Rebalancing involves responding to what the market has already done, and market timing involves responding to predictions about what it might do next.Some straightforward definitions of rebalancing and market timing (in addition to those in the wiki):"Instead of pondering questions like these, I look only at my chosen asset allocation."
sticking to a precise AA is market timing. if your target is 60% equity and your equity goes to 65%, you need to sell to get back to 60%. and vice versa when the allocation trends below 60%.
your portfolio is guiding your timing, but your portfolio % is driven at least in part by the market.
alternatively, one can stray from a fixed AA as a fixed target, and react to market events so that your equity allocation moves in a range or band.
all of which makes common sense
maybe someone can tell me how "rebalancing" differs from market timing...although on this site, one is anathema and the other is not
https://www.investopedia.com/terms/r/rebalancing.asp
https://www.investopedia.com/terms/m/ma ... and%20down.
Statistics: Posted by Rocinante Rider — Sat Aug 03, 2024 11:12 am