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.
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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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