rebalancing could be bad

[NW-Bound]

I dunno. With most schemes, sometimes you make money, other times you lose.

Some schemes, you lose all the time. There's no scheme where you win all the time.


Let's have a break with some music.

Sometimes You Win

Take a little chance
It don't mean nothing
Sometimes you win, sometimes you lose

And don't you know that life is just a game
That you play, win or lose, it's all the same

Open your eyes, you better
Look before you leap, take heed
And watch the signs of life
Don't play the cheat
The wheel of fortune just may take its toll

Be a gambler, play your ace in the hole
You'll never know
You might wind up way ahead
Shoot your best shot
Take a little chance before you're dead​

 

[big-papa]

There is little point.

Studies have shown that 1 year or slightly longer is optimal for rebalancing. You’ve got to give assets time to diverge.

Yep - that's why some people have moved to absolute/relative bands. Sets a rebalance based on a certain amount of divergence instead of a date. Of course, if you're retired, you can also move towards balance by deciding how much to withdraw from stocks and how much from bonds. At that point, if also using bands, a triggered rebalance event is probably pretty rare.

 

[steelyman]

I did some rebalancing this year due to a) market performance and b) readjustment of my benchmark that guides my AA and c) peace of mind (even if the numbers don’t justify). Everything is well within my bands at this point.

I’m planning for future benchmark changes and am thinking about abandoning the target date fund I currently use and going with VBIAX which is a 60/40 fund. That’s a while off.

 

[LRDave]

DW has an inherited IRA. It is only about $65K, so not really meaningful in the grand scheme of things. It is a bunch of individual stocks. I tried to talk to FIL about simplifying their IRAs and investing in low-cost index funds, but he would have none of it.

DW sees me poring over the wisdom here (perhaps in her mind I might be wasting time and avoiding chores.... ), so she asks me: "What should we do with this? Sell and buy other stuff? I hear you blabbering about "asset allocation" - what should we do here, genius?" (It was not quite that harsh.)

I blurted out: "50/50 - TSM/TBM. This would make perfect sense...." She left me with: "Do whatever you think...."

I have not acted and my current thought is to let it ride. I don't really have any idea what would work best in the future and for this small bet, we can see how FIL's vision plays out - good, bad or indifferent.