conversation: User (Berzurker): "Let's say I own 4 index funds in an individual account at vanguard. I have 50% in domestic stock, 30% in international stock, 10% in a REIT, and 10% in bonds. Let's assume I have made a profit on my investments but I want to reallocate into 80% bonds because I am feeling bearish on stocks. \n\nIs there any way to avoid paying capital gains tax on my earnings when I transfer funds into my bond investment? \n\nIf I was doing this same thing in an IRA or 401k would I have to pay capital gains when re allocating?\n\n\nAlso, what are your thoughts on reallocation such as this as opposed to buy and hold? (30 year time frame)"
  Self: "&gt;Is there any way to avoid paying capital gains tax on my earnings when I transfer funds into my bond investment?\n\nNo, and...\n\n&gt;I want to reallocate into 80% bonds because I am feeling bearish on stocks.\n\nMarket timing is not an investment strategy, it is a gambling strategy.  You cannot predict the future.\n\n&gt;If I was doing this same thing in an IRA or 401k would I have to pay capital gains when re allocating?\n\nNo.  There aren't any capital gains in an IRA or 401k."
  User (Berzurker): "Thanks for the quick and informative response. \n\nOn market timing, I guess I don't see how it's that black and white.\nIf you buy and hold, you are essentially betting that the markets you are invested in will be higher than they are currently. That is in and of itself not a guarantee.\n\nI can see how market timing would be very risky on a short term basis, such as day trading, but I think it becomes less risky on a time frame of years. If the S&amp;P500 is at a p/e ratio of 100, it makes sense to me that a stock market crash is more probable than if the S&amp;P500 is at a p/e ratio of 10. Also there are many other factors to consider like employment and interest rates. In my mind, what you are calling market timing essentially comes down to risk management. Am I wrong here?"
  hydrocyanide (hydrocyanide): "You aren't wrong. It's ridiculous not to shift a portfolio with new information. Deciding on an arbitrary allocation three years ago, for example, should have no bearing on what your allocation is today."
  