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Author: montecfo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 60104  
Subject: Re: More On Re-Balancing Date: 2/17/2007 11:58 PM
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I've decided to take a "re-balancing" look at my holdings every May and again every September -- and do any minor re-balancings at that time. This should minimize any major tax bills and keep my portfolio healthy.

Twice a year is probably too often.

And if you are trying to take a modern portfolio theory type of approach, you are not diversified enough, in my opinion. I would see that as far more important than rebalancing.

How often do the rest of you take a critical look at your portfolio and re-balance it?

I look at my portfolio constantly, but I never rebalance per se.

I have 40% of my portfolio in 8 mutual funds, mostly value oriented with a small amount of aggressive growth, and a balanced fund. For my supersafe type money, I pay down my mortgage which gives me a bondlike guaranteed return.

The rest of my portfolio is in 20-25 individual stocks and bonds, which provide what I feel is adequate diversification, though in recent years I have been overweighted in oil and gas and rails, and always underweight in tech.

When I am buying new stocks, I consider diversification at that time. However, a value-type approach will necessarily result in overweighting of particular industries. Same when I am selling.

If you hope to beat the market, you have to overweight. If you want to track the market, you have to be more diversified.

Above all, you must watch costs, they will kill you.

Best,

Montecfo

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