let's say you have 4 assets (stocks,metals,bonds and RE) and each have allocations of 25% just for the sake of the example. You determined that the correct exposure you want to metals for example is 25% and it's 2007. By 2011 metals now take up to 50% of your portfolio. Should you re-balance it? Why? Doesn't it mean that this asset is performing well and in this case re-balancing means something like timing the market?
On the other hand, you didn't want exposure more than 25% of your portfolio in metals because you consider them too volatile/risky.
This scenario can also happen if your stocks crash and suddenly you only have 15% stocks. In that case it kind of makes sense to re-balance by buying?
Interested in thoughts and theory.
Submitted April 29, 2018 at 05:27AM by aelaos1 https://ift.tt/2HXSDHr
