slightly confused about rebalancing

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dualstow
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Re: slightly confused about rebalancing

Post by dualstow » Mon Oct 10, 2011 8:36 pm

I think the key is your second paragraph. That is, gold would more likely be through the roof on the eve of a depression, forcing you to rebalance months before (and hell, *during*) the recognition of a depression, not hovering at 34%.

Of course, Harry Browne also said that he picked the 25% shares for simplicity, so I don't think it would kill you to take profits at 34% or to ignore your portfolio while lounging in Ubud, Bali at 36%. I saw that some of you knocked gold back to 30% well before that $100-in-one-day drop.
Last edited by dualstow on Mon Oct 10, 2011 8:38 pm, edited 1 time in total.
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Re: slightly confused about rebalancing

Post by edsanville » Mon Oct 10, 2011 9:51 pm

I fully agree that the quantitative analysis may be a bit much, but I did it for one main reason:  I don't like doing something arbitrary without understanding why I'm doing it.  So, my initial question was "why 15/35?"

From the analysis I did, it does turn out that the exact rebalancing band doesn't matter as much as I thought it might.  Rebalancing every day is within a percentage point of rebalancing at a 5/45 band!  That's pretty interesting information right there, if you ask me.  I'm sticking with 15/35, myself.  My curiosity has been satisfied.
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Re: slightly confused about rebalancing

Post by vnatale » Wed Jan 15, 2020 8:45 pm

What are current thoughts regarding this? And, more importantly, what IS YOUR rebalancing method, e.g., how frequently, what triggers it?

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Re: slightly confused about rebalancing

Post by Kbg » Wed Jan 15, 2020 10:36 pm

Rebalancing benefits or costs are completely path dependent. There is really no solid "evidence" statistically for one method over another. That's the bottom line. The standard line, which I concur with, is that rebalancing is primarily about risk not performance.

In/assuming a taxable account, one can mess around with different methods to see what the tax hit is which is a useful exercise. Such an approach looks at frequency of trades and assesses the distribution of ST and LT capital gains taxes and then adjusts performance expectations accordingly.
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