Rebalance Our Investments? How Often? Part II

I wanted to publish this second part to what I started some time ago.  Unfortunately a couple of deaths in the family, Christmas, and the holidays all conspired to take my focus away from completing this.

Originally, I wanted to get this done as a means of recommending people rebalance their portfolios in the fall/November time frame.  As we can see, now, despite seasonality being in our favour, the markets are off the November highs.  It should go to make the point that seasonality is the probability of an event, not the certainty of it occurring.  Me, I will continue to play the probabilities, make corrections when proved wrong, and keep my losses to a minimum.

History says this year (2015) is normally the strongest in the four year U.S. election cycle.  Whether we have already pulled those gains forward into the end of last year, or no, remains to be seen.  That is, in fact, the reason we need to rebalance our investments by taking profits and readjusting our asset allocations back to "normal".

 Wishing you all the best for 2015.

May 2012 Returns

Click To Enlarge

I would rather not spend a lot of time or energy being negative about the markets and how things continue to go from bad to worse.  I want to be more positive than that.  It is not difficult to understand why people would think stock markets are completely unregulated and out of control, or at least controlled by big money with nothing in it for the small, personal investor.  I still feel small is beautiful, especially under current conditions.  We can run rings around the big fund managers and still minimize our risk with Exchange Traded Funds.  That strategy can be  particularly effective during months like this last May when inverse ETF's allow us to profit while the markets are trending down.  The markets appear to be more oversold than last year, at this time, but that doesn't mean we can't go a lot lower.  It is the fourth year in the U.S. election cycle.  Markets tend to be stronger during the second half of that year than others.  We will have to watch and see!  


17 month return for TSX @ April 30, 2012 = -14.59 percent
Return for Basic Timing Model using XIU = 10.57 percent
Return for Advanced Timing Model (my returns) = -4.36
Money for charity = $0.00