modeling the upcoming Bear Market
After spending years slowly preparing my retirement portfolio for a predicted recession and attendant Bear Market beginning circa July 2020, now that these things are arriving (a few months early) I'm trying to model the upcoming Bear Market so I will know the speed at which I should re-enter the equity markets.
It would not be optimal for me to switch all the way back from 25% equities to 60% equities on the day we enter a Bear Market, if stock prices will continue to decline for a while.
The median Bear Market lasts for two or three quarters. So I'm thinking about -- over how many months do I spread my repurchases of stocks? I'm thinking three to six months. Increasing my equity percentage by 5% twice per month. My final equity target will depend on how far stock prices fall, I could move as high as 80% equities if stock prices fall over 50%.
A major complication to any modeling on my part is that we'll probably see unprecedented fiscal and monetary stimuli applied by governments and central banks in order to prop up stock prices. The pace, size, and effect of these stimuli are impossible to model.
It would not be optimal for me to switch all the way back from 25% equities to 60% equities on the day we enter a Bear Market, if stock prices will continue to decline for a while.
The median Bear Market lasts for two or three quarters. So I'm thinking about -- over how many months do I spread my repurchases of stocks? I'm thinking three to six months. Increasing my equity percentage by 5% twice per month. My final equity target will depend on how far stock prices fall, I could move as high as 80% equities if stock prices fall over 50%.
A major complication to any modeling on my part is that we'll probably see unprecedented fiscal and monetary stimuli applied by governments and central banks in order to prop up stock prices. The pace, size, and effect of these stimuli are impossible to model.