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Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 12:33 am
by Copernicus
As the stock markets have climbed rapidly, how many times did you rebalance during the 12 months?
Or, did you wait for your annual rebalancing date?
Do you go strictly by pre-set rebalancing bands? - or approximately in a range around your rebalancing trigger?

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 12:45 am
by corn18
I just set my contributions to all go to bond funds. That didn't keep up with the crazy stock climb, so I just did my rebalance in Dec. Still 100% contributions buying bonds and I hope they still don't keep up and I need to do an out of cycle rebalance into bonds (and not the other way around :mrgreen: )

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 12:07 pm
by Copernicus
corn18 wrote:
Thu Jan 18, 2018 12:45 am
I just set my contributions to all go to bond funds. That didn't keep up with the crazy stock climb, so I just did my rebalance in Dec. Still 100% contributions buying bonds and I hope they still don't keep up and I need to do an out of cycle rebalance into bonds (and not the other way around :mrgreen: )
Nice. I, on the other hand, no more have ongoing contributions :annoyed. All assets are in tax-efficient locations. The assets in the tax-deferred account offer very limited rebalancing opportunity. I have lot of gains in the taxable account. So, while keeping tax impact low, I have to use dividend income to rebalance in the taxable account.

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 2:22 pm
by statman
Twice, when equity AA exceeded bands. Second was donation of appreciated fund shares to charity, the save-taxes way to bring equities back to AA.

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 2:32 pm
by Whakamole
Buying bonds like crazy (total bond in 401k, short-term tax exempt in taxable) and still off my target AA by 3%. At one point this year my 401k contributions switch from traditional with match to after-tax (aka the "mega backdoor Roth") and I assume I will have to rebalance in tax-deferred, which stinks because I have a very cheap S&P 500 fund available there. Ah well.

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 3:44 pm
by ByThePond
Not rebalancing per se, but taking a less aggressive AA as retirement approaches. I went from 100/0 to 60/40 in two steps in the last 7 months. I admit that the decision was helped along by recent market strength, though.

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 3:54 pm
by John151
I’m a retiree in my seventies. I’m about six percentage points above my desired allocation to stocks, but all of my stocks are in taxable accounts, and rebalancing would mean paying hefty capital gains taxes. So I’ve decided not to rebalance. My pension and my bond investments are enough to see me through to the end of my days and then some, so even a precipitous drop in stocks wouldn’t change my lifestyle in any way.

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 3:59 pm
by bobolinx
Slowly selling winners and moving towards less aggressive allocation. Bought some AGG, and global wellesley income. Taking advantage of high prices on some long-term equities to sell. Not looking forward to the tax hit, but am in the simplifying stage for the investments. Time to become less aggressive in the portfolio but enjoy the rising tide.

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 4:04 pm
by livesoft
I go by tight bands and RBDs, so my records show I sold equities on at least 14 days in significant amounts including today.

BTW, that's an advantage to using MSMoney: I can create a report that only shows sell transactions for equities greater than a given dollar amount over any date range. Plus many more options.

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 4:11 pm
by WoodSpinner
Copernicus wrote:
Thu Jan 18, 2018 12:33 am
As the stock markets have climbed rapidly, how many times did you rebalance during the 12 months?
Or, did you wait for your annual rebalancing date?
Do you go strictly by pre-set rebalancing bands? - or approximately in a range around your rebalancing trigger?
My IPS uses a rebalancing band that is 25% off my target Allocation, rather than a Fixed time.

Example: Asset-a target is 10% so I would rebalance if it was:
  • < 7.5%
  • > 12.5%
I ended up rebalancing twice last year. Once due to market changes and once after pulling 2018 living expenses out.

Hope this helps...

WoodSpinner

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 4:25 pm
by tuningfork
I rebalanced at the beginning of October when my end-of-quarter financial review showed my rebalancing band had been tripped. My target AA is 65/35 and it had reached 71/29, so back to 65/35 it went.

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 4:27 pm
by Blueskies123
Two days ago

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 4:28 pm
by Blueskies123
Two days ago, for the second time

Re: Rebalancing in last 12 months

Posted: Thu Jan 18, 2018 7:04 pm
by AnalogKid22
Small rebalance so far, but increasing bond assets while still buying stocks. This bull ain't done runnin', but, even if it crashes head first into a major downturn, my current AA won't affect my sleep.

Re: Rebalancing in last 12 months

Posted: Fri Jan 19, 2018 9:32 am
by House Blend
My IPS says that I *must* rebalance if certain thresholds are crossed, but it also says that I am *allowed* to make trades at any time for any reason (including phases of the moon or who wins the Super Bowl) as long as two conditions are met:

1. The trade moves the portfolio closer to my allocation targets.
2. The trade is cost-free and tax-free.

On that basis I have made 5 small (1%-ish) rebalancing trades from equities to fixed income over the past 12 months, on 1/26/17, 6/20/17, 10/4/17, 12/19/17, and 1/3/18.

I may do another one soon, but perhaps I should wait until I see who wins the Super Bowl. :D

Re: Rebalancing in last 12 months

Posted: Fri Jan 19, 2018 9:40 am
by jebmke
Copernicus wrote:
Thu Jan 18, 2018 12:33 am
As the stock markets have climbed rapidly, how many times did you rebalance during the 12 months?
Or, did you wait for your annual rebalancing date?
Do you go strictly by pre-set rebalancing bands? - or approximately in a range around your rebalancing trigger?
Every quarter I sweep my equity dividends to my bank for spending. So, at a minimum, I re-balanced every quarter.

Re: Rebalancing in last 12 months

Posted: Fri Jan 19, 2018 10:20 am
by am
What does academic literature say on frequency of rebalancing and effect on returns? I remember a fidelity article about best returns being for those who were deceased and didn’t touch their accounts.

Re: Rebalancing in last 12 months

Posted: Fri Jan 19, 2018 10:23 am
by randomizer
Via new contributions. Pretty much only bought bonds.

Re: Rebalancing in last 12 months

Posted: Fri Jan 19, 2018 10:31 am
by livesoft
am wrote:
Fri Jan 19, 2018 10:20 am
What does academic literature say on frequency of rebalancing and effect on returns? I remember a fidelity article about best returns being for those who were deceased and didn’t touch their accounts.
Total hearsay, so you remember hearsay. Here is more hearsay:

I heard of a Fidelity article about the best returns being for those whose Fidelity advisors were deceased.

Re: Rebalancing in last 12 months

Posted: Fri Jan 19, 2018 10:52 am
by Garco
In my taxable (brokerage) account, I don't rebalance for the sake of better balance but may buy or sell certain holdings based on the market, e.g., in one or two more speculative investments. This account also provides income (cash) that augments my family budget.

In my tax deferred accounts, I basically reset my allocation at the end/beginning of the year. But these aren't usually major changes. I've been on a multi-year path of reducing the equity share of my accounts. I'm now retired. In my main tax deferred (401k) account, equities are now about 45%; a few years ago they were about 60%. I also make some allocation changes within a calendar year as market momentum clarifies -- principally on international vs. domestic, and growth vs. value dimensions. (In 2017, I increased the international and value shares of my investments within the calendar year. However, I did not make significant changes at year-end.) This is based less on my evaluation of the performance of my own particular investments but rather on overall market trends. I have a diverse enough AA on the size, growth-value, and domestic-foreign dimensions that I make just shifts of a few percentage points on those dimensions.