Dip Buying the PP

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perfect_simulation
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Dip Buying the PP

Post by perfect_simulation » Fri Nov 26, 2021 7:49 am

Does anyone have any thoughts or strategies for dip buying the PP?

I usually move a portion of my paycheck into my PP account, but I have no problem waiting for a day when stocks, bonds, and gold are down to buy. it just feels too good not to do it that way. 8)

I'll add that I don't really pay attention to my bucket sizes when I buy, I just split my "addition" 4x ways and go at it.
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Cortopassi
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Re: Dip Buying the PP

Post by Cortopassi » Fri Nov 26, 2021 8:53 am

Maybe set your rebalance bands tighter so you are rebalancing more often, and not necessarily when you emotionally think it's a good time is my suggestion.

Like today...stocks look like a good buy, but you never know. There's a whole weekend for this new variant news to get potentially worse.
perfect_simulation
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Re: Dip Buying the PP

Post by perfect_simulation » Fri Nov 26, 2021 9:09 am

Cortopassi wrote:
Fri Nov 26, 2021 8:53 am
Maybe set your rebalance bands tighter so you are rebalancing more often, and not necessarily when you emotionally think it's a good time is my suggestion.

Like today...stocks look like a good buy, but you never know. There's a whole weekend for this new variant news to get potentially worse.
Personally, I rebalance 1x annually but its never a wrong time to rebalance IMHO
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Cortopassi
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Re: Dip Buying the PP

Post by Cortopassi » Fri Nov 26, 2021 9:51 am

There used to be a PP website called peak to trough that allowed you to adjust frequency of rebalancing to see the effects. Generally if I recall, the more you rebalance, the lower the return was.

I have not looked at Tyler's Portfolio Charts in a while and do not recall if he has anything similar, regardless if you don't know about this, it is a great resource.

https://portfoliocharts.com/
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Matthew19
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Re: Dip Buying the PP

Post by Matthew19 » Mon Nov 29, 2021 12:36 pm

perfect_simulation wrote:
Fri Nov 26, 2021 9:09 am
Cortopassi wrote:
Fri Nov 26, 2021 8:53 am
Maybe set your rebalance bands tighter so you are rebalancing more often, and not necessarily when you emotionally think it's a good time is my suggestion.

Like today...stocks look like a good buy, but you never know. There's a whole weekend for this new variant news to get potentially worse.
Personally, I rebalance 1x annually but its never a wrong time to rebalance IMHO
It's actually bad to rebalance too often. You're removing funds from a winning asset as it rises and it lowers returns. Stick with the bands. I've even seen some backtesting showing that it's better to add additional funds at an equal dollar amount rather than rebalancing via unequal additional funds, but then there's potential tax savings that come from adding new funds to rebalance rather than taking capital gains. That one confused me.
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Xan
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Re: Dip Buying the PP

Post by Xan » Mon Nov 29, 2021 1:07 pm

Matthew19 wrote:
Mon Nov 29, 2021 12:36 pm
perfect_simulation wrote:
Fri Nov 26, 2021 9:09 am
Cortopassi wrote:
Fri Nov 26, 2021 8:53 am
Maybe set your rebalance bands tighter so you are rebalancing more often, and not necessarily when you emotionally think it's a good time is my suggestion.

Like today...stocks look like a good buy, but you never know. There's a whole weekend for this new variant news to get potentially worse.
Personally, I rebalance 1x annually but its never a wrong time to rebalance IMHO
It's actually bad to rebalance too often. You're removing funds from a winning asset as it rises and it lowers returns. Stick with the bands. I've even seen some backtesting showing that it's better to add additional funds at an equal dollar amount rather than rebalancing via unequal additional funds, but then there's potential tax savings that come from adding new funds to rebalance rather than taking capital gains. That one confused me.
I wouldn't say it's quite so straightforward. Sure, on average the less you rebalance, the better your returns, because you ultimately end up with a 100% stock portfolio. Primarily the reason we rebalance (and maintain a portfolio other than 100% stocks) is to keep our risk profile where we like it.

So if you want to rebalance, and you'd sleep better if you rebalanced, you should do it. Basically that's just choosing to have narrower bands based on your risk tolerance, which is a perfectly reasonable thing to do.
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