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I've been avoiding thinking about it for a while but I can't avoid it any longer.
It's time to decide about whether to participate in a late stage equity meltup (if it occurs) or whether I can mentally sit it out. Particularly, I have about 5% of assets accumulating or about 500k in cash (short term MM funds - debt) and I am wondering whether to put that into an equity allocation or not.
My asset situation is:
House : 3m, no debt
Other property assets : 7.5m-10m, 500k debt
Household income : 900k/year
retirement accounts : 1m : Short term MM/cash allocation
My retirement account is in cash since 2014 when I had this crazy, hare brained idea that the world was coming to an end with the Chinese economy hiccup. Anyway, I did find workarounds to this by buying property in my non retirement holdings with debt to offset the cash balance in my retirement account. But once that mistake was made, I found it very hard to reverse the cash allocation in the retirement account.
With things getting to a later stage in the cycle, I sold all the non-core property holdings recently and paid off debt.
Now I am wondering whether I can sit and watch an equity meltup or whether I should bite the bullet and just allocate it into the 500k-1m in a 30-70 type allocation.
The January 2018 Grantham article keeps coming into my mind (to paraphrase): 'Prudent preparation for a downturn will take a psychological toll. Know how much pain you can stand because the average person is going to lose patience. “The market, instead of going down, not only goes up, but goes up at a faster rate than normal,” . “You’re going to feel dreadful.”'
https://www.gmo.com/docs/default-source/research-and-commentary/strategies/asset-allocation/viewpoints---bracing-yourself-for-a-possible-near-term-melt-up.pdf
Unfortunately, I think may have made an error and gone to cash to wait for a downturn in this portion of my portfolio and rationalized it as risk control.
Any thoughts ?
It's time to decide about whether to participate in a late stage equity meltup (if it occurs) or whether I can mentally sit it out. Particularly, I have about 5% of assets accumulating or about 500k in cash (short term MM funds - debt) and I am wondering whether to put that into an equity allocation or not.
My asset situation is:
House : 3m, no debt
Other property assets : 7.5m-10m, 500k debt
Household income : 900k/year
retirement accounts : 1m : Short term MM/cash allocation
My retirement account is in cash since 2014 when I had this crazy, hare brained idea that the world was coming to an end with the Chinese economy hiccup. Anyway, I did find workarounds to this by buying property in my non retirement holdings with debt to offset the cash balance in my retirement account. But once that mistake was made, I found it very hard to reverse the cash allocation in the retirement account.
With things getting to a later stage in the cycle, I sold all the non-core property holdings recently and paid off debt.
Now I am wondering whether I can sit and watch an equity meltup or whether I should bite the bullet and just allocate it into the 500k-1m in a 30-70 type allocation.
The January 2018 Grantham article keeps coming into my mind (to paraphrase): 'Prudent preparation for a downturn will take a psychological toll. Know how much pain you can stand because the average person is going to lose patience. “The market, instead of going down, not only goes up, but goes up at a faster rate than normal,” . “You’re going to feel dreadful.”'
https://www.gmo.com/docs/default-source/research-and-commentary/strategies/asset-allocation/viewpoints---bracing-yourself-for-a-possible-near-term-melt-up.pdf
Unfortunately, I think may have made an error and gone to cash to wait for a downturn in this portion of my portfolio and rationalized it as risk control.
Any thoughts ?
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