136 votes
Accepted

One of my stock positions has grown substantially. Should I rebalance my portfolio?

So, you have a portfolio of around 50k, and you're wondering whether you should change it. The question I always ask myself in this kind of situation is: If someone gave you 50k today, how would you ...
Sam Hopkins's user avatar
35 votes

Can you really always yield profit if you diversify and wait long enough?

"Always" is an absolute, but history does show that in the long run the (EDIT: US) stock market has gone up. But not continuously up. And in the long run, you're dead. Unless you're really ...
RonJohn's user avatar
  • 50.7k
18 votes

Can you really always yield profit if you diversify and wait long enough?

The odds are on your side but there's no guarantee that "you can totally invest as much as you want at any point in time you want and you can never go wrong." In the US, the market's ...
Bob Baerker's user avatar
  • 76.4k
14 votes

One of my stock positions has grown substantially. Should I rebalance my portfolio?

Before you buy a stock (or anything else to be honest) you should have an entry and an exit criteria set. These criteria should be based on a calculated metric rather than a fixed number or a ...
MD-Tech's user avatar
  • 8,955
13 votes

One of my stock positions has grown substantially. Should I rebalance my portfolio?

In addition to the other helpful answers here, I think a practical consideration/caution is in order. Rebalancing is a good idea in general, but it does have costs. Every time you make a transaction ...
Joe's user avatar
  • 35.8k
11 votes

How to rebalance a portfolio without moving money into losing investments

A strategy of rebalancing assumes that the business cycle will continue, that all bull and bear markets end eventually. Imagine that you maintained a 50% split between a US Treasury bond mutual fund ...
NL - Apologize to Monica's user avatar
10 votes
Accepted

Why do passive ETFs require so much trading (and incur costs)?

Now, if I'm not mistaken, tracking a value-weighted index is extremely easy - just buy the shares in the exact amount they are in the index and wait. Yes in theory. In practise this is difficult. ...
Dheer's user avatar
  • 57.1k
10 votes

Can you really always yield profit if you diversify and wait long enough?

No, it’s not always true. Suppose, for example, that you had invested in the Russian stock market in 1910. Political risk can permanently destroy your investment.
Mike Scott's user avatar
  • 23.5k
9 votes

What is the minimum time an S&P 500 index fund should be given before selling?

I don't need funds at this time. Then there's nothing to do. If the strategy is "buy and hold" then you keep holding. When you need capital you assess your allocations and potentially sell some of ...
quid's user avatar
  • 49k
7 votes

How aggressive should my personal portfolio be?

You're completely missing the most important thing you can do: minimize fees. There is no reason whatsoever to pay a yearly account fee. Take your business to a broker that does not take such fees. ...
Michael Borgwardt's user avatar
7 votes

One of my stock positions has grown substantially. Should I rebalance my portfolio?

Vanguard said about it from Best practices for portfolio rebalancing(Link): The primary goal of a rebalancing strategy is to minimize risk relative to a target asset allocation, rather than to ...
user2652379's user avatar
7 votes

Can you really always yield profit if you diversify and wait long enough?

From a strictly mathematical point of view of infinity, whenever you wait "long enough" for anything, eventually everything possible will happen. Based on that idea, no matter what the stock ...
TTT's user avatar
  • 47.2k
6 votes

How to rebalance a portfolio without moving money into losing investments

If you are making regular periodic investments (e.g. each pay period into a 401(k) plan) or via automatic investment scheme in a non-tax-deferred portfolio (e.g. every month, $200 goes automatically ...
Dilip Sarwate's user avatar
6 votes

One of my stock positions has grown substantially. Should I rebalance my portfolio?

Conventional wisdom is that one should rebalance one's portfolio in order to balance risk and reward, adhering to the goals of a portfolio. It's the most important decision that you can make after ...
Bob Baerker's user avatar
  • 76.4k
5 votes
Accepted

Why is tax loss harvesting helpful for passive investing?

The harvested losses are capital losses. See this IRS page: Generally, realized capital losses are first offset against realized capital gains. Any excess losses can be deducted against ordinary ...
BrenBarn's user avatar
  • 24k
5 votes

Does dollar cost averaging apply when moving investments between fund families?

As mentioned by others, dollar cost averaging is just a fancy term for how many shares your individual purchases get when you are initially adding money to your investment accounts. Once the money ...
NL - Apologize to Monica's user avatar
5 votes

Stocks vs Bonds

Bonds help diversify an equity portfolio, which reduces risk (the amount of swing up or down that you can expect from a portfolio). Yes, historically equities have a higher average return than bonds, ...
D Stanley's user avatar
  • 135k
5 votes

What are the steps to create a balanced portfolio from scratch?

The main problem with investing small sums is that trading fees can take up a larger percentage of the total. For example, if you invest $100 and are charged a flat $5 fee, you retain $95 in your ...
Lawrence's user avatar
  • 9,362
5 votes
Accepted

ETF rebalancing: do I pay fees?

You pay a periodic fee ("expense ratio") for holding an ETF that encompasses all costs - transactions costs, management costs, etc. You do not pay additional costs purely for rebalancing ...
D Stanley's user avatar
  • 135k
4 votes

Does dollar cost averaging apply when moving investments between fund families?

Dollar cost averaging doesn't (or shouldn't) apply here. DCA is the natural way we invest in the market, buying in by a steady dollar amount each pay period, so over time we can buy more shares when ...
JTP - Apologise to Monica's user avatar
4 votes

How to rebalance a portfolio without moving money into losing investments

Also, almost by definition rebalancing involves making more trades than you would have otherwise; wouldn't the additional trading fees you incurred in doing so reduce the benefits of this strategy?...
mhoran_psprep's user avatar
4 votes
Accepted

How to deal with activist targeting of individual stocks?

The easiest way to deal with risks for individual stocks is to diversify. I do most of my investing in broad market index funds, particularly the S&P 500. I don't generally hold individual ...
NL - Apologize to Monica's user avatar
4 votes

Why are daily rebalanced inverse/leveraged ETFs bad for long term investing?

Fund rebalancing typically refers to changing the investment mix to stay within the guidelines of the mutual fund objective. For example, lets say a fund is supposed to have at least 20% in bonds. ...
Pete B.'s user avatar
  • 76.5k
4 votes
Accepted

Why weight a portfolio by market cap when equal weighting has higher ROI?

As a general rule, large caps tend to be less volatile than small and mid caps. In other words, large caps tend to go up less than small/mid caps in a bull market and, conversely, large caps tend to ...
not-nick's user avatar
  • 6,418
4 votes
Accepted

How often should one's retirement portfolio be adjusted (rebalanced), and how?

I think that there are two different questions here: 1) What is a good asset allocation, and how should it change over time 2) How to rebalance a portfolio to match the desired asset allocation There ...
KeithB's user avatar
  • 5,005
4 votes
Accepted

Auto balancing portfolio through new purchases

Finding the "optimal" solution (and even defining what optimal is) would probably take a lot of searching of all the possible combinations of stocks you could buy, given that you can't buy fractional ...
GS - Apologise to Monica's user avatar
4 votes
Accepted

Is using debt into a regular mutual fund different from investing in a leveraged mutual fund?

There is one important difference: If you invest in a leveraged fund, you can only lose 100% of your investment. If you take on debt to invest, you can lose more. For simplicity let us assume that you ...
Manziel's user avatar
  • 7,422
4 votes
Accepted

index rebalancing question

The index level is unaffected by index rebalancings. It is true that prices and outstanding shares change during rebalancing, but the divisor will change to account for this. (Divisor) after ...
AKdemy's user avatar
  • 2,774

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