In his recent nationally syndicated column, The Savings Game, personal finance writer Humberto Cruz interviewed me for to find out if there is: “A different way to rebalance your portfolio?” We explored a few options and he wrote:
To be sure, this strategy — and even just rebalancing back to an original asset mix — can be counterintuitive. You have to lighten up on investments that are doing well (but have become too big a percentage of your portfolio) and buy more of the asset classes not doing as well.
“The average investor continually makes the wrong decision because they are based on emotion — fear and greed — as opposed to any long-term logical plan,” said Andrew Horowitz, a certified financial planner in Weston and author of the informative The Disciplined Investor: Essential Strategies for Success…
… They buy high or sell low, or refuse to sell for emotional rather than logical reasons.”If it’s going up they don’t want to sell because it’s going up; if it’s going down, they want to hold until it ‘comes back,'” even if the investment was a mistake, Horowitz said. Bottom line: “Investors who stick with a plan are far better off in the long term.”
The Disciplined Investor is available at Amazon and other fine retailers.