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Old 11-14-2013, 05:03 PM   #21
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Jim Otar says to rebalance every 4 years after the Presidential election with some supporting data to show it is the best approach. YMMV
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Old 11-14-2013, 05:12 PM   #22
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I'm at the stage where I'm trying to manage risk rather than maximize returns. Being what I consider FI, I'm pulling my gains from equities. I view this as another couple months of expenses gained, there's plenty left for long term growth.
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Old 11-14-2013, 06:18 PM   #23
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I don't like to use a "date" on which to rebalance. The reason is that one can miss significant moves down, then back up.

An example of a possible missed opportunity occurred just this year. From mid-May to late-June, emerging markets dropped 15%. Time to rebalance into EM. From late-June to mid-October, EM is up 18% since then, but still down year-to-date.

Many (but not all) asset classes move more than 10% each way in any given 12-month period.

While one's overall stock:bond ratio may not change, other things can be going on, so I am in the "look-often, but rebalance on significant change" camp. Even so, rebalancing can be a rare event.
As I am a slicer, I can see relative movements between sectors, countries, industries, etc... These relative movements are often a lot larger than the relative movements between total equity market index and total bond market index. I find the above large movements interesting, and would attempt to capitalize on it by rebalancing between sectors. This results in mixed success of course, so I do not go overboard and liquidate something on a wholesale level.

And when trying to reduce equity AA, I could be selling some loser stocks or ETFs that I felt could never recover, or also to sell stocks that I thought were overvalued.
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Old 11-14-2013, 06:26 PM   #24
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Jim Otar says to rebalance every 4 years after the Presidential election with some supporting data to show it is the best approach. YMMV
I remember reading that. He made a good case for it.
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Old 11-14-2013, 06:56 PM   #25
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Jim Otar says to rebalance every 4 years after the Presidential election with some supporting data to show it is the best approach. YMMV
How would this have done in 2008?
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Old 11-14-2013, 06:57 PM   #26
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Jim Otar says to rebalance every 4 years after the Presidential election with some supporting data to show it is the best approach. YMMV
Okay, that's what Omar said. What do you say? Is it whatever what Omar says?
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Old 11-14-2013, 07:08 PM   #27
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I remember reading that. He made a good case for it.
I don't think he made a good case. Wasn't it just fortuitous that a couple of the best rebalancing times occurred in those years. Remove those 2 data points and there is no case. Maybe even remove one data point and there is no case.
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Old 11-14-2013, 07:16 PM   #28
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After 2013 being a banner year for equities (20+ % in my case) I am now at roughly at 63%/37% equities/bonds (~5% cash not included). Since my planned and actual AA a year ago was a 55-60%/45-40% range, I am wondering if it is time to do a 6 percent (or so) re-balance or just let it be. (Age 58, retired and not getting any younger).
I'm 48 and positioned in 87% stock ETF's, 10% gold and 3% cash that I play around with 3X leveraged ETF's. Sometime in early 2014 I will be shifting 10% into bonds as a hedge against a stock market correction.
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Old 11-14-2013, 08:31 PM   #29
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I don't think he made a good case. Wasn't it just fortuitous that a couple of the best rebalancing times occurred in those years. Remove those 2 data points and there is no case. Maybe even remove one data point and there is no case.
I agree. It's very easy to come up with spurious correlations especially when there's no real logical reason for the decision rule.
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Old 11-14-2013, 08:37 PM   #30
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I've seen it opined that there is no rebalance "bonus", but I don't have that info at my fingertips...
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Old 11-14-2013, 08:41 PM   #31
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It does not pay to rebalance during a long secular market rise like in 1980-2000, if one knew that secular rise in advance.

Rebalance works darn well in the 2000-2013, but not if one does it on a fixed day of the year. He would miss the big market troughs in March 2003 and March 2009. Better do it by % of asset imbalance.
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Old 11-14-2013, 09:01 PM   #32
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It seems everyone wants to tell about their rebalance philosophy ... including me, I fear.
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Old 11-14-2013, 09:09 PM   #33
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It's not a philosophy, it's a religion.

I am an atheist or at least an agnostic, in both religion and investing.

Having an unshaken belief in some rules does keep things simple. However, I see life as complicated and not obeying simple rules.
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Old 11-14-2013, 09:18 PM   #34
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Good thoughts NW-Bound.

When it comes to investing I've tried to be a complete pragmatist. If it will make me money over the longish run and is completely legal, I just might do it. I don't care if it's market timing or buy-hold, just has to work.
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Old 11-14-2013, 09:22 PM   #35
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Whatever makes money makes me feel good. I just wish I could be right all the time.
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Old 11-14-2013, 10:17 PM   #36
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It seems everyone wants to tell about their rebalance philosophy ... including me, I fear.
That is the thread topic, isn't it? The OP asked if it was time to rebalance. There is no provable correct time. Therefore, most of us gave our own philosophy. The OP gets the advice he paid for. I'm wondering what kind of posts your are otherwise looking for?
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Old 11-14-2013, 10:43 PM   #37
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That is the thread topic, isn't it? The OP asked if it was time to rebalance. There is no provable correct time. Therefore, most of us gave our own philosophy. The OP gets the advice he paid for. I'm wondering what kind of posts your are otherwise looking for?
I'm just making an unnecessary observation. Don't mind me.
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Old 11-15-2013, 09:13 AM   #38
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That is the thread topic, isn't it? The OP asked if it was time to rebalance. There is no provable correct time. Therefore, most of us gave our own philosophy. The OP gets the advice he paid for. ...
I appreciate all the input people have provided to my OP. Lots of good info and food for thought. I'll probably just wait 2 months and go with my January re-balance (if still needed). That gives me time to see what kind Financial Plan Vanguard provides based on my goals and "my risk/comfort level" (since I'm eligible for a free ones and have never used this service). Yes, I'll have a grain of salt or two handy.
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Old 11-16-2013, 06:45 AM   #39
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I'm a January rebalancer as well, for some reason glad its coming soon.

January works for us because there is always a slight change in the norm since some of the usual automated monthly buys (we're in accumulation phase) are halted to instead put the max into my Roth IRA in January and wife's in February. Depending on how out of wack things are might not transfer any funds at all, instead changing monthly buy AA to compensate over the ensuing year.
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Old 11-16-2013, 06:50 AM   #40
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It seems everyone wants to tell about their rebalance philosophy ... including me, I fear.
I don't think there's one right way to rebalance. It's just important that you use objective, measurable criteria to trigger a rebalance... and do it.
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