What is Your Portfolio Management Plan?

Want to take the guesswork and the stress of portfolio management off your plate? History and statistics tell us that timing equity markets is not generally a successful long-term portfolio strategy. At Moneta, we try to eliminate the guesswork and take a different, more disciplined approach. It’s called rebalancing.

What is portfolio rebalancing?

Rebalancing means taking profits when the equity market is up and buying into equities when the market is down. When one asset class significantly outperforms another, your portfolio drifts from its originally stated objective, and the portfolio will move differently than it did before.

As stocks appreciate, rebalancing becomes a risk mitigation exercise.  If an investor “sets it and forgets it,” stocks become a higher weighting and the portfolio will likely go down further in a market decline – perhaps more than the investor is comfortable with.

On the other hand, buying in during a down market can increase portfolio returns.  Market declines are often followed by periods of strong returns.  Rebalancing when stocks are lower will mean an investor has more money in stocks during the recovery.

There is no one way to rebalance your portfolio and the timing can vary among investors.  Some investors rebalance based on a calendar date.  Others initiate rebalancing when the markets change significantly or when the portfolio allocation moves off target.

The key is to rebalance in a disciplined way to ensure you buy stocks low and sell high.  With this approach, you don’t necessarily need to know where the market is headed.  You have an all-weather plan.

Contact Us with Questions

If you have more portfolio management questions, don’t hesitate to contact us.  We do more so you can too.

© 2022 Moneta Group Investment Advisors, LLC. All rights reserved. These materials were prepared for informational purposes only based on materials deemed reliable, but the accuracy of which has not been verified; trademarks and copyrights of materials linked herein are the property of their respective owners. Examples contained herein are for illustrative purposes only based on generic assumptions. This is not an offer to sell or buy securities, nor does it represent any specific recommendation.  You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.

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