Ch. 9:  Portfolio Management

9.0 Introduction

            Stocks generate high returns but are risky. Bonds generate lower returns and are less risky.  By investing in stocks and bonds simultaneously, one can effectively choose their desired level of return and risk. Consider the historical returns of six different portfolios:

Historical Returns (1926-2022)[1]

Because stocks generate larger average returns (10.3% over the period studied), investors seeking maximum returns can allocate 100% of their portfolio in stocks.  Investors seeking minimal risk can choose an allocation that is bond heavy.  An investor employing a 20% stock/80% bond portfolio, for example, can expect negative annual returns about half as often as an investor only buying stocks.  A full spectrum of risk-return profiles is available to investors.  This chapter should help you decide how to choose an allocation at different periods of your life.

9.1 Invest Your Age in Bonds

            The invest your age in bonds approach serves as a solid starting point for building a portfolio that reduces risk through time.  I seriously doubt you’ll follow this approach verbatim. This approach is too cautious for most. But the lessons learned from the approach will help investors choose a more sophisticated portfolio allocation.  Under this approach, a 35-year-old investor holds 35% of their portfolio in bonds (and 65% in stocks).  A 55-year-old investor holds 55% of their portfolio in bonds (and 45% in stocks). And so forth.  The invest your age in bond approach, and similar methods, provide three key benefits to investors. 

Benefit #1:  The investor will reduce their risk as they age.

• As investors age, they typically need to hold a progressively larger share of their portfolio in bonds (and a lower share in stocks).  Why?  When an investor has many years to invest (e.g. 20 years), the expected return on stock investing is very large.  A 20-year stock investor can expect to turn $1 into $6.73 over twenty years of investing.  While risk is important, the allure of returns are too great to ignore.  On the contrary, a one-month stock investor can expect to turn $1 into about $1.01 (and has a 41% chance of losing money[2].  For such a short investing window, the benefits (returns) of investment are small relative to the risk that must be endured.  Long-term investors care more about growth; short-term investors care more about risk.  Investors nearing retirement are typically short-term investors.  They will soon need to sell investments to cover their living expenses.  Thus, the closer one is too retirement, the shorter their investing window will be.

Benefit #2:  The investor will naturally buy-low and sell-high

• An investor that follows the invest your age in bonds approach will frequently need to rebalance their portfolio.  For example, image a 50-year-old investor has $300,000 in stocks and $300,000 in bonds, but there is a sudden stock market crash, leaving them with only $200,000 in stocks (and $300,000 in bonds).  To return to their desired portfolio mix, they must sell $50,000 in bonds and buy $50,000 in stocks (leaving them with $250,000 each in stocks and bonds).  Alternatively, if stock prices rise, they will need to sell stock.  If they have $400,000 in stocks and $300,000 in bonds, they must sell $50,000 in stocks and buy $50,000 in bonds.  Thus, when stock prices drop, they will buy stock and when stock prices rise, they will sell stock.  An investor steadfastly following the invest your age in bonds approach (or a similar method) will naturally buy-low and sell-high.  Nice.

  Benefit #3:  Eliminating Emotion

• For many investors, emotions are critical obstacles on the path to achieving financial goals.  Fear is particularly powerful. When stock prices drop, fearful investors often sell their stocks to avoid more losses.  And the so-called “fear of missing out (FOMO)” causes investors to buy when prices are rising.  Emotional investors may thusly be predisposed to buy high and sell low.  No bueno.  Such investors need to relinquish control of their investment decisions.  By strictly following the invest your age in bonds model (or a similar approach), the investor need not think about when they should buy and sell, but rather will follow the rules set forth by their plan.

If you think the invest your age in bonds approach is a bit arbitrary, you’re right!  These three benefits of the approach are legit but they could be achieved using other plans.  For example, you might decide to use an invest your age minus-10 approach (e.g. a 40-year old would invest 30% of their portfolio in bonds).  This approach would allow for more risk and still attain the benefits laid out above.  The invest your age in bonds approach is just a starting point to building a more sophisticated portfolio.     

9.2 Improving on this Approach

The invest your age in bonds approach provides a general template for investors—as we age, our portfolio should gradually transition towards more bond ownership.  But this transition doesn’t necessarily need to be smooth, and we shouldn’t expect everyone to follow the same trajectory.  Heck, some investors may wisely choose to hold no bonds. 

Factor 1:  Do you own any bond-like assets already?

            Like many state government employees, I am currently contributing to a state pension plan.  When I reach retirement (targeting age 57), I will receive monthly pension payments that will effectively replace about 60% of my salary and, thusly, cover at least 60% of my spending needs.[3]  These pension payments are not directly tied to any investments and, if nothing crazy happens, will be fully paid to me from retirement until death.  The fact that I have a pension should (and for me, does) play a major role in how I allocate my investments.  But how?  I’m 38-years-old right now.  What should my investment portfolio look like?  Let’s see how Donny Dumbass views my situation…

What is the mistake in Donny’s logic?  While he has correctly recognized that I will not need to withdraw much invested money during retirement, his recommendation to invest in bonds misses the mark entirely.  Donny should be advising me to invest primarily in stocks! Since I already have a safe asset (pension), I can afford to be risky with my investments.[4]  So, my investments are stock-heavy. Specifically, about 95% of my investment funding is allocated to stock.  

            To build an appropriate investment portfolio, one must assess their current mix of assets. Specifically, I find it useful to categorize assets. Some assets are bond-like. Bond-like assets offer a stable return with little risk. Pension payments are bond-like. Social Security payments are bond-like. Stock-like assets offer higher potential returns but are risky.  Cryptocurrencies are stock-like. Partial ownership in a small business is stock-like. And some assets toe-the-line. A vacation rental property, for example, is probably safer than stocks but riskier than bonds. 

            Investors that have lots of safe bond-like assets already have stable, income-generating assets. They can afford to seek higher returns with their remaining investments by purchasing stocks. Investors holding many stock-like assets need more stability and should buy bonds.

Factor 2:  How long until retirement?

            As investors age, they transition from an investment purchaser to an investment seller.  For most Americans, this transition occurs abruptly at retirement.  A 55-year-old retiree may see their income drop from $150,000/yr to $0 overnight. To cover expenses, the investor will, perhaps for the first time in their lives, begin making substantial and periodic withdrawals from their portfolio. 

           The longer you have until retirement, the more aggressive you can afford to be in your investment portfolio.  An investor with 30 years until retirement need not worry about fluctuations in the market.  A 30% drop in the S&P 500 today has little bearing on their future retirement goals.[5]  On the contrary, a 30% drop in the S&P 500 can be devastating to an individual that is only two years away from retirement since this person will need to withdraw funds in two years.  By investing 100% in stocks, a soon-to-be retiree with $2m invested wealth could see their net worth decline to $1.4m in quick succession.  So much for that beach house in Florida.

           While the invest your age in bond approach automatically reduces risk as a person ages, it does not control for retirement age.  Generally speaking, the earlier you plan to retire, the quicker you will need to transition to bonds (or other bond-like assets).[6]

Factor 3:  Are you saving for yourself or for future generations?

            Duration until retirement is important, especially for those that plan to exhaust nearly all of their net worth during retirement.  But many investors seek to build generational wealth. For example, consider Reagan. Reagan is 72 years old and has $6m in assets. She plans to spend about $2m between now and death and the remaining $4m will be allocated to a college fund for future generations to use. Reagan faces two very different planning needs.  She should probably invest the $2m based on her own needs—this money should be invested primarily in bonds and other safe assets.  But the remaining $4m can be invested in risky assets like stocks.  After all, her unborn ancestors will benefit far more from Reagan’s college fund if Reagan seeks high-interest investments today.  Generally, investors seeking to build generational wealth should be more willing to seek high-return/high-risk investing (often via stocks) than retirees that plan to exhaust their wealth during retirement.

9.3 Rebalancing

            Regardless of the stock-to-bond mix in your portfolio, fluctuations in the market will necessitate frequent monitoring and adjustments. We introduced the topic of rebalancing in section 9.1, but it merits additional consideration.  Imagine a 30-year-old investor has decided that a portfolio holding 80% stocks and 20% bonds is appropriate.  They invest $800,000 in stocks, $200,000 in bonds and make no changes to their investments.  How would their portfolio look like over time?  The table below shows their portfolio mix through time if they earn a 10% return in stocks and 5% in bonds.

By doing nothing the investor’s portfolio deviates further and further from their initial 80/20 portfolio mix.  And in the wrong direction—the older they get, the riskier their portfolio comes!  At age 50, the investor now holds a 91/9 portfolio mix.  Maybe this mix wouldn’t be so bad for a 30-year-old, but the 50-year-old is taking on far too much risk. 

            Rebalancing is a necessary component of your personal financial plan.  To stay on track, investors need to consistently re-evaluate their portfolios to assure that their current portfolio mix does not differ from their preferred allocation.  During times of extreme volatility, a portfolio can violently stray from your initial allocation.  For example, the S&P 500 declined 12% in just one day during March 2020.  Investors need to have a plan of action to buy stocks and sell bonds when stock prices decline, and sell stocks to buy bonds during stock rallies.[7]

            Stock-bond allocation is probably the most important reason one rebalances, but it’s not the only.  Even young investors, who choose to hold no bonds, need to rebalance.  For example, a young investor may choose to hold a portfolio containing 75% domestic stocks and 25% international.  When domestic stocks outperform international stocks, the investor will become overexposed in domestic stocks.  To readjust back to their desired allocation, they must sell US stock and buy more international stocks.

            How often should you rebalance?  That’s a good question. Investors with a high net generally have a greater need to rebalance since a 5% increase in stocks could mean hundreds of thousands of dollars in excess stock allocation.  If you are just getting started as an investor, rebalancing will, frankly, not be important.  Personally, I review all of my finances once per month.  I check my credit card statements, calculate my net worth, conduct any necessary rebalancing, etc. This seems to serve me just fine, but I’ll admit that it’s a bit arbitrary. 

9.5 Target Date Fund

            Building a portfolio and rebalancing can be a real pain in the ass.  As a reader of my book, I’m guessing you can and will handle this on your own.  But maybe you shouldn’t.  Back in the early 90s, a pair of investors created what is now called a target date fund.[8]  Target date funds are designed to be a do-all investment fund that contain US stocks, US bonds, international stocks, and international bonds.  When investment prices change, the fund will automatically rebalance to revert back to a desired allocation.  And as you age the fund will slowly and gradually transition towards a higher bond allocation.  It basically does everything in this chapter for you!  What’s the catch?  Slightly higher fees than other similar investments.  I routinely recommend target date funds to my friends and family and hold a few target date funds myself.

            Investing in a target date fund only requires one initial decision.  You’ll need to choose the year to set as your target.  Generally, the target year approximates your expected retirement year.  A Target Date 2050 plan, for example, hold a portfolio that is designed to be appropriate for workers that plan to retire in 2050.  Today, the fund will be very stock-centric, but as you approach 2050, the fund will slowly transfer more of your funds away from stocks and into bonds.  To get an idea of the types of allocations to expect, consider the allocation of the 12 target date funds currently offered by Vanguard, below.[9]  Note that all these funds are merely different allocations of four different index funds.  So, this target date fund is passively managed. 

As a college student, you would certainly want to steer clear of funds on the right-hand side of the column.  The Income fund (far right) is designed for investors that have reached retirement several years ago and are now primarily preserving wealth.  As indicated, investors in this bond will only be allocating about 30% of their money into stocks.[10]

          Investors seeking more risk will choose a fund with a much later target date.  The 2070 target date fund (VSVNX) offers the highest risk and greatest potential return.  At present, the fund is roughly 90% invested in stocks.  As indicated, the 2070, 2065, 2060, 2055, and 2050 funds are all quite similar; each holds about 90% in stocks.  This is quite the deviation away from the invest your age in bonds approach, but consistent with the portfolio recommendations made by academics.  For investors that are roughly 20-plus years away from retirement, a portfolio invested almost solely into stocks is reasonable since 20 years provides adequate time for a market to rebound from a significant decline.  The image below, which details target date allocations as a function of years prior to retirement echoes this sentiment. Until the investor reaches the 30 years to retirement mark, the fund is very aggressive, but then slowly reduces risk (by adding bonds) thereafter.  Even if you don’t use target date funds, you could use the image below as a model for your own investment allocation choices.

          While target date funds are often advertised based on the assumption that investors will choose a date that approximates their retirement date, there is no obligation to do so.  While I plan to retire around 2045, my target date fund holdings are all in the latest-year funds available in my accounts (e.g. 2070 target date funds).  I have a substantial pension plan, which is bond-like, so I choose to maintain a stock-heavy portfolio. Also, one doesn’t need to hold a single fund.  A 2028 retiree, for example, might choose to invest 60% of their money in the 2030 fund and 40% into the 2025 fund.  Finally, note that target date funds do not need to be on your only invested asset. You might choose to invest in a 2070 target date fund in your 401(k) as it may be the best option among a slew of high-fee crap. But perhaps the rest of your investment money is held in stock index funds. That is aggressive and sounds like a reasonable plan for a young investor.

           All of the Vanguard target date funds levy a 0.08% expense ratio, which is very low for target date funds.  A savvy investor could do a tiny bit better.  An investor looking to approximate the 2060 target date fund, for example, could allocate 54% of their investment funds into Vanguard’s Total Stock Market Index Fund Institutional Plus Shares (VSMPX), 36% into the Total International Stock Index Fund Investor Shares (VTIAX), and so forth.  In doing so, the investor could build a Target Date Fund lookalike and pay a slightly lower aggregate expense ratio. I can’t deny that.  But then the investor would need to do their own rebalancing and manage their own risk-reduction through time.  It may not be practical, especially within employer-sponsored retirement plans like 401(k)s, which offer limited investing options. A good target date fund is hard to beat and requires virtually no maintenance.  Set it and forget it.

9.6 Conclusions

            It’s difficult to provide direct guidance on asset allocation.  I would love to just say “you should just do this” but financial planning is rarely so simple.  The mix of stocks and bonds in your portfolio is based on many factors.  We discussed age, retirement date, and the desire to leave money for future generations.  But there are additional factors.  What is your level of risk tolerance?  Individuals that hate risk may rationally choose a bond-heavy portfolio.  How flexible are your future plans?  A 55-year-old planning to retire at 60 will typically choose a fairly cautious portfolio mix, but if they are happy to keep working if necessary, they may choose to take on more risk now.  Do you live in an expensive house that you are willing to sell (downsize to a cheap home) if necessary?  Then perhaps you can be riskier with your investments today.  There are lots of factors to consider.

            Additionally, tax planning will naturally add complexity to one’s financial situation.  Perhaps you would like to invest all of your money into a Target Date 2070 Fund.  But what if your 401(k) doesn’t have any target date funds.  You might opt for a Stock Index Fund in your 401(k), which means that you will need extra bond allocation in other investment vehicles.  Ultimately, everyone’s financial situation will have some quirks that makes it necessary to understand both the “why” and the “how” of your financial choices. 

End Notes

[1] Source. 

[2] Source. 

[3] During retirement, spending usually declines.  As my living expenses drop, my pension will cover a greater share of my costs.  But I plan to make it rain in retirement, so I’m not a typical case tbh.

[4] The fact that I have a relatively small monetary need in the future just means that I don’t need to save as much money as individuals that don’t have a pension.  Donny should be advising me to save less, not to seek a low risk/low return portfolio.

[5] This could improve the investors future outlook.  When stock prices decline, the investor will be able to buy shares at a 30% price reduction.

[6] This is only a generalization. If a worker retires at age 40 but is fully willing to return to work if necessary, it may be appropriate to hold a stock-heavy portfolio.  Such a young retiree probably needs substantial investment returns to maintain their standard of living into old age.  Since the investor is willing to return to work, they have more flexibility with their investing choices than an older retiree who is unable to work.

[7] Stocks are far more volatile than bonds. Thus, substantial rebalancing needs are far more likely to result from changes in stock prices than changes in bond values.

[8] A discussion on the history of target date funds can be found here.

[9] The 2015 fund was recently discontinued, but still appears on this table for whatever reason.  The holdings that would have appeared in the 2015 fund today are identical to the Income fund. Thus, Investors in the 2015 were automatically transferred to the Income fund when the 2015 fund attained equivalency.

[10] Source. 

Key Terms

Invest your Age in Bond Approach:  The simplistic risk management strategy where an investor invests X% of their investment funds into bonds, wherein X is their age, in years. 

Rebalancing:  The act of buying and selling assets to revert to your preferred portfolio allocation.  Because asset prices change over time, rebalancing is necessary to maintain a given mix of stocks, bonds, and other assets.

Target Date Funds:  Catch-all investment funds that (a) contain a mix of US and international stocks and bonds (b) automatically rebalance and (c) transition towards more bond ownership (safer) as one ages.

Practice Problems

1. Greg and Derek have similar financial situations.  Both have about $800,000 in invested funds.  Both are 50 years old.  And both plan to retire at age 65.  However, Greg will not receive any Social Security payments during retirement while Derek will receive about $25,000/year.  Based on this information, who should have a higher bond-allocation in their portfolio?  Explain your answer.

2. I’m considering investing in three different funds:  A Target Date 2060 fund, a Target Date 2050 Fund, and a Total Stock Market Index Fund. 

a.      Rank these funds from most to least risky.

b.       Rank these funds from highest to lowest expected annual return.

c.       For someone that plans to retire in 2055, what would be a good recommendation if these are there only three investment options?

3. Ava currently has $1.2 million in invested assets.  She is 58 years old and plans to retire in 2030.  She has no plans to leave any money to her heirs… she is happy to gradually exhaust her invested money.  Provide Ava some investing advice. 

4. Anna currently has $2.4 million in invested assets.  She is 58 years old and plans to retire in 2030.  She thinks she needs to spend about half of this money during retirement.  The other $1.2 million she plans to donate to a non-profit when she dies (which she thinks will be in about 30 years).  Provide Anna some investing advice. 

5. I am saving money for a house that I plan to buy in 20 years. Is it reasonable for me to invest in stocks now to finance this purchase? Explain.  Are there any other viable strategies. 

6. I am saving money for a house that I plan to buy in 2 months. Is it reasonable for me to invest in stocks now to finance this purchase? Explain.  Are there any other viable strategies. 

7. Generally speaking, do you think stock index funds or passively managed target date funds will have a higher expense ratio?  Explain.

8. Explain why rebalancing helps lead to the “buy low/sell high” goal.

9. I am using the “invest your age in bonds approach”.  I have $145,000 in my brokerage account.  If I am 29 years old, how much money should I have invested in stocks and how much should be in bonds?

a.       This approach is more ________ than I would generally recommend.  (Cautious or risky?)

10. A retiree desires to maintain a 40% bond/60% stock portfolio.  Currently they have  $960,000 in bonds and $1,444,000 in stocks.  Suddenly, stocks gain 10% in value.  What will they need to do to rebalance?

11. I have a portfolio that contains stocks and bonds.  Regarding rebalancing… when stock prices fall, what should I do?

12. I have a 100% stock portfolio that contains US stocks and international stocks.  Regarding rebalancing… when US stock prices sharply rise, what should I do?

13. I have 100% of my portfolio invested in a Target Date 2055 fund.  When stock prices rise, what should I do?

Solutions

1. Greg and Derek have similar financial situations.  Both have about $800,000 in invested funds.  Both are 50 years old.  And both plan to retire at age 65.  However, Greg will not receive any Social Security payments during retirement while Derek will receive about $25,000/year.  Based on this information, who should have a higher bond-allocation in their portfolio?  Explain your answer.

Greg.  Derek has a bond-like Social Security account—it’s safe and stable.  So Derek can afford to be riskier with his investments.

2. I’m considering investing in three different funds:  A Target Date 2060 fund, a Target Date 2050 Fund, and a Total Stock Market Index Fund. 

a.       Rank these funds from most to least risky.

Total Stock Market Index Fund, Target Date 2060 Fund, Target Date 2050 Fund.  As more bonds are added, the risk declines.  The Target Date 2050 fund has the most bonds.

b.      Rank these funds from highest to lowest expected annual return.

Total Stock Market Index Fund, Target Date 2060 Fund, Target Date 2050 Fund.  As more bonds are added, the expected return declines.  The Target Date 2050 fund has the most bonds and the lowest expected return.

c. For someone that plans to retire in 2055, what would be a good recommendation if these are there only three investment options?

They could allocate half of their money into the Target Date 2060 Fund and half into the Target Date 2050 Fund.  Of course, we would need to know more about the person to determine if this is a sound move.

3. Ava currently has $1.2 million in invested assets.  She is 58 years old and plans to retire in 2030.  She has no plans to leave any money to her heirs… she is happy to gradually exhaust her invested money.  Provide Ava some investing advice. 

Her situation is simple.  She only needs to worry about her own financial situation.  A nice simple plan would be to buy a 2030 Target Date Fund.  This fund will naturally reduce risk as she ages and will do a good job of preserving wealth while offering returns.

4. Anna currently has $2.4 million in invested assets.  She is 58 years old and plans to retire in 2030.  She thinks she needs to spend about half of this money during retirement.  The other $1.2 million she plans to donate to a non-profit when she dies (which she thinks will be in about 30 years).  Provide Annaa some investing advice. 

Anna has two situations to consider—hers and her donation.  The first portion is just like Ava’s.  She can invest $1.2 million in a 2030 Target Date Fund.  This fund will naturally reduce risk as she ages and will do a good job of preserving wealth while offering returns.  She can invest the rest very aggressively.  For example, she could buy a Target Date 2070 fund.  Or, she could divide her $1.2 million between a US Total Stock Market Fund and a Total International Stock Market Fund.

(This is not discussed in the chapter, but in my opinion, Anna could also decide to be very risk with all of her money as long as she is willing to potentially reduce her donation to the non-profit.  By investing all of her money in a risky way, she should be in good personal financial situation even if the stock market experiences a substantial downturn.  By having $1.2 million in extra money, she has a nice buffer against a collapse.  If the market does indeed collapse, she might have little left over for the non-profit.  Financial Planners would never make this recommendation as it is risky, but I’d probably be quite aggressive if I was in Anna’s shoes.)

5. I am saving money for a house that I plan to buy in 20 years. Is it reasonable for me to invest in stocks now to finance this purchase? Explain.  Are there any other viable strategies. 

I think so, although it might be smart to have a mix of stocks and bonds.  Over a 20-year period, stocks are very likely to perform better than bonds and this window is long enough that the stock market should have time to rebound from any near-future declines.  If I buy stocks now, I should probably prepare to eventually mix some bonds into my allocation.

Alternatively, you might consider a target date fund.  A Target Date 2045 Fund, for example, behaves as if you are retiring in 21 years; that’s similar to needing to access the funds to buy a house in 20ish years.  But you don’t have to choose this year.  You could take on more risk (later date) or less risk (earlier date).

6. am saving money for a house that I plan to buy in 2 months. Is it reasonable for me to invest in stocks now to finance this purchase? Explain.  Are there any other viable strategies. 

Unless you are willing to possibly not buy the house, this is unreasonable.  Two months does not provide adequate time for the market to rebound from a potential decline.  The investor should probably buy super safe assets, like soon-expiring government bonds, or even hold the money in a savings or checking account.

7. Generally speaking, do you think stock index funds or passively managed target date funds will have a higher expense ratio?  Explain.

This is not always true, but target date funds typically have higher fees since they require more work from the vendor. 

8. Explain why rebalancing helps lead to the “buy low/sell high” goal.

Read the chapter!

9. I am using the “invest your age in bonds approach”.  I have $145,000 in my brokerage account.  If I am 29 years old, how much money should I have invested in stocks and how much should be in bonds?

Amount in bonds:  $145,000*0.29 = $42,050

Amount in stocks:  $145,000*0.71 = $102,950

a.       This approach is more ________ than I would generally recommend.  (Cautious or risky?)

a. This is too cautious for my tastes.  Unless you have a specific goal in mind for the money, I would call this a long-term investment and I believe a 29-year old can take-on more risk.  At 29, we might expect this investor to consider a 2060 target date fund, which would have a much smaller (~10%) bond allocation.

10. A retiree desires to maintain a 40% bond/60% stock portfolio.  Currently they have  $960,000 in bonds and $1,444,000 in stocks.  Suddenly, stocks gain 10% in value.  What will they need to do to rebalance?

New Stock Value:  $1,588,400

Bond Value:  $960,000

Total Portfolio:  $2,548,400 (of which, 62.33% is held in stocks)

Correct Allocation

    Stocks = $2,548,400(0.6) = $1,529,040

    Bonds =  $2,548,400(0.4) = $1,019,360

The investor needs to sell $59,360 in stocks and use the money to buy bonds.  This will allow them to return to their 40% bond/60% stock portfolio.

11. I have a portfolio that contains stocks and bonds.  Regarding rebalancing… when stock prices fall, what should I do?

Sell bonds to buy stocks.

12. I have a 100% stock portfolio that contains US stocks and international stocks.  Regarding rebalancing… when US stock prices sharply rise, what should I do?

Sell US stocks to buy international stocks.

13. I have 100% of my portfolio invested in a Target Date 2055 fund.  When stock prices rise, what should I do?

Nothing!  The Target Date fund will automatically rebalance without you having to do anything.