tempted to rebalance LTT to gold prematurely

[stone]

I'm finding I get itchy feet when it comes to rebalancing. I sold some gold (at about $1890) in the summer because I was worried about the rapid rise and I've been  resisting the same feeling about UK LTT that are 30% up from earlier in the year. So far they seem to just tick up and up and so it has been just as well that I have resisted my impulse. I kind of think though that if gold gets one of its option expiry date plummets around next Tuesday's option expiry date, it might be harmless enough to even out my LTT and gold holdings.  I sort of justify to myself that so long as I'm always moving towards equal allocations, I'm still in the spirit of things???

[Ad Orientem]

I'm finding I get itchy feet when it comes to rebalancing. I sold some gold (at about $1890) in the summer because I was worried about the rapid rise and I've been  resisting the same feeling about UK LTT that are 30% up from earlier in the year. So far they seem to just tick up and up and so it has been just as well that I have resisted my impulse. I kind of think though that if gold gets one of its option expiry date plummets around next Tuesday's option expiry date, it might be harmless enough to even out my LTT and gold holdings.  I sort of justify to myself that so long as I'm always moving towards equal allocations, I'm still in the spirit of things???

This is a good reminder for why Harry B and Craig recommend that we avoid checking our portfolios too frequently.  When you see all the moving parts and start focusing on one asset class that is doing either very well or very poorly the inevitable temptation creeps in to try and market time.  Of course it's hard to never peek (I do).  My view is that as long as you are not moving outside the 15/35 rebalancing bans, then go with whatever makes you sleep better at night.  But if your prognosticating on future events, don't be surprised if you kick yourself down the road for missing some upward move after rebalancing early.

[stone]

Ad Orientem, you're talking good sense. The whole point of the PP is that we are not supposed to think about the unknowable future. Nevertheless I'm still bracing myself for whatever this euro-zone fiasco throws out. I find it hard to see it just quietly going away. In 2008 gold saved the UK PP but it was a drag for the Japanese PP.

[MediumTex]

If it makes you feel better to rebalance early, then I would do it.

Bear in mind, though, that what you are contemplating has historically always led to lowers returns on the whole portfolio.

I would guess that many new PP'ers do a few of these premature rebalancings in their early time with the PP.  As they get more comfortable with some of the more subtle aspects of the PP, I'll bet they develop more respect for the rebalancing bands.  IMHO, it's all part of the learning process and getting to a place of mental comfort with the strategy.

[cabronjames]

The Obama/Boehner bipartisan/clownish 2011-Jul Debt Ceiling fiasco imho personally was a great example of guessing at asset returns, especially in short time frames like 1-month, 1-yr future returns.  30 yr T-Bonds were threatened by the Debt Ceiling crisis, but then 30 yr T-Bonds performed great, while stocks declined heavily.

1 approach is to put at least 50% of your PP where you robotically rebalance per your set rebalancing scheme.  Then consider the remainder smaller part a "VP" where you "speculate" on your asset mix, while still remaining within the 15/35 limits.

[Storm]

The Obama/Boehner bipartisan/clownish 2011-Jul Debt Ceiling fiasco imho personally was a great example of guessing at asset returns, especially in short time frames like 1-month, 1-yr future returns.  30 yr T-Bonds were threatened by the Debt Ceiling crisis, but then 30 yr T-Bonds performed great, while stocks declined heavily.

1 approach is to put at least 50% of your PP where you robotically rebalance per your set rebalancing scheme.  Then consider the remainder smaller part a "VP" where you "speculate" on your asset mix, while still remaining within the 15/35 limits.

I like that idea.  Then after a few years you can compare the returns and finally rid ourselves of the notion that we can predict the markets based on recency bias.

[murphy_p_t]

getting tempted to trade paper for metal on a day like this...buying opportunity ahead for vp?