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Market Factors and Regular Rebalancing Affecting Allocation Decisions

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Last month’s Asset Allocation Survey special question asked AAII members what most often causes them to alter their portfolio allocations. The largest group (14% of all respondents) cited market factors such momentum, technical analysis and valuation. More than 13% said that they periodically rebalance their portfolios or otherwise make small adjustments when their allocations stray too far off target. A nearly equal number of respondents said that they don’t or that they rarely change their allocations. About 10% of respondents said that they take advantage of market downturns to buy perceived bargains. Age, particularly nearness to or progression in retirement, is a catalyst for more than 7% of respondents. Approximately the same number of respondents said that the economy or other macro factors influence their decisions.

Here is a sampling of the responses:

  • “I don’t change my allocation very much. I try to stay with stocks by picking good companies that are going to grow over time.”
  • “Market drops to increase present positions and to take advantage of new positions”
  • “Tilting more conservative as retirement approaches.”
  • “Generally, I don’t alter my portfolio except for my annual rebalancing.”
  • “Market volatility”
  • “I only alter my portfolio when I have a projected or emergency need for cash.”

Want to weigh in? Take the survey yourself and see results online at http://www.aaii.com/assetallocationsurvey.

If you want to become an effective manager of your own assets and achieve your financial goals, consider a risk-free 30-day Trial AAII Membership.

 

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