Year Start Rebalancers

[M Paquette]

My policy calls for me to rebalance once a year, if and only if one or more of the investments is outside the +-25% tolerance bands I have set for that allocation, or the cash reserve falls below 1 year's worth.

I just ran the numbers, and I have nothing to do this year. Some stock funds are close to the high end, and some bond funds are close to the low end, so maybe I'll have to do something next year.

I can hardly wait.

[Midpack]

I review quarterly, but I don't rebalance unless an asset class gets 5% outside of overall AA target (or 25% off asset class target). An approach that many here probably use. I am usually deploying new cash since we're still working and I probably don't have to rebalance more than annually if that in the long run.

[HFWR]

Quote:

Originally Posted by Midpack I review quarterly, but I don't rebalance unless an asset class gets 5% outside of overall AA target (or 25% off asset class target). An approach that many here probably use. I am usually deploying new cash since we're still working and I probably don't have to rebalance more than annually if that in the long run.

This is what I use, and one of my funds, PCRIX, is now at 36.6%. Rubber meet road?

[kaudrey]

I am a little low on bonds/cash right now but decided that is OK. I am overweighted on foreign funds a bit, but decided to just change my 401(k) allocation out of foreign funds to other things to help them catch up toward my targets. I'll look again at the end of the 1st quarter, and if things are still out of whack, I'll probably move some money out of foreign investments.

I am still working/investing for quite a while, so the added risk of the foreign funds doesn't really bother me.

[TromboneAl]

I should probably rebalance less often than once per year, but one gets the itch to "do something" with regard to one's investments, and rebalancing resolves that.

So far today it's looking like I'll get an extra little 1% kick to my locked in gains.

I'm glad to be cutting back my stock allocation, because people's perceptions of the equity outlook is way too rosy.

[79protons]

Quote:

Originally Posted by TromboneAl I'm glad to be cutting back my stock allocation, because people's perceptions of the equity outlook is way too rosy.

a flat market for the past 10 years makes thinking equity might return to some form of incremental increase rosy?

to me the rosy outlook is thinking inflation will remain at 0% and thus your 2% yeild fixed income is safe.

[audreyh1]

My last rebalance was August of 2009.

Audrey

[W2R]

I rebalanced on January 1st, 2011, but because of the timing Vanguard hadn't actually done anything before closing today. Very nice.

[audreyh1]

Quote:

Originally Posted by W2R I rebalanced on January 1st, 2011, but because of the timing Vanguard hadn't actually done anything before closing today. Very nice.

It always works that way with mutual funds. You get the end of day pricing.

Oh wait - you were pulling our legs! Got me!

Audrey

[W2R]

Yes, Audrey, I knew it worked that way with mutual funds ("because of the timing", see my post).

Did you miss the point? Not to belabor it, but my equity mutual funds are bringing me a higher value than last week's price, due to today's small market spike which I had not anticipated. Which I happen to think is nice, oh silly me.

Guess I should get out that crystal ball again.

[Alan]

Quote:

Originally Posted by W2R Yes, Audrey, I knew it worked that way with mutual funds ("because of the timing", see my post). Did you miss the point? Not to belabor it, but my equity mutual funds are bringing me a higher value than last week's price, due to today's small market spike which I had not anticipated. Which I happen to think is nice, oh silly me. Guess I should get out that crystal ball again.

Oh, oh, out of balance already

[W2R]

Quote:

Originally Posted by Alan Oh, oh, out of balance already

I know, it's killin' me! Oh well.

I am being VERY good and not saying the "W" word about that little spike in the market today, too, in case anyone noticed.

[Alan]

Quote:

Originally Posted by W2R I am being VERY good and not saying the "W" word about that little spike in the market today, too, in case anyone noticed.

Don't you dare!!

I won't be re-balancing until my 401k rollover is complete, which is going to take several days / weeks as my employer plan will only do it via paper and snail mail.

[W2R]

Quote:

Originally Posted by Alan Don't you dare!! I won't be re-balancing until my 401k rollover is complete, which is going to take several days / weeks as my employer plan will only do it via paper and snail mail.

Well, the Dow only went up 93 points. It's not like it was, oh, say, up 100 points or anything like that.



Besides, maybe it will be up even more by the time your paperwork goes through....

[audreyh1]

Quote:

Originally Posted by W2R Yes, Audrey, I knew it worked that way with mutual funds ("because of the timing", see my post). Did you miss the point? Not to belabor it, but my equity mutual funds are bringing me a higher value than last week's price, due to today's small market spike which I had not anticipated. Which I happen to think is nice, oh silly me. Guess I should get out that crystal ball again.

But it ALWAYS works this way. You ALWAYS get the next trading day pricing when you rebalance. You never get the pricing from which you do your rebalancing calcs.

It can help, it can hurt. You never know - there is no way to anticipate.

YOU may have computed your rebalance on Jan 1, 2011 and entered the orders - but with the markets closed, nothing actually gets done that day. Even if the markets had been open on Jan 1, you still would have gotten end of day pricing.

Your posting made it sound like it was Vanguard who "didn't actually do anything" to implement your rebalance instructions until market close - as if they had a choice. Then I decided you were making a joke.

I guess I otherwise didn't understand why you point out any "timing" since it always works this way?

Audrey

[audreyh1]

Quote:

Originally Posted by Alan Oh, oh, out of balance already

Now that's the joke!

[obgyn65]

I am not rebalancing. Still 100% in CDs, money market or equivalent. Still saving $100K+ a year. Hoping to retire in 2012.

[audreyh1]

Quote:

Originally Posted by obgyn65 I am not rebalancing. Still 100% in CDs, money market or equivalent. Still saving $100K+ a year. Hoping to retire in 2012.

If your AA is 100% a single asset class - you never need to rebalance! LOL!

Audrey

[obgyn65]

When I retire I hope to have some time to study investing a lot more.

I count on you guys to educate me.

Quote:

Originally Posted by audreyh1 If your AA is 100% a single asset class - you never need to rebalance! LOL! Audrey

[audreyh1]

OUCH!

Taxable capital gains from rebalancing a little higher than I anticipated. I guess my cost basis is quite a bit lower now...

It's been so long since I rebalanced by selling equities that I forgot how big the tax bit can get. Ouch!

Well - I guess the last time (16 months ago) I did sell equities but I was able to realize tax losses to offset gains. And the two times before that I was buying equities into a down market.

I'm definitely NOT rebalancing every year unless my portfolio AA gets out of whack enough to hit my rebalance triggers. That's the nice thing - I can go a fairly long time without rebalancing unless there is a pretty strong market move one way or the other.

Audrey