One of my investing pet peeves is the phrase “take some money off the table.” Perhaps the reason why is the blatant reference to gambling. At a casino in Las Vegas, it wouldn't be unusual for a gambler who has had a recent streak of luck to “take some money off the table” and just play with “house money.” If he takes off what he brought to the table, his worst-case scenario is going home without any losses. Not a bad outcome in a place where the odds are always against you.
The reason I don't like it when it is used with investing is that smart investing really isn't gambling. Not only are the odds stacked in your favor, but the secret to investing intelligently is to make as few trips through the “Wall Street Casino” as possible. Ideally, it's one round trip for each dollar. You might contribute this hypothetical dollar into a 401(k) at age 35, invest it in a hypothetical index fund, and then pull it out at age 75 to spend. One round trip through the casino over 40 years will have a trivial effect on that dollar–the “casino” won't be getting much of a cut of it. Plus, the likelihood of that investor losing money on that investment over 40 years is so close to zero that the difference can be safely ignored.
Investing is serious business for me. I don't really do “fun money” or “play money.” If I want to have fun, I use the money to go heli-skiing rather than send it to some Wall Street gurus and Uncle Sam. I might be a thrill-seeker, but there is little thrill for me in investing, and it turns out that's a good thing for long-term returns.
What Does it Really Mean When an Investor Says “I'm Going to Take Some Money Off the Table”?
Well, it could mean any of several things.
They Are Timing The Market
What nutcase did Angel's Landing in the snow with those little kids? (Note the harnesses and rope.)
Most commonly, it means he is trying to time the market by going to cash with some or all of his investment. He believes that the market is going to go down in the near future and that he can then invest the money back in the market.
I'm not sure I need to go over why this is a dumb idea, but the difficulty with market timing is that you have to be right not once, but twice, and you have to be right by enough to overcome the transaction costs including taxes and the value of your time. It is so hard to do that consistently over the long run that it isn't worth trying. As a general rule, all that “going to cash” is going to do is decrease your returns.
They Are Selling Investments to Spend the Money
For some people “taking money off the table” means to sell investments and spend the money. While I'm a big fan of spending money on things, experiences, and charitable causes that will increase your happiness, it is important to be aware of The Wealth Effect. That is to say, when our investments go up we feel wealthier and are more likely to spend. That's not such a bad thing since spending the same dollar amount from your portfolio when it is up means spending a smaller percentage of it than spending from it when it is down.
However, it is important to remember that you're not really as rich as you think you are in a bull market (but neither are you as poor as you think you are in a bear market.) “Mr. Market” has some rather volatile moods which even out over the long term for the patient investor. Bipolar disorder might not be contagious, but catching Mr. Market's moods certainly is.
They Are Wisely Trying to Take Less Risk With Their Asset Allocation
A few people use the phrase “taking money off the table” when referring to a permanent change in their asset allocation. Bernstein likes the phrase “When you win the game, stop playing.” That is to say, if a recent bull market has decreased your need to take risk, then take less risk. Most investors will want to decrease the “shallow risk” (volatility) of their portfolio as they approach retirement to reduce sequence of returns risk (i.e. the risk of running out of money despite having adequate average returns because the poor returns showed up early.)
It seems wiser to make that sort of an asset allocation change a few years into a bull market rather than after a recent 30% drop. Isn't that market timing too? I suppose it is in a way, but I see it more as a reaction to your own personal situation (nest egg to financial needs ratio) rather than a reaction to Moody Mister Market.
So the next time you hear someone use the phrase “take some money off the table,” rather than think “That sure sounds smart,” I want you to remember it probably isn't very smart at all if the intent is for that money to go back on the table at some point.
What do you think? What common investing phrases annoy you? Have you been guilty of “taking money off the table?” Why did you do it? Did it work out well for you? Comment below!
For me it’s been the latter. I decided I just had to take a stab at what amount of cash or cash equivalents would make me confident my retirement would not be ruined by a big market drop in early retirement, and this did teach me that my risk tolerance was lower than in the past. Better to admit that now in semi-retirement, than after a dramatic crash. So, enough to provide an income floor is what feels right for me; it’s not money that will be returning to the stock market.
“Keep your powder dry” is one of my pet peeve Wall Street sayings. It’s used when people intentionally have cash on the sidelines, waiting for a market correction to “put their money to work.” I bet some people have been “keeping their powder dry” for the last 8 years of this bull market.
Probably my biggest pet peeve is the daily market recaps you see on Bloomberg or WSJ. It is so formulaic and adds little for the long-term investor. I put a few of my other pet peeve investment sayings (“buyers outnumber sellers”, “risk on/risk off”) in a satirical market recap article I wrote about 3 months ago:
http://www.wallstreetphysician.com/read-daily-market-wraps/
-WSP
Well written article Wall St Doc.
My all time favorite phrases from when I used a broker were “this is really a stock pickers market” and “these fees really don’t matter on an account of your size”.
I am taking some money off the table now (just collecting a cash position from dividends and interest) to protect myself from a sequence of returns problem as retirement approaches. I am not “keeping my powder dry” in order to reinvest. Different age bands call for different approaches.
You only know the best time to take your money off the table in hindsight. The same goes for when to place those dollars back on the table.
People like to talk smart and tell you how they made such a move before the last crash or the one before that. How many do you suppose actually got back in at the trough? Close to none, whether they admit it or not. If they’re investing based on emotion and hunches, it’s highly doubtful they’ll be comfortable buying more stocks after watching them perform so poorly.
Best,
-PoF
I think trying to time the market would just stress me out. I had a friend stay with me recently . They are already pretty stressed with raising two kids. My friend looked at me and she said she wants to start buying individual stocks in companies she liked. That way she would not miss out when they do well.
I get that people find stocks fun, but putting your money into stocks should not be a game. Just set it and forget it (except for the occasional check in). If you want to gamble, then go to the casino. At least there you get some flashy lights and the occasional drink.
“Have you been guilty of “taking money off the table?” Why did you do it? Did it work out well for you?”
I don’t consider it “guilty” because the only time I sell investments is to replenish by cash reserves.
As an early-retired person living off investments, I keep between 2-3 years of living expenses in cash (per Nick Murray’s excellent argument and guidance). That will let me ride out any market downturns without having to stress or sell while securities are beaten up.
Oh, and an occasional rebalance, but that really isn’t “taking money off the table” – just moving it from one table to another. 🙂
Great post btw. I hadn’t thought about it this way but that’s a great perspective on this unfortunately popular phrase.
I thankfully am not guilty of taking money off the table… Currently I’m most annoyed by those who keep trumpeting the concept of the age of the bull market. Even an entry level statistician knows that no matter how many times you flip a coin and the prior results, the next flip has a fifty fifty chance of being heads. And yet we as a society constantly feel the need to point out the market has gone up for x years so it will go down soon. Will it? Who knows, but age since a recession makes it no less or more likely.
Fundamentally I do not disagree with you, but I would offer this as an aside: once you are significantly past your “FIRE” number like 33X or 50X expenses, converting paper assets to tangible assets or more conservative assets shouldn’t be viewed as a negative thing. Yes tangible assets and less risky stuff are market to market like everything else and can have significant swings in valuation as well. For example, having your home paid for vs. even a low 3.75% mortgage, a bond portfolio (actual bonds not a fund) that in itself covers your annual expenses, having actual rental properties vs. a REIT.
No doubt the math says stay all in forever and stocks out perform bonds. There are many bloggers who make a great case for 100% equities, and I don’t disagree with them. My only wonder as somebody who is in the 80X-100X category is why is it so critical for people to keep pressing? So your name can be bigger and more pronounced on the building you donate to your alma mater? So you can gain the admiration of your peers by outbidding them at the next charity auction for whatever fabulous cause is on the agenda? So your kids can not have to ever work their tails off the way that you did to become the person you are? If you are hovering in the 20X to 40X number I suppose I can get behind the thought process, I don’t know…I just know I look at things differently now than I did 10 years ago at 35 and I’m sure I’ll think differently 5-10 years from now when I’m 55.
For me, “taking money off the table” has been simply switching my asset allocation in my retirement accounts to a lower percentage of stock (which is something I look at every 5 years or so). I agree that any other approach to t”taking money off the able” is silly and likely to be counter-productive.
I agree, WCI. Another pet peeve of mine is tax “loophole.” There are few, if any, loopholes in the tax code. Our society is often envious of those with wealth, and they’ve used the term to further the narrative that legally following the law (via loophole) is somehow unlawful or greedy. I think this dangerous. We are either following the law or we are not, but loophole is cast as some sort of in-between, which is false.
There may be one possible exception now. When Nixon left the White House, stocks were down approximately 25% from their high. The stock market wavered down and down over the period of the hearings and on the day he left office, a bigger drop. We appear to be poised for the President to be taken out of office, and if there is one thing the stock market does not like, it’s uncertainty. Right now, despite reports, it started to meander down and popped back up. I have heard from a couple of sources that Sen Hatch is now receiving presidential daily briefs, as he needs to be prepared to take office at any time (NOTE: This does not indicate he is not complicit, but is just a reflection of the fact that no evidence against him appears to exist). Reports say an indictment against Trump, the GOP and many in the line of succession has been handed down by a Fed court in VA. Here is one source that has proven reliable over time: https://patribotics.blog/2017/05/11/sources-russia-probe-means-president-hatch-rico-case-against-gop/ I encourage you to read her posts from the beginning, esp the first one concerning Comey. Trump was asked about golfing on Mother’s Day and reportedly said something like, “I want to golf while I still can.” He knows he is going, too, and that is why he fired Comey, to which he has alluded. Press is sparsely covering these events and it seems, maintaining the stock market may be a part of the “why”. If there is a large event brewing which can reasonably be assumed to negatively affect the market, yes, it’s risky, but I think if there is one time it may be pertinent, it is now. 25% is not chicken feed. By the way, I timed the real estate market just prior to downturn and made a BUNCH of money. It was obvious that when 60% of loans in CA were for 0% down/adjustable mortgages, it was only a matter of time until the dominoes fell. This is a similar situation. With a treasonous wretch in the White House, inviting Russian spies and press into the Oval Office and blocking U.S. reporters, either we have a stock market fall, or the country falls. Either one is bad.
Who knew that tinfoil hats were for sale at WCI? Excuse me while I take an eye-roll break
Did you seriously just site Patribotics are your source? Yes, I second the tinfoil hat comment.
This all makes perfect sense if you pretend to not know how the basic civics works.
Since you commented, an independent investigator has been named and Republicans are saying Trump is a goner. So what civics lesson am I missing? I would be curious to know.
The blog you linked is awash with nonsense and a total misunderstanding of how the system works. That there is a special investigator does not validate the many nonsensical claims in it.
How does impeachment work? Just look up the process yourself and you will know. Supreme court marshal is probably one of my favorite things of late.
Lets suppose Trump does go down, we can hope. However, that will not make your source any more credible or less nonsensical and out of the loop for how civics works. These are not mutually exclusive. That blog is pure money grabbing for confirmationists and the rising left conspiracy theorists.
Oh, 3 more points:
1. When I sold my real estate at the top of the market due to obvious market conditions, (awaiting the inevitable downfall), I was screamed at by a very confident real estate investor who was dismayed that I would “sell in such a hot market”. That is a key sign things have gone awry. Your comment, I think, verifies our current situation.
2. I was contacted yesterday by investment advisor who corrected my number. She states the market went down 50% in the year before Nixon left and she stated fundamentals contributed. I would concur and would say that there are some key fundamentals right now that, on the surface look good, but a little digging reveals concerning hints of things to come. Like this: https://www.nationalmortgagenews.com/news/late-pays-on-cmbs-loans-rise-again-in-april I have had a couple of commercial lenders say they have a much larger than usual number of commercial loan failures. In my market, residential real estate (read: ave home buyer) is hot hot hot but the commercial climate chilled months ago.
3. I also agree with the comment that believing our stock market will “always go up” may be, like Japan, problematic. Maybe yes, maybe no. But there are, again, fundamentals at work which could be bad. Although productivity has risen due to technology, that same technology will continue to eat through our jobs, creating a country void of consumers. The strength of our economy, for a long time, has been founded on a consumerism which may be over. Over, concurrently with political chaos. Eyes wide open.
Please post your predictions/trades in real time and we’ll see if your crystal ball is more or less cloudy than the rest of ours.
OK, you asked. Stock market is UP 4,192 since we spoke. Up approx 20%, fantastic. However, as Goldman Sachs said, “Goldman Warns That Market Valuations Are at Their Highest Since 1900” Since 1900!!! Yikes. In speaking with many investors and understanding that 95% of stock trades are now done by computers (computers which are programmed by Wall Street insiders), I feel confident that trusting them is a bad policy, despite these results. SO, what did I do? I took all my money out and used for real estate deals, making 100% on my money. So, win win. And I trust my own dirt a lot more than folks who, under Bush, put our country and the world in major jeopardy. I screen shot the current stock graph and it was, I kid you not, a line straight up. How long do you think this will continue? Do you think that Bannon’s statement that Trump family committed treason or Trump’s daring NK to nuclear bomb us will affect this? When the inevitable crash of this administration occurs, what do you think will happen? Or when the tax bill is repealed, which also appears inevitable? How do you decide when to pull back to avoid catastrophe? Or are you willing to ride it all the way down?
With respect, it sounds like your politics are clouding your judgement. Just do what WCI preaches – invest in sound instruments like index funds and real estate, know there will be ups and down, stay the course, and you’ll be better than 99%.
I’m willing to “ride it all the way down” just like I did last time and expect to do 5-10 times more during my investment career. Good luck investing and congratulations on your success in real estate.
Only time I took “money off the table” was mid last year when we needed to beef up our cash reserves inorder to buy a house and in the Nov/Dec time frame. My car bit the dust unexpectedly right after that too but the emergency fund helped with getting a new car the next day. Otherwise I generally don’t sell to reduce exposure to the market as there is regular income to provide dry powder in the event of a market sell off and it’s not like I would need my invested money for the next couple of years. Just can’t time these things.
I agree with you about this phrase mostly being tied to a gambling analogy / being annoying, but I think there are a couple other cases where this applies.
The first is a slight variation on the permanent asset allocation change, and that is choosing to redirect money (either selling equities or redirecting cash flow that would otherwise purchase them) to pay down/off the mortgage. I personally don’t include mortgage in my asset allocation, so doing so is less shifting allocation in my mind, but is derisking at the cost of lower returns.
The second is one that many (non physician) high income professionals run into, and that is dealing with company stock / options. In general I sell any RSUs as soon as they vest, but options you generally have to hold onto for some period of time before they’re worth anything. I have a level at which options become too high of a percentage, and I’ll sell some to “take some money off the table” and redirect to general allocation. Holding them through end of 10 year period might give greater return, but I’m not comfortable with how close that gets to gambling on success of company that also provides all of my compensation.
Yep, the risk of losing your employment and watching company stock crater at the same time is just too high. Ask former Enron employees if they wish they hadn’t had so much of their portfolio in their employer’s stock.
I like stock options and I like the ability to buy company stock at a discount from what the general public pays. That said, have a systemic plan to liquidate the stock once it vests. Try to hold no more than 10% of your portfolio in individual stocks, especially your employer’s stock.
The only exception would be for C-level executives whose holdings are reportable to the SEC and the general public. These folks might depress price of the stock through a selloff. Even for these folks, they should publish a divestiture schedule and liquidate over time. If you don’t have control of the company, try to keep your position in the company to less than half of your holdings.
I agree that if you’re forced to hold bad investments (i.e. single company stock or options) then taking some money off the table is wise (since the ideal in that situation is to take ALL the money off the table.)
The phrase “Cash on the sidelines” is a huge pet peeve for me.
Folks use it to imply that there is a lot of cash sitting around waiting to be invested.
But what happens when it gets invested?
The cash just transfers from one account (the buyer’s) to another account (the seller’s). So it’s still “Cash on the sidelines”!
Everyone here should understand the meaning of marginal utility of wealth pre retirement or sooner if need be
Swedroe taught me this and it worked out wonderfully for me
Nobody has lost a cent taking a profit
I guess that could be true if you ignore both inflation and opportunity cost.
I admit to having thought about taking some “off the table” since the post-election run-up. But I decided no. I am doing Bernstein’s liability matching portfolio (LMP) in early retirement, so we ought to have enough fixed income already to see us through. Likely there still exists an equity risk premium, though maybe not as generous as at market troughs. Ultimately, the funds beyond LMP will go to our heirs or charity and they are best served by keeping “risk on”.
Ha, that’s one of my favorite pet peeves, too. Only to be topped by “there’s a lot of money on the sidelines” which is normally used by commentators who want to argue that the market will continue to go up because so much money could still flow in. The only problem: for every dollar someone spends on buying stocks, someone else has to sell and bring his/her money back to the sideline.
I have a different perspective. Instead of calling it “market timing”, I think valuation based retirement strategies (I am in early retirement) have merit; e.g. see Pfau, Kitces, Hussman. Although no one can predict near term stock returns, there is good correlation between Schiller 10 year CAPE ratio (for example) and future 10 year returns. Dynamic asset allocation/stock glide path based on valuation based strategies can increase historical safe maximum withdrawal rates.
You mean “has been” not “is,” and “increased in the past” instead of “can increase” right?
Alas, Hussman’s Strategic Growth Fund, which we presume uses his best analysis, has 10-year *annualized* returns of -5.85%. Before that, during 2002 – 2007, he had positive returns. But that implies his shorts aren’t just “reducing the fund’s exposure to general market fluctuations,” rather they’re actively tilting his fund bearishly. (Over the long haul, of both markets and humanity, that seems to be a bad bet.) I haven’t read one of his annual letters to investors lately, because I lost some money and got out of HSGFX. It might be he’s bearish, or it might just be that he’s a bad stock-picker.
I have certainly been tempted to “take money off the table” by building up cash reserves rather than immediately investing the money. It would be nice to shove a few hundred thousand into the stock market after it crashes by 40-50%.
Of course, you never know when the market will drop. If it doesn’t drop for 10 years, then you’ve been out of the market for 10 years, which isn’t great. You also never know how low it will go. Maybe it only drops 20% or 30% at a time and your threshold is 40%. Again, you could be out of the market for decades.
I tried to use this line of reasoning with a friend who has $500,000 in cash on the sidelines in his late 30’s. His total net worth is around $1.5 million. He didn’t buy my logic.
If the market drops by 50% and he shoves all that money in, I’m sure I’ll hear about his “success” in timing the market. If that happens, will it be luck or skill?
There are some people that have been saying similar on several websites for years. One guys limit is a general index down 20%, he has a massive cash amount right now and that was years ago so had he just bought instead of accumulated dividends, etc…hed have been fine.
A 50% decline over a short period is rare. People had that chance in the 90s and those that pulled out in 95-96 and had the fortune to time the exact bottom still bought in at a higher price, yet lost in inflation adjusted and dividends/total return as well.
Good luck with that strategy. That said I’ve definitely done it, but we all make mistakes and have to try to learn from them. I’ve had both large/smaller taking off the tables, and large/smaller gains/losses. However, I recognize most of that is due to just luck so not pressing that side of things anymore.
I do however still do similarly if you consider changing asset allocations, but not to cash. With my play money its basically 100% a timing/signal type thing so that definitely occurs all the time, but has no influence on my main accounts at all. I do think it helps me to not over play with them though as the play money keeps me satiated.
Taking Money Off the Table,
Means many different things to many different people.
Mutual Fund Companies will tell you the best possible thing you can do is to dollar cost average until retirement.
That Fear of Losses result in substantially lower returns (which is true)
But at the same time, if there’s a Black Swan event, reducing your exposure can only be beneficial. But you need to courage to eventually reinvest that money. Pulling the trigger after a big one day drop is counterproductive, no doubts about that, and there’s no way of knowing how long a bear market will last. But if you look at the long term ups\downs of the stock market, wouldn’t it be nice to reduce your exposure after a 5% or 10% drop and then reinvest the cash after a 15% or 25% drop.
Warren Buffet was vilified for leaving cash on the sidelines during the dot com craze. But he’s tended to be very disciplined over the years and has a preference for not buying something just to buy something. To invest along the lines of be fearful when others are greedy, and greedy when others are fearful.
Certainly shouldn’t be your main investment philosophy, but when a fire sale comes along there’s nothing you can do unless you have some Cash Off the Table
Sure there is. If you’re still earning, you can use your new money to buy stocks at the fire sale. Whether you’re earning or not, you can rebalance your portfolio, forcing yourself to sell high and buy low. That’s hardly “nothing.”
You should have enough mony in equities to sleep at night and withstand a possible 40-50% loss in one year
Those who were retiring before the crash had their plans dramatically changed
Bulls make $$$ bears make $$$ PIGS GET SLAUGHTERED
Will file this blog post away to revisit in 1-2 years (or as little as 6 months IMHO). I couldn’t disagree more with a lot of this. It seems that the main point is to minimize fees and taxes as the keys to investing success. If minimizing fees/taxes means keeping/sinking even more money into overvalued assets, then I am happy to stay out. I have taken money off the table or as I like to call it pick my cards up to play another day. We are now at the 2nd highest market valuation and, historically, subsequent market events have not been kind. Instead of investing based on minimizing expenses, I would rather weigh the risk benefit profiles of possible events and allocating capital accordingly. Instead of touting only the pros of the buy and hold indexation strategy (which is frequent here), I prefer to look at the cons as well. And granted, the biggest risks are the one’s I cant see. But to address the potential meanings (and criticisms) of what “take some money off the table” means:
1. Market timing: I find it funny that market timing is such a dirty work. Everyone market times. To quote this blog post, “The likelihood of that investor losing money on that investment over 40 years is so close to zero that the difference can be safely ignored.” So even this poster is market timing, albeit over a 40 year period. Although the U.S. market has historically risen over longer time frames, this is only an assumption. As an example, the Japanese market is still ~20% lower from 30 years ago and ~40% from ATHs. And another minor point: the word likelihood connotates probability which is another word for odds which is associated with gambling. So basically, the buy and hold strategy is gambling on the assumption that the market will be higher 40 years later. And that assumption is for nominal terms not real terms. Furthermore, for all those FIRE people out there, is 40 years an acceptable investment time frame to meet the goals of retiring early. And, then there are extended periods where cash equivalents have outperformed equities for example from 1968-82. Consequently, given that 401K plans really don’t provide many options currently for protecting against the downside, I do have a large allocation to cash right now.
2. The wealth effect. Given that the ratio of hard assets to financial assets (i.e. your 401K) are at all time lows, I would argue it is better to build up reasonably priced hard assets now before that ratio reverses. At the end of the day, wealth is not just a bunch of increasing numbers at the bottom of your 401k (or whatever account).
3. Being Wise About Asset Allocation Changes. Where do you put your money if you are taking it out of equities? Into overpriced bonds? Not many options to decrease risk in a retirement portfolio these days.
If the market crashes, I can’t wait to see the indexers who said they got out at the top (they didn’t) or they don’t market time, but are now cashing out of bonds and putting it into equities (which is market timing). I have read some of the Boglehead posts from 2008-9. They are quite entertaining to see how well all the Boglehead mantras that were preached during the good times really held up during the hard times (they really didn’t).
Finally, I have said before, I don’t know how this will play out. I think the market will drop but it may just continue to rise in nominal terms. Either way, financial assets will be destroyed and I prefer to protect myself against the destruction of wealth as much as possible.
And, now for those responses….
Your entire post can be summed up with one word………worry. See my post below.
Not that I am saying your are wrong, there are many paths one can follow.
Your critique of Bogleheads, however, does miss a key point……they need to be able to design a plan they can stick with. Many did fine in the last crisis if they had a plan that was in-line with their risk tolerance. If they displayed fear and/or greed during the crisis, my bet is they did get hurt.
While I can think of several Bogleheads who didn’t stay the course, there were plenty more who did.
Also, bonds, even if “overpriced” (whatever that means, let me know what the “fair price” is), are still a great option to reduce sequence of returns risk early in retirement. A bad year in bonds is quite different from a bad year in stocks.
“take some money off the table”
This is just Wall Street using behavioral finance. They know there is an intuitive appeal to taking a sure thing. Traditional Wall Street is looking for reasons for you to trade – this is an easy button to push.
Kahneman & Tversky have written extensively on the concept that investors show “risk aversion” when shown a sure win and “risk seeking” behavior when shown a sure loss. Taking money off the table feels good to us at a primal level.
This is the fuel to the idiom….”bull markets climb a wall of worry, and bear markets slide down the slippery slope of hope.”
Why does Warren Buffet have $90 billion in cash?
I am guilty of taking money off the table, keeping powder dry, market timing. how did it go for me? I will let you know once this cycle is completed. for a lot of people here- “it is noise, stay the course”. Sometimes, when everyone is dumping their money in index funds, it is ok to be different from the crowd. I do not mind being conservative.
Based on current valuation extremes, the outlook for prospective 12-year S&P 500 total returns remains dismal, likely averaging less than 1% annually . 12-year total returns for a conventional portfolio mix of 60% stocks, 30% bonds, and 10% T-bills remains near a historic low of about 1.5% annually. This profile of expected returns is likely to improve substantially over the completion of the current market cycle.
“It seems wiser to make that sort of an asset allocation change a few years into a bull market rather than after a recent 30% drop.”
No. What I think you meant is that it’s more likely to be the right decision for your unique circumstance – that is, you “hit your number” or “won the game” – a few years into a bull market than a bear one.
Well said.