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Old 12-16-2007, 06:41 PM   #121
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I can only pass on what I read: Commodity Futures Funds
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Old 12-16-2007, 07:09 PM   #122
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Old 12-17-2007, 03:14 AM   #123
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most of these funds are structured as some sort of partnership and is reported on a k1. they arent included on your regular brokerage tax statement in entirety on the ones like fidelity gives you. . problem is these didnt all show up until end of march. beginning of april so if you werent aware you were getting reported on a k1 and filed you had to do an amended return.

most commodity funds dividends are all at regular income tax levels too
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Old 12-18-2007, 12:00 AM   #124
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Umm, so wait I wanted to get some advice, studies, charts, etc to look at whether or not all things being equal, a once a year rebalancing will increase returns. Did we go over that or make some conclusion on this?
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Old 12-18-2007, 06:59 AM   #125
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This was covered in the links posted in message #115 previously.

All things being equal, rebalancing once a year is too often. However, you should be taking some fund distributions in cash and not automatically reinvesting them. You should use these distributions along with new money to buy whatever asset is below your target (i.e. buy low). This is tough to do because you would be buying small cap value and REITs nowadays. But this will be helpful to keep taxes in control.

As mathjak107 hinted, actually rebalancing no sooner than about every 2 years appears to be good. Furthermore, rebalancing at a specific time frame does not appear to be beneficial. Better is to rebalance when asset allocation is different from your target significantly. Say by 5% of total portfolio value for large holdings or by 25% of smaller holdings. Once again try to do this in a tax efficient way.
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Old 12-18-2007, 08:27 AM   #126
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Umm, so wait I wanted to get some advice, studies, charts, etc to look at whether or not all things being equal, a once a year rebalancing will increase returns. Did we go over that or make some conclusion on this?
Shabber2,

While there is no guarantee, yearly rebalancing ususally increases returns. See Bernstein's The Intelligent Asset Allocator for a bunch of charts showing the 'bulge' gained from yearly rebalancing for several different cases.
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Historical Data Sources to Aid Asset Allocation
Old 12-19-2007, 08:32 PM   #127
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Historical Data Sources to Aid Asset Allocation

Can't remember if these links were mentioned earlier. I just ran across them in an AAII article, so here they are:

Planning Resources There are several other places where you can find historical data to help you make the final asset allocation decision. One of the best on the Web is at www.callan.com. Callan Associates routinely collects performance on thousands of institutional investment and mutual fund products; the information is aggregated in the form of various indexes based on investment style and asset class. A similar database available to the general public is maintained by Wilshire Associates at www.wilshire.com.
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Old 01-01-2008, 05:25 PM   #128
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A new article on rebalancing by Gobind Daryanani just appeared in the Jan 2008 issue of the Journal of Financial Planning: FPA Journal - Opportunistic Rebalancing: A New Paradigm for Wealth Managers

It discusses "opportunistic rebalancing" which is 'range rebalancing' combined with how often one 'looks' to see if rebalancing is necessary to bring things back to within tolerance.

Not explicit mentioned in the article, but suggestive is that this opportunistic rebalancing is not inconsistent with buying rebalancing on dips.

Quote:
Yet significant benefits can be achieved with optimal location combined with opportunistic rebalancing (30 bps from location and 50 bps to 80 bps from rebalancing, depending on the period considered).
Comments and questions welcome!
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Old 01-02-2008, 09:01 AM   #129
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Thanks for the article. I just settled on an AA last spring and my plan called for May 1st to be my first "official" rebalance day. I have a long term perspective, I'm still accumulating and I'm still trying to buy my way to the AA I set (I have the cash/bond, u.s. stock and intl at target but still have work within these classes). As we hit some rough patches this past year I accelerated my buying of classes that were getting hit and felt a little like I was market timing. This appears to absolve me of that offense. I also have been unsure of what size band to allow the classes in order to get the most benefit. This article has ended that debate for me I will be using 20%.
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Old 01-02-2008, 09:01 PM   #130
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Asset allocation data for select asset classes, and for three model portfolios -- returns for 1, 5, and 10 year periods. At American Association Individual Investors website:

AAII.com Login
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Old 02-06-2008, 06:56 PM   #131
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I wanted to call attention to a relatively new Vanguard whitepaper "Portfolio Construction for Taxable Investors" which is esstentially a summary of this entire thread:
https://institutional.vanguard.com/i...nstruction.pdf

This was brought to my attention by poster ddb on the Diehards forum. It talks about asset allocation, sub-asset allocation, active and/or passive allocations, asset location, manager selection, rebalancing, and other topics in its 24 pages.
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Old 02-06-2008, 08:35 PM   #132
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I wanted to call attention to a relatively new Vanguard whitepaper "Portfolio Construction for Taxable Investors" which is esstentially a summary of this entire thread:
https://institutional.vanguard.com/i...nstruction.pdf

This was brought to my attention by poster ddb on the Diehards forum. It talks about asset allocation, sub-asset allocation, active and/or passive allocations, asset location, manager selection, rebalancing, and other topics in its 24 pages.
Nice paper.

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Old 02-16-2008, 07:49 AM   #133
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Hey folks, a relatively new member to the forum, grfiv, has quite an outstanding set of web articles and presentations on the subject of asset allocation.

Read his introduction and get links to good stuff at this link: http://www.early-retirement.org/foru...tor-33276.html
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Old 03-09-2008, 09:31 AM   #134
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Jonathan Clements writes a 'how-to' asset allocation 'tutorial' in his column today in 7 easy steps:
Getting Going - WSJ.com
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Old 03-09-2008, 03:56 PM   #135
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oooh, homework. <kidding>
...the last act of rebalancing that you did.
easy one.
i changed strategy in the 2Q of 2007, right after i FIREd. i wanted to adopt a balanced 50/50 temporarily for 1 year til i saw how my pension + fixed annuity actually covered my annual expenses and how much pain was to be involved.
i invest only in MFs. i increased my DCA into tax free muni MFs, reduced my DCA into stock MFs, and let the portfolio gradually adapt itself to the change. didn't sell anything. trying to reduce tax burden and generate income just in case my expenses grew beyond my pre-FIRE projections.
so far so good. my projected income and expenses are pretty much on target to what i had calculated pre-FIRE.
because of my age, i will return to a 60/40 by changing my DCA allotments again in late 2008 and gradually let it readjust.
comments are welcome!
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Old 03-10-2008, 11:25 AM   #136
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Originally Posted by Shabber2 View Post
Umm, so wait I wanted to get some advice, studies, charts, etc to look at whether or not all things being equal, a once a year rebalancing will increase returns. Did we go over that or make some conclusion on this?
Smart money ran an article years and years ago which did a monte carlo simulation with rebalancing.

Conclusion was to let winners ride more than rebalance out for long term (for best performance using past performance). I think conclusion was 2 years or 3 years, or 10% out of line with allocation.

I have not followed this whole thread, but saw this question and will add my comment to it.

In my own situation, I rebalance 2X per year.

I start Jan 1 off with proper allocation and proper contributions to main that allocation for the year (45% large cap, 15% mid cap and 15% small cap; 15% international large cap and 10% international small cap).

In June, I adjust contributions so anything underperforming is getting more money. Might take 45% and drop it to 40% for example, and up another asset by 5%. The goal is to have proper allocation in December without selling anything.

In December I will reset all contributions to normal allocations, and also buy/sell in 401ks and IRAs to make it all start January off properly. In the 18 months I have been doing this, my allocations have never been off by more than 2% of target anytime I checked.

A caveat to this is I am increasing from 0% bonds to 10% bonds, by adding 1% to bonds at each rebalance (lowered large cap to do this). So above allocation is only 43% large cap right now (unless market has adjusted it for me last 3 months) and 2% bonds. Will go to 42-3 in June when I rebalance.
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Old 05-27-2008, 02:11 PM   #137
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It's been awhile since this thread has had any posts, but it has had alot of page views: It's now in the top 10 most-viewed threads for the FIRE and Money forum.

But there has been alot of activity at the Diehards forum in the last couple of months as well. I want to bring to anyone's attention that Bogleheads :: View Forum - Investing - Portfolio Help has evolved into a free online personal portfolio asset allocation help forum where you can show your portfolio, your fund selections, your desired asset allocation and get a personalized response from the folks who hang out there. You can even ask questions after seeing a customized for you portfolio asset allocation.

There is nothing like it on the web as far as I can tell. It's simply awesome!
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Old 10-08-2008, 01:21 PM   #138
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I thought this was a good thread to reread in these interesting times.

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Originally Posted by bamsphd View Post
Sorry I'm behind on my homework. I'll get it done Real Soon Now....
The recent changes in my portfolio's mark-to-market value have finally motivated me to finish some of my homework. I expect to do some tax loss harvesting, and to rebalance my portfolio soon.

So almost 11 months after the homework was assigned, my CURRENT portfolio X-Ray information is:
  • Cash 9.17%
  • US Stocks 45.50%
  • Foreign Stocks 21.76%
  • Bonds 22.56%
  • Other 1.01%
Valuation
21 21 24
4 6 6
6 7 6

Interest Rate Sensitivity
91 0 9
0 0 0
0 0 0

The only assets I could not enter properly were my individual TIPS, which were entered as conventional short-term treasuries, and make up 10.43% of my portfolio.
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Old 10-08-2008, 07:44 PM   #139
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The recent changes in my portfolio's mark-to-market value have finally motivated me to finish some of my homework. I expect to do some tax loss harvesting, and to rebalance my portfolio soon.
Speaking of homework... I need to do some on those Long Term Capital Gain tax rates for 2008-2010.

This might not be a good year to do 'tax loss harvesting'. If your cap gains tax rate is very low this year, it might be better to use those losses later. Taking them now will just increase the gains in future years, which may be taxed at a higher rate.

Due to the wonderful complexity of our tax system, you may need to run this through a tax program to even see if you qualify. However, since Congress can't seem to finalize the 2008 laws before the end of 2008, there is no way to know for sure at this time.

-ERD50
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Old 10-09-2008, 07:47 AM   #140
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...the last act of rebalancing that you did.
in the 2Q of 2007...adopt a balanced 50/50 temporarily for 1 year til i saw how my pension + fixed annuity actually covered my annual expenses and how much pain was to be involved.
i increased my DCA into tax free muni MFs, reduced my DCA into stock MFs, and let the portfolio gradually adapt itself to the change...will return to a 60/40 by changing my DCA allotments again in late 2008 and gradually let it readjust.
5 months later update in a very ugly market: never did the 60/40 AA change, and am still running at 51/49. slightly increased DCA into TE munis recently to shorten the time to arrive at self-inposed target principal. overall YTD loss now at 21%. no intention or need to rebalance.
we are all feeling the pain...
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