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[Deleted User]

           

MaxiRobriguez

Bonds have fallen because inflation/interest rate expectations have increased. Rotating into bonds is a bet that both of those will fall back to what they were a few months ago. Brave bet that is given where we are in terms of vaccination programmes and stimulus. 

Linton

If your policy is to keep a steady % of bonds rebalancing once per year then you are right to carry on.  It is not a a brave bet on anything but rather a blind strategy - the best sort,.

MaxiRobriguez

Deleted_User said:

It's not a bet, it's a rebalance!

If I didn't rebalance, I'd be letting equities grow to become too large a proportion of my portfolio. I am still mostly in equities, but bonds and cash provide some ballast. That is the point of bonds, not attempting to predict short-term changes in long-term interest rates.

If equities power on up and bonds fall further, I'll be doing fine overall, and happy. OTOH, if equities fall, I'll be better cushioned and have some scope to buy more of them at lower prices.

If it's to keep you within pre-planned strategy then yes, it's fine, but your post was a little ambiguous as to reasons for it, especially the title.

Thrugelmir

Why aren't using one of the VLS or Retirement Target funds and allowing Vanguard to tweak asset allocation for you. Allocations are rarely rigid. 

AnotherJoe

Deleted_User said:

It's not a bet, it's a rebalance!

If I didn't rebalance, I'd be letting equities grow to become too large a proportion of my portfolio. I am still mostly in equities, but bonds and cash provide some ballast. That is the point of bonds, not attempting to predict short-term changes in long-term interest rates.

If equities power on up and bonds fall further, I'll be doing fine overall, and happy. OTOH, if equities fall, I'll be better cushioned and have some scope to buy more of them at lower prices.

A rebalance is still a bet, a bet that in the long run an arbitrary x/y balance will do better than some other balance.

Linton

AnotherJoe said:

Deleted_User said:

It's not a bet, it's a rebalance!

If I didn't rebalance, I'd be letting equities grow to become too large a proportion of my portfolio. I am still mostly in equities, but bonds and cash provide some ballast. That is the point of bonds, not attempting to predict short-term changes in long-term interest rates.

If equities power on up and bonds fall further, I'll be doing fine overall, and happy. OTOH, if equities fall, I'll be better cushioned and have some scope to buy more of them at lower prices.

A rebalance is still a bet, a bet that in the long run an arbitrary x/y balance will do better than some other balance.

A rebalance is not a bet on future better performance. If anything it's the complete the reverse.  It takes the gains from past out- performance  to reduce future risk by preventing any one investment area becoming over dominant, and so negating the reasons for choosing a particular allocation in the first place.

[Deleted User]

AnotherJoe said:

Deleted_User said:

It's not a bet, it's a rebalance!

If I didn't rebalance, I'd be letting equities grow to become too large a proportion of my portfolio. I am still mostly in equities, but bonds and cash provide some ballast. That is the point of bonds, not attempting to predict short-term changes in long-term interest rates.

If equities power on up and bonds fall further, I'll be doing fine overall, and happy. OTOH, if equities fall, I'll be better cushioned and have some scope to buy more of them at lower prices.

A rebalance is still a bet, a bet that in the long run an arbitrary x/y balance will do better than some other balance.

On the anniversary of some arbitrary date.

Albermarle

ZingPowZing said:

AnotherJoe said:

Deleted_User said:

It's not a bet, it's a rebalance!

If I didn't rebalance, I'd be letting equities grow to become too large a proportion of my portfolio. I am still mostly in equities, but bonds and cash provide some ballast. That is the point of bonds, not attempting to predict short-term changes in long-term interest rates.

If equities power on up and bonds fall further, I'll be doing fine overall, and happy. OTOH, if equities fall, I'll be better cushioned and have some scope to buy more of them at lower prices.

A rebalance is still a bet, a bet that in the long run an arbitrary x/y balance will do better than some other balance.

On the anniversary of some arbitrary date.

Being relatively new to the 'science' of asset allocation , rebalancing etc , I always though that the weak point was that the asset allocation decided in the beginning was just a guess , so why bother making a fuss about rebalancing , when nobody knows whether the original asset allocation was correct or not .
I remember seeing some statistical info that showed rebalancing  made little difference anyway , especially not on an annual basis , but I can not substantiate that as I can not remember where I saw it. 

Linton

ZingPowZing said:

AnotherJoe said:

Deleted_User said:

It's not a bet, it's a rebalance!

If I didn't rebalance, I'd be letting equities grow to become too large a proportion of my portfolio. I am still mostly in equities, but bonds and cash provide some ballast. That is the point of bonds, not attempting to predict short-term changes in long-term interest rates.

If equities power on up and bonds fall further, I'll be doing fine overall, and happy. OTOH, if equities fall, I'll be better cushioned and have some scope to buy more of them at lower prices.

A rebalance is still a bet, a bet that in the long run an arbitrary x/y balance will do better than some other balance.

On the anniversary of some arbitrary date.

Rebalancing once a year on a fixed but arbitrary date helps ensure that:
1) it is done at a sensible frequency. Once a month would be too frequent. once every ten years is too long.
2) It is not forgotten.
3) You know it is going to be done well in advance and so you have time to think through exactly what you want to do.
4) It discourages ill considered emotion-driven reactions to events.

bostonerimus

Deleted_User said:

Thrugelmir said:

Why aren't using one of the VLS or Retirement Target funds and allowing Vanguard to tweak asset allocation for you.

VLS would of course do the rebalancing for me. The main reason I'm not using it is that the equities and bonds I've chosen differ from to the equities and bonds within VLS. I do hold some Vanguard funds, but other things, too, including active. VLS would be simpler, and the results might be better or worse, but at least this way I have something to do, which keeps me off the streets

It's less expensive to hold the index funds over VLS and you can sell a particular asset class if you want. I don't think it makes all that much difference in the long run.