Investing - Theory, News & General • I ignore EVERYTHING except AA. Am I missing something?

I understand that assets should be placed in a tax efficient manner among taxable, tax-deferred, and tax-free accounts; that rebalancing should be done tax-efficiently; that one's AA might change as one's personal circumstances change (e.g., approaching or entering retirement, risk tolerance); and that people might differ in deciding which assets to include as part of their allocations (e.g., REITs, international). None of these considerations, however, involve market timing. Neither does tlh, which can be done without changing one's AA.

Leaving aside questions of how to select an AA, where to best hold each asset, and how and when to best rebalance, do you make changes based on predictions?

First, I no longer target an allocation. I think in terms of sources of spending. TIPS + SS form a floor and the rest is in stock. With the floor in place, I can tolerate a lot of gyrations in stock. If somehow stock outperforms significantly more than I expect, I will consider moving some of that to the income floor, either to "raise the floor" or "extend the floor to last longer". I will never go in the other direction, however.

While I don't make changes to what I hold based on predictions, the withdrawals I make from stocks use an amortization method which uses estimated future real returns in the calculation. Extreme accuracy is not required for this and I do not consider this to be market timing. If somebody else does think it's market timing, bully for them. I've seen a lot of discussions on this forum where just about everything has been called market timing at one point or another. But since I don't invest for anybody else but my family, I don't care what anybody else thinks.


Cheers.

Statistics: Posted by Rocinante Rider — Sat Aug 03, 2024 10:51 am — Replies 28 — Views 2439