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Is there anything wrong with putting my monthly contributions into 100% stocks right now that they're so low - or even selling my current 80/20 portfolio to buy 100% stocks? Is this considered "timing the market" or being smart about it?

I am new to investing, and want to build good habits here, so I am wary of fallacies in my thinking. But I don't see it, hence why I'm reaching out. As I see it, buy low and ride the wave back up. I am thinking of investing future monthly contributions in 100% stocks until markets get back to what they were (possibly a long time, understood), and then investing mostly in bonds to get the ratio back to that 80/20 or so.

Am I fundamentally wrong somewhere here? I feel like this falls into "timing markets" which I have learned is "bad" but I simply cannot see how it would be bad to buy cheap stocks. I know a lot of Couch Potatoes just stay at that 80/20 and don't even think about it. This makes me second-guess myself.

Currently, I have a 80/20 stock/ bond split and am very securely employed. I have a long time until retirement, so I'm okay with risk/ loss if it leads that way. I took a big hit with the crash, but not worried about it at all (which is another thing that worries me, but that's a different matter).
 

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Nothing wrong with this at all. If you have an allocation you are trying to maintain, you can usually get away without rebalancing by just buying whatever part of your portfolio is underweight.
 

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If you are many years from retirement, IMO, yes, it's a good time to lean closer to 100% equities with valuations where they are. Take into consideration the threat of a double dip though but shouldn't worry people with a longer timeline.
(Conversely, as I near retirement, I need to be wary of sequence of return risks and a double dip at 100% equities and unknown recovery time to indexed peak could throw a bigger curve than expected in my withdrawals.)

WRT timing, we don't know if this was the bottom of the market, if this string of gains is indicative of a recovery, if there will be a double dip, etc. But with the hit that the markets have taken, the valuations are good enough that if the markets do drop again, you're still would have bought at a great price. You don't have to buy at the absolute bottom to come out ahead.

Also take into consideration J4B's comments about bond ETF's under NAV if you are looking to sell bond ETF's to switch them to equity. Here's a recent article in the G&M describing how a lack of liquidity due to a stamped to get out is causing units to sell at lower than expected. A safer play may be your first comment on allocating new contributions to 100% equities.
 

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I went from 70-30 to 80-20 when the markets fell 30%. That is in place now. I almost went 90-10 when they fell 40% but they bounced back very quickly and bonds were not really liquid enough anyway because it was so volatile and short lived. If we get back there, I will do it again. If we reach all time highs again or near to it in a few years I will probably start allocating back into bonds.
 

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If you are many years from retirement, IMO, yes, it's a good time to lean closer to 100% equities with valuations where they are. Take into consideration the threat of a double dip though but shouldn't worry people with a longer timeline.
(Conversely, as I near retirement, I need to be wary of sequence of return risks and a double dip at 100% equities and unknown recovery time to indexed peak could throw a bigger curve than expected in my withdrawals.)

WRT timing, we don't know if this was the bottom of the market, if this string of gains is indicative of a recovery, if there will be a double dip, etc. But with the hit that the markets have taken, the valuations are good enough that if the markets do drop again, you're still would have bought at a great price. You don't have to buy at the absolute bottom to come out ahead.

Also take into consideration J4B's comments about bond ETF's under NAV if you are looking to sell bond ETF's to switch them to equity. Here's a recent article in the G&M describing how a lack of liquidity due to a stamped to get out is causing units to sell at lower than expected. A safer play may be your first comment on allocating new contributions to 100% equities.
Flip side, is there any opportunity here to pick up bonds cheap due to trading below NAV.
 

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about a week ago I think bonds were trading at a discount...

right now I would say that things are fare value.

If there are giant discounts in the US bond markets, the Fed will step in and buy....

over 10 years this action will make the US Fed money .... I am sure of it...
 

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XBB has a NAV of $31.58 per share, closed trading at 30.55. That's a pretty big discount! I wonder why more APs are not taking advantage. You would think institutional investors would be all over a 3% discount on bonds.
 

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XBB has a NAV of $31.58 per share, closed trading at 30.55. That's a pretty big discount! I wonder why more APs are not taking advantage. You would think institutional investors would be all over a 3% discount on bonds.
Its cause of the Corporate Bond component...
 

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Still, does that justify the big discount to NAV? Unless the spreads on the underlying corporate bonds is massive, it doesn't make a lot of sense to me.
 

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Still, does that justify the big discount to NAV? Unless the spreads on the underlying corporate bonds is massive, it doesn't make a lot of sense to me.
Bond market experts are suggesting the ETF bid price may be more reliable than NAV.
NAV for bond funds is calculated in an interesting way -- often with estimates calculated by formula for the underlying bonds, not actual sales prices. This is because the bonds themselves can often be so thinly traded.

Bond ETF discounts during recent volatility

Horizons ETFs - Notice: Bid/Ask Spreads on Fixed Income ETFs
 

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Still, does that justify the big discount to NAV? Unless the spreads on the underlying corporate bonds is massive, it doesn't make a lot of sense to me.
There is definitely an underlying spread. Lack of liquidity means the underlying bonds are not being marked to market. A 3% discount? I think that means nothing when funds are being liquidated en-masse, including from international sources. XBB fell 17% from peak to trough. The speed in which money fled fixed income was extreme. Even so, year over year XBB market price is still positive. Which is why I have been selling this week as prices returned to less of a discount and reinvested that in the equity indexes.
 

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On this question of switching allocations... I think it's best to stick with whatever allocation plan you already have. If you're adding new money, sure, add it into whichever segment will get you closer to your asset allocation targets.

Regarding bonds, in the early days I was calling this a "discount to NAV" but I see it differently now. The problem is that we don't know what corporate bonds are worth. The bond ETFs are simply struggling, as everyone is, to price them:

Bond funds (ZDB and VAB) also down significantly today. Why?
 

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Do these massive discounts on corporate bonds make sense though? Most of these companies are unlikely to fail. Sounds like a buying opportunity.

Even a lot of the preferred are off 20%. Sounds like a buying opportunity to me!
 

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Your asset allocation shouldn't depend on the vagaries of the market. Your asset allocation should have ideally been planned in calmer times, and built to match your needs, age, job security, personality, and other factors. If your proper asset allocation is 80-20, the fact that the markets are down now shouldn't change that. Putting all your money into stocks is very risky. If you're very young, and you like risk, you have a stable job, and you don't have much money to risk, maybe that suits you. But it sounds like your proper allocation is 80-20 so I would stick with that.
 

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Your asset allocation shouldn't depend on the vagaries of the market. Your asset allocation should have ideally been planned in calmer times, and built to match your needs, age, job security, personality, and other factors. If your proper asset allocation is 80-20, the fact that the markets are down now shouldn't change that. Putting all your money into stocks is very risky. If you're very young, and you like risk, you have a stable job, and you don't have much money to risk, maybe that suits you. But it sounds like your proper allocation is 80-20 so I would stick with that.
The question isn't about allocation of holdings, but allocation of contributions. I see nothing wrong with making contributions to the asset class that is most underweight in your portfolio.
 

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The question isn't about allocation of holdings, but allocation of contributions. I see nothing wrong with making contributions to the asset class that is most underweight in your portfolio.
Yes, that's fine, but he asked about selling his entire portfolio and switching the whole thing to 100% equity.
 

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with interest rates going to 0 where do bonds prices have left to go? Remember, cash is also an asset class.
Exactly, if I am going to put money @ risk on the table there must be a big reward. I am often wrong which is why I would never be long bonds here. If your right there is hardly any money to be made & the risk of ruin is HUGE.
 

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I don't think the bottom is here so there is no hurry to take action. Maybe suspend contributions to build your cash buffer for eventual reinvestment?
 

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If people really can't see the value of holding bonds, even after this most recent crash, then I think I'm done trying to explain to people the point of diversifying between stocks & bonds.

But the quick recap is that bonds, even if they fall, are still much safer than stocks. They simply don't fall as much in % terms.

If you don't like the price volatility of bonds, you can also hold GICs. My own fixed income portfolio (aggregating everything including registered accounts) is made up of:

23% XBB
38% 5 year GIC ladder
39% individual government bonds

It performed beautifully during the market crash.
 
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