Dividends?baw703916 wrote:I invest in stocks because I think the market will go up in value in the next 2-3 decades. If I didn't think this, then I can't imagine why I would own stocks. According to the definition, that constitutes market timing.telemark wrote: I would define market timing in general as taking actions based on what you think is going to happen in the market in the future. Rebalancing makes no predictions about the future: it's based solely on the state of your portfolio today.
Do you Rebalance ?
Re: Do you REBALANCE?
Re: Do you REBALANCE?
Hence my question. Rebalance clearly does not LOWER risk nor does it INCREASE returns. Not sure how rebalancing should play a crucial role.telemark wrote:I would define market timing in general as taking actions based on what you think is going to happen in the market in the future. Rebalancing makes no predictions about the future: it's based solely on the state of your portfolio today.nisiprius wrote: If this is "market timing," it is very different from what people who call themselves "market timers" do. It does not involve large-commitment shifts in an out of asset classes, just small adjustments, and it isn't based on technical analysis.
Re: Do you REBALANCE?
To the extent that to a very crude approximation a fixed stock/bond split has more or less constant risk then rebalancing simply keeps risk more or less constant over time. Of course risk probably does go up and down over time and so this is only a crude approximation.tphp99 wrote:Hence my question. Rebalance clearly does not LOWER risk nor does it INCREASE returns. Not sure how rebalancing should play a crucial role.telemark wrote:I would define market timing in general as taking actions based on what you think is going to happen in the market in the future. Rebalancing makes no predictions about the future: it's based solely on the state of your portfolio today.nisiprius wrote: If this is "market timing," it is very different from what people who call themselves "market timers" do. It does not involve large-commitment shifts in an out of asset classes, just small adjustments, and it isn't based on technical analysis.
The problem is finding a better way to guess or predict time varying risk. Some people use measures like Tobin's Q or similarly P/E10 to gauge both risk and potential returns. On 20-year time scales that seems to have some minor validity, but most people want to assess their allocation due to changes in their lives more often than that, so unclear that is much help. But certainly not crazy.
So if you want to keep risk more or less, vaguely constant (about the best you can do) you can rebalance.
But again, not imperative, and not one of the top few things you need to get right to be successful.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
Re: Do you REBALANCE?
If the market drops 90% in 22 days, yes that would be bad. Of course if the market rebounded by 11% a day for 22 days you'd be back to even.Suppose the market drops 10% a day for 22 days straight and the bond market stays the same. My portfolio would be worse off if I rebalanced daily during this unlikely but possible event.
If you are looking for a system that can never fail you are not going to find one.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
Re: Do you REBALANCE?
The numbers for 2008 - 2011 with monthly rebalancing were presented earlier in this thread by gt4715b. It was 15 (not 22) months of drops, and there were a few minor ups within the long sequence of downs, but it gives you a sense of what would happen.Rodc wrote:If the market drops 90% in 22 days, yes that would be bad. Of course if the market rebounded by 11% a day for 22 days you'd be back to even.Suppose the market drops 10% a day for 22 days straight and the bond market stays the same. My portfolio would be worse off if I rebalanced daily during this unlikely but possible event.
http://www.bogleheads.org/forum/viewtop ... 0#p1597290
Re: Do you REBALANCE?
It does both. Just not at the same time. When the stock market is booming, rebalancing lowers your risk and also your expected return. In a down market rebalancing increases your risk and also your expected return. In both cases you are simply returning your allocation to its previous level.tphp99 wrote:Hence my question. Rebalance clearly does not LOWER risk nor does it INCREASE returns. Not sure how rebalancing should play a crucial role.telemark wrote: I would define market timing in general as taking actions based on what you think is going to happen in the market in the future. Rebalancing makes no predictions about the future: it's based solely on the state of your portfolio today.
And yes, this often feels like the wrong thing to do, sometimes very wrong. But in investing your feelings are the last thing you should rely on.
Re: Do you REBALANCE?
What brings you to YOUR conclusion?tphp99 wrote:Rebalance clearly does not LOWER risk nor does it INCREASE returns. Not sure how rebalancing should play a crucial role.
1. Rebalance to control risk.
2. For simplicity: (a) Only Domestic Stocks/Bonds, (b) 15-year period starting 1/1/97, (c) $1 million, split 50/50 annual rebalance.
Code: Select all
$1 Million 50/50 $1 Million 50/50 Rebalanced
Year VTSMX VBMFX VTSMX VBMFX TOTAL VTSMX VBMFX TOTAL
2012 16.25% 4.05% 1,336,819 1,264,265 2,601,084 1,493,264 1,336,552 2,829,816 <- +8.8% risk-adjusted return
2011 0.96% 7.56% 1,149,952 1,215,056 2,365,007 1,243,871 1,325,186 2,569,057
2010 17.09% 6.42% 1,139,017 1,129,654 2,268,671 1,290,859 1,173,228 2,464,087
2009 28.70% 5.93% 972,771 1,061,505 2,034,276 1,209,439 995,461 2,204,901
2008 -37.04% 5.05% 755,843 1,002,082 1,757,925 704,312 1,175,158 1,879,470
2007 5.49% 6.92% 1,200,514 953,909 2,154,423 1,111,135 1,126,197 2,237,331
2006 15.51% 4.27% 1,138,036 892,171 2,030,207 1,107,176 999,440 2,106,616
2005 5.98% 2.40% 985,227 855,635 1,840,862 974,979 942,044 1,917,022
2004 12.52% 4.24% 929,635 835,581 1,765,216 955,106 884,823 1,839,929
2003 31.35% 3.97% 826,195 801,594 1,627,789 947,596 750,069 1,697,665
2002 -20.96% 8.26% 629,003 770,986 1,399,989 608,881 833,976 1,442,857
2001 -10.97% 8.43% 795,803 712,161 1,507,964 694,661 846,030 1,540,690
2000 -10.57% 11.39% 893,860 656,794 1,550,653 694,932 865,577 1,560,509
1999 23.81% -0.76% 999,507 589,634 1,589,142 862,666 691,471 1,554,137
1998 23.26% 8.58% 807,291 594,150 1,401,441 740,885 652,647 1,393,532
1997 30.99% 9.44% 654,950 547,200 1,202,150 654,950 547,200 1,202,150
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
Re: Do you REBALANCE?
tphp99 wrote:Suppose the market drops 10% a day for 22 days straight and the bond market stays the same. My portfolio would be worse off if I rebalanced daily during this unlikely but possible event.
magician wrote:A constant-mix strategy outperforms a buy-and-hold strategy in a volatile, non-trending market, but underperforms in a trending market. It certainly isn't universally a better strategy than buy-and-hold.
Simplify the complicated side; don't complify the simplicated side.
Re: Do you REBALANCE?
The existence of momentum suggests that monthly rebalancing isn't an optimal strategy.sscritic wrote:The numbers for 2008 - 2011 with monthly rebalancing were presented earlier in this thread by gt4715b. It was 15 (not 22) months of drops, and there were a few minor ups within the long sequence of downs, but it gives you a sense of what would happen.Rodc wrote:If the market drops 90% in 22 days, yes that would be bad. Of course if the market rebounded by 11% a day for 22 days you'd be back to even.Suppose the market drops 10% a day for 22 days straight and the bond market stays the same. My portfolio would be worse off if I rebalanced daily during this unlikely but possible event.
http://www.bogleheads.org/forum/viewtop ... 0#p1597290
Most of my posts assume no behavioral errors.
Re: Do you REBALANCE?
Right now equities have a higher yield than bonds, but that's not typically the case.telemark wrote:Dividends?baw703916 wrote:I invest in stocks because I think the market will go up in value in the next 2-3 decades. If I didn't think this, then I can't imagine why I would own stocks. According to the definition, that constitutes market timing.telemark wrote: I would define market timing in general as taking actions based on what you think is going to happen in the market in the future. Rebalancing makes no predictions about the future: it's based solely on the state of your portfolio today.
Most of my posts assume no behavioral errors.
Re: Do you REBALANCE?
So the key is to forecast whether we will have a trending market or a non-trending market.magician wrote:tphp99 wrote:Suppose the market drops 10% a day for 22 days straight and the bond market stays the same. My portfolio would be worse off if I rebalanced daily during this unlikely but possible event.magician wrote:A constant-mix strategy outperforms a buy-and-hold strategy in a volatile, non-trending market, but underperforms in a trending market. It certainly isn't universally a better strategy than buy-and-hold.
If trending, don't rebalance.
If non-trending, rebalance.
Re: Do you REBALANCE?
I say rebalance to control risk and don't get cute thinking one knows what the Market(s) may (may not) do at any time.grayfox wrote:So the key is to forecast whether we will have a trending market or a non-trending market.magician wrote:A constant-mix strategy outperforms a buy-and-hold strategy in a volatile, non-trending market, but underperforms in a trending market. It certainly isn't universally a better strategy than buy-and-hold.
If trending, don't rebalance.
If non-trending, rebalance.
- In the past 15 years, the disciplined rebalancer has been compensated as Stocks do well/poorly.
- The NEXT 15 years may bring something quite different - so rebalance, regardless.
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
Re: Do you REBALANCE?
Piece of cake, eh?grayfox wrote:So the key is to forecast whether we will have a trending market or a non-trending market.magician wrote:tphp99 wrote:Suppose the market drops 10% a day for 22 days straight and the bond market stays the same. My portfolio would be worse off if I rebalanced daily during this unlikely but possible event.magician wrote:A constant-mix strategy outperforms a buy-and-hold strategy in a volatile, non-trending market, but underperforms in a trending market. It certainly isn't universally a better strategy than buy-and-hold.
If trending, don't rebalance.
If non-trending, rebalance.
Simplify the complicated side; don't complify the simplicated side.
Re: Do you REBALANCE?
I am starting to become convinced that re-blancing is an unnecessary evil.
Re: Do you REBALANCE?
If both stocks and bonds are falling, and you follow a band approach to rebalancing, there is likely little cause to rebalance since the bands won't get outside their AA by more than the typical 5%. So it would cause one to 'stay the course' which turned out to be a good thing since both stocks and bonds rebounded. Correct?Tom_T wrote:Agreed. Anyone who rebalanced from bonds into stocks in early 2009 wasn't selling high. Both stocks and bonds had fallen -- and both went on to have gains over the next four years.sscritic wrote:I didn't claim I could tell you. I just said that "forces you to sell high and buy low" is too simplistic. Sometimes rebalancing takes the form of "sell low but buy lower" and sometimes the form of "buy high but sell higher." Neither of these is "sell high buy low."
“The only freedom that is of enduring importance is freedom of intelligence…” John Dewey
Re: Do you REBALANCE?
In theory, sure. But, stocks are generally much more volatile than bonds. We could have slowly-rising rates and a tanking market. That could trigger the rebalancing bands.dewey wrote:If both stocks and bonds are falling, and you follow a band approach to rebalancing, there is likely little cause to rebalance since the bands won't get outside their AA by more than the typical 5%. So it would cause one to 'stay the course' which turned out to be a good thing since both stocks and bonds rebounded. Correct?Tom_T wrote:Agreed. Anyone who rebalanced from bonds into stocks in early 2009 wasn't selling high. Both stocks and bonds had fallen -- and both went on to have gains over the next four years.sscritic wrote:I didn't claim I could tell you. I just said that "forces you to sell high and buy low" is too simplistic. Sometimes rebalancing takes the form of "sell low but buy lower" and sometimes the form of "buy high but sell higher." Neither of these is "sell high buy low."
I think we're getting a little off-point. What a couple of us were trying to say is that it is too simplistic to equate "rebalancing" to "sell high and buy low". That's all.
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Re: Do you Rebalance ?
I don't generally rebalance. What I sometimes do is adjust where future investments go.
For example, say I have a taxable account invested in an equity fund like TSM which is a tax-efficient fund. Where would I rebalance to? A taxable bond fund and then incur a taxable event on the sale of TSM? And now I have a tax inefficient fund? I don't see that making sense.
For IRAs where taxation is moot then rebalancing is easy. But you must consider your entire portfolio.
Are all your investments in IRAs or 401(k)s? If only 25% of your investments are in IRAs/401(k)s then how relevent is rebalancing these funds?
For example, say I have a taxable account invested in an equity fund like TSM which is a tax-efficient fund. Where would I rebalance to? A taxable bond fund and then incur a taxable event on the sale of TSM? And now I have a tax inefficient fund? I don't see that making sense.
For IRAs where taxation is moot then rebalancing is easy. But you must consider your entire portfolio.
Are all your investments in IRAs or 401(k)s? If only 25% of your investments are in IRAs/401(k)s then how relevent is rebalancing these funds?
“Gold gets dug out of the ground, then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility.”--Warren Buffett
Re: Do you Rebalance ?
In my company plan, I have it setup to auto rebalance once a year to my desired AA.
Same thing is setup in my Wife's plan with her investments - auto rebal once yearly.
At Vanguard where I have a Rollover IRA (that I do no contribute to)... there is no auto rebal option available ... so I check it once a year and if things are out of whack enough... I manually rebal... if they are still fairly close - I just let it be and check it again the next year.
Best I remember in 4 Pillars - Wbern said that once every 2 or 3 years was fine.
I don't see rebalancing as something to really fret over myself. Some folks pay way too much attention to their investments and IMO would be much better off if they spent that extra time doing something with their family / loved ones.
PS... I do wish that Vanguard would add a auto rebalance option that could be enabled within IRA type accounts (non taxable).
Trev H
Same thing is setup in my Wife's plan with her investments - auto rebal once yearly.
At Vanguard where I have a Rollover IRA (that I do no contribute to)... there is no auto rebal option available ... so I check it once a year and if things are out of whack enough... I manually rebal... if they are still fairly close - I just let it be and check it again the next year.
Best I remember in 4 Pillars - Wbern said that once every 2 or 3 years was fine.
I don't see rebalancing as something to really fret over myself. Some folks pay way too much attention to their investments and IMO would be much better off if they spent that extra time doing something with their family / loved ones.
PS... I do wish that Vanguard would add a auto rebalance option that could be enabled within IRA type accounts (non taxable).
Trev H
Re: Do you Rebalance ?
So, rebalance is at best a small gamble (I'll not use market timing).
What I don't get is - if I have x amount safely sitting in bonds - why in the world should I put that at risk in stocks? Conventional wisdom says that you should not put money in stocks unless you're willing to lose it all. At least that's how I feel about stocks.
Someone here on this forum said: the money from bonds should cover retirement expenses. Stocks allocation can to zero and that'll be OK.
So maybe my question ought to be: do you rebalance in retirement? That's awfully risky.
What I don't get is - if I have x amount safely sitting in bonds - why in the world should I put that at risk in stocks? Conventional wisdom says that you should not put money in stocks unless you're willing to lose it all. At least that's how I feel about stocks.
Someone here on this forum said: the money from bonds should cover retirement expenses. Stocks allocation can to zero and that'll be OK.
So maybe my question ought to be: do you rebalance in retirement? That's awfully risky.
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Re: Do you Rebalance ?
I rebalance in taxable with new contributions and when tax loss harvesting.HardKnocker wrote:I don't generally rebalance. What I sometimes do is adjust where future investments go.
For example, say I have a taxable account invested in an equity fund like TSM which is a tax-efficient fund. Where would I rebalance to? A taxable bond fund and then incur a taxable event on the sale of TSM? And now I have a tax inefficient fund? I don't see that making sense.
For IRAs where taxation is moot then rebalancing is easy. But you must consider your entire portfolio.
Are all your investments in IRAs or 401(k)s? If only 25% of your investments are in IRAs/401(k)s then how relevent is rebalancing these funds?
My tax-deferred plans don't offer an automatic rebalancing option, so periodically I have to calculate if I've exceeded my threshold and re-balance, same goes for the IRA.
My spouses plan offers an automatic rebalancing feature that is run once per quarter. Good feature, but her actively managed funds have higher expense ratios.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Do you Rebalance ?
What is risky about re-balancing in retirement especially if you have either reached certain asset accumulation milestones or have other unforseen plans for the money? If it's a tax-deferred plan and you anticipate dialing down the risk over time in retirement, then yes - rebalance. Why take on excessive risk that you don't need?tphp99 wrote:So, rebalance is at best a small gamble (I'll not use market timing).
What I don't get is - if I have x amount safely sitting in bonds - why in the world should I put that at risk in stocks? Conventional wisdom says that you should not put money in stocks unless you're willing to lose it all. At least that's how I feel about stocks.
Someone here on this forum said: the money from bonds should cover retirement expenses. Stocks allocation can to zero and that'll be OK.
So maybe my question ought to be: do you rebalance in retirement? That's awfully risky.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Do you REBALANCE?
So you think daily is optimal? Or do you think looking at rebalancing on the date of the decennial census gives a better picture of what daily rebalancing would do? The question wasn't about optimal, the question is about what would happen if you rebalanced daily. Do you have an answer?baw703916 wrote:sscritic wrote:The existence of momentum suggests that monthly rebalancing isn't an optimal strategy.Rodc wrote:The numbers for 2008 - 2011 with monthly rebalancing were presented earlier in this thread by gt4715b.My portfolio would be worse off if I rebalanced daily during this unlikely but possible event.
Re: Do you Rebalance ?
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Re: Do you Rebalance ?
That's incorrect. The Target Retirement Fund is constantly rebalancing to maintain the structured allocation path.Confused wrote:No, because I can't. I only have enough in my Vanguard Roth IRA to have a Target Retirement Fund, so I can only roll with that until I have enough money to put into separate stock and bond funds.
I have rebalanced my 401k, though, but it's still under $1000, so it's not a super big deal.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Do you Rebalance ?
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Re: Do you Rebalance ?
If you have enough in bonds or other safe assets, say to fund your minimum required retirement income, there really is no need to rebalance and a perfectly sensible path would be to not rebalance when stocks go down, though you might want to rebalance from stocks to bonds when stocks have gone up. In fact my company 401k was originally set with this as the only way to rebalance.tphp99 wrote:So, rebalance is at best a small gamble (I'll not use market timing).
What I don't get is - if I have x amount safely sitting in bonds - why in the world should I put that at risk in stocks? Conventional wisdom says that you should not put money in stocks unless you're willing to lose it all. At least that's how I feel about stocks.
Someone here on this forum said: the money from bonds should cover retirement expenses. Stocks allocation can to zero and that'll be OK.
So maybe my question ought to be: do you rebalance in retirement? That's awfully risky.
Depending on how things go this might hurt your returns if we have a large drop followed by a nice recovery, but if you have enough to cover expenses in bonds you will do plenty fine: just try not to sell too much in stocks while they are down and when they recover you will be back to having enough for your discretionary desires. If the market does not bounce back, well you have enough and you will sleep well at night while providing sympathies to other retirees.
I do not think this is a bad approach and may use it myself. In retirement maximizing returns is less important than preserving what you have (especially if what you have is enough).
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
Re: Do you Rebalance ?
The idea of only going from stocks -> bonds but not the other way makes more sense than going back and forth stocks <->bonds.Rodc wrote: If you have enough in bonds or other safe assets, say to fund your minimum required retirement income, there really is no need to rebalance and a perfectly sensible path would be to not rebalance when stocks go down, though you might want to rebalance from stocks to bonds when stocks have gone up. In fact my company 401k was originally set with this as the only way to rebalance.
Think about investing money that you will spend 40 years later. You could start off by buying 100% stocks and hold it for about 30 years with no re-balancing. About 10 or 15 years before you need the money, you might start looking into moving to bonds, either a little at a time or in one fell swoop, if the opportunity presents itself.
The money starts at high risk so that it has a chance to grow for a few decades. After it has grown big enough over 25 to 35 years, move it to safer assets.
Re: Do you Rebalance ?
Thank you - this crystallizes my thinking.grayfox wrote:
The idea of only going from stocks -> bonds but not the other way makes more sense than going back and forth stocks <->bonds.
I feel like the portion in bonds at some point should cover ALL my retirement needs. The portion in stocks may at best:
1) alter my life style
2) nice inheritance for the kids
3) charity once I'm gone.
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Re: Do you Rebalance ?
Although I have rebalanced in each direciton since I ERed 4 years ago, 4 of the last 5 moves covering the last 2 years have been in the stocks --> bonds direction. And since I recently changed my IRA's AA from 55/45 to 50/50 (and expect to gradually keep lowering the stock percentage over time), I expect most of my rebalancing moves to continue to be in the stocks --> bonds direction.tphp99 wrote:Thank you - this crystallizes my thinking.grayfox wrote:
The idea of only going from stocks -> bonds but not the other way makes more sense than going back and forth stocks <->bonds.
Re: Do you REBALANCE?
In a trending (i.e., momentum) market, a buy-and-hold strategy outperforms a constant-mix rebalancing strategy. So the existence of momentum suggests rebalancing less frequently, not more frequently. If monthly rebalancing isn't optimal in the presence of momentum, perhaps quarterly, semiannual, or annual rebalancing is better; daily rebalancing would be worse (even without transactions costs).sscritic wrote:So you think daily is optimal? Or do you think looking at rebalancing on the date of the decennial census gives a better picture of what daily rebalancing would do? The question wasn't about optimal, the question is about what would happen if you rebalanced daily. Do you have an answer?baw703916 wrote:sscritic wrote:The existence of momentum suggests that monthly rebalancing isn't an optimal strategy.Rodc wrote:The numbers for 2008 - 2011 with monthly rebalancing were presented earlier in this thread by gt4715b.My portfolio would be worse off if I rebalanced daily during this unlikely but possible event.
Simplify the complicated side; don't complify the simplicated side.
Re: Do you Rebalance ?
Yes and I don't consider it market timing.
To me the same action can be market timing or not depending on frequency and reason. If you are investing new money or exchanging money from one fund to another because you feel you have a special insight into the future e.g. stocks are so high now I need to exchange out of equities into fixed income. You are trying to time the market. You are basically saying I don't trust the market I have superior knowledge (actually most likely it is based on tidbits of knowledge with lots of fear or greed).
If you have a well thought out investment plan which requires you to rebalance based on a specific date or % variation of actual to planned allocation - that isn't market timing - is is risk adjusting. You are not claiming any superior knowledge of the market or acting out of fear or greed - you are executing a previously thought out plan to maintain your level of risk. You do not have a position whether the market is too high or too low - just that the risk needs to be managed.
I am not a gambler but I will I'll take a chance on this imperfect analogy. The person betting on the super bowl is gambling the Nevada odds makers are not - they just keep rebalancing their risk exposure -- the person making the bet is basically claiming superior knowledge, the house is keeping his risk under control - doesn't claim to "know" the outcome.
To me the same action can be market timing or not depending on frequency and reason. If you are investing new money or exchanging money from one fund to another because you feel you have a special insight into the future e.g. stocks are so high now I need to exchange out of equities into fixed income. You are trying to time the market. You are basically saying I don't trust the market I have superior knowledge (actually most likely it is based on tidbits of knowledge with lots of fear or greed).
If you have a well thought out investment plan which requires you to rebalance based on a specific date or % variation of actual to planned allocation - that isn't market timing - is is risk adjusting. You are not claiming any superior knowledge of the market or acting out of fear or greed - you are executing a previously thought out plan to maintain your level of risk. You do not have a position whether the market is too high or too low - just that the risk needs to be managed.
I am not a gambler but I will I'll take a chance on this imperfect analogy. The person betting on the super bowl is gambling the Nevada odds makers are not - they just keep rebalancing their risk exposure -- the person making the bet is basically claiming superior knowledge, the house is keeping his risk under control - doesn't claim to "know" the outcome.
Re: Do you Rebalance ?
There's a horrible article out today on Yahoo finance (URL below), but it does give a reference to a source that contends annual rebalancing is good for a 40 basis point improvement in annual average return, namely David Swensen, Unconventional Success: A Fundamental Approach to Personal Investment
It then goes on to list several unrelated actions completely independent from rebalancing that the author claims are "better" than rebalancing.
Using the authors logic you should not pick a $20 bill you find on the ground while walking to work, because you'll earn more than $20 in a typical workday.
http://finance.yahoo.com/news/whats-bet ... 17217.html
It then goes on to list several unrelated actions completely independent from rebalancing that the author claims are "better" than rebalancing.
Using the authors logic you should not pick a $20 bill you find on the ground while walking to work, because you'll earn more than $20 in a typical workday.
http://finance.yahoo.com/news/whats-bet ... 17217.html
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.