Pointers for a Positively Perfect Portfolio |
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A fixed-weight strategy, with rebalancing at least annually, is an excellent strategy
Rebalancing is the simple idea that a stable asset mix gives an investor a stable risk exposure that is appropriate for his or her financial needs, which are typically dictated by the stage in life.
A fixed-weight strategy is a long-run contrarian strategy. When stocks rise from being fairly valued to overvalued, the investor sells the overvalued stocks and buys bonds (or cash), or when putting new money into the portfolio purchases bonds or cash rather than stocks. When stocks fall from being fairly valued to undervalued, the investor sells bonds and buys the undervalued stocks, or uses new money to buy stocks. In short, a fixed-weight strategy allows someone to profit from market misvaluations while maintaining a stable risk exposure.
Avoid market timing 
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