Revisit: Dumping CDs for invesments

[Mr. Green]

A while back I entertained the thought of dumping 40k in CDs I have (3 more years @ 3%), but the market was up and I was willing to let them ride. Long term averages tell me the market will outperform them but that doesn't mean it will outperform them for the next 3 specific years (until they mature). As the market drops, I find myself increasingly wondering if I should consider converting them at some point. I'll lose 12 months of interest, or 3%, as a penalty for closing them early but the lower the market goes the more likely it is to outperform them over the next 3 years. If I walk into a branch and close them, I can wire the money to my Vanguard account and trade on it the same day as long as the transfer happens early enough in the day. Thoughts?

Worth noting the CDs are in 5k increments so I could hedge my bet by only converting some of them.

[ZiziPB]

What does your investment policy say and what is your desired asset allocation?  With the market going down, at some point presumably your portfolio will need to be rebalanced and the ratio of cash to equities to be righted.  That would require some of your cash to be invested into equities.

[Mr. Green]

I am 100% stocks, with the exception of these CDs, which are the last holdover from my pre-mustachian days. Whatever is converted would be dumped into VTSAX. The CDs currently represent ~7% of my liquid net worth.

[ZiziPB]

If you want to be 100% stocks, then be 100% stocks.  What you are doing is, however, is trying to time the market.  Basically, you are asking us to tell you if we think the market will do better than 3% in the next 3 years.  Who knows... 

Just stick to your chosen asset allocation and be consistent about it.

[Mr. Green]

I wasn't particularly looking for someone to reassure me that the market will outperform the CDs. I know I'm timing the market, and I already have a rough idea of when I would pull the trigger and move the money. I just like hearing other view points, and every once in a while someone drops a nugget worth reading and considering, even if it doesn't change my opinion.