Rebalancing…Not So Fast

My last article used Warren Buffett’s pre-crisis sale of put options to highlight the risk of getting over our financial skis. In both temperament and negotiation, Warren can outlast most bear markets. Many of us cannot. Proponents of rebalancing should acknowledge the real risk that downturns can continue, and that rebalancing increases the risk of “crying uncle,” giving into the pain and pulling out of the market when expected returns are the highest. To guard against this potential, investors should first and . . .


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