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Asset allocation considering this crazy bull market???

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  • #31
    Early 30s. 100% equities. My "cash" is what I have for current living expenses so I don't count it. I don't count my house because I still hold a mortgage. I am okay with a massive "correction" because I feel I could recover; I (hopefully) have many more working years & I make decent income; so I'll build back up.
    $1 saved = >$1 earned. ✓

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    • #32
      Late 30's. Currently 70/30. Was more like 90/10 up until a few months ago... looked at the numbers, decided we were ahead of schedule and that the risk/reward wasn't that necessary.

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      • #33
        Later 40s. Total portfolio has a heavy pension portion of currently 30% of income source post retirement and can increase to 50% by retirement depending on 10-15 years.

        If we factor in income RE, that will bring in ~30% too.

        This all matters as our equities retirement portion remains fairly aggressive for late 40s at 80% index and most in sp500.

        It would certainly be a lot more bonds heavy and total market in the stocks if we didn't have the pensions and RE throwing off steady income.

        It is the recent stock market run up that made us make a new FI category of burgerFI after fatFI.

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        • #34
          Originally posted by EntrepreneurMD View Post
          Yes, purchased too much house.
          Currently transitioning cash equivalents begrudgingly to RE debt paydown, more business offerings and further potential real estate opportunity, then to further market investments early in the next bull run.
          If you wouldn’t mind sharing with your friends here when the next bull run is just getting off the ground, that would be much appreciated

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          • #35
            Originally posted by Cubicle View Post
            Early 30s. 100% equities. My "cash" is what I have for current living expenses so I don't count it. I don't count my house because I still hold a mortgage. I am okay with a massive "correction" because I feel I could recover; I (hopefully) have many more working years & I make decent income; so I'll build back up.
            Is there a question there? I use the same asset allocation in "crazy bull markets" as "crazy bear markets." That relieves me of the burden of trying to figure out which one we're in and when it will swap one for the other.

            I'm 60% stocks, 20% real estate, and 20% bonds.
            Helping those who wear the white coat get a fair shake on Wall Street since 2011

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            • #36
              Originally posted by TheDangerZone View Post

              If you wouldn’t mind sharing with your friends here when the next bull run is just getting off the ground, that would be much appreciated
              The only way I know how to look for this effectively is to be a good market historian and study past bull/bear cycles in depth. The 2007-roughly 2012 time frame would be a good start to understanding leading an lagging indicators. Since every cycle is different to a degree, the more you understand about each the less likely you will be blindsided.

              For this cycle we've seen the classic treasury inversion and post-inversion melt up. I think particular close attention is warranted around election time and the few months thereafter to see if this is indeed a late phase or if the anticipated worldwide recovery materialize as expected. Given this bull cycle has been relatively weak, that may lend to a prolonged late phase if all continues to go well.

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              • #37
                Originally posted by Tim View Post
                Random thought:
                How do you determine when to jump in? You will NEVER (of course by luck) pick the bottom. Are you waiting for the market to turn? How long? What gives you confidence that its not a dead cat bounce, another 10-15% down? That "dry powder" becomes so much more emotionally valuable, it's extremely hard to pull the trigger in major moves of 30%+/-.
                How do you determine when to jump out? What is the difference between 35% and 50% drop? If your plan is 50%, you may never get back in. Yes, some people are still waiting for that 50% sure signal. It is extremely difficult to accomplish. Just saying, hindsight is great. I personally feel one stockpiling cash is "hoping to be right", not planning a reliable investment strategy.
                I typically use this formula:

                10% drop: Invest 25% of cash reserves
                20% drop: 50% ( could be incremental)
                30% drop: 75%
                40% drop: All in

                BTW, I keep about 20% of equity account in cash purely for the above purpose.


                Ravi

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                • #38
                  Originally posted by Cubicle View Post
                  Early 30s. 100% equities. My "cash" is what I have for current living expenses so I don't count it. I don't count my house because I still hold a mortgage. I am okay with a massive "correction" because I feel I could recover; I (hopefully) have many more working years & I make decent income; so I'll build back up.
                  Ditto. 100% stocks, I have some cash saved up for an expected purchase, but no emergency savings.

                  Mid 30's, high income, low expenses, so I can weather a crash.

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                  • #39
                    Originally posted by The White Coat Investor View Post
                    Is there a question there? I use the same asset allocation in "crazy bull markets" as "crazy bear markets." That relieves me of the burden of trying to figure out which one we're in and when it will swap one for the other.
                    Not particularly. My current (100% equities) allocation is what I've always had since I've gotten serious about investing. During the next crash/correction I'll still be all equities.
                    ____________________________________

                    Originally posted by xraygoggles View Post
                    Mid 30's, high income, low expenses, so I can weather a crash.
                    You said this much better than I did.
                    $1 saved = >$1 earned. ✓

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                    • #40
                      Late 30s.
                      of retirement and investment: 100% equities. About 25% international.

                      Real estate/medical practice is about 75% compared to stocks

                      so of net worth 60% stock and 40% real estate

                      low income physician but ultra low expenses. No plan to retire soon

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                      • #41
                        Originally posted by TheDangerZone View Post

                        If you wouldn’t mind sharing with your friends here when the next bull run is just getting off the ground, that would be much appreciated
                        We've been through this many a times. We've gotten answers about when the market is going to go down anywhere from the next day to years from now. And if you look at his response to yours, I'll sum it up, "I don't know" but he never comes out and says it that directly.

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                        • #42
                          Originally posted by CordMcNally View Post

                          We've been through this many a times. We've gotten answers about when the market is going to go down anywhere from the next day to years from now. And if you look at his response to yours, I'll sum it up, "I don't know" but he never comes out and says it that directly.
                          My request was tongue in cheek but perhaps I am not well established enough around here so that was not obvious.

                          EMD, I do appreciate the reply and if you really believe all of that, more power to you.

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                          • #43
                            Originally posted by White.Beard.Doc View Post
                            Happy Sunday! I did my 2020 asset allocation check up today. This is what I found:

                            20% short term bonds/cash equivalents
                            17% medium and long term bonds
                            37% total bond/cash allocation

                            44% US stocks
                            19% International stocks
                            63% total stocks

                            I feel like I am ok with my current asset allocation. In the past, I did not calculate cash or cash equivalents in my asset allocation, but this year I included those funds in my calculation because clearly the cash equivalents are part of my allocation. I am a couple of percentage points ahead of my written IPS in terms of lower risk, more stable bond and cash assets, but not enough for me to want to rebalance at the moment. My conclusion after this exercise is that I am going to sit tight. The frothiness of the stock market continues to make me feel like the big bear is coming soon. So that leads to my desire to maintain that 37% in low risk assets, and not get too greedy with my asset allocation. Of course, I am missing out on some stock market gains, but I am also holding a decent defensive position should the market tumble.

                            My life situation: although I could stop working for money as of today, at this moment my plan is to work for another 7 years. The plan could change tomorrow if I get hit by a bus, or perhaps I may end up wanting to continue working longer than 7 years. I have been around long enough to know that my perspectives on work and life evolve with time. The longevity calculator based on all of my health parameters says I have more than 3 decades yet to go, but only time will tell.

                            Is anyone else out there considering a change in their asset allocation? Or are you happy with where you are and staying the course?
                            YES. IMO you are right!

                            Everyone says: "you cannot time the market" and they are also right, but these two things are not totally mutually exclusive.

                            I think you would have to be dumb as a sack of rocks to not think as you do.

                            The things that make me think you are behaving rationally are:

                            1. You won the game (have enough to retire now) so why continue to take unnecessary risks?

                            2. You have 7 (or less if you get sick of the bs) years until you retire (why put your freedom at risk?)

                            3. The market is "frothy" as you say. No one can say when or how bad things will get? A bear is more than likely coming, and you would be a fool to ignore this.

                            I am personally now down to 65-70% stocks and I am slowly decreasing this. I am not reinvesting dividends and with all my income, I am paying off my mortgage and buying bonds rather than putting more in stocks.

                            The only place I am buying stocks is in my backdoor Roth.

                            Everything else is: 1. mortgage, 2. bonds 3. cash

                            I am trying to stay agile / nimble. If the market drops greater than 20% I will start converting bonds (in my IRAs) to stocks to take advantage of the sale but until then I am not doing that.

                            If the market keeps going up, great, I will take it. If it tanks next week to greater than 20% great, I will buy stocks on sale as I did at the end of 2018.

                            I am in a similar situation to you. I probably could stop working today, but will plan to go part time and try to stick it out for a few more years while I pay off the mortgage and decrease my stock allocation without selling in taxable (capital gains taxes, + other taxes are keeping me from selling stocks in my taxable now).


                            IMO, I think you are 100% correct!

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                            • #44
                              I’m not making any changes based on the current market, but I am slowly increasing my bond portfolio as I approach retirement. Currently about 82% stocks/18%bonds&cash. No debt or mortgage; 529 likely fully funded. I’m 50, and anticipate (& enjoy) working another 8-10 years until my 4th grader is in college. My long term plan is not for a specific stock/bond allocation but plan on using the “bucket” system: 2-3 years cash/bonds always on hand (maybe increase this for the few years immediately before & after retirement; money I anticipate using 4-9 years in future in something with less volatility- maybe Vanguard Wellesley or Wellington; everything else (won’t need for 10 years or more) will be in stocks.

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                              • #45
                                DMC
                                You still have an AA plan. You just used Mapquest rather than google maps. Same destination and same roads, Stocks and bonds and cash.

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