How, When, and Why Should You Rebalance Your Investment Portfolio?

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Why bother rebalancing your investment portfolio and what is the best method for doing so.

Topics covered include:

  • How a target asset allocation can get out of line if a portfolio is not rebalanced
  • What is positive skewness and why it matters to portfolio investing
  • What is volatility drag and how it can lead to lower end of period wealth
  • What are the costs of rebalancing
  • Which rebalancing method if any has been the most effective

Thanks to Felix Gray glasses and Mint Mobile for sponsoring the episode.

For more information on this episode click here.

Show Notes

Long-Horizon Stock Returns Are Positively Skewed by Adam Farago and Erik Hjalmarsson

Positively Skewed Distribution—Corporate Finance Institute

Prospect Theory and Stock Market Anomalies by Nicholas Barberis, Lawrence J. Jin, and Baolian Wang

Strategic Rebalancing by Sandy Rattray, Nicolas Granger, Campbell R. Harvey, and Otto Van Hemert

Portfolio Rebalancing: Tradeoffs and Decisions by Xing Hong and Philipp Meyer-Brauns

Diversification Returns, Rebalancing Returns and Volatility Pumping by Keith Cuthbertson, Simon Hayley, Nick Motson, and Dirk Nitzsche

Getting back on track: A guide to smart rebalancing by Jenna L. McNamee, Thomas Paradise, and Maria A. Bruno—Vanguard

Safe Haven: Investing for Financial Storms by Mark Spitznagel

Related Episodes

313: No One Is Entirely a Buy and Hold Investor

341: How to Overcome Investing Fears

354: Now Is the Best Time Ever to Be an Individual Investor

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