Annual Portfolio Rebalance

It is mid January and it is time to rebalance my investments. It was a wild year in the markets and my portfolio reflects that fact. I always like to rebalance in January after the year end sell off that people do for tax reasons in December. I personally believe it is a good time to make adjustments while markets are quiet.

I can't trade today since it is Martin Luther King day and the markets are closed. I have my spreadsheet ready and placed the trades which will go through tomorrow. I was better off than I thought and only have to make a couple of adjustments this year.

Re-balancing is very important since it forces you to sell your winners and buy some of your under performing positions. This is basically selling high and buying low to an extent. You are bringing your portfolio back to your target percentage of stocks and bonds. I like to do this once per year to stay on the right track. Doing this also hedges you (to an extent) against big loses like in 2000-2001.