In this episode, Mark talks about rebalancing and the psychology of buying losers and selling winners, as well as the opportunity cost: if I invest in something and it doesn't go well what is the cost of doing that? No portfolio should rely on any one position. It should have multiple moving parts working together to help the portfolio be successful over time. You will always be wrong when you second guess. You should rebalance to something, like to your asset allocation. Owning numerous mutual funds is not necessarily asset allocation and risk management means appropriate asset allocation. The best performing money managers under perform their benchmarks 50% of time. A process is what creates success.
December 28, 2016