To prevent myself from doing this, I imposed this rule:
I'm not allowed to execute a change in asset allocation strategy until one year after formally declaring it. Any new change declared during that time resets the clock.
An example to explain the mechanics of it (not a realistic example):
- 6/13/18: Declare that you want to increase your REIT allocation from 2% to 10%. Mark the execution date, 6/13/19, on your calendar.
- 1/1/19: You read something about emerging markets and decide to add some to your portfolio. The execution date is now pushed further to 1/1/20.
- 2/4/19: You change your mind about emerging markets, but want to increase your international allocation to 45% and REITs to 6% instead of 10% like you originally wanted. The execution date is now pushed even further to 2/4/20.
- 2/4/20: You execute your plan to increase REIT to 6% and international to 45%.
What do you think about this? Too strict?
Note: This rule would be mostly for investors who already have a decent investment strategy in place.