Today I sold about $18,000 worth of stock mutual funds to get back within my target asset range. Routine rebalancing, right? Well, not quite. It was a delayed implementation of the rebalancing I normally would have done at the end of December in order to start the New Year fresh. I intentionally held off on my year end rebalancing because it was looking as if there would be a resolution to the fiscal cliff negotiations, and I didn't want to miss out on a potential relief rally.
Well, things worked out ok on that guess, so now I'm properly balanced and can forget about rebalancing for a while, right? Well, not quite that either. I suspect that there will be some bumpy days ahead because of the debt ceiling issue. I know I'll be following the market over the next month or so, hoping for an opportunity to repurchase my shares at a lower price.
I've done this sort of dual purpose rebalancing many times over the years, generally with favorable results. It has become a little hobby of mine that I thoroughly enjoy. I am probably rationalizing, but I figure that allowing myself the flexibility to decide when to rebalance puts me in a no lose situation. If I guess wrong and the market continues to go up after I sell, I've accomplished my goal of reducing risk and getting back to my target asset allocation. If I'm lucky enough to guess the market's direction correctly, I get to make a little money by repurchasing shares at a lower price.
Do other people do the same thing? If so, what is your experience?
Well, things worked out ok on that guess, so now I'm properly balanced and can forget about rebalancing for a while, right? Well, not quite that either. I suspect that there will be some bumpy days ahead because of the debt ceiling issue. I know I'll be following the market over the next month or so, hoping for an opportunity to repurchase my shares at a lower price.
I've done this sort of dual purpose rebalancing many times over the years, generally with favorable results. It has become a little hobby of mine that I thoroughly enjoy. I am probably rationalizing, but I figure that allowing myself the flexibility to decide when to rebalance puts me in a no lose situation. If I guess wrong and the market continues to go up after I sell, I've accomplished my goal of reducing risk and getting back to my target asset allocation. If I'm lucky enough to guess the market's direction correctly, I get to make a little money by repurchasing shares at a lower price.
Do other people do the same thing? If so, what is your experience?