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Rebalancing frequency

Posted: Tue Mar 24, 2020 7:52 am
by bugleheadd
is it better to rebalance more often than less often? are there any metrics that show differences in reblanacing daily/weekly/monthly/quarterly/semi annual/ annual? in these market downturns, is it better to monitor and rebalance more often to buy more shares on the way down?

Re: Rebalancing frequency

Posted: Tue Mar 24, 2020 7:55 am
by livesoft
Don't rebalance based on the calendar. Rebalance based on what has happened to the asset allocation of your portfolio. Your AA does not go out of whack on the 1st of every month, nor quarter, nor annually, nor every 4 years.

Look as often as you want to, but mostly look when news headlines have "worst" or "best" in them.

We can easily define what it is best to do: Rebalance into equities when they are at their bottom and about to go up. Rebalance out of equities when they are at their top and about to go down. Most people see a problem trying to do that, so what is good enough has to be decided by each investor for themselves.

In other words, there is no best answer to your question, but here is link to one study: https://www.onefpa.org/journal/Pages/Op ... agers.aspx

Re: Rebalancing frequency

Posted: Tue Mar 24, 2020 10:48 pm
by Eagle33
Here is a Vanguard paper: A guide to smart rebalancing.

Re: Rebalancing frequency

Posted: Wed Mar 25, 2020 12:22 am
by flaccidsteele
bugleheadd wrote:
Tue Mar 24, 2020 7:52 am
is it better to rebalance more often than less often? are there any metrics that show differences in reblanacing daily/weekly/monthly/quarterly/semi annual/ annual? in these market downturns, is it better to monitor and rebalance more often to buy more shares on the way down?
I market time, ahem, rebalance only during bear markets. I like buying more when prices go down

I don’t rebalance based on time passed. That’s arbitrary. Makes no sense

Re: Rebalancing frequency

Posted: Wed Mar 25, 2020 9:11 pm
by Phineas J. Whoopee
What do you expect rebalancing to accomplish? It might or might not end up doing that, but the answer can inform our response to your frequency question.
PJW

Re: Rebalancing frequency

Posted: Wed Mar 25, 2020 9:45 pm
by JustinR
bugleheadd wrote:
Tue Mar 24, 2020 7:52 am
is it better to rebalance more often than less often? are there any metrics that show differences in reblanacing daily/weekly/monthly/quarterly/semi annual/ annual? in these market downturns, is it better to monitor and rebalance more often to buy more shares on the way down?
Once a year, on your birthday.

https://www.vanguard.com/pdf/ISGPORE.pdf

Re: Rebalancing frequency

Posted: Thu Mar 26, 2020 12:52 am
by pascalwager
I have a 20% balancing band, so in normal markets, I rebalance about every four years, or so. But I did rebalance very recently after the 30% drop.