From personal experience layoffs are a tricky subject and there’s a great deal of nuance. For the largest of companies that have 10s of thousands of employees there can be many factors which drive layoffs. Whether it be economic conditions, change in direction of the company, management or mismanagement, or simply pleasing Wall Street! For many reasons the process for performing layoffs may seem sterile but unfortunately from an HR and business security perspective it has to be. Many employees for large companies receive very generous severance packages. For small companies there is little incentive to let people go, they are our number one resource. It can take a long time and financial resources to replace the employees further down the line. But circumstances outside of the business’ control can make layoffs a necessary evil in order to keep the doors open. I work in the architecture and engineering field. In July 2008 it was announced that I would manage our local office of about 50 employees starting January 1, 2009. In July 2008 business was booming, and we couldn’t hire someone if we tried. September 15 Lehman Brothers filed for bankruptcy. By January 1, 2009, I inherited an office with a rapidly declining book of business as clients cancelled projects. We were a satellite office and also navigating the proclamations received from ‘mothership’. On the personal side of things my was wife was laid off while I was simultaneously planning a business future with fewer employees. Without doubt this was the hardest time of my career. Not because of the long hours spent trying to keep the business viable but because letting people go was so emotional and stressful. I knew everyone personally and knew the impact this would have on their families / personal life. The list of those to be let go changed 3-4 times a day as I sweated the details and consulted with senior colleagues. If skillsets were similar, what if one employee has two young children and mortgage and another a single person who rented an apartment? Is there a right answer? There were many other factors to account for. I still lose sleep over the day when the layoffs were made and unfortunately had to repeat the process in January 2010. The plan for our office was to avoid the weekly lay-off scenario. We also wanted to reassure retained employees that all things being equal we had a plan for the rest of the year. We watched from afar the weekly torture in other parts of the company.
From a purely $ numbers perspective being ahead of the curve actually saved jobs long term. When I received calls from mothership to cut more people, I simply declined, indicating that our business was in equilibrium and we were not the problem! I fully expected to be locked out of my computer the next day. Even though we carefully prepared with HR and tried to be as humane as possible during the lay-off process, I am sure the only thing the affected employees heard was the fact they no longer had a job. Severance packages, COBRA, resources we would make available to find new employment, in one ear out the other. Understandably so. HR demanded that e-mail be shut down. We negotiated the ability for employees to retrieve personal information from computers and to copy information that would help them to update their resumes/portfolios, under supervision, and allowed the affected employees to come back at a different time, after hours if they desired. While I am still happy working part-time, I am so glad I don’t have to deal with this aspect of business anymore. One size doesn’t fit all.
I ran some rebalancing scenarios using AI a few months ago – another rabbit hole! I initially used ChatGPT but this proved to be very frustrating. I switched to Gemini and found this more to my liking. During an episode of one of the podcasts I listen to regularly, the hosts indicated they achieved easier/better results for financial analysis using Gemini, and that inspired that change. I ended up running 20 or more scenarios, changing the prompts and guide rails. I won’t go down that entire rabbit hole here. But here is a summary: I started with a hypothetical $1m 50:50 portfolio, S&P 500 for stocks and 20-year treasuries for bonds as baseline for all scenarios. I have several reasons for picking the 20-year treasury, the main reason being I was going to run a 20 year back test and for academic purposes felt that a constant rate of return would reduce one of the variables. By coincidence the coupon interest rate was also very similar to today 20 years ago. The scenarios I ran assumed the portfolio is within an IRA, do not address taxes, RMD's or other withdrawals. Also note that the duration of any back test and start date can skew results, so take this all with a pinch of salt. Scenario 1: I ran a simple annual rebalance back test through end of 2025 which resulted in growth to $4.24mScenario 2: I then compared to 100% S&P 500 portfolio, to see what I was “leaving on the table” with a 50:50, which grew to $7.5m The subsequent process of refinements I sought to close the gap between 1 and 2. I had AI advise the number of “trades” required to maintain the strategy as I didn’t want a rebalancing process that required a lot of maintenance………………………….the refinement process took a couple hours, but I can only imagine the months it would have taken an analyst back in the day. Scenario 17 rules for rebalancing / guard rails:
Interest from bonds is reinvested into stocks every 6 months, dollar cost averaging while maintaining the $500k in bonds as a “bedrock” for the portfolio.
Dividends are reinvested into stocks.
The portfolio is allowed to deviate from 50:50 to a maximum of 70:30, to allow the stocks to run during bull markets while maintaining the initial $500k in bonds.
The 70:30 tether requires stocks to be sold to buy 20 year US treasuries at prevailing rates (reviewed quarterly).
Bonds are capped at $1m.
When stocks fall in value 10% from high water mark the lowest yielding bonds are sold to bring stock levels back up. If there is a further 10% drop rinse and repeat for every 10%. This cannot happen if $500k bond threshold is met.
Net result of all these gyrations, portfolio grows to $6.88m in the 20 year back test, with bond portion reaching $1m. This is much closer to Scenario 2 the 100% S&P 500 portfolio. This scenario would have required on average 3.15 trades per year with a peak of 6 in 2014, 2016, 2019. Scenario 18 is the same as 17 except for the stock portion I used a 4 fund portfolio (equally split between large cap blend (S&P 500), large cap value, small cap blend and small cap value, which matches equity positions in my portfolio) and this portfolio grows to $10.96m in the 20 year back test with bond portion reaching $1m. This is significantly larger than Scenario 2 the 100% S&P 500 portfolio. This scenario would have required a lot more maintenance, on average 6.5 trades per year with the peak year in 2022 requiring 20 trades. For scenarios 17 and 18 the increase in frequency of trades happens when the 70:30 tether is met after 7 years or so. The four fund portfolio has more trades because there are 4 funds vs 1 in the S&P 500 version, but in reality the maintenance required is very similar performing trades on a quarterly basis. This version of back testing shows that having a rebalancing strategy could potentially be effective matching or beating 100% S&P 500 performance with a 50:50 portfolio over a 20 year period. The added potential benefit for those who are about to retire or in early retirement and concerned about sequence of return risk, the severity of drawdowns during the first 6-7 years in these back tests were significantly mitigated by the bond holding. For what it's worth! Adding to the conversation.
Adam, fair comments. I still find his choice of example a little puzzling as the end result was so close. While the Invesco Equal Weight did not start until 2003 it is easy enough to back test. That being said, we are in the minutia here. Bottom line, in order to get stock market returns you have to take the risk of investing and as history has shown there will be ups and downs. I agree with your separate comment above "To me the best way to mitigate sequence of return risk is proper asset allocation between types of assets (equities, bonds, cash) coupled with a withdrawal plan that is suitable for your timeframe. Managing the sector allocations of my stock portfolio seems secondary to that."
I agree with Mark. Additionally, I would add that the article which compares the S&P 500 with the equal weight version seems overly dismissive and has some basic flaws. The article compares returns before and after expenses and concludes that because of expenses, the equal weight is an underperformer ….. by 1/10th of a percentage point, while still returning 11.3% annually! Pretty thin argument IMO. More importantly, by cherry picking dates you can generate different outcomes. For example, if the comparison starts in 2000 instead of 2003, the average annualized return of the equal weight (9.9%) is 1.6% higher per year than the S&P 500 (8.3%), which is a massive difference when compounded over 25 years. $100,000 compounds to $818,854 invested in S&P 500, the equal weight $1,152,902, which is 29% outperformance! I knew I was going to be able to generate that outcome because the longer period includes the Dot Com bubble, which is the type of event you own the equal weight for. By choosing 2003 as the starting point Jason Zweig captures the recovery only from Dot Com bubble, which works significantly in favor of the S&P 500. The devil is in the details. I assume the primary goal of equal weight is to address concentration risk, and it appears the equal weight held up much better and outperformed the S&P 500 when the chips were down from a risk perspective. I understand the underlaying premise of the article is to illustrate the impact of fees/costs which is very important subject, but I think the example used to illustrate that is quite poor. Jason cherry picks data and his conclusions cast shade on the performance of the equal weight index which IMO are unjustified.
Thanks, I didn't know that about the links. My takeaway also was that the article supports early retirement. However, it is also a little clinical and I was a little concerned it may not strike a chord with a number of HD readers
At 62 years of age, working part time and my wife fully retired age 57 we are still re-investing in stocks and bonds. We will be looking to do some Roth conversions over the next few years. I could see a scenario where future withdrawals from IRA's which are not earmarked for spending or gifting would be reinvested in taxable accounts and utilize tax efficient ETFs, municipal bonds etc.
Comments
From personal experience layoffs are a tricky subject and there’s a great deal of nuance. For the largest of companies that have 10s of thousands of employees there can be many factors which drive layoffs. Whether it be economic conditions, change in direction of the company, management or mismanagement, or simply pleasing Wall Street! For many reasons the process for performing layoffs may seem sterile but unfortunately from an HR and business security perspective it has to be. Many employees for large companies receive very generous severance packages. For small companies there is little incentive to let people go, they are our number one resource. It can take a long time and financial resources to replace the employees further down the line. But circumstances outside of the business’ control can make layoffs a necessary evil in order to keep the doors open. I work in the architecture and engineering field. In July 2008 it was announced that I would manage our local office of about 50 employees starting January 1, 2009. In July 2008 business was booming, and we couldn’t hire someone if we tried. September 15 Lehman Brothers filed for bankruptcy. By January 1, 2009, I inherited an office with a rapidly declining book of business as clients cancelled projects. We were a satellite office and also navigating the proclamations received from ‘mothership’. On the personal side of things my was wife was laid off while I was simultaneously planning a business future with fewer employees. Without doubt this was the hardest time of my career. Not because of the long hours spent trying to keep the business viable but because letting people go was so emotional and stressful. I knew everyone personally and knew the impact this would have on their families / personal life. The list of those to be let go changed 3-4 times a day as I sweated the details and consulted with senior colleagues. If skillsets were similar, what if one employee has two young children and mortgage and another a single person who rented an apartment? Is there a right answer? There were many other factors to account for. I still lose sleep over the day when the layoffs were made and unfortunately had to repeat the process in January 2010. The plan for our office was to avoid the weekly lay-off scenario. We also wanted to reassure retained employees that all things being equal we had a plan for the rest of the year. We watched from afar the weekly torture in other parts of the company. From a purely $ numbers perspective being ahead of the curve actually saved jobs long term. When I received calls from mothership to cut more people, I simply declined, indicating that our business was in equilibrium and we were not the problem! I fully expected to be locked out of my computer the next day. Even though we carefully prepared with HR and tried to be as humane as possible during the lay-off process, I am sure the only thing the affected employees heard was the fact they no longer had a job. Severance packages, COBRA, resources we would make available to find new employment, in one ear out the other. Understandably so. HR demanded that e-mail be shut down. We negotiated the ability for employees to retrieve personal information from computers and to copy information that would help them to update their resumes/portfolios, under supervision, and allowed the affected employees to come back at a different time, after hours if they desired. While I am still happy working part-time, I am so glad I don’t have to deal with this aspect of business anymore. One size doesn’t fit all.
Post: America Doesn’t Just Do Layoffs. It’s Fallen in Love With Them
Link to comment from March 20, 2026
I ran some rebalancing scenarios using AI a few months ago – another rabbit hole! I initially used ChatGPT but this proved to be very frustrating. I switched to Gemini and found this more to my liking. During an episode of one of the podcasts I listen to regularly, the hosts indicated they achieved easier/better results for financial analysis using Gemini, and that inspired that change. I ended up running 20 or more scenarios, changing the prompts and guide rails. I won’t go down that entire rabbit hole here. But here is a summary: I started with a hypothetical $1m 50:50 portfolio, S&P 500 for stocks and 20-year treasuries for bonds as baseline for all scenarios. I have several reasons for picking the 20-year treasury, the main reason being I was going to run a 20 year back test and for academic purposes felt that a constant rate of return would reduce one of the variables. By coincidence the coupon interest rate was also very similar to today 20 years ago. The scenarios I ran assumed the portfolio is within an IRA, do not address taxes, RMD's or other withdrawals. Also note that the duration of any back test and start date can skew results, so take this all with a pinch of salt. Scenario 1: I ran a simple annual rebalance back test through end of 2025 which resulted in growth to $4.24m Scenario 2: I then compared to 100% S&P 500 portfolio, to see what I was “leaving on the table” with a 50:50, which grew to $7.5m The subsequent process of refinements I sought to close the gap between 1 and 2. I had AI advise the number of “trades” required to maintain the strategy as I didn’t want a rebalancing process that required a lot of maintenance………………………….the refinement process took a couple hours, but I can only imagine the months it would have taken an analyst back in the day. Scenario 17 rules for rebalancing / guard rails:
- Interest from bonds is reinvested into stocks every 6 months, dollar cost averaging while maintaining the $500k in bonds as a “bedrock” for the portfolio.
- Dividends are reinvested into stocks.
- The portfolio is allowed to deviate from 50:50 to a maximum of 70:30, to allow the stocks to run during bull markets while maintaining the initial $500k in bonds.
- The 70:30 tether requires stocks to be sold to buy 20 year US treasuries at prevailing rates (reviewed quarterly).
- Bonds are capped at $1m.
- When stocks fall in value 10% from high water mark the lowest yielding bonds are sold to bring stock levels back up. If there is a further 10% drop rinse and repeat for every 10%. This cannot happen if $500k bond threshold is met.
Net result of all these gyrations, portfolio grows to $6.88m in the 20 year back test, with bond portion reaching $1m. This is much closer to Scenario 2 the 100% S&P 500 portfolio. This scenario would have required on average 3.15 trades per year with a peak of 6 in 2014, 2016, 2019. Scenario 18 is the same as 17 except for the stock portion I used a 4 fund portfolio (equally split between large cap blend (S&P 500), large cap value, small cap blend and small cap value, which matches equity positions in my portfolio) and this portfolio grows to $10.96m in the 20 year back test with bond portion reaching $1m. This is significantly larger than Scenario 2 the 100% S&P 500 portfolio. This scenario would have required a lot more maintenance, on average 6.5 trades per year with the peak year in 2022 requiring 20 trades. For scenarios 17 and 18 the increase in frequency of trades happens when the 70:30 tether is met after 7 years or so. The four fund portfolio has more trades because there are 4 funds vs 1 in the S&P 500 version, but in reality the maintenance required is very similar performing trades on a quarterly basis. This version of back testing shows that having a rebalancing strategy could potentially be effective matching or beating 100% S&P 500 performance with a 50:50 portfolio over a 20 year period. The added potential benefit for those who are about to retire or in early retirement and concerned about sequence of return risk, the severity of drawdowns during the first 6-7 years in these back tests were significantly mitigated by the bond holding. For what it's worth! Adding to the conversation.Post: Well That’s A Bummer!
Link to comment from March 18, 2026
Adam, fair comments. I still find his choice of example a little puzzling as the end result was so close. While the Invesco Equal Weight did not start until 2003 it is easy enough to back test. That being said, we are in the minutia here. Bottom line, in order to get stock market returns you have to take the risk of investing and as history has shown there will be ups and downs. I agree with your separate comment above "To me the best way to mitigate sequence of return risk is proper asset allocation between types of assets (equities, bonds, cash) coupled with a withdrawal plan that is suitable for your timeframe. Managing the sector allocations of my stock portfolio seems secondary to that."
Post: Sector Fund by Stealth
Link to comment from March 13, 2026
I agree with Mark. Additionally, I would add that the article which compares the S&P 500 with the equal weight version seems overly dismissive and has some basic flaws. The article compares returns before and after expenses and concludes that because of expenses, the equal weight is an underperformer ….. by 1/10th of a percentage point, while still returning 11.3% annually! Pretty thin argument IMO. More importantly, by cherry picking dates you can generate different outcomes. For example, if the comparison starts in 2000 instead of 2003, the average annualized return of the equal weight (9.9%) is 1.6% higher per year than the S&P 500 (8.3%), which is a massive difference when compounded over 25 years. $100,000 compounds to $818,854 invested in S&P 500, the equal weight $1,152,902, which is 29% outperformance! I knew I was going to be able to generate that outcome because the longer period includes the Dot Com bubble, which is the type of event you own the equal weight for. By choosing 2003 as the starting point Jason Zweig captures the recovery only from Dot Com bubble, which works significantly in favor of the S&P 500. The devil is in the details. I assume the primary goal of equal weight is to address concentration risk, and it appears the equal weight held up much better and outperformed the S&P 500 when the chips were down from a risk perspective. I understand the underlaying premise of the article is to illustrate the impact of fees/costs which is very important subject, but I think the example used to illustrate that is quite poor. Jason cherry picks data and his conclusions cast shade on the performance of the equal weight index which IMO are unjustified.
Post: Sector Fund by Stealth
Link to comment from March 13, 2026
Thanks, I didn't know that about the links. My takeaway also was that the article supports early retirement. However, it is also a little clinical and I was a little concerned it may not strike a chord with a number of HD readers
Post: Forget the 4% rule.
Link to comment from March 13, 2026
Duplicate
Post: Forget the 4% rule.
Link to comment from March 12, 2026
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Post: Forget the 4% rule.
Link to comment from March 12, 2026
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Post: Forget the 4% rule.
Link to comment from March 12, 2026
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Post: Forget the 4% rule.
Link to comment from March 12, 2026
At 62 years of age, working part time and my wife fully retired age 57 we are still re-investing in stocks and bonds. We will be looking to do some Roth conversions over the next few years. I could see a scenario where future withdrawals from IRA's which are not earmarked for spending or gifting would be reinvested in taxable accounts and utilize tax efficient ETFs, municipal bonds etc.
Post: Always an investor?
Link to comment from March 12, 2026