Covid/DC/China - Buy Treasuries?
Covid/DC/China - Buy Treasuries?
(The question is about asset allocation. Please no comments about news events.)
I use a plus/minus 5% equity/fixed variation as my rebalancing band. Does changing to a smaller band make sense in todays market?
Thoughts.
I use a plus/minus 5% equity/fixed variation as my rebalancing band. Does changing to a smaller band make sense in todays market?
Thoughts.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
Re: Covid/DC/China - Buy Treasuries?
What does Covid/DC/China have to do with your question?
What do you think is different/special about "today's market" that would affect rebalancing bands? I honestly don't see any connection. I believe there are studies that show the frequency and/or band sizes used for rebalancing make very little difference.
Once in a while you get shown the light, in the strangest of places if you look at it right.
Re: Covid/DC/China - Buy Treasuries?
There's currently an unusual amount of "weird" news on the tube. Higher risk maybe? Upping the Treasury allocation would reduce risk.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
Re: Covid/DC/China - Buy Treasuries?
But is there actually an "unusual" amount? Or is that just recency bias?
Remember with the media, "if it bleeds it leads" has been their motto for a long time. Sensationalism sells, but over time we forget the sensational nature of past reporting.
Last edited by David Jay on Wed Jul 28, 2021 1:18 pm, edited 1 time in total.
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Re: Covid/DC/China - Buy Treasuries?
There is always weird news.
Changing allocation (more treasuries) is quite different than changing the size of reallocation bands. What if equity markets drop a little bit on this supposed weird news, your proposed smaller rebalancing band would have you selling bonds and buying equities quicker. Seems opposite action relative to your concerns.
Once in a while you get shown the light, in the strangest of places if you look at it right.
Re: Covid/DC/China - Buy Treasuries?
Don't let Fox News influence your investing/market timing. You do have an IPS, right? What does it say??
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Re: Covid/DC/China - Buy Treasuries?
Hey, you said no comments about news events in your OP!
Re: Covid/DC/China - Buy Treasuries?
I wasn't clear. I am not changing allocations. I'm just changing my bands from plus/minus 5% to plus/minus 4%.marcopolo wrote: ↑Wed Jul 28, 2021 1:16 pm Changing allocation (more treasuries) is quite different than changing the size of reallocation bands. What if equity markets drop a little bit on this supposed weird news, your proposed smaller rebalancing band would have you selling bonds and buying equities quicker. Seems opposite action relative to your concerns.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
Re: Covid/DC/China - Buy Treasuries?
I didn't mean to comment about the news events themselves just that there are a lot of them. I don't want to discuss the news itself. It would just get the thread locked.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
Re: Covid/DC/China - Buy Treasuries?
Probably won't matter much. If anything, you should tune out the noise and just re-balance once per year. You'll probably end up both richer and happier .Doc wrote: ↑Wed Jul 28, 2021 2:17 pmI wasn't clear. I am not changing allocations. I'm just changing my bands from plus/minus 5% to plus/minus 4%.marcopolo wrote: ↑Wed Jul 28, 2021 1:16 pm Changing allocation (more treasuries) is quite different than changing the size of reallocation bands. What if equity markets drop a little bit on this supposed weird news, your proposed smaller rebalancing band would have you selling bonds and buying equities quicker. Seems opposite action relative to your concerns.
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Re: Covid/DC/China - Buy Treasuries?
It is hard to imagine that level of change would have any measurable impact at all. It is also not clear that would have the desired effect in your thread title of buying more treasuries. If there is a dip in equities, it have the opposite effect.Doc wrote: ↑Wed Jul 28, 2021 2:17 pmI wasn't clear. I am not changing allocations. I'm just changing my bands from plus/minus 5% to plus/minus 4%.marcopolo wrote: ↑Wed Jul 28, 2021 1:16 pm Changing allocation (more treasuries) is quite different than changing the size of reallocation bands. What if equity markets drop a little bit on this supposed weird news, your proposed smaller rebalancing band would have you selling bonds and buying equities quicker. Seems opposite action relative to your concerns.
Once in a while you get shown the light, in the strangest of places if you look at it right.
Re: Covid/DC/China - Buy Treasuries?
Doc, you're a long time valued Boglehead... Come on, man!
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Re: Covid/DC/China - Buy Treasuries?
The point of fixed rebalancing bands is so that you don't market time your rebalancing. Now you are trying to tweak the bands based on your interpretation of what the markets might do which puts you in the market timing category.
Re: Covid/DC/China - Buy Treasuries?
Unless you have quite a lot of money parked inside that 1%, it doesn't seem like this band change will amount to much of anything at all.Doc wrote: ↑Wed Jul 28, 2021 2:17 pmI wasn't clear. I am not changing allocations. I'm just changing my bands from plus/minus 5% to plus/minus 4%.marcopolo wrote: ↑Wed Jul 28, 2021 1:16 pm Changing allocation (more treasuries) is quite different than changing the size of reallocation bands. What if equity markets drop a little bit on this supposed weird news, your proposed smaller rebalancing band would have you selling bonds and buying equities quicker. Seems opposite action relative to your concerns.
How more often do you expect to be rebalancing now that you did before?
Hopefully, this change isn't prompted by some recent "weird news" you happened to see?
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Re: Covid/DC/China - Buy Treasuries?
I don't rebalance on a time schedule. Never did. I rebalance using bands. I am also not changing the target AA.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
Re: Covid/DC/China - Buy Treasuries?
Difficult to understand why someone worried about "DC" would buy Treasuries.
Think about it.....
In fact, the same inconsistency would appear to extend to the other "weird" news items listed in the title.
Think about it.....
In fact, the same inconsistency would appear to extend to the other "weird" news items listed in the title.
Re: Covid/DC/China - Buy Treasuries?
We're getting way far away from my intent which I purposely didn't state.
What I'm trying to do is get some more Treasuries into our ROTHs and fewer Treasuries in taxable accounts so I can rebalance into equities if needed without (future) tax consequences. The thought is that it will get reversed when the "crisis" ends just like it did in early 2020. Right now those same Treasuries are in taxable.
I'm not changing my asset allocation at all now. Just moving some parts of it from taxable to tax advantaged for tax reasons. And I have no intent of changing my overall AA now. Maybe I will in my five year "age" review.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
Re: Covid/DC/China - Buy Treasuries?
What does that have to do with changing your rebalancing bands?Doc wrote: ↑Wed Jul 28, 2021 3:09 pmWe're getting way far away from my intent which I purposely didn't state.
What I'm trying to do is get some more Treasuries into our ROTHs and fewer Treasuries in taxable accounts so I can rebalance into equities if needed without (future) tax consequences. The thought is that it will get reversed when the "crisis" ends just like it did in early 2020. Right now those same Treasuries are in taxable.
I'm not changing my asset allocation at all now. Just moving some parts of it from taxable to tax advantaged for tax reasons. And I have no intent of changing my overall AA now. Maybe I will in my five year "age" review.
Why not just ask the question for which you are seeking advice? What is the benefit of three levels of obfuscation?
If you want to exchange treasuries into Roth account, just go ahead and do that. Why would you need to change anything about your rebalancing bands?
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: Covid/DC/China - Buy Treasuries?
I was thinking same. Suggest OP edit the post to get straight to the point.marcopolo wrote: ↑Thu Jul 29, 2021 3:33 amWhat does that have to do with changing your rebalancing bands?Doc wrote: ↑Wed Jul 28, 2021 3:09 pmWe're getting way far away from my intent which I purposely didn't state.
What I'm trying to do is get some more Treasuries into our ROTHs and fewer Treasuries in taxable accounts so I can rebalance into equities if needed without (future) tax consequences. The thought is that it will get reversed when the "crisis" ends just like it did in early 2020. Right now those same Treasuries are in taxable.
I'm not changing my asset allocation at all now. Just moving some parts of it from taxable to tax advantaged for tax reasons. And I have no intent of changing my overall AA now. Maybe I will in my five year "age" review.
Why not just ask the question for which you are seeking advice? What is the benefit of three levels of obfuscation?
If you want to exchange treasuries into Roth account, just go ahead and do that. Why would you need to change anything about your rebalancing bands?
Re: Covid/DC/China - Buy Treasuries?
I sometimes feel a strong desire to do "something". I do not see how changing from a 5% band to 4% can hurt anything. I don't think it is important one way or the other.
Re: Covid/DC/China - Buy Treasuries?
Okay. I don't see how this has anything to do with "bands".Doc wrote: ↑Wed Jul 28, 2021 3:09 pmWe're getting way far away from my intent which I purposely didn't state.
What I'm trying to do is get some more Treasuries into our ROTHs and fewer Treasuries in taxable accounts so I can rebalance into equities if needed without (future) tax consequences. The thought is that it will get reversed when the "crisis" ends just like it did in early 2020. Right now those same Treasuries are in taxable.
I'm not changing my asset allocation at all now. Just moving some parts of it from taxable to tax advantaged for tax reasons. And I have no intent of changing my overall AA now. Maybe I will in my five year "age" review.
This isn't just my wallet. It's an organizer, a memory and an old friend.
Re: Covid/DC/China - Buy Treasuries?
There is no money to buy the Treasuries unless I sell something else. According to my current rebalancing bands there is nothing to exchange. Therefore I have to change my bands to have something to sell.
Catch 22.
(Gee whiz I'm showing my age.)
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
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Re: Covid/DC/China - Buy Treasuries?
I use 4/20 bands. One study discussed here showed 20% to be optimal.