Re-balance Triggers... Do You Have Them?

[ejman]

I think I read in one of Saint Bogle's books (unfortunately I don't possess NW-Bound superior memory so no guarantees that reference actually exists) that rebalancing was a much overrated activity and didn't really result in superior results. So why do I do it when my wide bands are reached? dunno, just to feel like I'm doing something I guess.

 

[NW-Bound]

I am not a Boglehead, but have respect for Bogle. I have not read any of his books, but do recall reading in an interview where he said rebalancing would not make much difference.

Rebalancing is just something we do to avoid feeling helpless. Same as praying when in hopeless situations, I guess.

He did mention reducing stock AA with age, and in a long bull market people discredit him. Nah, you've got to increase stock AA with age. Buy, buy, buy...

The above said, do I dare do a major tactical AA move later? In Dec 2019, I lowered my stock AA from 80% to 60%. Now wish I had lowered it to 40%. Will see if I dare move it up to 80% later. I don't know when yet.

 

[captain3d]

The longer you can let the diversification run away from each other the better the rebalance effect. But ultimately you start to cross into market timing territory. Also more extremely diverse assets help. Gold, long bond, small cap stocks, cash etc

 

[CRLLS]

I am currently retired and am collecting SS and withdrawing from assets for living expenses. I have not rebalanced at all. IMO, if my equities grow disproportionally, then I can survive a deeper correction with no real difference. I am in it for the long haul. Long haul slightly favors not rebalancing. I will admit that there is a higher roller coaster effect to deal with emotionally. A lot of my comfort lies in the fact that my other incomes currently cover a large part of both my fixed and discretional expenses.

 

[NW-Bound]

I played quite a bit with Portfolio Visualizer, and found something very interesting.

That is, when I compared a 100% stock portfolio with one that's 60/40, the 100% stock outpaced the 60/40 during a long bull run, as could be expected. And then, every so often, something big came along and knocked it down, and they were the same again. All that gain evaporated and the two portfolios were on the same footing again. Hah! Easy come, easy go, as they say.

 

[Theo]

In portfolio visualizer, try targeted negative volatility.

 

[ls99]

No. Whatever I set up ten years ago works fine. I look at the bottom line avery six months or so. It is showing I need to blow some dough so my nieces won't be filthy rich when I exit.