3 ms·

Please don't shuffle your retirement investments based on market volatility. Best thing is just do nothing and ride it out.

by zyang 7y ago

the_gastropod 7y ago
I'd tweak this advice _slightly_. After this pretty significant swing, it's probably a good time to re-visit your asset allocation. If you're, for example, holding 10% bonds, your allocation is now going to be overweight bonds. So it's a good time to sell some bonds, buy equities, and get back to your 90%/10% allocation.
allovernow 7y ago
This isn't market volatility. The is a global geopolitical event exposing the weakness of the US and global markets that people have been warning about for something like 3 years. Some treasury notes have dropped by more than 30%. We're years overdue for a cyclical recession. The fed has little room to lower rates. I could go on but the point is this is the closest we've been to a Black swan in decades.
- nostrademons 7y ago
  If it's really your retirement money then presumably you are 20-40 years out from needing it. Cyclical recessions typically last 1-2 years, and even the biggest Black Swan events like the Great Depression last maybe 10 years. By the time you retire you will have largely forgotten about this. (If your retirement is less than 5-10 years away, you should have diversified away from stocks years ago, and it's a little late now. Most target-date funds and financial advisors do this anyway.)
thedance 7y ago
This advice is both common and crazy. Each individual does not live the average life. Being able to recognize once-in-a-lifetime events, and act on them, is a rational strategy, even if it seems like it is not the optimal strategy for the perfectly spherical portfolio belonging to a person with infinite lifetime.
- axaxs 7y ago
  I agree with this. I'd never touched my 401k until now, well, a few weeks ago. Anyone who couldn't see that this virus was a world-changing event wasn't paying attention. I did 'time' my way out of the market, but not so much back in. Even if I miss some gains, I just want things to stabilize some before going back in long.
- jfengel 7y ago
  I'm not sure it is possible to rationally recognize once-in-a-lifetime events, since by definition you've never seen them before and don't know how they'll play out.
- anm89 7y ago
  Well said.

Please don't shuffle your retirement investments based on market volatility. Best thing is just do nothing and ride it out.

by zyang 7y ago

Please don't shuffle your retirement investments based on market volatility. Best thing is just do nothing and ride it out.

the_gastropod 7y ago

I'd tweak this advice _slightly_. After this pretty significant swing, it's probably a good time to re-visit your asset allocation. If you're, for example, holding 10% bonds, your allocation is now going to be overweight bonds. So it's a good time to sell some bonds, buy equities, and get back to your 90%/10% allocation.

allovernow 7y ago

This isn't market volatility. The is a global geopolitical event exposing the weakness of the US and global markets that people have been warning about for something like 3 years. Some treasury notes have dropped by more than 30%. We're years overdue for a cyclical recession. The fed has little room to lower rates. I could go on but the point is this is the closest we've been to a Black swan in decades.

nostrademons 7y ago
If it's really your retirement money then presumably you are 20-40 years out from needing it. Cyclical recessions typically last 1-2 years, and even the biggest Black Swan events like the Great Depression last maybe 10 years. By the time you retire you will have largely forgotten about this. (If your retirement is less than 5-10 years away, you should have diversified away from stocks years ago, and it's a little late now. Most target-date funds and financial advisors do this anyway.)

thedance 7y ago

This advice is both common and crazy. Each individual does not live the average life. Being able to recognize once-in-a-lifetime events, and act on them, is a rational strategy, even if it seems like it is not the optimal strategy for the perfectly spherical portfolio belonging to a person with infinite lifetime.

axaxs 7y ago
I agree with this. I'd never touched my 401k until now, well, a few weeks ago. Anyone who couldn't see that this virus was a world-changing event wasn't paying attention. I did 'time' my way out of the market, but not so much back in. Even if I miss some gains, I just want things to stabilize some before going back in long.
jfengel 7y ago
I'm not sure it is possible to rationally recognize once-in-a-lifetime events, since by definition you've never seen them before and don't know how they'll play out.
anm89 7y ago
Well said.