The portfolios that are best in the accumulation phase, are not the best for the post-retirement/decumulation phase.

You're making that transition.

Just make sure you don't leave in those bond funds for too long and don't get around to making a plan.

Timing the market is still not a great idea IMO, but you might not really be doing that. People who time the market also intend to get back in, and you may not.

If you're reallocating to the mix you plan to have for retirement, then honestly there's probably not much harm in doing it 18 months early. But if you see yourself getting back into an higher equity mix in 3-5 years after a rebound, then you really shouldn't have gotten out in the first place, because you will suck at deciding when it's safe to get back in (and there might not be a downturn anyways).

Also, I'm no expert, but I think looking at historic returns from the last century and planning based on those old strategies for equity/bond mixes in retirement might be a bad idea. When companies stopped giving pensions and everyone got into a 401k-based system, the rules changed. Markets will continue to go up more often simply because everyone with a decent job is paying into Index funds every month regardless of what's happening.

We're all handcuffed to this "free market" and the deeper we get dependent on it, the more divorced indexes will be from major economic events. See how quickly the markets rebounded after Covid despite massive inflation, a yield curve inversion, etc.

You don't have to be all the way out or all the way in the market.

If you want to take 5%-15% out of stocks to invest elsewhere that's fine too. You don't have to pull out all of your money to hedge a bit.

If you already had the mindset of DCA when getting back in, why are you not consodering doing this on the way out as well?

Oh I didn't read the "probably DCA back in" part. Then yes, OP, you are timing the market and it's not a good idea.

Again, it'd be one thing if you're shifting to your retirement allocation, but if you're planning to get back into equities, it's a bad idea.

To time the market and win, you'd have to be successful at both selling at the right time, and re-entering at the right time. And it's dang hard, if not impossible to do both. My FIL claims he timed successfully using yield-curve inversions/reversions throughout his career, but as I mentioned above, I think the old-school economic indicators may prove to be of little value in this new normal where we just funnel billions every month into index funds and fiddle while Rome burns, so to speak.

And I know first hand how hard it is to get both sides right. I tried timing in COVID. Utterly nailed getting out at the right time (I think a blind squirrel could see what was coming)… and while that felt great on the way down, it was impossible to figure out when it was safe to get back in and I ended up losing out on unrealized gains. I'd have been better off if I had just stayed in. It would've been a more stressful month of March, but the flip side was that I spent the next year fretting how to get back in… way more anxiety and I came off the worse for it.

So learn from my mistake.

Unless you need all of your retirement money up front (and you don't), it's better just to leave it alone (or maybe shift a bit towards whatever retirement mix you plan to have, but then stay there).

Bob Knights Liver said:

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If you already had the mindset of DCA when getting back in, why are you not considering doing this on the way out as well?

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I think we can execute our retirement plans where we are now. I don't want to risk a 30% hit should the drop come sooner than later. That would likely have me delaying retirement, which I don't care to do.

You had a massive violent correction what 5 months ago. Youre v unlikely to get another this soon. Cant remember the figure offhand but frequency of 20% corrections is in years

jamey said:

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What about keeping 5 to 10% cash on hand to buy dips


Is that timing the market?

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No.. if you have 900k equities and 100k cash (so keeping 10% cash) and the market tanks 20% you will now have 720k stocks 100k cash so 12.2% cash and 87.8 stock but your desired allocation is 90/10 so you would want to take 18k of your cash and buy stock to get back to your desired allocation. This isn't timing, this is rebalancing.

If you are changing your allocation bc you have a hunch about the market and plan to change that allocation when the market changes, that is textbook market timing.

Nearly 6 months later I'm still comfortable with my decision. That's easy to say now with the market now below my exit point, which was about 6650 for the S&P. I was also still comfortable with the decision with the S&P at ~7000.
I still expect the market will have a big drop in the next couple of years, at which time some, and maybe a lot of our money will reenter the market. I haven't really developed a good plan for how I will reenter the market, but I'm not too worried about that either.
I need to figure out how confident I am in my thinking the market will tank significantly. To this point I've only moved money in our tax advantaged accounts. We still have a lot to lose in our taxable accounts.
Has anyone else made significant de-risking decisions?

MEENag said:

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Has anyone else made significant de-risking decisions?

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I've de-risked some this past year but when I took money out it went into a stable value fund earning 3%, but I never moved more than 60% out and that was kinda breaking my own rule where I look at like its a 60/40 equities/bonds situation. 40% bonds seems too high with todays bond market to me but it felt ok having 40% of my money in bonds or the stable value to de-risk. I briefly had 60% in bonds/stable value.

I put almost half back in at break even a few weeks ago and put 40% of the remainder back in yesterday so now I only have 27% of portfolio in bonds or stable value

I made several small moves like cashing out all my mid caps when it hit new ATH. I had held thst for a few years but was ok letting it go and making 25%. Cahed out some bonds too that I had made 10% or so on to limit the downside in bonds we are now seeing. So that worked out ok


If it drops more I'll put the remainder of stable value funds back in which would leave me at 15% in bonds and everythingelse in equities. If it crashes more, I'll consider selling bonds if they dont deteriorate too much.

Overall, probably not worth it imo

What sucks is the bond market isn't what it use to be. It isnt the offset it use to be. We're gonna money print till something bad happens I guess

I completed our latest derisking move from 75/25 to 70/30 last fall.

You derisk what you need in the next 3-5 years. You keep the rest rolling in equities. Rules of thumb on percentages are not useful because there are too many variables person to person. Instead, view it that if we hit a downturn, what you would liquidate in the near term would be impacted less, while you keep the rest maximized in growth because history tells us it will outlive the downturn and provide the most return over the long haul. So that also means that if you are not retiring in the next 5, let it all ride.

MEENag said:

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permabull said:

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If you are going to a higher bond allocation now with the expectation to get back into equities later at a lower price then yes that is textbook market timing.

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When I first posted this I had convinced myself I wasn't timing the market, I was just reducing risk, but also limiting gains. I've continued to read and watch interviews with various financial "experts" and I'm even more convinced that I'm not timing the market. I feel like every expert I've seen says that we should be reducing our exposure to this oversold market to varying degrees. They all expect a downturn in the next year-ish.
I'm also getting the impression that the widespread adoption of the Boglehead and buy and hold philosophies, amongst others, has oversimplified investing for casual investors like me to the exclusion of situational logic. I think a lot of money is going to be lost as a result.
Being close to retirement might be skewing my opinion, or I might be an investing-dummy.

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1) If you follow 'financial experts and influencers' long enough, you will see they are generally all hat no cattle. If anything, they have a knack for being wrong. The ones that seem to be right more often are the overall market permabulls which proves nothing.

2) Having a buy and hold philosophy doesn't mean you have to be as rigid in dogma as a Boglehead. It's not an all or nothing decision. You can tailor your portfolio for your situation and temperament with leeway for tactical changes. For instance you can have a portfolio with multiple asset classes (not just the Boglehead 3 asset classes) plus you can decide to cut back your 10Y treasury allocation from 25% to 15% and increase cash if interest rates get too low (like after Covid in 2021) and then return back to 25% when interest rates rise to reasonable level again (like in 2023). Making small tactical adjustments are ok for buy and hold investors.

3) You need to determine your risk profile and then make sure your portfolio matches that risk profile. I rebalance every year and that often results in selling high and buying low, but that isn't the reason I rebalance, it's just a positive side-effect. I rebalance only to keep my portfolio risk profile aligned with me. For instance, my single biggest company exposure since 2016 is Nvidia; it has been great and would have been even greater if I had never sold any of it, but I'm not comfortable with Nvidia exceeding a set weight in my portfolio. My portfolio is aligned with my risk profile, not my guesses or someone else's guesses of what will go up or down the most in the future.

MEENag said:

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Nearly 6 months later I'm still comfortable with my decision. That's easy to say now with the market now below my exit point, which was about 6650 for the S&P. I was also still comfortable with the decision with the S&P at ~7000.
I still expect the market will have a big drop in the next couple of years, at which time some, and maybe a lot of our money will reenter the market. I haven't really developed a good plan for how I will reenter the market, but I'm not too worried about that either.
I need to figure out how confident I am in my thinking the market will tank significantly. To this point I've only moved money in our tax advantaged accounts. We still have a lot to lose in our taxable accounts.
Has anyone else made significant de-risking decisions?

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I have some cash I will deploy to tech stocks when some of the tariff and war nonsense subsides; targeting end of year. That represents 10% of my portfolio. That is the full extent of my de-risking.

My employer went with a new HSA provider this year. About a month ago, my HSA investments at the old bank got liquidated. This week, the money finally showed up at the new bank and got put in the mutual fund I had designated. So hopefully I've time the market without trying to.

happened to me when I was transferring HSA from Optum to Fidelity April 2024 and caught a ~5% market drop, but transfer deposited in cash so decided to yolo half heavy into tech (PLTR/HOOD/SOFI/SMH/AMZN) and have tripled the acct since

MEENag said:

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Nearly 6 months later I'm still comfortable with my decision. That's easy to say now with the market now below my exit point, which was about 6650 for the S&P. I was also still comfortable with the decision with the S&P at ~7000.

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How's it going 6 weeks after this post?

It's going fine. I still have more money than I did then, which is an amount that will let me retire before I'm 50. I actually learned today that Vanguard recently began recommending a 40% stock/60% bond ratio, which I am pretty close to. I still think there's a decent likelihood of a very large dip somewhere ahead of us, but I think it might be further away out than I did before.

MEENag said:

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It's going fine. I still have more money than I did then, which is an amount that will let me retire before I'm 50. I actually learned today that Vanguard recently began recommending a 40% stock/60% bond ratio, which I am pretty close to. I still think there's a decent likelihood of a very large dip somewhere ahead of us, but I think it might be further away out than I did before.

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For their more conservative risk profiles, or everyone?

Only took 4 months for this info to get to me.
https://finance.yahoo.com/news/vanguard-flips-the-script-on-6040-investment-strategy-110026190.html

So, for medium to short time horizons. Makes more sense in that context. Their logic behind why is same as mine for our allocation. We just aren't as conservative as 40/60.

Our bonds are also munis. I don't own government bonds.