Rebalancing doesn’t always work
Wait! What!?
“But Rick, I thought you said your Financial Zen Rebalancing Strategy is the BEES KNEES. What gives!?!?”
That’s right I did say that and it’s true.
However, rebalancing doesn’t always “work” over shorter time frames.
Just like buying and holding can be losing strategy over short periods, so can rebalancing.
You see when you rebalance you buy the current losers before they pop and you sell the winners before they drop.
So if you look too soon – as in before the winners drop and the losers pop – then it’ll appear like it’s not working.
Good things come to those who wait
But with a little patience comes reward…
Eventually what goes up just come down (and what goes down must come up).
So measuring over a time frame long enough for investments to revert back to their means will demonstrate a winning strategy.
So How long is long enough?
Well that my friends is a worthwhile question and one that will require more of your attention than I can likely before it goes tl;dr.
So you’ll have to tune into FZ Daily tomorrow when I’ll break it down for you!
