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Friday, July 30, 2010
With downbeat economic data countering mostly solid June-quarter results, stocks have been unable to build on recent gains this week…
Real Questions from Real Subscribers
Q: How often do you recommend a buy list portfolio be rebalanced?
A: Dear Subscriber,
We don't have a specific recommendation for rebalancing, in large part because there is no single answer that works for everyone. Excessive transaction costs can eat away at returns, especially for small portfolios.
Investors with large portfolios or low transaction costs can afford to rebalance more frequently, but every investors has a different comfort level. The closest I can come to an answer to your question is that yes, you should rebalance periodically, but beware of too much churn in your portfolio. In the case of rebalancing, your own comfort level is more important than any rule of thumb.
Thanks for your interest,
Bob Sweet, CFA
Managing Editor, Dow Theory Forecasts
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