Anybody else having an aversion to rebalancing?

[Gearhead Jim]

Just do it. If you are sure of your AA, as you should be, it's a no brainer. Equities may never be this low again in your lifetime.

Didn't they say that in 1929?
If only I could read the future...

 

[Gone4Good]

The volatility has me confused. A couple of 5% surges (or dips) can throw me off very quickly.

I noticed this too. I was a little quick on the trigger with my rebalancing this year . . . jumped in the week stocks went vertical and were down ~35% from the peak. Figured it looked like panic selling and that I was rebalancing at a good time. A couple of weeks later stocks were down 50% and my AA was out of whack again. I was thinking of pushing more chips in but decided to cool it for a bit. I eventually did buy some REITs but after that I think I'm done buying anything for 6 to 12 months. Even though I like the idea of buying stocks on sale, "rebalancing" every couple of weeks seems counter productive.

 

[jIMOh]

It appears the people buying more equities are w*rking. I am w*rking, and my method of rebalance leans towards using new cash to rebalance.

Most accounts I have rebalance once per year (Dec 29-30-31- last trading day of year). In my 401k I will adjust contributions around June 15 to attempt not to have to sell anything in December.

My Roth account is maxed in August most years ($625/mo) and will be maxed in October this year ($500/mo), so I don't have the flexibility to use deposits to react to late year drops like 2008. Oh well.

In wife's Roth it is a compilation of sector funds. In December I make the decision which sectors I will overweight for the year (in 2009 I chose Real Estate and Financial Services); 2008 was tech and financial services- then we buy some of each sector (tech-healthcare-natural resources-emerging markets-real estate-financial services-growth-value), then overweight 2 or 3 of the sectors with the rest ($150/mo to overweight and $350/mo to all sectors).

Meaning my contributions "rebalance" when I need to... I am close to 100% equities (was 97-3 in June) and am slowly selling gains (2% per year) to get to 90-10 or 80-20 for growth and income portfolio. I assume the drop made me close to 95-5 or 90-10 now (I have not looked yet)... but I will just buy more equities with new money rather than sell bonds right now.

 

[Urchina]

DH is still w*rking (for pay; I, of course, am in voluntary domestic servitude) and we've decided that instead of rebalancing, we'll just send new money to lagging asset classes (you are free to interpret this as "too chicken to sell.")

Hmmm..... let's see... this year that would be equities!

Since our portfolio is supposed to be 85%-90% equities, that's gonna be it for the year.

 

[Gotadimple]

It appears the people buying more equities are w*rking. I am w*rking, and my method of rebalance leans towards using new cash to rebalance.

I am not working and have been rebalancing this month by buying equities (and selling fixed income assets) to get back to my target asset allocation. The same way Urchina did.

Your method of rebalancing is exactly what I did when I was working.

-- Rita