Home > I'm not a market timer, but ....

I'm not a market timer, but ....

May 11th, 2021 at 09:23 pm

I am by no means a market timer. I believe in investing regularly over time and, for the most part, holding things long term.

That said, over the past 3-ish years, I have gradually reduced the equity allocation of our portfolio and it now stands at about 66% (it was 80% 3 years ago). It's part of the adjustments I've been making as we prep for retirement. My plan had been to wait for the impending inheritance I'll be getting and use that money to adjust it down further to 60%. However, I don't know when that money will come and I've gotten increasingly nervous about the state of the market, so I've decided to start tweaking things a bit now.

The first thing I did was to turn off reinvestment of dividends and capital gains for a few of our stock mutual funds. That won't make a huge change and it won't move the needle quickly, but it will gradually lessen the stock exposure.

The other more immediate thing I did was to put in a sell order last night for one growth fund in my Roth. The aggressive growth stuff has shot up the most and will likely drop the most when things go sour. I'd much rather sell high and buy low than the other way around.  That fund held about 2.5% of our total so it takes us to about  63.5% equities.

I don't want to make any drastic moves so I may stop there until I get the inheritance, and then tweak it the rest of the way to the 60% mark. Of course, if today's market performance continues, the market itself might get us down the rest of the way.

6 Responses to “I'm not a market timer, but ....”

  1. Lots of ideas Says:

    I think the opposite. Today was a one time blip in response to the Colonial Pipeline hack (IMO)

    I think the Jobs Plan and Family Plan are going to pass and drive the economy in a positive direction. I have money that I kept on the side forever (literally) and based on my and the country’s circumstances, I am going to move half of it into the market.

    Still leaves me with a good cushion, and my income stream more than covers my current and projected this is a risk I can take...

  2. disneysteve Says:

    Lots of ideas, just to clarify, what I'm doing is not in response to yesterday's market performance. I actually did it before that. And by no means am I selling off all of our stock and stashing cash under the mattress. It's all just part of an ongoing (years) progression to being a bit more conservative in our portfolio. My target AA is 60% stock and we were sitting at 66%, partly because of how well things have done recently, so this is largely just rebalancing to get us down to that 60% mark. We're staying in the market for the long run. I don't expect to go below 60% anytime soon.

  3. Dido Says:

    With your target retirement in two years (per your sidebar), reallocating some is fine. The riskiest years are the five years before and the five years after retirement, so make sure you have a cash bucket (or fixed income such as a bond ladder) to cover you for 2-5 years depending on your risk tolerance. The riskiest assets *should* be in your Roth--ideally that is the last money you would draw on, so I wouldn't worry about risk assets in that account as long as they are good investments because they will have time to recover. There is probably going to be a short-term dip but, while business spending may be more tepid given the uncertainty about upcoming tax and regulatory changes, there is still pent-up demand and cash sitting in people's bank accounts, so recovery from a downturn is also likely, driven by consumer spending.

  4. LivingAlmostLarge Says:

    It sounds like a good plan.

  5. terri77 Says:

    Sounds like a good plan. I tend to have a more aggressive investing strategy because I will have another income source with my pension, but I would be less aggressive if I didn’t expect a pension.

  6. rob62521 Says:

    Sounds like a smart plan. They say the closer you are to retirement, the less you should have in stocks, especially if you have a bunch like you did at 80%. I think with inflation and fewer people wanting to go back to work, I think the market is going to have some pretty dismal days ahead.

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