Bogleheads

[livesoft]

I searched casually to see if there was a poll on rebalancing, but didn't find one. So here it is.

I'd really like to know if you rebalanced into equities in the last month though.

[Rodc]

I rebalance on bands (20%) and have not yet hit a rebalance. But I also redirect new money into sectors that start to fall noticeably behind which slows the hitting of rebalance thresholds.

I have three funds, REIT, Small value, and International value in a brokerage account with trading fees, and so I do not redirect new money to those funds. I am close to rebalancing in the international value, fine on REITS and Small value.
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"all standard caveats apply"

[chaz]

My TR fund rebalances itself - no help from me needed.
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Chaz
"It is better to travel well than to arrive." - Buddha
http://www.bogleheads.org/wiki/index.php/Main_Page

[Buddtholomew]

[DA]

I rebalance once a year, on my birthday. That date came and went early in the year.

I use bands of +/- 5%, except for reit. For reit I use +/- 25%, since reits are a much smaller percentage of the portfolio (a constant 5%).

Dan

[MitchL]

I use 20% rebalancing bands.

I rebalanced to DFA Emerging Value earlier this month and redirected my monthly 401k contribution to DFA International Small Value on Friday (usually VG Short Treasury).

All asset classes now within 5% of goal except TIPS has slipped to 94.6%.

[Sibelius]

I use 25% re-balancing bands. In my Vanguard rollover IRA I have small value and emerging markets. I re-balanced out of EM last October 31 and have not had to do anything since, although it is getting pretty close to the threshold with the collapse in the EM index fund.

[Buckeye]

[Judsen]

As I approached and began Required Minimum Distribution (RMD) and as I felt that the market was overdue a correction (Regression to Mean)
I let my Asset-Allocation (A-A) which is 70% Equities/30%Cash&Fixed creep up to 77% Equities. As anticipated, RMD and correction together have brought me (painless rebalance) to 68% Equities (TSM & VFIAX) and 32% Cash&Fixed. No muss no fuss no bother.
If S&P will go below 1200 and stay long enough for a proffessional crastinator to act I will add TSM in taxable.
If we are in for 7 lean years I will simply endure.
Jud

[tetractys]

I like the 5/25 rule that you can read about in Larry Swedroe's book, Winning Investment Strategy, and also on various threads on this forum. I also rebalance sensibly whenever I invest new money. In the last half year I've bought a bunch of Total Stock Market, which has put my portfolio out of whack past the bands, so I'm just now mailing in a form to transfer some assets for rebalancing.

Best regards, Tet
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"Near panic conditions prevail in financial markets. People want to know what lies ahead. I cannot tell them because I do not know." -- George Soros

[livesoft]

Thanks everybody for the responses. It seems that 70% of folks like rebalancing based on bands. Do you use The Rolling Stones or something more modern?

I was hoping to get upwards of 100 votes on this. With more than 500 views (some redundant) I know that there are alot of lurkers out there. Here's your chance to be heard without revealing yourself! Thanks!

[kdmusic]

I rebalance quarterly. New (monthly) money sits in a stable value account, and then on Jan 1, April 1, July 1, and Nov. 1, I distribute things to fit with my coffeehouse self. Rebalancing so frequently, the need for bands is mostly obviated. A small amount of money sitting in stable value helps calm me when things go as they have this year (even though the new money is a small part of the portfolio).

kdm

[jhd]

I like the 20% bands suggested by the Opportunistic Rebalancing paper (http://www.tdainstitutional.co....yanani.pdf). Pretty similar to the 5/25 rule - follow 20% bands, rebalance back to within 10% either way, and check every 1-4 weeks. I don't do the latter faithfully because of the time it takes, but it's a good goal.

No guarantee that this approach will continue its historic premium (maybe 0.3%-0.5%), but it's a system, and what matters is following a reasonable system, not trying to determining the perfect one.
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No, I'm not panicking.

[DocHolliday]

I rebalance when I fill up my Roth in the first quarter of each year. I do not use % bands. I do not look at my investments very often and feel it is better for me if I leave things on autopilot. Not looking is probably saving me some stress these days.

[lazyrad]

I guess my strategy isnt that good

I rebalanced Friday to return to my AA, buying equities.

Oh well...

Anyone got a crystal ball??

[House Blend]

I'm similar to Rodc. I use a 5%/20% rule for rebalancing, but I've had large chunks of non-wage income show up the past two months, which have gone 100% into equities. So I haven't had to make rebalancing moves lately.

Also, I only allow myself to check the error bars once per month (when new shares are purchased). So that's sort of like rebalancing 12 times per year instead of once/year.

[Sheepdog]

Actually my allocation is at 30% stocks only, but it had drifted up to a little bit over 32%. The market rebalanced for me back to 30% now.
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Frame every so-called disaster with these words "in five years, will this matter?"

[MitchL]

[Tall Grass]

I don't usually rebalance until my target percentages deviate more than 5%...
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"I am less interested in the return on my money than the return of my money."
- Will Rogers

[paul e]

I only wish my mom had rebalanced along the way.. She has a sizeable equities portfolio which is 75% stocks. At 86 yrs of age, I dont have to tell you thats a problem. As her attorney-in-fact, Id love to rebalance this portfolio. However, to rebalance this to what it should be would cost probably near $200k in capital gains taxes, plus, doing it now after a year that is down about 30% is not exactly ideal. In addition, because of her age, when this portfolio is inherited, no capital gains tax will need be paid.

So, rebalancing now doesnt seem like the best move.. Its driving me a little nutty though, because part of me wants to do what should have been done all along.. shes a person who carried buy and hold to the extreme.. Rather, she practiced Buy and Forget, and thats not the same as buy and hold, even if she thinks it was. Buy and Hold, in my way of thinking, requires prudent management exercised by regular rebalancing to an age-appropriate asset allocation.. Now, for the reasons given above, I think Ill have to wait to inherit before I rebalance.

[Buddtholomew]

[livesoft]

But you can write a check on your MM fund and mail them that!

[Ilovevolleyball]

Hello,

I have been rebalancing every quarter, in 401k and Roth. I am thinking I might want to move to bands. I need to read up I guess. 60% Stock and 40% Bond is my allocation.

Mike

[Tall Grass]

Can't keep up wth my re-balancing...
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"I am less interested in the return on my money than the return of my money."
- Will Rogers

[CyberBob]

I never rebalance - my plan doesn't call for it.

Yes, keeping your stock/bond allocation balanced at a certain level is a manner of risk control and a way to keep your return characteristics at a certain level. But, depending on the way you view risk, rebalancing now could actually increase your risk

If I rebalanced now in the conventional sense, I would be selling bonds to buy stocks (which has historically been a good thing - buy low). But, my plan, rather than keep a certain static stock/bond allocation calls for controlling my risk by having a large number of years of withdrawals out of the stock market and in 'safe' assets. This money is completely independent of how my stock investments perform or how my overall portfolio fluctuates.

If I rebalanced from bonds into stocks, I would be severely shortening the number of years worth of safe money I have, therefore potentially increasing my risk because I would have fewer date-certain withdrawals tucked away - making me more reliant on having the market bounce back sooner. Essentially, in my plan, money can move from the stock pile to the bond pile when stocks do well, but never the other way around.
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(100-(VBTLX+VMMXX))VTWSX+((1-(COS(age)))*100)VBTLX+((1/(89-age))*100)VMMXX=100

[paul e]

[dbr]

[paul e]