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Rebalancing Your Portfolio

https://invest.usgoldbureau.com/news/rebalancing-your-portfolio/



Rebalancing Your Portfolio

As mid-February creeps near and the first quarter of the year officially reaches its halfway point, we’re feeling the urge to step back and take stock of how our 2020 goals are shaping up. While Americans love a good New Years’ resolution, it’s no secret that for most people, many of those well-intended aspirations that were so motivating in January tend to fall to the wayside come February.






Comments

  • edited February 12
    “As mid-February creeps near and the first quarter of the year officially reaches its halfway point, we’re feeling the urge to step back and take stock ...”

    Sounds like a kid watching for Santa Clause before Thanksgiving’s arrived. Whatever floats your boat I suppose.

    “So what’s a person to do? How do you make sure you’re maximizing those hard-earned dollars and setting your investments up for success year after year? The answer can be summed up in one word: Rebalancing.”

    The last line there is designed to save reader some time.
  • @hank
    I like this tidbit at the bitter end: "Ready to take the next step? Our team of Precious Metals Experts is standing by to assist. Give us a call today at 800-775-3504."
    Dang, the words of a tv infomercial; or QVC or HSN. Buy now, cause we're go'in to run out of a product you know you need.

    'Course, when the site is named, U.S. Gold Bureau; it does take much to assume what the "re-balance pitch will be, eh?

    Our household, starting with the colder period of our winter season has a seasonal, dietary re-balance from the dairy aisle; from pre-Thanksgiving until mid-January. We re-balance with egg-nog while the seasonal supply is available. Kinda like eating the heck out of fresh sweet corn during the summer months.

    Well, anyway. We're all wasting too much time and too many electrons with this.

    Finding and linking a useful investment oriented informational site is more than a: seek and ye may find task, eh?
  • edited February 12
    “We re-balance with egg-nog ... “ - Dunno why, but that usually unbalances me.

    While the guy is nearly half way through the month of February, which he feels will than put him half way through the first quarter, I’ll note that he’s cheating a bit. February is the shortest month..

    I used to rebalance more often than nowadays. It can be self-defeating when overdone. There’s a bit of truth in the old adage: “Let your winners run ...”
  • @hank,
    Yeah, with the 2020 runup in DSEEX I went and looked at total egg proportions and thought about dialing it back from 64% toward 60%.
    But since I have ~5y' worth of bondy things, I then thought 'Why? Why not leave alone, what does it matter?'
    So I am letting that winner run.
    Bought some FAMEX at market height today, which will be a challenge to watch ....
  • edited February 12
    I'm still with my thoughts that the market is in a topping out process. I'm waiting for big money to cut and run before I put any new money to work. I'm sure there are those that are chasing the market; but, I'm not one of them as valuations are just to high from my perspective to be buying at this time.

    Maintaing my asset allocation.
  • yeah, I have thought it was topping for 5y now
  • I have too much to rebalance it would become a full time job. I'm retired and don't need a full time job. My wife wants me to apply for a door greeter position job at Wall Mart. I tell her I cant find my flack jacket. Oh well!!!
  • Ya, this is a blatant come-on. Cripes. i am simply staying the course. Valuations and prices are just too rich these days. I'm near my self-proclaimed sweet-spot in terms of allocation. $100 per month is going into PTIAX automatically. Maybe I'll get to 60% in bonds in my NEXT lifetime? In the meantime, I am enjoying the rising market. 56 bonds, 36 stocks, 7 cash. And I like living HERE, as opposed to where I WAS. :)
  • My notes after reading The Investor’s Manifesto by William Bernstein.

    Over periods of more than a year, stock and asset prices tend to mean revert. An asset class with an above-average past return will tend to deliver a below-average future return and vice versa. In tax-sheltered accounts, letting the losses and gains run for two to three years before rebalancing seems to be the optimal strategy.

    Rebalance your portfolio approximately once every few years. In taxable portfolios, do so even less frequently. Rebalancing your portfolio more than once per year is probably too often.
  • not one of the sharper bernsteins
  • Rebalancing is a pretty easy task for me. Since I am not using distributions yet for expenses, I generally will put them where I want to build a position. Right now all goes into my favorite bond OEF.
  • Gary1952 said:

    Rebalancing is a pretty easy task for me. Since I am not using distributions yet for expenses, I generally will put them where I want to build a position. Right now all goes into my favorite bond OEF.

    +1. Brilliant. Why didn't I think of that?:)

  • edited February 18
    Ignore gold shills.

    Rebalancing is not too hard. Don't be afraid of capital gains taxes, they are at historic lows if you have little or no earned income.

    I am wary of bond funds. As I shave off my stock index fund gains little by little, I've actually been buying individual bonds of 1 to 2 year duration until recently. The offerings really dried up in January, though, and even money markets are paying more than 1-2 year near-junk-grade stuff. Once rates hit zero (and I think they will) what will happen to valuations? I dunno.

    My calculations say I can live for a few years off my for-now 3% bond ladder yield so I am buying my time. 15% cash as well, shooting for higher.

    Don't forget that I-series savings bonds pay over 2% if you are willing to hold them a long time.

  • edited February 20
    Zero rates here? Gawd, I hope not. The very idea is double-speak, as in "1984." Zero rates put the earth where the sky should be, and vice-versa. 2% for I-Series? Why bother? We are still better off than the Weimar Republic. I once saw an illustration, in a history book. A guy was using a wheelbarrow to lug a big pile of Deutschmarks. Not to use them to buy wood to burn for the fireplace at home, but rather to PUT them in the fireplace--- because it was more cost-effective than to buy the wood. Jay-zuz. I expect and depend on more than 2% from my bond funds. I own three, offering yields today of:
    1) 4.35%
    2) 2.82%
    3) 3.36%

    I remember the '80s, where it was easy to find a CD (FDIC-guarantee!) yielding 14%. But I had no money, then. (sigh.) The last DECENT bond rate I took was an individual foreign gov't bond bought in 2003, a 10-year "Zero." Over 5.6%. I'd kill for that, now.



  • I'm glad you mentioned that zero, because it highlights the distinction between current yield (interest payments), and yield to maturity (for individual bonds) or SEC yield (for bond funds).

    That zero "yielded" zero (duh). It paid no interest. That 5.6% figure was the rate of return you got on the bond, including interest payments (none) and "appreciation". That is, total return.

    (BTW, that "appreciation" would be taxed as ordinary income under today's tax laws.)

    Now suppose you bought a 10 year bond for $1090 (par $1K) with a coupon of 3%. Your current yield would be 2.75% ($30/$1090). But your yield to maturity would be only 2%, because you'd get back just $1K at maturity.
    http://www.moneychimp.com/calculator/bond_yield_calculator.htm

    A way to think about it (and the way the IRS thinks about it), is that part of that $30 in annual "interest" is return of principal. Effectively, this "current yield" is eating away at your investment.

    This is why I prefer to look at SEC yield. This is also why in your post it helps to compare the SEC yield of the bond funds with the yield to maturity of the zero bond. Were the bond fund yields you gave current (or trailing) yields, or were they SEC yields?
  • wsanders said:

    Ignore gold shills.

    Rebalancing is not too hard. Don't be afraid of capital gains taxes, they are at historic lows if you have little or no earned income.

    I am wary of bond funds. As I shave off my stock index fund gains little by little, I've actually been buying individual bonds of 1 to 2 year duration until recently. The offerings really dried up in January, though, and even money markets are paying more than 1-2 year near-junk-grade stuff. Once rates hit zero (and I think they will) what will happen to valuations? I dunno.

    My calculations say I can live for a few years off my for-now 3% bond ladder yield so I am buying my time. 15% cash as well, shooting for higher.

    Don't forget that I-series savings bonds pay over 2% if you are willing to hold them a long time.

    I am curious why you are wary on bond OEFs? There are 2 excellent posters here that do a lot of research on them. From those 2 I have learned a lot about bond funds. I do not follow anyone blindly but still do my own due diligence.

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