Is It Time To Buy This Rally?

Back in September, I wrote about the importance of diversification even as the market hits new highs as it did during that month when the S&P 500 edged above 1,400. The index closed recently at 1,500, near a five-year high. This compares to the low point for the index during the market downturn of 2008-09 of 677 reached on March 9, 2009. Now, we're close to the all-time high for the index, which was 1,565 reached on October 9, 2007.

The current rally off of the financial-crisis-induced low is nearing four years in duration. According to data from S&P, the average duration of a bull market run off of a market low is 68 months. The range for nine such periods from 1946 through 2000 was 26 months off of a market bottom in October of 1966 to 148 months off of a market low reached in December of 1987.

Based upon these historical examples perhaps the financial pundits are right, this rally still has some room to run. One such investment manager recently said that while everyone's situation is different, he would suggest that investors consider going over their normal equity allocation by 10-15 percent.

What he suggests sounds like tactical asset allocation, where you might allow a portion of your portfolio to hit the high end of your allocation range and stay there for as long as you feel that that asset class or style might outperform the market overall.

In fact we recently did this to a very limited extent in conjunction with the investment committee of a foundation portfolio for which I serve as investment adviser. We decided to let large cap and small- and mid-cap equities remain a bit over the midpoint of our target asset allocation, but still within the target range. International equities remained in the lower half of the target range so in total the percentage of equities and real estate were pretty much in line.

This client has a very long time horizon. Further we have set all distributions from the institutional mutual funds held by the foundation to go to cash, so we have a significant portion of the annual cash withdrawal funded from that source. Our decision was also based upon the investment process outlined in the foundation's written investment policy statement.

Tactical allocation is far different from going out and loading up on stocks. Professional traders and money managers might do some of this, but they generally have very defined rules for when they will sell. In contrast I've had conversations with individuals over the years who wanted to wait until they felt good about stocks before buying after a market downturn. This often means buying high and selling low, often out of fear.

I have no idea what the stock market will do over the next year let alone the next week. Frankly I really don't care. My opinion is that your financial plan, your tolerance for risk, and your financial goals should drive your investment allocation. Any buying or selling of stocks or any other type of investment should be driven by keeping your asset allocation in line with your financial plan.

Roger Wohlner, CFP®, is a fee-only financial adviser at Asset Strategy Consultants based in Arlington Heights, Ill., where he provides financial planning and investment advice to individual clients, 401(k) plan sponsors and participants, foundations, and endowments. Roger is active on both Twitter (@rwohlner) and LinkedIn. Check out Roger's popular blog The Chicago Financial Planner where he writes about issues concerning financial planning, investments, and retirement plans.



More From US News & World Report

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • France urges halt to EU-U.S. trade talks Reuters - 3 minutes 16 seconds ago

    PARIS (Reuters) - Trade talks between the European Union and the United States should be halted and a new set started, France's trade minister said on Tuesday, adding his voice to calls from within Germany ... … More »

  • Mitsubishi says overstated mileage for more vehicle models
    Mitsubishi says overstated mileage for more vehicle models Reuters - 9 minutes ago

    Mitsubishi Motors Corp said on Tuesday more of its vehicle models were involved in a mileage cheating scandal than initially stated, and that it would temporarily stop domestic sales of affected vehicles and compensate owners. Earlier in the day, … More »

  • Slowing German inflation puts pressure on ECB
    Slowing German inflation puts pressure on ECB Reuters - 24 minutes ago

    German annual inflation slowed unexpectedly in August, preliminary data showed on Tuesday, suggesting price pressures in Europe's largest economy remain weak despite the European Central Bank's ultra-loose monetary policy. The euro zone has … More »

  • Fed bets boost dollar, EU tax bill bites Apple Reuters - 29 minutes ago

    U.S. interest rate rise expectations pushed the dollar up for a seventh time in eight days on Tuesday, while Wall Street dealers braced for a bruising session for Apple after it was hit by a record $14.5 billion European tax bill. The dollar … More »

  • Iowa at center of debate over 'shadow insurance' deals
    Iowa at center of debate over 'shadow insurance' deals Associated Press - 42 minutes ago

    For cash-strapped life insurance companies, the deal sounds almost too good to be true: A state law allows them to create complex financial instruments to transfer liabilities to new subsidiaries, instantly ... … More »

  • Irish finance minister says EU Apple tax ruling bizarre, political Reuters - 44 minutes ago

    DUBLIN (Reuters) - An order by European Union antitrust regulators for Apple (AAPL.O) to pay up to 13 billion euros ($14.5 billion) in taxes is a bizarre exercise in politics, Ireland's finance minister ... … More »

  • Uganda grants 8 oil production licenses to Total, Tullow Associated Press - 46 minutes ago

    Uganda's government has issued eight oil production licenses to two foreign companies, moving the East African country closer to becoming a producer of crude. Five of the licenses were granted to Britain's ... … More »

  • Gold edges lower as focus shifts to U.S. payrolls data
    Gold edges lower as focus shifts to U.S. payrolls data Reuters - 1 hour 0 minutes ago

    Gold fell on Tuesday after Federal Reserve officials sounded a hawkish note on interest rates, boosting the dollar, while attention turned to U.S. payrolls data this week for further clues on the pace of rate hikes. Fed Chair Janet Yellen said on … More »

  • EU tax avoidance action could hurt foreign investment: U.S. Treasury Reuters - 1 hour 3 minutes ago

    The actions of European regulators could hurt foreign investment, the U.S. Treasury said on Tuesday after the European Commission ruled Apple must pay up to 13 billion euros ($14.5 billion) in taxes plus interest to the Irish government. "The … More »

  • EU trade chief says many countries shown support for TTIP Reuters - 1 hour 8 minutes ago

    Many EU countries have contacted the European Commission to express their support for the planned EU-U.S. free-trade deal (TTIP) after German and French ministers said talks should be ended, the EU trade chief said on Tuesday. "I do not agree that … More »

  • Data demand, M&A hopes propel valuations of European mast owners Reuters - 1 hour 10 minutes ago

    Surging data traffic and a push to merge capital-intensive networks to cut costs are swelling the value of Europe's mobile infrastructure as it is gradually split away from the telecom industry that built it. The companies that operate cellular … More »

  • EDBI invests in LogRhythm to help enterprises detect and neutralise cyber threats
    EDBI invests in LogRhythm to help enterprises detect and neutralise cyber threats e27 - 1 hour 17 minutes ago

    LogRhythm helps organisations to reduce the time to detect and respond to cyber threats that have penetrated the enterprise perimeter or originated from within Less than a week after injecting money into RetailNext, EDBI — the VC investment arm of … More »

  • Oil prices rise on U.S. weather fears, OPEC speculation
    Oil prices rise on U.S. weather fears, OPEC speculation Reuters - 1 hour 18 minutes ago

    Oil futures rose on Tuesday supported by production suspensions in the U.S. Gulf due to an expected tropical storm and speculation that producers meeting in Algeria next month will act to prop up prices. Brent crude futures were trading at $49.53 … More »

  • China's Xi urges boost to economic reforms
    China's Xi urges boost to economic reforms Reuters - 1 hour 34 minutes ago

    BEIJING (Reuters) - China's key reforms have been smooth over the last three years, but implementation needs to be faster, Xinhua news agency said, citing a statement from a meeting chaired by President ... … More »

  • Apple ordered to pay record 13 bn-euro Irish tax bill
    Apple ordered to pay record 13 bn-euro Irish tax bill AFP News - 1 hour 37 minutes ago

    The European Union on Tuesday ordered Apple to pay a record 13 billion euros in back taxes in Ireland, saying deals allowing the US tech giant to pay almost no tax were illegal. In the latest in a series of rulings that has angered Washington, … More »

  • Warsaw looks to win more finance business in wake of Brexit
    Warsaw looks to win more finance business in wake of Brexit Reuters - 1 hour 41 minutes ago

    Poland's deputy prime minister is due to meet a string of banks in London this week as the country tries to boost its status as one of Europe's fastest growing financial centres and benefit from Britain's decision to leave the European Union. … More »

  • German minister says no sense in ending talks but TTIP has failed Reuters - 1 hour 43 minutes ago

    German Economy Minister Sigmar Gabriel said on Tuesday there would not be an official declaration that negotiations on a free trade deal between the United States and the European Union had ended without an agreement although talks had de facto … More »

  • German economy minister backs EU decision to make Apple pay Ireland billions in tax Reuters - 1 hour 46 minutes ago

    BERLIN (Reuters) - German Economy Minister Sigmar Gabriel on Tuesday backed a decision by EU antitrust regulators to demand that Apple pay up to 13 billion euros in taxes plus interest to the Irish government. ... … More »

  • All four big Chinese banks report rising bad loans
    All four big Chinese banks report rising bad loans AFP News - 1 hour 48 minutes ago

    All of China’s “Big Four” state-owned banks reported mounting bad loans in the first half of the year, statements showed, as the world's second-largest economy faces souring debt amid slowing growth. The Industrial and Commercial Bank of China, the … More »

  • S. African school told to halt 'racist' hair policy
    S. African school told to halt 'racist' hair policy AFP News - 1 hour 50 minutes ago

    A South African school was ordered Tuesday to suspend allegedly racist hairstyle regulations after black pupils said they had been called monkeys by teachers for wearing banned 'afros'. Local education authorities in Gauteng province gave Pretoria … More »

  • G-III Apparel reports 2Q loss Associated Press - 1 hour 54 minutes ago

    On a per-share basis, the New York-based company said it had a loss of 3 cents. Earnings, adjusted for non-recurring costs, were 1 cent per share. The results missed Wall Street expectations. The average ... … More »

  • China lenders ICBC, BoC report near flat profits as margins shrink
    China lenders ICBC, BoC report near flat profits as margins shrink Reuters - 1 hour 57 minutes ago

    SHANGHAI/BEIJING (Reuters) - Two of China's Big-Five banks, ICBC and BoC, reported on Tuesday near flat profits as margins shrank, mirroring results of other major domestic lenders that are feeling the pain of China's slowing economic growth that is … More »

  • U.S. unwillingness to compromise ended TTIP - German economy minister
    U.S. unwillingness to compromise ended TTIP - German economy minister Reuters - 2 hours 11 minutes ago

    German Economy Minister Sigmar Gabriel on Tuesday said the United States had effectively ended talks on a free trade deal with the European Union because Washington had not wanted to compromise with its European counterparts. The U.S. and the EU … More »

  • Dogs, like humans, distinguish words and intonation
    Dogs, like humans, distinguish words and intonation AFP News - 2 hours 13 minutes ago

    Dogs distinguish words and intonation in the same region of the brain as humans, according to a new study of how man's best friend interprets our language. Published Monday in the journal Science, the report by researchers at Budapest's Eotvos … More »

  • Canada PM touts agricultural safety amid China canola dispute Reuters - 2 hours 14 minutes ago

    Canadian farm goods are high quality and safe, Prime Minister Justin Trudeau said in Beijing on Tuesday as his trade minister said Canada was working hard to resolve a canola import dispute that threatens C$2 billion (1.14 billion pounds) in … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.123-0.001-0.81%
    N21.SI
    0.3550.0000.00%
    E5H.SI
    0.235-0.005-2.08%
    5ME.SI
    0.725-0.010-1.36%
    G13.SI
    0.315+0.005+1.61%
    5OT.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.55+0.12+27.91%
    BJZ.SI
    0.45+0.09+25.00%
    BFK.SI
    0.46+0.06+15.00%
    M05.SI
    0.23+0.03+12.20%
    BTJ.SI
    0.525+0.055+11.70%
    BQD.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.13-0.02-13.33%
    5TI.SI
    0.20-0.03-13.04%
    AWI.SI
    0.176-0.024-12.00%
    A04.SI
    0.166-0.022-11.70%
    AWS.SI
    0.155-0.020-11.43%
    5WD.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3618+0.0025+0.18%
    USDSGD=X
    1.5201-0.0005-0.03%
    EURSGD=X
    1.7846+0.0031+0.17%
    GBPSGD=X
    75.2480+0.331+0.44%
    SGDJPY=X
    5.6952-0.0072-0.13%
    SGDHKD=X
    2.9676-0.0077-0.26%
    SGDMYR=X
    9,785.2246+32.7207+0.34%
    SGDIDR=X
    4.9023-0.012-0.24%
    SGDCNY=X
    1.0270-0.0029-0.28%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,321.90-5.20-0.39%
    GCZ16.CMX
    18.69-0.07-0.39%
    SIU16.CMX
    96.93
    ^XAU
    2.070.00-0.22%
    HGU16.CMX
    47.32+0.34+0.72%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.19
    ^FVX
    1.58
    ^TNX
    2.23
    ^TYX