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Ben Carlson: A Pressure Release Valve For Your Portfolio
FYI: The markets have a way of making investors fearful whether stocks are up (they can’t rise any further can they?) or down (surely the worst is yet to come, right?). It’s always something which is what makes the markets equal parts fascinating and gut-wrenching. Regards, Ted http://awealthofcommonsense.com/2016/09/a-pressure-release-valve-for-your-portfolio/
A good article on rebalancing covering the why's and how to's.
For me, the best thing I did, years back, was to determine an asset allocation consisting of cash, bonds, stocks and other assets with target percentages being set for each asset class allowing for some range movement based upon market conditions, my needs and most important my risk tolerance. Over time, I developed a matrix that helps me determine just how much stocks, the most risky asset class, to hold from time-to-time based upon certain market condidtions but keeping within my asset allocation range for stocks.
Currently, my range allocations are as follows: Cash Allocation range 15% to 25% with target currently being set at 20% ... Income Allocation range 25% to 35% with target currently being set at 30% ... Growth & Income Allocation range 30% to 40% with target being set at 35% ... and Growth Allocation range 10% to 20% with target being set at 15%. In doing a recent Morningstar Instant Xray analysis on my portfolio the results were cash 25%, bonds 25%, domestic stocks 30%, foreign stocks 15% and other assets 5%. With this, I am currently light in my income allocation due to an anticipated rising interest rate environment, neutral in my stock allocation and heavy in my cash allocation. Note, some of my hybrid funds must have recently bought stocks because not too long ago I was light in stocks as well as bonds.
In general, my market valuation matrix determines how much stocks I will hold from time-to-time on the investment positions that I set the allocation on and is based, in most part, on some valuations measures I use to gague the market. These include both technical and fundamental measures along with some room for my other measure that allows for some reasoning and is known, by me, as my SWAG mythology, Scientific Wild Ass Guess, which includes some investment folklore. For the hybrid funds that I own, I let the fund manages determine what assets to hold and how much of each while I determine how much of my portfolio is to be invested in hybrid type funds. In doing this, this allows for some adaptive allocation movement, within the portfolio, through asset movement and repositioning within the hybrid funds held. Currnetly, the hybrid funds make up about 40% of the overall portfolio.
For me, rebalaning form time-to-time has indeed, I feel, been beneficial.
Comments
A good article on rebalancing covering the why's and how to's.
For me, the best thing I did, years back, was to determine an asset allocation consisting of cash, bonds, stocks and other assets with target percentages being set for each asset class allowing for some range movement based upon market conditions, my needs and most important my risk tolerance. Over time, I developed a matrix that helps me determine just how much stocks, the most risky asset class, to hold from time-to-time based upon certain market condidtions but keeping within my asset allocation range for stocks.
Currently, my range allocations are as follows: Cash Allocation range 15% to 25% with target currently being set at 20% ... Income Allocation range 25% to 35% with target currently being set at 30% ... Growth & Income Allocation range 30% to 40% with target being set at 35% ... and Growth Allocation range 10% to 20% with target being set at 15%. In doing a recent Morningstar Instant Xray analysis on my portfolio the results were cash 25%, bonds 25%, domestic stocks 30%, foreign stocks 15% and other assets 5%. With this, I am currently light in my income allocation due to an anticipated rising interest rate environment, neutral in my stock allocation and heavy in my cash allocation. Note, some of my hybrid funds must have recently bought stocks because not too long ago I was light in stocks as well as bonds.
In general, my market valuation matrix determines how much stocks I will hold from time-to-time on the investment positions that I set the allocation on and is based, in most part, on some valuations measures I use to gague the market. These include both technical and fundamental measures along with some room for my other measure that allows for some reasoning and is known, by me, as my SWAG mythology, Scientific Wild Ass Guess, which includes some investment folklore. For the hybrid funds that I own, I let the fund manages determine what assets to hold and how much of each while I determine how much of my portfolio is to be invested in hybrid type funds. In doing this, this allows for some adaptive allocation movement, within the portfolio, through asset movement and repositioning within the hybrid funds held. Currnetly, the hybrid funds make up about 40% of the overall portfolio.
For me, rebalaning form time-to-time has indeed, I feel, been beneficial.
I really did enjoyed reading the article.
Thanks @Ted for posting.
I wish all ... "Good Investing."