Thinking of doing Reallocation today

**Scanner** · 09-17-2008, 09:35 AM

I think bonds are overbought - the time to own bonds was 2 years ago. . .I'd go for equities right now.

In fact, if you own ETF's, you can track them on the way down with Buy Stop orders so you get a reasonable price for them so if they shoot up, you get in on the action.

I wanted to clarify my actions. And I'll admit what I do goes against the pundit philosophy of "buy it and forget about it."

I have been wanting to get into oil for some time now but I knew at $120 barrel, oil was overpriced, even being a Peak Oilist somewhat. . .I knew a lot of this was temporary. But as it went down I knew some of that was emotional also. . .so I tracked USO down.

I would place a Buy Stop order in at 80 and then at 78 and then at 76, it got activated today when it jumped back up.

So, I'm in on oil at around $94/barrel. . .a little higher than I would want (would have liked it around $80 but then again, I wouldn't mind an Endless Pool for 10K either).

I like this strategy because it lessens to me the biggest downside risk of trading (vs. buying and holding) - missing "upswings". Upswings are very brief, esp. w/ stocks. They say on bull years, all the bull runs happened in an average of 45 days, that hte other days, it traded flat or for less.

Anyway, you can do this for blue chips or whatever, but I must admit, it would work better for ETF's vs. mutual funds.

My silver is recovering today today. I don't know, if you want a good buy right now - snatch up some silver - down like 45% in the last 2 months, down even more than gold.

**tripods68** · 09-17-2008, 10:05 AM

Scanner,

Unfortunately, my 457 account do not have the many options that I would like. I'm simply parking into bonds right now to minimize some losses until the market improves.

We are allowed to transfer half of my 457 balance into Charles Scwab account and be able to trade in and out. Except, i already have an existing account via Ameritrade which is a lot cheaper. I also hesitate because I know myself and if have complete access to half of my retirement account I may trade with such irrational exuberant. That I can take.

**sweeps** · 09-17-2008, 10:12 AM

The horse has already left the barn. Might as well keep the door open now, in case it comes back.

**Broken Arrow** · 09-17-2008, 10:21 AM

My international is down 25%, and my stake is 30%. No. I will no change it. But then, this is for retirement, and I think I have plenty of time for it to adjust.

I also have a bond fund, which I'm happy with where that is as well, at 10%.

My 401k is passive, and I intend to keep it that way.

**tripods68** · 09-17-2008, 10:27 AM

Both bonds index and short term fund are both doing well. Up 8% and 5% respectively. Still not bad...why take some more further losses when you have other funds that are doing well.

**jIM_Ohio** · 09-17-2008, 10:43 AM

Sound like panic selling you justified to yourself as a rebalance. Because if you rebalanced then you would have sold what was high (bonds) and bought what was low (stocks).

**Broken Arrow** · 09-17-2008, 10:59 AM

Aye, I fully agree with Jim. I just didn't have the heart to come out and say it....

**simpletron** · 09-17-2008, 11:01 AM

you are doing the exact opposite of what you should be doing. you are selling international low and buying bonds high. you should be selling the bonds to capturing the gain so far and buying the international while it is low.

if you liked buying your international fund when it was $100(made up number) at the end of second quarter, why don't you like buying now when it is $75.5? it is less now, so you should like it even more. so what has changed?

there is a saying(by warren buffet, i think): be greedy when everyone else is fearful, and be fearful when everyone else is greedy.

Originally posted by tripods68

why take some more further losses when you have other funds that are doing well.

generally speakly, bonds and stocks move in oppposite directions. so when stocks are falling, bonds are raising and vice versa. so when your international fund turns around your bonds are more likely to be falling and will miss out on the gain because no one can time the bottom or the top.

EDIT: today's winners are tommorow's losers and today's losers are tommorow's winners.

Originally posted by Scanner

I like this strategy because it lessens to me the biggest downside risk of trading (vs. buying and holding) - missing "upswings". Upswings are very brief, esp. w/ stocks. They say on bull years, all the bull runs happened in an average of 45 days, that hte other days, it traded flat or for less.

here is an interesting statistics: from jan 1, 1998 to jan 1, 2008, the S&P 500 return 6%/year with dividends. if you managed to skip the 30 best days over that 10 year period, the return goes to -6%/year. if you managed to skip the 30 worst days over that 10 year period, the return goes to 18%/year. that's almost 1% of the days.

**MonkeyMama** · 09-17-2008, 11:03 AM

Wait, we are s'posed to buy high and sell low?

I sold off a lot of my int'l when it was high(er). Sticking with 30% allocation for my retirement funds. Which means no panic here, I have a few decades before I need it. I am sure there will be many more ups and downs in the interim.

(& yes it would have sucked if I hadn't of re-allocated appropriately in past years because I would be VERY heavy in int'l then).

Anyway, this would signal that it is a good time to buy int'l, but I am letting the dust settle first.

You could argue Int'l is still quite high, as a whole. But a proper re-allocation strategy, and dollar-cost averaging as well, keeps you from trying to guess where the peak or bottom is.

**jIM_Ohio** · 09-17-2008, 11:18 AM

My wife's IRA deposit is in 11 days and I hope the market stays this low until then. We are buying 100% equities in her Roth. $375 of the $1025 deposit will be financial stocks and another $375 will be tech stocks.

**tripods68** · 09-17-2008, 11:37 AM

Originally posted by jIM_Ohio View Post

Sound like panic selling you justified to yourself as a rebalance. Because if you rebalanced then you would have sold what was high (bonds) and bought what was low (stocks).

It's justified based on the market conditions. There are two type of people in the market today. Those you rides it and take the pain, or those reallocate towards a safer bet. I choose to allocate cuz that how i operate under distressed market. Which one are you?

**tripods68** · 09-17-2008, 11:51 AM

Simpleton,

Just to clarify I didn't sell my international fund at complete loss even though the quarter has been devasting. I first bought this fund 6 years ago at $10 per share. It now around $14- 15K per share. At the end of the 2nd quarter is was around $20s. It capitulated but I was still positive.

**scfr** · 09-17-2008, 12:06 PM

I have not and will not change my portfolio. My asset allocation is set in a way that the losses I have incurred are tolerable for me ... And my tolerance is very low.

Even tho I was not invested in the stock market in '87 crash (was fresh out of college then), I drew on my memories of how I felt when the market "crashed" to help me determine my risk tolerance. The current market is a great learning tool for any young people just starting out investing ... Take note of how you feel, set your asset allocation accordingly, and when the next bull market comes along, change nothing. When the next sector bubble comes along, change nothing. When your best friend uses his/her stock option in a hot company stock as collateral to get a new Ferrari, change nothing.

**sweeps** · 09-17-2008, 12:27 PM

Originally posted by Scanner View Post

My silver is recovering today today. I don't know, if you want a good buy right now - snatch up some silver - down like 45% in the last 2 months, down even more than gold.

Shoulda bought some gold too. Gold Stages Biggest Gain Ever in Bid For Safety

Thinking of doing Reallocation today