Source: Yes you can time the market.com
As the U.S. stock market has gone galloping off, the sunset will set on this aging bull cycle. The time is now [and has been for many months] to rebalance your portfolio locking in those gains. Our forecast of 45% to 60% decline will decimate a fully invested stock portfolio. It is time to rethink your asset allocation between stock and bonds to determine how much of a portfolio decline one can endure.
Historical portfolio decline based upon a 50% stock market decline.
% Loss % in Stocks
35% 80%
30% 70%
25% 60%
20% 50%
15% 40%
10% 30%
5% 20%
0% 10%
The average investor, which is most of us if we are to be truthful, cannot tolerate a decline greater than 20%. This 20% threshold has been determined by surveys and focus groups going all the way back to the 1950's. Human nature has not changed in over 60 years [most likely never] when it comes to that 20% threshold of pain.
One of the ideas that I purpose is a 40% stock and 60% bond allocation for an individual 401k. This creates a "set it and forget it" type of portfolio; for moneys outside of a pension follow DYI's aggressive portfolio for higher gains.
DYI
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