i never got a response for this (Question about rebalancing)

[Alan]

i read one of the links above and i read a ton of people bragging about their stockpiles of cash , so it seems that rebalancing was not done by many, at least during the crash, i havent done it yet as i just moved out of the accumulation (100% equities) stage, but as i said earlier i got my answer about the "i rebalanced and im now at 100 % equities statements. during 2007-2009 crash i kept dollar cost averaging, from my paycheck, pension excess, & lump sum distribution. the i now have 10 years of cash on hand, and the i just went to 100 % equities ill take with a grain of salt.

I was in the last 2 years of working in 2008 and 2009 and kept on maximizing my and DW's 401k and IRA contributions.

The vast majority of rebalancing was done by the computers of the brokerage companies because we were/are mostly in target date funds, plus Vanguard Wellesley and Wellington.

 

[dtbach]

I try to keep a 60/40 balance but am not tied to that number. I've been investing since around '85 so have been through the wringer a couple of times. I freaked out and sold about half my equities in '87, did some dumb stuff in '98/'99 (buying tech stocks on margin), then freaked in '2001 and sold a bunch.

But 2009 was different. I did see this as a once in a lifetime buying opportunity and even though I had lost my job in 2008, I dumped all of my bond funds and bought both stock mutual funds and some individual stocks. I got my courage from Warren Buffet who said that he had never seen such a buying opportunity and that the "World was not going to end"

So for probably the only time in my life I basically went 100% equities (other than some balanced funds) and it worked out fabulously. I doubt (and hope) I never see such an opportunity again.

 

[Markola]

I was in my mid-40s and my flinch was to go from 100% to 80/20 at precisely the wrong time in hindsight, but not devastating, thankfully. We're still 80/20.

Here's what I don't understand: I try to only rebalance once per year on DW's birthday as a way to restrain timing. Others mention "rebalancing several times" during the Great Recession. Is there a significant difference in outcomes over time? I know those Vanguard LifeStrategy funds rebalance nearly every day.

 

[travelover]

I'd retired in 2007 and I was invested 80/20. I did not rebalance, but I did tax loss harvest, which I'm still carrying forward.

 

[SecondCor521]

Is there a significant difference in outcomes over time? I know those Vanguard LifeStrategy funds rebalance nearly every day.

I don't think so. From what I've read, rebalancing every year to 18 months is considered the sweet spot when one ignores tax consequences. Taxes can obviously affect things if one is using a taxable account.

Rebalancing more often doesn't really improve things much, but probably won't hurt either.

 

[audreyh1]

re balancing, i read a few posts in here from folks that claim that in 2008-2009 they re balanced to 100 % equities, and they reaped the huge rewards, i even read one post where he claimed he re balanced every day. the posters that went to 100 % equities arent they violating their asset allocations? if they started at 70/30 or 80/20 how do u go to 100 % equities, and didnt they switch back to their original allocation?, im a skeptical guy , i view some of these posts as suspect, , just like my tax guy who cold cold feet in 2007 went to money market, bragged he avoided the 2007-2009 carnage, i wonder when and if he went back to equities. so im fuzzy on this rebalance to 100 % equity thing, . for full disclosure i dont rebalance untill its really out of whack, during the last 2007-2009 blood bath i was 100 equities so no rebalance needed, i was mostly small cap,sp500 and the still terrible international. now im 80/20 and thats my mix probably till the end. thank you in advance for any info u can provide me

Going to 100% equities from some other allocation is not rebalancing.

That's completely changing your asset allocation, for whatever reason.

I did rebalance several times in 2008-2009 but I kept catching a falling knife! As a result I widened my rebalance bands so I don't rebalance now unless there is a much larger change.