Poll: do you "rebalance" and how often?

George the original one · Tue Aug 03, 2010 8:45 pm

I'm not looking for the pros/cons of rebalancing -- please save that discussion for another thread.
Do you rebalance your portfolio? If so, how often or what triggers a rebalance?
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I do not rebalance in the classical sense.
I do practice a different rebalancing based on dividend growth or fixed dividends, but not to the point of selling securities to effect the change.

Steve Austin · Post by **Steve Austin** » Tue Aug 03, 2010 8:51 pm

Doesn't this question depend on an answer (in the affirmative) to: do you use explicit asset allocation? In other words, rebalance to *what*? If someone answers "No", is that "No, I have an asset allocation strategy but I don't rebalance", or "No, I don't have an asset allocation strategy to keep balanced" ?

Post by **jacob** » Tue Aug 03, 2010 8:53 pm

I rebalance my Dogs of the Dow in my IRA annually (at no particular date).
Otherwise no.

Sven · Post by **Sven** » Tue Aug 03, 2010 9:21 pm

I just started investing early on this year, as i started to realize that most of my 'net worth' is tied in my house. So i think i am kinda doing some re-balancing in my portfolio.. because before it was only in 'real estate' (of the liability type, i have learned) and cash.
I read on 7millions7years that your house should only be accountable for like 20% of your net worth and for me it is currently about 75%. My goal is to put aside enough money to get that 75% on the stock side of the portfolio.
Regarding the balance inside the stock side: i am currently for 80% in ETFs and the remaining 20% in cash.

Maus · Post by **Maus** » Tue Aug 03, 2010 10:15 pm

I do not.
I direct new investments to whatever asset class (currently -- and broadly speaking -- US equity, Int'l equity, bonds and cash) is underweight my ideal preferences. But I am giving some thought to the either the PP or DoD, both of which would require rebalancing.

JohnnyH · Post by **JohnnyH** » Tue Aug 03, 2010 10:21 pm

Yes, and usually, near the bottom... at the point of maximum pain.

Kinda like where the USD is right now, getting ready to slam through the 200 MA.
Better start scaling out, only to watch it break 90.

Kevin M · Post by **Kevin M** » Wed Aug 04, 2010 6:44 pm

I rebalance in the sense that my 401(k) money is in a target date fund. It is about 1/2 our retirement money, the other half being dividend stocks.

George the original one · Fri Aug 06, 2010 4:32 am

There aren't as many participants in this poll compared to the poll on index funds. Makes me wonder if most people even have a concept of rebalancing, regardless of whether it's the conventional term of rebalancing.
@Steve Austin - the answers are a little muddled, so you're probably right (and I didn't help matters by muddling the answer at the very start!). If I take a mulligan on this, at least there are some ideas to follow up with.

Steve Austin · Post by **Steve Austin** » Fri Aug 06, 2010 3:40 pm

Perhaps you'd like to see the result of a poll "Do you have an asset allocation strategy? And if so, feel free to briefly lay it down for us here."

il-besa · Post by **il-besa** » Fri Aug 06, 2010 4:06 pm

I don't know the concept of rebalancing, or better, I did rebalance my life but never did it with my money... any explanation/link is appreciated

Thanks

D

Robert Muir · Post by **Robert Muir** » Fri Aug 06, 2010 5:02 pm

il-besa, what they're talking about is asset allocation. That's where you decide what percentage of your investments is devoted to cash, equities, bonds, or commodities/precious metals.
The theory is that if a particular portion of your investments are doing well in comparison to the rest, then there will come a point that you'll want to re-balance your assets. For example, if you decide that you want 10% of your assets in gold and the run-up of the shiny stuff has made it 20% of your assets, then at some point you would decide to sell gold and buy other assets to get the gold portion back down to 10%.
Another option is to just redirect future deposits to the investments that are behind. Depending on how out of wack your allocation is and how much you're investing on an on-going basis, this strategy can keep you fairly balanced.

Marius · Post by **Marius** » Sat Aug 07, 2010 1:07 am

I plan to. My asset allocation is not yet fixed. Once it is, I'll probably check at least once a month if I need to rebalance, but I'll use wide bands so only very large changes would trigger actual rebalancing.
I'm not yet sure if I'm going to use Harry Browne's permanent portfolio. But I like the way many only rebalance theirs whenever one of their assets grows to 35% or drops to 15% (initially they're 25% each).

il-besa · Post by **il-besa** » Sat Aug 07, 2010 9:28 am

Thanks Robert for the explanation!

I'm just started working on my investments, as I'm reading the book "$ave smart, earn more" by Dennis Blits.

Funny enough, I read this morning about rebalance

He mentioned that can be done based on % difference (ex. 5%) or on a time basis (ex. every 3 months)
Thanks!!

D

Macs · Post by **Macs** » Sun Aug 08, 2010 12:15 am

I will rebalance when I have more to rebalance.
For now it's a case of bringing the lagging asset class up to where it needs to be, ie my equities portfolio, which I'm selecting for dividend yields (after due diligence, of course). This will also be balanced wrt its components, 10-20 individual stocks with appropriate sector diversification, possibly a little overweight towards exposure to energy (trad and alt), as I think with peak oil, the only way is up, there.

Leo · Post by **Leo** » Mon Aug 16, 2010 1:15 pm

I don't rebalance actively. Only when contributing "fresh money" to my portfolio I do this according to my target asset allocation.

See http://www.earlyretirementineurope.com/ ... ncome.html for details.