Should I Do Anything with the Gone-Fishing Portfolio in Response to this Volatility?

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A gone-fishing portfolio is a portfolio of just a few stocks which should weather the ups and downs of the market fairly well while only rebalancing twice a year. We recommend a gone-fishing portfolio for people who are just getting started with investing. For people with more invested assets or who are in or near retirement, we recommend professional management. For that reason, our calculators do not make recommendations beyond age 70.

We have thousands of people who follow our annually updated Marotta’s Gone-Fishing Portfolio.

Periodically, I get an email from one such reader saying something like:

Late last year I put money in the Gone Fishing Portfolio. Should I make adjustments given the volatile market we’ve been experiencing over recent weeks?

The gone-fishing portfolio is intended to be an asset allocation using a small number of very low costs funds that you can set once and then “go fishing,” meaning live out your actual dreams in life. We typically recommend looking at it in February when we come out with a new gone-fishing portfolio allocation and then not peeking until the next year.

When things happen during the year that make you want to do something and you wonder what you are supposed to do, the answer is that you should rebalance.

Rebalancing is the process of trading your investments so they match your investment targets. To rebalance, you always sell what has gone up to buy more of what has gone down. Rebalancing to your investment targets will naturally do what is appropriate.

When stock prices are soaring, rebalancing will sell off those stock gains to invest more in the stability of bonds. When stock prices are falling, rebalancing will take money out of those stable bonds so you can invest back into the appreciation of stocks.

For a gone-fishing portfolio, these inter-year rebalancing updates are optional. You can simply rebalance in February and if you make new contributions.

However, if you are tempted to do something with your portfolio, rebalancing is always the best strategy.

If you find yourself tempted to do something a lot, you may be a good candidate for our “Do-It-Yourself” service level. That way you’ll have access to the care of a financial advisor to protect you from the big mistake. Additionally, the DIY service level has a few notable differences. For example, the DIY service level has more diversification through having more funds, and it also utilizes the dynamic tilt and freedom investing strategies.

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President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. Favorite number: e (2.7182818...)