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Warren Buffett on Rebalancing
Old 09-22-2019, 07:24 AM   #1
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Warren Buffett on Rebalancing

I’ve been reading some articles about Berkshire and Buffett and was wondering if some of the older members know what Buffett has said about rebalancing? There doesn’t seem to be much about what Buffett thinks about it?
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Old 09-22-2019, 07:29 AM   #2
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Buffett doesn’t believe in rebalancing. He doesn’t like bonds at all. He’s not an AA type investor - he buys companies directly. So he’s not a good guide for what the early retiree investor should do. His advice to the passive investor is to put everything in the S&P500.
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Old 09-22-2019, 12:19 PM   #3
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Quote:
Originally Posted by audreyh1 View Post
Buffett doesn’t believe in rebalancing. He doesn’t like bonds at all. He’s not an AA type investor - he buys companies directly. So he’s not a good guide for what the early retiree investor should do. His advice to the passive investor is to put everything in the S&P500.
He does talk about VG and the small investor, low cost investing. He says great things about J. Bogle, offering services to small investors.https://www.cnbc.com/2019/01/16/warr...ver-known.html
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Old 09-23-2019, 09:15 AM   #4
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This is where the adage "The Rich are not like the rest of us" comes into play. Buffett is not your "average" investor and can and does make huge plays. Not a good example for 99% of the ER crowd.
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Old 09-23-2019, 02:40 PM   #5
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Buffet mentioned his company has never been lower than 60% stocks. Take that FWIW. He is not your average investor like you and I lol, more like a Businessman.
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Old 09-28-2019, 11:15 PM   #6
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Berkshire Hathaway is a holding company, that looks to own profitable and sustainable businesses outright or big chunks of them. And ideally hold them forever. In his capacity as chairmen of Berkshire Warren Buffet probably never thinks about rebalancing.

But as others have stated he recommends individual investors looking to fund their future retirement to passively invest in the big indexes.
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Old 09-29-2019, 05:08 AM   #7
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Buffetts investing philosophy and his advice to the average investor aren’t the same, and he’s said the same many times. No reason to conflate the two.

From 10 years ago, and his advice hasn’t changed:
Quote:
Question: “What advice would you give to someone who is not a professional investor? Where should they put their money?”

Answer from Buffett: “Well, if they’re not going to be an active investor – and very few should try to do that – then they should just stay with index funds. Any low-cost index fund. And they should buy it over time. They’re not going to be able to pick the right price and the right time. What they want to do is avoid the wrong price and wrong stock. You just make sure you own a piece of American business, and you don’t buy all at one time.”

Response from Charlie Munger, long-time partner of Buffett’s and Vice Chairman of Buffett’s Berkshire Hathaway: “If you don’t have any real prospects for being a very skilled professional investor, of course you should compromise on some simple thing like an index fund.”

And Buffett’s follow up response: “And you won’t get that advice from anybody, because nobody gets paid to give you that advice. So you’ll have all kinds of people telling you how much better they can do for you than that — and how if you just give them a wrap fee or commission or whatever it may be, they’ll do better. But they won’t do better.

“You will get a perfectly decent return over a 30 or 40 year period by doing what I suggest. And in the end, why should you expect more than that if you don’t bring anything to the party? Salesmen will tell you that you’ll get more — but you won’t…”
https://tiphero.com/warren-buffetts-...erage-investor
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Old 09-29-2019, 08:14 AM   #8
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But what are Warren Buffett’s thoughts on rebalancing? He’s discussed diversification and suggested appropriate asset allocations (90% in S&P index), but I can’t find even a mention of rebalancing
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Old 09-29-2019, 11:17 PM   #9
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The fund tracking the S&P 500 index or any other index would be the one rebalancing their holdings. The investor who has already allocated 90% of their investment money into the index fund(s) would not need to take any action as the fund adjusts their holdings internally to track the index.

Or are you asking about rebalancing between asset classes or otherwise adjusting their holdings to match their stage in life? As a 30yo saver with a long time horizon would likely have a different asset allocation when compared to a 65yo.
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Old 09-30-2019, 04:16 AM   #10
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Warren Buffett's thoughts on rebalancing are seen in the constitution of the investments and how they change periodically. One might also read his thoughts in the annual letters.

I imagine his thoughts on rebalancing for individual investor are different than what he believes for his business investments.
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Old 09-30-2019, 09:24 AM   #11
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I seem to recall that when pressed, Buffet said there are a lot of people who rebalance too often, so less of their portfolio experiences the run-ups and the rebalancing advantage is thus smaller. No reference... just my memory FWIW.
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