We are coming into Bob’s bi-annual rebalancing again. As 30 June 2019 is a Sunday, Bob has two options: either doing it on 28 June (Friday), or on 1 July (Monday).
Thing is, Bob is aware that the G20 Summit is coming up on 28 – 29 June, and along with it a possible meeting between the leaders of the two largest economic powerhouses, China and the United States, on settling the trade dispute.
Bob knows that the core ethos of rebalancing is to inject fresh funds into his Bedokian Portfolio, and then adjust it accordingly to his strategic allocation. However, whatever happens on the period of 28 – 30 June 2019 may bring a difference between the trading days on 28 June and 1 July, as in whether the markets will go up, down or (remotely) sideways over the weekend.
You see, Bob is worried that if he does his rebalancing on 28 June, only for prices to slide further on 1 July if not-so-good news happens during the Summit, then he will feel shortchanged by buying them at a higher price. Conversely, if he chooses 1 July instead, and prices are higher than on 28 June due to good news, then he will still feel shortchanged for not buying at a low.
So how now, Bob?
Choice #1: Stick To The Plan
Since Bob had started his Bedokian Portfolio back in the beginning of 2017, he had never done a rebalancing no later than 30 June. So sticking to his policy, he will do it on 28 June 2019 as planned.
Choice #2: See The Outcome
Bob will sit it out through the weekend and see how things unfold. Good or bad result, he will have to accept the outcome and carry it out on 1 July.
The Bedokian’s Take
Rebalancing or not, and if you are Bob or not, we do face such situations and tests in our investing life. Putting it simply, we can learn two things from here. Firstly, investing is long term. Ups and downs, they are just kinks in your investment journey, so do not fret much. Secondly, if a decision has been made, do not look back. Make do with what you have and press on, taking this as an investment lesson.
With this, Bob has decided he will do his rebalancing on 28 June.
You may see Bob’s portfolio after rebalancing from 29 June 2019 onwards here.