I never rebalance.
IMO rebalancing is a CON that wall street came up with
to take more of our money. Unless things get absolutely
ridiculously out of whack, its not necessary. Why would
I want to trigger taxable events, complicate tax reporting
time with partial MLP sales, and hand out transaction fees?
Because my "allocation" of resources is some % points
different from what someone tells me is "appropriate," who
stands to benefit financially from my rebalancing? A bit
of a conflict of interest, isn't it?
Wall Street will also tell you to allocate your funds across
multiple sectors to protect yourself from any one of them
going down the tubes. In reality, with the better investments,
this hardly ever happens. The market meltdown in 2008
took all sectors with it and most have recovered reasonably
well since (not talking about property or art work here.) If this
"strategy" is worthless in a crash, then what good is it?
The only real protection is to not be in investments that can
go down much. Of course, they won't go up much, either. All
investments, where there is a chance to make good money,
are risky; but if you are in for the long term, have income
producing investments, and reinvest as much of that income
as you can, you will do far better in the long run than any
trading and rebalancing strategy. And trust me, you do get
used to the day to day, week to week, month to month, and
even year to year gyrations that will go on in your portfolio.
What I can handle now with the big swings, is far, far better
than I could when I initially went into MLPs, which by the way
occupy 100% of my portfolio.
I know, I know, I'm an idiot, I'm crazy...but I'm getting 8% on
current portfolio value and 19% on the initial investment. The
value of the portfolio is up 155% in 3 yrs from initial entry. I've
reinvested over 80% of all distributions. This has made the
invested amount grow by 30%. In other words the reinvestment
has increased (with associated compounding) the money working
for me to 1.3X what is was when I started just 3 yrs ago. And that's
including a 15% position in NRGY(!) which is way, way down now;
but even so, when they cut the distribution by around 50%
next quarter, it will still be paying out around 8.5% (on today's
value,) not to mention that it will most likely be worth a lot more
in 2 or 3 yr than it is today. I'll ride it out.
I find it amusing when people here mention they are 20% in MLPs
and they think it might be too much. Tell me, does anyone really think
that the better MLPs are going out of business anytime soon? Are
they going to stop paying distributions? Is the gov really going to
destroy MLPs with tax changes when the needed build out of energy
infrastructure in this country is billions and billions every year for the
next 20 yrs or so? They can't even get together to stop the obscene
tax incentives that big oil sticks this country with every year. And this
group of clowns is going to target and ruin MLPs? I doubt it.
Anyway, we all do what we have to do based on how we feel. Sometimes
when you question your motivations, you discover that you are acting
illogically or for no good reason. I enjoy questioning why I do things and
why I have certain belief systems. My investment strategy is a result of this
personal inquiry and goes against most mainstream thinking (or lack of it,
actually, IMHO.) Following the herd is just not in my DNA anymore, and I
trust no one who profits off what goes on in my portfolio and the changes I
make with it.