B. Malkiel: Buy and Hold Still Works

[Gone4Good]

Quote:

Originally Posted by NW-Bound Eh? Then, my next question is how "tight" should one hold her AA? Rebalance everyday? Or intraday?

I think most people do it annually.

Personally I approach it more from a bit of a trading perspective. I won't do it just because the calendar rolls over if my AA is near where I want it. And I also won't wait for the calendar to roll if the market goes vertical (up or down) mid-year and takes my AA out of whack. The effect so far is that I was a buyer of equities from Nov 2008 to Mar 2009, and a seller of equities on November 4, 2010.

So far, so good.

[NW-Bound]

Quote:

Originally Posted by Gone4Good Personally I approach it more from a bit of a trading perspective.

I always like an honest answer.

My point is that trading is not a bad thing. It's just an attempt to help fellow investors like Templeton explained. Your buying low keeps the market from crashing harder when there are no buyers to be found. Same with being a seller at the top of the market to keep it from getting even frothier.

Not everybody can be successful all the time in this charitable endeavor, but just because one fails does not make him a "dirty market t*m*r"!

[Gone4Good]

Quote:

Originally Posted by NW-Bound My point is that trading is not a bad thing.

We'll you might say that drinking and trading are of a kind. Some folks won't touch the stuff. Me, I like a drink, now and again. But if it becomes a habit, it will ruin you.

[ERD50]

Quote:

Originally Posted by NW-Bound Eh? Then, my next question is how "tight" should one hold her AA? Rebalance everyday? Or intraday?

What does a % range difference between investment classes have to do with a calendar? 2+2 =4 any day of the year. That's why some of us call it rebalancing and not market "timing" - time is not a factor for me.

I've never considered a calendar in my re-balancing. I look at whether my AA has gone out-of-whack enough to make me feel like doing something. That's a fairly arbitrary 5%, but if I can learn a better way from Malkiel, I'm all ears (eyes I guess, I'll have to read the book).

-ERD50

[Onward]

Here's a podcast of a recent interview with Malkiel. Good stuff.

http://soundinvesting.fundadvice.net...el_8.17.10.mp3