The Full Motley -- 4Q, 2015

As the tide rolls in and rolls out, the markets rise and fall alike, at least during business hours save on a few national holidays.  After a choppy third quarter, the markets saw a strong rise throughout October.  Unfortunately, it's not October anymore and the Santa Claus Rally (which is more lore than rule) is several weeks away.  The markets have been recently retreating, and as much as ever, the possibility of any day rising or falling is anyone's guess.

While this tumultuous uncertainty may inspire many questions, more opinions and few answers, the most productive steps for your financial health may be considering every possibility and then weighing each against its corresponding probability to revisit your asset allocation and assess that the percentages are a true reflection of your long-term view of the market.  Then, rebalance accordingly.  

When things were at their most dire in early 2009, I remember considering the probability that the US dollar would become worthless and that the markets would zero out to nothing.  The former scenario was vastly unlikely and the latter hypothetical was borderline impossible, requiring virtually every business to file bankruptcy (which, even then, it would take a few years before the stock values would be zeroed out).  Compared to the chances that the market declines were irrational overreactions, it became easy to justify not just maintaining my investments in the market but increasing them at the time.

While markets are only down 10% at most, the long-term views should not be influenced on whether the market is going to retreat 15% or even 20% from its all-time high, but merely whether today's all-time high will continue to be the all-time in another decade or two.  The money invested in stocks, including equity mutual funds, will be working for you.  Those efforts are not always an instant reward, but historically, they have been.

Therefore, while others celebrated Singles Day online (mostly in China), I rebalanced my portfolio as quickly as I could, moving about 0.1% from four funds to split between two trailing equity funds, namely Vanguard Total Stock Market Index and Vanguard Explorer Fund.  And now I'm done for activity in my 401(k) for the rest of the year (in fact, until February 10, 2016, which marks the 7th anniversary of this blog).  While I will likely keep an eye out to see how things develop in between, I am committed to my asset allocation and there is no need or temptation to adjust the portfolio any further.  The most complicated part of investing is how simple it is.