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.