[USER]

At the end of 2021, I parked about 10% percentage of my net worth into a conservative all-weather type fund, thinking the diversified asset mix (including long term bonds) would be a safe haven for any market turmoil. This was when talk of recession and inflation started to percolate. The money used to fund this was “left-over” from funding Roth, SEP, HAS, and Emergency fund.

In the last 18 months, the fund has been on a slightly more gentle roller coaster than the market at large but hasn’t rebounded as fast either. Bonds offered little stability. When I invested the money I didn’t (and still don’t) have a complete grasp of the bond market but was relying on the traditional wisdom that bonds smooth the ride. All said, I’m now sitting on a loss of around 10%. Had I just invested in the SP500 I would be sitting fairly better.

My question is, what to do now? Should I stay invested in this diversified fund, hoping bonds bounce back? Should I sell everything and reinvest in SP500, thinking the SP500 will keep climbing? Another thought would be to just put it in one of the many cash accounts offering 5% return. Note: I shouldn’t need this money anytime soon. At this point, I’m willing to take on a little more risk with it than I did at the end of 2021.

[Sean]

I think you missed the other part of conventional wisdom, don’t try to time the market.

Pick an asset allocation, appropriate for your risk tolerance and stick with it.

The reason bonds were down, is because this was a recession with high inflation and rising interest rates. When interest rates rise bond prices fall as they are worth less due to having a lower interest rate than the prevailing rate.

[Jeff]

Right! I’ve thought about this… it used to be that these types of instruments work opposite or with less volatility to the overall market, which is still partly true.. but not as much as say 50 yrs ago. It seems to me that the markets are so interconnected that everything goes up and down together. Trying to pick the right one for the moment rarely works, even with well seasoned professionals.

What do you believe to be true!? Is the market going to rebound from its lows consistently over the next few years?

But like Kevin said, pick a strategy and stick with it. Don’t try to time market swings.

Also, check out: Should I diversify my investments in real estate or a business for different assets and cash flow?

[Kevin]

The amusing thing is that people thing what you did is not timing the market. It absolutely is.

To answer your question, best thing you can do now is learn from this and realize that you need a strategy that doesn’t change just because the markets don’t behave in the way you thought. So I would, if I were you, sell and get into S&p500 and never get out unless my overall strategy changed.

[Mark]

Sounds like u shouldn’t try to time the market anymore. get ur investment strategy together and stick with it thru thick and thin.

Would you also like to explore: VITAX investment minimum for admiral shares is $100k!

[Author]

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