your portfolio to completely suck, is baffling to me.
Show me a 15 year period where the market trailed t-bills for next decade using every two week period of that 15 year period as a start date. Why two weeks? Because that's about the DCA period for folks doing automatic investment in 401Ks.
Show me that for your 15 year periods that if I START with $1 in 1929, 2000 and 1966 that my returns will trail TBills over that period if I'm investing in my 401K at the max rate.
I'll do the easy one for you:
https://www.portfoliovisualizer.com/bac ... ion2_2=100
Nope.
US Large Cap:
Professor Kenneth French's Research Data1 1972-1976
Vanguard 500 Index Fund (VFINX) 1977+
Treasury Bills / Cash - Risk Free Return Benchmark:
3-month Treasury Bills (FRED Data) 1972+
Can we have a 15 year period where real returns are negative? Yes. If you pick the right start dates.
For early accumulators it doesn't matter. For late retirees it doesn't matter.
This is why folks worry about SORR but it's a 20 year window in your life and there isn't actually all that much you can do about it beyond save more, spend less and be a reasonable diversified. Or I guess retire later.
Bond tents, cash hoards, dividend shields, etc are tactical plays that have varying impact depending on what kind of negative outcome you have.
Better to be lucky.
Whether we have a hard or soft landing from current valuations are still TBD. IF we can avoid recession (great or otherwise) it'll be soft. Consumer expectations is soft so...it should be interesting to see December numbers.
If it WERE a true statement and meant what folks who trot out that data point want to imply then YES, you probably should consider 20 year performance because investing in the stock market as a passive investor would absolutely suck.
Also I would also say that folks near retirement or in early retirement today should be far more defensive than they otherwise could afford to be when valuations are low. The risk of SORR biting you is much higher than when valuations are low. So yes, you should make changes to your plan because of conditions. Not HUGE DRASTIC CHANGES but 10-15% swing from equities to fixed income and more diversification in fixed income. A 60/40 plan made a few years ago becomes 50/50. Simple 50% BND becomes 30% BND and a mix of iBonds, VGLT, BNDX, GLDM, etc. Simple 50% VTI becomes VTI + VXUS + VBR.
And this sort of tinkering that generally leads to sub-optimal performance is only desireable in that 20 year window near retirement.
The rest of the time VTI+BND or VT+BNDW should work just fine and you can ignore the market and just DCA in or RMD out.
Your statement is wrong because 2000-2012 wasn't a bad time to invest in the S&P 500 but 2000 was a bad time to invest in the S&P 500.
$10000 invested in 2003 was good:
https://www.portfoliovisualizer.com/bac ... ion2_2=100
2000 was a bad time to RETIRE and it still worked out.
No. Large or small portfolio doesn't matter. This is with 10 years of savings (10,500 x 10).Why should they be more defensive - for periods exactly like that. When the portfolio gets large, contributions have a smaller and smaller effect so to cherry pick a time period starting at $0 investment doesn't prove your point that the underperformance of the S&P 500 over t-bills is BS and should be ignored.
https://www.portfoliovisualizer.com/bac ... ion2_2=100
$350K for the S&P 500 vs $315K for tbills. In early or mid accumulation phase it doesn't matter. The assumption that the return on risk for stocks will reasonable Is likely true.
Also, you DON'T have $105,000 in the 2000 market if you didn't start investing in 1995.
https://www.portfoliovisualizer.com/bac ... ion2_2=100
An apples to apples comparisons mean the tbills start with $61,000, not $105000.
What matters is time horizon...if you have time then you don't need to be defensive as you only need to worry about SORR around retirement (by definition).
When conditions are benign you can putter along with anything vaguely reasonable. When not so benign you should diversify wider and be more aggressive in mitigating SORR.
AND I didn't cherry pick a time period. YOU DID. Starting with $0 and DCAing is as valid (actually more valid) as starting with $10000 and never putting in another dime.
tl;dr:
1) 45 years of S&P underperforming TBills remains bogus.
2) You shouldn't assume that because that argument is bogus you can ignore SORR or that tactical asset allocation is either good or bad.
Re: Gravy train ride over ? Time to reevaluate asset allocation
Not me. We chose an AA that lets us SWAN; 55/45. It drifts from time to time and then we rebalance annually, if needed. I always remember the SWAN factor. If I had to choose a "feeling", I feel that we have too much equities (risk) and too much bonds (ballast), at the same time. The sweet spot.Jimsad wrote: ↑Fri Dec 03, 2021 5:45 pmMy question is how many others feel the way ?delamer wrote: ↑Fri Dec 03, 2021 4:53 pmI can only give you my interpretation of your comments.Jimsad wrote: ↑Fri Dec 03, 2021 4:18 pmI am not sure why you thought I was implying others are greedy .
I am trying to warn myself and also others to be more vigilant
As one of the moderators asked above, what question did you have?
- burritoLover
- Posts: 4097
- Joined: Sun Jul 05, 2020 12:13 pm
Re: Gravy train ride over ? Time to reevaluate asset allocation
Why on earth are you comparing it to cash? Cash is not t-bills.nigel_ht wrote: ↑Mon Dec 06, 2021 11:06 amA statement made in support of an idea can be completely wrong without the idea itself being wrong. This is a pretty easy concept to understand.burritoLover wrote: ↑Mon Dec 06, 2021 10:07 amI don't get how you can call it BS in one breath and then make qualifications about someone retiring at that the start of those periods, saying they should be more defensive.nigel_ht wrote: ↑Mon Dec 06, 2021 9:51 amI'm saying your "S&P 500 has underperformed riskless 1-month t-bills for 3 periods of 13-17 consecutive years, about 45 years of 90 years of US stock data?" is complete BS. Something you want to continue to dance around.burritoLover wrote: ↑Mon Dec 06, 2021 9:17 amSo you are arguing that you should make changes based on 10-20 years performance of funds?nigel_ht wrote: ↑Mon Dec 06, 2021 9:11 am
Nice clipping and dodging the point.
Show me a 15 year period where the market trailed t-bills for next decade using every two week period of that 15 year period as a start date. Why two weeks? Because that's about the DCA period for folks doing automatic investment in 401Ks.
Show me that for your 15 year periods that if I START with $1 in 1929, 2000 and 1966 that my returns will trail TBills over that period if I'm investing in my 401K at the max rate.
I'll do the easy one for you:
https://www.portfoliovisualizer.com/bac ... ion2_2=100
Nope.
US Large Cap:
Professor Kenneth French's Research Data1 1972-1976
Vanguard 500 Index Fund (VFINX) 1977+
Treasury Bills / Cash - Risk Free Return Benchmark:
3-month Treasury Bills (FRED Data) 1972+
Can we have a 15 year period where real returns are negative? Yes. If you pick the right start dates.
For early accumulators it doesn't matter. For late retirees it doesn't matter.
This is why folks worry about SORR but it's a 20 year window in your life and there isn't actually all that much you can do about it beyond save more, spend less and be a reasonable diversified. Or I guess retire later.
Bond tents, cash hoards, dividend shields, etc are tactical plays that have varying impact depending on what kind of negative outcome you have.
Better to be lucky.
Whether we have a hard or soft landing from current valuations are still TBD. IF we can avoid recession (great or otherwise) it'll be soft. Consumer expectations is soft so...it should be interesting to see December numbers.
If it WERE a true statement and meant what folks who trot out that data point want to imply then YES, you probably should consider 20 year performance because investing in the stock market as a passive investor would absolutely suck.
Also I would also say that folks near retirement or in early retirement today should be far more defensive than they otherwise could afford to be when valuations are low. The risk of SORR biting you is much higher than when valuations are low. So yes, you should make changes to your plan because of conditions. Not HUGE DRASTIC CHANGES but 10-15% swing from equities to fixed income and more diversification in fixed income. A 60/40 plan made a few years ago becomes 50/50. Simple 50% BND becomes 30% BND and a mix of iBonds, VGLT, BNDX, GLDM, etc. Simple 50% VTI becomes VTI + VXUS + VBR.
And this sort of tinkering that generally leads to sub-optimal performance is only desireable in that 20 year window near retirement.
The rest of the time VTI+BND or VT+BNDW should work just fine and you can ignore the market and just DCA in or RMD out.
Your statement is wrong because 2000-2012 wasn't a bad time to invest in the S&P 500 but 2000 was a bad time to invest in the S&P 500.
$10000 invested in 2003 was good:
https://www.portfoliovisualizer.com/bac ... ion2_2=100
2000 was a bad time to RETIRE and it still worked out.
No. Large or small portfolio doesn't matter. This is with 10 years of savings (10,500 x 10).Why should they be more defensive - for periods exactly like that. When the portfolio gets large, contributions have a smaller and smaller effect so to cherry pick a time period starting at $0 investment doesn't prove your point that the underperformance of the S&P 500 over t-bills is BS and should be ignored.
https://www.portfoliovisualizer.com/bac ... ion2_2=100
$350K for the S&P 500 vs $315K for tbills. In early or mid accumulation phase it doesn't matter. The assumption that the return on risk for stocks will reasonable Is likely true.
Also, you DON'T have $105,000 in the 2000 market if you didn't start investing in 1995.
https://www.portfoliovisualizer.com/bac ... ion2_2=100
An apples to apples comparisons mean the tbills start with $61,000, not $105000.
What matters is time horizon...if you have time then you don't need to be defensive as you only need to worry about SORR around retirement (by definition).
When conditions are benign you can putter along with anything vaguely reasonable. When not so benign you should diversify wider and be more aggressive in mitigating SORR.
AND I didn't cherry pick a time period. YOU DID. Starting with $0 and DCAing is as valid (actually more valid) as starting with $10000 and never putting in another dime.
tl;dr:
1) 45 years of S&P underperforming TBills remains bogus.
2) You shouldn't assume that because that argument is bogus you can ignore SORR or that tactical asset allocation is either good or bad.
https://www.portfoliovisualizer.com/bac ... ion2_2=100
Re: Gravy train ride over ? Time to reevaluate asset allocation
Are you? Trying, that is. When was the last time you rebalanced to 60/40? When was the last time you rebalanced? Not trying to sound rude, just trying to give you honest feedback which is what I expect when I post here. All the best to you....Jimsad wrote: ↑Sat Dec 04, 2021 6:10 amMy IPS is 60/40 but sticking to it is a bit like losing weight - Easy in theory( eat less , exercise more ) but hard in practice .dcabler wrote: ↑Sat Dec 04, 2021 6:01 am I also went through the same gut wrench as many here on the forum did back in 2008. I learned from it and set an AA I could live with.
Multiple times since 2008 there was noise about large corrections that were about to happen. I ignored them and kept my AA and rebalancing according to my IPS. OP: Did you do likewise all along the way or did you make changes every time you thought it didn't feel like the party was going to continue? Did it work out for you? Do you have an IPS (a contract to yourself) that tells you exactly what to do?
I have only a vague inkling of what the next 10 years might look like, but the error bars are probably huge. So huge, in fact, that I see no way to act on it in any reasonable way. So.... staying the course.
Cheers.
But I am trying….
Re: Gravy train ride over ? Time to reevaluate asset allocation
Yes, I went through 2008/2009 like everyone else. My AA was such that I didn't need to do a thing other than rebalance when necessary. Like others that did the same, we've done well by staying the course and REBALANCING to comfortable and maintainable AA. Not sure what "answer" you're looking for here, but just REBALANCE to your comfortable AA and get on with life. Nothing anyone us can do about the markets.Jimsad wrote: ↑Sat Dec 04, 2021 8:19 amHave you been through 2008/2009? When the market keeps going down and nobody knows if and when it will recover , you need nerves of steel to hang on .Silverado wrote: ↑Sat Dec 04, 2021 7:33 amThis is the part that I don’t understand. It feels better to buy on the way down to me than the way up ( though both feel pretty darn good). Any stress I feel when things are going down come from uneasy feelings around job security. If money is coming in, it always feels good to invest in VTSAX.
I held on and kept buying but It was nerve wracking .
Also my portfolio is much bigger now and I have more to lose! !
Re: Gravy train ride over ? Time to reevaluate asset allocation
That's very sensible. May I ask: how did you determine the moments when you would rebalance during the Great Recession--so as to minimize throwing good money after bad? I think about how I'll deploy my bond money should the stock market tank, and I'm not very confident about assessing the right timing.JnyVuko wrote: ↑Mon Dec 06, 2021 11:52 amYes, I went through 2008/2009 like everyone else. My AA was such that I didn't need to do a thing other than rebalance when necessary. Like others that did the same, we've done well by staying the course and REBALANCING to comfortable and maintainable AA. Not sure what "answer" you're looking for here, but just REBALANCE to your comfortable AA and get on with life. Nothing anyone us can do about the markets.Jimsad wrote: ↑Sat Dec 04, 2021 8:19 amHave you been through 2008/2009? When the market keeps going down and nobody knows if and when it will recover , you need nerves of steel to hang on .Silverado wrote: ↑Sat Dec 04, 2021 7:33 amThis is the part that I don’t understand. It feels better to buy on the way down to me than the way up ( though both feel pretty darn good). Any stress I feel when things are going down come from uneasy feelings around job security. If money is coming in, it always feels good to invest in VTSAX.
I held on and kept buying but It was nerve wracking .
Also my portfolio is much bigger now and I have more to lose! !
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Gravy train ride over ? Time to reevaluate asset allocation
I should've stopped reading at "I feel". He's driving himself crazy. I remember those days, before I found Jack Bogle.4nursebee wrote: ↑Sat Dec 04, 2021 4:33 pmI stopped reading at "I feel".Jimsad wrote: ↑Fri Dec 03, 2021 3:48 pm Hi
I feel that the the huge returns we have been enjoying last 10 years will be ending .
Is it time to reassess one’s asset allocation?
I was 60/40 and let it drift to 75/25 due to greed and to take advantage of the roaring market .
But now am planning to dial down back to my target 60/40
I feel that especially those who have been investing <10 years and are 100% stocks may have a rude awakening and realize they do not have the stomach for 100% stocks ;this happened to me in 2008 when I went through the crash
Last edited by JnyVuko on Mon Dec 06, 2021 12:21 pm, edited 1 time in total.
Re: Gravy train ride over ? Time to reevaluate asset allocation
+1000 wrote: ↑Mon Dec 06, 2021 12:37 amYes. I can't believe you are unaware that the forum's investment philosophy is 'buy & hold'.TheDDC wrote: ↑Mon Dec 06, 2021 12:36 amOkay. As opposed to… what? Sitting in losers for 5-10 years? Is that the Boglehead way?000 wrote: ↑Mon Dec 06, 2021 12:35 amAh, yes, the good old 'sell the loser and buy the winner every five years' strategy. A time tested classic.TheDDC wrote: ↑Mon Dec 06, 2021 12:31 am Gee, I don’t know. Maybe after five years of not making any money at all in equities I’d get a clue and see what’s actually moving? Investing more in my business? Crypto? You know… actually watching money go to work… As opposed to what? Getting led to slaughter?
-TheDDC
-TheDDC
Re: Gravy train ride over ? Time to reevaluate asset allocation
So why are you staying at 75/25? Not really sure what you're looking for here, at this point.Jimsad wrote: ↑Mon Dec 06, 2021 8:40 am As Mike Tyson famously said “everybody has a plan until they get punched in the mouth”
This happened to me in 2008 crash when I realized I overestimated my true risk tolerance
2008 shook me which was a major crash unlike the minor ones which occurred later ; I hardly felt those
You may overestimate your risk tolerance without going through a true test
Re: Gravy train ride over ? Time to reevaluate asset allocation
mikejuss- I rebalance when may AA exceeds +/- 5% of my chosen AA. i.e., 55/45 turns to 60/40 or 50/50.mikejuss wrote: ↑Mon Dec 06, 2021 12:02 pm
That's very sensible. May I ask: how did you determine the moments when you would rebalance during the Great Recession--so as to minimize throwing good money after bad? I think about how I'll deploy my bond money should the stock market tank, and I'm not very confident about assessing the right timing.
Re: Gravy train ride over ? Time to reevaluate asset allocation
This reminds me of the quote "Sometimes doing nothing is doing something".Jimsad wrote: ↑Fri Dec 03, 2021 3:48 pm Hi
I feel that the the huge returns we have been enjoying last 10 years will be ending .
Is it time to reassess one’s asset allocation?
I was 60/40 and let it drift to 75/25 due to greed and to take advantage of the roaring market .
But now am planning to dial down back to my target 60/40
I feel that especially those who have been investing <10 years and are 100% stocks may have a rude awakening and realize they do not have the stomach for 100% stocks ;this happened to me in 2008 when I went through the crash
BTW, today might be a good day to see if one is sticking to their AA or being greedy. Markets are up again. Shazamm. - satire- Maybe?
Re: Gravy train ride over ? Time to reevaluate asset allocation
I see. But when there's a steep drop in the stock market--such as in 2008--do you ever hold off rebalancing into equities when you're not sure how much further they'll fall? I understand there's no way to perfectly time this stuff, but I wonder what factors are worth considering.JnyVuko wrote: ↑Mon Dec 06, 2021 12:20 pmmikejuss- I rebalance when may AA exceeds +/- 5% of my chosen AA. i.e., 55/45 turns to 60/40 or 50/50.mikejuss wrote: ↑Mon Dec 06, 2021 12:02 pm
That's very sensible. May I ask: how did you determine the moments when you would rebalance during the Great Recession--so as to minimize throwing good money after bad? I think about how I'll deploy my bond money should the stock market tank, and I'm not very confident about assessing the right timing.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Gravy train ride over ? Time to reevaluate asset allocation
Do it mechanically or don't do it at all.mikejuss wrote: ↑Mon Dec 06, 2021 12:26 pmI see. But when there's a steep drop in the stock market--such as in 2008--do you ever hold off rebalancing into equities when you're not sure how much further they'll fall? I understand there's no way to perfectly time this stuff, but I wonder what factors are worth considering.JnyVuko wrote: ↑Mon Dec 06, 2021 12:20 pmmikejuss- I rebalance when may AA exceeds +/- 5% of my chosen AA. i.e., 55/45 turns to 60/40 or 50/50.mikejuss wrote: ↑Mon Dec 06, 2021 12:02 pm
That's very sensible. May I ask: how did you determine the moments when you would rebalance during the Great Recession--so as to minimize throwing good money after bad? I think about how I'll deploy my bond money should the stock market tank, and I'm not very confident about assessing the right timing.
Every 5% or 10% is a good way to do it.. Yes, you will rebalance multiple times on the way down, just like he's probably been rebalancing multiple times on the way up over the past years.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Re: Gravy train ride over ? Time to reevaluate asset allocation
+1Yup. That's the ticket. I do it manually just because I like something to do between my beers and naps!HomerJ wrote: ↑Mon Dec 06, 2021 12:30 pmDo it mechanically or don't do it at all.mikejuss wrote: ↑Mon Dec 06, 2021 12:26 pmI see. But when there's a steep drop in the stock market--such as in 2008--do you ever hold off rebalancing into equities when you're not sure how much further they'll fall? I understand there's no way to perfectly time this stuff, but I wonder what factors are worth considering.JnyVuko wrote: ↑Mon Dec 06, 2021 12:20 pmmikejuss- I rebalance when may AA exceeds +/- 5% of my chosen AA. i.e., 55/45 turns to 60/40 or 50/50.mikejuss wrote: ↑Mon Dec 06, 2021 12:02 pm
That's very sensible. May I ask: how did you determine the moments when you would rebalance during the Great Recession--so as to minimize throwing good money after bad? I think about how I'll deploy my bond money should the stock market tank, and I'm not very confident about assessing the right timing.
Every 5% or 10% is a good way to do it.. Yes, you will rebalance multiple times on the way down, just like he's probably been rebalancing multiple times on the way up over the past years.
Re: Gravy train ride over ? Time to reevaluate asset allocation
Fair enough. The more routinized the rebalance process is the better, in my opinion. I seek to leave my feelings and inclinations at the door.HomerJ wrote: ↑Mon Dec 06, 2021 12:30 pmDo it mechanically or don't do it at all.mikejuss wrote: ↑Mon Dec 06, 2021 12:26 pmI see. But when there's a steep drop in the stock market--such as in 2008--do you ever hold off rebalancing into equities when you're not sure how much further they'll fall? I understand there's no way to perfectly time this stuff, but I wonder what factors are worth considering.JnyVuko wrote: ↑Mon Dec 06, 2021 12:20 pmmikejuss- I rebalance when may AA exceeds +/- 5% of my chosen AA. i.e., 55/45 turns to 60/40 or 50/50.mikejuss wrote: ↑Mon Dec 06, 2021 12:02 pm
That's very sensible. May I ask: how did you determine the moments when you would rebalance during the Great Recession--so as to minimize throwing good money after bad? I think about how I'll deploy my bond money should the stock market tank, and I'm not very confident about assessing the right timing.
Every 5% or 10% is a good way to do it.. Yes, you will rebalance multiple times on the way down, just like he's probably been rebalancing multiple times on the way up over the past years.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Gravy train ride over ? Time to reevaluate asset allocation
In PV cash is tbills. I even called this out.burritoLover wrote: ↑Mon Dec 06, 2021 11:36 am
Why on earth are you comparing it to cash? Cash is not t-bills.
https://www.portfoliovisualizer.com/bac ... ion2_2=100
https://www.portfoliovisualizer.com/faq
US Large Cap
Professor Kenneth French's Research Data1 1972-1976
Vanguard 500 Index Fund (VFINX) 1977+
Treasury Bills / Cash - Risk Free Return Benchmark
3-month Treasury Bills (FRED Data) 1972+
Short term treasuries is:
Short Term Treasuries
FRED Interest Rate Data (2-year maturity) 1977-1991
Vanguard Short Term Treasury Fund (VFISX) 1992+
Why do you think cash has a return in PV?
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Re: Gravy train ride over ? Time to reevaluate asset allocation
Ok, fair enough. Did not know that - was thinking Cash was MM returns.nigel_ht wrote: ↑Mon Dec 06, 2021 1:31 pmIn PV cash is tbills. I even called this out.burritoLover wrote: ↑Mon Dec 06, 2021 11:36 am
Why on earth are you comparing it to cash? Cash is not t-bills.
https://www.portfoliovisualizer.com/bac ... ion2_2=100
https://www.portfoliovisualizer.com/faq
US Large Cap
Professor Kenneth French's Research Data1 1972-1976
Vanguard 500 Index Fund (VFINX) 1977+
Treasury Bills / Cash - Risk Free Return Benchmark
3-month Treasury Bills (FRED Data) 1972+
Short term treasuries is:
Short Term Treasuries
FRED Interest Rate Data (2-year maturity) 1977-1991
Vanguard Short Term Treasury Fund (VFISX) 1992+
Why do you think cash has a return in PV?
I think you are missing the point of the 13-17 year periods underperforming t-bills. It doesn't mean we take it literally as far as portfolio construction - no one has a bond portfolio that consists of only t-bills. What it shows is that the stock market can have long periods of underperformance - many DIY investors don't understand this, especially when you are coming off of an incredible 10 years. If you are paying attention to stock returns in those periods - they are going to suck, plain and simple. Sure, we can show it is not as bad if we are buying stocks at what we know (in hindsight) is low valuations, but that could be proposed for any back-test you look it where the asset in question has poor performance. It doesn't mean that it is "BS".
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Re: Gravy train ride over ? Time to reevaluate asset allocation
Come on, it is on Internet, so it has to be correct!skynjia wrote: ↑Sun Dec 05, 2021 10:16 pmI thought of the same thing that 70:30 does not look very different to 60:40 but then this is when the markets are going down, is the difference just as little when the markets go uptheorist wrote: ↑Sat Dec 04, 2021 4:39 pmSorry, this may be a bit off topic of the thread, but I was looking at this a bit carefully. It is interesting and I like your general advice in this vein. But I am confused — how does the 70/30 come so close to the 60/40 in terms of maximal drawdown? Unless you’re doing some masterful timing in rebalancing, I would expect it to have about a 5% greater drawdown than 60/40. I could understand how details might lead to that being 4% or 6%, but here it is just .35% worse! Whats up with that? (Yes, my interest is because I tend to aim for 70/30 these days, though it may get more conservative in a few years…)arcticpineapplecorp. wrote: ↑Sat Dec 04, 2021 8:14 amthanks. i had help from the bogleheads. and fortunately, i change my mind when the facts change.Beensabu wrote: ↑Sat Dec 04, 2021 12:03 amI like your new table. It's a good one.arcticpineapplecorp. wrote: ↑Fri Dec 03, 2021 8:32 pm then decide what your worst tolerable loss is, assuming a market decline of 50% (using 2008-2009 numbers):
Then stay the course. always be prepared for a 50% decline in stocks and set your AA to your maximum paint point regardless of fear or greed.
Re: Gravy train ride over ? Time to reevaluate asset allocation
In accumulation phase you will be buying stock at low valuations and high. What you don't have is a 13-17 year period where you didn't make any money. Not even in the 1966 period which even though it mostly went sideways had periods where the market was cheaper than average.burritoLover wrote: ↑Mon Dec 06, 2021 1:48 pmOk, fair enough. Did not know that - was thinking Cash was MM returns.nigel_ht wrote: ↑Mon Dec 06, 2021 1:31 pmIn PV cash is tbills. I even called this out.burritoLover wrote: ↑Mon Dec 06, 2021 11:36 am
Why on earth are you comparing it to cash? Cash is not t-bills.
https://www.portfoliovisualizer.com/bac ... ion2_2=100
https://www.portfoliovisualizer.com/faq
US Large Cap
Professor Kenneth French's Research Data1 1972-1976
Vanguard 500 Index Fund (VFINX) 1977+
Treasury Bills / Cash - Risk Free Return Benchmark
3-month Treasury Bills (FRED Data) 1972+
Short term treasuries is:
Short Term Treasuries
FRED Interest Rate Data (2-year maturity) 1977-1991
Vanguard Short Term Treasury Fund (VFISX) 1992+
Why do you think cash has a return in PV?
I think you are missing the point of the 13-17 year periods underperforming t-bills. It doesn't mean we take it literally as far as portfolio construction - no one has a bond portfolio that consists of only t-bills. What it shows is that the stock market can have long periods of underperformance - many DIY investors don't understand this, especially when you are coming off of an incredible 10 years. If you are paying attention to stock returns in those periods - they are going to suck, plain and simple. Sure, we can show it is not as bad if we are buying stocks at what we know (in hindsight) is low valuations, but that could be proposed for any back-test you look it where the asset in question has poor performance. It doesn't mean that it is "BS".
1929 is worst in that regard as pretty much 1925 through 1931 meant you had to wait a while before you got back to even. That's six years not 13-17.
You should re-evaluate every 5 or so years to see if your AA still fits you and whether anything needs changing.
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Re: Gravy train ride over ? Time to reevaluate asset allocation
Because the table is based on a single crash (2008 GFC). If you include other crashes, the table would get more smoothed out.
- burritoLover
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Re: Gravy train ride over ? Time to reevaluate asset allocation
"Making money" meaning making less than a 2-year treasury most of the time. So that bar is low - your DCAing beats t-bills - so what. You aren't exactly swinging from the rafters about your stock portfolio during those periods.nigel_ht wrote: ↑Mon Dec 06, 2021 2:57 pmIn accumulation phase you will be buying stock at low valuations and high. What you don't have is a 13-17 year period where you didn't make any money. Not even in the 1966 period which even though it mostly went sideways had periods where the market was cheaper than average.burritoLover wrote: ↑Mon Dec 06, 2021 1:48 pmOk, fair enough. Did not know that - was thinking Cash was MM returns.nigel_ht wrote: ↑Mon Dec 06, 2021 1:31 pmIn PV cash is tbills. I even called this out.burritoLover wrote: ↑Mon Dec 06, 2021 11:36 am
Why on earth are you comparing it to cash? Cash is not t-bills.
https://www.portfoliovisualizer.com/bac ... ion2_2=100
https://www.portfoliovisualizer.com/faq
US Large Cap
Professor Kenneth French's Research Data1 1972-1976
Vanguard 500 Index Fund (VFINX) 1977+
Treasury Bills / Cash - Risk Free Return Benchmark
3-month Treasury Bills (FRED Data) 1972+
Short term treasuries is:
Short Term Treasuries
FRED Interest Rate Data (2-year maturity) 1977-1991
Vanguard Short Term Treasury Fund (VFISX) 1992+
Why do you think cash has a return in PV?
I think you are missing the point of the 13-17 year periods underperforming t-bills. It doesn't mean we take it literally as far as portfolio construction - no one has a bond portfolio that consists of only t-bills. What it shows is that the stock market can have long periods of underperformance - many DIY investors don't understand this, especially when you are coming off of an incredible 10 years. If you are paying attention to stock returns in those periods - they are going to suck, plain and simple. Sure, we can show it is not as bad if we are buying stocks at what we know (in hindsight) is low valuations, but that could be proposed for any back-test you look it where the asset in question has poor performance. It doesn't mean that it is "BS".
1929 is worst in that regard as pretty much 1925 through 1931 meant you had to wait a while before you got back to even. That's six years not 13-17.
You should re-evaluate every 5 or so years to see if your AA still fits you and whether anything needs changing.
Re: Gravy train ride over ? Time to reevaluate asset allocation
Investing in 2003 was awesome.burritoLover wrote: ↑Mon Dec 06, 2021 3:13 pm"Making money" meaning making less than a 2-year treasury most of the time. So that bar is low - your DCAing beats t-bills - so what. You aren't exactly swinging from the rafters about your stock portfolio during those periods.nigel_ht wrote: ↑Mon Dec 06, 2021 2:57 pmIn accumulation phase you will be buying stock at low valuations and high. What you don't have is a 13-17 year period where you didn't make any money. Not even in the 1966 period which even though it mostly went sideways had periods where the market was cheaper than average.burritoLover wrote: ↑Mon Dec 06, 2021 1:48 pmOk, fair enough. Did not know that - was thinking Cash was MM returns.nigel_ht wrote: ↑Mon Dec 06, 2021 1:31 pmIn PV cash is tbills. I even called this out.burritoLover wrote: ↑Mon Dec 06, 2021 11:36 am
Why on earth are you comparing it to cash? Cash is not t-bills.
https://www.portfoliovisualizer.com/bac ... ion2_2=100
https://www.portfoliovisualizer.com/faq
US Large Cap
Professor Kenneth French's Research Data1 1972-1976
Vanguard 500 Index Fund (VFINX) 1977+
Treasury Bills / Cash - Risk Free Return Benchmark
3-month Treasury Bills (FRED Data) 1972+
Short term treasuries is:
Short Term Treasuries
FRED Interest Rate Data (2-year maturity) 1977-1991
Vanguard Short Term Treasury Fund (VFISX) 1992+
Why do you think cash has a return in PV?
I think you are missing the point of the 13-17 year periods underperforming t-bills. It doesn't mean we take it literally as far as portfolio construction - no one has a bond portfolio that consists of only t-bills. What it shows is that the stock market can have long periods of underperformance - many DIY investors don't understand this, especially when you are coming off of an incredible 10 years. If you are paying attention to stock returns in those periods - they are going to suck, plain and simple. Sure, we can show it is not as bad if we are buying stocks at what we know (in hindsight) is low valuations, but that could be proposed for any back-test you look it where the asset in question has poor performance. It doesn't mean that it is "BS".
1929 is worst in that regard as pretty much 1925 through 1931 meant you had to wait a while before you got back to even. That's six years not 13-17.
You should re-evaluate every 5 or so years to see if your AA still fits you and whether anything needs changing.
Re: Gravy train ride over ? Time to reevaluate asset allocation
Thanks! That makes sense. The more I dwell into finance, the more it appears like an Amazon jungle to me. This is a good thread to re-evaluate your stock and bond ratio. Like OP I have let it drift to how the indices have performed lately.Marseille07 wrote: ↑Mon Dec 06, 2021 3:03 pmBecause the table is based on a single crash (2008 GFC). If you include other crashes, the table would get more smoothed out.
Re: Gravy train ride over ? Time to reevaluate asset allocation
I am not sure if the chart actually changed to this, I do like the background color OTOH I take most and all posts posted on Bogleheads like pearls of wisdomwrongfunds wrote: ↑Mon Dec 06, 2021 2:28 pmCome on, it is on Internet, so it has to be correct!skynjia wrote: ↑Sun Dec 05, 2021 10:16 pmI thought of the same thing that 70:30 does not look very different to 60:40 but then this is when the markets are going down, is the difference just as little when the markets go uptheorist wrote: ↑Sat Dec 04, 2021 4:39 pmSorry, this may be a bit off topic of the thread, but I was looking at this a bit carefully. It is interesting and I like your general advice in this vein. But I am confused — how does the 70/30 come so close to the 60/40 in terms of maximal drawdown? Unless you’re doing some masterful timing in rebalancing, I would expect it to have about a 5% greater drawdown than 60/40. I could understand how details might lead to that being 4% or 6%, but here it is just .35% worse! Whats up with that? (Yes, my interest is because I tend to aim for 70/30 these days, though it may get more conservative in a few years…)arcticpineapplecorp. wrote: ↑Sat Dec 04, 2021 8:14 amthanks. i had help from the bogleheads. and fortunately, i change my mind when the facts change.
Re: Gravy train ride over ? Time to reevaluate asset allocation
Answer: Your plan (moving toward your target allocation of 60/40) is perfectly OK.
Are we done?
Strategic Macro Senior (top 1%, 2019 Bogleheads Contest)
Re: Gravy train ride over ? Time to reevaluate asset allocation
Yup. Enjoy, OP!
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Gravy train ride over ? Time to reevaluate asset allocation
Looks like some of what I feared may be coming true .
Glad I rebalanced to be closer to my more conservative allocation as per my IPS.
Glad I rebalanced to be closer to my more conservative allocation as per my IPS.
Re: Gravy train ride over ? Time to reevaluate asset allocation
I cannot support your first sentence. No one knows what's going to happen in the future. Your second sentence is reasonable.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Gravy train ride over ? Time to reevaluate asset allocation
But the days of gleefully buying dips may be over for a little while
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Re: Gravy train ride over ? Time to reevaluate asset allocation
Do your thing OP -- your IPS and risk evaluations have to match what you are comfortable with at a personal level. Everyone else will do likewise. And it's for that reason that when one posts things like "Market did X, I'm doing Y, cool?" the LAST thing you should be looking for is moral affirmation that you did the right thing. We'll get debates, disagreements, quotes from Bogle, portfolio comparisons, backtesting results, etc. Those can be very helpful and nuanced. But at the end of the day, nothing beats what you are comfortable with, since you alone have to live with the consequences of those choices (just like everyone else!).
Re: Gravy train ride over ? Time to reevaluate asset allocation
I am comfortable now with my allocation and sticking to my IPS .LeeAtlantica2020 wrote: ↑Tue Jan 18, 2022 5:28 pm Do your thing OP -- your IPS and risk evaluations have to match what you are comfortable with at a personal level. Everyone else will do likewise. And it's for that reason that when one posts things like "Market did X, I'm doing Y, cool?" the LAST thing you should be looking for is moral affirmation that you did the right thing. We'll get debates, disagreements, quotes from Bogle, portfolio comparisons, backtesting results, etc. Those can be very helpful and nuanced. But at the end of the day, nothing beats what you are comfortable with, since you alone have to live with the consequences of those choices (just like everyone else!).
I stopped buying extra on days like this though which is the difference from what I did last year
Re: Gravy train ride over ? Time to reevaluate asset allocation
I don’t even bother putting extra money into the market (beyond my auto-investments) unless the market is down at least 10%. 5% dips are nothing and happen a lot.Jimsad wrote: ↑Tue Jan 18, 2022 5:35 pmI am comfortable now with my allocation and sticking to my IPS .LeeAtlantica2020 wrote: ↑Tue Jan 18, 2022 5:28 pm Do your thing OP -- your IPS and risk evaluations have to match what you are comfortable with at a personal level. Everyone else will do likewise. And it's for that reason that when one posts things like "Market did X, I'm doing Y, cool?" the LAST thing you should be looking for is moral affirmation that you did the right thing. We'll get debates, disagreements, quotes from Bogle, portfolio comparisons, backtesting results, etc. Those can be very helpful and nuanced. But at the end of the day, nothing beats what you are comfortable with, since you alone have to live with the consequences of those choices (just like everyone else!).
I stopped buying extra on days like this though which is the difference from what I did last year
Re: Gravy train ride over ? Time to reevaluate asset allocation
Hard to know; I always assume that a 10-20% haircut on our assets could occur at any time. If one can't imagine that, probably taking on too much risk.
Stay hydrated; don't sweat the small stuff
Re: Gravy train ride over ? Time to reevaluate asset allocation
Is it time for a bunch of posts about "why not 100% bonds?" "why would you use stocks?" What are stocks good for? "why buy stocks if they only go down?
Best course of action still remains:
Choose an allocation based on willingness, need, ability to take risk, and rebalance regularly.
What return number will help you reach your goals in your desired time frame?
What magnitude of drawdown would you like to avoid?
What constraints do you have on on required expenses over the next X years?
Best course of action still remains:
Choose an allocation based on willingness, need, ability to take risk, and rebalance regularly.
What return number will help you reach your goals in your desired time frame?
What magnitude of drawdown would you like to avoid?
What constraints do you have on on required expenses over the next X years?
Crom laughs at your Four Winds
Re: Gravy train ride over ? Time to reevaluate asset allocation
Delete
Last edited by Jimsad on Thu Jan 20, 2022 4:35 pm, edited 1 time in total.
Re: Gravy train ride over ? Time to reevaluate asset allocation
Still falling! My fears are coming true!
Re: Gravy train ride over ? Time to reevaluate asset allocation
They did go up after I initially posted . Last couple of weeks is a different story . But I had already gone back to my comfort level allocation, so am not bothered too much now