Great question. The real problem is if you rebalance quarterly and the market takes 18 months to fall 50%, revealing that
1: Timing the market is critical in this thought experiment, and
2: Timing the market is impossible in real life.
If you are retired, in my opinion, everything is super easy. You simply live off your bond holdings for as long as it takes. If you're working, you have a legitimate question whether to take more risk and also when to take it. If you're working, and the risk goes wrong, then you will be thinking you will work longer. Can't do that when you're retired.
during the recent unpleasantness, we had several "lucky hits" for the quarterly people, the biggest being April 1 2020 very near a low and then January 1 2022 at a high more than double (wow). Rebalance timing adds the element of luck, and there doesn't seem to be an alternative to luck when you're still working.
1: Timing the market is critical in this thought experiment, and
2: Timing the market is impossible in real life.
If you are retired, in my opinion, everything is super easy. You simply live off your bond holdings for as long as it takes. If you're working, you have a legitimate question whether to take more risk and also when to take it. If you're working, and the risk goes wrong, then you will be thinking you will work longer. Can't do that when you're retired.
during the recent unpleasantness, we had several "lucky hits" for the quarterly people, the biggest being April 1 2020 very near a low and then January 1 2022 at a high more than double (wow). Rebalance timing adds the element of luck, and there doesn't seem to be an alternative to luck when you're still working.
Statistics: Posted by firebirdparts — Mon Dec 30, 2024 1:56 pm — Replies 23 — Views 1867