Gyroscopic Investing

buddtholomew wrote: I have an additional 10K in Cash available for investment in a taxable account and am weighing the following options. I have a total of 10K in ST and LT capital gains incurred after selling PRPFX earlier this year and transitioning to the 4x25 HBPP.

1. Do nothing. All assets are well within their 15/35 tolerance bands. Keep the 10K liquid for rebalancing purposes when a 15% band is breached.
2. Sell GLD and VTI (approximately $2500) to capture gains and offset losses respectively.
3. Invest a portion of the 10K in VTI to restore equities to 25% of portfolio.
4. Invest the whole 10K to restore all assets to 25% of portfolio.

VTI: $23,071.47 22.42% $(3,941.63)
GLD: $28,072.20 27.28% $5,095.07
TLT: $26,704.79 25.95% $3,785.04
CSH: $25,053.65 24.35% $99.97

Adam1226 wrote: I personally would view this as a chance to safely speculate.  None of the options are wrong, so pick the one you think is going to do the best, and see if you're right. If it were me, I'd buy bonds.

buddtholomew wrote: Very interesting perspective. Buying bonds was not one of the options I was considering. Would you care to elaborate further on your suggestion?

VTI: $23,071.47    22.42%    $(3,941.63)
GLD: $28,072.20    27.28%    $5,095.07
TLT: $26,704.79    25.95%    $3,785.04
CSH: $25,053.65    24.35%    $99.97
 

Lone Wolf wrote: I like option #4 (the "buy lagging assets option"), so long as this makes sense from a trading cost and tax perspective.  When I have cash coming online for some reason, this is generally what I do.

I look at it as an opportunity to get back to 4x25% without much risk of tax consequences.

buddtholomew wrote: What interests me most is how taxable investors manage those investments that have appreciated in value substantially (20%+). Do they contribute to lagging investments and restore the portfolio to 4x25% or sell the outperforming asset and incur capital gains?