Elysium wrote: Wed Oct 08, 2025 11:20 am
EnjoyIt wrote: Mon Oct 06, 2025 3:39 pm
We agree that diversification is key. But, do we diversify because that is what we have always done, or do we do it because of some metric in the market and we think we know where the market is going next? The big question is, if one is not diversified and chooses to make that transition today, does that person keep that change forever, or is there some future data that will make you want to switch again?I would totally agree for diversification now and keep it permanent. I would not agree on diversifying now and then adjusting at some future date.
We have had a very nice run up in the market recently and it is very possible one is close to or exceeded their number. It would make a ton of sense if that person’s need to take risk decreased and therefore permanently adjusting asset allocation can make a ton of sense.
I shared my thinking into another thread here. You can read it, don’t want to derail this thread further with my thought process which I have been sharing gradually in other threads. Bottomline it is not simply a tactical shift based on market valuations alone, which I would not have done in the past, however if you read the other thread you will know some of my thinking along why the bedrock principles that made a 3-fund market portfolio a stable choice could be under threat. In other words, if the playing rules changed then would you continue playing the same game according to same strategy or adapt a different one. It is basically an insurance that the rules are shifting permenant and cannot be reversed quickly. I accept the possibility of being wrong, and in that case I have enough hedging to ensure I am going to meet my goals. It is doing well so far. As for it is permenant or temporary, I don’t make such decisions upfront, as of now it is done, whether they switch back or not at another point is something I do not know because that depends on how much factors have shifted or not. Suffice to say those changes are done at glacial pace with a lot of reading and thinking that goes into it.
I read that post.
I appreciate your concern, I truly do as I think most people who are paying attention probably have some level of concern. If I am understanding this correctly, you have shifted some large cap equities to have more bonds, cash, and commodities. It was not clear to me if you increased international in any sort of way. Sounds like de-risking your portfolio. You mentioned you have a concern for SORR. Does that mean you are retired or close to it? I don’t want to make assumptions about you . I think with the healthy run up recently, managing risk prior to or during retirement is a sound strategy. But that leads me to my next question.
How long do you plan on keeping this asset allocation, is it permanent, or will there be some trigger that has you switch back? I think that is the hardest part of all this…Being right twice if you plan on going back one day.
Edit to add:
One thing that I wanted to add. When we “win the game,” is it necessary to have that portfolio to grow larger and larger? Probably not, and I think that is where some of us are getting stuck. “I want more money and I will take my chances and stick to my large equity allocation.” Maybe have the most money isn’t the correct goal. I know it isn’t at some point, but who doesn’t want more?
