S&P

Time to Rebalance Your Portfolio Again (2009-09-21)

by David John Marotta

The S&P 500 over the past six months is up over 40%. You have had smooth sailing and are beginning to feel comfortable again. Don't. It's time to tack once more and rebalance your accounts.

Studies show that rebalancing your portfolio can boost your returns by as much as 1.6% annually. This rebalancing bonus is measurable but by no means guaranteed. It works best in choppy volatile markets with asset classes that don't move in sync with one another.

It is always a contrarian move, expecting the wind to change. But when it does, rebalancing can fill your sails again. However if the market continues moving in the same direction, there can be a rebalancing penalty. The past year has been a little of both.

About 3 weeks ago I happened to be doing some research and noticed a strikign similarity between the crash and rebound in 2003 to whats happeend in 2009 (so far).

2 weeks ago we expected the HIGH of this leg to be set on Thursday/Friday Aug 27/28 and the Botton to be set 3 or 4 trading days after on Weds/Thurs Sept 2/3 --> I expect a slow grind higher and the TOP of this leg to be set in about 2 weeks on Sept 17th - the day before OPTION EXPIRATION. We would expect a move maybe 1% - 2% or so higher then previous highs - possible a little higher as the angle of this rally is steeeper so pullback and breakout should be equally steep.

Someone posted this in the live chat and I thought it was interesting.  While I'm not politically active nor would I say I am a member of a particular party this really surpised me to see this.